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

               ANNUAL REPORT PERSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934
                                     
                For the Fiscal Year Ended December 31, 1998

                                     
                                                    IRS Employer      
 Commission    Registrant; State of Incorporation   Identification
 File Number     Address; and Telephone Number           No.        
 -----------   ----------------------------------  --------------  
                                                          
   1-9057         WISCONSIN ENERGY CORPORATION       39-1391525
                      (A Wisconsin Corporation)           
                      231 West Michigan Street
                      P.O. Box 2949
                      Milwaukee, WI  53201
                      (414) 221-2345
                                                          
                                                          
   1-1245       WISCONSIN ELECTRIC POWER COMPANY     39-0476280
                      (A Wisconsin Corporation)           
                      231 West Michigan Street
                      P.O. Box 2046
                      Milwaukee, WI  53201
                      (414) 221-2345
                                                          
                                     
Indicate  by  check mark whether each 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
each  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 each 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.    [  ]

The  aggregate  market  value  of  the common  stock  of  Wisconsin  Energy
Corporation  held  by non-affiliates is approximately $3,054,459,000  based
upon  the reported last sale price of such securities as of March 5,  1999.
All  of  the  common stock of Wisconsin Electric Power Company is  held  by
Wisconsin Energy Corporation.

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

                                                  Name of Each Exchange
  Registrant / Title of Each Class                 on Which Registered
  --------------------------------                 -------------------
Securities Registered Pursuant to Section 12(b) of the Act:
                                                
  Wisconsin Energy Corporation               
    Common Stock, $.01 Par Value                   New York Stock Exchange
                                                             
  Wisconsin Electric Power Company                        
    None                                                     N/A
                                                             
Securities Registered pursuant to Section 12(g) of the Act:
                                                             
  Wisconsin Energy Corporation                            
    None                                                       
                                                             
  Wisconsin Electric Power Company                        
    Serial Preferred Stock, 3.60% Series, $100               N/A
        Par Value
    Six Per Cent. Preferred Stock, $100 Par                  N/A
        Value
                                                       
                      -------------------------------  

Indicate  the  number  of shares outstanding of each  of  the  Registrant's
classes of common stock, as of the latest practicable date (March 8, 1999):


  Wisconsin Energy Corporation        Common Stock, $.01 Par Value,
                                      116,241,667 shares outstanding.
                                      
  Wisconsin Electric Power Company    Common Stock, $10 Par Value,
                                      33,289,327 shares outstanding.
                                      Wisconsin Energy Corporation is the
                                      sole holder of Wisconsin Electric
                                      Power Company Common Stock
                                                          
                      --------------------------------    

                    Documents Incorporated by Reference
                    -----------------------------------                 
Portions  of Wisconsin Energy Corporation's definitive Proxy Statement  for
its  Annual  Meeting  of Stockholders, to be held  on  June  2,  1999,  are
incorporated by reference into Part III hereof.

Portions  of  Wisconsin  Electric  Power Company's  definitive  Information
Statement  for its Annual Meeting of Stockholders, to be held  on  May  26,
1999, are incorporated by reference into Part III hereof.

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

This combined Form 10-K is separately filed by Wisconsin Energy Corporation
and  by  Wisconsin  Electric Power Company.  Information  contained  herein
relating  to any individual Registrant is filed by such Registrant  on  its
own behalf.



                  WISCONSIN ENERGY CORPORATION
                WISCONSIN ELECTRIC POWER COMPANY  
                                
      FORM 10-K REPORT FOR THE YEAR ENDED DECEMBER 31, 1998
                        TABLE OF CONTENTS
                                
Item                                                                  Page
----                                                                  ----
                             PART I
                             ------   
1.   Business..............................................................
        Electric Operations................................................
           Electric Sales..................................................
           Sources of Electric Energy......................................
           Coal-Fired Generation...........................................
           Nuclear Generation..............................................
           Hydroelectric Generation........................................
           Natural Gas-Fired Generation....................................
           Oil-Fired Generation............................................
           Purchased Power Commitments.....................................
           Interconnections with Other Utilities...........................
        Gas Operations.....................................................
           Gas Deliveries..................................................
           Gas Supply......................................................
        Steam Operations...................................................
        Non-Utility Operations.............................................
           Non-Utility Subsidiaries........................................
           Non-Utility Restrictions........................................
        Regulation.........................................................
        Rate Matters.......................................................
        Energy Efficiency..................................................
        Environmental Compliance...........................................
           Solid Waste Landfills...........................................
           Ash Landfills...................................................
           Manufactured Gas Plant Sites....................................
           Air Quality.....................................................
        Other..............................................................

2.   Properties............................................................

3.   Legal Proceedings.....................................................
           Environmental Matters...........................................
           Rate Matters....................................................
           Other Matters...................................................
 
4.   Submission of Matters to a Vote of Security Holders...................

     Executive Officers of the Registrants.................................

                             PART II
                             -------
                                
5.   Market for Registrants' Common Equity and Related 
     Stockholder Matters...................................................
        Number of Common Stockholders......................................
        Common Stock Listing and Trading...................................
        Dividends and Common Stock Prices..................................

6.   Selected Financial Data...............................................
        Wisconsin Energy Corporation.......................................
        Wisconsin Electric Power Company...................................

7.   Management's Discussion and Analysis of Financial.....................
        Condition and Results of Operations................................
        Results of Operations..............................................
           Earnings........................................................
           Electric Revenues, Gross Margins and Sales......................
           Gas Revenues, Gross Margins and Therm Deliveries................
           Operating Expenses..............................................
           Other Items.....................................................
        Factors Affecting Results of Operations............................
           Mergers.........................................................
           Nuclear Matters.................................................
           Electric System Reliability Matters.............................
           Industry Restructuring and Competition..........................
           Rates and Regulatory Matters....................................
           Year 2000 Technology Issues.....................................
           Environmental Matters...........................................
           Coal Supply and Transportation Matters..........................
           Outlook.........................................................
           Effects of Weather..............................................
           Effects of Inflation............................................
           Market Risks....................................................
           Accounting Matters..............................................
        Liquidity and Capital Resources....................................
           Investing Activities............................................
           Cash Provided by Operating and Financing Activities.............
           Capital Structure...............................................
           Capital Requirements............................................
           Capital Resources...............................................
        Cautionary Factors.................................................

7A.  Quantitative and Qualitative Disclosures About Market Risk............

8.   Financial Statements and Supplementary Data...........................
        Index to 1998 Financial Statements.................................
        Wisconsin Energy Corporation.......................................
        Wisconsin Electric Power Company...................................

9.   Changes in and Disagreements with Accountants.........................
        on Accounting and Financial Disclosure.............................
                                
                            PART III
                            --------
                                
10.  Directors and Executive Officers of the Registrant....................
11.  Executive Compensation................................................
12.  Security Ownership of Certain Beneficial Owners and Management........
13.  Certain Relationships and Related Transactions........................

                             PART IV
                             -------
                                
14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K
     Schedule 1 - Condensed Parent Company Financial Statements
     Consents of Independent Accountants...................................
     Signatures............................................................
     Exhibit Index.........................................................


                           DEFINITIONS

Abbreviations and Acronyms used in the text are defined below.

  Abbreviations and Acronyms                  Term
  --------------------------                  ----
                                 
APB 25.........................  Accounting Principles Board
                                 Opinion No. 25, Accounting for
                                 Stock Issued to Employees
AFUDC..........................  Allowance for Funds Used During Construction
Cogentrix......................  Cogentrix Energy Inc., an
                                 independent power producer and
                                 parent company of LS Power
Company........................  Wisconsin Energy Corporation and subsidiaries
Court..........................  United States Court of Appeals
                                 for the District of Columbia circuit
D&D Fund.......................  Uranium Enrichment Decontamination and
                                 Decommissioning Fund
D&P............................  Duff & Phelps Inc.
DOE............................  United States Department of Energy
Edison Sault...................  Edison Sault Electric Company
EITF 98-10.....................  Emerging Issues Task Force
                                 Consensus Number 98-10,
                                 Accounting for Energy Trading
                                 and Risk Management Activities
EPA............................. United States Environmental Protection Agency
Equipment....................... Kimberly Cogeneration Facility
                                 Project equipment
ESELCO.......................... ESELCO, Inc., former parent
                                 company of Edison Sault;
                                 acquired by Wisconsin Energy
                                 effective May 31, 1998
FAS............................. Statement of Financial Accounting Standards
FASB............................ Financial Accounting Standards Board
FAS 71.......................... Accounting for the Effects of
                                 Certain Types of Regulation
FAS 109......................... FAS No. 109, Accounting for Income Taxes
FAS 121......................... FAS No. 121, Accounting for
                                 the Impairment of Long-Lived Assets
FAS 123......................... FAS No. 123, Accounting for
                                 Stock-Based Compensation
FAS 133......................... FAS No. 133, Accounting for
                                 Derivative Instruments and Hedging Activities
FERC............................ Federal Energy Regulatory Commission
Fitch........................... Fitch Investors Service, Inc.
Fund............................ Nuclear Decommission Trust Fund
GCRM............................ Gas Cost Recovery Mechanism
ISFSI........................... Independent Spent Fuel Storage Installation
ISO............................. Independent System Operator (transmission)
LS Power........................ LSP-Whitewater, Limited
                                 Partnership, an unaffiliated
                                 independent power producer and
                                 owner of the Whitewater Cogeneration Facility
MAIN............................ Mid-America Interconnected Network, Inc.
MDNR............................ Michigan Department of Natural Resources
Midwest ISO..................... Midwest Independent Transmission System 
                                 Operator, Inc.
Minergy......................... Minergy Corp.
Moody's......................... Moody's Investors Service
MPSC............................ Michigan Public Service Commission
Mwh............................. Megawatt-hour
NEIL............................ Nuclear Electric Insurance Limited
NOx2............................ Nitrogen Oxide
NRC............................. United States Nuclear Regulatory Commission
NSP............................. Northern States Power Company,
                                 a Minnesota corporation
OSIP............................ Omnibus Stock Incentive Plan
PCB............................. Polychlorinated Biphenly (environmental)
Point Beach..................... Point Beach Nuclear Plant
Proposed FAS.................... Proposed FAS, Accounting for
                                 Obligations Associated with
                                 the Retirement of Long-Lived Assets
PRP............................. Potentially Responsible Party
                                 (environmental)
PSCW............................ Public Service Commission of Wisconsin
S&P............................. Standard & Poor's Corporation
SO2............................. Sulfur Dioxide
Trust........................... Wisconsin Electric Fuel Trust (nuclear)
Waste Act....................... Nuclear Waste Policy Act of 1982
Waukesha........................ City of Waukesha, Wisconsin
WDNR............................ Wisconsin Department of Natural Resources
WIEP............................ Wisconsin International Electric Power, Ltd
Wisconsin Electric.............. Wisconsin Electric Power Company
Wisconsin Energy................ Wisconsin Energy Corporation
                                 and subsidiaries
Wispark......................... WISPARK Corporation
Wisvest......................... WISVEST Corporation
Witech.......................... WITECH Corporation
WRAO............................ Wisconsin Reliability
                                 Assessment Organization
WSSA............................ Wilderness Shores Settlement Agreement
Yellowcake...................... Uranium Concentrates (nuclear)



                                  PART I
                                  ------   
ITEM 1.  BUSINESS

Wisconsin Energy Corporation was incorporated in the State of Wisconsin  in
1981 and became a holding company in 1986.  Unless qualified by the context
used  in this document, the terms "Wisconsin Energy" or the "Company" refer
to  the  holding  company and all of its subsidiaries.  Wisconsin  Energy's
principal  subsidiary  at  December 31, 1998 was Wisconsin  Electric  Power
Company  ("Wisconsin  Electric"),  an  electric,  gas  and  steam  utility
which was incorporated in the State of Wisconsin in 1896.  The
following discussion includes both Wisconsin Energy and Wisconsin  Electric
unless otherwise stated.

Effective  May 31, 1998, Wisconsin Energy acquired ESELCO, Inc. ("ESELCO"),
a  holding  company  whose principal subsidiary was Edison  Sault  Electric
Company ("Edison Sault"), in a tax free reorganization accounted for  as  a
pooling  of  interests.  Due to the immaterial nature of this  transaction,
Wisconsin  Energy has not restated any historical financial or  statistical
information  contained  in this document.  Wisconsin  Energy  is  operating
Wisconsin  Electric  and  Edison Sault, an electric  utility,  as  separate
subsidiaries within their historical service territories.  Unless otherwise
noted,  the discussion that follows includes Edison Sault's activity  since
June  1,  1998.   For additional information concerning Wisconsin  Energy's
acquisition  of  ESELCO,  see "Factors Affecting Results  of  Operations  -
Mergers"  in  Item  7.  Management's Discussion and Analysis  of  Financial
Condition and Results of Operations.

Wisconsin  Energy  also has certain subsidiaries engaged  in  various  non-
utility businesses.  The operations of the Company and its subsidiaries are
conducted in the following four areas of business.

ELECTRIC  OPERATIONS:   Wisconsin Electric's electric operations  generate,
transmit,   distribute  and  sell  electric  energy  in  a   territory   of
approximately 12,000 square miles with a population estimated at  2,300,000
in  southeastern (including the metropolitan Milwaukee area), east  central
and  northern  Wisconsin and in the Upper Peninsula  of  Michigan.   Edison
Sault  generates,  transmits, distributes and sells electric  energy  in  a
territory  of  approximately  2,000  square  miles  with  a  population  of
approximately 55,000 in the eastern Upper Peninsula of Michigan.

GAS  OPERATIONS:   Wisconsin Electric's gas operations purchase, distribute
and  sell natural gas to retail customers and transport customer-owned  gas
in  four  distinct service areas of about 3,800 square miles in  Wisconsin:
west and south of the City of Milwaukee, the Appleton area, the Prairie  du
Chien  area  and  areas within Iron and Vilas Counties.   The  gas  service
territory has an estimated population of approximately 1,200,000.

STEAM   OPERATIONS:    Wisconsin  Electric's  steam  operations   generate,
distribute and sell steam supplied by its Valley and Milwaukee County Power
Plants.  Steam is used by customers for space heating and processing in the
metropolitan Milwaukee area.

NON-UTILITY OPERATIONS:   Wisconsin Energy's non-utility operations seek to
grow  shareholder  value by leveraging on the Company's core  competencies.
Wisconsin  Energy's  non-utility  subsidiaries  are  involved  in   various
activities,  among  which  are  development,  ownership  and  operation  of
electric  generating facilities; waste/energy by-product  utilization;  and
real   estate   development.   For  information   about   the   non-utility
subsidiaries, see "Non-Utility Operations" below.

For additional financial information about Wisconsin Energy's and Wisconsin
Electric's business segments, see "Note K - Segment Reporting" in Wisconsin
Energy's and Wisconsin Electric's Notes to Financial Statements in Item  8.
Financial Statements and Supplementary Data.

CAUTIONARY  FACTORS:   A number of forward-looking statements are  included
in   this   document.   When  used,  the  terms,  "anticipate",  "believe",
"estimate",   "expect",   "objective",  "plan",  "possible",   "potential",
"project"  and  similar expressions are intended to identify such  forward-
looking  statements.   Forward-looking statements are  subject  to  certain
risks,  uncertainties and assumptions which could cause actual  results  to
differ  materially  from those that are described,  including  the  factors
described  in  Item  7. Management's Discussion and Analysis  of  Financial
Condition and Results of Operations.


                            ELECTRIC OPERATIONS

ELECTRIC SALES

See Item 7. Management's Discussion and Analysis of Financial Condition and
Results  of Operations - "Results of Operations - Electric Revenues,  Gross
Margins  and  Sales"  for  selected  electric  operating  information   for
Wisconsin Energy and additional selected electric operating information  by
customer class for Wisconsin Electric.

WISCONSIN  ELECTRIC:   Wisconsin Electric is authorized to  provide  retail
electric  service in designated territories in the State of  Wisconsin,  as
established  by  indeterminate permits, certificates of public  convenience
and  necessity, or boundary agreements with other utilities, and in certain
territories  in  the  State of Michigan pursuant to franchises  granted  by
municipalities.  Wisconsin Electric also sells wholesale electric power.

Electric  energy  sales by Wisconsin Electric in 1998  to  all  classes  of
customers  totaled  approximately  29.5  billion  kilowatt-hours,  a   6.5%
increase over 1997.  There were approximately 989,000 electric customers at
December 31, 1998, an increase of 1.0% since December 31, 1997.

Electric energy sales are impacted by seasonal factors and varying  weather
conditions from year-to-year.  Wisconsin Electric, a summer peaking utility
as  a  result  of cooling load, reached its all-time electric  peak  demand
obligation  of  5,468 megawatts on July 21, 1998.  During  the  years  1999
through  2003,  Wisconsin Electric currently estimates that  electric  peak
demand   obligation  will  grow  at  an  annualized   rate   of   1.0%   to
5,746 megawatts by the year 2003.

EDISON  SAULT:    Edison  Sault is authorized to  provide  retail  electric
service  in  certain  territories in the  State  of  Michigan  pursuant  to
franchises granted by municipalities.  Edison Sault also provides wholesale
electric service under contract with one rural cooperative.

During  the  seven  months  ended December  31,  1998  following  Wisconsin
Energy's acquisition of Edison Sault, electric energy sales by Edison Sault
to  all  classes  of customers totaled approximately 465 million  kilowatt-
hours.  There were approximately 21,000 electric customers at December  31,
1998.

Edison Sault, a winter peaking utility as a result of heating load, reached
its  all-time  peak electric demand of 138 megawatts on January  14,  1999.
Edison  Sault's  peak load growth during the past five years  has  averaged
between  1% and 2% per year, and Edison Sault expects this level of  growth
to continue into the foreseeable future.

SALES  TO  LARGE  RETAIL ELECTRIC CUSTOMERS:   Wisconsin Electric  provides
electric  utility  service to a diversified base of  industrial  customers.
Major  industries  served by Wisconsin Electric include  iron  ore  mining,
paper,  machinery production, foundry and food products.   The  Empire  and
Tilden  iron ore mines located in the Upper Peninsula of Michigan, the  two
largest retail electric customers of Wisconsin Electric, accounted for 4.3%
and  3.9%, respectively, of total electric kilowatt-hour sales during 1998.
Sales  to  the  Empire and Tilden iron ore mines were 7.4% higher  in  1998
compared to 1997 due to a two month outage at the Tilden mine during  1997.
Edison Sault provides electric service to large industrial accounts in  the
paper,  crude oil pipeline and limestone quarry industries as  well  as  to
several state and federal government facilities.

SALES  TO  WHOLESALE  CUSTOMERS:    During 1998,  Wisconsin  Electric  sold
wholesale  electric energy to five municipally owned systems,  three  rural
cooperatives and two municipal joint action agencies located in the  States
of  Wisconsin, Michigan and Illinois.  Wholesale electric energy  sales  by
Wisconsin  Electric were also made to 47 other public utilities  and  power
marketers throughout the region under rates approved by the Federal  Energy
Regulatory   Commission   ("FERC").    Wholesale   sales   accounted    for
approximately 10% of Wisconsin Electric's total electric energy  sales  and
6%  of  total electric operating revenues in 1998 compared to 8%  of  total
electric energy sales and 5% of total electric operating revenues in 1997.

On January 1, 1998, Upper Peninsula Power Company began taking service from
Wisconsin  Electric  under a capacity exchange agreement.   This  agreement
allows  for  elections to receive 30 to 65 megawatts  of  power,  and  runs
through  December  31,  2007.  Upper Peninsula  Power  Company  elected  to
receive  65  megawatts for calendar year 1999.  Oconto Electric Cooperative
ceased  taking power from Wisconsin Electric for its system on May 1,  1998
when  a partial requirements contract of approximately 8 megawatts expired.
Wisconsin  Public Power Inc. began taking service May 1, 1998 under  a  new
three-year contract.  This contract allows Wisconsin Public Power  Inc.  to
choose  power  demand  in amounts up to 100 megawatts  by  the  year  2000.
Initially,  Wisconsin  Public Power Inc. elected to  receive  45  megawatts
under its new contract.

Wisconsin  Electric's existing FERC tariffs also provide  for  transmission
service to its wholesale customers.  During 1998, Wisconsin Electric had 19
customers taking transmission service.

COMPETITION:    Driven  by a combination of market forces,  regulatory  and
legislative  initiatives and technological changes,  the  electric  utility
industry continues a trend towards restructuring and increased competition.
See Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - "Factors Affecting Results of Operations - Industry
Restructuring and Competition" for a description of competition issues  and
electric industry restructuring initiatives that are underway in regulatory
jurisdictions  where  Wisconsin  Electric and  Edison  Sault  currently  do
business.

FERC  OPEN  ACCESS TRANSMISSION RULING:   As a result of the Energy  Policy
Act  of  1992,  the  FERC issued two orders in April 1996  and  March  1997
relating to open access transmission service, stranded costs, standards  of
conduct  and  open access same-time information systems.  On  November  25,
1997,  these  orders  were reaffirmed with little change  by  the  FERC  on
rehearing.   The ruling is intended to create a more competitive  wholesale
electric power market.  See Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations - "Factors Affecting  Results
of  Operations  -  Industry Restructuring and Competition"  for  additional
information.

ELECTRIC  UTILITY  INDUSTRY  INVESTIGATIONS:    See  Item  7.  Management's
Discussion and Analysis of Financial Condition and Results of Operations  -
"Factors  Affecting  Results  of Operations  - Industry  Restructuring  and
Competition"  for  information regarding the Public Service  Commission  of
Wisconsin's  ("PSCW")  and  Michigan Public Service  Commission's  ("MPSC")
separate investigations into the structure of the electric industry in  the
States of Wisconsin and Michigan, respectively.

ELECTRIC  SYSTEM  RELIABILITY  MATTERS:    While  Wisconsin  Electric   had
adequate  capacity  to  meet all of its firm load  obligations  during  the
summer of 1998, it was required to appeal for conservation on two occasions
during  1998  when weather-induced demand and capacity conditions  strained
the  regional  electric network in the midwest.  See Item  7.  Management's
Discussion and Analysis of Financial Condition and Results of Operations  -
"Factors  Affecting  Results  of Operations - Electric  System  Reliability
Matters"  for  information concerning ongoing actions  in  which  Wisconsin
Electric  is  currently  involved to improve electric  reliability  in  the
midwest region.


SOURCES OF ELECTRIC ENERGY

The  table  below  indicates Wisconsin Energy's  and  Wisconsin  Electric's
sources  of electric energy supply for their  control areas, including  net
generation by fuel type, for the following years ended December 31.

                                  
                               1996     1997(a)    1998(b)    1999(c)
                              ------    -------    -------    -------
Wisconsin Energy                                                     
  Coal                          67.2%      71.8%      63.0%      61.0%
  Nuclear                       23.9        5.6       18.2       21.7
  Hydroelectric                  1.6        1.6        1.6        1.9
  Natural gas                    1.0        1.9        1.8        0.7
  Oil (d)                        0.3        0.2        0.2        0.0
                              ------     ------     ------     ------
    Net Generation              94.0       81.1       84.8       85.3
  Power Purchases (e)            6.0       18.9       15.2       14.7
                              ------     ------     ------     ------
    Total                      100.0%     100.0%     100.0%     100.0%
                              ======     ======     ======     ======
Wisconsin Electric                                                   
  Coal                          67.2%      71.8%      63.8%      62.8%
  Nuclear                       23.9        5.6       18.5       22.3
  Hydroelectric                  1.6        1.6        1.0        1.4
  Natural gas                    1.0        1.9        1.8        0.7
  Oil                            0.3        0.2        0.2        0.0
                              ------     ------     ------     ------
    Net Generation              94.0       81.1       85.3       87.2
  Power Purchases                6.0       18.9       14.7       12.8
                              ------     ------     ------     ------
    Total                      100.0%     100.0%     100.0%     100.0%
                              ======     ======     ======     ======  

(a)  The  mix  of  electric energy supply during  1997  reflects  extended
     outages  of  Units  1 and 2 at Wisconsin   Electric's Point  Beach  Nuclear
     Plant  ("Point  Beach").  See "Electric Operations  -  Nuclear  Generation"
     below for discussion of matters related to Point Beach.

(b)  Wisconsin Energy's information includes Edison Sault for  the  period
     June through December 1998.

(c)  Estimated assuming that there are no unforeseen contingencies such  as
     unscheduled  maintenance  or repairs of Wisconsin  Energy's  generating  or
     electric  transmission  facilities.  See Item 7. Management's    Discussion
     and Analysis of Financial Condition and Results of Operations - "Cautionary
     Factors."

(d)  Includes  generation  by  Edison Sault's  4.8  megawatt  diesel-fired
     peaking power plant.

(e)  Excludes  purchases by Edison Sault of power  supplied  by  Wisconsin
     Electric.


WISCONSIN   ELECTRIC:     Wisconsin  Electric's  net   generation   totaled
26 million megawatt-hours during 1998 compared to 24 million megawatt-hours
during 1997 and 27 million megawatt-hours during 1996.  Net generation  was
down  during 1997 primarily due to extended outages at Point Beach.  During
1998,  Wisconsin  Electric's generation was supplemented with  4.5  million
megawatt-hours  of  power purchases from neighboring utilities;  from  LSP-
Whitewater Limited Partnership ("LS Power"), an independent power  producer
with  whom Wisconsin Electric has a long-term power purchase contract; and,
to  a  minor  extent,  from  other sources.  Wisconsin  Electric  purchased
5.5  million  megawatt-hours  and 1.8 million  megawatt-hours  of  electric
energy  during  1997 and 1996, respectively.  The dependable capability  of
Wisconsin Electric's generating stations was 5,652 megawatts in August 1998
as more fully described in Item 2. Properties.

Wisconsin  Electric's average total fuel costs per million British  thermal
units by fuel type for the years ended December 31 are shown below.

                                                                      
                                  1996            1997            1998
                                  ----            ----            ----
Coal                             $1.16           $1.22           $1.17
Nuclear                           0.46            0.49            0.53
Natural Gas                       3.60            2.79            2.74
Oil                               4.22            4.70            3.70


EDISON  SAULT:    During  1998, Edison Sault generated  20%  of  its  total
electric energy requirements with its hydroelectric plant and purchased the
remaining   80%  of  such  requirements.   Edison  Sault's  total   average
generating capability is 34.6 megawatts as more fully described in Item  2.
Properties.


COAL-FIRED GENERATION

Wisconsin  Electric diversifies coal sources for its power  plants  in  the
States of Wisconsin and Michigan by purchasing from mines in northern  and
central  Appalachia as well as from various western mines.   Following  are
the  periods and annual tonnage amounts for Wisconsin Electric's  principal
coal contracts.


                Contract Period              Annual Tonnage        
                ---------------              --------------        
            Jan. 1980 to Dec. 2006             2,000,000  
            Jul. 1983 to Dec. 2002             1,000,000  
            Jan. 1992 to Dec. 2005             2,200,000  
            Oct. 1992 to Dec. 2001               500,000  
            Sep. 1994 to Aug. 1999               600,000  
            Sep. 1995 to Dec. 1999               600,000  
            Jan. 1996 to Dec. 1999               100,000  
            Jan. 1998 to Dec. 2002               900,000  


For  information regarding emission restrictions, see Item  1.  Business  -
"Environmental Compliance."

Approximately  75%  of  Wisconsin Electric's  1999  coal  requirements  are
expected to be delivered by Wisconsin Electric-owned unit trains.  The unit
trains  will  transport coal for the Oak Creek and Pleasant  Prairie  Power
Plants  from  Colorado, Pennsylvania, New Mexico and Wyoming  mines.   Coal
from  Pennsylvania and Colorado mines is also transported via rail to  Lake
Erie  or Lake Michigan transfer docks and delivered to the Valley and  Port
Washington  Power Plants by lake vessels.  Coal from central Appalachia  is
shipped via rail to Lake Erie transfer docks and delivered to the Milwaukee
County  Power  Plant by truck once it arrives by lake vessel in  Milwaukee.
Montana  and  Wyoming  coal for Presque Isle is  transported  via  rail  to
Superior, Wisconsin, placed in dock storage and reloaded into lake  vessels
for  plant  delivery.   The  Presque Isle central  Appalachian  origin  and
Colorado  origin  coal is shipped via rail to Lake Erie and  Lake  Michigan
(Chicago)  coal transfer docks, respectively, for lake vessel  delivery  to
the  plant.  Wisconsin Electric's 1999 coal requirements, projected  to  be
11.3 million tons, will be 89% under contract.  Wisconsin Electric does not
anticipate  any  problem in procuring its remaining 1999 coal  requirements
through  short-term  or  spot  purchases and  inventory  adjustments.   For
information  concerning coal delivery problems during 1997 with  the  Union
Pacific Railroad as well as coal inventory contingency plans related to the
Year  2000,  see Item 7. Management's Discussion and Analysis of  Financial
Condition  and  Results  of  Operations -  "Factors  Affecting  Results  of
Operations - Coal Supply and Transportation Matters."

PLEASANT PRAIRIE POWER PLANT:   All of the estimated 1999 coal requirements
for this plant are presently under contract.

OAK  CREEK  POWER PLANT:   All of the estimated 1999 coal requirements  for
this plant are presently under contract.

PRESQUE ISLE POWER PLANT:   All of the estimated 1999 coal requirements for
this plant are presently under contract.

EDGEWATER  5  GENERATING  UNIT:   Coal for this unit,  in  which  Wisconsin
Electric  has  a  25% interest, is purchased by Wisconsin Power  and  Light
Company,  a  non-affiliated investor owned utility, which is  the  majority
owner of the facility.

VALLEY  AND  PORT  WASHINGTON POWER PLANTS:   Coal requirements  for  these
plants will be supplied in 1999 by contracts that have been agreed upon  in
principle.

MILWAUKEE  COUNTY  POWER PLANT:   Coal for this facility  is  purchased  by
Wisconsin Electric through annual spot purchases.


NUCLEAR GENERATION

Wisconsin  Electric  purchases  uranium  concentrates  ("Yellowcake")   and
contracts  for  its  conversion,  enrichment  and  fabrication.   Wisconsin
Electric  maintains  title to the nuclear fuel until  the  fabricated  fuel
assemblies are delivered to Point Beach, whereupon it is sold to and leased
back  from  the  Wisconsin  Electric Fuel Trust.  For  further  information
concerning  this nuclear fuel lease, see "Note H - Long-Term Debt"  in  the
Notes  to  Financial  Statements  in  Item  8.  Financial  Statements   and
Supplementary  Data.

POINT  BEACH  NUCLEAR  PLANT:   Wisconsin Electric owns  and  operates  two
approximately 500 megawatt electric generating units at Point Beach in  Two
Rivers,  Wisconsin.  During the summer of 1997, Wisconsin Electric replaced
two low pressure turbines in Unit 1, which increased its maximum dependable
generating capability from 500 to approximately 510 megawatts.  During  the
winter  of  1998-1999, Wisconsin Electric replaced Unit  2's  low  pressure
turbine  rotors, which is expected to also increase the maximum  dependable
generating  capability of Unit 2 from 500 to approximately  510  megawatts.
Due to extended outages during 1997, Point Beach provided approximately  6%
of  Wisconsin Electric's net electric energy supply during 1997 compared to
18%  and 24% during 1998 and 1996, respectively.  The United States Nuclear
Regulatory Commission operating licenses for Point Beach expire in  October
2010 for Unit 1 and in March 2013 for Unit 2.

For additional information concerning Point Beach, see Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations  -
"Factors Affecting Results of Operations - Nuclear Matters" and "Note  F  -
Nuclear  Operations"  in  the  Notes to Financial  Statements  in  Item  8.
Financial Statements and Supplementary Data.

URANIUM   REQUIREMENTS:     Wisconsin   Electric   requires   approximately
400,000  pounds of Yellowcake to refuel a generating unit at  Point  Beach.
During 1998, Wisconsin Electric implemented staggered, extended fuel cycles
that  are  expected to average approximately 18 months  in  duration.   The
supply of Yellowcake for these refuelings is currently provided through one
long-term   contract,  which  provides  between  60%  to  100%  of   annual
requirements  under  these  staggered,  extended  fuel  cycles.   Wisconsin
Electric  may exercise flexibility available in this contract and  purchase
certain  quantities  of  uranium  on the spot  market,  should  the  market
conditions prove favorable.  Negotiations for the supply of the quantity of
uranium  not covered by the long-term contract beyond 1998 will be  ongoing
during 1999.

CONVERSION:   Wisconsin Electric has a long-term contract with  a  provider
of   uranium   conversion  services  to  supply  100%  of  the   conversion
requirements for the Point Beach reactors from 1996 through 1999. For   the
years  2000 through 2004, this same contract will provide 75% of  Wisconsin
Electric's annual conversion requirements.  During 1997, an additional long-
term  conversion  contract  was executed to supply  the  remaining  25%  of
Wisconsin Electric's annual conversion requirements.

ENRICHMENT:   During 1998, a long-term contract for the supply of  enriched
uranium  was  executed  capable  of  providing  up  to  100%  of  Wisconsin
Electric's  enriched  uranium requirements  through  2006.   As  a  result,
Wisconsin Electric currently has two long-term contracts for the supply  of
enrichment  services.  The combination of the contracts  provides  for  the
required enrichment services for the Point Beach reactors through the  year
2006.

FABRICATION:    Fabrication of fuel assemblies from  enriched  uranium  for
Point  Beach  is  covered  under  a  contract  with  Westinghouse  Electric
Corporation  for  the  balance of the plant's  current  operating  license.
During  1995,  an  agreement  was reached between  Wisconsin  Electric  and
Westinghouse to supply Wisconsin Electric with a new fuel design  beginning
in  the fall of 1997.  The 1995 agreement was modified in November 1996 due
to  delayed licensing of a new analysis method desired for the use  of  the
new  fuel  design.  Current plans now assume initial use of  the  new  fuel
design  in  the fall of the year 2000.  The new fuel design is expected  to
provide additional safety margin and cost savings and to reduce the  number
of discharged spent fuel assemblies over the remaining operating license.

SPENT  FUEL  STORAGE AND DISPOSAL:   Wisconsin Electric currently  has  the
capacity  to store limited amounts of spent nuclear fuel in the spent  fuel
pool   at   Point   Beach.   In  addition,  Wisconsin  Electric   completed
construction of an Independent Spent Fuel Storage Installation in 1995  for
the  temporary  dry storage of spent fuel at Point Beach.  For  information
concerning spent fuel storage and disposal issues, see Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations  -
"Factors Affecting Results of Operations - Nuclear Matters."

DECOMMISSIONING  FUND:   Wisconsin Electric provides for  costs  associated
with  the  eventual decommissioning of Point Beach through the  use  of  an
external  trust  fund.   Payments to this fund,  together  with  investment
earnings,  brought the balance in the trust fund at December  31,  1998  to
approximately   $519   million.   For  additional   information   regarding
decommissioning,  see  "Note  F  - Nuclear  Operations"  in  the  Notes  to
Financial  Statements  in  Item 8. Financial Statements  and  Supplementary
Data.

NUCLEAR PLANT INSURANCE:   For information regarding matters pertaining  to
nuclear plant insurance, see "Note F - Nuclear Operations" in the Notes  to
Financial  Statements  in  Item 8. Financial Statements  and  Supplementary
Data.


HYDROELECTRIC GENERATION

WISCONSIN ELECTRIC:   Wisconsin Electric's hydroelectric generating  system
consists of fifteen operating plants.  Of these fifteen plants, five plants
with  a  total installed generating capacity of approximately 26  megawatts
have  long-term licenses with the FERC, and a sixth plant with an installed
generating  capacity of approximately 2 megawatts does not require  a  FERC
license.  Wisconsin Electric is in the process of selling to an independent
party  one  plant  with an installed generating capacity  of  approximately
1 megawatt.

Wisconsin  Electric  is  seeking renewal of the remaining  eight  operating
licenses  from  the  FERC for licenses that expired or  expire  during  the
period  1998  to  2001.  Key issues concerning relicensing of  these  eight
plants were covered by the Wilderness Shores Settlement Agreement ("WSSA"),
signed  in  February 1997.  The WSSA was the culmination of more  than  two
years of negotiations between Wisconsin Electric and representatives of the
Wisconsin  Department  of  Natural Resources, the  Michigan  Department  of
Environmental  Quality, the Michigan Department of Natural Resources,   the
U.S. Fish and Wildlife Service, the Wisconsin Department of Administration,
the  National  Park Service and two river/recreational organizations:   the
Michigan  Hydro Relicensing Coalition and the River Alliance of  Wisconsin.
Wisconsin  Electric  expects the WSSA to assure  the  continued  profitable
operation of its hydroelectric system in the Upper Menominee River Basin as
well  as the protection of associated land and water resources for 40 years
following license renewal by the FERC.

Wisconsin Electric's hydroelectric facilities covered by the WSSA  are  the
Big  Quinnesec Falls, Kingsford, Michigamme Falls, Twin Falls, Lower  Paint
Dam,  Peavy Falls, Hemlock Falls and Way Dam Projects, representing a total
of  59  megawatts  of  installed capacity.  Wisconsin Electric  is  in  the
process of completing an applicant-prepared environmental assessment and  a
FERC  license application.  These, along with the WSSA, will be filed  with
the FERC by October 1999.

For  additional  information concerning Wisconsin Electric's  hydroelectric
generating facilities, see Item 2. Properties.

EDISON  SAULT:    Edison  Sault's  primary  source  of  generation  is  its
30  megawatt hydroelectric generating plant located on the St. Marys  River
in Sault Ste. Marie, Michigan.  The water for this facility is leased under
a  contract  with  the  United States Corps of  Engineers  with  tenure  to
December  31,  2050.  However, the Secretary of the Army has the  right  to
terminate the contract subsequent to December 2025 by providing at least  a
five-year  termination  notice.  No such  notice  can  be  given  prior  to
December  31,  2020.  Edison Sault pays for all water taken  from  the  
St. Marys  River  at  predetermined rates with  a  minimum  annual  payment 
of $100,000  per year.  The total flow of water taken out of Lake Superior,
which  in effect is the flow of water in the St. Marys River, is under  the
direction and control of the International Joint Commission, created by the
Boundary  Water Treaty of 1909 between the United States and Great Britain,
now represented by Canada.

Water elevation levels on Lake Superior in the second half of 1998 and into
1999  have  been at their lowest levels since the year 1926.  As a  result,
the  International Joint Commission has placed limitations on the  flow  of
water from Lake Superior that limits Edison Sault's amount of hydroelectric
generation.   During  any limited flow months, it is necessary  for  Edison
Sault to purchase additional power from other sources and increase the  use
of Edison Sault's diesel generation.

Hydroelectric  generation is also purchased by Edison Sault under  contract
from  the United States Corps of Engineers' hydroelectric generating  plant
located  within the Soo Locks complex on the St. Marys River in Sault  Ste.
Marie,  Michigan.  This 17 megawatt contract has a tenure  to  November  1,
2040,  and  cannot be terminated by the United States government  prior  to
November 1, 2030.

During  1998,  hydroelectric energy provided 38% of  Edison  Sault's  total
energy  requirements, of which 20% was generated by Edison Sault's facility
and 18% was purchased from the United States Corps of Engineers.


NATURAL GAS-FIRED GENERATION

The  Concord  and Paris Combustion Turbine Power Plants and the  Oak  Creek
combustion turbine use natural gas as their primary fuel, with fuel oil  as
backup.   Gas  for  these plants is purchased on the spot market  from  gas
marketers  and/or producers and delivered on the local distribution  system
of Wisconsin Electric's gas operations.

An  interruptible  balancing and storage agreement  with  ANR  Pipeline  is
intended  to  facilitate the variable gas usage pattern of  the  combustion
turbine plants.

Natural  gas for boiler ignition and flame stabilization purposes  for  the
Pleasant  Prairie, Oak Creek and Valley Power Plants is purchased under  an
agency agreement with a gas marketing company.  The agent purchases natural
gas  and  arranges for interstate pipeline transportation to the local  gas
distribution utility.  The local gas distribution utilities then  transport
Wisconsin  Electric's  gas  to  each  plant  under  interruptible  tariffs.
Wisconsin  Electric's  gas  operations  is  the  distribution  utility  for
Pleasant  Prairie and Oak Creek Power Plants.  Wisconsin  Gas  Company,  an
unaffiliated  company, is the distribution utility  for  the  Valley  Power
Plant.


OIL-FIRED GENERATION

Fuel oil is used for the combustion turbines at the Point Beach, Germantown
and  Port Washington Power Plants.  It is also used for boiler ignition and
flame stabilization at the Presque Isle Power Plant, as backup for ignition
at  the  Pleasant Prairie Power Plant and as a backup fuel for the  natural
gas-fired  gas  turbines  discussed  above.   Fuel  oil  requirements   are
purchased  under partnering agreements with suppliers that assist Wisconsin
Electric with inventory tracking and oil market price trends.

Subject to various regulatory approvals, four existing generating units  at
the Germantown Power Plant will be converted, one unit per year from 2000 to
2003, to  dual  fuel (natural gas and oil).  A fifth dual  fuel  combustion
turbine is planned to begin commercial operation at Germantown Power  Plant
in  2000.   For  further  information about these  Germantown  Power  Plant
projects,  see  Item 7. Management's Discussion and Analysis  of  Financial
Condition  and  Results  of  Operations -  "Factors  Affecting  Results  of
Operations - Electric System Reliability Matters."


PURCHASE POWER COMMITMENTS

WISCONSIN ELECTRIC:   To meet a portion of Wisconsin Electric's anticipated
increase  in  future electric energy supply needs, Wisconsin  Electric  has
entered into long-term power purchase contracts with LS Power and with SEI-
Wisconsin,  a subsidiary of the Southern Company, an unaffiliated  investor
owned utility.

The  contract  with LS Power, for 236 megawatts of firm  capacity  from  LS
Power's  gas-fired cogeneration facility located in Whitewater,  Wisconsin,
includes  no  minimum energy requirements.  Wisconsin Electric treats  this
power  purchase contract as a capital lease.  See "Note H - Long-Term Debt"
in  the  Notes to Financial Statements in Item 8. Financial Statements  and
Supplementary  Data  for additional information about Wisconsin  Electric's
long-term power purchase agreement with LS Power.

In March 1998, LS Power's parent company signed an agreement with Cogentrix
Energy  Inc. ("Cogentrix"), an independent power producer unrelated  to  LS
Power  or  Wisconsin Electric, to sell a majority interest in LS  Power  to
Cogentrix.  Wisconsin Electric's long-term purchase power contract with  LS
Power is expected to remain effective under the ownership of Cogentrix.

On  August  28,  1998,  Wisconsin Electric entered into  a  power  purchase
agreement  with SEI -Wisconsin for SEI-Wisconsin to design, construct,  own
and  operate  a 300 megawatt gas turbine peaking facility in  the  town  of
Neenah,  Wisconsin and to provide the output of this facility to  Wisconsin
Electric  for  eight  years.   The facility  is  scheduled  for  commercial
operation  by  June  2000.   The purchase power  agreement  is  similar  in
structure to arrangements commonly referred to in the electric industry  as
a  "tolling arrangement."  That is, Wisconsin Electric delivers fuel to the
facility  and  takes  away electric power.  Wisconsin  Electric  pays  SEI-
Wisconsin  a "toll" to convert Wisconsin Electric's fuel into the  electric
energy.   The  entire  output of the facility is  available  for  Wisconsin
Electric  to  dispatch during the eight year term of  the  agreement.   The
purchase power agreement with SEI-Wisconsin is the culmination of a request
for proposal process that Wisconsin Electric initiated in November 1997  to
fulfill  a  new  capacity need and to comply with a  PSCW  order  and  with
Wisconsin  Act  204.   For additional information concerning  the  purchase
power agreement with SEI-Wisconsin, see Item 7. Management's Discussion and
Analysis  of  Financial  Condition and Results  of  Operations  -  "Factors
Affecting  Results  of  Operations - Electric System Reliability  Matters."
For further information regarding Wisconsin Act 204, see "Regulation" below
in Item 1. Business.

In  the normal course of business, Wisconsin Electric utilizes contracts of
various  duration  for  the forward purchase of electricity  to  meet  load
requirements  in an economic manner and when the anticipated  market  price
for electric energy is below Wisconsin Electric's expected incremental cost
of  generation.   Contracts of this nature are  one  of  the  power  supply
resources Wisconsin Electric uses to meet its reliability requirements.

EDISON  SAULT:    To  meet  80%  of its energy requirements,  Edison  Sault
purchased  the  following megawatt-hours from the following  sources  under
firm contracts during the seven months ended December 31, 1998.


                                                  Megawatt-hours       
                                                  --------------       
        Consumers Energy Company                      218,078 
        Wisconsin Electric                             98,437 
        U.S. Corps of Engineers - Hydro                92,119 
        Cloverland Electric Cooperative                   119 
        Upper Peninsula Power Company                       2 
                                                     -------- 
                  Total                               408,755 
                                                     ======== 


Edison  Sault  purchases  power  from  Consumers  Energy  Company  under  a
wholesale  power  sales agreement that expires in 2020, or  2010  under  an
early  termination provision.  Rates under the agreement, approved  by  the
FERC,  provide for capacity and energy charges.  Effective January 1,  1997
under  this agreement, Edison Sault began purchasing 35 megawatts  of  firm
power and a variable amount of interruptible power.  This contract contains
a  reorganization  provision  under  which  Edison  Sault's  obligation  to
purchase  firm power will change to 30 megawatts in 2000, 25  megawatts  in
2001  and  20 megawatts in 2002 and thereafter.  The interruptible  service
provisions of the contract expire on January 1, 2000.

Effective  January 1, 1998, Edison Sault began purchasing 20  megawatts  of
firm power from Wisconsin Electric under the terms of a ten-year agreement.

As discussed above under "Hydroelectric Generation", Edison Sault purchases
all available hydroelectric generation or approximately 17.4 megawatts from
the  United States Corps of Engineers' St. Marys River plant under a  long-
term  purchase  power  contract.  Annual payments under  the  contract  are
subject  to  renegotiation every five years with the current  terms  having
been implemented in November 1996.


INTERCONNECTIONS WITH OTHER UTILITIES

WISCONSIN  ELECTRIC:    Wisconsin Electric's system  is  interconnected  at
various  locations with the systems of Commonwealth Edison Company, Madison
Gas  and  Electric Company, Northern States Power Company, Upper  Peninsula
Power  Company, Wisconsin Power and Light Company, Wisconsin Public Service
Corporation  and the Marquette, Michigan Board of Light and  Power.   These
interconnections  provide  for  interchange  of  power  to  assure   system
reliability as well as facilitating access to generating capacity  and  the
transfer of energy for economic purposes.

Wisconsin Electric is a member of Mid-America Interconnected Network,  Inc.
("MAIN"),  which  is  one of ten regional members  of  the  North  American
Electric  Reliability Council.  Membership in these groups  permits  better
utilization  of reserve generating capacity and coordination of  long-range
system planning and day-to-day operations.

In  February  1996,  Wisconsin Electric and five  other  Midwest  utilities
announced  that they had agreed to pursue the development of an independent
organization,  the Midwest Independent Transmission System  Operator,  Inc.
("Midwest  ISO"), which would be responsible for ensuring nondiscriminatory
open  electric  transmission access and the planning and  security  of  the
combined  bulk electric transmission systems of the utilities.   The  group
has  grown to include nine utilities.  All transmission owners of the  East
Central  Area  Reliability  Council  and  MAIN  have  participated  in  the
development  of the Midwest ISO.  An order conditionally approving  of  the
Midwest ISO was issued by the FERC on September 16, 1998.

See Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - "Factors Affecting Results of Operations - Electric
System  Reliability Matters" for additional information  regarding  certain
electric transmission projects and the Midwest ISO.

EDISON  SAULT:    Edison Sault's electric transmission system  is  directly
interconnected with the systems of Consumers Energy Company and  Cloverland
Electric  Cooperative.   With  completion of the  Central  Upper  Peninsula
Transmission  Project  in the spring of 2000, Edison  Sault  will  also  be
interconnected with the electric transmission system of Wisconsin Electric.
Edison  Sault  is  currently a member of the East Central Area  Reliability
Council, another regional member of the North American Electric Reliability
Council.


                              GAS OPERATIONS

GAS DELIVERIES

Wisconsin  Electric  is  authorized to provide gas  service  in  designated
territories  in  the  State of Wisconsin, as established  by  indeterminate
permits,  certificates  of public convenience and  necessity,  or  boundary
agreements with other utilities.

Total  gas therms delivered by Wisconsin Electric, including customer-owned
transported  gas,  were approximately 923 million  therms  in  1998,  a  6%
decrease  compared to 1997.  At December 31, 1998, Wisconsin  Electric  was
transporting gas for approximately 310 customers who choose to purchase gas
directly from other suppliers.  Transported gas accounted for approximately
46%  of  total therms delivered during 1998, 40% during 1997 and 31% during
1996.    There   were  approximately  388,000  natural  gas  customers   at
December  31,  1998, an increase of approximately 3.1% since  December  31,
1997.

Wisconsin   Electric's   maximum   daily   send-out   during    1998    was
619,578 dekatherms on January 13, 1998.  A dekatherm is equivalent  to  ten
therms or one million British thermal units .  Sales of gas fluctuate  with
the  heating  cycle  of the year and are also impacted by  varying  weather
conditions from year-to-year.

For  further  gas  operating information by customer  class,  see  Item  7.
Management's Discussion and Analysis of Financial Condition and Results  of
Operations  -  "Results of Operations - Gas Revenues,   Gross  Margins  and
Therm Deliveries."

Wisconsin  Electric's  gas  operations delivers natural  gas  to  Wisconsin
Electric's Concord, Paris and Oak Creek Power Plants.  Deliveries to  these
facilities  are at rates approved by the PSCW.  See "Electric Operations  -
Natural Gas-Fired Generation" above.

For  information concerning Wisconsin Electric's expansion of  natural  gas
service  to  more than 4,500 potential customers in northeastern Wisconsin,
see Item 7. Management's Discussion and Analysis of Financial Condition and
Results  of  Operations  -  "Factors  Affecting  Results  of  Operations  -
Outlook."

SALES  TO  LARGE GAS CUSTOMERS:   Wisconsin Electric provides  gas  utility
service  to  a  diversified base of industrial customers  who  are  largely
within  its  electric  service  territory.   Major  industries  served   by
Wisconsin  Electric's gas operations include the paper, food  products  and
fabricated  metal  products industries.  During 1998, Wisconsin  Electric's
electric  operations  took  delivery of  8.5%  of  total  therm  deliveries
compared  to  8.8%  during  1997.  See "Electric Operations  -  Sources  of
Electric Energy" above for information about anticipated gas-fired electric
generation by Wisconsin Electric during 1999.  No single retail customer of
the  gas utility accounted for more than 2.8% of total gas therms sold  and
transported during 1998.

COMPETITION:    Competition  in  the natural gas  industry  is  increasing,
driven  by  a  combination  of  market forces and  regulatory  initiatives.
Natural gas companies are now operating in a competitive environment at the
wholesale   level,  and  regulators  in  Wisconsin  continue  to   evaluate
competition  at the retail level.  See Item 7. Management's Discussion  and
Analysis  of  Financial  Condition and Results  of  Operations  -  "Factors
Affecting  Results of Operations - Industry Restructuring and  Competition"
for information regarding the PSCW's ongoing generic investigation into the
structure of the retail natural gas industry in the State of Wisconsin.


GAS SUPPLY

Wisconsin  Electric's  gas operations has entered into  more  than  60  gas
service  contracts for supply, pipeline capacity, underground  storage  and
balancing services.  Contracts vary in term from less than one year to  ten
years.  Gas supply contracts contain pricing options that allow pricing  at
market  rates or the ability to fix future prices for varying  terms  which
Wisconsin  Electric  can  exercise  to mitigate  substantial  market  price
fluctuations.   The  gas  from these contracts is  used  to  meet  customer
requirements on a daily basis and to fill storage during the warm months to
be withdrawn from storage during the heating season in order to meet system
gas demands.

The use of storage increases the load factor of supply contracts and allows
Wisconsin  Electric  to  take  advantage of seasonal  price  differentials.
Wisconsin  Electric's  gas operations has six firm gas  storage  agreements
with  pipelines that allow daily withdrawals of 320,511 dekatherms  and  an
annual  capacity of 19.5 million dekatherms.  The initial  terms  of  these
contracts vary with the last one expiring in May 2006.  Gas stored at these
facilities is purchased by Wisconsin Electric from a number of suppliers.

Wisconsin  Electric  has 25 transportation contracts,  the  last  of  which
expires  in 2006, that it uses to meet daily customer requirements  and  to
inject  and  withdraw from gas storage.  In each case, subject  to  certain
provisions,  Wisconsin Electric's gas operations can extend  the  terms  of
these contracts at the time the agreements would otherwise expire.

Wisconsin  Electric  also has three contracts for salt  dome  storage  that
provide seasonal gas supply backup in the event of well freeze-off or other
loss of supply.


                             STEAM OPERATIONS

Wisconsin  Electric operates a district steam system in downtown  Milwaukee
and  the near south side of downtown Milwaukee.  Steam is supplied  to  the
system   from  Wisconsin  Electric's  Valley  Power  Plant,  a   coal-fired
cogeneration facility.  In November 1996, Wisconsin Electric acquired  from
Milwaukee  County the steam production and distribution facilities  of  the
Milwaukee  County  Power Plant located on the Milwaukee County  Grounds  in
Wauwatosa, Wisconsin.  Wisconsin Electric operates these facilities as part
of its steam utility operations.

Annual  sales of steam fluctuate from year to year based upon system growth
and  variations  in weather conditions.  Primarily due  to  a  warmer  than
normal  heating season, steam sales decreased 12% during 1998.  At 
December 31,  1998,  steam was used by 454 customers for processing, space
heating, domestic hot water and humidification.


                          NON-UTILITY OPERATIONS

See  "Note  K - Segment Reporting" in Wisconsin Energy's Notes to Financial
Statements  in  Item  8.  Financial Statements and Supplementary  Data  for
information concerning non-utility net income, net identifiable assets  and
construction expenditures during each of the three years ended December 31,
1998.


NON-UTILITY SUBSIDIARIES

Wisconsin Energy's non utility subsidiaries include:

WISPARK CORPORATION:   WISPARK Corporation ("Wispark") develops and invests
in  real  estate.   While Wispark's core geographic  area  is  southeastern
Wisconsin,   it   is  currently  developing  properties   in   metropolitan
Minneapolis/St.   Paul,  Minnesota;  Chicago,  Illinois;  and   Sacramento,
California.   Wispark's  initial development, LakeView  Corporate  Park,  a
1,500-acre business park located near Kenosha, Wisconsin, has developed 689
acres  with over 6,500,000 square feet of buildings for 60 companies during
its  first  ten  years  of existence.  Wispark is also  developing  or  has
developed business parks such as those in the following locations:

* Westridge Business Park - New Berlin, Wisconsin;
* RidgeView Corporate Park - Pewaukee, Wisconsin;
* GrandView Business Park - Racine, Wisconsin;
* Business Park of Kenosha - Kenosha, Wisconsin:
* Grand Oak Business Park - Eagan, Minnesota;
* NorthWest Corporation Park - Elgin, Illinois; and
* White Oak Business Park - Aurora, Illinois.

In addition to developing business parks, Wispark has established itself as
one of southeastern Wisconsin's largest developers of industrial buildings.
In  the  last  five years, Wispark has developed 2,700,000 square  feet  of
buildings on a build-to-suit basis, and just over 1,700,000 square feet  of
other  building space.  Wispark has also developed mixed-use projects  such
as  Gaslight Pointe in Racine, Wisconsin.  Wispark constructed  a  120-room
Radisson Hotel and Conference Center in LakeView Corporate Park.

WISVEST  CORPORATION:   WISVEST Corporation ("Wisvest") invests in  energy-
related  entities and develops energy-related projects.  Wisvest  owns  and
manages  the chilled water production and distribution facilities that  are
part of the Milwaukee County Power Plant on the Milwaukee County Grounds in
Wauwatosa,  Wisconsin.  Wisvest is also an investor in other energy-related
entities  such  as a strategic energy management services  company  with  a
focus  on  natural gas management, a natural gas marketer, a  company  that
designs,  builds  and  operates  landfill  gas  recovery  systems   and   a
cogeneration  facility in the State of Maine, the Androscoggin Cogeneration
Center.   Wisvest's  subsidiary, Griffin Energy Marketing,  L.L.C.  markets
energy related services and trades electricity.  See "Liquidity and Capital
Resources  -  Investing Activities" in Item 7. Management's Discussion  and
Analysis  of  Financial  Condition and Results of  Operations  for  further
information concerning the acquisition of the Milwaukee County Power Plant.
See "Note L - Commitments and Contingencies" in Wisconsin Energy's Notes to
Financial Statements in Item 8. Financial Statements and Supplementary Data
for information concerning the Androscoggin Cogeneration Center.

In  October 1998, WISVEST Connecticut, LLC, a wholly owned subsidiary of
Wisvest,  entered  into  an agreement to purchase two  fossil-fueled  power
plants  in  the State of Connecticut that is expected to be consummated  in
the  second  quarter  of  1999.   See Item  1.  Business  -  "Environmental
Compliance",  Item  7.  Management's Discussion and Analysis  of  Financial
Condition  and  Results of Analysis - "Liquidity and  Capital  Resources  -
Capital  Requirements"  and  "Note L - Commitments  and  Contingencies"  in
Wisconsin  Energy's  Notes to Financial Statements  in  Item  8.  Financial
Statements and Supplementary Data for further information.

WISCONSIN   ENERGY   CAPITAL   CORPORATION:    Wisconsin   Energy   Capital
Corporation, formerly Wisconsin Michigan Investment Corporation, engages in
investing  and  financing  activities.   Activities  include  advances   to
affiliated  companies  and  investments in  financial  instruments  and  in
partnerships  developing low-and moderate-income housing  projects.   Other
investments  may  be  made  from time to time.   Wisconsin  Energy  Capital
Corporation's subsidiary, WMF Corp., engages in financing activities.   Any
funds obtained by WMF Corp. through financing arrangements are advanced  to
Wisconsin Energy Capital Corporation.

MINERGY  CORP.:   Minergy Corp. ("Minergy") is engaged in the  business  of
developing and marketing proprietary technologies designed to convert  high
volume industrial and municipal wastes into value-added products.  In 1998,
Minergy completed construction of and placed into commercial operation   in
Neenah,  Wisconsin a facility that recycles paper sludge  from  area  paper
mills  into  two usable and salable products:  glass aggregate  and  steam.
The plant also provides substantial environmental and economic benefits  to
the area by providing a beneficial alternative to landfilling paper sludge.
For  additional  information related to the Minergy glass aggregate  plant,
see  Item  3.  Legal Proceedings - "Other Matters" and Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations  -
"Liquidity and Capital Resources - Investing Activities."

WEC  INTERNATIONAL,  INC.:    WEC International Inc.  serves  as  Wisconsin
Energy's  international  investment vehicle.  WEC International,  Inc.  has
investments  in two joint ventures in the Netherlands.  One  joint  venture
owns  and operates a by-product utilization plant.  The other joint venture
is in the process of renovating a waste treatment facility.

WITECH  CORPORATION:   WITECH Corporation ("Witech") is a  venture  capital
company operating in the State of Wisconsin.  At December 31, 1998,  Witech
had  investments  in  eleven companies and three funds totaling  more  than
$34  million.   Among  others,  the companies  include  an  operator  of  a
nationwide  data  communications network for the  agriculture  industry,  a
manufacturer of electronic components and a manufacturer of motor drives.

WEC  NUCLEAR  CORP.:   WEC Nuclear Corp., formerly WEC Sub  Corp.,  has  an
ownership interest in Nuclear Management Company L.L.C..  Formed during the
first  quarter  of  1999,  it is intended that Nuclear  Management  Company
L.L.C. will provide services to Wisconsin Electric in connection with Point
Beach Nuclear Plant as well as to other unaffiliated companies with nuclear
generating   facilities.    For  additional  information,   see   Item   7.
Management's Discussion and Analysis of Financial Condition and Results  of
Operations - "Factors Affecting Results of Operations - Nuclear Matters."

NORTHERN  TREE  SERVICE,  INC.:   Northern Tree  Service,  Inc.,  a  former
subsidiary  of  ESELCO,  is  engaged in  tree  trimming  in  the  State  of
Michigan's eastern Upper Peninsula.

BADGER  SERVICE  COMPANY:   Badger Service Company  holds  coal  rights  in
Indiana.   Estimates  indicate  that 40  million  tons  of  coal  could  be
recovered from this property with conventional mining techniques.  However,
there are no current plans to develop the property.  Badger Service Company
may sell or develop these rights in the future as conditions warrant.


NON-UTILITY RESTRICTIONS

For information concerning certain restrictions which limit diversification
of  Wisconsin  Energy in non-utility activities, see Item  7.  Management's
Discussion and Analysis of Financial Condition and Results of Operations  -
"Rates and Regulatory Matters."

For  information  concerning  restrictions  on  the  ability  of  Wisconsin
Electric  to transfer funds to Wisconsin Energy, see "Note A -  Summary  of
Significant  Accounting Policies" in Wisconsin Energy's Notes to  Financial
Statements in Item 8. Financial Statements and Supplementary Data.


                                REGULATION

Wisconsin  Electric is subject to the regulation of the PSCW as  to  retail
electric,  gas  and  steam  rates in the State of Wisconsin,  standards  of
service,   issuance   of  securities,  construction  of   new   facilities,
transactions  with  affiliates,  levels  of  short-term  debt  obligations,
billing practices and various other matters.  Wisconsin Electric and Edison
Sault  are subject to the regulation of the MPSC as to the various  matters
associated with retail electric service in the State of Michigan  as  noted
above  except  as to issuance of securities, construction of   certain  new
facilities,  levels of short-term debt obligations and advance approval  of
transactions   with   affiliates.    Wisconsin   Electric's   hydroelectric
facilities are regulated by the FERC.  Wisconsin Electric and Edison  Sault
are  subject  to  regulation of the FERC with respect  to  wholesale  power
service, electric transmission, and accounting.  Operation and construction
relating  to  Wisconsin Electric's Point Beach facilities  are  subject  to
regulation by the United States Nuclear Regulatory Commission.  Total  flow
of  water  to  Edison Sault's hydroelectric generating plant is  under  the
control  of  the  International Joint Commission, created by  the  Boundary
Water  Treaty  of  1909 between the United States and  Great  Britain,  now
represented by Canada.  Wisconsin Electric's and Edison Sault's  operations
are  also  subject to regulations, where applicable, of the  United  States
Environmental  Protection  Agency  ("EPA"),  the  Wisconsin  Department  of
Natural  Resources  ("WDNR"), the Michigan Department of Natural  Resources
("MDNR") and the Michigan Department of Environmental Quality.

The PSCW is authorized to direct expenditures for promoting conservation if
it   determines  that  the  programs  are  in  the  public  interest.   For
information concerning evolving conservation requirements for utilities  in
the State of Wisconsin, see "Energy Efficiency" below.

Wisconsin Energy is an exempt holding company by order of the United States
Securities  and  Exchange Commission under Section 3(a)(1)  of  the  Public
Utility  Holding Company Act of 1935 and, accordingly, is exempt  from  the
law's  provisions  other  than  with respect  to  certain  acquisitions  of
securities of a public utility.

In  1997,  the  Wisconsin  State Legislature passed  and  the  Governor  of
Wisconsin  signed into law Wisconsin Act 204, intended to address  concerns
with  electric reliability in the State of Wisconsin.  Among other  things,
Act  204 required the PSCW to replace the Advance Plan process with  a  new
Strategic Energy Assessment process.  In January 1999, the PSCW issued  its
final  Advance  Plan order, Advance Plan 8, approving Wisconsin  Electric's
generation  and  transmission expansion plans  essentially  as  filed.   In
response to Act 204, the PSCW has replaced the Advance Plan process with  a
non-binding  Strategic Energy Assessment performed by the  PSCW  every  two
years beginning in July 2000.

Wisconsin  Act 204 includes new requirements concerning market power  which
utilities  and their affiliates must meet in order to construct  generating
facilities.  The requirements would apply to utility facilities  in  excess
of  100  megawatts.   The  PSCW  is currently  engaged  in  a  rule  making
proceeding  involving  the applicability of Act 204 to  utility  affiliates
seeking  to construct facilities in the State of Wisconsin.  For additional
information  concerning the PSCW's current utility  affiliate  rule  making
efforts,  see  Item  7. Management's Discussion and Analysis  of  Financial
Condition  and  Results  of  Operations -  "Factors  Affecting  Results  of
Operations - Industry Restructuring and Competition."

In  1994, the PSCW ordered the state's utilities to competitively  bid  all
new generation needs in excess of 12 megawatts to be built in the State  of
Wisconsin.  The two-stage process established by the PSCW consists  of  
(1) an all-parties (including utilities) bidding procedure for fossil-fueled
and renewable generation projects; and (2) the conventional Certificate  of
Public  Convenience and Necessity procedure for the winner or winners.   In
the first quarter of 1997, the PSCW extended this to include repowering  or
upgrades of existing generation in excess of 12 megawatts.


                               RATE MATTERS

See Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations- "Factors Affecting Results of Operations - Rates and
Regulatory Matters" for a discussion of rate matters, including recent rate
changes  and  a  discussion of the tariffs and procedures with  respect  to
recovery of changes in the costs of fuel, purchased power and gas purchased
for resale.


                             ENERGY EFFICIENCY

The  PSCW  continues to mandate electric and natural gas energy  efficiency
goals  for  Wisconsin  Electric's residential, small  commercial,  and  low
income customers.  Goals for large commercial and industrial customers were
eliminated in 1997.  During 1998, the PSCW continued its policy  of  moving
the  accomplishment of small customer energy efficiency goals from  utility
to non-utility providers.  Wisconsin Electric supports this policy of using
a  bidding  process to hire non-utility providers to accomplish its  goals.
Currently,  Wisconsin  Electric  has  contracts  for  100%  of   its   1999
residential  and  small  commercial  energy  efficiency  goals.   Wisconsin
Electric  works  cooperatively  with  state  weatherization  operators  and
community  organizations  in  achieving its low  income  energy  efficiency
goals.

As  noted  above, Wisconsin Electric supports the move away  from  mandated
utility  energy  efficiency goals by the PSCW.  However,  as  part  of  its
commitment to customer service Wisconsin Electric will continue to  provide
its customers information on how to control their energy costs.

In  a related matter, the Wisconsin State Legislature formed a committee to
study  ways  of  preserving  and enhancing various  public  benefits  in  a
restructured  utility  environment.  Among other  things,  public  benefits
include  efforts  to  help  develop  the  competitive  market  for   energy
efficiency  in the State of Wisconsin and the funding of energy  efficiency
services  for  low  income customers.  The committee is  using  the  PSCW's
Enunciation of Policy and Principles, as stated in Docket 05-BU-100, as the
foundation  piece  for  its  work, although the committee  is  expected  to
recommend  some changes.  The general concept of the committee  is  that  a
statewide  entity  would be charged with preserving public  benefits.   The
responsibility for achieving energy efficiency goals would shift  from  the
utility  to this new entity.  The goal of the new entity would be  to  have
energy  efficiency improvements occur through the competitive market place.
It  is likely legislation creating such an entity will be submitted in  the
current legislative session.

Wisconsin  Electric will continue to offer programs which provide customers
the  incentive  to  move their energy use to times when Wisconsin  Electric
facilities  are less utilized.  Interruptible and curtailable rates,  along
with an energy cooperative-managed load curtailment program, are offered to
certain  industrial customers to control peak demand.  Direct load  control
of central air conditioners is offered to most residential customers.  Time-
of-use rates continue to be available to most customers.  Real-time pricing
programs are also being offered to some customers.


                         ENVIRONMENTAL COMPLIANCE

Compliance   with   federal,  state  and  local  environmental   protection
requirements  resulted  in capital expenditures by  Wisconsin  Electric  of
approximately  $23  million  in 1998.  Expenditures  incurred  during  1998
included  costs  associated with the installation  of  pollution  abatement
facilities  at  Wisconsin Electric's power plants.   Such  expenditures  at
Wisconsin  Electric are budgeted at approximately $4 million  during  1999,
$54  million  during  2000 and $118 million during 2001.   The  significant
increases in 2000 and 2001 are attributable to final ozone transport  rules
that were issued by the EPA in October 1998.

Operation,  maintenance and depreciation expenses for Wisconsin  Electric's
fly  ash  removal equipment and other environmental protection systems  are
estimated  to have been approximately $37 million during 1998, $30  million
during 1997 and $32 million during 1996.

As noted above under "Non-Utility Operations," WISVEST Connecticut, LLC, a
wholly  owned  subsidiary of Wisvest, agreed to purchase two  fossil-fueled
power  plants in the State of Connecticut in a deal that is expected to  be
consummated  in the second quarter of 1999.  As a result of this  purchase,
WISVEST Connecticut, LLC will also be affected by the final ozone transport
rules  that  were  issued  by the EPA in October 1998.   These  rules  will
require WISVEST Connecticut, LLC to reduce nitrogen oxide ("NOx") emissions
from  the  acquired  plants  by approximately 25%  compared  to  historical
levels.  Engineering and economic studies are currently underway to develop
alternative  capital  expenditure programs which would  provide  compliance
with  the  regulations at the lowest life cycle cost.   These  studies  are
expected to be completed by December 31, 1999.  Depending upon the form  of
Nox  reduction  strategy  that  is implemented,  WISVEST  Connecticut,  LLC
currently  estimates  that efforts to implement this  strategy  would  cost
between $20 million and $35 million prior to May 2003.

Sub-surface,  non-aqueous petroleum liquids have been  identified  at  both
power  plant  sites  that are being acquired by WISVEST  Connecticut,  LLC.
Based upon recent, preliminary environmental studies, the Company currently
estimates  that it will incur approximately $2.7 million during  the  three
years  ending December 31, 2001 to treat and remediate these sites.   These
expenditures  are  expected  to bring the two sites  into  compliance  with
applicable standards in the State of Connecticut.

Expenditures  for  environmental compliance and  remediation  issues  noted
above  are  included in anticipated construction expenditures described  in
Item  7.  Management's Discussion and Analysis of Financial  Condition  and
Results   of  Analysis  -  "Liquidity  and  Capital  Resources  -   Capital
Requirements."

For  discussion  of  additional environmental issues,  see  Item  3.  Legal
Proceedings - "Environmental Matters."  For further information  concerning
the  EPA's  final ozone transport rules, see "Factors Affecting Results  of
Operations - Environmental Matters" in Item 7. Management's Discussion  and
Analysis  of  Financial Condition and Results of Operations.   For  further
information concerning WISVEST Connecticut, LLC's acquisition  of  the  two
Connecticut power plants, see Item 7. Management's Discussion and  Analysis
of  Financial  Condition and Results of Analysis - "Liquidity  and  Capital
Resources   -   Capital  Requirements"  and  "Note  L  -  Commitments   and
Contingencies"  in  Wisconsin Energy's Notes  to  Financial  Statements  in
Item 8. Financial Statements and Supplementary Data.


SOLID WASTE LANDFILLS

Wisconsin  Electric  and Edison Sault provide for the disposal  of  non-ash
related  solid  wastes  and hazardous wastes through  licensed  independent
contractors,  but  federal statutory provisions impose  joint  and  several
liability   on   the  generators  of  waste  for  certain  cleanup   costs.
Remediation-related  activity pertaining to  specific  sites  is  discussed
below.

ETSM  PROPERTY/CITY  OF  WEST  ALLIS:   See Item  3.  Legal  Proceedings  -
"Environmental  Matters"  for information concerning  iron  cyanide-bearing
wastes found at two sites in West Allis, Wisconsin.

MANISTIQUE  RIVER/HARBOR  AREA:   In 1993, Wisconsin  Electric  and  Edison
Sault  received independent notifications from the EPA that they were being
named  Potentially Responsible Parties ("PRPs") at the Manistique  River  /
Harbor  Area of Concern in Manistique, Michigan.  The EPA, with  the  MDNR,
had identified the Manistique River and Harbor as an Area of Concern due to
polychlorinated biphenyl (more commonly known as "PCB") contamination  that
had been found in the area.

In  1993  and  again in 1995, Wisconsin Electric responded  to  information
requests  from the EPA concerning Wisconsin Electric's PCB and  oil  filled
equipment  management  in the Manistique River drainage  basin.   Wisconsin
Electric  has no reason to believe that it is responsible in  total  or  in
part  for  the  PCB  contamination in the Manistique River/Harbor  Area  of
Concern.   Wisconsin Electric has not heard anything from the EPA regarding
this site since 1995.

Edison  Sault  submitted an Environmental/Cost Analysis  to  the  EPA  that
provided  an  analysis  of  six  alternative  methods  of  remediation  and
ultimately  recommended a remediation method of in-place  capping.   Edison
Sault  believed this to be the most prudent course of action.  During  1995
and  1996,  the  EPA agreed to allow active PRP's to remediate  the  harbor
through  in-place  capping at a cost of $6.4 million, with  Edison  Sault's
portion  costing $3.2 million.  Through further negotiations, the  EPA  and
the  active  PRP's agreed to a cash-out settlement under which  the  active
PRP's  would pay to the EPA the $6.4 million cost of capping for the  right
to  be absolved from any future legal actions concerning PCB contamination.
To  effect this settlement, all parties executed an Administrative Order on
Consent  in December 1996, with payments made to the EPA prior to  year-end
1996.

Edison  Sault incurred a total cost of $3.6 million related to this matter.
Edison  Sault  has  retained legal assistance  to  initiate  a  process  of
recovering these costs from several insurance entities.  Although  four  of
seven  named  insurers  have settled to date with Edison  Sault  and  legal
actions  continue  against the remaining insurers,  Edison  Sault  can  not
predict  the certainty and magnitude of total insurance recoveries at  this
time.

MARINA  CLIFFS  BARREL DUMP SITE:   Wisconsin Electric received  a  special
notice letter and information request on March 25, 1994 from the WDNR.  The
letter  described  a  release of hazardous substances at  a  former  barrel
reclamation  facility and landfill site, and requested information  on  any
business  dealings  Wisconsin  Electric  may  have  had  with  this  former
operation.  Wisconsin Electric responded to this request in April 1994.  An
additional  request  for  information,  or  PRP  letter,  was  received  on
March 24, 1995. Wisconsin Electric responded to this request in April 1995.
Since that time a number of follow-up contacts have been made with the EPA.
Wisconsin Electric has no reason to believe that it is responsible for  the
contamination  problems at this site, but the EPA has identified  Wisconsin
Electric  as  a  De  Minimis  Party.  The EPA  has  undertaken  remediation
activities  at  the  site.  The first phase of such  remediation  has  been
substantially  completed.  Recently, local residents  have  voiced  concern
regarding use of the site.  This publicity has led to additional fencing at
the site and may affect the remediation time table.

Wisconsin  Electric  has received an executed Buyout Agreement  from  major
participants  at  this site.  Under the agreement, those participants  have
assumed responsibility to complete the clean-up required by the EPA at this
site in return for Wisconsin Electric's payment of $30,000.

TRINITY  CHEMICALS SITE:   In late 1997, Edison Sault was notified  by  the
EPA  that investigations were being conducted at the Trinity Chemicals site
in  Kansas  City,  Missouri, to which Edison Sault may  have  shipped  PCB-
related  materials during the 1980's under legal, appropriate and  accepted
industry  standards.  Edison Sault has answered various EPA interrogatories
which  showed  that  Edison  Sault appeared  to  have  been  a  very  minor
contributor to this site and has signed an Administrative Order of Consent,
paid  a minimal and final assessment and has been released by the EPA  from
future activities related to this site.

WEST AVENUE LANDFILL:   Wisconsin Electric has been informed by the City of
Waukesha ("Waukesha") that it has been identified as a "responsible  party"
at  a  former  Waukesha landfill which Waukesha will be  remediating  under
Wisconsin  state law.  Waukesha has further indicated that  it  intends  to
invoke   a  new  statutory  negotiation  procedure  to  attempt  to  obtain
consensual agreement regarding responsible parties and cost sharing for the
remediation.   Waukesha  has  hired  a  private  environmental   allocation
consultant  to  apportion cost shares in an attempt  to  promote  voluntary
settlement.  The consultant has issued a preliminary allocation  report  in
which  assignment  of  a zero share was given to Wisconsin  Electric.   The
matter is pending.


ASH LANDFILLS

Wisconsin   Electric   aggressively   seeks   environmentally   acceptable,
beneficial uses for its combustion products.  However, combustion  products
have been, and to some degree continue to be, disposed of in company-owned,
licensed landfills.  Some landfills may allow the release of low levels  of
constituents  resulting  in  the need for various  levels  of  remediation.
Where Wisconsin Electric has become aware of these conditions, efforts have
been expended to define the nature and extent of any release, and work  has
been performed to address these conditions.  The costs of these efforts are
included in the environmental operating and maintenance costs for Wisconsin
Electric.  Sites currently undergoing remediation include:

CEDAR   SAUK   LANDFILL:    During  1997,  Wisconsin   Electric   completed
installation  of  an  upgraded  cover to the  closed  Cedar-Sauk  landfill,
located  in the Town of Cedarburg, Wisconsin.  In addition to a new  cover,
the  existing  groundwater pumping system was removed  from  service.   The
project  was  completed below the projected cost estimate of $4.5  million.
Future expenses at the site are expected to be minimal.

HIGHWAY  59  LANDFILL:    In  1989, a sulfate plume  was  detected  in  the
groundwater beneath a Wisconsin Electric-owned former ash landfill  located
in  the  Town of Waukesha, Wisconsin.  After notifying the WDNR,  Wisconsin
Electric initiated a five-year expanded monitoring program.  In July  1995,
Wisconsin  Electric prepared an environmental contamination  assessment  of
the  landfill and submitted the report to the WDNR.  Wisconsin Electric has
petitioned  the City of Waukesha to extend city water service to  residents
of  the  Town  of Waukesha affected by contamination from site.   The  City
Council  has  agreed  to extend service at Wisconsin Electric's  cost.   In
addition  to providing city water to the nine affected residents, Wisconsin
Electric  anticipates  excavating  saturated  ash  from  and  capping   the
landfill.   Total  remediation  cost for the  site  is  anticipated  to  be
$6 million.

KANSAS  AVE. LANDFILL:   The Kansas Ave. site, located in the City  of  
St. Francis, Wisconsin, was a small  landfill  area  used  to  support  the
operations of Wisconsin Electric's former Lakeside Power Plant.   Wisconsin
Electric has entered into an agreement with the WDNR to place a cover  over
the   former  ash  landfill  site.   Expenses  associated  with   a   cover
installation  are  expected  to be minimal.  No  groundwater  treatment  is
planned at this time.

OAK  CREEK NORTH LANDFILL:   Groundwater impacts at this landfill,  located
in  the  City  of  Oak  Creek, Wisconsin, prompted  Wisconsin  Electric  to
investigate,  during 1998, the condition of the existing  cover  and  other
conditions  at  the  site.  Wisconsin Electric and the WDNR  are  currently
evaluating  the  results of this investigation.  Cover  upgrades,  leachate
collection  (if  required) and possible site development will  most  likely
take  place in the year 2000 at the earliest.  No cost estimates  for  this
site  will be developed until a work scope is finalized as a result of  the
ongoing investigation.

PLEASANT  PRAIRIE LANDFILL:   A groundwater investigation at this site  was
completed  in  1997,  and  Wisconsin Electric is designing  an  alternative
system  for  surface  water drainage and implementing modification  to  the
operations  of  the  landfill, located in the Village of Pleasant  Prairie,
Wisconsin,  to  address  an  isolated area  of  groundwater  contamination.
Financial impacts to Wisconsin Electric are projected to be minimal.


MANUFACTURED GAS PLANT SITES

Wisconsin Electric is reviewing and addressing environmental conditions  at
a number of former manufactured gas plant sites.  See "Note L - Commitments
and  Contingencies"  in  the  Notes  to Financial  Statements  in  Item  8.
Financial Statements and Supplementary Data.


AIR QUALITY

The  1990  amendments  to  the Federal Clean Air  Act  mandate  significant
nationwide  reductions in air emissions.  The most significant sections  of
this  law  to the country's electric utilities are the acid rain and  ozone
nonattainment provisions  The acid rain provisions are scheduled  to  limit
sulfur  dioxide  and nitrogen oxide emissions in phases.   Phase  I  became
effective  in  1995 and Phase II will take effect in the  year  2000.   The
Company has met the requirements of Phase I.  The Phase II requirements  of
the  1990  amendments  to the Federal Clean Air Act are  expected  to  have
minimal future impacts on the Company's utilities because of existing  cost
effective compliance strategies and previous actions taken.

See Item 7. Management's Discussion and Analysis of Financial Condition and
Results  of  Operations  -  "Factors  Affecting  Results  of  Operations  -
Environment  Matters"  for  information  concerning  National  Ambient  Air
Quality  Standards  established during 1997 by  the  EPA  and  final  ozone
transport rules promulgated by the EPA during 1998.


OTHER

YEAR  2000  TECHNOLOGY  ISSUES:   See Item 7. Management's  Discussion  and
Analysis  of  Financial  Condition and Results  of  Operations  -  "Factors
Affecting  Results  of  Operations  -  Year  2000  Technology  Issues"  for
information concerning the Company's efforts to examine and modify existing
software  application and operational programs and hardware that  are  date
sensitive and may not be "Year 2000 Ready."

RESEARCH  AND  DEVELOPMENT:    Research  and  development  expenditures  by
Wisconsin Electric amounted to $7.5 million in 1998, $8.5 million  in  1997
and $5.7 million in 1996.  Such expenditures were primarily for improvement
of  service  and  abatement  of  air and  water  pollution.   Research  and
development  activities  include work done by  employees,  consultants  and
contractors, plus sponsorship of research by industry associations.

EMPLOYEES:    As of December 31, 1998, the Company added approximately  650
employees  compared to December 31, 1997, including approximately  600  new
employees  at  Wisconsin  Electric.  About half of  the  new  employees  at
Wisconsin Electric replaced existing contract employees, including 210 from
Upper Peninsula Power Company, an unaffiliated investor owned utility which
operated  Presque Isle Power Plant under contract since Wisconsin  Electric
acquired  the plant in 1987.  Wisconsin Electric added additional employees
during  1998 to fill vacant positions that occurred while Wisconsin  Energy
was pursuing a merger with Northern States Power Company and to support key
areas  such  as  nuclear  operations as well as  customer  and  information
services.   The acquisition of Edison Sault during 1998 added approximately
70 employees who did not work for the Company during 1997.  At December 31,
1998, the following number of individuals were employed by Wisconsin Energy
and its subsidiaries.


                                Full Time       Part Time          Total
                                ---------       ---------          -----
   Utility                                                              
     Wisconsin Electric             5,111             151          5,262
     Edison Sault                      68               3             71
                                    -----           -----          -----
   Total Utility                    5,179             154          5,333
   Non-Utility                         68               3             71
                                    -----           -----          -----
   Total Employees                  5,247             157          5,404
                                    =====           =====          =====


Of  these  employees, the following number of individuals were  represented
under  labor agreements with the following bargaining units as of
December 31, 1998.

<TABLE>
<CAPTION>
                                                                Expiration Date of Current
                                         Number of Employees         Labor Agreement
                                         --------------------   --------------------------
<S>                                                <C>                 <C>
Wisconsin Electric                                                                          
  Local 2150 of International                                                               
    Brotherhood of Electrical Workers              2,564                August 15, 2001
  Local 317 of International                                                                
    Union of Operating Engineers                     501                January 1, 2000
  Local 12005 of United                                                                     
    Steel Workers of  America                        193               November 3, 2001
  Local 7-0111 of Paper, Allied-                                                            
    Industrial Chemical & Energy                                                            
     Workers International Union                      67               November 3, 2001
  Local 510 of International                                                                
     Brotherhood of Electrical Workers               158                    May 1, 2000
                                                   -----                               
Total Wisconsin Electric                           3,483                               
Edison Sault                                                                                
  Local 13457 of United                                                                     
    Steel Workers of America                          49               October 31, 2001
Non-Utility                                           - 
                                                   ----- 
Total Employees                                    3,532 
                                                   ===== 
</TABLE>

For  anticipated  employee  additions during  1999,  see  Item  7.  Management's
Discussion  and  Analysis  of Financial Condition and Results  of  Operations  -
"Factors Affecting Results of Operations - Outlook."


ITEM 2.   PROPERTIES

The  principal  properties of Wisconsin Energy and its  subsidiaries  are  owned
in  fee  except  that  the  major portion of utility electric  transmission  and
distribution  lines  and  steam distribution mains and  gas  distribution  mains
and  services  are  located, for the most part, on or in  streets  and  highways
and  on  land  owned by others.  Substantially all utility plant is  subject  to
first mortgage liens.

WISCONSIN   ELECTRIC:     Wisconsin  Electric  owns  the  following   generating
stations with 1998 capabilities as indicated.
<TABLE>
<CAPTIONS>
                                                                   Dependable Capability
                                                       No. of          In Megawatts (a)
                                                     Generating     August       December
Name                                     Fuel           Units        1998          1998
----                                    -------      ----------     ------       --------
<S>                                     <C>                <C>       <C>           <C> 
Steam Plants                                                                       
   Point Beach (b)                      Nuclear             2        1,000         1,010
   Oak Creek                            Coal                4        1,135         1,139
   Presque Isle                         Coal                9          617           617
   Pleasant Prairie                     Coal                2        1,200         1,210
   Port Washington                      Coal                4          326           327
   Valley                               Coal                2          267           227
   Edgewater (c)                        Coal                1           98            98
   Milwaukee County                     Coal                3           11            11
                                                           --        -----         -----
Total Steam Plants                                         27        4,654         4,639
                                                                                        
Hydro Plants (15 in number)                                37           63            67
                                                                                        
Germantown Combustion Turbines          Oil                 4          212           252
Concord Combustion Turbines             Gas/Oil             4          332           376
Paris Combustion Turbines               Gas/Oil             4          332           376
Other Combustion Turbines & Diesel      Gas/Oil             6           59            75
                                                           --        -----         -----
Total System                                               82        5,652         5,785
                                                           ==        =====         ===== 
<FN>
(a)   Dependable  capability  is the net power output  under  average  operating
      conditions  with  equipment  in  an average  state  of  repair  as  of  a  
      given month  in  a  given  year.  Changing seasonal conditions  are  
      responsible for the  different  capabilities  reported for the  winter and  
      summer  periods  in the  above  table.   The  values   were  established  
      by  test  and  may  change slightly from year to year.

(b)   During  an  outage  that  began  in  December  1998,  Wisconsin  Electric
      replaced   Unit  2's  low  pressure   turbine  rotors  which  is   expected
      to increase   its   maximum  dependable  capability  from  500  to    
      approximately 510 megawatts.  See Item 7. Management's Discussion and
      Analysis of Financial Condition and Results of Operations - "Factors 
      Affecting Results of Operations - Nuclear Matters."

(c)   Wisconsin  Electric  has a 25% interest in Edgewater  5  Generating  Unit,
      which  is  operated  by  Wisconsin   Power and Light  Company,  an  
      unaffiliated utility.
</TABLE>

At   December   31,   1998,  Wisconsin  Electric's  electric  transmission   and
distribution  system  had  2,855  miles  of  transmission  circuits,  of   which
639  miles  were  operating  at  345 kilovolts,  123  miles  at  230  kilovolts,
1,704  miles  at 138 kilovolts, and 394 miles at voltage levels  less  than  138
kilovolts.   At  December  31,  1998, Wisconsin Electric  was  operating  21,927
pole  miles  of  overhead  distribution lines and 16,295  miles  of  underground
distribution  cable,  as  well  as  350  distribution  substations  and  233,726
line transformers.

As  of  December  31,  1998, the gas distribution system included  approximately
7,895   miles   of  mains  connected  at  21  gate  stations  to  the   pipeline
transmission  systems  of  ANR Pipeline Company, Natural  Gas  Pipeline  Company
of  America  and  Northern Natural Pipeline Company.  Wisconsin Electric  has  a
liquefied  natural  gas  storage plant which converts and  stores  in  liquefied
form  natural  gas  received during periods of low consumption.   The  liquefied
natural  gas  storage  plant  has  a send-out capability  of  70,000  dekatherms
per  day.   Wisconsin  Electric  also has propane tanks  for  peaking  purposes.
These  tanks  will  provide  approximately 7,000 dekatherms  of  supply  to  the
system.

At  December  31, 1998, the combined steam systems supplied by  the  Valley  and
Milwaukee  County  Power  Plants consisted of approximately  43  miles  of  both
high  pressure  and  low pressure steam piping, 8.8 miles  of  walkable  tunnels
and other pressure regulating equipment.

Wisconsin   Electric   owns  various  office  buildings  and   service   centers
throughout its service area.

EDISON  SAULT:    Edison  Sault's  major  source  of  electric  energy  is   its
29.8  megawatt  hydroelectric  generating  plant  on  the  St.  Marys  River  in
Sault  Ste.  Marie,  Michigan.  In addition, Edison Sault owns  and  operates  a
4.8 megawatt diesel-fired peaking power plant.

Edison  Sault  owns  two  138  kilovolt submarine  transmission  cable  circuits
which  interconnects  with Consumers Power Company in  the  Lower  Peninsula  of
Michigan,  as  well  as two 138 kilovolt substations which interconnect with a
46 mile, 138  kilovolt  transmission  line  owned and  operated  by  Cloverland
Electric Cooperative.   In  total,  Edison Sault had 282 miles of  transmission
line  in service   as  of  December  31,  1998  and  maintained  792  miles  of
primary distribution  lines.   Edison Sault renders service  to  its  customers
through approximately 8,600 line transformers.

NON-UTILITY:     Wispark  properties  include  the  following  commercial  and
industrial   parks   in  the  State  of  Wisconsin:   LakeView,   located   near
Kenosha;  GrandView  in  Racine County, RidgeView  in  Pewaukee;  and  Westridge
in   New  Berlin.   Wispark  also  owns  Gaslight  Pointe,  a  residential   and
commercial  complex  located  in  Racine,  the  Radisson  Hotel  and  Conference
Center  in  Kenosha  plus  other  properties  located  in  Wisconsin  Electric's
service  territories  that  are held for future development.   Wispark  is  also
developing  other  real  estate property located in the  States  of  California,
Illinois and Minnesota.

Wisvest  owns  a  chilled  water  production and distribution  facility  located
in  Milwaukee  County,  Wisconsin;  Minergy  owns  a  glass  aggregate  facility
located  in  Neenah,  Wisconsin;  and Badger Service  Company  holds  rights  to
coal in an area of 8,568 acres in Knox County, Indiana.




ITEM 3. LEGAL PROCEEDINGS

                           ENVIRONMENTAL MATTERS

The   Company  is  subject  to  federal,  state  and  certain  local  laws   and
regulations  governing  the  environmental  aspects  of  its  operations.    The
Company  believes  that,  with immaterial exceptions,  its  existing  facilities
are in compliance with applicable environmental requirements.

See  Item  1.  Business - "Environmental Compliance", which is  incorporated  by
reference  herein,  for  a  discussion  of  matters  related  to  certain  solid
waste and ash landfills, manufactured gas plant sites, and air quality.

ETSM  PROPERTY/CITY  OF  WEST  ALLIS:   Iron  cyanide-bearing  wastes,  believed
to  be  manufactured  gas  plant process wastes, were  found  at  two  sites  in
West  Allis,  Wisconsin.   One site is on property  formerly  owned  by  Kearney
and  Trecker,  which  was  sold to others (including Wisconsin  Electric)  prior
to  the  discovery  of  the  wastes, and the other is  the  "Greenfield  Avenue"
site,  owned  by  the  City of West Allis.  Several years  ago,  materials  were
removed  from  the  "Kearney & Trecker" site, with Wisconsin  Electric  and  the
other   current  owners  paying  for  disposal  of  materials  found  on   their
respective portions of the site.

On  July  25,  1996, Giddings & Lewis, Kearney & Trecker and the  City  of  West
Allis  filed  an  action  for  damages in the  Milwaukee  County  Circuit  Court
against    Wisconsin   Electric,   alleging   that   Wisconsin   Electric    was
responsible   for   the  deposition  of  the  material   and   liable   to   the
plaintiffs.   Investigations  into  the  potential  source  of  the  waste  lead
Wisconsin  Electric  to  believe  that it was not  the  source  of  this  waste.
Wisconsin   Electric   has  joined  Wisconsin  Gas  Company,   an   unaffiliated
natural  gas  utility which had extensive gas manufacturing  operations  in  the
Milwaukee  area,  as  a  third  party  defendant.   Trial  in  this  matter   is
scheduled for June 1999.

Wisconsin  Electric  has  been named a defendant in  a  second  action  relating
to  the  waste  material at the "Kearny and Trecker" site.   That  action  is  a
contract   action  brought  by  an  environmental  remediation  contractor   for
payment  for  investigative  work for Giddings and Lewis.   Giddings  and  Lewis
counterclaimed   because   of   the  non-discovery   of   the   material.    The
contractor  joined  Wisconsin  Electric on a  contribution  theory.   The  court
has  issued  a  decision  in  this matter which  denies  Giddings  &  Lewis  any
substantial  recovery  from  the remediation contract  or  the  counterclaim  by
Giddings  and  Lewis.   That  decision  is  on  appeal.   If  upheld,  Wisconsin
Electric will have no liability in this proceeding.


                               RATE  MATTERS

WISCONSIN  RETAIL  JURISDICTION:    See  Item  7.  Management's  Discussion  and
Analysis   of  Financial  Condition  and  Results  of  Operations   -   "Factors
Affecting   Results   of  Operations  -  Rates  and  Regulatory   Matters"   for
information  concerning  (1)  rate orders issued  by  the  PSCW  for  the  1996,
1997  and  1998  test years, (2) an interim rate order issued by  the  PSCW  for
the  1998  test  year,  (3) Wisconsin's fuel cost adjustment  procedure,  (4)  a
fuel  surcharge  approved  by the PSCW during 1997, (5)  approval  by  the  PSCW
during  1997  for  Wisconsin Electric to defer certain excess  non-fuel  nuclear
operation   and   maintenance   costs,  and   (6)   Wisconsin's   purchase   gas
adjustment mechanism.

MICHIGAN    RETAIL   ELECTRIC   JURISDICTION:     See   Item   7.   Management's
Discussion  and  Analysis  of Financial Condition and Results  of  Operations  -
"Factors  Affecting  Results  of  Operations -  Rates  and  Regulatory  Matters"
for   information   concerning  (1)  1998  test  year   information   filed   by
Wisconsin  Electric  with  the  MPSC,  (2)  a  Wisconsin  Electric  rate   order
issued  by  the  MPSC  for  the  1996 test year, (3)  Edison  Sault's  temporary
price  cap  approved  by  the  MPSC,  and  (4)  Michigan's  Power  Supply   Cost
Recovery Clause.

WHOLESALE   ELECTRIC  JURISDICTION:    Some  customers  served  under  Wisconsin
Electric's  and  Edison Sault's wholesale rates are subject  to  automatic  fuel
adjustment  or  purchased  power  pass through  provisions  to  reflect  varying
fuel  and purchased power costs.


                               OTHER MATTERS

MINERGY  GLASS  AGGREGATE  PLANT  SUIT:   In 1996,  three  individuals  and  two
environmental  organizations  filed an action in  Circuit  Court  for  Winnebago
County  against  Minergy Corp., a non-utility subsidiary  of  Wisconsin  Energy;
the   City   of  Neenah,  Wisconsin;  and  a  paper  company,  challenging   the
legality  of  the  City's  lease of certain land  to  Minergy  for  construction
and  operation  of  a  facility  that recycles  paper  sludge  from  area  paper
mills  into  glass  aggregate  and  steam.   The  plaintiffs  alleged  that  the
lease  violated  the  public trust doctrine under Wisconsin  law  and  requested
that  the  court  declare  the lease a public nuisance  and  grant  a  permanent
injunction  against  construction  of the facility.   The  court  dismissed  the
plaintiffs'  complaint  and  Minergy completed  construction  of  the  facility,
placing   it   into  commercial  operation  in  April  1998.    The   plaintiffs
appealed  the  circuit court decision to the Wisconsin Court  of  Appeals  which
certified  the  case  to the Wisconsin Supreme Court.   On  July  2,  1998,  the
Supreme  Court  reversed  the decision of the circuit court,  holding  that  the
plaintiffs  may  bring  suit  under  a  Wisconsin  statute  to  abate  a  public
nuisance.    The   case   was   remanded  to  the  circuit   court   which,   on
February  23,  1999,  issued a decision dismissing all  claims  against  Minergy
and the other defendants.

PITTSBURG  &  MIDWAY  CASE:    In a matter brought before  the  FERC,  Wisconsin
Electric  filed  an initial brief in July 1993 supporting its  right  to  retain
coal   reclamation  costs  collected  through  the  wholesale  fuel   adjustment
clause  in  1986  that  it  believes were prudently  incurred  in  a  settlement
with   the  Pittsburg  &  Midway  Coal  Mining  Company.   Of  the  total  costs
involved,  the  portion  recovered through the  wholesale  fuel  clause  amounts
to  approximately  $750,000.   This filing  was  made  in  response  to  a  FERC
audit  staff  determination that Wisconsin Electric should have  applied  for  a
waiver  for  the  FERC's fuel clause regulations in order  to  attempt  to  pass
through  the  wholesale  portion  of  the settlement  costs.   On  December  13,
1995,   the   administrative  law  judge  issued  an   initial   decision   that
Wisconsin   Electric  was  required  to  refund  the  portion   of   such   cost
collected   from  its  wholesale  customers   The  administrative  law   judge's
initial  decision  found  in favor of Wisconsin Electric  with  respect  to  the
prudence   of  the  administration  of  the  coal  contracts.   The  matter   is
pending before the full commission.

In  November  1993,  the  FERC  rejected  Wisconsin  Electric's  request  to  be
allowed  to  recover,  in wholesale rates in the future, the  amount  which  may
have  to  be  refunded  to customers in the event of an  unfavorable  ruling  in
the  pending  fuel  adjustment  clause proceeding  concerning  the  Pittsburg  &
Midway  reclamation  charges.   In January 1994,  Wisconsin  Electric  filed  an
appeal  with  the  U.S. Court of Appeals for the District  of  Columbia  Circuit
regarding this rejection .  The matter is pending.

POINT   BEACH   NUCLEAR  PLANT:    See  Item  7.  Management's  Discussion   and
Analysis   of  Financial  Condition  and  Results  of  Operations   -   "Factors
Affecting   Results   of   Operations  -  Nuclear   Matters"   for   information
concerning  the  United  States  Department of Energy's  breach  of  a  contract
with   Wisconsin  Electric  that  required  the  United  States  Department   of
Energy  to  begin permanently removing spent nuclear fuel from  Point  Beach  by
January 31, 1998.

URANIUM  ENRICHMENT  CHARGES:    On October 11,  1996,  Wisconsin  Electric  and
six  other  utilities  filed  an  action in the U.S.  Court  of  Federal  Claims
appealing  a  final  October 1995 decision by the United  States  Department  of
Energy's  contracting  officer,  which  denied  claims  of  the  utilities   for
damages  by  reason  of  overcharges for uranium  enrichment  services  provided
under  Utility  Services Contracts between October 1, 1992 and  June  30,  1993.
The   damages   sought   by   Wisconsin  Electric  total   $1.3   million.    On
December  1,  1997,  the  government  filed  a  motion  for  judgment   on   the
pleadings  based  upon a prior decision of the U.S. Court  of  Appeals  for  the
Federal  Circuit  in a related matter.  On August 12, 1998, the  U.S.  Court  of
Federal   Claims   granted  the  government's  motion  for   summary   judgment,
dismissing   the   utilities'  complaint.   On  October   9,   1998,   Wisconsin
Electric  and  the  other  utilities filed an appeal  with  the  U.S.  Court  of
Appeals for the Federal Circuit.  The matter is pending.

WISCONSIN  INTERNATIONAL  ELECTRIC  POWER  LITIGATION:    On  March  25,   1998,
Wisconsin   International  Electric  Power,  Ltd.  ("WIEP")  filed   an   action
against  Wisconsin  Electric  in Milwaukee County Circuit  Court  alleging  that
WIEP  and  Wisconsin  Electric  were parties to  a  joint  venture  to  develop,
build,  operate  and  maintain an electric generating  plant  at  Subic  Bay  in
the   Philippines   involving   certain  equipment   originally   purchased   by
Wisconsin   Electric   for   a   proposed  cogeneration   plant   in   Kimberly,
Wisconsin.   The  complaint  in  the  action  alleges  that  Wisconsin  Electric
breached  duties  allegedly  owed  to  WIEP,  causing  damages  to  WIEP  in  an
amount  claimed  to  be  at least $100 million.  On April  15,  1998,  Wisconsin
Electric  filed  an  answer to the complaint denying  liability.   The  case  is
scheduled  for  trial  in  May  1999.   On March  1,  1999,  Wisconsin  Electric
filed  a  motion  for  summary judgment and supporting papers  on  all  but  one
count  of  the  complaint.  The motion is pending.  See "Note  L  -  Commitments
and   Contingencies"  in  the  Notes  to  Financial  Statements   in   Item   8.
Financial  Statements  and  Supplementary Data for information  related  to  the
Kimberly Cogeneration Equipment.

STRAY   VOLTAGE:    On  July  11,  1996,  the  PSCW  issued  its   final   order
regarding   the   stray   voltage  policies  of   Wisconsin's   investor   owned
utilities.    The  PSCW  order  clarified  the  definition  of  stray   voltage,
affirmed  the  level  at  which  utility action is required,  and  appropriately
placed  some  of  the  responsibility  for  this  issue  in  the  hands  of  the
customer.    Additionally,  the  order  established  a  uniform  stray   voltage
tariff   which   delineates  utility  responsibility  and   provides   for   the
recovery  of  costs  associated  with unnecessary  customer  demanded  services.
While  this  action  has  been  beneficial in Wisconsin  Electric's  efforts  to
manage  this  controversial  issue, it has  not  had  a  significant  impact  on
Wisconsin Electric's financial position or results of operation.

In  recent  years,  several  actions by dairy farmers  have  been  commenced  or
claims  made  against  Wisconsin  Electric  for  loss  of  milk  production  and
other   damages   allegedly  caused  by  stray  voltage   resulting   from   the
operation  of  its  electrical system.  At the present time, five  such  actions
are  pending.   Wisconsin  Electric does not believe,  however,  that  these  or
any  other  claims  thus  far made or threatened against Wisconsin  Electric  by
reason  of  stray  voltage  will  result in any  substantial  liability  on  its
part.   Currently,  there  are  no cases pending or  threatened  against  Edison
Sault.

ELECTROMAGNETIC   FIELDS:    Claims  have  been  made  or   threatened   against
electric  utilities  across  the country for bodily  injury,  disease  or  other
damages   allegedly   caused  or  aggravated  by  exposure  to   electromagnetic
fields   associated   with   electric  transmission  and   distribution   lines.
Results  of  scientific  studies  conducted to date  have  not  established  the
existence  of  a  causal  connection  between  electromagnetic  fields  and  any
adverse  health  affects.   Wisconsin Electric and  Edison  Sault  believe  that
their   facilities  are  constructed  and  operated  in  accordance   with   all
applicable  legal  requirements and standards.  Currently, there  are  no  cases
pending or threatened against Wisconsin Electric nor against Edison Sault.



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

No  matters  were  submitted  to  a  vote of Wisconsin  Energy's  nor  Wisconsin
Electric's  security  holders  during the fourth  quarter  of  the  fiscal  year
covered by this report.



EXECUTIVE OFFICERS OF THE REGISTRANTS

The   names,  ages  at  December  31,  1998  and  positions  of  the   executive
officers  of  Wisconsin  Energy and Wisconsin Electric are  listed  below  along
with  their  business  experience during the  past  five  years.   All  officers
are  appointed  until they resign, die or are removed pursuant  to  the  Bylaws.
There  are  no  family  relationships among these officers,  nor  is  there  any
agreement   or   understanding  between  any  officer  and  any   other   person
pursuant to which the officer was selected.

                              
Richard A. Abdoo (54):        Chairman of the Board, President and  Chief
                              Executive   Officer  of  Wisconsin   Energy
                              since  1991;  Director of Wisconsin  Energy
                              since  1988.   Chairman of  the  Board  and
                              Chief   Executive  Officer   of   Wisconsin
                              Electric,   a   subsidiary   of   Wisconsin
                              Energy,  since 1990; Director of  Wisconsin
                              Electric  since  1989.   Chairman  of   the
                              Board   and  Chief  Executive  Officer   of
                              Wisconsin  Natural  Gas Company,  a  former
                              subsidiary  of  Wisconsin Energy  that  was
                              merged    into   Wisconsin   Electric    on
                              January  1,  1996, from 1990 through  1995;
                              Director  of Wisconsin Natural Gas  Company
                              from 1989 through 1995.
                              
Richard R. Grigg (50):        Vice  President of Wisconsin  Energy  since
                              1995;  Director of Wisconsin  Energy  since
                              1995.    President   and  Chief   Operating
                              Officer  of Wisconsin Electric since  1995;
                              Chief  Nuclear  Officer, December  1996  to
                              March   1998;  Group  Executive  and   Vice
                              President,  June  to  December  1994;  Vice
                              President,  1990 to June 1994; Director  of
                              Wisconsin  Electric since 1994.   President
                              and  Chief  Operating Officer of  Wisconsin
                              Natural  Gas Company during 1995;  Director
                              of  Wisconsin  Natural Gas  Company  during
                              1995.
                              
Calvin H. Baker (55):         Treasurer  and Chief Financial  Officer  of
                              Wisconsin   Energy   since   1996.    Chief
                              Financial  Officer  of  Wisconsin  Electric
                              since  1996;  Vice President -  Finance  of
                              Wisconsin Electric since 1994.
                              
Charles T. Govin, Jr. (52):   Vice  President - Electric & Gas Operations
                              of  Wisconsin Electric since December 1996;
                              Vice   President  -  Gas  Operations   from
                              January  to December 1996.  Vice  President
                              of  Wisconsin  Natural, September  1994  to
                              December    1995;   General   Manager    of
                              Wisconsin  Natural during  1994  and  1995;
                              Director  of Wisconsin Natural Gas  Company
                              June to December 1995.
                              
Anne K. Klisurich (51):       Controller of Wisconsin Energy since  1995.
                              Controller  of  Wisconsin  Electric   since
                              1994.   Assistant  Corporate  Secretary  of
                              Wisconsin  Energy  and  Wisconsin  Electric
                              from  July  1997 to March 1998.  Controller
                              of  Wisconsin Natural Gas Company from 1994
                              through 1995.
                              
Kristine M. Krause (44):      Vice  President  -  Fossil  Operations   of
                              Wisconsin  Electric since 1994; Manager  of
                              Valley  Power  Plant  and  Steam  Services,
                              1992 to 1994.
                              

David K. Porter (55):         Senior Vice President of Wisconsin Electric
                              since 1989; Director of Wisconsin  Electric
                              since 1989.   Vice President  of  Wisconsin
                              Natural Gas Company from 1989 through 1995;
                              Director of Wisconsin  Natural Gas  Company
                              from 1988 through 1995.
                            
Kristine A. Rappe (42):       Vice President  -  Customer  Services   of
                              Wisconsin  Electric  since  1994;  Regional
                              Manager of Customer Operations - Fox Valley
                              Region, 1991 to 1994.
                            
Michael B. Sellman (51):      Senior  Vice  President  -  Nuclear   Power
                              Business Unit and Chief Nuclear Officer  of
                              Wisconsin  Electric  since  March   1998.
                              President, Main Yankee Atomic Power Company
                              from  February 1997 to  March  1998.   Vice
                              President - Waterford Nuclear Plant, Entergy
                              Arkansas, Inc. from February 1996 to  
                              February 1997;  General Manager - River Bend
                              Nuclear Plant, Entergy Gulf States, Inc. 
                              from September 1993 to February 1996.
                            
Certain executive officers also hold offices in Wisconsin Energy's non-
utility subsidiaries.



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

                       NUMBER OF COMMON STOCKHOLDERS

As  of  year-end 1998, based on the number of Wisconsin Energy  Corporation
stockholder  accounts  (including accounts in Wisconsin  Energy's  dividend
reinvestment  and  stock  purchase  plan),  there  were  94,645  registered
stockholders.


                     COMMON STOCK LISTING AND TRADING

Wisconsin  Energy Corporation common stock is listed on the New York  Stock
Exchange.   The ticker symbol is WEC.  Daily trading prices and volume  can
be  found in the "NYSE Composite" section of most major newspapers, usually
abbreviated as WiscEn or WiscEngy.


                     DIVIDENDS AND COMMON STOCK PRICES

COMMON  STOCK DIVIDENDS OF WISCONSIN ENERGY:   Cash Dividends on  Wisconsin
Energy's  common stock, as declared by the Board of Directors, are normally
paid on or about the first day of March, June, September and December.

RANGE OF WISCONSIN ENERGY COMMON STOCK PRICES AND DIVIDENDS:


                      1998                              1997
           -------------------------        ----------------------------
Quarter    High      Low    Dividend        High        Low     Dividend
-------    ----      ---    --------        ----        ---     --------
First    $31        $27       $ .385      $27-7/8     $23-1/4    $ .380
Second    31-11/16   28-1/2     .390       25-5/8      23          .385
Third     32         27-3/8     .390       26-1/4      23-1/2      .385
Fourth    34         30         .390       29-1/16     24-1/8      .385
                              ------                             ------
Year     $34        $27       $1.555      $29-1/16    $23        $1.535
                                                                          
                                                                           
COMMON STOCK DIVIDENDS OF WISCONSIN ELECTRIC:   Cash dividends declared  on
Wisconsin Electric Power Company's common stock during the two most  recent
fiscal  years  are  set  forth below.  Dividends  were  paid  to  Wisconsin
Electric's sole common stockholder, Wisconsin Energy.


                                            Total Dividend            
                                            --------------            
         Quarter                      1998                 1997     
         -------                      ----                 ----     
         First                      $ 44,322,000       $ 80,726,000
         Second                       44,893,000         44,322,000 
         Third                        44,893,000         44,322,000 
         Fourth                       44,893,000                    
                                                         44,322,000
                                    ------------       ------------ 
         Total                      $179,001,000       $213,692,000 
                                    ============       ============ 



ITEM 6.  SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
                                       WISCONSIN ENERGY CORPORATION
                                  CONSOLIDATED SELECTED FINANCIAL DATA
                                                                                                                
                                                    (Thousands of Dollars except for per share amounts)
              Financial                      1998          1997             1996          1995          1994        
------------------------------               ----          ----             ----          ----          ----
<S>                                      <C>           <C>              <C>           <C>          <C>
Year Ended December 31                                                                                  
  Net income                             $  188,132    $   60,716 (a)   $  218,135    $  234,034   $  180,868 (b)
  Earnings per share of  common                                                                            
    stock ($; basic and diluted)               1.65          0.54 (a)         1.97          2.13         1.67 (b)
  Dividends per share of                                                                                         
    common stock ($)                          1.555         1.535           1.5075         1.455      1.39625
                                                                                                             
  Operating revenues                                                                                         
     Electric                            $1,663,632    $1,412,115       $1,393,270    $1,437,480   $1,403,562
     Gas                                    295,848       355,172          364,875       318,262      324,349
     Steam                                   20,506        22,315           15,675        14,742       14,281
                                         ----------    ----------       ----------    ----------   ----------
  Total operating revenues               $1,979,986    $1,789,602       $1,773,820    $1,770,484   $1,742,192
                                         ==========    ==========       ==========    ==========   ==========  
At December 31                                                                                               
  Total assets                           $5,361,757    $5,037,684       $4,810,838    $4,560,735   $4,408,259
  Long-term debt and preferred                                                                        
     stock - redemption required         $1,749,024    $1,532,405       $1,416,067    $1,367,644   $1,283,686
                                                                                                             
Sales and Customers - Utility               1998           1997             1996          1995          1994
------------------------------              ----           ----             ----          ----          ----
  Electric                                                                                                    
     Megawatt-hours sold                 29,940,384    27,671,946       27,560,428    27,283,869   26,911,363
     Customers (End of year)              1,010,318       978,835          968,735       955,616      944,855
                                                                                                             
  Gas                                                                                                        
     Therms delivered  (Thousands)          922,836       983,676          936,894       886,729      811,219
     Customers (End of year)                388,478       376,732          367,275       357,030      347,080
                                                                                                             
  Steam                                                                                                          
     Pounds sold  (Millions)                  2,773         3,161            2,705         2,532        2,395    
     Customers (End of year)                    454           474              465           473          471    
                                                                                                
<CAPTION>                                                                                         
CONSOLIDATED QUARTERLY FINANCIAL DATA
                                                                                                                 
                                                         (Thousands of Dollars except for per share amounts)
                                                                  March                          June
                                                           ---------------------          -------------------
Three Months Ended                                         1998             1997          1998        1997 (a)    
-------------------------------                            ----             ----          ----        ----     
<S>                                                      <C>              <C>           <C>          <C>
  Total operating revenues                               $510,681         $510,383      $464,968     $403,214    
  Operating income                                         67,411           65,637        55,058       31,716    
  Net income                                               49,048           45,069        28,854      (10,632)    
  Earnings per share of common                                                                            
    stock ($; basic and diluted)                             0.43             0.40          0.25        (0.09)    
<CAPTION>                                                                                                     
                                                                 September                      December
                                                            ---------------------          --------------------
Three Months Ended                                          1998             1997          1998        1997 (a)    
-------------------------------                             ----             ----          ----        ----   
<S>                                                      <C>              <C>           <C>          <C>
  Total operating revenues                               $506,330         $400,614      $498,007     $475,391    
  Operating income                                         83,867           46,441        70,367       55,665    
  Net income                                               58,176           23,975        52,054        2,304    
  Earnings per share of common                                                                            
    stock ($; basic and diluted)                             0.50             0.21          0.45         0.02    
<FN>                                                                                                    
  Quarterly results of operations are not directly comparable because of seasonal and other factors.
  See Management's Discussion and Analysis of Financial Condition and Results of Operations.            
                                                                                                 
 (a)   Includes May 1997 nonrecurring $31 million charge ($19 million net of tax or $.17 per share)
       to write-off deferred merger costs related to the terminated merger agreement with Northern
       States Power Company and December 1997 $30 million write-down $18 million net of tax
       or $.16 per share) of equipment purchased for the Kimberly Cogeneration Project.
                                                                                                  
 (b)   Includes 1994 nonrecurring $74 million charge ($45 million net of tax or $.42 per share) 
       for Wisconsin Electric Power Company's restructuring program.
</TABLE>  
<TABLE>
<CAPTION>
                                       WISCONSIN ELECTRIC POWER COMPANY       
                                           SELECTED FINANCIAL DATA    
                                                                                        
                                                                  (Thousands of Dollars)
              Financial                      1998          1997             1996          1995          1994 
---------------------------------            ----          ----             ----          ----          ----
<S>                                      <C>           <C>              <C>           <C>           <C> 
Year Ended December 31                                                                                   
  Earnings available for                                                                                 
    common stockholder                   $  182,971    $   69,412 (a)   $  210,112    $  239,465    $  180,403 (b) 
                                                                                                               
  Operating revenues                                                                                           
    Electric                             $1,641,403    $1,412,115       $1,393,270    $1,437,480    $1,403,562 
    Gas                                     295,848       355,172          364,875       318,262       324,349 
    Steam                                    20,506        22,315           15,675        14,742        14,281 
                                         ----------    ----------       ----------    ----------    ----------  
  Total operating revenues               $1,957,757    $1,789,602       $1,773,820    $1,770,484    $1,742,192  
                                         ==========    ==========       ==========    ==========    ==========  
At December 31                                                                                                  
  Total assets                           $4,768,942    $4,667,840       $4,507,160    $4,318,924    $4,202,193  
  Long-term debt and preferred                                                                                  
    stock - redemption required          $1,512,531    $1,448,558       $1,371,446    $1,325,169    $1,257,776   
                                              
Sales and Customers - Utility                 1998          1997             1996          1995          1994
--------------------------------              ----          ----             ----          ----          ----
  Electric                                                                                                    
    Megawatt-hours sold                  29,475,163    27,671,946       27,560,428    27,283,869    26,911,363 
    Customers (End of year)                 988,929       978,835          968,735       955,616       944,855  
                                                                                                               
  Gas                                                                                                          
    Therms delivered  (Thousands)           922,836       983,676          936,894       886,729       811,219  
    Customers (End of year)                 388,478       376,732          367,275       357,030       347,080 
                                                                                                                
  Steam                                                                                                         
              Pounds sold  (Millions)         2,773         3,161            2,705         2,532         2,395  
    Customers (End of year)                     454           474              465           473           471 

<CAPTION>                                                                                        
QUARTERLY FINANCIAL DATA                                                                           
                                                                          (Thousands of Dollars)
                                                                   March                          June
                                                            ---------------------          --------------------  
Three Months Ended                                          1998             1997          1998        1997 (a)   
------------------------------                              ----             ----          ----        ---- 
<S>                                                      <C>              <C>           <C>           <C>    
  Total operating revenues                               $510,681         $510,383      $461,771      $403,214 
  Operating income                                         67,411           65,637        54,623        31,716 
  Earnings available for                                                                                         
    common stockholder                                     49,995           43,386        31,071       (6,353)
<CAPTION>                                                                                                    
                                                                 September                       December 
                                                            ---------------------          --------------------  
Three Months Ended                                          1998             1997          1998        1997 (a) 
-------------------------------                             ----             ----          ----        ---- 
<S>                                                      <C>              <C>           <C>           <C> 
  Total operating revenues                               $496,603         $400,614      $488,702      $475,391  
  Operating income                                         82,839           46,441        68,823        55,665  
  Earnings available for                                                                                       
    common stockholder                                     57,956           22,321        43,949        10,058   
<FN>                                                                                                  
Quarterly results of operations are not directly comparable because of seasonal and other factors.  See
Management's Discussion and Analysis of Financial Condition and Results of Operations.
                                                                                                          
Earnings and dividends per share are not provided as all of Wisconsin Electric Power Company's common stock
is held by Wisconsin Energy Corporation.                                                                      
                                                                                                             
(a)  Includes May 1997 nonrecurring $22 million charge ($13 million net of tax) to write-off deferred merger
     costs related to the terminated merger agreement with Northern States Power Company and 
     December 1997 $30 million write-down ($18 million net of tax) of equipment purchased for the Kimberly
     Cogeneration Project.
                                                                                                          
(b)  Includes 1994 nonrecurring $74 million charge ($45 million net of tax) for Wisconsin Electric Power
     Company's restructuring program.                                                                     
</TABLE>


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

Wisconsin   Energy  Corporation  is  a  holding  company  whose   principal
subsidiary  is Wisconsin Electric Power Company ("Wisconsin Electric"),  an
electric, gas and steam utility.  Unless qualified by the context  used  in
this  document, the terms "Wisconsin Energy" or the "Company" refer to  the
holding  company  and all of its subsidiaries.  As of  December  31,  1998,
approximately  89%  of  the  Company's  consolidated  total   assets   were
attributable to Wisconsin Electric.  The following discussion and  analysis
of  financial  condition and results of operations includes both  Wisconsin
Energy and Wisconsin Electric unless otherwise stated.

ACQUISITION OF ESELCO, INC.:   Effective May 31, 1998, Wisconsin Energy acquired
ESELCO, Inc. ("ESELCO"), a holding company whose principal subsidiary was Edison
Sault  Electric Company ("Edison Sault"), in a tax free reorganization accounted
for as a pooling of interests.  Due to the immaterial nature of the transaction,
Wisconsin  Energy  has  not  restated any historical  financial  or  statistical
information.  Wisconsin Energy is operating Wisconsin Electric and Edison Sault,
an  electric  utility, as separate subsidiaries within their historical  service
territories.  The discussion that follows below includes Edison Sault's activity
since  June  1,  1998.   Wisconsin Electric and  Edison  Sault  continue  to  be
separately  regulated  by their respective states.  For additional  information,
see "Factors Affecting Results of Operations - Mergers" below.

CAUTIONARY  FACTORS:     A number of forward-looking statements are included  in
this  document.   When  used,  the  terms "anticipate",  "believe",  "estimate",
"expect",  "objective", "plan", "possible", "potential", "project"  and  similar
expressions are intended to identify such forward-looking statements.   Forward-
looking  statements are subject to certain risks, uncertainties and  assumptions
which  could  cause  actual results to differ materially  from  those  that  are
described,  including  the  factors described  below  under  "Factors  Affecting
Results of Operations" and under "Cautionary Factors."


                              RESULTS OF OPERATIONS

See  "Note  K  -  Segment  Reporting" in the Notes To Financial  Statements  for
additional  information related to Wisconsin Energy's and  Wisconsin  Electric's
results of operations.


EARNINGS

1998 COMPARED TO 1997:   During 1998, Wisconsin Energy's consolidated net income
and   earnings  per  share  of  common  stock  were  $188  million  and   $1.65,
respectively, compared to $61 million and $0.54 per share during 1997.   Between
the   comparative   periods,  Wisconsin  Electric's  earnings   increased   from
$69  million during 1997 to $183 million during 1998.  As described  in  further
detail below, 1998 earnings increased primarily because increased revenues  from
interim  and final 1998 retail rate increases for Wisconsin Electric's customers
in  the State of Wisconsin and from an increase in total 1998 electric kilowatt-
hour  sales more than offset the effects of reduced natural gas therm deliveries
as   well   as  the  effects  of  increased  operating  expenses  during   1998.
Strengthened  performance  at Wisconsin Electric's  Point  Beach  Nuclear  Plant
("Point Beach") also contributed to increased comparative earnings during  1998.
Comparative  earnings during 1997 were negatively impacted  by  (1)  a  one-time
charge  of $31 million at Wisconsin Energy ($19 million net of tax or  17  cents
per  share)  for  the write-off of deferred costs related to Wisconsin  Energy's
terminated  merger  agreement with Northern States Power  Company,  a  Minnesota
corporation  ("NSP"), (2) a one-time $30 million impairment charge at  Wisconsin
Electric  ($18  million  net  of tax or 16 cents per  share)  for  its  Kimberly
Cogeneration  Equipment,  and  (3) increased  costs  beyond  those  included  in
electric  rates  associated with buying replacement power  for  both  generating
units at Point Beach, which were out of service during a large part of 1997.

1997 COMPARED TO 1996:   Compared to consolidated net income of $218 million and
earnings  per  share of $1.97 during 1996, Wisconsin Energy's  consolidated  net
income   and  earnings  per  share  were  $61  million  and  $0.54  per   share,
respectively,  during  1997.   Wisconsin  Electric's  earnings  decreased   from
$210  million in 1996 to $69 million in 1997.  As described further below,  1997
earnings  decreased primarily due to (1) significantly higher fuel and purchased
power   expenses,  (2)  increased  other  operation  and  maintenance  expenses,
(3)  higher  depreciation  expense, (4) the one-time  write-off  in  the  second
quarter  of  1997  of  deferred costs related to Wisconsin  Energy's  terminated
merger  agreement  with NSP, (5) the one-time impairment charge  in  the  fourth
quarter  of  1997  for  the  write-down to fair value  of  Wisconsin  Electric's
Kimberly  Cogeneration Equipment, and (6) retail electric and gas rate decreases
that became effective in February 1997.


ELECTRIC REVENUES, GROSS MARGINS AND SALES

The  following  table  summarizes Wisconsin Energy's  and  Wisconsin  Electric's
electric  revenues, gross margins, sales and customers for  each  of  the  three
years ended December 31, 1998.
<TABLE>
<CAPTION>
                                                                 % Change                % Change
                                                                   1997                  1996
         Electric Operations               1998        1997       to 1998      1996     to 1997
         -------------------               ----        ----       -------      ----     -------
<S>                                     <C>          <C>          <C>      <C>          <C>
WISCONSIN ENERGY:                                                                                 
  Electric Gross Margin ($000's)                                                                  
     Total Operating Revenues           $1,663,632   $1,412,115    17.8%   $1,393,270     1.4%
     Total Fuel & Purchased Power          461,365      444,655     3.8%      331,867    34.0%
                                        ----------   ----------            ----------           
  Gross Margin                          $1,202,267   $  967,460    24.3%   $1,061,403    (8.9%)
                                        ==========   ==========            ==========         

  Total Electric Sales (Mwh)            29,940,384   27,671,946     8.2%   27,560,428     0.4%
  Total Average Customers                1,009,223      972,593     3.8%      962,020     1.1%
                                                                                                  
WISCONSIN ELECTRIC:                                                                               
  Electric Gross Margin ($000's)                                                                  
     Operating Revenues                                                                           
        Residential                     $  571,378   $  487,219    17.3%   $  494,142    (1.4%)
        Small Commercial/Industrial        487,549      430,193    13.3%      421,511     2.1%
        Large Commercial/Industrial        450,138      402,684    11.8%      383,047     5.1%
        Other-Retail/Municipal              51,211       55,246    (7.3%)      56,318    (1.9%)
        Resale-Utilities                    60,927       24,538   148.3%       26,372    (7.0%)
        Other Operating Revenues            20,200       12,235    65.1%       11,880     3.0%
                                        ----------   ----------            ----------           
     Total Operating Revenues            1,641,403    1,412,115    16.2%    1,393,270     1.4%
     Fuel & Purchased Power                                                                    
        Fuel                               308,374      311,966    (1.2%)     295,651     5.5%
        Purchased Power                    141,619      132,689     6.7%       36,216   266.4%
                                        ----------   ----------            ----------          
     Total Fuel & Purchased Power          449,993      444,655     1.2%      331,867    34.0%
                                        ----------   ----------            ----------         
  Gross Margin                          $1,191,410   $  967,460    23.2%   $1,061,403    (8.9%)
                                        ==========   ==========            ==========           
                                                                                                  
  Sales (Mwh)                                                                                     
     Residential                         7,327,024    6,863,569     6.8%    6,998,769    (1.9%)
     Small Commercial/Industrial         7,612,397    7,433,087     2.4%    7,204,694     3.2%
     Large Commercial/Industrial        11,391,979   11,021,476     3.4%   10,785,505     2.2%
     Other-Retail/Municipal              1,287,162    1,412,623    (8.9%)   1,476,999    (4.4%)
     Resale-Utilities                    1,856,601      941,191    97.3%    1,094,461   (14.0%)
                                        ----------   ----------            ----------          
  Total Electric Sales                  29,475,163   27,671,946     6.5%   27,560,428     0.4%
                                        ==========   ==========            ==========           
  Average Customers                                                                               
     Residential                           886,635      876,776     1.1%      867,917     1.0%
     Small Commercial/Industrial            94,675       93,259     1.5%       91,565     1.9%
     Large Commercial/Industrial               720          714     0.8%          706     1.1%
     Other-Retail/Municipal                  1,804        1,811    (0.4%)       1,812     0.0%
     Resale-Utilities                           51           33    54.5%           20    65.0%
                                        ----------   ----------            ----------         
  Total Average Customers                  983,885      972,593     1.2%      962,020     1.1%
                                        ==========   ==========            ==========           
</TABLE>     

1998  COMPARED TO 1997:   Primarily due to retail electric rate increases during
1998  for  Wisconsin Electric's customers in the State of Wisconsin  and  to  an
increase  in  total 1998 electric kilowatt-hour sales, total electric  operating
revenues  increased  by  $252 million or 17.8% during  1998  compared  to  1997.
Between the comparative periods, the gross margin on electric operating revenues
(total  electric  operating  revenues less fuel and  purchased  power  expenses)
increased  by  $235  million  or 24.3%.  The discussion  that  follows  reflects
Wisconsin  Electric's contribution to Wisconsin Energy's 1998 electric revenues,
gross margin and sales.

Wisconsin Electric's total electric operating revenues increased by $229 million
or 16.2% during 1998 compared to 1997 and the gross margin on electric operating
revenues  increased  by  $224 million or 23.2%.  Wisconsin  Electric  attributes
these  increases  to  (1)  an interim Wisconsin retail electric  rate  increase,
effective  from January 1, 1998 through April 30, 1998, of $135  million  on  an
annualized basis, (2) a final Wisconsin retail electric rate increase, effective
May  1, 1998, of $160 million or 12.7% on an annualized basis, and (3) increased
total  electric kilowatt-hour sales during 1998.  The increase in  gross  margin
can  also  be partly attributed to a smaller rate of increase in total fuel  and
purchased  power  costs during 1998 compared to the rate of  increase  in  total
electric sales and electric operating revenues.

Total  fuel  and  purchased power expenses at Wisconsin  Electric  increased  by
$5  million or 1.2% compared to 1997.  Increased availability of lower cost  per
kilowatt-hour  generating capacity at Point Beach during 1998 allowed  Wisconsin
Electric  to  generate 11.3% more electricity while enjoying a 1.2% decrease  in
fuel costs compared to 1997.  However, despite a 17.7% decrease in megawatt-hour
power  purchases  between  the  comparative  periods,  purchased  power  expense
increased 6.7%, resulting in the net increase in total fuel and purchased  power
expenses.   Contributing  to the increased purchased power  expenses,  Wisconsin
Electric arranged for the purchase of more reliable firm supplies of energy  and
incurred a full twelve months of demand charges for the first time under a long-
term  power  purchase  contract  with LSP-Whitewater  Limited  Partnership  ("LS
Power") during 1998, resulting in higher fixed contract and power transportation
costs.   In  addition, the per unit cost of wholesale electric energy fluctuated
more  during  1998 compared to 1997, increasing the cost of certain spot  market
purchases.

Total  electric kilowatt-hour sales increased 6.5% during 1998 compared to 1997.
Increased  use  per  customer  by  residential and  large  commercial/industrial
customers,  combined  with  growth  in  the  number  of  residential  and  small
commercial/industrial customers, contributed to the increase in  total  electric
kilowatt-hour sales.  Warmer weather during the cooling load months of 1998 also
contributed to the increase in 1998 sales, especially to residential  and  small
commercial/industrial customers who tend to be more weather sensitive.  Electric
energy  sales  to  the  Empire and Tilden ore mines,  Wisconsin  Electric's  two
largest  electric  retail  customers, increased  7.4%  between  the  comparative
periods primarily due to a temporary shutdown of the Tilden mine during July and
August  1997.   Excluding the Empire and Tilden ore mines, total  1998  electric
sales  at  Wisconsin  Electric increased 6.4% and sales to the  remaining  large
commercial/industrial customers increased 2.3%. During 1998, sales in the other-
retail/municipal  customer  class  decreased  8.9%  primarily  due  to   reduced
contractual  requirements nominations, effective May 1997, by  Wisconsin  Public
Power  Inc.,  Wisconsin Electric's largest municipal wholesale  customer.   This
customer  had been reducing its purchases from Wisconsin Electric over the  past
several years subsequent to acquiring generating capacity and expanding  use  of
its  existing  generation facilities.  Mostly due to higher  opportunity  sales,
sales  for  resale  to  other  utilities, the resale-utilities  customer  class,
increased 97.3% in 1998 compared to 1997.

1997  COMPARED  TO  1996:    Primarily due to  a  fuel  surcharge  in  Wisconsin
Electric's  electric  retail jurisdiction in the State of  Wisconsin,  effective
May 24, 1997, total electric operating revenues increased by $19 million or 1.4%
during  1997  compared  to 1996.  Revenues from the fuel  surcharge  offset  the
impact on electric operating revenues of a retail electric rate decrease in  the
State  of  Wisconsin, effective February 18, 1997, of $7 million or 0.6%  on  an
annualized basis.

The gross margin on electric operating revenues decreased by $94 million or 8.9%
primarily  due  to  significantly  higher fuel  and  purchased  power  expenses.
Compared to 1996, fuel and purchased power expenses increased by $113 million or
34.0%  during  1997 as a result of (1) extended outages at Point Beach,  (2)  an
extended maintenance outage at Oak Creek Power Plant that was concluded in  June
1997,  (3) delayed commercial operation of contractual generating capacity  from
LS  Power,  and  (4) higher costs per megawatt-hour of power  purchases  due  to
regional generation outages.  During 1997, Wisconsin Electric replaced its  lost
generating  capacity with higher cost generation and with  a  218%  increase  in
megawatt-hours of power purchases.  Partially offsetting the increased 1997 fuel
and  purchased  power  expenses,  Wisconsin Electric  recorded  $24  million  of
revenues during 1997 as a result of the fuel surcharge.  For further information
concerning the 1997 fuel surcharge and the extended outages at Point Beach,  see
"Rates and Regulatory Matters" and "Nuclear Matters", respectively, below  under
"Factors Affecting Results of Operations."

Total  electric sales increased by 0.4% during 1997 compared to 1996.  Increased
1997  sales  to  small  commercial/industrial and to large commercial/industrial
customers were almost completely offset by decreased sales to customers  in  the
residential, the other-retail/municipal and resale-utilities customer classes.

Total  1997 electric sales were positively impacted by growth in the  number  of
customers in the residential, the small commercial/industrial and especially  in
the  large  commercial/industrial customer classes  and  by  increased  use  per
customer by small and by large commercial/industrial customers.  Cooler  weather
during  the  summer  of  1997 compared to the summer  1996,  however,  primarily
contributed  to lower use per residential customer and to the decrease  in  1997
residential  electric sales.  Compared to 1996, electric  energy  sales  to  the
Empire  and  Tilden  ore mines decreased by 5.4% in 1997 due  to  the  temporary
shutdown  in 1997 of the Tilden ore mine noted above.  Excluding the Empire  and
Tilden ore mines, total electric sales increased 1.0% and sales to the remaining
large  commercial/industrial customers increased 4.3%  between  the  comparative
periods.

1997  sales in the other-retail/municipal customer class decreased 4.4% compared
to  1996  primarily due to the continued phase out in 1997 of firm  requirements
contracts  totaling 12.5 megawatts with two wholesale customers and a  reduction
of 30 megawatts in contractual requirements nominations during 1997 by Wisconsin
Public  Power  Inc..  Sales for resale to other utilities, the  resale-utilities
customer  class,  decreased 14.0% primarily as a result of  reduced  opportunity
sales  caused  by  the Point Beach and Oak Creek Power Plant  outages  mentioned
above.


GAS REVENUES, GROSS MARGINS AND THERM DELIVERIES

The  following  table  summarizes Wisconsin Electric's gas  operating  revenues,
gross  margins,  therm deliveries and average customers for each  of  the  three
years ended December 31, 1998.
<TABLE>
<CAPTION>
                                                                    % Change              % Change
                                                                      1997                  1996
              Gas Operations                   1998       1997       to 1998     1996      to 1997
              --------------                   ----       ----       -------     ----      -------
<S>                                           <C>       <C>          <C>        <C>        <C>
Gas Gross Margin ($000's)                                                                         
  Operating Revenues                                                                              
    Residential                               $176,499  $221,968      (20.5%)   $218,811      1.4%
    Commercial/Industrial                       87,899   113,609      (22.6%)    108,100      5.1%
    Interruptible                                7,003     8,970      (21.9%)     11,531    (22.2%)
    Interdepartmental                              138     3,096      (95.5%)      3,050      1.5%
                                              --------  --------                --------          
       Total Gas Sales                         271,539   347,643      (21.9%)    341,492      1.8%
    Transported Customer Owned Gas              12,014    11,295        6.4%      11,006      2.6%
    Transported - Interdepartmental              2,462     2,105       17.0%         725    190.3%
    Other Operating Revenues                     9,833    (5,871)     267.5%      11,652   (150.4%)
                                              --------  --------                --------          
  Total Operating Revenues                     295,848   355,172      (16.7%)    364,875     (2.7%)
  Cost of Gas Sold                             175,475   233,877      (25.0%)    234,254     (0.2%)
                                              --------  --------                --------          
Gross Margin                                  $120,373  $121,295       (0.8%)   $130,621     (7.1%)
                                              ========  ========                ========          
Therms Delivered (000's)                                                                          
    Residential                                289,509   347,859      (16.8%)    371,990     (6.5%)
    Commercial/Industrial                      182,033   211,453      (13.9%)    225,169     (6.1%)
    Interruptible                               22,872    24,532       (6.8%)     35,869    (31.6%)
    Interdepartmental                              398     9,696      (95.9%)     11,280    (14.0%)
                                              --------  --------                --------          
        Total Gas Sales                        494,812   593,540      (16.6%)    644,308     (7.9%)
    Transported Customer Owned Gas             349,443   313,466       11.5%     268,163     16.9%
    Transported - Interdepartmental             78,581    76,670        2.5%      24,423    213.9%
                                              --------  --------                --------          
Total Gas Delivered                            922,836   983,676       (6.2%)    936,894      5.0%
                                              ========  ========                ========          
Average Customers                                                                                 
    Residential                                347,747   339,002        2.6%     330,153      2.7%
    Commercial/Industrial                       31,586    30,594        3.2%      29,936      2.2%
    Interruptible                                  146       170      (14.1%)        190    (10.5%)
    Interdepartmental                              -           2     (100.0%)          4    (50.0%)
                                              --------  --------                --------          
        Total Sales Customers                  379,479   369,768         2.6%    360,283      2.6%
    Transportation                                 271       254         6.7%        230     10.4%
    Transportation - Interdepartmental               6         5        20.0%          4     25.0%
                                              --------  --------                --------          
Total Average Customers                        379,756   370,027         2.6%    360,517      2.6%
                                              ========  ========                ========          
</TABLE>  

1998   COMPARED  TO  1997:    Despite  an  interim  retail  gas  rate  increase,
effective  from  January 1, 1998 through April 30, 1998, of $19  million  on  an
annualized  basis  and  despite  a final retail  gas  rate  increase,  effective
May  1,  1998,  of  $19  million  or  5.4% on an  annualized  basis,  total  gas
operating  revenues  decreased by $59 million or  16.7%  and  the  gross  margin
on  gas  operating  revenues (gas operating revenues  less  cost  of  gas  sold)
decreased  by  $1  million or 0.8% during 1998 compared to  1997.   Between  the
comparative  periods,  the cost of gas sold decreased by $58  million  or  25.0%
due  to  decreased  gas  sales and to a lower cost per unit  of  purchased  gas.
Changes  in  the  cost  of natural gas purchased at market prices  are  included
in  customer  rates  through  the purchased gas adjustment  mechanism,  reducing
1998  operating  revenues  but  not gross margin.   See  "Rates  and  Regulatory
Matters"  below  in  "Factors  Affecting Results of Operations"  for  additional
information  concerning  the  purchased gas  adjustment  mechanism.   Total  gas
operating  revenues and gross margin both declined in 1998  due  to  a  decrease
in   therm  deliveries,  especially  to  residential  and  commercial/industrial
customers  who  contribute  higher margins to  earnings  than  other  customers.
Other  operating  revenues  reflect adjustments for over  and  under  collection
of gas costs included in operating revenues from gas sales.

Compared  to  the  same  period  in 1997, total  natural  gas  therm  deliveries
decreased  6.2%  during  1998  primarily due to significantly  lower  therm  use
per  residential  and  commercial/industrial  customer.   While  the  number  of
residential   and   commercial/industrial  customers   increased   between   the
comparative  periods,  residential  and commercial/industrial  therm  deliveries
decreased   16.8%  and  13.9%,  respectfully,  due  in  large  part  to   warmer
weather  during  the  heating  months of 1998.  During  1998,  therm  deliveries
to  the  Whitewater  Cogeneration Facility, owned by LS Power,  an  unaffiliated
independent  power  producer, primarily contributed  to  an  11.5%  increase  in
transported   customer  owned  gas  deliveries.   The  Whitewater   Cogeneration
Facility,  a  gas-fired  electric cogeneration  plant  in  Wisconsin  Electric's
gas  service  territory,  went  into commercial  operation  in  September  1997.
Wisconsin  Electric  purchases  the majority of  the  electricity  generated  by
the   Whitewater   Cogeneration  Facility  under  a  long-term  power   purchase
contract.     During    1998,   natural   gas   therm    deliveries    to    the
interdepartmental   customer   classes   decreased   8.6%   primarily   due   to
increased   availability  of  Point  Beach,  allowing  Wisconsin   Electric   to
reduce  generation  at  its  Concord and Paris Power Plants,  natural  gas-fired
peaking  facilities.   Therm deliveries to the Concord and  Paris  Power  Plants
are   at   rates  approved  by  the  Public  Service  Commission  of   Wisconsin
("PSCW").   Excluding  deliveries  to  Wisconsin  Electric's  facilities,  total
therm deliveries during 1998 decreased 6.0% compared to 1997.

1997   COMPARED   TO   1996:    Total  gas  operating  revenues   decreased   by
$10  million  or  2.7%  during 1997 compared to 1996, and the  gross  margin  on
gas   operating   revenues  decreased  by  $9  million  or  7.1%.    Total   gas
operating  revenues  and gross margin declined primarily due  to  an  annualized
gas  retail  rate  decrease,  effective February 18,  1997,  of  $6  million  or
2.0%  on  an  annualized  basis  and  to a  weather-related  decrease  in  therm
deliveries  to  residential  and  commercial/industrial  customers.   As   noted
above,  other  operating  revenues  reflect  adjustments  for  over  and   under
collection of gas costs included in operating revenues from gas sales.

Cost  of  gas  sold  was  unchanged between the comparative  periods.   An  8.4%
increase  in  1997 in the per unit cost of purchased gas was offset  by  a  7.9%
decrease  in  total  gas  purchases during 1997.   Wisconsin  Electric  arranges
for  its  own  gas  supply contracts with terms of various  lengths.   As  noted
above,   changes  in  the  cost  of  natural  gas  purchased  affect   operating
revenues  due  to  the  purchased gas adjustment mechanism  but  do  not  affect
gross margin.

Total  natural  gas  therm  deliveries increased by 5.0%  in  1997  compared  to
1996.   Decreased  deliveries  to  the  residential,  the  commercial/industrial
and  the  interruptible customer classes during 1997 were more  than  offset  by
increased   interdepartmental  deliveries  to  Wisconsin   Electric-owned   gas-
fired   generating  facilities  and  increased  deliveries  of   transported   -
customer   owned   gas.   Despite  an  increase  in  the   average   number   of
residential   and  commercial/industrial  customers  during  1997  compared   to
1996,   deliveries  to  these  two  customer  classes  decreased   between   the
comparative  periods  primarily due to warmer weather during  the  1997  heating
seasons.   These  customers  are  more sensitive  to  weather  variations  as  a
result  of  heating  requirements  and contribute  higher  margins  to  earnings
than  other  customer  classes.   Therm deliveries  to  interruptible  customers
decreased  during  1997  compared to 1996 due  to  a  decrease  in  the  average
number   of   interruptible   customers  and   the   average   therm   use   per
Interruptible customer.

Deliveries  of  transported  -  customer owned gas  increased  by  16.9%  during
1997  compared  to  1996 due to an increase in the average number  of  transport
customers   and  to  an  increase  in  the  average  therm  use  per   transport
customer.   During  1997,  a  number  of  sales  customers  switched  to  become
transportation   customers.   Also,  increased  deliveries  of   transported   -
customer  owned  gas  in 1997 reflect start-up in September 1997  of  commercial
operations of LS Power's Whitewater Cogeneration Facility.

Due  to  the  Point  Beach  and Oak Creek plant outages noted  above,  Wisconsin
Electric  increased  generation  at  its natural  gas-fired  Concord  and  Paris
Power  Plants,  resulting  in  a 142% increase in total  1997  interdepartmental
deliveries  compared  to  1996.  Excluding interdepartmental  deliveries,  total
1997 therm deliveries decreased 0.8% compared to 1996.

For  further  information concerning Wisconsin Electric's 1996,  1997  and  1998
Rate   Orders,   see  "Rates  and  Regulatory  Matters"  below  under   "Factors
Affecting Results of Operations."


OPERATING EXPENSES

1998  COMPARED  TO  1997:    During  1998, Wisconsin  Energy's  other  operation
and  maintenance  expenses  increased by  $107  million  or  19.7%  compared  to
1997,  including  a  $49 million increase in Wisconsin Electric's  nuclear  non-
fuel    expenses,    a   $40   million   increase   in   Wisconsin    Electric's
administrative  and  general  expenses, an $11  million  increase  in  Wisconsin
Electric's  electric  distribution  expenses  and  a  $10  million  increase  in
Wisconsin   Electric's   non-nuclear,  non-fuel   power   generation   expenses.
Nuclear  non-fuel  expenses increased during 1998 primarily due  to  efforts  by
Wisconsin  Electric  to  continue to improve the overall  performance  at  Point
Beach.   Also  influencing  the  1998 increase  in  nuclear  non-fuel  expenses,
Wisconsin   Electric   deferred  $18  million  of  nuclear  non-fuel   operation
expenses  during  1997  and  began amortizing these deferred  costs  to  expense
in  1998  on  a five-year straight line basis.  See "Nuclear Matters"  below  in
"Factors   Affecting   Results   of  Operations"  for   additional   information
concerning  Wisconsin  Electric's  Point Beach  Nuclear  Plant.   Administrative
and  general  expenses  increased  during  1998  primarily  due  to  efforts  to
resolve  Year  2000  technology issues, to various  other  corporate  technology
improvement  efforts  and  to  increased staffing and  higher  employee  pension
and  benefit  expenses.   For  further information, see  "Year  2000  Technology
Issues"   below  in  "Factors  Affecting  Results  of  Operations."     Electric
distribution  expenses increased in large part as a result  of  damage  from  an
unusually  high  number  of  violent  storms that  struck  Wisconsin  Electric's
service   territory   during   1998  and  as  a   result   of   increased   tree
trimming/forestry  efforts  intended  to improve  reliability  of  the  electric
distribution   system.    Non-nuclear,  non-fuel   power   generation   expenses
increased   primarily  due  to  a  scheduled  maintenance  outage  at  Wisconsin
Electric's  Oak  Creek  Power Plant during the second quarter  of  1998  and  to
other reliability improvement efforts.

The  increase  in  depreciation  expense  during  1998  is  the  net  result  of
several  factors  at Wisconsin Electric.  Depreciation expense  increased  as  a
result   of  increased  (1)  depreciable  plant  during  1998,  (2)  amortizable
software  during  1998, and (3) decommissioning expenses  during  1998  compared
to  1997.   This  was  offset to a large extent by a change  in  the  regulatory
accounting   treatment  of  pre-1991  contribution  in   aid   of   construction
balances,   which   had  the  effect  of  reducing  current  year   depreciation
expense.   For  further information, see "Note C - Depreciation"  in  the  Notes
to   Financial  Statements.   Total  operating  income  taxes  increased  as   a
result of higher taxable income.

1997  COMPARED  TO  1996:    During  1997, Wisconsin  Energy's  other  operation
and  maintenance  expenses increased by $48 million or 9.6%  compared  to  1996,
including   a   $33   million  increase  in  non-fuel   nuclear   expenses,   an
$11   million   increase  in  administrative  and  general   expenses   and   an
$8   million  increase  in  transmission  system  expenses.   Non-fuel   nuclear
expenses  increased  during  1997  due to extended  and  unscheduled  generating
unit  outages  at  Point  Beach  and  due to  efforts  by  Wisconsin  Electric's
nuclear   operations   to   strengthen   plant   performance.    During    1997,
administrative  and  general  expenses  increased  primarily   due   to   higher
salaries  and  outside  services employed, and transmission  expenses  increased
due  to  significantly  higher 1997 power purchases.  An  $11  million  decrease
in   customer   service  expenses  during  1997,  primarily   due   to   reduced
conservation  expenses,  partially offset the higher 1997  other  operation  and
maintenance expenses.

Depreciation  expense  increased  between  the  comparative  periods   primarily
due  to  higher  depreciable plant balances in 1997 and to  higher  depreciation
rates  included  in  the PSCW's 1997 Rate Order.  Total operating  income  taxes
decreased as a result of lower taxable income.

During  1997,  Wisconsin  Electric  deferred $18  million  of  nuclear  non-fuel
operation  and  maintenance costs under authority granted by the  PSCW  in  July
1997.    For  further  information  concerning  Wisconsin  Electric's   deferred
nuclear  non-fuel  operation  and maintenance  costs,  see  "Note  F  -  Nuclear
Operations" in the Notes to Financial Statements.


OTHER ITEMS

1998   COMPARED  TO  1997:    During  the  second  quarter  of  1997,  Wisconsin
Energy  recorded  a  one-time $31 million charge to write  off  deferred  merger
costs   related  to  the  terminated  merger  agreement  with   NSP   of   which
$22   million  was  attributable  to  Wisconsin  Electric.   Also  during  1997,
Wisconsin  Energy  recorded  $1  million  of  merger  expenses  related  to  the
acquisition  of  ESELCO.   For  further information  concerning  the  terminated
merger  with  NSP  and  the  acquisition of ESELCO, see  "Mergers"  below  under
"Factors Affecting Results of Operations."

Miscellaneous  net  other  income and deductions increased  by  $47  million  or
99.5%  at  Wisconsin  Energy and by $37 million or 98.2% at  Wisconsin  Electric
during   1998   compared   to  1997.   Significantly   contributing   to   these
increases,  Wisconsin  Electric  recorded  a  one-time  $30  million  impairment
charge  in  December  1997 for its Kimberly Cogeneration  Equipment  based  upon
the  results  of  a  discounted  cash flow analysis.   For  further  information
concerning  the  Kimberly  Cogeneration Equipment, see  "Note  L  -  Commitments
and   Contingencies"  in  the  Notes  to  Financial  Statements.   In  addition,
miscellaneous  net  other income and deductions increased  during  1998  due  to
(1)  a  $9  million  increase  in  net pretax  miscellaneous  income  at  WITECH
Corporation,  (2)  a  $5  million increase in net  pretax  miscellaneous  income
at  WISPARK  Corporation,  and  (3)  a  $4  million  reduction  during  1998  in
charitable  donations  by  Wisconsin Electric.  WITECH Corporation  and  WISPARK
Corporation are non-utility subsidiaries of Wisconsin Energy.

Primarily   due   to   increased  short-term  borrowing   levels   between   the
comparative  periods,  other  interest  expense  increased  by  $10  million  or
102.4%   at   Wisconsin  Energy  and  by  $3  million  or  34.7%  at   Wisconsin
Electric.

1997  COMPARED  TO  1996:    As noted above, Wisconsin Energy  recorded  a  one-
time  $31  million  charge in 1997 to write off deferred  merger  costs  related
to  the  terminated  merger  agreement  with  NSP  of  which   $22  million  was
attributable  to  Wisconsin  Electric.   During  1997,  Wisconsin  Energy   also
recorded  $1  million  of merger expenses related to the acquisition  of  ESELCO
by Wisconsin Energy.

Compared  to  1996,  Wisconsin  Energy's  miscellaneous  net  other  income  and
deductions  decreased  by  $45 million during 1997  of  which  $34  million  was
attributable  to  Wisconsin  Electric.   As  noted  above,  Wisconsin   Electric
recorded  a  one-time  $30 million impairment charge in December  1997  for  the
Kimberly   Cogeneration  Equipment.   During  1997,  miscellaneous   net   other
income   and   deductions  also  decreased  due  to  increased  1997  charitable
donations   by   Wisconsin   Electric  and  due   to   fair   market   valuation
adjustments of non-utility investments.

Interest  income  increased  by  $6 million or 34.8%  during  1997  compared  to
1996   primarily   due   to   increased   earnings   on   Wisconsin   Electric's
decommissioning  trust  fund.   Interest charges  on  long-term  debt  increased
between   the   comparative   periods  as  a   result   of   increased   average
outstanding long-term debt during 1997, primarily at Wisconsin Electric.


                  FACTORS AFFECTING RESULTS OF OPERATIONS

MERGERS

NORTHERN  STATES  POWER  COMPANY:   On May 16, 1997,  the  Boards  of  Directors
of  Wisconsin  Energy  and NSP agreed to terminate the  Agreement  and  Plan  of
Merger  which  provided  for  a business combination  of  Wisconsin  Energy  and
NSP  to  form  Primergy Corporation.  As a result, Wisconsin Energy  recorded  a
$31  million  charge in the second quarter of 1997 ($19 million net  of  tax  or
approximately  17  cents  per  share)  to write  off  the  deferred  transaction
costs  and  costs  to achieve the merger.  Approximately $22 million  of  merger
write-off costs were attributable to Wisconsin Electric.

ESELCO,  INC.:    Effective May 31, 1998, Wisconsin Energy  acquired  ESELCO  in
a  tax  free  reorganization  accounted for  as  a  pooling  of  interests.   In
connection  with  the  acquisition, Wisconsin  Energy  issued  2,407,275  shares
of  common  stock,  with  fractional interests  paid  in  cash,  based  upon  an
exchange  ratio  of  1.5114 shares of Wisconsin Energy  common  stock  for  each
outstanding share of ESELCO common stock.

Due  to  the  immaterial  nature of the transaction, Wisconsin  Energy  has  not
restated   any  historical  financial  or  statistical  information.    Instead,
Wisconsin   Energy   combined  ESELCO's  May  31,  1998   balance   sheet   with
Wisconsin  Energy's,  including a $1.2 million credit to  retained  earnings  of
which  $0.9  million  represents ESELCO's consolidated  net  income  during  the
first five months of 1998.

ESELCO  was  the  parent  company of Edison Sault,  an  electric  utility  which
serves    approximately   21,000   residential,   commercial   and    industrial
customers   in   the  State  of  Michigan's  eastern  Upper  Peninsula.    Where
appropriate,  discussions  as well as financial or  statistical  information  of
Wisconsin  Energy  include  Edison  Sault's  operations  since  June  1,   1998.
Wisconsin   Energy  is  operating  Wisconsin  Electric  and  Edison   Sault   as
separate  utility  subsidiaries  within their  historical  service  territories.
Wisconsin  Electric  and  Edison Sault continue to be  separately  regulated  by
their respective states.


NUCLEAR MATTERS

POINT   BEACH  NUCLEAR  PLANT:    Wisconsin  Electric  owns  and  operates   two
approximately  500  megawatt electric generating units at  Point  Beach  Nuclear
Plant  in  Two  Rivers,  Wisconsin.  During 1998, 1997  and  1996,  Point  Beach
provided   18%,  6%  and  24%  of  Wisconsin  Electric's  net  electric   energy
supply,   respectively.    The  United  States  Nuclear  Regulatory   Commission
("NRC")  operating  licenses  for  Point  Beach  expire  in  October  2010   for
Unit 1 and in March 2013 for Unit 2.

From   late   1996   through  early  1999,  Point  Beach  experienced   extended
generating  unit  outages.  During a scheduled outage of Unit 2  that  began  in
October  1996  and  was  completed in August 1997, Wisconsin  Electric  replaced
the   unit's  steam  generators.   For  additional  information  concerning  the
Unit  2  steam  generator  replacement,  see  "Investing  Activities"  below  in
"Liquidity  and  Capital Resources".  In February 1997, Unit  1  was  taken  out
of   service  for  equipment  repairs.   Wisconsin  Electric  decided  to   keep
Unit  1  out  of  service  to allow Point Beach staff to focus  their  attention
on  the  work  necessary to bring Unit 2 back to service.   During  the  Unit  1
outage,   Wisconsin   Electric  replaced  two  low   pressure   turbines   which
increased  Unit  1's  maximum  dependable  generating  capability  from  500  to
approximately  510  megawatts.  Wisconsin Electric returned Unit  1  to  service
from  December  1997  through  mid-February 1998,  when  it  began  a  scheduled
refueling  outage  that  was completed in late June 1998.   With  completion  of
this  outage,  Wisconsin  Electric  initiated  its  first  extended  fuel  cycle
which  should  allow  for the operation of Unit 1 until its next  refueling  and
maintenance  outage  scheduled  for the fall of  1999.   In  early  March  1999,
Wisconsin   Electric   returned  Unit  2  to  service  following   a   scheduled
refueling  and  maintenance outage that began in early  December  1998.   During
this  outage,  Wisconsin  Electric  replaced the  unit's  low  pressure  turbine
rotors,  which  is  expected  to  increase  the  maximum  dependable  generating
capability  of  Unit  2 from 500 to approximately 510 megawatts.   As  a  result
of  the  low  pressure  turbine  work recently  performed  on  Units  1  and  2,
Wisconsin  Electric  expects  to reduce future maintenance costs at point beach.
During  the Unit  2  outage,  Wisconsin  Electric initiated an extended  fuel  
cycle,  which should  allow  for  the  operation of the unit  until  its  next
refueling and maintenance  outage  scheduled  for  the  fall  of  2000.   Over  
the last few years,  Point  Beach  Unit's  1  and  2 have  also  experienced  
some  unplanned short-term shutdowns or power reductions to address various
equipment issues.

As  a  result  of  the  outages noted above and various performance  improvement
initiatives,  Wisconsin  Electric's  total  nuclear  operation  and  maintenance
expenses,   excluding   fuel  and  benefit  overheads,   have   increased   from
$74  million  in  1996  to $107 million in 1997 to $156 million  in  1998.   See
"Note  F  -  Nuclear  Operations"  in  the Notes  to  Financial  Statements  for
information   concerning   Wisconsin  Electric's   deferral   during   1997   of
approximately  $18  million of nuclear non-fuel O&M costs  in  excess  of  those
included  in  1997  rates.   Due  in  large  part  to  the  need  for  Wisconsin
Electric  to  replace  Point  Beach's low cost generating  capacity  during  the
period   1996  through  1998  with  higher  cost  sources  of  electric  energy,
Wisconsin  Electric's  total  fuel  and purchased  power  costs  have  increased
from $332 million in 1996 to $445 million in 1997 to $450 million in 1998.

Additional  unplanned  shutdowns or power reductions  of  Point  Beach  Units  1
or  2  may  be necessary as Wisconsin Electric continues to perform  reviews  of
facility  design  and  to  implement  other improvement  initiatives.   However,
availability  of  Point Beach increased significantly during  1998  compared  to
1997,   and  Wisconsin  Electric  expects  the  reliability  of  the  units   to
continue  to  improve  toward historical levels as these efforts  progress.   In
addition,  Wisconsin  Electric  expects  that  nuclear  non-fuel  operating  and
maintenance expenses will begin to decline in 1999.

On  January  27,  1997,  the  NRC notified Wisconsin  Electric  of  a  declining
trend  in  performance  at  Point  Beach.   The  NRC  issues  trend  letters  to
provide  early  notification of declining performance and  to  offer  a  utility
the  opportunity  to  take  early corrective actions.   During  1997,  Wisconsin
Electric  undertook  a  comprehensive effort to address  specific  concerns  and
to   take   advantage   of  industry  best  practices  to   further   strengthen
performance  at  the  plant.  In January 1998, the NRC rescinded  its  declining
trend  letter  and  informed  Wisconsin Electric  that  the  corrective  actions
taken  or  being  taken  by  Wisconsin Electric  appeared  to  be  effective  in
addressing the adverse trends in performance at Point Beach.

In   a  March  12,  1999  inspection  report  to  Wisconsin  Electric,  the  NRC
requested  a  meeting  with Wisconsin Electric to discuss  Wisconsin  Electric's
response  to  the  condition  of  certain  systems  at  Point  Beach   in   late
December  1998  and  early January 1999.  The NRC indicated that  there  was  an
apparent  violation  of  its  requirements based  upon  the  status  of  certain
safety  related  equipment.   An  analysis indicates  that  the  safety  systems
would  have  performed their intended function if called  upon.   On  March  26,
1999,  representatives  of Wisconsin Electric met with  staff  of  the  NRC  and
provided  information  to  assist  the NRC in its  evaluation  of  the  apparent
violation.  The matter is pending.

In  August  1998,  Wisconsin Electric announced that  it  was  participating  in
cooperative  alliance  teams  with three other unaffiliated  utilities:  Alliant
Energy,  NSP  and  Wisconsin Public Service Corporation.  The purpose  of  these
teams   was   to   examine   opportunities  to  enhance   safety   and   improve
performance  and  reliability at the participants'  nuclear  generating  plants.
The  participants  operate  seven nuclear generating  units  at  five  sites  in
the   States   of   Wisconsin,  Minnesota  and  Iowa  with  a   total   combined
generating capacity exceeding 3.600 megawatts.

The  alliance  work  led the participants to a conclusion that,  in  some  areas
of  technical  expertise,  greater benefit could be gained  in  a  more  formal,
integrated   structure.   In  February  1999,  Wisconsin   Electric,   NSP   and
Wisconsin  Public  Service  Corporation  announced  the  formation  of   Nuclear
Management   Company,   L.L.C.   to  further   pursue   the   initial   alliance
objectives.   At  the  same  time, Alliant Energy  announced  its  intention  to
join  the  other  members  of  the  nuclear  management  company  but  that   it
required   prior   approval   of  the  Securities   and   Exchange   Commission.
Services   to   be   delivered  by  the  nuclear  management  company   to   the
participating   utilities  will  also  be  subject  to  additional   state   and
federal regulatory approvals.

Nuclear  Management  Company  L.L.C.  is  in  the  process  of  establishing   a
senior  management  team  that  will focus on consolidating  the  expertise  and
talents  of  their  nuclear employees, building on the best  business  practices
identified   as  strengths  at  each  plant  site,  reducing  the  overhead   of
commonly  used  services  and  commodities,  and  more  effectively  integrating
the  resources  of  all  seven  nuclear generating  units.   Each  utility  will
continue  to  own  its  respective nuclear units, maintain exclusive  rights  to
the   energy   generated,   and  retain  financial   responsibility   for   safe
operation, maintenance and decommissioning.

Wisconsin   Electric   and  Wisconsin  Public  Service  Corporation   anticipate
transfer   of  their  NRC  operating  licenses  for  Point  Beach  and  Kewaunee
generating stations, respectively, to Nuclear Management Company LLC.  A
submittal, seeking  approval  of the NRC for the license transfer of Point Beach
is planned during the second quarter of 1999.

SPENT    FUEL    STORAGE   AND   DISPOSAL:     Wisconsin   Electric    completed
construction  of  an  Independent Spent Fuel Storage Installation  ("ISFSI")  in
1995  for  the  temporary  dry storage of spent nuclear  fuel  at  Point  Beach.
The  PSCW  has  authorized  Wisconsin  Electric  to  load  up  to  twelve  casks
containing  a  total  of 288 fuel assemblies with spent fuel  and  transfer  the
casks  to  the  ISFSI.  To date, five VSC-24 casks, designed by  Sierra  Nuclear
Corporation  and  containing  a total of 120 spent fuel  assemblies,  have  been
loaded  and  moved  to the ISFSI.  Wisconsin Electric currently  plans  to  load
four  additional  casks  during 1999 and the remaining  three  authorized  casks
in 2000.

To  maintain  flexibility associated with the continued  temporary  dry  storage
of  spent  fuel  at  Point  Beach,  Wisconsin Electric  is  in  the  process  of
procuring  alternative  model  TN-32 casks from  Transnuclear  Corp.  TN-32  dry
storage  casks  have  been previously approved by the NRC for  specific  use  at
other   nuclear   generating  facilities  in  the  United   States.    Wisconsin
Electric  currently  plans to obtain three TN-32 casks by the  spring  of  2000.
In  August  1998,  the  PSCW issued an order approving the  substitution  of  up
to  six  TN-32  casks  for VSC-24 casks at Point Beach in the  event  that  this
becomes  necessary.   Wisconsin Electric believes that the  NRC  will  authorize
TN-32 casks for use at Point Beach by early in the year 2000.

Wisconsin  Electric  estimates that, with implementation of  the  extended  fuel
cycles   noted  above,  with  the  remaining  authorized  casks  and  with   the
remaining  space  in  the spent fuel pool in its current configuration,  it  has
sufficient   temporary  spent  fuel  storage  capacity  to  continue   operating
Point  Beach  until  2004.  Wisconsin Electric currently  plans  to  apply  with
the  PSCW  in  the  fall of 1999 for authority to load additional  casks  beyond
the twelve that are currently authorized.

Temporary  spent  fuel  storage  alternatives  are  necessary  at  Point   Beach
until  the  United  States Department of Energy ("DOE") takes ownership  of  and
permanently  removes  the  spent fuel as mandated by the  Nuclear  Waste  Policy
Act  of  1982,  as  amended in 1987 ("Waste Act").  The DOE has  indicated  that
it  does  not  expect  a permanent spent fuel repository to be  available  until
at least 2010.

As   of   January  31,  1998,  the  DOE  has  failed  to  meet  its  contractual
obligation  to  begin  removing  spent  fuel  from  Point  Beach.   In  February
1998,  Wisconsin  Electric  joined other utilities in  a  motion  to  enforce  a
July  1996  mandate of the United States Court of Appeals for  the  District  of
Columbia  Circuit  ("Court")  that the DOE had an  unconditional  obligation  to
begin  accepting  spent fuel by January 31, 1998.  Wisconsin  Electric  and  the
other  utilities  requested  an  order  (1)  compelling  the  DOE  to  submit  a
detailed  program  for  disposing of spent fuel from  utilities,  (2)  declaring
that  the  utilities  are relieved of their obligation  to  pay  fees  into  the
Nuclear  Waste  Fund  for a permanent spent fuel repository and  are  authorized
to  place  such  fees  into  escrow until the DOE commences  with  disposing  of
spent  fuel  pursuant  to  its  obligation, and  (3)  precluding  the  DOE  from
using  any  fees  paid  into the Nuclear Waste Fund to reimburse  utilities  for
damages   they  have  incurred  as  a  result  of  the  DOE's  breach   of   its
obligations.   On  May  5,  1998,  the  Court  issued  a  decision  denying  the
motion  of  Wisconsin  Electric and the other utilities to enforce  the  Court's
mandate,  principally  on  the  ground that the  question  of  whether  the  DOE
could  properly  use  the  Nuclear Waste Fund as a  source  to  pay  damages  to
utilities  was  not  ripe for review.  The Court further  held  that  the  other
requested  remedies  fell outside the scope of its mandate,  which  was  limited
to  defining  the  nature  of  the  DOE's  statutory  obligations  and  did  not
extend  to  requiring  the  DOE to perform under its  contracts  with  Wisconsin
Electric  and  the  other  utilities.   At  this  time,  Wisconsin  Electric  is
unable  to  predict  when  the DOE will actually begin accepting  spent  nuclear
fuel.

During  1997  and  again  in  1998, the United  States  Senate  and  the  United
States  House  of  Representatives each passed versions  of  the  Nuclear  Waste
Policy  Acts  of  1997  and 1998, respectively.  The legislation  would  require
the  DOE  to  establish  a  temporary spent fuel  repository  in  the  State  of
Nevada  until  the  permanent  repository  is  available  and  to  begin  taking
ownership  from  utilities  and removing spent fuel as  required  by  the  Waste
Act.   Differences  between  Senate and House versions  of  the  bill  were  not
reconciled  in  1997  nor  in 1998.  In early January 1999,  the  Nuclear  Waste
Policy  Act  of  1999  was introduced in the House, and  in  mid-March  1999,  a
similar   bill   was   introduced  in  the  Senate.    President   Clinton   has
threatened  to  veto  any  legislation which  mandates  a  DOE  temporary  spent
fuel repository in Nevada.


ELECTRIC SYSTEM RELIABILITY MATTERS

During  the  summer of 1998, Wisconsin Electric had adequate  capacity  to  meet
all  of  its  firm load obligations.  While Wisconsin Electric did  make  public
appeals  for  conservation  on  two days during the  summer;  this  was  due  to
constraints  on  the  regional electric network in the Midwest  caused  by  high
weather-induced demand as well as generation  and  transmission  unavailability.
Wisconsin  Electric  also  experienced  curtailments  of  power  purchases  from
other companies on various occasions during the summer of 1998.

The  regional  electric  energy  supply  was  especially  tight  in  late  June,
1998,  as  unusually  warm, humid weather coincided with  storm-related  outages
of  major  transmission  lines and generating plants in  nearby  states.   Under
such  circumstances,  utilities with available capacity  are  required  to  make
that   capacity   available  to  neighboring  utilities  who  are   experiencing
shortages.    Wisconsin  Electric  has  available  the  ability   to   free   up
generation   by  interrupting  and  /or  curtailing  certain  customers.    Said
customers  who  participate,  voluntarily, in  these  load  management  programs
receive   rate  discounts  in  exchange  for  allowing  their  service   to   be
curtailed   or   interrupted  when  power  supplies  become  tight.    Wisconsin
Electric  has  used  such  load management programs regularly  since  the  early
1980s.  During  late  June,  1998, Wisconsin Electric was one of the  utilities
in the region which contributed  its available resources, including  curtailable
and interruptible  capacity,  to  help  maintain  regional  reliability.

Wisconsin Electric  expects  to have adequate capacity during 1999  to  meet all
of its firm load obligations. However, the Company anticipates that the regional
electric  energy  supply will remain tight during 1999.  As a  result  of  this,
or  of  extremely  hot  weather along with unexpected equipment  unavailability,
Wisconsin   Electric  could  be  required  to  call  upon  its  load  management
procedures, as it has in the past.

Wisconsin  Electric  is proceeding with several long-term  measures  to  enhance
the  reliability  of  its  own system and that of the  midwestern  region.   The
measures  described  in  the  following sections will  begin  to  contribute  as
early as the summer of 1999.

300  MEGAWATT  CONTRACT  WITH  SOUTHERN  ENERGY:    In  August  1998,  Wisconsin
Electric  and  Atlanta-based Southern Energy, Inc.,  a  subsidiary  of  Southern
Company,  signed  a  formal  power purchase agreement wherein  Southern  Energy,
Inc.  will  license,  construct, own and operate  a  300-megawatt  natural  gas-
fired  peaking  power  plant,  located  in  Neenah,  Wisconsin,  and  sell   its
electric   output  to  Wisconsin  Electric  for  eight  years.   The   agreement
satisfies  Wisconsin  Electric's  responsibility  under  directives   from   the
PSCW  and  under  the  new  reliability legislation,  1997  Wisconsin  Act  204,
signed into law in April 1998 by the governor of the State of Wisconsin.

In   February   1999,   Southern  Energy  received  a  certificate   of   public
convenience  and  necessity for the facility from the PSCW  and  a  construction
air  permit  from  the  Wisconsin  Department  of  Natural  Resources  ("WDNR").
The facility is scheduled for commercial operation by June 2000.

COMBUSTION   TURBINE   INLET  COOLERS:    Wisconsin   Electric   received   PSCW
approval  to  proceed  with the installation of inlet  coolers  at  its  Concord
and  Paris  Power  Plants  in  February  and  April  1998,  respectively.   PSCW
approval  was  granted  promptly upon Wisconsin Electric's  receipt  of  amended
air  emission  permits  from  the  WDNR.   Construction  of  the  inlet  cooling
facilities   at   both  plants  is  on  schedule  for  the  facilities   to   be
operational  by  the  summer  of  1999.   The  facilities  will  counteract  the
reduction  in  generating  capacity due to hot  summer  weather  experienced  by
these   two   plants.   Approximately  112  megawatts  of  total   hot   weather
capacity  degradation  will  be recovered.  Wisconsin  Electric  estimates  that
the  inlet  coolers  for  the  two plants will cost  a  total  of  approximately
$24   million  during  the  1998-1999  biennial  period.   The  costs  of  these
projects   are  included  in  anticipated  construction  expenditures  described
below in "Capital Requirements" under "Liquidity and Capital Resources."

GERMANTOWN   GENERATION  PROJECTS:    As  a  result  of  updated   load   growth
projections   based   upon  summer  of  1998  experience,   Wisconsin   Electric
determined  that  it  has  the need for additional generating  capacity  by  the
summer  of  2000  and  selected its Germantown Power Plant for  installation  of
a  new  combustion  turbine  unit  and other facilities.   The  addition  of  an
85  megawatt  combustion  turbine is planned for a June  2000  in-service  date.
Further,  inlet  cooling  facilities,  similar  to  those  at  the  Concord  and
Paris  Generating  Stations, are planned to be installed on  the  four  existing
combustion  turbine  units at the Germantown Power  Plant  as  well  as  on  the
new  unit.   The  inlet  cooling  facilities will counteract  the  reduction  in
generating  capacity  due  to hot summer weather.   A  net  increase  in  summer
capacity  of  approximately 133 megawatts is planned to  be  available  by  June
2000  as  a  result of these efforts.  Natural gas facilities are  also  planned
to  be  added  at  the Germantown site to provide dual fuel capability  for  the
new  as  well  as  the existing units.  As part of the dual  fuel  project,  dry
low-nitrogen  oxide  burners  will  be  installed  on  the  existing  units   to
reduce  air  emissions.   The dual fuel facilities  will  be  installed  over  a
four-year   period  with  completion  in  2003.   The  project  is  subject   to
approval  of  various  state  and  local  authorities.   Applications  with  the
PSCW  to  install  the  new  combustion turbine, inlet  cooling  and  dual  fuel
facilities  were  submitted  in  March  1999.   The  matter  is  pending.   1999
expenditures   for  this  project  are  included  in  anticipated   construction
expenditures  described  below in "Capital Requirements"  under  "Liquidity  and
Capital Resources."

ELECTRIC  TRANSMISSION  PROJECTS:    Wisconsin  Electric  is  pursuing  multiple
projects  designed  to  increase  the electric import  capability  into  eastern
Wisconsin   and   to   improve   electric  system  reliability.   The   Northern
Interface   Project   involves   operation   of   an   existing   138   kilovolt
transmission  line  at  345  kilovolts  (for  which  the  line  was   originally
designed  and  constructed) and construction of a new  345-138  kilovolt  Morgan
Substation.    The   project   will  allow  an  additional   80   megawatts   of
generating  capacity  in  the Upper Peninsula of Michigan  to  be  available  to
Wisconsin  Electric's  transmission system in  the  State  of  Wisconsin.   PSCW
approval  was  received  in  June 1998, and the project  is  under  construction
with  a  scheduled  in-service  date  of  June  1999.   The  Southern  Interface
Project  is  the  first of several projects being undertaken to  improve  system
reliability  in  southeast  Wisconsin and the  metropolitan  Milwaukee  area  as
well  as  to  eliminate  constraints  on  the  Wisconsin  Electric  system   for
future  increased  transfer capability between northern  Illinois  and  southern
Wisconsin.   The   Southern  Interface  Project  will   replace   138   kilovolt
substation  facilities  and  upgrade  345  kilovolt  substation  facilities   at
Wisconsin  Electric's Oak Creek Substation.  Authorization  from  the  PSCW  was
received  in  June  1998,  and the project is scheduled  to  be  in  service  by
June  1999.  The  Oak Creek-Arcadian 345 kilovolt Transmission  Upgrade  Project
will  upgrade  a  230 kilovolt transmission line to 345 kilovolt  operation  and
will  also  upgrade  substation  facilities at Wisconsin  Electric's  Oak  Creek
and   Arcadian  Substations  to  improve  system  reliability.   An  application
with  the  PSCW  for  authorization to proceed with the  project  was  submitted
in  March  1999.   Expenditures during 1999 for these projects are  included  in
anticipated    construction   expenditures   described   below    in    "Capital
Requirements"  under  "Liquidity  and Capital  Resources."   Other  transmission
projects   to  improve  system  reliability  are  in  the  planning  stage   for
submission to the PSCW later in 1999.

WISCONSIN  RELIABILITY  ASSESSMENT  ORGANIZATION:    The  Wisconsin  Reliability
Assessment  Organization  ("WRAO")  was  formed  in  early  1998  to  coordinate
activities  relating  to  generation  and transmission  reliability  issues   in
the  State  of  Wisconsin.  Wisconsin Electric is an active participant  in  the
WRAO,   whose   members  include  all  of  the  state's  other  investor   owned
utilities,  members  of  the   PSCW  Staff,   several  municipal  utilities  and
coops,   and  utilities  from  surrounding  states.   Activities  of  the   WRAO
include   reliability  policy  development,  performance  evaluations   of   its
members  with  respect  to the adequacy of their supplies,  and  sponsorship  of
regional    transmission    planning   studies   (see    "Wisconsin    Interface
Reliability  Enhancement  Study" below).  The WRAO also  conducts  meetings  and
regional  reliability  symposia with external organizations  with  interests  in
system reliability to provide forums for information and idea sharing.

WISCONSIN  INTERFACE  RELIABILITY ENHANCEMENT  STUDY:    Under  WRAO  direction,
the  Wisconsin  Interface  Reliability Study group is  conducting  a  continuing
study  which  examines  numerous options for improving the  reliability  of  the
state's   electric   system   by  strengthening   its   connections   with   the
interstate   transmission  grid.   The  group  includes  transmission   planners
from  WRAO  members  as well as  planning and regulatory staff  from  throughout
the  region.   The  Wisconsin  Interface  Reliability  Study  group  produced  a
report  from  the first phase of its current study which became  the  basis  for
the  PSCW's  recent  "Report  to  the  Wisconsin  Legislature  on  the  Regional
Electric Transmission System."

An   assessment   of  the  strengths  and  weaknesses  of  various   reliability
improvement  options  is  expected to be completed by the  end  of  March  1999.
The  WRAO  will  combine this information with the results of  an  environmental
screening  process  and  other relevant information  to  recommend  a  preferred
expansion  plan  and  two alternatives to the PSCW by the  end  of  April  1999.
Filing  for  the  required Certificate of Public Convenience  and  Necessity  is
planned for the third quarter of 1999.

NEW  RENEWABLE  ELECTRIC  ENERGY:    In early August  1998,  Wisconsin  Electric
issued  a  request  for  proposal soliciting bids  for  one  or  more  contracts
totaling   up  to  75  megawatts  of  renewable  electric  generating  capacity.
Renewable   electric  energy,  also  known  as  green  energy,  includes   power
generated  by  wind,  water, sun, biomass and other  renewable  resources.   The
request  for  proposals  is in response to the requirements  of  1997  Wisconsin
Act  204  and  supports  Wisconsin Electric's "Energy  for  Tomorrow"  renewable
energy  program.   The  deadline for proposals was  October  1,  1998.   By  the
October   1,   1998  deadline,  Wisconsin  Electric  received   more   than   20
responses   to  the  request  for  proposal.   After  evaluation  of   all   the
proposals  that  were submitted, Wisconsin Electric developed a  short  list  of
proposals   and  is  currently  engaged  in  contract  negotiations.   Wisconsin
Electric  expects  to  complete  these  negotiations  and  sign  purchase  power
agreements in the spring of 1999.

1997   Wisconsin  Act  204  calls  for  the  investor-owned  utilities  in   the
eastern   part  of  the  State  of  Wisconsin  to  add  a  combined   total   of
50  megawatts  of  renewable electric generating capacity to  their  energy  mix
by   the   end   of   year   2000.   Wisconsin  Electric  is   responsible   for
27  megawatts  of  this  total.  The August 1998 request for  proposal  fulfills
this obligation.

In  June  1999,  Wisconsin  Electric will place  in  service  two  660  kilowatt
Vestas  V47  wind  turbines.   The wind turbines will  be  located  in  southern
Fond  du  Lac  County  in  the  Town of Byron.  The electricity  generated  from
this  approximately  $1.8 million dollar project will  be  sold  to "Energy  for
Tomorrow" customers.

MIDWEST   ISO:     Wisconsin  Electric  is  currently   participating   in   the
formation  of  a  regional  independent electric  transmission  system  operator
("ISO")  to  promote  reliability  in  the  Midwest  (the  "Midwest  ISO").   On
January  15,  1998,  Wisconsin  Electric,  along  with  eight  other  utilities,
filed  a  proposal  with  the Federal Energy Regulatory Commission  ("FERC")  to
establish  the  Midwest  ISO, which would operate member  electric  transmission
systems   within  the  region  as  a  single  system.   Regional  oversight   is
required   to   maintain   reliability  because  the  system   is   being   used
increasingly  for  broad,  regional transactions.  In  addition  to  reliability
benefits,  a  regional  ISO  helps  to ensure  open  and  equal  access  to  the
electric  transmission  system  and broadens the energy  market  by  eliminating
redundant  transmission  fees.   As a net buyer of  electric  energy,  Wisconsin
Electric  expects  the  Midwest ISO to result in  lower  energy  costs  for  its
customers as well as to improved regional reliability.

The  PSCW  completed  a review of ISOs and issued an order  in  June  1998  that
laid  out  new  ISO guidelines that are more consistent with guidelines  of  the
FERC.   However,  in  its order, the PSCW stated that the Midwest  ISO  did  not
entirely   meet   the  PSCW's  guidelines.   While  not  necessarily   required,
Wisconsin Electric plans to seek approval of the Midwest ISO from the PSCW.

The  FERC  conditionally  approved the Midwest  ISO  proposal  by  order  issued
September  16,  1998.  By order dated December 17, 1998, the  FERC  granted  the
Midwest  ISO  applicants'  request for rehearing  of  certain  portions  of  the
September  1998  order.   Hearings  on the  transmission  rate  aspects  of  the
proposal   are  expected  to  commence  before  the  FERC  in  June  1999.    An
independent  Board  of  Directors for the Midwest ISO was  elected  in  December
1998.


INDUSTRY RESTRUCTURING AND COMPETITION

Driven   by   a   combination  of  market  forces,  regulatory  and  legislative
initiatives,  and  technological  changes, the  electric  industry  continues  a
trend    towards   restructuring   and   increased   competition.    To    date,
competitive  forces  have  been most prominent in  the  wholesale  power  market
but  are  expected  to  continue  to develop in  the  electric  retail  markets.
The  State  of  Illinois  has  passed legislation  introducing  retail  electric
choice  for  large  customers in 1999 and for all customers by  May  2002.   For
information  concerning  restructuring in  the  State  of  Michigan,  see  "MPSC
Electric   Restructuring"  below.   While  the  Company   cannot   predict   the
ultimate  timing  or  impact  of  a restructured  electric  industry,  Wisconsin
Electric   believes   that,  as  a  low-cost  energy  provider,   it   is   well
positioned   to  compete  in  a  deregulated  and  competitive  market.    Among
others,  the  following  electric  and  gas industry  restructuring  initiatives
are  underway  in  regulatory  jurisdictions where the  Company  currently  does
business.

PSCW'S  ELECTRIC  UTILITY INDUSTRY INVESTIGATION:   Because  of  electric  power
shortages  experienced  during  the  summer  of  1997,  the  PSCW  expressed   a
desire  in  October  1997  to work on infrastructure issues  and  to  develop  a
robust  competitive  electric  wholesale  market.   The  PSCW  also  stated  its
belief   that   the   question   of  whether  to   implement   electric   retail
competition  in  Wisconsin  ultimately  should  be  decided  by  the   Wisconsin
Legislature  rather  than  by  the  PSCW.   The  PSCW  agreed  to   pursue   the
following   priority   infrastructure   issues   as   prerequisites   to   other
restructuring work:

*   Improvements  to  existing  and  addition  of  new  electric  transmission
    lines in the State of Wisconsin.

*   Additions of new generating capacity in the State of Wisconsin.

*   Modifications   to  State  of  Wisconsin  statutes  to   allow   merchant
    generating  plants  to be built in Wisconsin without prior PSCW  
    determination of need as one means of ensuring adequate generation.

*   Development  of  an  ISO  for either the electric transmission  system  in
    the State of Wisconsin or in the region.

The  Governor  of  the  State  of Wisconsin recently  proposed  in  his  current
budget  that  the  PSCW conduct a one year study on what it would  take  to  get
retail  access  in  Wisconsin.   This proposal  will  need  to  go  through  the
legislative review process before such a study would be conducted.

AFFILIATE  INTEREST  DOCKET  (05-BU-101):    The  PSCW  is  developing  policies
governing  activities  that  can  be  performed  by  a  utility  or  a   utility
affiliate.   The  activities  under  review include  providing  or  selling  any
product  or  service  other  than  core utility  products.   Wisconsin  Electric
has  taken  the  position  that  state policy should  protect  competition,  not
individual  competitors,  and  that customers should  have  the  choice  to  use
either   Wisconsin   Electric  or  another  vendor  for   these   products   and
services.   Technical  and  public hearings were held in  October  and  November
of 1998.  The PSCW is expected to issue an order by June 1999.

PUBLIC  BENEFITS:    The Wisconsin Legislature has formed  a  Council  to  draft
legislation  forming a Public Benefits Board.  The Council  is  using  the  PSCW
order  in  Docket  05-BU-100 as the starting point for  the  draft  legislation.
This  PSCW  order  recommends  plans to protect  low-income  utility  customers,
conservation   programs  and  the  environment  under  a  deregulated   electric
industry.   Wisconsin  Electric  has  supported  the  development  of  such   an
approach  to  public  benefits  to  ensure  that  Wisconsin  Electric   is   not
competitively  disadvantaged  by being required to  continue  to  provide  these
benefits.   It  is  likely  legislation creating such a  Public  Benefits  Board
will be submitted in 1999.

MPSC   ELECTRIC   RESTRUCTURING:    In  1998,  the   Michigan   Public   Service
Commission   ("MPSC")  continued  to  move  toward  implementation   of   direct
access   for  retail  electric  markets  beginning  on  January  1,  2002.    In
February,  the  MPSC  issued  an  order  clarifying  restructuring  issues   and
directing  Detroit  Edison and Consumers Energy, the two  largest  utilities  in
the  State  of  Michigan, to file tariff sheets and draft  implementation  plans
for  direct  access.   Following company submittals in late February  1998,  the
MPSC   staff   held  several  public  meetings  to  discuss   the   plans   with
stakeholders.    On   June   30,   1998,  the  two   companies   filed   revised
implementation  plans  reflecting some of issues  raised  during  the  meetings.
While  the  MPSC  is currently reviewing other issues raised  by  the  meetings,
a  phase-in  of  direct  access  is  expected  to  commence  in  late  1999  for
Michigan's two largest utilities with full access by January 1, 2002.

During  1998,  public  meetings on electric restructuring  were  also  conducted
in  Michigan's  Upper  Peninsula to discuss direct access.   Following  meetings
with  the  MPSC  staff  and  the opening of dockets  to  begin  the  process  of
electric   restructuring   for   smaller   utilities,   the   smaller   Michigan
utilities,  including Wisconsin Electric, filed  proposals  with  the  MPSC  for
implementing  retail  direct  access  on January  1,  2002  without  a  phase-in
program.   On  February  2,  1999, the MPSC issued an order  closing  the  above
dockets,   citing   the  progress  made  to  date.   Issues  requiring   further
resolution  will  be  the subject of future dockets for the  smaller  companies.
The  MPSC  is  expected to address access programs for smaller  utilities  after
the  initial  phase-in  has commenced in late 1999 for the  large  utilities  in
Michigan.

FERC  OPEN  ACCESS  TRANSMISSION  PROCEEDINGS:    As  a  result  of  the  Energy
Policy  Act  of  1992,  the FERC issued Order Nos. 888 and  889  in  April  1996
relating  to  open  access transmission service, stranded  costs,  standards  of
conduct  and  open  access  same-time  information  systems.   The  ruling   was
intended to create a more competitive wholesale electric power market.

In  April  1997,  Wisconsin  Electric submitted a  revised  transmission  tariff
in  compliance  with  FERC's orders on rehearing  of  its  Order  No.  888.   In
connection  with  Wisconsin Energy's acquisition of ESELCO,  the  FERC  approved
a  joint  transmission  tariff  covering  both  Wisconsin  Electric  and  Edison
Sault  by  order  issued  June  29,  1998.   On  December  18,  1998,  the  FERC
approved  Wisconsin  Electric's  Standards of  Conduct  required  by  Order  
No. 889.  Order Nos. 888 and 889 have been appealed by many parties to the  U.S.
Court of Appeals for the Second Circuit.

Wisconsin  Electric  has  long advocated open access  to  electric  transmission
facilities  as  a  necessary  step  in  the  competitive  restructuring  of  the
electric  utility  industry.   Wisconsin Electric  does  not  believe  that  the
FERC  rulings  or  judicial  review of these  orders  will  have  a  detrimental
effect on its liquidity, financial position or results of operations.

WHOLESALE  COMPETITION:    Wholesale  sales of  electric  energy  accounted  for
6%,  5%  and  5%  of Wisconsin Electric's total electric operating  revenues  in
1998,   1997   and  1996,  respectively.   Wisconsin  Electric  attributes   the
increase  in  the  past  year  to  additional  sales  for  resale  that   offset
decreasing  sales  to  municipal and rural electric  wholesale  customers  as  a
result   of   renegotiated  power  sales  contracts  in  1995  and  1996.    The
renegotiated  contracts  contain  discounts  from  previous  rates  charged   to
these customers.

A   current   contract   with   a  75  megawatt  wholesale   customer   includes
nominations  of  90  megawatts  as of May 1999  and  120  megawatts  as  of  May
2000.   A  second  wholesale  customer with a current  50  megawatt  demand  may
become   a   partial   requirements  customer   beginning   in   October   2000.
Wisconsin  Electric  expects  to  continue providing  transmission  services  to
this customer.

PSCW  NATURAL  GAS  UTILITY  INDUSTRY  INVESTIGATION:    The  PSCW  continued  a
generic  investigation  of the natural gas industry in the  State  of  Wisconsin
and  addressed  the  extent to which traditional regulation should  be  replaced
with  a  different  approach.   On  July 1, 1997,  Wisconsin  Electric  filed  a
modified   dollar   for   dollar  gas  cost  recovery  mechanism   ("GCRM")   in
accordance  with  a  November  1996 PSCW order.   This  filing  was  updated  on
June  30,  1998.   Purchased gas adjustment mechanisms have  been  evaluated  by
the  PSCW  as  part  of the PSCW's generic investigation.  A GCRM  will  include
after  the  fact  prudence  reviews by the PSCW.  The  matter  is  pending  with
anticipated   implementation   in  the  third  quarter   of   1999.    Wisconsin
Electric  does  not  expect  that  a  major  portion  of  gas  costs  that   are
currently  passed  through  to customers will be subject  to  price  risk  under
this GCRM.


RATES AND REGULATORY MATTERS

The  table  below  summarizes  the  anticipated  annualized  revenue  impact  of
recent   rate  changes  authorized  by  regulatory  commissions  for   Wisconsin
Electric's  electric,  natural  gas and steam utilities  based  upon  the  sales
projections  utilized  by  those commissions in  setting  rates.   Edison  Sault
implemented  a  temporary  price  cap  in  1995.   The  PSCW  regulates   retail
electric,  steam  and  natural gas rates in the State of  Wisconsin,  while  the
FERC    regulates    wholesale   power,   electric    transmission    and    gas
transportation  service  rates.  The MPSC regulates  retail  electric  rates  in
the State of Michigan.


                              Revenue         Percent     
                              Increase         Change     
         Service             (Decrease)       in Rates    Effective Date
         -------             ----------       --------    --------------
                             (Millions)         (%)       
                                                          
Retail electric, WI (a)       $ 160.2          12.7          05/01/98
Retail gas (a)                   18.5           5.4          05/01/98
Steam heating (a)                 1.2           9.3          05/01/98
Retail electric, WI (a)         134.9          10.7          01/01/98
Retail gas (a)                   18.5           5.5          01/01/98
Steam heating (a)                 0.8           6.3          01/01/98
Retail electric, WI (b)          27.2           2.2          05/23/97
Retail electric, WI              (7.4)         (0.6)         02/18/97
Retail gas                       (6.4)         (2.0)         02/18/97
Steam heating                     0.1            .5          02/18/97
Retail electric, WI             (33.4)         (2.8)         01/01/96
Retail electric, WI              (1.1)         (3.3)         01/01/96
Retail gas                       (8.3)         (2.6)         01/01/96
Steam heating                    (0.8)         (5.1)         01/01/96
                                     
(a)  The January 1, 1998 order was an interim PSCW order that was effective
     until the May 1, 1998 final order was received from the PSCW.  The 
     final May 1, 1998 order superseded the January 1, 1998 interim order.

(b)  Fuel surcharge which ended as of May 1, 1998.  Reflecting the combined
     effect of two PSCW  orders, this surcharge was initially ordered on 
     May 23, 1997 and was amended by the PSCW on  December 23, 1997.


The  PSCW  requires that rate cases to be conducted once every  two  years.
Wisconsin  Electric's  next test year filing under the  biennial  cycle  is
scheduled  to  be filed with the PSCW in 1999.  Discussion of rate  changes
for the 1998, 1997 and 1996 test years follow.

1998  TEST  YEAR:     On  December  23, 1997,  the  PSCW  issued  an  order
authorizing  Wisconsin Electric to implement interim Wisconsin retail  rate
increases  effective January 1, 1998 in the amount of $154  million  on  an
annualized   basis,   including  $135  million  for  electric   operations,
$19  million  for gas operations and $1 million for steam operations.   The
PSCW  authorized  permanent annualized retail base rate  increases  in  the
State  of  Wisconsin  effective May 1, 1998 of $160  million  for  electric
operations,  $19  million  for gas operations  and  $1  million  for  steam
operations.  The increases were based upon an authorized regulatory  return
on common equity of 12.2%.

In  November 1998, Wisconsin Electric filed testimony and exhibits with the
MPSC  showing  a  $4  million annual revenue deficiency  for  its  electric
utility operations in the State of Michigan.  Wisconsin Electric proposed a
two  stage  increase in the filing.  The first stage would  increase  rates
9.4%  on  an  annualized basis effective with issuance of an order  in  the
case.   The  second  stage, proposed to be effective July  1,  1999,  would
increase the stage-one rates by another 4.8% on an annualized basis.

The  primary  factors influencing the 1998 rate changes  in  the  State  of
Wisconsin and the proposed rate changes in the State of Michigan include:

*  Increased costs related to the construction, operation and maintenance
   of   generation,  transmission  and  distribution  facilities to assure
   reliability of electric service.

*  Increased  costs associated with the need to implement  technological
   solutions to make computer systems "Year 2000 Ready" and to meet 
   customer expectations.

*  Increased payroll and benefits due to (1) additional personnel to fill
   vacant positions that occurred while Wisconsin Energy and Northern 
   States Power Company were pursuing the Primergy merger and (2) increased
   staff to support  key  areas  such  as nuclear operations,  customer  
   service  and information services.

*  Increased fuel and purchased power costs.

*  Increased cost of capital.

*  Accelerated  amortization  of  the  remaining  balance  of  pre-1991
   contributions in aid of construction at December 31, 1997..

See  "Mergers"  above for additional information concerning  the  Wisconsin
Energy's  terminated merger agreement with NSP.  See "Year 2000  Technology
Issues"  below  for further information concerning the estimated  costs  to
examine  and modify existing software application and operational  programs
and  hardware that is date sensitive and may not be "Year 2000 Ready."  See
Note C - Depreciation" in the Notes to Financial Statements for information
about  the  accelerated  amortization of certain contributions  in  aid  of
construction.

1997  TEST  YEAR:   In an order dated February 13, 1997, the PSCW  directed
Wisconsin Electric to implement rate decreases for retail electric and  gas
customers  in  the  State  of  Wisconsin of  $7  million  and  $6  million,
respectively,  on  an  annualized basis,  and  a  steam  rate  increase  of
$0.1 million on an annualized basis.  The order was effective February  18,
1997 and was based upon a regulatory return on common equity of 11.8%.  The
PSCW  had  determined that it required a special full review  of  Wisconsin
Electric's rates for the 1997 test year in connection with consideration of
the application for approval of the proposed merger of Wisconsin Energy and
NSP discussed above under "Mergers."

1996  TEST  YEAR:   In a letter order dated September 11,  1995,  the  PSCW
directed  Wisconsin  Electric  to implement rate  decreases  for  Wisconsin
retail  electric, gas and steam customers of $33 million,  $8  million  and
$0.8  million,  respectively, on an annualized basis effective  January  1,
1996.   Also  effective  January  1, 1996, the  MPSC  authorized  Wisconsin
Electric to implement a rate decrease for Michigan non-mine retail electric
customers  of  $1 million or 3.3% on an annualized basis.  The  Empire  and
Tilden ore mines are separately regulated by the MPSC.

EDISON  SAULT  PRICE  CAP:    On August 22, 1995,  Edison  Sault  filed  an
application  with the MPSC for authority to implement price cap  regulation
for  its  electric customers in the State of Michigan.  In the application,
Edison  Sault  proposed that its base rates be capped at  existing  levels,
that  its  existing Power Supply Cost Recovery factor be rolled  into  base
rates and that its existing Power Supply Cost Recovery Clause be suspended.
On September 21, 1995, the MPSC approved Edison Sault's application subject
to  the modification that Edison Sault give thirty days notice rather  than
two weeks notice for rate decreases.  Edison Sault will file an application
with  the MPSC by October 1, 2000 to address the experience under the price
cap  mechanism.   The  MPSC's order authorizing Edison  Sault's  price  cap
represents a temporary  experimental regulatory mechanism and allows Edison
Sault   to  file  an  application  seeking  an  increase  in  rates   under
extraordinary circumstances.

FUEL COST ADJUSTMENT PROCEDURE:   Effective in 1998 under the PSCW's retail
electric  fuel cost adjustment procedure in the State of Wisconsin,  retail
electric rates may be adjusted, on a prospective basis, if cumulative  fuel
and  purchased  power costs, when compared to the costs  projected  in  the
retail  electric rate proceeding, deviate from a prescribed range  and  are
expected  to continue to be above or below the authorized annual  range  of
2%.

During  1997,  extended  outages at Point Beach,  an  extended  maintenance
outage  at  Oak Creek Power Plant that was concluded in June 1997,  delayed
commercial  operation of LS Power's cogeneration facility, and higher  than
projected purchased power costs per megawatt-hour due to regional  electric
energy  supply  constraints resulted in increased fuel and purchased  power
costs  at Wisconsin Electric.  Wisconsin Electric estimates that such costs
were  approximately $116 million higher than those included  in  1997  base
electric rates in all jurisdictions.

On  December 23, 1997, the PSCW issued a combined final order on  two  1997
Wisconsin   Electric  filings  under  Wisconsin's  fuel   cost   adjustment
procedure,  authorizing  Wisconsin  Electric  to  recover  $27  million  of
additional  1997  fuel  and  purchased power costs  from  Wisconsin  retail
electric  customers during the 1997-1998 biennial period.   This  temporary
fuel  surcharge ended as of May 1, 1998.  Wisconsin Electric estimates that
of  the  $116  million  of excess fuel and purchased power  costs  incurred
during  1997, it recovered a total of $27 million as a result of the PSCW's
December 1997 order, leaving $89 million unrecovered.

As  part of the PSCW's 1998 Rate Order, Wisconsin Electric was required  to
file  by  October 1, 1998 its forecast of electric fuel costs for the  1999
calendar  year.  Wisconsin Electric filed the forecast, which indicated  no
change  in  fuel costs compared to the 1998 Rate Order, with  the  PSCW  on
September 25, 1998.  This matter is currently under review by the PSCW.

In December 1995, the MPSC approved the suspension of the Power Supply Cost
Recovery  Clause  (fuel adjustment procedure) for a  five-year  period  for
Michigan retail electric customers.

NUCLEAR  OPERATION AND MAINTENANCE COST DEFERRAL:   See "Note F  -  Nuclear
Operations" in the Notes to Financial Statements for information  regarding
approval  by  the PSCW during 1997 for Wisconsin Electric to defer  certain
non-fuel nuclear operation and maintenance costs.

PURCHASED  GAS  ADJUSTMENT MECHANISM:   In the case of natural  gas  costs,
differences between the test year estimate and the actual cost of purchased
gas  are  accounted  for  through a purchased gas adjustment  clause.   See
"Industry Restructuring and Competition" above for information concerning a
PSCW order changing the purchased gas adjustment mechanism in 1999.

NON-UTILITY  ASSET  CAP:   Wisconsin Energy is subject to  certain  current
restrictions  which  may  limit diversification in non-utility  activities.
Under  a  formula included in the provisions of Wisconsin's Public  Utility
Holding Company Law, the sum of the assets of all non-utility affiliates in
a  holding company system generally may not exceed 25% of the assets of all
public  utility  affiliates.   As  of December  31,  1998,  the  assets  of
Wisconsin Energy's non-utility affiliates approximated 12% of the assets of
its  public  utility  affiliates.  Following WISVEST Corporation's  pending
acquisition of $272 million of generating facilities in the second  quarter
of 1999, Wisconsin Energy anticipates that the percent of asset cap formula
non-utility  assets  will  increase from approximately  12%  to  over  18%.
Wisconsin  Energy  is  currently working with  the  other  utility  holding
companies  in the State of Wisconsin in an effort to modify the  asset  cap
provisions  of  Wisconsin's Public Utility Holding Company  Law.   However,
there  can be no assurance that the current asset cap restrictions will  be
modified or that the restrictions will not affect Wisconsin Energy's future
non-utility diversification activities.

For   additional  information  concerning  WISVEST  Corporation's   pending
acquisition of generating assets in the State of Connecticut, see "Note L -
Commitments  and  Contingencies" in Wisconsin Energy's Notes  to  Financial
Statements.


YEAR 2000 TECHNOLOGY ISSUES

The Company is working to resolve the potential impact of the Year 2000  on
its   ability  to  operate  critical  systems  and  to  accurately  process
information  that  may  be  date sensitive.   Wisconsin  Energy,  including
Wisconsin Electric, Edison Sault and the non-utility subsidiaries,  utilize
business application software as well as infrastructure and process control
systems  across their operations.  Related computer programs  and  hardware
may  use  two-character digits such as `00' to define the  applicable  year
rather  than four-character digits such as `2000'.  When these  systems  or
applications encounter the Year 2000, they could potentially read the  year
as  `1900' and either process data incorrectly or shut down altogether.  If
not  addressed  in  a timely manner, this Year 2000 problem  could  have  a
materially adverse impact on the operations or financial condition  of  the
Company.

YEAR  2000  PROJECT:   During 1997, the Company created Year  2000  program
teams,  overseen  by executives of the Company, to address  its  Year  2000
issues.    The  teams,  comprising  representatives  with  subject   matter
expertise, are addressing:

*  Business  applications  that  provide function  and  process  to  the
   business units;

*  Infrastructure  including information technology voice,  video,  data
   systems and related structure;

*  Process  control  systems including the impact  of  embedded  systems
   across all operations;

*  Supplier compliance dealing with critical direct suppliers of services
   and materials; and

*  Significant  customers and their ability to avoid  major  Year  2000-
   related business interruptions.

The  Year 2000 teams are following a structured process of inventorying and
assessing  potential  Year  2000 problems,  of  remediating,  testing,  and
certifying Year 2000 readiness and of developing and implementing Year 2000
risk   management  contingency  plans.   Although  additional  systems   or
processes  may be identified as the program moves forward, the Company  has
substantially  completed  an  initial  inventory  of  potential  Year  2000
problems  across  all  operating  areas and  completed  its  assessment  of
critical areas in the fourth quarter of 1998.  The remediation and  testing
phases are currently in progress and extensive contacts with critical third
party  suppliers are ongoing.  Based upon an initial assessment of critical
supplier  Year  2000 readiness that was completed in the third  quarter  of
1998,  the  Company  is  currently  initiating  additional  supplier   risk
mitigation  actions.  Wisconsin Energy expects to evaluate its  significant
customers during 1999.

The  Company  has structured its Year 2000 program to identify,  prioritize
and address critical business functions within the Company including:

*  Providing  Energy  Supply,  which includes  the  safe  operation  and
   maintenance of all nuclear, fossil and hydro generating facilities;

*  Providing a Reliable Energy Pathway, which includes the safe operation
   and  maintenance of the Company's electric transmission and electric, 
   gas and steam distribution systems;

*  Providing Customer Service, which includes the ability to respond  to
   customer emergencies both from a customer contact point of view and from 
   a restoration perspective as well as the ability to handle customer 
   calls, to bill customers and to process payments;

*  Supporting the Business, which includes the critical human  resource,
   supply  chain, finance and information resource activities that support
   operation of the business; and

*  Critical Facilities operations.

With  the  exception of those projects that are dependent  upon  activities
such  as  scheduled  power plant maintenance outages  later  in  1999,  the
Company  currently  expects its core, critical  business  functions  to  be
"Year  2000  Ready" by June 30, 1999.  However, additional refinements  and
testing  may  continue  through the end of 1999.  Based  upon  the  Nuclear
Energy Institute's standard definition, which has been adopted by Wisconsin
Energy,  "Year  2000 Ready" systems or applications will  be  suitable  for
continued use into the Year 2000 even though the system or application  may
not be fully "Year 2000 Compliant."

POTENTIAL  RISKS AND CONTINGENCY PLANNING:   The Company is  continuing  an
ongoing  process of assessing potential Year 2000 risks and  uncertainties.
Internal  and  external risks are included in the Company's assessment  and
identification  of  mitigation strategies.   Wisconsin  Energy  expects  to
successfully mitigate its controllable internal Year 2000 problems.

For  its  core  operation, Wisconsin Energy also relies upon third  parties
such  as  (1)  other  power providers to and operators  of  the  integrated
electric   transmission  and  distribution  grid,   (2)   fuel   suppliers,
(3)  producers  of  natural  gas and suppliers of  interstate  natural  gas
transportation services, and (4) providers of external infrastructure  such
as  telecommunications,  municipal sewer and water  as  well  as  emergency
services.   Failure  of  these  critical  third  parties  to  identify  and
remediate  their  Year 2000 problems could have a material  impact  on  the
Company's  operation  and  financial condition.  The  Company's  Year  2000
program  is  structured to identify, assess and mitigate these third  party
risks  where  possible.   At  this  time, Wisconsin  Energy  believes  that
mitigation efforts will be successful.

As  part  of  its  normal  business practice,  the  Company  maintains  and
periodically  initiates various contingency plans to maintain  and  restore
its  energy  services during emergency circumstances, some of  which  could
arise  from  Year  2000  related problems.  During 1999,  Wisconsin  Energy
intends  to  leverage this experience in the development and implementation
of Year 2000 related contingency and business continuity plans.  As part of
this  effort,  the Company is coordinating its Year 2000 readiness  program
with various trade associations and industry groups and is working with the
Mid-America  Interconnected  Network, Inc., ("MAIN"),  the  North  American
Electric  Reliability  Council  and  the Wisconsin  Reliability  Assessment
Organization  to  develop  and  implement  regional  electric   reliability
contingency  plans.   Wisconsin  Electric  is  participating   with   other
utilities in MAIN to develop reasonably likely worst case scenarios for the
region.   The scenarios currently identified as reasonably likely represent
situations  that  have been encountered under normal operating  conditions.
Contingencies  for these scenarios are generally addressed  through  normal
operating  procedures.   Scenarios that have been  jointly  identified  and
assessed are:

*  Loss or unavailability of some generation;

*  Partial  loss  of system monitoring and control functions,  including
   data communication;

*  Partial loss of voice communications;

*  Loss of transmission facilities; and

*  Loss of load and/or uncharacteristic loads.

Wisconsin  Electric  presently  agrees  with  MAIN's  assessment  that  the
probability  of  these  scenarios  occurring  due  to  Year  2000  is   not
significantly  in  excess of normal expectations.   The  Company's  current
operating and contingency plans are expected to adequately handle the above
scenarios.   The  Company is currently reviewing operating and  contingency
plans  to  identify further enhancements or updates specifically addressing
Year 2000 issues.

FINANCIAL IMPLICATIONS:   Wisconsin Energy currently estimates that it will
incur  approximately $44 million of expenses during 1998 through  2000  for
its  Year  2000 program.  $15 million has been incurred as of December  31,
1998.    In   addition,  the  Company  expects  to  capitalize   costs   of
approximately  $20  million to replace certain existing infrastructure  and
process  control  systems of which $9 million has been  capitalized  as  of
December  31,  1998.  In its May 1998 Rate Order from the  PSCW,  Wisconsin
Electric   received  approval  for  recovery  in  rates  of   approximately
$13  million per year of Year 2000-related expenses in the Wisconsin retail
jurisdiction during the 1998-1999 biennial period.  In addition,  the  1998
PSCW  rate  order included the associated capital expenditures  related  to
Wisconsin Electric's Year 2000 program.

The  discussion  above includes many forward looking statements  concerning
potential schedules, plans, costs, risks and uncertainties facing Wisconsin
Energy as a result of the Year 2000 problem.  Based upon its activities  to
date,  the  Company expects to successfully implement the changes necessary
to  become  "Year 2000 Ready" by the end of 1999.  However, the  Year  2000
problem has many elements and potential consequences, some of which may not
be  reasonably  foreseeable,  and there can be  no  assurances  that  every
Year  2000  problem  will be identified and addressed  or  that  unforeseen
consequences will not arise.  Unanticipated factors while implementing  the
changes  necessary  to mitigate Year 2000 problems, including  the  ongoing
availability  and  costs of trained personnel, the ability  to  locate  and
correct all relevant codes in computer and embedded systems, or the failure
of  critical  third  parties to communicate about  and  to  mitigate  their
Year  2000 problems could result in unanticipated interruptions in  certain
core business activities or operations of Wisconsin Energy.


ENVIRONMENTAL MATTERS

NATIONAL  AMBIENT  AIR QUALITY STANDARDS:   On July  18,  1997  the  United
States Environmental Protection Agency ("EPA") revised the National Ambient
Air  Quality Standards for ozone and particulate matter.  Although specific
emission  control  requirements  are not yet  defined,  Wisconsin  Electric
believes  that  these  revised standards will  likely  require  significant
reductions  in sulfur dioxide ("SO2") and nitrogen oxide ("NOx")  emissions
from  coal-fired  generating facilities.  Wisconsin Electric  expects  that
reductions needed to achieve compliance with the ozone attainment standards
will  be  implemented in stages from the year 2003 through the  year  2012,
beginning with the ozone transport reductions described below under  "Final
EPA  Ozone  Transport  Rulemaking."  Reductions  associated  with  the  new
particulate matter standard will likely be implemented in stages after  the
year  2010  and  extending  to the year 2017.  Beyond  the  cost  estimates
identified  below  in  "Final  EPA Ozone Transport  Rulemaking",  Wisconsin
Electric  is  currently unable to determine the impact of the  revised  air
quality  standards on its future liquidity, financial condition or  results
of operation.

FINAL  EPA  OZONE  TRANSPORT RULEMAKING:   On October  27,  1998,  the  EPA
promulgated  ozone transport rules to address transport of  NOx  and  ozone
into  ozone non-attainment areas in the eastern half of the United  States.
The  rules require electric utilities in 22 eastern states and the District
of  Columbia, including the State of Wisconsin, to significantly reduce NOx
emissions  by  May 1, 2003.  Affected states are required to  submit  their
respective  state implementation plans to the EPA by September  1999.   The
rules  have been legally challenged by numerous affected states  and  other
stakeholders.

Wisconsin  Electric  is  working  with a  variety  of  state  and  regional
stakeholders to provide input to the plan under development by the State of
Wisconsin.  Wisconsin Electric is evaluating various NOx control techniques
to  develop  a  least  cost compliance plan and currently  estimates  total
capital  costs  of  $250 million to $300 million and annual  operation  and
maintenance costs of $10 million to $25 million to comply with such a plan.
Wisconsin   Electric  believes  that  compliance  with  the  NOx   emission
reductions  required by the EPA's final ozone transport rules  will  likely
mitigate  costs  to comply with the EPA's July 18, 1997  revisions  to  the
ozone National Ambient Air Quality Standards discussed above.

As  a  result  of the EPA's October 1998 final ozone transport  rules,  the
Company also expects to incur capital costs in the range of $20 million  to
$35  million prior to May 2003 at the two fossil-fueled power plants in the
State  of  Connecticut, which the Company expects to acquire in the  second
quarter of 1999.  For additional information concerning the acquisition  of
these two Connecticut power plants, see "Liquidity and Capital Resources  -
Capital  Requirements"  below  as  well  as  "Note  L  -  Commitments   and
Contingencies" in Wisconsin Energy's Notes to Financial Statements.

MANUFACTURED GAS PLANT SITES:   Wisconsin Electric is voluntarily reviewing
and  addressing environmental conditions at a number of former manufactured
gas plant sites.  See "Note L - Commitments and Contingencies" in the Notes
to Financial Statements for additional information.

ASH LANDFILL SITES:   Wisconsin Electric aggressively seeks environmentally
acceptable,  beneficial uses for its combustion byproducts.   However,  ash
materials have been, and to some degree, continue to be disposed in company
owned,  licensed landfills.  Some early designed and constructed  landfills
may  allow the release of low levels of constituents resulting in the  need
for  various  levels of remediation.  Where Wisconsin Electric  has  become
aware  of  these conditions, efforts have been performed to  address  these
conditions.   These costs are included in the environmental  operating  and
maintenance costs of Wisconsin Electric.


COAL SUPPLY AND TRANSPORTATION MATTERS

During  1997,  coal  deliveries  to certain Wisconsin  Electric  generating
facilities, as well as to the electric generating facilities of many  other
utilities,  had been impaired by massive congestion problems on  the  Union
Pacific  Railroad.  As a result of the merger of the Union Pacific Railroad
with the Southern Pacific Railroad, a backlog of coal deliveries had caused
stockpiles  to  decline at some of Wisconsin Electric's  power  plants  and
forced Wisconsin Electric to seek alternative coal delivery routes.   While
coal  delivery  performance by the Union Pacific  Railroad  has  not  fully
recovered, performance improved during 1998 and  Wisconsin Electric's  coal
inventories have now returned to acceptable levels.

During  the  fall of 1997, Wisconsin Electric completed construction  of  a
rail  spur  at the Pleasant Prairie Power Plant, which burns  over  40%  of
Wisconsin  Electric's  annual  coal  requirements.   The  new  rail   spur,
connecting to the rail line of a competitor of the Union Pacific  Railroad,
provides  Wisconsin Electric with another means of delivery to the Pleasant
Prairie  Power Company and significantly reduced Wisconsin Electric's  risk
of  future  impaired  coal delivery due to problems at  the  Union  Pacific
Railroad.

As  of the beginning of 1999, Wisconsin Electric had approximately a 94-day
supply  of coal in inventory at its coal-fired facilities.  As part of  its
Year   2000-related  contingency  planning  and  implementation,  Wisconsin
Electric  expects to build the inventory of coal during 1999 at  its  coal-
fired facilities to an estimated  111-day supply by December 31, 1999.


OUTLOOK

The  following forecasts are forward-looking statements subject to  certain
risks,  uncertainties and assumptions.  Actual results may vary materially.
Factors  that could cause actual results to differ materially include,  but
are  not  limited  to: business and competitive conditions  in  the  energy
industry,  in general, and in the Company's service territory; availability
of  the  Company's generating facilities; changes in purchased power costs;
and the economy, weather, the restructuring of the electric and gas utility
industries,   and   unforeseen   problems   associated   with   non-utility
diversification efforts.  See "Cautionary Factors" below.

EARNINGS:    The Company currently estimates that its earnings during  1999
will be in the range of $1.85 to $2.05 per share, an increase of between 12
and 24 percent over 1998 earnings.

ELECTRIC  SALES:   Assuming moderate growth in the economy of  its  service
territory  and  normal  weather, the Company  presently  anticipates  total
retail  and  municipal electric kilowatt-hour sales to grow at  a  compound
annual rate of 2.1% over the five-year period ending December 31, 2003.

GAS  DELIVERIES:   Assuming moderate growth in the economy of  its  service
territory  and normal weather, the Company currently forecasts total  therm
deliveries  of  natural  gas  to  grow  at  a  compound  annual   rate   of
approximately 1.9 % over the five-year period ending December 31, 2003.

ADDITIONAL  GAS  SERVICE  TERRITORY:   In  July  1997,  the  PSCW  approved
Wisconsin Electric's application to expand natural gas service to more than
4,500  potential customers in northeastern Wisconsin.  When completed,  the
project  will involve the installation of more than 350 miles  of  new  gas
main.   During 1998, about 2,400 customers were connected and the remainder
are  expected  to be connected during 1999.  1999 capital expenditures  for
this  project  are included in anticipated construction expenditures  shown
below under "Capital Requirements" in "Liquidity and Capital Resources."

EMPLOYEES:    The  Company  expects  to  add  approximately  570  full-time
equivalent  employees  during 1999.  Of the total 570 full-time  equivalent
employees,   approximately  370  are attributable  to  Wisconsin  Electric,
primarily in such key areas as distribution operations, nuclear operations,
customer service and information resources.  Approximately half of the  new
employees at Wisconsin Electric are expected to replace contract labor that
has been used during the past couple of years.  Approximately 200 full-time
equivalent  non-utility employees are expected to be added  in  the  second
quarter of 1999 when WISVEST Corporation closes on the acquisition  of  two
fossil-fuel   power  plants  from  The  United  Illuminating  Company,   an
unaffiliated  investor  owned  utility  in  New  Haven,  Connecticut.   For
additional  information  concerning  this  acquisition,  see  "Note   L   -
Commitments  and  Contingencies" in Wisconsin Energy's Notes  to  Financial
Statements.


EFFECTS OF WEATHER

By  the  nature  of its utility business segments, Wisconsin  Energy's  and
Wisconsin  Electric's  earnings are sensitive to  weather  variations  from
period  to  period.  Variations in winter weather affect heating  load  for
both  the gas and electric utilities.  Variations in summer weather  affect
cooling load for the electric utilities  as well as therm deliveries to gas-
fired electric generating customers.  The table below summarizes weather as
measured  by  degree days at Mitchell International Airport  in  Milwaukee,
Wisconsin for each of the three years ended December 31, 1998.


                                        % Change           % Change
                                          1997               1996
       Degree Days        1998   1997    to 1998    1996    to 1997
       -----------        ----   ----    -------    ----    -------
Heating (7,005 Normal)   5,848  7,101    (17.7%)   7,469     (4.9%)
Cooling (657 Normal)       800    407     96.6%      608    (33.1%)


EFFECTS OF INFLATION

With  expectations  of  low-to-moderate inflation,  the  Company  does  not
believe  the impact of inflation will have a material effect on its  future
results of operations.


MARKET RISKS

The  Company  is  potentially exposed to market  risk  due  to  changes  in
interest rates, the return on marketable securities and the market price of
electricity  as  well  as  to changes in fuel costs  incurred  to  generate
electricity  and  in the cost of gas for its gas operations.   Exposure  to
interest rate changes relates to the Company's short and long-term debt  as
well as its preferred equity obligations, while exposure to fluctuations in
the  return  on  marketable securities relates to debt and equity  security
investments  held  in various trust funds.  Exposure to electricity  market
price risk relates to forward activities taken to manage the supply of  and
demand  for  electric energy, and exposure to fuel and gas cost  variations
relates to the supply of and demand for coal, uranium, natural gas and fuel
oil.    Currently,  the  Company  does  not  utilize  derivative  financial
instruments.   Griffin  Energy Marketing L.L.C., a subsidiary  of  Wisvest,
began  marketing energy related services and limited trading of electricity
in  1998.  Griffin's activities during 1998 were financially insignificant.
The  Company is evaluating to what extent it will use derivative  financial
and commodity instruments in the normal course of their future business.

For additional information concerning risk factors, including market risks,
see "Cautionary Factors" below.

INTEREST  RATE RISK:   The Company, including its affiliates, have  various
short-term  borrowing arrangements to provide working capital  and  general
corporate funds.  The level of borrowings under such arrangements vary from
period to period, depending upon, among other factors, capital investments.
Future short-term interest expense and payments will reflect both the level
of future short-term interest rates and borrowing levels.

The  table  that  follows  provides information about  long-term  financial
instruments that were held by the Company at December 31, 1998 and that are
sensitive  to  changes in interest rates.  For long-term  debt,  the  table
presents  principal cash flows that exist by maturity date and the  related
annualized  average  interest  rate of the maturing  long-term  debt.   The
annualized  average interest rate on the variable rate long-term  debt  was
estimated based upon a weighted average interest rate at December 31, 1998.
<TABLE>
<CAPTION>                                                                                                   
                                                 Expected Maturity Date                            Fair Value   
                                     --------------------------------------------------               as of  
                                     1999    2000     2001     2002    2003  Thereafter   Total     12/31/98
                                     ----    ----     ----     ----    ----  ----------   -----     --------
                                                               (Millions of Dollars)
<S>                                 <C>    <C>      <C>      <C>     <C>      <C>        <C>        <C>  
Fixed Rate Long-Term Debt                                                                               
   Wisconsin Electric               $92.9  $ 1.9    $ 1.9    $ 1.9   $ 1.9    $1,193.1   $1,293.6   $1,378.7
      Average Interest Rate           6.6%   7.5%     7.5%     7.5%    7.5%        7.2%       7.2%            
   Wisconsin Energy  (a)            $95.9  $31.9    $20.7    $16.9   $16.0    $1,338.3   $1,519.7   $1,605.7
      Average Interest Rate           6.6%   6.4%     6.8%     6.6%    6.9%        7.2%       7.1%            
                                                                                                                   
Variable Rate Long-Term Debt                                                                                       
   Wisconsin Electric                  -      -        -        -       -     $  165.4   $  165.4   $  165.4
      Average Interest Rate                                                        4.0%       4.0%           
   Wisconsin Energy  (a)            $ 2.9  $ 8.1    $ 4.3    $ 0.2   $ 0.3    $  167.8   $  183.6   $  183.6
      Average Interest Rate           7.7%   6.9%     6.9%     7.6%    7.6%        4.1%       4.3%            
                                                                                                                   
Preferred Stock Not Subject to                                                                                     
   Mandatory Redemption                                                                                            
      Wisconsin Electric                                                                                           
          and Wisconsin Energy (a)     -       -        -       -        -         -     $   30.4   $   20.2
          Average Dividend Rate                                                               4.0%            
<FN>
(a)   Wisconsin  Energy  includes  the  holding  company  as  well  as  all
subsidiaries.
</TABLE>

For  additional information concerning the Company's short-term debt, long-
term debt and preferred stock, see "Note I- Notes Payable," "Note H - Long-
Term  Debt" and "Note G - Preferred Stock", respectively, in the  Notes  to
Financial Statements.

MARKETABLE  SECURITIES RETURN RISK:   The Company funds its pension,  other
postretirement  benefit  and  nuclear decommissioning  obligations  through
various  trust  funds, which in turn invest in debt and equity  securities.
Changes  in the market price of the assets in these trust funds can  affect
pension,  other postretirement benefit and nuclear decommissioning expenses
in  future  periods. Future annuity payments to these trust  funds  can  be
affected  by  changes  in  the  market price  of  the  trust  fund  assets.
Wisconsin  Energy  expects  that the risk of expense  and  annuity  payment
variations as a result of changes in the market price of trust fund  assets
would  be  mitigated in part through future rate actions by  the  Company's
various utility regulators.

At December 31, 1998, the Company had the following total trust fund assets
at  fair value, primarily consisting of available for sale debt and  equity
security investments.

                                    
                                       Wisconsin Energy   Wisconsin Electric
                                       ----------------   ----------------- 
                                               (Thousands of Dollars)
                                                          
Pension trust funds                        $839,659            $828,491
Nuclear decommissioning trust fund          518,505             518,505
Other postretirement benefit trust funds     68,913              68,913
                                                                         

For  additional  information  concerning the Company's  pension  and  other
postretirement benefits, see "Note J - Benefits" in the Notes to  Financial
Statements.  For additional information concerning nuclear decommissioning,
see "Note F - Nuclear Operations" in the Notes to Financial Statements.

COMMODITY  PRICE  RISK:   In the normal course of business,  the  Company's
utility  subsidiaries utilize contracts of various duration for the forward
sale and purchase of electricity to effectively manage utilization of their
available  generating  capacity and energy during  periods  when  available
power  resources  are expected to exceed the requirements of  their  native
load  customers.  This practice may also include forward contracts for  the
purchase  of  power  during periods when the anticipated  market  price  of
electric  energy  is  below expected incremental  power  production  costs.
Wisconsin  Electric  manages  its  fuel and  gas  supply  costs  through  a
portfolio  of  short  and  long-term  procurement  contracts  with  various
suppliers.   To  a  certain extent, Wisconsin Electric's retail  fuel  cost
adjustment  procedure in Wisconsin may mitigate some of the  risk  of  fuel
cost  price fluctuation.  Currently, the purchased gas adjustment mechanism
in  Wisconsin mitigates the risk of gas cost variations.  During 1999, this
purchased  gas  adjustment mechanism will be replaced by  a  new  gas  cost
recovery  mechanism.  For additional information concerning the  fuel  cost
adjustment procedure and the purchased gas adjustment mechanism, see "Rates
and Regulatory Matters" above in "Factors Affecting Results of Operations."
For  additional  information concerning the change  in  the  purchased  gas
adjustment mechanism, see "Industry Restructuring and Competition" above in
"Factors Affecting Results of Operations."


ACCOUNTING MATTERS

NEW  PRONOUNCEMENTS:    See  "Note A - Summary  of  Significant  Accounting
Policies"  in the Notes to Financial Statements for information  concerning
new  pronouncements  issued  by the Financial  Accounting  Standards  Board
("FASB") during 1998.

In  February  1996, the FASB released for comment an exposure  draft  of  a
Proposed  Statement of Financial Accounting Standards entitled  "Accounting
for Certain Liabilities Related to Closure or Removal of Long-Lived Assets"
("Proposed  FAS").   The Proposed FAS would have required  the  Company  to
recognize  as  a liability the present value of the estimated future  total
costs  associated with closure or removal of certain long-lived assets  and
to  correspondingly capitalize those costs as an increase in  the  cost  of
long-lived  asset  associated with the obligation.  The  capitalized  costs
would  have been depreciated to expense over the useful life of the  asset.
Following  redeliberations during 1997 and 1998, the FASB  has  decided  to
continue with the project and plans to issue a second exposure draft in the
second  quarter  of 1999.  To reflect a broadened scope from  the  original
project,  the  title  of  the  project  was  changed  to  "Accounting   for
Obligations Associated with the Retirement of Long-Lived Assets."

The  scope  of  the second exposure draft of the Proposed  FAS  would  most
likely include decommissioning costs for Point Beach and may also apply  to
other facilities of the Company.  With respect to decommissioning costs for
Point  Beach, the Proposed FAS would result in Wisconsin Electric recording
a  decommissioning liability and a corresponding asset as required  by  the
pronouncement.   Currently, nuclear decommissioning costs  are  accrued  as
depreciation  expense over the expected service lives of the two  units  at
Point  Beach  based upon an external sinking fund method.  Any  changes  in
depreciation expense due to differing assumptions between the Proposed  FAS
and  those  currently required by the PSCW are not expected to be  material
and  would  most  likely  be  deferrable and  recoverable  in  rates.   For
additional  information on the costs of decommissioning  Point  Beach,  see
"Note F - Nuclear Operations" in the Notes to Financial Statements.

REGULATORY ACCOUNTING:   Wisconsin Energy's utility subsidiaries, Wisconsin
Electric  and Edison Sault, operate under electric utility rates which  are
subject  to  the approval of the PSCW, MPSC and FERC, and natural  gas  and
steam  utility  rates that are subject to the approval  of  the  PSCW  (see
"Rates  and Regulatory Matters" above).  Such rates are designed to recover
the  cost  of  service  and  provide  a  reasonable  return  to  investors.
Developing  competitive  pressures in the utility industry  may  result  in
future  utility  rates  which  are  based  upon  factors  other  than   the
traditional  original  cost of investment.  In such a situation,  continued
deferral  of  certain  regulatory  asset  and  liability  amounts  on   the
utility's' books may no longer be appropriate as allowed under Statement of
Financial  Accounting  Standards No. 71,  Accounting  for  the  Effects  of
Certain  Types  of  Regulation ("FAS 71"), and the  unamortized  regulatory
assets  net  of  the  regulatory  liabilities  would  be  recorded  as   an
extraordinary after-tax non-cash charge to earnings.

As discussed above under "Rates and Regulatory Matters", the MPSC issued  a
five-year experimental price cap order for Edison Sault electric rates that
expires  in  the year 2000.  This order allows Edison Sault  to  seek  rate
relief for costs incurred under extraordinary circumstances.

Because  of  Edison Sault's price cap order and other potential changes  in
the  industry, the Company continually reviews the applicability of FAS  71
and  has  determined that it is currently appropriate to continue following
FAS  71  at  Edison Sault.  At this time, the Company is unable to  predict
whether any adjustments to regulatory assets and liabilities will occur  in
the future at either Wisconsin Electric or at Edison Sault.  See "Note A  -
Summary  of  Significant  Accounting Policies" in the  Notes  to  Financial
Statements for additional information.


                      LIQUIDITY AND CAPITAL RESOURCES

INVESTING ACTIVITIES

Wisconsin  Energy  invested a net total of $1.3 billion in  its  businesses
during the three years ended December 31, 1998 of which $1.0 billion was at
Wisconsin  Electric.   Investments during this three-year  period  included
$1.1  billion  for  construction  of  or  investment  in  new  or  improved
facilities  or  projects:  $909 million for  the  construction  of  new  or
improved  utility plant at Wisconsin Electric and $225 million for projects
at  Wisconsin  Energy's  remaining  subsidiaries.   Additional  investments
during  this three-year period included $43 million for the acquisition  of
nuclear  fuel  and  $85 million for the eventual decommissioning  of  Point
Beach.   The  following are some of the larger construction  or  investment
projects  in  which  the  Company invested during  the  three  years  ended
December 31, 1998.

POINT  BEACH  UNIT  2  STEAM GENERATORS:   In May 1996, Wisconsin  Electric
received  a written order from the PSCW approving replacement of the  Point
Beach  Unit 2 steam generators.  Replacement of the Unit 2 steam generators
was  completed  in January 1997.  Capital expenditures of  $7  million  and
$48  million  were made during 1997 and 1996, respectively, for replacement
of the Unit 2 steam generators.

MILWAUKEE COUNTY POWER PLANT:   In December 1996, Wisconsin Energy acquired
the  steam  and  chilled  water production and distribution  facilities  to
complete  the  second phase of the purchase of the Milwaukee  County  Power
Plant.   Two  outstanding  contingencies were  met  prior  to  closing  the
purchase.  The PSCW approved the purchase of the steam facilities, and  the
five  largest  customers signed steam and chilled water service  agreements
which  obligate  them  to  purchase their present and  future  heating  and
cooling requirements from Wisconsin Energy for a period of ten years.   The
capital  cost  for  the  steam  facilities was approximately  $21  million.
Wisconsin  Electric  has  integrated these facilities  and  the  associated
customers  into  its steam utility operations.  The capital  cost  for  the
chilled  water  facilities  was  approximately  $19  million.   A  separate
subsidiary of Wisconsin Energy operates the chilled water facilities  as  a
non-regulated business.

NON-UTILITY:    Wisconsin  Energy's  net  non-utility  assets  amounted  to
approximately   $524  million  at  December  31,  1998,  an   increase   of
$293  million  over  the past three years.  Primary additions  during  this
three-year  period included $138 million of energy related  investments  by
WISVEST  Corporation, $82 million of investments in land and  buildings  by
WISPARK  Corporation,  $45  million for  Minergy's  glass  aggregate  plant
described below and 19 million for WISVEST Corporation's acquisition of the
chilled  water  facilities at the Milwaukee County  Power  Plant  described
above..   Wisconsin  Energy  is  reviewing  additional  non-utility  growth
opportunities  on an ongoing basis and may make further investments  and/or
acquisitions  from  time  to time.  For additional  information  concerning
WISVEST Corporation's pending acquisition of two fossil-fueled power plants
in  the State of Connecticut, see "Capital Requirements" below.  Also,  see
"Note  K  -  Segment  Reporting" in Wisconsin Energy's Notes  to  Financial
Statements.

MINERGY  GLASS  AGGREGATE PLANT:   In 1998, Minergy  Corp.,  a  non-utility
subsidiary  of   Wisconsin  Energy, placed into  operation  a  $45  million
facility  in Neenah, Wisconsin that recycles paper sludge from  area  paper
mills  into  two  usable products:  glass aggregate and steam.   The  glass
aggregate  is  being sold into existing construction and aggregate  markets
and  the  steam is being sold to a local paper mill.  The plant results  in
substantial environmental and economic benefits to the area by providing an
alternative to landfilling paper sludge.  Minergy commenced construction in
July  1996,  with commercial operation scheduled for April  1998.   Capital
expenditures  of $3 million, $27 million and $15 million were  made  during
1998, 1997 and 1996, respectively, for this facility.


CASH PROVIDED BY OPERATING AND FINANCING ACTIVITIES

During  the  three  years ended December 31, 1998, total cash  provided  by
operating  activities at both Wisconsin Energy and Wisconsin Electric  were
$1.3  billion.   During this period, internal sources of funds,  after  the
payment  of  dividends,  provided 63% of  Wisconsin  Energy's  and  74%  of
Wisconsin Electric's capital requirements.

Financing activities during the three-year period ended December  31,  1998
included the issuance of $599 million of long-term debt by Wisconsin Energy
of  which  $400 million was issued by Wisconsin Electric.  The proceeds  of
these new debt issues were used to retire maturing debt or refinance higher
coupon  debt  in the amount of $324 million at Wisconsin Energy,  including
$303  million  at  Wisconsin  Electric, and  for  other  general  corporate
purposes.   Wisconsin Energy and Wisconsin Electric increased their  short-
term  debt  by  $125  million and $69 million, and Wisconsin  Energy  added
$63  million  of common equity from the issuance of new shares through  the
Company's stock plans during the three years ended December 31,  1998.   No
preferred  stock was issued.  Dividends on Wisconsin Energy's common  stock
were  $177  million, $173 million and $167 million during  1998,  1997  and
1996,  respectively.  Wisconsin Electric paid dividends to Wisconsin Energy
of  $179 million, $214 million and $168 million during 1998, 1997 and 1996,
respectively, and received a total of $100 million in capital contributions
from Wisconsin Energy during this three-year period.

During  1998,  WISPARK Corporation, a non-utility subsidiary  of  Wisconsin
Energy,  secured  $18 million of bank financing in the form  of  adjustable
rate  mortgage notes due 2000-2008 to finance the construction or  purchase
of various facilities.

In December 1998, Wisconsin Energy Capital Corporation, another non-utility
subsidiary  of  Wisconsin Energy then named Wisconsin  Michigan  Investment
Corporation,  issued  $20  million of 6.21%  medium-term  notes  due  2008,
$30  million of 6.51% medium-term notes due 2013 and $50 million  of  6.94%
medium-term notes due 2028.  Proceeds of the issues were added to Wisconsin
Energy  Capital Corporation's general funds and were used to  finance  non-
utility projects and for other general corporate purposes.

In  June  1998, Wisconsin Electric issued $150 million of 6-1/2% debentures
due  2028.   Proceeds  from  the issue were added to  Wisconsin  Electric's
general  funds and were used to reduce short-term borrowings and for  other
general corporate purposes.

In  April 1998, Wisconsin Energy Capital Corporation issued $25 million  of
6.48%  medium-term notes due 2008.  Proceeds from the issue were  added  to
Wisconsin  Energy  Capital Corporation's general funds  and  were  used  to
financed non-utility projects and for other general corporate purposes.

In  October 1997, Wisconsin Energy Capital Corporation, issued $15  million
of  6.40%  medium-term notes due 2001 and $12 million of 6.33%  medium-term
notes  due  2002.   In November 1997, Wisconsin Energy Capital  Corporation
issued  $20  million  of 6.22% medium-term notes due 2000.   Proceeds  were
added to Wisconsin Energy Capital Corporation's general funds and were used
to  finance  various non-utility projects and for other  general  corporate
purposes.

In  December  1996,  Wisconsin  Electric  and  WISVEST  Corporation  issued
promissory   notes  in  the  amount  of  $12  million  and   $11   million,
respectively,  due 2006.  The notes were issued as part of the  transaction
to  acquire  the steam and chilled water facilities from Milwaukee  County.
The  notes  have  been  discounted to reflect  the  difference  between  an
effective interest rate of 6.36% and a stated rate of 1.93%.

In  November  1996,  Wisconsin  Electric issued  $200  million  of  6  5/8%
unsecured debentures due 2006.  Proceeds were added to Wisconsin Electric's
general  funds  and were applied to the repayment of short-term  borrowings
and for other general corporate purposes.

See  "Note  A  - Summary of Significant Accounting Policies"  in  Wisconsin
Energy's  Notes  to  Financial  Statements  for  a  discussion  of  various
limitations  on  the  ability of Wisconsin Electric to  transfer  funds  to
Wisconsin Energy.


CAPITAL STRUCTURE

Wisconsin  Energy's and Wisconsin Electric's capitalization at December  31
were:

                                                                          
                                  Wisconsin Energy   Wisconsin Electric
                                  ----------------   ------------------
                                     1998     1997       1998      1997
                                     ----     ----       ----      ----
Common Equity                       46.6%    48.6%      47.5%     48.5%
Preferred Stock                      0.7%     0.8%       0.9%      0.9%
Long-Term Debt (including 
  current maturities)               45.7%    42.3%      45.5%     43.7%
Short-Term Debt                      7.0%     8.3%       6.1%      6.9%
                                   ------   ------     ------    ------
                                   100.0%   100.0%     100.0%    100.0%
                                   ======   ======     ======    ======
                                                                          

Even  though earnings increased during 1998 compared to 1997, the Company's
common equity ratio decreased while long-term debt increased.  This was due
to  the  issuance of $150 million of debentures by Wisconsin  Electric  and
$100  million of medium term notes by Wisconsin Energy Capital Corporation,
which  were added to the general funds of Wisconsin Electric and  Wisconsin
Energy  Capital  Corporation, respectively, and used to  reduce  short-term
borrowings  and  for other general corporate purposes.  Wisconsin  Electric
decreased  short-term  debt  by  $23  million,  while  Wisconsin   Energy's
consolidated short-term debt decreased by $38 million.

The  Company  has  maintained strong bond ratings which provides  necessary
access to the capital markets for growth opportunities.  Wisconsin Electric
currently  has  senior  secured debt ratings of AA+ by  Standard  &  Poor's
Corporation  ("S&P")  and  Duff  & Phelps  Inc.  ("D&P"),  Aa2  by  Moody's
Investors  Service ("Moody's") and AA by Fitch Investors Service ("Fitch").
In  addition, Wisconsin Electric currently has unsecured debt ratings of AA
by  S&P  and  D&P, Aa3 by Moody's and  AA- by Fitch.  Wisconsin  Electric's
preferred stock has ratings of AA- by S&P and Fitch, aa3 by Moody's and  AA
by  D&P.   Moody's  has  assigned  a rating  on  Wisconsin  Energy  Capital
Corporation's  unsecured  debt  of A1 and  S&P  an  AA.   Wisconsin  Energy
Corporation's and Wisconsin Electric's commercial paper are rated  A-1+  by
S&P  and  P1 by Moody's.  In March 1999, the Trust Preferred securities  of
WEC  Capital Trust I were assigned preliminary ratings of a1 by Moody's and
a+ by S&P.

At year-end 1998, Wisconsin Energy had $255 million of unused lines of bank
credit  and  approximately $17 million of  cash and cash  equivalents,  and
Wisconsin  Electric  had $128 million of unused lines of  bank  credit  and
$14 million of cash and cash equivalents.


CAPITAL REQUIREMENTS

CONSTRUCTION  EXPENDITURES:   The Company's total construction  budget  for
1999  is  approximately $889 million, including $350 million for  Wisconsin
Electric  and  $539 million for Wisconsin Energy's non-utility subsidiaries
as well as for Edison Sault.

Wisconsin   Electric's  construction  expenditures  during   1999   include
recurring additions to and/or improvements of generation, transmission  and
distribution  facilities  to assure the reliability  of  electric  service;
anticipated expenditures at fossil power plants to comply with evolving air
quality  standards;  the  acquisition  of  new  combustion  turbines;   and
technology-related expenditures for the Year 2000 and for other  technology
improvement efforts.

Of  Wisconsin  Energy's  $539 million capital budget  for  the  non-utility
subsidiaries  and  for Edison Sault, $315 million is  directly  related  to
WISVEST Corporation's anticipated acquisition of certain generating  assets
discussed  below.  The remaining capital budget is primarily  for  property
additions   at   Wisconsin  Energy's  principal  non-utility   subsidiaries
including WISVEST Corporation, Minergy Corp., and WISPARK Corporation.

In  October  1998, WISVEST Connecticut, LLC, a wholly owned  subsidiary  of
WISVEST  Corporation,  entered into an agreement to  purchase  two  fossil-
fueled  power plants for $272 million from The United Illuminating Company,
an  unaffiliated  investor owned utility in New  Haven,  Connecticut.   The
acquisition is expected to close in the second quarter of 1999.  To finance
the purchase price of the facilities as well as provide working capital and
letter  of credit capabilities, Wisvest anticipates a nonrecourse long-term
project  financing  arrangement of $245 million and a capital  contribution
from   Wisconsin  Energy  of  $105  million.   For  additional  information
concerning WISVEST Connecticut, LLC's pending acquisition, see  "Note  L  -
Commitments  and  Contingencies" in Wisconsin Energy's Notes  to  Financial
Statements.

Due  to  changing  environmental  and other  regulations  that  impact  the
Company's  utility  affiliates, future long-term capital  requirements  may
vary  from  recent  capital requirements.  For example, see  "Environmental
Matters"  and  "Industry Restructuring and Competition" above  in  "Factors
Affecting Results of Operations" for a discussion of the EPA's evolving air
quality  standards  applicable to utilities and for  the  changing  utility
industry,  respectively.   Wisconsin Electric currently  expects  to  spend
$350  million to $400 million for new construction in each of the next five
years.   Also, Wisconsin Energy is reviewing additional non-utility  growth
opportunities  on an ongoing basis and may make further investments  and/or
acquisitions from time to time in projects or entities that are expected to
provide a satisfactory return on the investment.  The specific form, amount
and  timing  of  these  investments and  the  related  financing  of  these
opportunities  have  not yet been determined.  As  a  result,  the  Company
expects  that  its  future  long-term capital requirements  may  vary  from
historical levels.


CAPITAL RESOURCES

The  Company  expects internal sources of funds from operations  after  the
payment  of  dividends to provide approximately 40% and  80%  of  Wisconsin
Energy's and Wisconsin Electric's respective  construction expenditures for
1999.   The  remaining cash requirements at Wisconsin Energy and  Wisconsin
Electric  during 1999 are expected to be met through one  or  more  of  the
following: short-term borrowings, the issuance of intermediate or long-term
debt,  the  issuance of trust preferred securities, and proceeds  from  the
sale  of  new  issue  common stock under Wisconsin  Energy's  stock  plans.
Wisconsin  Electric is planning to issue up to $150 million  of  debentures
during  1999.   In  March  1999,  Wisconsin  Energy  filed  a  registration
statement  for  the  issuance  of up to $300  million  of  trust  preferred
securities  of which $200 million was issued in March 1999 in  anticipation
of  funding Wisconsin Energy's capital contribution to WISVEST Connecticut,
LLC   for   the  pending   power   plant  acquisitions  from  The   United
Illuminating  Company and to pay down short-term borrowings.   A  secondary
offering  of  the  balance may occur later in 1999.  Also  in  March  1999,
Wisconsin  Energy  Capital Corporation increased the  availability  of  its
medium-term  note program from $200 million to $400 million.  Beyond  1999,
capital  requirements  will  be  met  through  internally  generated  funds
supplemented,  when  required,  by  debt and  equity  financing,  including
Wisvest's  nonrecourse  long-term project financing arrangements  described
above.   The  specific form, amount and timing of securities which  may  be
issued have not yet been determined and will depend, to a large extent,  on
market conditions and other factors.

Between  November  1, 1998 and December 31, 1998, Wisconsin  Energy  issued
334,270 new shares of common stock which were purchased by participants  in
the  Company's  stock plans with cash investments and reinvested  dividends
aggregating  approximately  $10  million.   Prior  to  November  1,   1998,
Wisconsin Energy had been purchasing shares for its stock plans on the open
market.


                            CAUTIONARY FACTORS

This  report  and  other  documents or oral presentations  contain  or  may
contain forward-looking statements made by or on behalf of Wisconsin Energy
or Wisconsin Electric.  Such statements are based upon management's current
expectations  and are subject to risks and uncertainties that  could  cause
Wisconsin  Energy's  or  Wisconsin  Electric's  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 Energy's or Wisconsin Electric's  actual
results to differ materially from those contemplated in any forward-looking
statements include, among others, the following:

* Factors  affecting  utility  operations  such  as  unusual   weather
  conditions; catastrophic weather-related damage; availability of 
  Wisconsin Electric's or Edison Sault's generating facilities; unscheduled
  generation outages, maintenance or repairs; unanticipated changes in  
  fossil fuel, nuclear  fuel,  purchased  power, gas supply or water supply 
  costs or availability due to higher demand, shortages, transportation 
  problems or other  developments;  nonperformance by electric energy  or
  natural gas suppliers under existing power purchase or gas supply 
  contracts; nuclear or environmental  incidents; resolution of spent
  nuclear fuel storage and disposal issues; electric transmission or 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; transmission
  system operation and/or administration initiatives; recovery of costs  of
  previous investments made under traditional regulation; required 
  approvals for  new  construction; changes in the United States  Nuclear 
  Regulatory Commission's regulations related to Point Beach Nuclear Plant;
  changes in the United States Environmental Protection Agency's as well as 
  the Wisconsin or Michigan Department of Natural Resources' regulations 
  related to  emissions from fossil-fuel-fired power plants; or the siting
  approval process for new generation and transmission facilities.

* The  rapidly changing and increasingly competitive electric  and  gas
  utility  environment  as  market-based  forces  replace  strict  industry
  regulation  and  other  competitors enter the electric  and  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.

* Certain  restrictions imposed by various financing  arrangements  and
  regulatory requirements on the ability of Wisconsin Electric to  transfer
  funds to Wisconsin Energy in the form of cash dividends, loans or 
  advances.

* Changes  in  social  attitudes  regarding  the  utility  and   power
  industries.

* 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, and investigations, claims and changes in those matters.

* Factors affecting the availability or cost of capital such as changes
  in interest rates; 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;  electric  and  gas industry restructuring  initiatives; or
  changes in environmental laws and regulation.

* 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.

* Unanticipated  developments  while  implementing  the  modifications
  necessary  to  mitigate  Year  2000 compliance  problems,  including  the
  availability and cost of personnel trained in this area, the  ability  to
  locate  and correct all relevant computer codes in computer and  embedded
  systems, the indirect impacts of third parties with whom the Company does
  business and who do not mitigate their Year 2000 compliance problems, and
  similar uncertainties.

* Possible  risks associated with non-utility diversification  such  as
  competition;  operating  risks; dependence  upon  certain  suppliers  and
  customers; the cyclical nature of property values that could affect  real
  estate  investments;  unanticipated changes in  environmental  or  energy
  regulations;  timely  regulatory approval without onerous  conditions  of
  potential  acquisitions; and risks associated with minority  investments,
  where there is a limited ability to control the development, management
  or operation of the project.

* Legislative  or  regulatory  restrictions  or  caps  on  non-utility
  acquisitions, investments or projects, including the State of Wisconsin's
  Public  Utility  Holding  Company Law, which could  limit  the  Company's
  diversification and growth opportunities or require the Company to divest
  of certain existing non-utility assets.

* Factors  affecting foreign non-utility operations  including  foreign
  governmental  actions;  foreign economic and  currency  risks;  political
  instability; and unanticipated changes in foreign environmental or energy
  regulations.

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

Wisconsin Energy and Wisconsin Electric undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.



ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See  "Factors Affecting Results of Operations - Market Risks"  in  Item  7,
Management's Discussion and Analysis of Financial Condition and Results  of
Operations  for  information concerning potential  market  risks  to  which
Wisconsin  Energy  and Wisconsin Electric are exposed  due  to  changes  in
interest  rates, the return on marketable equity securities and the  market
price  of  electricity,  fuel to generate electricity  and  gas  to  supply
Wisconsin Electric's gas operations.



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

            INDEX TO 1998 FINANCIAL STATEMENTS

                                                      Page
WISCONSIN ENERGY CORPORATION                          ----

     Consolidated Income Statement.................
     Consolidated Statement of Cash Flows..........
     Consolidated Balance Sheet....................
     Consolidated Capitalization Statement.........
     Consolidated Common Stock Equity Statement....
     Notes to Financial Statements.................
     Report of Independent Accountants.............

WISCONSIN ELECTRIC POWER COMPANY

     Income Statement..............................
     Statement of Cash Flows.......................
     Balance Sheet.................................
     Capitalization Statement......................
     Common Stock Equity Statement.................
     Notes to Financial Statements.................
     Report of Independent Accountants.............

<TABLE>

                           WISCONSIN ENERGY CORPORATION
                           CONSOLIDATED INCOME STATEMENT
                              Year Ended December 31
<CAPTION>                                                                        
                                                 1998             1997              1996
                                                 ----             ----              ----
                                                          (Thousands of Dollars)
<S>                                           <C>              <C>               <C>
Operating Revenues                                                                    
  Electric                                    $1,663,632       $1,412,115        $1,393,270
  Gas                                            295,848          355,172           364,875
  Steam                                           20,506           22,315            15,675
                                              ----------       ----------        ----------
       Total Operating Revenues                1,979,986        1,789,602         1,773,820
                                                                                                 
Operating Expenses                                                                               
  Fuel  (Note H)                                 308,385          311,966           295,651
  Purchased power  (Note H)                      152,980          132,689            36,216
  Cost of gas sold                               175,475          233,877           234,254
  Other operation expenses                       479,618          407,114           391,520
  Maintenance                                    169,262          135,096           103,046
  Depreciation  (Note C)                         243,271          237,698           202,796
  Taxes other than income taxes                   79,512           73,914            77,866
  Federal income tax  (Note D)                    80,267           40,221           105,656
  State income tax  (Note D)                      18,605           10,558            24,976
  Deferred income taxes - net  (Note D)             (658)           7,937            (1,575)
  Investment tax credit - net  (Note D)           (3,434)            (927)           (2,430)
                                              ----------       ----------        ----------
       Total Operating Expenses                1,703,283        1,590,143         1,467,976
                                                                                                 
Operating Income                                 276,703          199,459           305,844
                                                                                                 
Other Income and Deductions                                                                      
  Interest income                                 27,903           24,497            18,177
  Allowance for other funds used                                                                 
    during construction  (Note E)                  2,936            3,349             3,036
  Merger expenses (Note B)                          (563)         (31,934)              -
  Miscellaneous - net (Note L)                      (240)         (47,507)           (2,468)
  Federal income tax  (Note D)                     3,357           23,773             1,939
  State income tax  (Note D)                        (743)           3,011              (642)
                                              ----------       ----------        ----------
       Total Other Income and Deductions          32,650          (24,811)           20,042
                                                                                        
Income Before Interest Charges                                                           
  and Preferred Dividend                         309,353          174,648           325,886
                                                                                          
Interest Charges                                                                        
  Long-term debt                                 108,509          110,138           103,045
  Other interest                                  19,337            9,552             9,032
  Allowance for borrowed funds used                                                     
    during construction  (Note E)                 (7,828)          (6,961)           (5,529)
                                              ----------       ----------        ----------
       Total Interest Charges                    120,018          112,729           106,548
                                                                                          
Preferred Dividend Requirement                                                            
  of Subsidiary                                    1,203            1,203             1,203
                                              ----------       ----------        ----------  
Net Income                                    $  188,132       $   60,716        $  218,135
                                              ==========       ==========        ========== 
Average Number of Shares of Common                                                   
  Stock Outstanding  (Thousands)                 114,315          112,570           110,983
                                              ==========       ==========        ========== 
Earnings Per Share of Common Stock                                                         
  ($; Basic and Diluted)                            1.65             0.54              1.97
                                              ==========       ==========        ========== 
<FN>                                                  
The accompanying notes are an integral part of these financial statements.
</TABLE>    
<TABLE>

                         WISCONSIN ENERGY CORPORATION
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                            Year Ended December 31
<CAPTION>                                                                  
                                                   1998             1997          1996
                                                   ----             ----          ----
                                                         (Thousands of Dollars)
<S>                                              <C>             <C>            <C>  
Operating Activities                                                                          
  Net income                                     $188,132        $ 60,716       $218,135
  Reconciliation to cash                                                                      
     Depreciation                                 243,271         237,698        202,796
     Nuclear fuel expense - amortization           18,922           5,426         21,887
     Conservation expense - amortization           22,498          22,498         22,498
     Debt premium, discount &                                                                 
       expense - amortization                       4,202           7,930          9,809
     Deferred income taxes - net                     (658)          7,937         (1,575)
     Investment tax credit - net                   (3,434)           (927)        (2,430)
     Allowance for other funds used                                                           
       during construction                         (2,936)         (3,349)        (3,036)
     Write-off of merger costs                        563          30,684            -
     Write-down of equipment                          -            30,000            -
     Change in - Accounts receivable              (39,559)          5,736         (1,324)
                 Inventories                         (562)        (12,788)       (30,703)
                 Accounts payable                  36,001             159         39,921
                 Other current assets              10,881           8,452        (15,190)
                 Other current liabilities        (11,572)         31,933            295
     Other                                         (5,798)        (39,143)         3,716
                                                 --------        --------       --------
Cash Provided by Operating Activities             459,951         392,962        464,799
                                                                                        
Investing Activities                                                                    
  Construction expenditures                      (398,982)       (345,908)      (389,194)
  Allowance for borrowed funds used                                                    
    during construction                            (7,828)         (6,961)        (5,529)
  Nuclear fuel                                    (10,183)         (6,352)       (26,053)
  Nuclear decommissioning trust                   (31,379)        (27,248)       (26,309)
  Other                                           (29,552)         25,531         15,666
                                                 --------        --------       --------
Cash Used in Investing Activities                (477,924)       (360,938)      (431,419)
                                                                                     
Financing Activities                                                                 
  Sale of -                                        10,275          29,586         23,180
                                                  313,610          47,000        238,809
  Retirement of -                                     -               -               (1)
                                                  (93,023)       (177,725)       (53,356)
  Change in short-term debt                       (38,496)        250,688        (87,654)
  Dividends on stock - Common                    (177,397)       (172,714)      (167,236)
                                                 --------        --------       --------
Cash Provided by (Used in) Financing Activities    14,969         (23,165)       (46,258)
                                                 --------        --------       -------- 
Change in Cash and Cash Equivalents              $ (3,004)       $  8,859       $(12,878)
                                                 ========        ========       ========   
Supplemental Information                                                           
  Cash Paid For                                                                    
     Interest (net of amount capitalized)        $133,244        $111,383       $ 94,964
     Income taxes                                 103,855          42,859        103,916
<FN>                                                                       
The accompanying notes are an integral part of these financial statements.
</TABLE> 
<TABLE>

                       WISCONSIN ENERGY CORPORATION
                        CONSOLIDATED BALANCE SHEET
                               December 31

                                  ASSETS
<CAPTION>                                                                           
                                                          1998             1997
                                                          ----             ----
                                                         (Thousands of Dollars)
<S>                                                   <C>              <C>
Utility Plant                                                                    
  Electric                                            $4,900,836       $4,690,347
  Gas                                                    523,187          492,271
  Steam                                                   62,832           61,921
  Common                                                 420,750          330,761
                                                      ----------       ----------
                                                       5,907,605        5,575,300
  Accumulated provision for depreciation              (3,007,735)      (2,700,839)
                                                      ----------       ----------
                                                       2,899,870        2,874,461
  Construction work in progress                          117,848           81,612
  Leased facilities - net (Note H)                       133,007          138,687
  Nuclear fuel - net  (Note H)                            87,660           90,219
                                                      ----------       ----------
       Net Utility Plant                               3,238,385        3,184,979
                                                                                 
Other Property and Investments                                                   
  Nuclear decommissioning trust fund  (Note F)           518,505          404,240
  Non-utility property - net                             260,795          222,035
  Investments in unconsolidated subsidiaries             130,555           73,194
  Other                                                  146,616          125,888
                                                      ----------       ----------
       Total Other Property and Investments            1,056,471          825,357
                                                                                 
Current Assets                                                                   
  Cash and cash equivalents                               16,603           19,607
  Accounts receivable, net of allowance for                                      
     doubtful accounts - $16,653 and $15,641             190,103          145,737
  Accrued utility revenues                               130,518          141,273
  Fossil fuel (at average cost)                          123,618          124,045
  Materials and supplies (at average cost)                75,434           73,159
  Prepayments                                             68,745           62,479
  Other                                                    3,098            7,017
                                                      ----------       ----------
       Total Current Assets                              608,119          573,317
                                                                                 
Deferred Charges and Other Assets                                                
  Accumulated deferred income taxes  (Note D)            199,372          172,546
  Deferred regulatory assets  (Note A)                   225,464          215,200
  Other                                                   33,946           66,285
                                                      ----------       ----------
       Total Deferred Charges and Other Assets           458,782          454,031
                                                      ----------       ----------
Total Assets                                          $5,361,757       $5,037,684
                                                      ==========       ========== 
<FN>                          
The accompanying notes are an integral part of these financial statements.
</TABLE>  
<TABLE>

                           WISCONSIN ENERGY CORPORATION
                            CONSOLIDATED BALANCE SHEET
                                   December 31

                          CAPITALIZATION AND LIABILITIES
<CAPTION>                                                                   
                                                           1998               1997
                                                           ----               ----
                                                           (Thousands of Dollars)
<S>                                                    <C>                <C>
Capitalization (See Capitalization Statement)                                  
  Common stock equity                                  $1,903,105         $1,862,932
  Preferred stock                                          30,450             30,450
  Long-term debt  (Note H)                              1,749,024          1,532,405
                                                       ----------         ----------
       Total Capitalization                             3,682,579          3,425,787
                                                                             
Current Liabilities                                                                     
  Long-term debt due currently  (Note H)                  119,140             90,004
  Notes payable  (Note I)                                 286,859            319,953
  Accounts payable                                        187,452            148,588
  Payroll and vacation accrued                             29,578             25,392
  Taxes accrued - income and other                         38,177             41,495
  Interest accrued                                         20,755             20,334
  Other                                                    53,219             63,832
                                                       ----------         ----------
       Total Current Liabilities                          735,180            709,598
                                                                                     
Deferred Credits and Other Liabilities                                              
  Accumulated deferred income taxes  (Note D)             570,750            525,666
  Accumulated deferred investment tax credits              84,216             86,871
  Deferred regulatory liabilities  (Note A)               159,078            173,688
  Other                                                   129,954            116,074
                                                       ----------         ----------
       Total Deferred Credits and Other Liabilities       943,998            902,299
                                                                                   
Commitments and Contingencies  (Note L)                ----------         ---------- 
                                                                                   
Total Capitalization and Liabilities                   $5,361,757         $5,037,684
                                                       ==========         ==========
<FN>                        
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE> 

                                    WISCONSIN ENERGY CORPORATION
                                CONSOLIDATED CAPITALIZATION STATEMENT
                                             December 31
<CAPTION>
                                                                                     1998          1997
                                                                                     ----          ----
                                                                                  (Thousands of Dollars)
<S>                                                                             <C>           <C>
Common Stock Equity  (See Common Stock Equity Statement)                                                  
  Common stock - $.01 par value; authorized 325,000,000 shares;                                           
      outstanding - 115,607,389 and 112,865,844 shares                          $    1,156    $    1,129
        Other paid in capital                                                      759,195       729,654
  Retained earnings                                                              1,144,092     1,132,149
  Unearned compensation - restricted stock award                                    (1,338)          -
                                                                                ----------    ----------
        Total Common Stock Equity                                                1,903,105     1,862,932
                                                                                                         
Preferred Stock - Wisconsin Electric Power Company, Cumulative                                           
  Six Per Cent. Preferred Stock - $100 par value;                                                        
      authorized 45,000 shares; outstanding - 44,498                                 4,450         4,450
  Serial preferred stock - $100 par value; authorized 2,286,500 shares;                                  
      outstanding - 3.60% Series - 260,000 shares                                   26,000        26,000
                                                                                ----------    ----------
        Total Preferred Stock  (Note G)                                             30,450        30,450
                                                                                                         
Long-Term Debt                                                                                           
  First mortgage bonds                                                                                   
        Wisconsin Electric Power Company -     5-1/8% to 7-1/4% due 1998-2004      231,000       291,000
                                               6.85% to 7-3/4% due 2016-2023       209,000       209,000
                                               7.05% to 9-1/8% due 2024-2027       363,443       363,443
        Edison Sault Electric Company -        7.90% to 10.31% due 2001-2009         6,170           -
                                                                                                         
  Debentures  (unsecured)                                                                                
        Wisconsin Electric Power Company -     6-1/2% to 9.47% due 2006-2095       480,600       331,300
                                                                                                         
  Notes  (secured)                                                                                       
        Northern Tree Service, Inc. -          Variable rate due 2003                   36           -
        Wispark Corporation -                  Variable rate due 2000-2008          15,463           -
                                               7.40% due 2003                        2,469           -
        Wisvest Corporation -                  6.36% effective rate due 2006         8,758         9,853
                                                                                                         
  Notes  (unsecured)                                                                                     
        Wisconsin Electric Power Company -     Variable rate due 2006-2030         165,350       165,350
                                               6.36% effective rate due 2006         9,642        10,847
        Edison Sault Electric Company -        6.55% to 8.00% due 1999-2007          6,756           -
                                               Variable rate due 1999                2,750           -
        Wisconsin Energy Capital Corporation - 5.80% to 6.85% due 1998-2005         74,600        81,600
                                               6.21% to 6.94% due 2008-2028        125,400           -
        WMF Corp. -                            9.1% due 2001                         1,880         2,400
                                                                                                         
  Obligations under capital leases - Wisconsin Electric Power Company              189,980       182,450
  Unamortized discount - net                                                       (25,133)      (24,834)
  Long-term debt due currently                                                    (119,140)      (90,004)
                                                                                ----------    ----------
              Total Long-Term Debt  (Note H)                                     1,749,024     1,532,405
                                                                                ----------    ---------- 
Total Capitalization                                                            $3,682,579    $3,425,787
                                                                                ==========    ========== 
<FN>                    
The accompanying notes are an integral part of these financial statements.                            
</TABLE>
<TABLE>

                                       WISCONSIN ENERGY CORPORATION  
                                CONSOLIDATED COMMON STOCK EQUITY STATEMENT
<CAPTION>
                                                  Common Stock    
                                                  ------------
                                                          $.01 Par   Other Paid    Retained    Unearned
                                               Shares      Value     In Capital    Earnings  Compensation    Total
                                               ------     --------   ----------    --------  ------------    ----- 
                                                                           (Thousands of Dollars)
<S>                                          <C>             <C>        <C>         <C>         <C>        <C>   
Balance - December 31, 1995                  110,819,337     $1,108     $676,909    $1,193,248  $   -      $1,871,265
                                                                                                                   
  Net income                                                                           218,135                218,135
  Common stock cash dividends                                                                                     
     $1.5075 per share                                                                (167,236)              (167,236)
  Sale of common stock                           859,458          9       23,171                               23,180
                                             -----------     ------     --------    ----------  --------   ----------
Balance - December 31, 1996                  111,678,795      1,117      700,080     1,244,147      -       1,945,344
                                                                                                                    
  Net income                                                                            60,716                 60,716
  Common stock cash dividends                                                                                       
     $1.535 per share                                                                 (172,714)              (172,714)
  Sale of common stock                         1,187,049         12       29,574                               29,586
                                             -----------     ------     --------    ----------  --------   ----------
Balance - December 31, 1997                  112,865,844      1,129      729,654     1,132,149      -       1,862,932
                                                                                                                       
  Common stock cash dividends                                                                                          
     $1.555 per share                                                                 (177,397)              (177,397)
  Sale of common stock                           334,270          3       10,292           (20)                10,275
  Acquisition of ESELCO, Inc. (Note B)         2,407,275         24       19,249         1,228                 20,501
  Restricted stock award                                                                          (1,338)      (1,338)
                                             -----------     ------     --------    ----------  --------   ---------- 
Balance - December 31, 1998                  115,607,389     $1,156     $759,195    $1,144,092  $ (1,338)  $1,903,105
                                             ===========     ======     ========    ==========  ========   ==========  
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>      


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA  (cont'd)


                       WISCONSIN ENERGY CORPORATION 
                       NOTES TO FINANCIAL STATEMENTS


A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERAL:    The consolidated financial statements include the  accounts  of
Wisconsin  Energy  Corporation ("Wisconsin Energy" or the  "Company");  its
utility   subsidiaries,  Wisconsin  Electric  Power   Company   ("Wisconsin
Electric") and Edison Sault Electric Company ("Edison Sault"); and its non-
utility  subsidiaries, WISPARK Corporation; WISVEST Corporation;  Wisconsin
Energy   Capital   Corporation,  formerly  Wisconsin  Michigan   Investment
Corporation;  Minergy Corp.; WEC International, Inc.;  WITECH  Corporation;
Northern  Tree Service, Inc; Badger Service Company; and other  non-utility
companies.

The accounting records of the Company's utility subsidiaries are maintained
as  prescribed  by  the  Federal Energy Regulatory  Commission.   Wisconsin
Electric's  accounting records are modified for requirements of the  Public
Service Commission of Wisconsin ("PSCW").

The  preparation  of  financial  statements in  conformity  with  generally
accepted  accounting principles requires management to make  estimates  and
assumptions  that  affect  the  reported  amounts  of  certain  assets  and
liabilities and disclosure of contingent assets and liabilities at the date
of  financial statements and the reported amounts of revenues and  expenses
during  the  reporting  period.  Actual results  could  differ  from  those
estimates.

REVENUES:    Utility  revenues are recognized  on  the  accrual  basis  and
include estimated amounts for service rendered but not billed.

FUEL:   The cost of fuel is expensed in the period consumed.

PROPERTY:    Property  is recorded at cost.  Additions to  and  significant
replacements  of  utility property are charged to utility  plant  at  cost;
minor  items  are charged to maintenance expense.  Cost includes  material,
labor  and allowance for funds used during construction (see Note E).   The
cost  of  depreciable  utility property, together with  removal  cost  less
salvage, is charged to accumulated provision for depreciation when property
is retired.

In  1998,  Wisconsin Electric began classifying certain  utility  plant  as
common.  Common plant is allocated to electric, gas and steam utility plant
in  rate  proceedings.   All periods presented have been  reclassified  for
comparative purposes.

REGULATORY   MATTERS:    Pursuant  to  Statement  of  Financial  Accounting
Standards  No.  71,  Accounting  for  the  Effects  of  Certain  Types   of
Regulation,  the  utility subsidiaries capitalize,  as  regulatory  assets,
incurred costs which are expected to be recovered in future utility  rates.
The  utility  subsidiaries  also  record, as  regulatory  liabilities,  the
current recovery in utility rates of costs which are expected to be paid in
the future.

The  following deferred regulatory assets and liabilities are reflected  in
the Consolidated Balance Sheet at December 31.

                                    
                                                    1998           1997
                                                    ----           ----
                                                  (Thousands of Dollars)
Deferred Regulatory Assets                                              
   Deferred income taxes                         $160,941       $151,157
   Department of Energy assessments                24,841         28,575
   Deferred nuclear costs                          15,324         17,681
   Purchase power commitment                       13,379          5,050
   Other                                           10,979         12,737
                                                 --------       --------
Total Deferred Regulatory Assets                 $225,464       $215,200
                                                 ========       ========
Deferred Regulatory Liabilities                                         
   Deferred income taxes                         $142,483       $148,292
   Tax and interest refunds                         8,667         13,943
   Other                                            7,928         11,453
                                                 --------       --------
Total Deferred Regulatory Liabilities            $159,078       $173,688
                                                 ========       ========
                                                                        

Wisconsin Electric directs a variety of demand-side management programs  to
help  foster  energy conservation by its customers.  As authorized  by  the
PSCW,  Wisconsin  Electric capitalized certain conservation  program  costs
prior  to  1995.  Utility rates approved by the PSCW provide for a  current
return  on these conservation investments.  As of December 31, 1998,  there
were  $46.4 million of conservation investments on the Consolidated Balance
Sheet  in  other  property and investments which will  be  amortized  on  a
straight  line  basis  to  income over the  next  two  years,  as  well  as
$69.5 million of conservation investments as of December 31, 1997.

STATEMENT  OF  CASH  FLOWS:   Cash and cash equivalents include  marketable
debt  securities acquired three months or less from maturity.  During 1997,
Wisconsin   Electric  recorded  a  $140  million  non-cash  capital   lease
transaction for a long-term power purchase contract (see Note  H).   During
1998,  Wisconsin  Energy recorded a $19.3 million non-cash  acquisition  of
ESELCO, Inc. accounted for as a pooling of interests (see Note B).

RESTRICTIONS:   Various financing arrangements and regulatory  requirements
impose  certain  restrictions on the ability of Wisconsin Energy's  utility
subsidiaries   to transfer funds to Wisconsin Energy in the  form  of  cash
dividends,  loans or advances.  Under Wisconsin law, Wisconsin Electric  is
prohibited from loaning funds, either directly or indirectly, to  Wisconsin
Energy.   The  Company does not believe that such restrictions will  affect
its operations.

NEW  PRONOUNCEMENTS:   On June 15, 1998, the Financial Accounting Standards
Board   issued  Statement  of  Financial  Accounting  Standards  No.   133,
Accounting  for Derivative Instruments and Hedging Activities ("FAS  133").
FAS  133  is  effective  January 1, 2000 for  Wisconsin  Energy.   FAS  133
requires  that all derivative instruments be recorded on the balance  sheet
at  their  fair value.  Changes in fair value of derivatives  are  recorded
each  period in current earnings or in other comprehensive income depending
upon how the derivative is designated.  Based upon the current limited  use
of  derivative  instruments at Wisconsin Energy, the adoption  of  FAS  133
would  not  have  a  significant effect on its  results  of  operations  or
financial position.

In  1998,  the  Emerging  Issues Task Force  of  the  Financial  Accounting
Standards Board issued EITF 98-10,  Accounting for Energy Trading and  Risk
Management  Activities.   EITF 98-10 requires entities  engaged  in  energy
trading  activities  to adopt mark to market accounting  for  fiscal  years
beginning after December 15, 1998.  The Company elected early adoption  for
Griffin  Energy  Marketing  L.L.C. ("Griffin"),  a  subsidiary  of  WISVEST
Corporation,  and  the  impact was not material.  Griffin  began  marketing
energy related services and limited trading of electricity in January 1998.


B - MERGERS

NORTHERN  STATES POWER COMPANY:   On May 16, 1997, the Boards of  Directors
of  Wisconsin  Energy  and  Northern  States  Power  Company,  a  Minnesota
corporation, agreed to terminate by mutual written consent an Agreement and
Plan  of  Merger  which  provided for a business combination  of  Wisconsin
Energy and Northern States Power Company to form Primergy Corporation.   As
a  result,  Wisconsin Energy recorded a $30.7 million charge in the  second
quarter  of  1997 ($18.8 million net of tax or approximately 17  cents  per
share)  to  write off deferred transaction costs and costs to  achieve  the
merger.

ESELCO,  INC.:    On May 31, 1998, Wisconsin Energy acquired  ESELCO,  Inc.
("ESELCO"),  parent  company of Edison Sault, in a tax-free  reorganization
accounted  for  as  a  pooling  of  interests.   In  connection  with   the
acquisition, Wisconsin Energy issued 2,407,275 shares of common stock, with
fractional interests paid in cash, based upon an exchange ratio  of  1.5114
shares  of  Wisconsin  Energy common stock for each  outstanding  share  of
ESELCO  common  stock.  Due to the immaterial nature  of  the  transaction,
Wisconsin  Energy has not restated any historical financial or  statistical
information.   Instead,  Wisconsin Energy combined ESELCO's  May  31,  1998
balance  sheet with Wisconsin Energy's, including a $1.2 million credit  to
retained  earnings  of which $0.9 million represents ESELCO's  consolidated
net  income  during  the first five months of 1998.   Wisconsin  Energy  is
operating Edison Sault as a separate utility subsidiary.


C - DEPRECIATION

Depreciation  expense is accrued at straight line rates over the  estimated
useful  lives  of  the  assets.  These rates are  certified  by  the  state
regulatory commissions and include estimates for salvage and removal costs.
Depreciation as a percent of average depreciable utility plant was 4.4%  in
1998,  4.5%  in  1997  and 4.1% in 1996.  Nuclear plant decommissioning  is
accrued as depreciation expense (see Note F).  For contributions in aid  of
construction  remaining  on  the  Consolidated  Balance  Sheet  that   were
collected   prior   to  1991,  Wisconsin  Electric  had   been   amortizing
approximately $3 million per year as a credit to depreciation expense.   In
its 1998 Rate Order, the PSCW authorized Wisconsin Electric to amortize the
remaining  $45.7  million  balance  of pre-1991  contributions  in  aid  of
construction at December 31, 1997 on a straight line basis over  the  1998-
1999 biennial period. As a result, credits to depreciation expense for pre-
1991  contributions were $22.9 million in 1998, $3.5 million  in  1997  and
$3.4 million in 1996.


D - INCOME TAXES

The  Company  follows the liability method in accounting for income  taxes.
The  liability method provides that deferred tax assets and liabilities  be
recorded  based  on  the difference between the tax  bases  of  assets  and
liabilities and their carrying amounts for financial reporting purposes.

The following table is a summary of income tax expense and a reconciliation
of  total income tax expense with the tax expected at the federal statutory
rate.


                                                1998      1997       1996
                                                ----      ----       ----
                                                  (Thousands of Dollars)
                                                                        
Current tax expense                         $  96,258   $23,995   $129,335
                                                                     
Deferred income taxes - net                      (658)    7,937     (1,575)
Investment tax credit - net                    (3,434)     (927)    (2,430)
                                            ---------   -------   --------
    Total Tax Expense                       $  92,166   $31,005   $125,330 
                                            =========   =======   ========
Income Before Income Taxes                                               
   and Preferred Dividend                   $ 281,501   $92,924   $344,668 
                                            =========   =======   ========

Expected tax at federal statutory rate      $  98,525   $32,523   $120,634
State income tax net of federal tax benefit    13,550     6,176     17,671
Flowback of prior contributions in aid         (8,039)   (1,157)    (1,157)
     of construction
Investment tax credit restored                 (4,729)   (4,487)    (4,509)
Low-income housing credits                     (2,846)   (2,831)    (2,930)
Other (no item over 5% of expected tax)        (4,295)      781     (4,379)
                                            ---------   -------   --------
   Total Tax Expense                        $  92,166   $31,005   $125,330
                                            =========   =======   ========
                                                  
                                                                            
Statement of Financial Accounting Standards No. 109, Accounting for  Income
Taxes   ("FAS  109"),  requires  the  recording  of  deferred  assets   and
liabilities  to  recognize the expected future tax consequences  of  events
that  have  been  reflected in the Company's financial  statements  or  tax
returns  and  the adjustment of deferred tax balances to reflect  tax  rate
changes.  Following is a summary of deferred income taxes under FAS 109  at
December 31.


                                                  1998        1997
                                                  ----        ----
                                              (Thousands of Dollars)
Deferred Income Tax Assets                                         
     Decommissioning trust                      $ 48,812   $ 43,405
     Construction advances                        55,696     49,202
     Other                                        94,864     79,939
                                                --------   --------
Total Deferred Income Tax Assets                $199,372   $172,546
                                                ========   ========
Deferred Income Tax Liabilities                                    
     Property related                           $553,393   $514,792
     Other                                        17,357     10,874
                                                --------   --------
Total Deferred Income Tax Liabilities           $570,750   $525,666
                                                ========   ========
                                                                   

Wisconsin  Electric and Edison Sault have also recorded deferred regulatory
assets  and liabilities representing the future expected impact of deferred
taxes on utility revenues (see Note A).


E - ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION

Allowance  for  funds  used during construction ("AFUDC")  is  included  in
utility  plant  accounts  and represents the cost of  borrowed  funds  used
during  plant construction and a return on stockholders' capital  used  for
construction purposes.  Allowance for borrowed funds also includes interest
capitalized  on  qualifying  assets of non-utility  subsidiaries.   On  the
Consolidated  Income Statement, the cost of borrowed funds  (before  income
taxes)  is  a reduction of interest expense and the return on stockholders'
capital is an item of non-cash other income.

As  approved by the PSCW, Wisconsin Electric's AFUDC was capitalized during
the  following  periods  on 50% of construction work  in  progress  at  the
following rates:

*    June 1, 1998  December 31, 1998           10.21%
*    February 18, 1997  May 31, 1998           10.29%
*    January 1, 1996  February 17, 1997        10.17%


F - NUCLEAR OPERATIONS

POINT  BEACH  NUCLEAR  PLANT:   Wisconsin Electric owns  and  operates  two
approximately 500 megawatt electric generating units at Point Beach Nuclear
Plant  ("Point  Beach") in Two Rivers, Wisconsin.  During  1998,  1997  and
1996,  Point  Beach  provided 18%, 6% and 24%, respectively,  of  Wisconsin
Electric's   net  electric  energy  supply.   The  United  States   Nuclear
Regulatory Commission operating licenses for Point Beach expire in  October
2010 for Unit 1 and in March 2013 for Unit 2.

In  1997,  the PSCW authorized Wisconsin Electric to defer certain  nuclear
non-fuel  operation and maintenance costs in excess of  those  included  in
1997  rates.   As a result, Wisconsin Electric deferred $18 million  during
1997.   During  1998,  the  PSCW authorized a  five-year  recovery  in  the
electric  retail jurisdiction in the State of Wisconsin of the excess  1997
nuclear  non-fuel  operation and maintenance costs, and Wisconsin  Electric
began amortizing the $18 million of deferred costs on a straight line basis
over  the five year recovery period.  As of December 31, 1998, $15  million
of  deferred  costs  remain on the Consolidated Balance Sheet  in  Deferred
Charges and Other Assets - Deferred Regulatory Assets (see Note A).

NUCLEAR  INSURANCE:    The Price-Anderson Act as amended  and  extended  to
August  1,  2002, currently limits the total public liability  for  damages
arising  from  a nuclear incident at a nuclear power plant to approximately
$9.8  billion,  of  which  $200 million is covered by  liability  insurance
purchased from private sources, and $9.6 billion is covered by an  industry
retrospective loss sharing plan whereby in the event of a nuclear  incident
resulting  in damages exceeding the private insurance coverage, each  owner
of  a  nuclear  plant  would  be  assessed a  deferred  premium  of  up  to
$88.1  million per reactor (Wisconsin Electric owns two) with  a  limit  of
$10  million per reactor within one calendar year.  As the owner  of  Point
Beach, Wisconsin Electric would be obligated to pay its proportionate share
of any such assessment.

Wisconsin Electric participated in an industry-wide insurance program, with
an aggregate limit of $200 million which covered radiation injury claims of
nuclear workers first employed after 1987.  This program was replaced  with
a new program (which has no retrospective assessment provisions) at the end
of 1997.  However, the discovery period for claims covered under the former
program  remains  open until the end of 2007 for those few former  insureds
who  no  longer  need to participate in the new, replacement  program.   If
claims  in  excess  of the funds available under the old  program  develop,
Wisconsin Electric would be assessed up to a maximum of approximately
$3.1 million per reactor.

Wisconsin  Electric, through its membership in Nuclear  Electric  Insurance
Limited   ("NEIL"),   carries   decontamination,   property   damage    and
decommissioning shortfall insurance covering losses of up to  $1.5  billion
(subject  to a $1 million deductible for each loss) at Point Beach.   Under
policies  issued by NEIL, the insured member is liable for a  retrospective
premium  adjustment in the event of catastrophic losses exceeding the  full
financial  resources  of NEIL.  Wisconsin Electric's maximum  retrospective
liability under its policies is $10.1 million.

Wisconsin  Electric  also maintains insurance with NEIL  covering  business
interruption and extra expenses during any prolonged accidental outage  (in
excess  of  23  weeks)  at  Point Beach, where such  outage  is  caused  by
accidental property damage from radioactive contamination or other risks of
direct physical loss.  Wisconsin Electric's maximum retrospective liability
under this policy is $5.1 million.

It  should  not be assumed that, in the event of a major nuclear  incident,
any  insurance or statutory limitation of liability would protect Wisconsin
Electric from material adverse impact.

NUCLEAR  DECOMMISSIONING:   Wisconsin Electric expects to operate  the  two
units at Point Beach to the expiration of their current operating licenses.
The   estimated  cost  to  decommission  the  plant  in  1998  dollars   is
$489  million  based  upon  a  site  specific  decommissioning  cost  study
completed  in  1998.   Assuming plant shutdown at  the  expiration  of  the
current  operating licenses, prompt dismantlement and annual escalation  of
costs  at  specific  inflation  factors established  by  the  PSCW,  it  is
projected that approximately $1.8 billion will be spent over a thirty-three
year period, beginning in 2010, to decommission the plant.

Nuclear decommissioning costs are accrued as depreciation expense over  the
expected service lives of the two units following an external sinking  fund
method.    It  is  expected  that  the  annual  payments  to  the   Nuclear
Decommissioning  Trust Fund ("Fund") along with the earnings  on  the  Fund
will  provide  sufficient funds at the time of decommissioning.   Wisconsin
Electric  believes it is probable that any shortfall in  funding  would  be
recoverable in utility rates.

As  required  by  Statement  of  Financial Accounting  Standards  No.  115,
Accounting for Certain Investments in Debt and Equity Securities, Wisconsin
Electric's  debt and equity security investments in the Fund are classified
as available for sale.  Gains and losses on the Fund were determined on the
basis of specific identification; net unrealized holding gains on the  Fund
were recorded as part of accumulated provision for depreciation.

Following  is  a summary of decommissioning costs and earnings  charged  to
depreciation expense and the Fund balance included in accumulated provision
for depreciation at December 31.  The Fund balance is stated at fair value.


                                               1998      1997     1996
                                               ----      ----     ----
                                               (Thousands of Dollars)
                                                                          
Decommissioning costs                        $ 15,461  $ 11,402  $15,418
Earnings                                       15,918    15,846   10,891
                                             --------  --------  -------
  Depreciation Expense                       $ 31,379  $ 27,248  $26,309
                                             ========  ========  =======

Total costs accrued to date                  $320,356  $288,977        
Unrealized gain                               198,149   115,263        
                                             --------  --------        
  Accumulated Provision for Depreciation     $518,505  $404,240        
                                             ========  ========        
                                                                          

DECONTAMINATION AND DECOMMISSIONING FUND:   The Energy Policy Act  of  1992
establishes  a Uranium Enrichment Decontamination and Decommissioning  Fund
("D&D  Fund")  for  the United States Department of Energy's  nuclear  fuel
enrichment facilities.  Deposits to the D&D Fund are derived in  part  from
special  assessments  on  utilities  using  enrichment  services.   As   of
December  31, 1998, Wisconsin Electric has recorded its remaining estimated
liability  equal to the projected special assessments of $21.4 million.   A
corresponding  deferred  regulatory asset  is  detailed  in  Note  A.   The
deferred  regulatory asset will be amortized to nuclear  fuel  expense  and
included    in    utility    rates    over    the    next    nine    years.
In  Wisconsin  Electric's 1998 Rate Order, the PSCW approved recovery  over
the 1998-1999 biennial period of D&D Fund costs disallowed in 1997.


G - PREFERRED STOCK

Preferred  stock  authorized but unissued is:  Wisconsin Energy,  $.01  par
value, 15,000,000 shares and Wisconsin Electric, cumulative, $25 par value,
5,000,000 shares.

The  3.60% series preferred stock is redeemable in whole or in part at  the
option of Wisconsin Electric at $101 per share plus any accrued dividends.

The  fair  value of Wisconsin Electric's preferred stock was $20.2  million
and $17.8 million at December 31, 1998 and 1997, respectively.


H - LONG-TERM DEBT

FIRST  MORTGAGE BONDS, DEBENTURES AND NOTES:   The maturities  and  sinking
fund  requirements through 2003 for the aggregate amount of long-term  debt
outstanding  (excluding obligations under capital lease)  at  December  31,
1998 are shown below.


                   (Thousands of Dollars)
                                               
       1999               $98,809             
       2000                40,022             
       2001                25,031             
       2002                17,173             
       2003                16,220             
                                              

Sinking fund requirements for the years 1999 through 2003, included in  the
table above, are $27.6 million.  Substantially all utility plant is subject
to the mortgage of the respective subsidiary.

Long-term debt premium or discount and expense of issuance are amortized by
the straight line method over the lives of the debt issues and included  as
interest  expense.  Unamortized amounts pertaining to reacquired  debt  are
written  off  currently,  when  acquired  for  sinking  fund  purposes,  or
amortized  in  accordance  with state regulatory  commission  orders,  when
acquired for early retirement.

In October 1997, Wisconsin Energy Capital Corporation issued $15 million of
6.40% medium-term notes due 2001 and $12 million of 6.33% medium-term notes
due  2002.   In November 1997, Wisconsin Energy Capital Corporation  issued
$20  million of 6.22% medium-term notes due 2000.  Proceeds were  added  to
Wisconsin  Energy  Capital Corporation's general funds  and  were  used  to
finance  various  non-utility  projects and  for  other  general  corporate
purposes.

In  April 1998, Wisconsin Energy Capital Corporation issued $25 million  of
6.48%  medium-term notes due 2008.  Proceeds from the issue were  added  to
Wisconsin  Energy  Capital Corporation's general funds  and  were  used  to
finance non-utility projects and for other general corporate purposes.

In  June  1998, Wisconsin Electric issued $150 million of 6-1/2% debentures
due  2028.   Proceeds  from  the issue were added to  Wisconsin  Electric's
general  funds and were used to reduce short-term borrowings and for  other
general corporate purposes.

In  December 1998, Wisconsin Energy Capital Corporation issued $20  million
of 6.21% medium-term notes due 2008, $30 million of 6.51% medium-term notes
due 2013, and $50 million of 6.94% medium-term notes due 2028.  Proceeds of
the  issues  were  added to Wisconsin Energy Capital Corporation's  general
funds  and were used to finance non-utility projects and for other  general
corporate purposes.

During  1998, WISPARK Corporation secured $18 million of bank financing  in
the  form  of  adjustable rate mortgage notes due 2000-2008 to finance  the
construction or purchase of various facilities.

Following is Wisconsin Energy's long-term debt outstanding at December 31.
<TABLE>
<CAPTION>
                                                                                 1998          1997
                                                                                 ----          ----
                                                                               (Thousands of Dollars)
<S>                                                                         <C>            <C>         
First Mortgage Bonds                                                                                   
  Wisconsin Electric Power Company -       5-1/8% Series due 1998           $      -       $   60,000
                                           6-1/2% Series due 1999               40,000         40,000
                                           6-5/8% Series due 1999               51,000         51,000
                                           7-1/4% Series due 2004              140,000        140,000
                                           7-1/8% Series due 2016              100,000        100,000
                                           6.85% Series due 2021                 9,000          9,000
                                           7-3/4% Series due 2023              100,000        100,000
                                           7.05% Series due 2024                60,000         60,000
                                           9-1/8% Series due 2024                3,443          3,443
                                           8-3/8% Series due 2026              100,000        100,000
                                           7.70% Series due 2027               200,000        200,000
  Edison Sault Electric Company -          10.31% Series D due 2001                900            -
                                           7.90% Series H due 2002               1,200            -
                                           10-1/4% Series G due 2009             4,070            -
                                                                                                       
Debentures (unsecured)                                                                                 
  Wisconsin Electric Power Company -       6-5/8% due 2006                     200,000        200,000
                                           9.47% due 2006                        5,600          6,300
                                           8-1/4% due 2022                      25,000         25,000
                                           6-1/2% due 2028                     150,000            -
                                           6-7/8% due 2095                     100,000        100,000
                                                                           
Notes (secured)                                                            
  Northern Tree Service, Inc. -            Variable rate due 2003                   36            -
  Wispark Corporation -                    Variable rate due 2000                7,886            -
                                           Variable rate due 2001                4,070            -
                                           Variable rate due 2008                3,507            -
                                           7.4% due 2003                         2,469            -
  Wisvest Corporation -                    6.36% effective rate due 2006         8,758          9,853
                                                                                                      
Notes (unsecured)                                                                                      
  Wisconsin Electric Power Company -       Variable rate due 2006                1,000          1,000
                                           Variable rate due 2015               17,350         17,350
                                           Variable rate due 2016               67,000         67,000
                                           Variable rate due 2030               80,000         80,000
                                           6.36% effective rate due 2006         9,642         10,847
  Edison Sault Electric Company -          6.55%-8.00% due 1999-2007             6,756            -
                                           Variable rate due 1999                2,750            -
  Wisconsin Energy Capital Corporation -   5.8% due 1998                           -            7,000
                                           6.49% due 2000                        7,000          7,000
                                           6.22% due 2000                       20,000         20,000
                                           6.40% due 2001                       15,000         15,000
                                           6.33% due 2002                       12,000         12,000
                                           6.66% due 2003                       10,600         10,600
                                           6.85% due 2005                       10,000         10,000
                                           6.48% due 2008                       25,400            -
                                           6.21% due 2008                       20,000            -
                                           6.51% due 2013                       30,000            -
                                           6.94% due 2028                       50,000            -
  WMF Corp. -                              9.1% due 2001                         1,880          2,400
                                                                                                       
Obligations under capital leases -                                             189,980        182,450
Wisconsin Electric Power Company                                         
Unamortized discount - net                                                     (25,133)       (24,834)
Long-term debt due currently                                                  (119,140)       (90,004)
                                                                                                       
                                                                            ----------     ----------
Total Long-Term Debt                                                        $1,749,024     $1,532,405
                                                                            ==========     ==========
</TABLE>

Following  is  additional information concerning the  variable  rate  notes
outstanding and their corresponding interest rates at December 31, 1998.


                                      Variable Rate     Interest Rate
                                          Notes
                                      -------------     -------------
                                         (Thousands of Dollars)
                                                              
Northern Tree Service, Inc.         $    36  Due 2003         7.75%
Wispark Corporation                   7,886  Due 2000         6.89%
                                      4,070  Due 2001         6.84%
                                      3,507  Due 2008         7.60%
Wisconsin Electric Power Company     67,000  Due 2016         4.10%
                                     98,350  Due 2006-2030    3.95%
Edison Sault Electric Company         2,750  Due 1999         7.75%


OBLIGATIONS  UNDER CAPITAL LEASE:   Wisconsin Electric has a  nuclear  fuel
leasing  arrangement with Wisconsin Electric Fuel Trust ("Trust") which  is
treated  as  a capital lease.  The nuclear fuel is leased and amortized  to
fuel  expense for a period of 60 months or until the removal  of  the  fuel
from  the reactor, if earlier.  Lease payments include charges for the cost
of  fuel  burned,  financing  costs and  management  fees.   In  the  event
Wisconsin  Electric  or  the Trust terminates the lease,  the  Trust  would
recover  its  unamortized  cost of nuclear fuel  from  Wisconsin  Electric.
Under  the  lease  terms,  Wisconsin Electric is  in  effect  the  ultimate
guarantor  of  the  Trust's commercial paper and line of credit  borrowings
financing the investment in nuclear fuel.  Interest expense on the  nuclear
fuel  lease,  included in fuel expense, was $3.1 million, $0.9 million  and
$2.3 million during 1998, 1997 and 1996, respectively.

To  meet  a portion of its electric energy supply needs, Wisconsin Electric
entered  into  a  long-term power purchase contract  with  an  unaffiliated
independent   power  producer,  LSP-Whitewater  Limited  Partnership   ("LS
Power").  The contract, for 236 megawatts of firm capacity from LS  Power's
gas-fired cogeneration facility located in Whitewater, Wisconsin,  includes
no  minimum  energy  requirements.  When  the  contract  expires  in  2022,
Wisconsin  Electric may, at its option and with proper  notice,  renew  for
another  ten  years or purchase the generating facility at  fair  value  or
allow the contract to expire.  Wisconsin Electric treats this contract as a
capital  lease.   The  leased facility and corresponding  obligation  under
capital  lease  were recorded at the estimated fair value  of  the  plant's
electric generating facilities.  The leased facility is being amortized  on
a straight line basis over the original 25-year term of the contract.

Beginning  with  commercial operation of LS Power's facility  in  September
1997,  imputed interest costs on the purchase power obligation  were  
$22.9 million and $6.5 million during 1998 and 1997, respectively, and total
amortization  costs  of the leased facilities were $5.7  million  and 
$1.6 million during 1998 and 1997, respectively.  The long-term power purchase
contract is treated as an operating lease for rate-making purposes.   As  a
result,  the difference between the minimum lease payments and the  sum  of
the  imputed  interest and amortization costs are recorded  as  a  deferred
regulatory  asset  (see Note A).  Due to the timing of  the  minimum  lease
payments,  Wisconsin Electric expects the regulatory asset to  increase  to
approximately  $78 million by the year 2009 and the total obligation  under
capital  lease to increase to $160 million by the year 2005 before each  is
reduced  over  the  remaining  life of the  contract.   The  minimum  lease
payments  are  classified as purchased power expense  on  the  Consolidated
Income  Statement.   Interest  expense on the  purchase  power  obligation,
included  in  purchased power expense, was $20.3 million and  $5.6  million
during 1998 and 1997, respectively.

Provided below is a summary of Wisconsin Electric's nuclear fuel and leased
facilities at December 31.

                                   
                                                   1998         1997
                                                   ----         ----
                                                (Thousands of Dollars)
Nuclear Fuel                                              
   Under capital lease                          $100,809      $ 95,464
   Accumulated provision for amortization        (62,888)      (59,783)
   In process/stock                               49,739        54,538
                                                --------      --------
Total Nuclear Fuel                              $ 87,660      $ 90,219
                                                ========      ========
Leased Facilities                                                     
   Long-term purchase power commitment          $140,312      $140,312
   Accumulated provision for amortization         (7,305)       (1,625)
                                                --------      --------
Total Leased Facilities                         $133,007      $138,687
                                                ========      ========
                                                                      

Future  minimum  lease payments under the capital leases  and  the  present
value  of  the net minimum lease payments as of December 31,  1998  are  as
follows:


                                                        Purchase       
                                            Nuclear      Power         
                                           Fuel Lease  Commitment   Total
                                           ----------  ----------   -----
                                                (Thousands of Dollars)
                                                                   
   1999                                      $21,678   $ 24,123   $ 45,801
   2000                                       13,841     25,031     38,872
   2001                                        7,433     25,968     33,401
   2002                                        3,664     26,961     30,625
   2003                                        1,071     27,954     29,025
Later Years                                      -      560,191    560,191
                                             -------   --------   --------
Total Minimum Lease Payments                  47,687    690,228    737,915
Less:  Estimated Executory Costs                 -     (139,956)  (139,956)
                                             -------   --------   --------
Net Minimum Lease Payments                    47,687    550,272    597,959
Less:  Interest                               (4,093)  (403,886)  (407,979)
                                             -------   --------   --------
Present Value of Net Minimum Lease Payments   43,594    146,386    189,980
Less:  Due Currently                         (19,549)       -      (19,549)
                                             -------   --------   --------
                                             $24,045   $146,386   $170,431
                                             =======   ========   ========


FAIR  VALUE:    The  carrying amount of Wisconsin Energy's  long-term  debt
outstanding (excluding obligations under capital lease) was $1,703  million
and $1,465 million at December 31, 1998 and 1997, respectively, with a fair
value  of $1,789 million and $1,504 million, respectively.  The fair  value
of  the  first  mortgage bonds and debentures is estimated based  upon  the
market  value of the same or similar issues.  Book value approximates  fair
value for Wisconsin Energy's notes.

I - NOTES PAYABLE

Short-term notes payable balances and their corresponding weighted  average
interest rates at December 31 consist of:


                              1998                  1997
                              ----                  ----
                                   Interest             Interest
                        Balance      Rate    Balance      Rate
                        -------      ----    -------      ----
                              (Thousands of Dollars)
                                                               
Banks                  $ 51,503     5.42%   $127,815     6.40%
Commercial paper        235,356     5.35%    192,138     5.84%
                       --------             --------           
                       $286,859             $319,953           
                       ========             ========           
                                                                

Unused lines of credit for short-term borrowing amounted to $383 million at
December  31,  1998  of which $378 million supports commercial  paper.   In
support  of various informal lines of credit from banks, Wisconsin Energy's
subsidiaries have agreed to maintain unrestricted compensating balances  or
to   pay  commitment  fees;  neither  the  compensating  balances  nor  the
commitment fees are significant.


J - BENEFITS

The  Company  provides  defined benefit pension  and  other  postretirement
benefit  plans  to  employees.   The status of  these  plans,  including  a
reconciliation of benefit obligations, a reconciliation of plan assets  and
the  funded  status  of  the plans follows.  Also disclosed  below  is  the
aggregate  funded status of those pension and other postretirement  benefit
plans with accumulated net benefit obligations in excess of plan assets.
<TABLE>
<CAPTION>
                                                                      Other Postretirement
                                                Pension Benefits            Benefits
                                              --------------------    --------------------
                                               1998         1997         1998        1997
                                               ----         ----         ----        ---- 
                                                          (Thousands of Dollars)
<S>                                           <C>          <C>         <C>         <C>
Change in Benefit Obligation                                                               
  Benefit Obligation at January 1             $649,256     $601,213    $ 148,181   $142,783
    Service cost                                12,503        9,216        2,660      1,911
    Interest cost                               46,831       45,613       11,751     10,343
    Plan participants' contributions               -            -          5,908      4,903
    Plan amendments                                -          1,379        3,737     (4,828)
    Actuarial loss                              52,508       35,985       22,333      6,359
    Acquisition                                 13,676          -          1,862        -
    Benefits paid                              (45,674)     (44,150)     (15,665)   (13,290)
                                              --------     --------    ---------   --------
  Benefit Obligation at December 31           $729,100     $649,256    $ 180,767   $148,181
                                              --------     --------    ---------   --------
Change in Plan Assets                                                                      
  Fair Value at January 1                     $761,881     $687,482    $  59,841   $ 49,424
    Actual return on plan assets               104,658      114,294        8,515     10,555
    Employer contributions                       7,551        4,255       10,252      8,249
    Plan participants' contributions               -            -          5,908      4,903
    Acquisition                                 11,243          -            -          -
    Benefits paid                              (45,674)     (44,150)     (15,603)   (13,290)
                                              --------     --------    ---------   --------
  Fair Value at December 31                   $839,659     $761,881    $  68,913   $ 59,841
                                              --------     --------    ---------   --------
Funded Status of Plans                                                                     
  Funded status at December 31                $110,559     $112,625    $(111,854)  $(88,340)
  Unrecognized                                                                             
    Net actuarial (gain) loss                 (117,185)    (123,094)       4,673    (14,458)
    Prior service cost                          31,646       34,344        2,582       (938)
    Net transition obligation (asset)          (27,220)     (31,009)      64,918     68,825
                                              --------     --------    ---------   --------
  Net Accrued Benefit Cost                    $ (2,200)    $ (7,134)   $ (39,681)  $(34,911)
                                              ========     ========    =========   ========
Funded Status of Plans with Net                                                            
Benefit Obligations at December 31                                                         
    Fair value of plan assets                 $ 11,168     $    -      $  68,444   $ 59,394
    Less:  Benefit obligation                  (14,664)         -       (180,494)  (147,919)
                                              --------     --------    ---------   --------
  Net Benefit Obligation                      $ (3,496)    $    -      $(112,050)  $(88,525)
                                              ========     ========    =========   ========
</TABLE>     

The  components  of  net periodic pension and other postretirement  benefit
costs  as  well as the weighted-average assumptions used in accounting  for
the plans include the following:
<TABLE>
<CAPTION>
                                                                         Other Postretirement
                                            Pension Benefits                   Benefits
                                        ------------------------       -------------------------
                                        1998      1997      1996       1998      1997       1996
                                        ----      ----      ----       ----      ----       ----
                                                          (Thousands of Dollars)
<S>                                   <C>       <C>       <C>        <C>        <C>       <C>
Net Periodic Benefit Cost                                                                        
  Service cost                        $12,503   $ 9,216   $ 9,912    $ 2,660    $ 1,911   $ 2,436
  Interest cost                        46,831    45,613    41,454     11,751     10,343    10,456
  Expected return on plan assets      (57,384)  (51,592)  (48,494)    (5,008)    (4,085)   (3,708)
  Amortization of                                                                                
    Transition obligation (asset)      (3,798)   (3,802)   (3,802)     4,615      4,586     4,887
    Prior service cost                  3,090     3,061     1,755        217       (100)     (100)
    Actuarial loss (gain)                   7       -         -         (270)      (235)     (272)
                                      -------   -------   -------    -------    -------   -------
Net Periodic Benefit Cost             $ 1,249   $ 2,496   $   825    $13,965    $12,420   $13,699
                                      =======   =======   =======    =======    =======   =======
Weighted-Average Assumptions                                                                     
at December 31 (%)                                                                               
  Discount rate                          6.75      7.25      7.75       6.75       7.25      7.75
  Expected return on plan assets         9.0       9.0       9.0        9.0        9.0       9.0
  Rate of compensation increase        3.0 to   4.75 to   4.75 to     3.0 to    4.75 to   4.75 to
                                         5.0       5.0       5.0        5.0        5.0       5.0
</TABLE>  

PENSION  PLANS:    Pension plan assets, the majority of  which  are  equity
securities, are held by pension trusts.  Other pension plan assets  include
corporate  and  government bonds and real estate.  In the  opinion  of  the
Company, current pension trust assets and amounts which are expected to  be
paid  to  the trusts in the future will be adequate to meet pension payment
obligations to current and future retirees.

OTHER  POSTRETIREMENT BENEFIT PLANS:   The Company uses Employees'  Benefit
Trusts  to  fund  a  major  portion of other  postretirement  benefits  for
employees  of  Wisconsin  Electric  and the  non-utility  affiliates.   The
majority of the trusts' assets are mutual funds.

The  assumed health care cost trend rate at December 31, 1998 was 6.0%  for
those under age 65 and 6.8% for those over age 65, decreasing gradually  to
5.0%  in 2004 and thereafter.  Assumed health care cost trend rates have  a
significant effect on the amounts reported for health care plans.

A one-percentage-point change in assumed health care cost trend rates would
have the following effects:


                                                 1% Increase   1% Decrease  
                                                 -----------   -----------  
                                                  (Thousands of Dollars)    
Effect on                                                                     
  Postretirement benefit obligation                 $17,275     ($15,163)  
  Total of service and interest cost components       1,664       (1,444)  


OMNIBUS  STOCK INCENTIVE PLAN:   The Omnibus Stock Incentive Plan ("OSIP"),
as  approved by stockholders  in 1993 and amended by the Board of Directors
in  1998,  enables  the Company to provide a long-term  incentive,  through
equity  interests  in  Wisconsin  Energy, to  outside  directors,  selected
officers  and key employees.  The OSIP provides for the granting  of  stock
options,  stock  appreciation rights, stock awards  and  performance  units
during  the ten year term of the plan.  Awards may be paid in common stock,
cash  or  a  combination thereof.  No stock appreciation rights  have  been
granted  to  date.  Four million shares of common stock have been  reserved
under the OSIP.

The  exercise price of a stock option under the OSIP is to be no less  than
100%  of the common stock's fair market value on the grant date and options
may not be exercised within six months of the grant date.  The following is
a  summary  of  stock options issued through December 31,  1998  under  the
Omnibus Stock Incentive Plan.
<TABLE>
<CAPTION>                                                                                
                                       1998                    1997                     1996
                                       ----                    ----                     ----
                                          Weighted                 Weighted                Weighted
                                 Number     Average       Number      Average      Number     Average
                                   of      Exercise         of       Exercise        of      Exercise
                                 Options     Price        Options      Price       Options     Price
                                 -------    -------       -------    -------       -------    -------
<S>                              <C>        <C>           <C>        <C>          <C>        <C>
Outstanding at January 1         530,200    $27.999       523,900    $28.038      335,500    $28.832
     Granted                     331,500    $29.372        40,000    $27.653      210,900    $26.813
     Exercised                    (3,000)   $27.375           -          -            -          -
     Forfeited                      -           -         (33,700)   $28.085      (22,500)   $28.400
                                 -------                 --------                 -------    
Outstanding at December 31       858,700    $28.531       530,200    $27.999      523,900    $28.038
                                 =======                  =======                 =======           
</TABLE>     

As of December 31, 1998, the 858,700 options outstanding under the OSIP are
exercisable  at  per  share prices of between $26.813 and  $30.875  with  a
weighted  average  remaining contractual life of 8.0 years.   Under  "cliff
vesting"  terms, 527,200 of these options are exercisable four years  after
the  grant  date,  while 307,500 of these options vest on  a  straight-line
"graded"  basis over a four-year period from the grant date and  24,000  of
these  options  vest on a straight-line "graded" basis  over  a  three-year
period  from  the  grant date.  All outstanding options  have  an  exercise
period of ten years from the grant date.

The  earliest year in which any of the options could be exercised was 1997.
As  of  December  31, 1998, the 120,500 of exercisable options  outstanding
under  the OSIP are exercisable at per share prices of between $26.813  and
$27.375 with a weighted average remaining contractual life of 5.5 years.

Each  stock option granted prior to 1998 under the Omnibus Stock  Incentive
Plan  includes performance units based upon contingent dividends  for  four
years  from the date of grant.  Payment of these dividends depends  on  the
achievement of certain performance goals.  No performance units  have  been
earned to date.

Wisconsin Energy has adopted the disclosure-only provisions of Statement of
Financial   Accounting  Standards  No.  123,  Accounting  for   Stock-Based
Compensation ("FAS 123"), and continues to apply the intrinsic value method
of  accounting  for  awards  under  the  OSIP  as  required  by  Accounting
Principles  Board Opinion No. 25, Accounting for Stock Issued to  Employees
("APB  25").   If  Wisconsin  Energy  had  adopted  the  optional  FAS  123
accounting  method,  the effect on net income and earnings  per  share  for
1998, 1997 and 1996 would have been immaterial.

During  1998  and  1997, the Company granted to certain key  employees  the
following restricted shares of common stock under the OSIP at the following
weighted-average fair market values on the grant date.


                                     1998                    1997
                                     ----                    ----
                                         Weighted                Weighted
                               Number    Average       Number    Average
                                 of       Market         of       Market
                               Shares     Price        Shares     Price
                               -----------------       ----------------- 

Outstanding at January 1        6,000                     -                
  Granted                      49,750    $28.644        6,000    $28.814
                               ------                   -----              
Outstanding at December 31     55,750                   6,000              
                               ======                   =====              


Recipients  of the restricted shares have the right to vote the shares  and
to   receive   restricted  dividends  and  are  not  required  to   provide
consideration  to  the  Company other than rendering  service.   Forfeiture
provisions  on  the  restricted stock expire 10  years  after  award  grant
subject  to an accelerated expiration schedule based on the achievement  of
certain financial performance goals.

Under  the  provisions of APB 25, the market value of the restricted  stock
awards on the date of grant is recorded as a separate unearned compensation
component  of common stock equity and is then charged to expense  over  the
vesting  period  of the awards.  Adjustments are also made to  expense  for
achievement of performance goals.  Restricted stock compensation charged to
expense during 1998 and 1997 was immaterial.


K - SEGMENT REPORTING

Wisconsin Energy, a holding company with subsidiaries in utility  and  non-
utility businesses, has organized its operating segments according  to  how
its  principal  subsidiary,  Wisconsin Electric,  is  currently  regulated.
Operating  segments are defined as components of an enterprise about  which
separate financial information is available that is evaluated regularly  in
deciding  how to allocate resources or in assessing performance.  Wisconsin
Energy's  reportable  operating segments include electric,  gas  and  steam
utility segments.

The  electric  utility  segment derives its revenues from  the  generation,
transmission,  distribution  and sale of electric  energy  in  southeastern
(including metropolitan Milwaukee), east central and northern Wisconsin and
in  the  Upper Peninsula of Michigan.  The gas utility segment derives  its
revenues from the purchase, distribution and sale of natural gas to  retail
customers  and  the transportation of customer-owned gas  in  four  service
areas in southeastern, east central, western, and northern Wisconsin.   The
steam   utility   segment  derives  its  revenues  from   the   production,
distribution and sale of steam to space heating and processing customers in
the Milwaukee area.

The  lines  of  business for Wisconsin Energy's non-utilities include  real
estate investment and development, venture capital investments in Wisconsin
and  investments  in  recycling  technology and  energy  related  entities.
See  Note L for information concerning a pending energy related acquisition
by WISVEST Corporation.

The following summarizes the reportable operating segments of Wisconsin
Energy for the years ended December 31.
<TABLE>
<CAPTION>                                         
                                            Reportable Operating Segments (a)
                                       Electric       Gas       Steam       Total
                                       --------       ---       -----       -----
                                                 (Thousands of Dollars)
<S>                                   <C>          <C>         <C>       <C>
1998                                                        
   External revenues                  $1,663,512   $293,250    $20,506   $1,977,268
   Intersegment revenues (b)                 120      2,598        -          2,718
                                      ----------   --------    -------   ----------
     Total Operating Revenues         $1,663,632   $295,848    $20,506   $1,979,986
                                      ==========   ========    =======   ==========

   Depreciation                       $  217,368   $ 23,272    $ 2,631   $  243,271
   Operating Income Taxes                 93,392      1,055        333       94,780
   Operating Income (c)                  254,589     19,180      2,934      276,703
   Segment Assets (d)                  4,151,647    421,951     48,358    4,621,956
   Construction Expenditures             290,968     43,447      1,600      336,015
                                                                                   
1997                                                                               
   External revenues                  $1,411,962   $349,971    $22,315   $1,784,248
   Intersegment revenues (b)                 153      5,201        -          5,354
                                      ----------   --------    -------   ----------
     Total Operating Revenues         $1,412,115   $355,172    $22,315   $1,789,602
                                      ==========   ========    =======   ==========

   Depreciation                       $  213,785   $ 21,421    $ 2,492   $  237,698
   Operating Income Taxes                 48,442      7,973      1,374       57,789
   Operating Income (c)                  170,117     25,122      4,220      199,459
   Segment Assets (d)                  3,900,889    392,865     45,131    4,338,885
   Construction Expenditures             236,384     22,977      1,006      260,367
                                                                                   
1996                                                                               
   External revenues                  $1,393,057   $361,101    $15,675   $1,769,833
   Intersegment revenues (b)                 213      3,774        -          3,987
                                      ----------   --------    -------   ----------
     Total Operating Revenues         $1,393,270   $364,875    $15,675   $1,773,820
                                      ==========   ========    =======   ==========

   Depreciation                       $  183,159   $ 18,246    $ 1,391   $  202,796
   Operating Income Taxes                110,752     14,516      1,359      126,627
   Operating Income (c)                  269,068     33,204      3,572      305,844
   Segment Assets (d)                  3,646,997    400,582     46,499    4,094,078
   Construction Expenditures             272,838     22,851     21,651      317,340
<FN>
(a)  The  accounting policies of the operating segments are the same  as
     those  described in the summary of significant accounting  policies 
     (see Note A).

(b)  Wisconsin Electric accounts for intersegment revenues at  a  tariff
     rate established by the PSCW.

(c)  Interest  income and expense are not recorded to  the  segments  to
     determine segment operating income.

(d)  Common  utility plant is allocated to electric, gas  and  steam  to
     determine segment assets (see Note A).
</TABLE>

A  reconciliation of the totals reported for the operating segments to  the
applicable line items in the financial statements is as follows:

                                    
                                       1998         1997         1996
                                       ----         ----         ----
                                          (Thousands of Dollars)
Assets                                                                  
   Reportable segments              $4,621,956   $4,338,885   $4,094,078
   Non-utility                                                          
      Real estate activities           247,972      211,359      200,603
      Other (a)                        272,283      154,822       89,358
   Other - corporate (b)               219,546      332,618      426,799
                                    ----------   ----------   ----------
Total Assets                        $5,361,757   $5,037,684   $4,810,838
                                    ==========   ==========   ==========
Construction Expenditures                                               
   Reportable segments              $  336,015   $  260,367   $  317,340
   Non-utility                          62,967       85,541       71,854 
                                    ----------   ----------   ----------
Total Construction Expenditures     $  398,982   $  345,908   $  389,194
                                    ==========   ==========   ==========
Other Information                                                       
   Non-utility Net Income (c)                                           
      Real estate activities        $    8,377   $    6,966   $    8,820
      Other (a)                         (1,607)      (8,979)        (455)

(a)  Primarily  venture capital, recycling technology and energy  related
     activities.

(b)  Primarily other property and investments, materials and supplies and
     deferred charges.

(c)  Excludes merger expenses and holding company net income.


L - COMMITMENTS AND CONTINGENCIES

KIMBERLY  COGENERATION  EQUIPMENT:   In  conjunction  with  a  proposal  to
construct   a  cogeneration  facility  in  Kimberly,  Wisconsin,  Wisconsin
Electric  purchased three combustion turbines, three heat recovery  boilers
and  a  steam  turbine (the "Equipment").  Wisconsin Electric  carried  the
Equipment  at a cost of approximately $66.3 million, entertaining  numerous
proposals and projects for which the Equipment could be used.  During 1997,
Wisconsin Electric continued to review its options for use or sale  of  the
Equipment.   In  the  fourth quarter of 1997, WISVEST Corporation,  a  non-
utility  subsidiary of Wisconsin Energy, entered into the  final  phase  of
negotiations for a joint independent power project involving the Equipment.
Under  the  provisions of Statement of Financial Accounting Standards 
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets  to  Be  Disposed  Of,  Wisconsin Electric  refined  its  cash  flow
projection  for  the Equipment based upon this proposal.   As  measured  by
expected  gross  cash  flows  to be earned under  this  project,  Wisconsin
Electric  determined  that an impairment existed.  As a  result,  Wisconsin
Electric  recorded a $30.0 million impairment charge in the fourth  quarter
of  1997  which  was included in the Miscellaneous - Net Other  Income  and
Deductions  line of the Consolidated Income Statement.  During  the  second
quarter of 1998, WISVEST Corporation purchased the Equipment from Wisconsin
Electric  and  contributed  it to a joint independent  power  project,  the
Androscoggin Cogeneration Center.

MANUFACTURED  GAS PLANT SITES:   Wisconsin Electric continues  a  voluntary
program  to  investigate the remediation of eleven former manufactured  gas
plant sites.  Wisconsin Electric currently estimates that future costs  for
detailed  site  investigation  and  remediation  will  be  $25  million  to
$40  million  over the next ten years.  Actual costs are uncertain  pending
the  results  of further site specific investigations and the selection  of
site specific remediation.

Of the eleven sites, Wisconsin Electric has begun remediation activities at
the  former  manufactured  gas  plant  site  in  the  City  of  Burlington,
Wisconsin.  Wisconsin Electric also expects to begin remediation in 1999 at
sites  in  Fort  Atkinson  and  Kenosha, Wisconsin.   Wisconsin  Electric's
expected remediation of these sites is anticipated to be accomplished at an
aggregate cost of between $6 million and $11 million.

In  Wisconsin  Electric's February 13, 1997 Rate Order, the PSCW  amplified
its  position  on  the recovery of manufactured gas plant site  remediation
costs.   It reiterated its position that such costs should be deferred  and
amortized  and  recovered, without carrying costs, in  future  rate  cases.
Since the timing and recovery of remediation costs will be affected by  the
biennial   rate  case  cycle,  the  timing  and  magnitude  of  remediation
expenditures, and their recovery may be affected.

FUTURE  PLANT  ADDITIONS:   In October 1998, WISVEST  Connecticut,  LLC,  a
wholly  owned subsidiary of WISVEST Corporation, entered into an  agreement
to purchase two fossil-fueled power plants for $272 million from The United
Illuminating Company, an unaffiliated investor owned utility in New  Haven,
Connecticut.   Pursuant  to the agreement, WISVEST Connecticut,  L.L.C.  is
purchasing  the  Bridgeport Harbor Station, which has an active  generating
capacity  of  590 megawatts, as well as the 466-megawatt New  Haven  Harbor
Station.  The Bridgeport Harbor Station, located in Bridgeport Connecticut,
is  comprised of one active oil-fired unit, one oil and coal-fired unit and
one  jet-fueled unit.  The New Haven Harbor Station, located in New  Haven,
Connecticut,  has  one  oil  and gas-fired  generating  unit..   The  sale,
expected to close in the second quarter of 1999, is contingent upon certain
regulatory  approvals.   WISVEST  Corporation  anticipates  financing   the
acquisition  through long-term, nonrecourse project financing  arrangements
and through an equity contribution from Wisconsin Energy.

                                     
                                   
                     REPORT OF INDEPENDENT ACCOUNTANTS
                                     
To the Board of Directors and the
     Stockholders of Wisconsin Energy Corporation

In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) present fairly, in all material respects, the
financial position of Wisconsin Energy Corporation and its subsidiaries at
December 31, 1998 and 1997, and the results of their operations and their
cash flows for each of the three years in the period ended December 31,
1998, in conformity with generally accepted accounting principles.  In
addition, in our opinion, the financial statement schedule listed in the
index appearing under Item 14(a)(2) presents fairly, in all material
respects, the information set forth therein when read in conjunction with
the related consolidated financial statements.  These financial statements
and financial statement schedule are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.  We
conducted our audits of these statements in accordance with generally
accepted auditing standards which 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, assessing the accounting principles used and significant
estimates made by management and evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis for
the opinion expressed above.

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

Milwaukee, Wisconsin
January 27, 1999
<TABLE>


                      WISCONSIN ELECTRIC POWER COMPANY
                             INCOME STATEMENT
                         Year Ended December 31       
<CAPTION>                                        
                                            1998          1997         1996
                                            ----          ----         ----
                                                (Thousands of Dollars)
<S>                                      <C>           <C>          <C>
Operating Revenues                                                         
  Electric                               $1,641,403    $1,412,115   $1,393,270
  Gas                                       295,848       355,172      364,875
  Steam                                      20,506        22,315       15,675
                                         ----------    ----------   ----------   
       Total Operating Revenues           1,957,757     1,789,602    1,773,820
                                                                            
Operating Expenses                                                        
  Fuel (Note H)                             308,374       311,966      295,651
  Purchased power  (Note H)                 141,619       132,689       36,216
  Cost of gas sold                          175,475       233,877      234,254
  Other operation expenses                  476,279       407,114      391,520
  Maintenance                               168,120       135,096      103,046
  Depreciation (Note C)                     241,572       237,698      202,796
  Taxes other than income taxes              78,652        73,914       77,866
  Federal income tax (Note D)                79,198        40,221      105,656
  State income tax (Note D)                  18,605        10,558       24,976
  Deferred income taxes - net (Note D)         (438)        7,937       (1,575)
  Investment tax credit - net (Note D)       (3,395)         (927)      (2,430)
                                         ----------    ----------   ---------- 
       Total Operating Expenses           1,684,061     1,590,143    1,467,976
                                                                             
Operating Income                            273,696       199,459      305,844
                                                                              
Other Income and Deductions                                                   
  Interest income                            21,651        17,974       13,553
  Allowance for other funds used                                              
    during construction (Note E)              2,936         3,349        3,036
  Merger expenses (Note B)                      -         (21,881)         -
  Miscellaneous - net (Note L)                 (684)      (37,531)      (3,642)
  Federal income tax (Note D)                (2,124)       19,687         (631)
  State income tax (Note D)                    (605)        3,090         (570)
                                         ----------    ----------   ----------    
       Total Other Income               
         and Deductions                      21,174       (15,312)      11,746
                                                                              
Income Before Interest Charges              294,870       184,147      317,590
                                                                               
Interest Charges                                                               
  Long-term debt                            100,420       106,573      100,133
  Other interest                             11,756         8,730        7,821
  Allowance for borrowed funds used                                             
    during construction (Note E)             (1,480)       (1,771)      (1,679)
                                          ---------     ---------    --------- 
       Total Interest Charges               110,696       113,532      106,275
                                          ---------     ---------    --------- 
Net Income                                  184,174        70,615      211,315
                
Preferred Stock Dividend Requirement          1,203         1,203        1,203
                                          ---------     ---------    ---------  
Earnings Available for Common                                                  
  Stockholder                            $  182,971    $   69,412   $  210,112
                                         ==========    ==========   ========== 
<FN>
Note:  Earnings and dividends per share of common stock are not applicable because 
       all of Wisconsin Electric Power Company's common stock is owned by Wisconsin
       Energy Corporation.
                                            
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>    

                                  WISCONSIN ELECTRIC POWER COMPANY
                                       STATEMENT OF CASH FLOWS
                                        Year Ended December 31
<CAPTION>      
                                                  1998           1997            1996
                                                  ----           ----            ----
                                                       (Thousands of Dollars)
<S>                                             <C>            <C>             <C>
Operating Activities                                                                
  Net income                                    $184,174       $ 70,615        $211,315
  Reconciliation to cash                                                            
     Depreciation                                241,572        237,698         202,796
     Nuclear fuel expense - amortization          18,922          5,426          21,887
     Conservation expense - amortization          22,498         22,498          22,498
     Debt premium, discount &                                                         
       expense - amortization                      3,794          7,561           9,762
     Deferred income taxes - net                    (438)         7,937          (1,575)
     Investment tax credit - net                  (3,395)          (927)         (2,430)
     Allowance for other funds used                                                   
       during construction                        (2,936)        (3,349)         (3,036)
     Write-off of merger costs                       -           21,881             -
     Write-down of equipment                         -           30,000             -
     Change in - Accounts receivable             (26,537)           145           4,220
                 Inventories                        (811)       (12,788)        (30,703)
                 Accounts payable                 26,706         (3,097)         38,779
                 Other current assets             14,224         10,782         (14,297)
                 Other current liabilities       (14,268)        29,074          (2,780)
                 Other                            26,868        (52,759)          4,874
                                                 -------       --------         ------- 
Cash Provided by Operating Activities            490,373        370,697         461,310
                                                                                  
Investing Activities                                                            
  Construction expenditures                     (328,482)      (260,649)       (319,832)
  Allowance for borrowed funds used                                                   
    during construction                           (1,480)        (1,771)         (1,679)
  Nuclear fuel                                   (10,183)        (6,352)        (26,053)
  Nuclear decommissioning trust                  (31,379)       (27,248)        (26,309)
  Other                                           (1,873)        22,359          (7,892)
                                                --------       --------         -------
Cash Used in Investing Activities               (373,397)      (273,661)       (381,765)
                                                                                  
Financing Activities                                                               
  Retirement of preferred stock                      -              -                (1)
  Sale of long-term debt                         169,434            -           230,094
  Retirement of long-term debt                   (78,779)      (171,155)        (52,921)
  Change in short-term debt                      (23,344)       197,243        (105,304)
  Stockholder capital contribution                  -           100,000            -
  Dividends on - Common stock                   (179,001)      (213,692)       (167,889)
                 Preferred stock                  (1,203)        (1,203)         (1,203)
                                                --------       --------         -------
Cash Used in Financing Activities               (112,893)       (88,807)        (97,224)
                                                --------       --------        --------  
Change in Cash and Cash Equivalents             $  4,083       $  8,229        $(17,679)
                                                ========       ========        ========  
Supplemental Information                                                                 
  Cash Paid For                                                                          
    Interest (net of amount capitalized)        $125,344       $112,682        $ 94,845
    Income taxes                                 106,550         45,210         107,682
<FN>                                                                                    
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>

                       WISCONSIN ELECTRIC POWER COMPANY   
                                BALANCE SHEET
                                 December 31 

                                   ASSETS
<CAPTION>   
                                                           1998               1997
                                                           ----               ----
                                                           (Thousands of Dollars)
<S>                                                    <C>               <C>
Utility Plant                                                                 
  Electric                                             $4,820,239        $4,690,347
  Gas                                                     523,187           492,271
  Steam                                                    62,832            61,921
  Common                                                  420,750           330,761
                                                       ----------        ----------
                                                        5,827,008         5,575,300
  Accumulated provision for depreciation               (2,973,007)       (2,700,839)
                                                       ----------        ----------
                                                        2,854,001         2,874,461
  Construction work in progress                           109,412            81,612
  Leased facilities - net (Note H)                        133,007           138,687
  Nuclear fuel - net (Note H)                              87,660            90,219
                                                       ----------        ----------
       Net Utility Plant                                3,184,080         3,184,979
                                                                          
Other Property and Investments                                            
  Nuclear decommissioning trust fund (Note F)             518,505           404,240
  Other                                                    60,123            84,223
                                                       ----------        ----------
       Total Other Property and Investments               578,628           488,463
                                                                           
Current Assets                                                              
  Cash and cash equivalents                                14,183            10,100
  Accounts receivable, net of allowance for                                          
    doubtful accounts - $16,621 and $15,641               166,648           140,111
  Accrued utility revenues                                129,463           141,273
  Fossil fuel (at average cost)                           123,616           124,045
  Materials and supplies (at average cost)                 74,399            73,159
  Prepayments                                              59,046            56,192
  Other                                                       767             6,035
                                                       ----------        ----------
       Total Current Assets                               568,122           550,915
                                                                               
Deferred Charges and Other Assets                                             
  Accumulated deferred income taxes (Note D)              190,114           169,306
  Deferred regulatory assets (Note A)                     222,951           215,200
  Other                                                    25,047            58,977
                                                       ----------        ----------
       Total Deferred Charges and Other Assets            438,112           443,483
                                                       ----------        ----------  
Total Assets                                           $4,768,942        $4,667,840
                                                       ==========        ==========  
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE> 
<TABLE>

                       WISCONSIN ELECTRIC POWER COMPANY 
                                BALANCE SHEET
                                 December 31 

                        CAPITALIZATION AND LIABILITIES
<CAPTION>    
                                                             1998            1997
                                                             ----            ----
                                                           (Thousands of Dollars)
<S>                                                      <C>             <C>    
Capitalization (See Capitalization Statement)                                   
  Common stock equity                                     $1,698,478     $1,694,508
  Preferred stock                                             30,450         30,450
  Long-term debt (Note H)                                  1,512,531      1,448,558
                                                          ----------     ----------
       Total Capitalization                                3,241,459      3,173,516
                                                                              
Current Liabilities                                                            
  Long-term debt due currently (Note H)                      112,454         81,389
  Notes payable (Note I)                                     219,289        242,633
  Accounts payable                                           169,503        142,797
  Payroll and vacation accrued                                29,569         25,392
  Taxes accrued - income and other                            31,475         38,475
  Interest accrued                                            19,864         20,012
  Other                                                       46,574         57,871
                                                          ----------     ----------
       Total Current Liabilities                             628,728        608,569
                                                                                 
Deferred Credits and Other Liabilities                                           
  Accumulated deferred income taxes (Note D)                 559,574        521,429
  Accumulated deferred investment tax credits                 83,476         86,871
  Deferred regulatory liabilities (Note A)                   157,951        173,688
  Other                                                       97,754        103,767
                                                          ----------     ----------
       Total Deferred Credits and Other Liabilities          898,755        885,755
                                                                                     
Commitments and Contingencies (Note L)                                               
                                                          ----------     ---------- 
Total Capitalization and Liabilities                      $4,768,942     $4,667,840
                                                          ==========     ========== 
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE> 
<TABLE>

                            WISCONSIN ELECTRIC POWER COMPANY
                                CAPITALIZATION STATEMENT
                                      December 31
<CAPTION>
                                                                                 1998           1997
                                                                                 ----           ----
                                                                               (Thousands of Dollars)
<S>                                                                          <C>           <C>
Common Stock Equity (See Common Stock Equity Statement)                                                  
  Common stock - $10 par value; authorized 65,000,000 shares;                                            
    outstanding - 33,289,327 shares                                          $  332,893    $  332,893
  Other paid in capital                                                         380,689       380,689
  Retained earnings                                                             984,896       980,926
                                                                             ----------    ----------
       Total Common Stock Equity                                              1,698,478     1,694,508
                                                                                                         
Preferred Stock - Cumulative                                                                             
  Six Per Cent. Preferred Stock - $100 par value; authorized                                            
    45,000 shares; outstanding - 44,498 shares                                    4,450         4,450
  Serial preferred stock - $100 par value; authorized 2,286,500 shares;                              
    outstanding - 3.60% Series - 260,000 shares                                  26,000        26,000
                                                                             ----------    ----------
       Total Preferred Stock (Note G)                                            30,450        30,450
                                                                                                         
Long-Term Debt                                                                                           
  First mortgage bonds -  5-1/8% to 7-1/4% due 1998-2004                        231,000       291,000
                          6.85% to 7-3/4% due 2016-2023                         209,000       209,000
                          6.85% to 7-3/4% due 2016-2023                         363,443       363,443
                                                                                                        
Debentures (unsecured) -  6-1/2% to 9.47% due 2006-2095                         480,600       331,300
                                                                                                       
  Notes (unsecured) -     Variable rate due 2006-2030                           165,350       165,350
                          6.36% effective rate due 2006                           9,642        10,847
                                                                                                         
  Obligations under capital leases                                              189,980       182,450
  Unamortized discount - net                                                    (24,030)      (23,443)
  Long-term debt due currently                                                 (112,454)      (81,389)
                                                                             ----------    ----------
         Total Long-Term Debt (Note H)                                        1,512,531     1,448,558
                                                                             ----------    ---------- 
Total Capitalization                                                         $3,241,459    $3,173,516
                                                                             ==========    ========== 
<FN>                          
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>

                             WISCONSIN ELECTRIC POWER COMPANY
                              COMMON STOCK EQUITY STATEMENT   
<CAPTION>
                                         Common Stock
                                     -------------------
                                                 $10 Par    Other Paid    Retained           
                                     Shares       Value     In Capital    Earnings        Total
                                     ------      -------    ----------    --------        -----
                                                            (Thousands of Dollars)
<S>                                <C>           <C>          <C>         <C>          <C>       
Balance - December 31, 1995        33,289,327    $332,893     $280,689    $1,082,983   $1,696,565
                                                                                                 
 Net income                                                                  211,315      211,315
 Cash dividends                                                                                  
  Common stock                                                              (167,889)    (167,889) 
  Preferred stock                                                             (1,203)      (1,203)
                                   ----------    --------     --------    ----------   ----------
Balance - December 31, 1996        33,289,327     332,893      280,689     1,125,206    1,738,788
                                                                                                   
 Net income                                                                   70,615       70,615
 Cash dividends                                                                                  
  Common stock                                                              (213,692)    (213,692)
  Preferred stock                                                             (1,203)      (1,203)
 Stockholder capital contribution                              100,000                    100,000
                                   ----------    --------     --------    ----------   ----------
Balance - December 31, 1997        33,289,327     332,893      380,689       980,926    1,694,508
                                                                                                 
 Net income                                                                  184,174      184,174
 Cash dividends                                                                                  
  Common stock                                                              (179,001)    (179,001)
  Preferred stock                                                             (1,203)      (1,203)
                                   ----------    --------     --------    ----------   ----------
Balance - December 31, 1998        33,289,327    $332,893     $380,689    $  984,896   $1,698,478
                                   ==========    ========     ========    ==========   ==========
<FN>                                                         
The accompanying notes are an integral part of these financial statements.
</TABLE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA  (cont'd)


                     WISCONSIN ELECTRIC POWER COMPANY  
                       NOTES TO FINANCIAL STATEMENTS


A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERAL:    The  accounting  records of Wisconsin  Electric  Power  Company
("Wisconsin  Electric") are maintained as prescribed by the Federal  Energy
Regulatory  Commission, modified for requirements  of  the  Public  Service
Commission of Wisconsin ("PSCW").

The  preparation  of  financial  statements in  conformity  with  generally
accepted  accounting principles requires management to make  estimates  and
assumptions  that  affect  the  reported  amounts  of  certain  assets  and
liabilities and disclosure of contingent assets and liabilities at the date
of  financial statements and the reported amounts of revenues and  expenses
during  the  reporting  period.  Actual results  could  differ  from  those
estimates.

REVENUES:    Utility  revenues are recognized  on  the  accrual  basis  and
include estimated amounts for service rendered but not billed.

FUEL:   The cost of fuel is expensed in the period consumed.

PROPERTY:    Property  is recorded at cost.  Additions to  and  significant
replacements  of  utility property are charged to utility  plant  at  cost;
minor  items  are charged to maintenance expense.  Cost includes  material,
labor  and allowance for funds used during construction (see Note E).   The
cost  of  depreciable  utility property, together with  removal  cost  less
salvage, is charged to accumulated provision for depreciation when property
is retired.

In  1998,  Wisconsin Electric began classifying certain  utility  plant  as
common.  Common plant is allocated to electric, gas and steam utility plant
in  rate  proceedings.   All periods presented have been  reclassified  for
comparative purposes.

REGULATORY   MATTERS:    Pursuant  to  Statement  of  Financial  Accounting
Standards  No.  71,  Accounting  for  the  Effects  of  Certain  Types   of
Regulation, Wisconsin Electric capitalizes, as regulatory assets,  incurred
costs  which  are  expected  to  be  recovered  in  future  utility  rates.
Wisconsin  Electric  also records, as regulatory liabilities,  the  current
recovery  in  utility rates of costs which are expected to be paid  in  the
future.

The  following deferred regulatory assets and liabilities are reflected  in
the Balance Sheet at December 31.

                                     
                                                   1998              1997
                                                   ----              ----
                                                   (Thousands of Dollars)
Deferred Regulatory Assets                                
   Deferred income taxes                        $160,752          $151,157
   Department of Energy assessments               24,841            28,575
   Deferred nuclear costs                         15,324            17,681
   Purchase power commitment                      13,379             5,050
   Other                                           8,655            12,737
                                                --------          --------
Total Deferred Regulatory Assets                $222,951          $215,200
                                                ========          ========
Deferred Regulatory Liabilities                                           
   Deferred income taxes                        $141,356          $148,292
   Tax and interest refunds                        8,667            13,943
   Other                                           7,928            11,453
                                                --------          --------
Total Deferred Regulatory Liabilities           $157,951          $173,688
                                                ========          ========
                                                                          

Wisconsin Electric directs a variety of demand-side management programs  to
help  foster  energy conservation by its customers.  As authorized  by  the
PSCW,  Wisconsin  Electric capitalized certain conservation  program  costs
prior  to  1995.  Utility rates approved by the PSCW provide for a  current
return  on these conservation investments.  As of December 31, 1998,  there
were  $46.4  million of conservation investments on the  Balance  Sheet  in
other  property and investments which will be amortized on a straight  line
basis  to  income  over  the next two years as well  as  $69.5  million  of
conservation investments as of December 31, 1997.

STATEMENT  OF  CASH  FLOWS:   Cash and cash equivalents include  marketable
debt  securities acquired three months or less from maturity.  During 1997,
Wisconsin   Electric  recorded  a  $140  million  non-cash  capital   lease
transaction for a long-term power purchase contract (see Note H).

NEW  PRONOUNCEMENTS:   On June 15, 1998, the Financial Accounting Standards
Board   issued  Statement  of  Financial  Accounting  Standards  No.   133,
Accounting  for Derivative Instruments and Hedging Activities ("FAS  133").
FAS  133  is  effective January 1, 2000 for Wisconsin  Electric.   FAS  133
requires  that all derivative instruments be recorded on the balance  sheet
at their fair value.  Changes in the fair value of derivatives are recorded
each  period in current earnings or in other comprehensive income depending
upon how the derivative is designated.  Based upon the current limited  use
of  derivative instruments at Wisconsin Electric, the adoption of  FAS  133
would  not  have  a  significant effect on its  results  of  operations  or
financial position.


B - MERGERS

NORTHERN  STATES POWER COMPANY:   On May 16, 1997, the Boards of  Directors
of  Wisconsin  Energy  and  Northern  States  Power  Company,  a  Minnesota
corporation, agreed to terminate by mutual written consent an Agreement and
Plan  of  Merger  which  provided for a business combination  of  Wisconsin
Energy,  parent  company of Wisconsin Electric, and Northern  States  Power
Company  to  form  Primergy Corporation.  Primergy Corporation  would  have
become the parent company of Wisconsin Electric under the proposed business
combination.  As a result, Wisconsin Energy recorded a $30.7 million charge
in the second quarter of 1997 ($18.8 million net of tax or approximately 17
cents  per  share)  to write off deferred transaction costs  and  costs  to
achieve  the  merger, of which approximately $21.9 million was attributable
to Wisconsin Electric.


C - DEPRECIATION

Depreciation  expense is accrued at straight line rates over the  estimated
useful  lives  of the assets.  These rates are certified by  the  PSCW  and
include estimates for salvage and removal costs.  Depreciation as a percent
of  average  depreciable utility plant was 4.4% in 1998, 4.5% in  1997  and
4.1%  in  1996.   Nuclear plant decommissioning is accrued as  depreciation
expense  (see Note F).  For contributions in aid of construction  remaining
on  the Balance Sheet that were collected prior to 1991, Wisconsin Electric
had  been  amortizing  approximately $3 million per year  as  a  credit  to
depreciation  expense.   In  its  1998  Rate  Order,  the  PSCW  authorized
Wisconsin Electric to amortize the remaining $45.7 million balance of  pre-
1991  contributions  in  aid of construction at  December  31,  1997  on  a
straight  line  basis  over the 1998-1999 biennial period.   As  a  result,
credits   to   depreciation   expense  for  pre-1991   contributions   were
$22.9 million in 1998, $3.5 million in 1997 and $3.4 million in 1996.


D - INCOME TAXES

Wisconsin  Electric follows the liability method in accounting  for  income
taxes.   The  liability  method  provides  that  deferred  tax  assets  and
liabilities  be recorded based on the difference between the tax  bases  of
assets  and liabilities and their carrying amounts for financial  reporting
purposes.

The following table is a summary of income tax expense and a reconciliation
of  total income tax expense with the tax expected at the federal statutory
rate.


                                             1998        1997        1996
                                             ----        ----        ----
                                                (Thousands of Dollars)
                                                                           
Current tax expense                       $100,532    $ 28,002    $131,833
Deferred income taxes - net                   (438)      7,937      (1,575)
Investment tax credit - net                 (3,395)       (927)     (2,430)
                                          --------    --------    --------
     Total Tax Expense                    $ 96,699    $ 35,012    $127,828
                                          ========    ========    ========
Income Before Income Taxes                                                 
     and Preferred Dividend               $280,873    $105,627    $339,143
                                          ========    ========    ========

Expected tax at federal statutory rate    $ 98,306    $ 36,969    $118,700
State income tax net of federal 
   tax benefit                              13,461       6,125      17,624
Flowback of prior contributions 
   in aid of construction                   (8,039)     (1,157)     (1,157)
Investment tax credit restored              (4,690)     (4,487)     (4,509)
Other (no item over 5% of expected tax)     (2,339)     (2,438)     (2,830)
                                          --------    --------    --------
     Total Tax Expense                    $ 96,699    $ 35,012    $127,828
                                          ========    ========    ========
                                                                          

Statement of Financial Accounting Standards No. 109, Accounting for  Income
Taxes   ("FAS  109"),  requires  the  recording  of  deferred  assets   and
liabilities  to  recognize the expected future tax consequences  of  events
that  have  been reflected in Wisconsin Electric's financial statements  or
tax returns and the adjustment of deferred tax balances to reflect tax rate
changes.  Following is a summary of deferred income taxes under FAS 109  at
December 31.


                                                  1998              1997
                                                  ----              ----
                                                  (Thousands of Dollars)
Deferred Income Tax Assets                                                
     Decommissioning trust                      $ 48,812          $ 43,405
     Construction advances                        54,820            49,202
     Other                                        86,482            76,699
                                                --------          --------
Total Deferred Income Tax Assets                $190,114          $169,306
                                                ========          ========
Deferred Income Tax Liabilities                                           
     Property related                           $542,898          $510,621
     Other                                        16,676            10,808
                                                --------          --------
Total Deferred Income Tax Liabilities           $559,574          $521,429
                                                ========          ========
                                                                          

Wisconsin  Electric  has  also  recorded  deferred  regulatory  assets  and
liabilities  representing the future expected impact of deferred  taxes  on
utility revenues (see Note A).


E - ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION

Allowance  for  funds  used during construction ("AFUDC")  is  included  in
utility  plant  accounts  and represents the cost of  borrowed  funds  used
during  plant construction and a return on stockholders' capital  used  for
construction purposes.  On the Income Statement, the cost of borrowed funds
(before income taxes) is a reduction of interest expense and the return  on
stockholders' capital is an item of non-cash other income.

As approved by the PSCW, AFUDC was capitalized during the following periods
on 50% of construction work in progress at the following rates:

*    June 1, 1998  December 31, 1998           10.21%
*    February 18, 1997  May 31, 1998           10.29%
*    January 1, 1996  February 17, 1997        10.17%


F - NUCLEAR OPERATIONS

POINT  BEACH  NUCLEAR  PLANT:   Wisconsin Electric owns  and  operates  two
approximately 500 megawatt electric generating units at Point Beach Nuclear
Plant  ("Point  Beach") in Two Rivers, Wisconsin.  During  1998,  1997  and
1996,  Point  Beach  provided 18%, 6% and 24%, respectively,  of  Wisconsin
Electric's   net  electric  energy  supply.   The  United  States   Nuclear
Regulatory Commission operating licenses for Point Beach expire in  October
2010 for Unit 1 and in March 2013 for Unit 2.

In  1997,  the PSCW authorized Wisconsin Electric to defer certain  nuclear
non-fuel  operation and maintenance costs in excess of  those  included  in
1997  rates.   As a result, Wisconsin Electric deferred $18 million  during
1997.   During  1998,  the  PSCW authorized a five  year  recovery  in  the
electric  retail jurisdiction in the State of Wisconsin of the excess  1997
nuclear  non-fuel  operation and maintenance costs, and Wisconsin  Electric
began amortizing the $18 million of deferred costs on a straight line basis
over  the five year recovery period.  As of December 31, 1998, $15  million
of deferred costs remain on the Balance Sheet in Deferred Charges and Other
Assets - Deferred Regulatory Assets (see Note A).

NUCLEAR  INSURANCE:    The Price-Anderson Act as amended  and  extended  to
August  1,  2002, currently limits the total public liability  for  damages
arising  from  a nuclear incident at a nuclear power plant to approximately
$9.8  billion,  of  which  $200 million is covered by  liability  insurance
purchased from private sources, and $9.6 billion is covered by an  industry
retrospective loss sharing plan whereby in the event of a nuclear  incident
resulting  in damages exceeding the private insurance coverage, each  owner
of  a  nuclear  plant  would  be  assessed a  deferred  premium  of  up  to
$88.1  million per reactor (Wisconsin Electric owns two) with  a  limit  of
$10  million per reactor within one calendar year.  As the owner  of  Point
Beach, Wisconsin Electric would be obligated to pay its proportionate share
of any such assessment.

Wisconsin Electric participated in an industry-wide insurance program, with
an aggregate limit of $200 million which covered radiation injury claims of
nuclear workers first employed after 1987.  This program was replaced  with
a new program (which has no retrospective assessment provisions) at the end
of 1997.  However, the discovery period for claims covered under the former
program  remains  open until the end of 2007 for those few former  insureds
who  no  longer  need to participate in the new, replacement  program.   If
claims  in  excess  of the funds available under the old  program  develop,
Wisconsin  Electric  would  be assessed up to a  maximum  of  approximately
$3.1 million per reactor.

Wisconsin  Electric, through its membership in Nuclear  Electric  Insurance
Limited   ("NEIL"),   carries   decontamination,   property   damage    and
decommissioning shortfall insurance covering losses of up to  $1.5  billion
(subject  to a $1 million deductible for each loss) at Point Beach.   Under
policies  issued by NEIL, the insured member is liable for a  retrospective
premium  adjustment in the event of catastrophic losses exceeding the  full
financial  resources  of NEIL.  Wisconsin Electric's maximum  retrospective
liability under its policies is $10.1 million.

Wisconsin  Electric  also maintains insurance with NEIL  covering  business
interruption and extra expenses during any prolonged accidental outage  (in
excess  of  23  weeks)  at  Point Beach, where such  outage  is  caused  by
accidental property damage from radioactive contamination or other risks of
direct physical loss.  Wisconsin Electric's maximum retrospective liability
under this policy is $5.1 million.

It  should  not be assumed that, in the event of a major nuclear  incident,
any  insurance or statutory limitation of liability would protect Wisconsin
Electric from material adverse impact.

NUCLEAR  DECOMMISSIONING:   Wisconsin Electric expects to operate  the  two
units at Point Beach to the expiration of their current operating licenses.
The   estimated  cost  to  decommission  the  plant  in  1998  dollars   is
$489  million  based  upon  a  site  specific  decommissioning  cost  study
completed  in  1998.   Assuming plant shutdown at  the  expiration  of  the
current  operating licenses, prompt dismantlement and annual escalation  of
costs  at  specific  inflation  factors established  by  the  PSCW,  it  is
projected that approximately $1.8 billion will be spent over a thirty-three
year period, beginning in 2010, to decommission the plant.

Nuclear decommissioning costs are accrued as depreciation expense over  the
expected service lives of the two units following an external sinking  fund
method.    It  is  expected  that  the  annual  payments  to  the   Nuclear
Decommissioning  Trust Fund ("Fund") along with the earnings  on  the  Fund
will  provide  sufficient funds at the time of decommissioning.   Wisconsin
Electric  believes it is probable that any shortfall in  funding  would  be
recoverable in utility rates.

As  required  by  Statement  of  Financial Accounting  Standards  No.  115,
Accounting for Certain Investments in Debt and Equity Securities, Wisconsin
Electric's  debt and equity security investments in the Fund are classified
as available for sale.  Gains and losses on the Fund were determined on the
basis of specific identification; net unrealized holding gains on the  Fund
were recorded as part of accumulated provision for depreciation.

Following  is  a summary of decommissioning costs and earnings  charged  to
depreciation expense and the Fund balance included in accumulated provision
for depreciation at December 31.  The Fund balance is stated at fair value.


                                                1998       1997       1996
                                                ----       ----       ----
                                                  (Thousands of Dollars)

Decommissioning costs                        $ 15,461   $ 11,402    $15,418
Earnings                                       15,918     15,846     10,891
                                             --------   --------    -------
   Depreciation Expense                      $ 31,379   $ 27,248    $26,309
                                             ========   ========    =======

Total costs accrued to date                  $320,356   $288,977           
Unrealized gain                               198,149    115,263           
                                             --------   --------           
   Accumulated Provision for Depreciation    $518,505   $404,240           
                                             ========   ========           
                                                                             

DECONTAMINATION AND DECOMMISSIONING FUND:   The Energy Policy Act  of  1992
establishes  a Uranium Enrichment Decontamination and Decommissioning  Fund
("D&D  Fund")  for  the United States Department of Energy's  nuclear  fuel
enrichment facilities.  Deposits to the D&D Fund are derived in  part  from
special  assessments  on  utilities  using  enrichment  services.   As   of
December  31, 1998, Wisconsin Electric has recorded its remaining estimated
liability  equal to the projected special assessments of $21.4 million.   A
corresponding  deferred  regulatory asset  is  detailed  in  Note  A.   The
deferred  regulatory asset will be amortized to nuclear  fuel  expense  and
included  in  utility rates over the next nine years.   In  the  1998  Rate
Order,  the  PSCW approved recovery over the 1998-1999 biennial  period  of
D&D Fund costs disallowed in 1997.


G - PREFERRED STOCK

Serial  preferred  stock  authorized but unissued is  cumulative,  $25  par
value, 5,000,000 shares.

In the event of default in the payment of preferred dividends, no dividends
or other distributions may be paid on Wisconsin Electric's common stock.

The  3.60% series preferred stock is redeemable in whole or in part at  the
option of Wisconsin Electric at $101 per share plus any accrued dividends.

The  fair  value of Wisconsin Electric's preferred stock was $20.2  million
and $17.8 million at December 31, 1998 and 1997, respectively.


H - LONG-TERM DEBT

FIRST  MORTGAGE BONDS, DEBENTURES AND NOTES:   The maturities  and  sinking
fund  requirements through 2003 for the aggregate amount of long-term  debt
outstanding  (excluding obligations under capital lease)  at  December  31,
1998 are shown below.


                            (Thousands of Dollars)
                                               
          1999                      $92,905  
          2000                        1,905  
          2001                        1,905  
          2002                        1,905  
          2003                        1,905  


Sinking fund requirements for the years 1999 through 2003, included in  the
table  above, are $9.5 million.  Substantially all utility plant is subject
to the mortgage.

Long-term debt premium or discount and expense of issuance are amortized by
the straight line method over the lives of the debt issues and included  as
interest  expense.  Unamortized amounts pertaining to reacquired  debt  are
written  off  currently,  when  acquired  for  sinking  fund  purposes,  or
amortized  in  accordance  with  PSCW  orders,  when  acquired  for   early
retirement.

In  June  1998, Wisconsin Electric issued $150 million of 6-1/2% debentures
due  2028.   Proceeds  from  the issue were added to  Wisconsin  Electric's
general  funds and were used to reduce short-term borrowings and for  other
general corporate purposes.

Following   is   Wisconsin  Electric's  long-term   debt   outstanding   at
December 31.

                                                                      
                                                  1998           1997
                                                  ----           ----
                                                (Thousands of Dollars)
First Mortgage Bonds                                                   
  5-1/8% Series due 1998                       $     -       $   60,000
  6-1/2% Series due 1999                          40,000         40,000
  6-5/8% Series due 1999                          51,000         51,000
  7-1/4% Series due 2004                         140,000        140,000
  7-1/8% Series due 2016                         100,000        100,000
  6.85% Series due 2021                            9,000          9,000
  7-3/4% Series due 2023                         100,000        100,000
  7.05% Series due 2024                           60,000         60,000
  9-1/8% Series due 2024                           3,443          3,443
  8-3/8% Series due 2026                         100,000        100,000
  7.70% Series due 2027                          200,000        200,000
                                                                       
Debentures (unsecured)                                                 
  6-5/8% due 2006                                200,000        200,000
  9.47% due 2006                                   5,600          6,300
  8-1/4% due 2022                                 25,000         25,000
  6-1/2% due 2028                                150,000            -
  6-7/8% due 2095                                100,000        100,000
                                                                       
Notes (unsecured)                                                      
  Variable rate due 2006                           1,000          1,000
  Variable rate due 2015                          17,350         17,350
  Variable rate due 2016                          67,000         67,000
  Variable rate due 2030                          80,000         80,000
  6.36% effective rate due 2006                                        
                                                   9,642         10,847
                                                                       
  Obligations under capital leases               189,980        182,450
  Unamortized discount - net                     (24,030)       (23,443)
  Long-term debt due currently                  (112,454)       (81,389)
                                              ----------     ----------
Total Long-Term Debt                          $1,512,531     $1,448,558
                                              ==========     ==========
                                                                       

At  December 31, 1998, the interest rate for the $67 million variable  rate
note  due  2016  was  4.10% and the interest rate for  the  $98.35  million
variable rate notes due 2006-2030 was 3.95%.

OBLIGATIONS  UNDER CAPITAL LEASE:   Wisconsin Electric has a  nuclear  fuel
leasing  arrangement with Wisconsin Electric Fuel Trust ("Trust") which  is
treated  as  a capital lease.  The nuclear fuel is leased and amortized  to
fuel  expense for a period of 60 months or until the removal  of  the  fuel
from  the reactor, if earlier.  Lease payments include charges for the cost
of  fuel  burned,  financing  costs and  management  fees.   In  the  event
Wisconsin  Electric  or  the Trust terminates the lease,  the  Trust  would
recover  its  unamortized  cost of nuclear fuel  from  Wisconsin  Electric.
Under  the  lease  terms,  Wisconsin Electric is  in  effect  the  ultimate
guarantor  of  the  Trust's commercial paper and line of credit  borrowings
financing the investment in nuclear fuel.  Interest expense on the  nuclear
fuel  lease,  included in fuel expense, was $3.1 million, $0.9 million  and
$2.3 million during 1998, 1997 and 1996, respectively.

To  meet  a portion of its electric energy supply needs, Wisconsin Electric
entered  into  a  long-term power purchase contract  with  an  unaffiliated
independent   power  producer,  LSP-Whitewater  Limited  Partnership   ("LS
Power").  The contract, for 236 megawatts of firm capacity from LS  Power's
gas-fired cogeneration facility located in Whitewater, Wisconsin,  includes
no  minimum  energy  requirements.  When  the  contract  expires  in  2022,
Wisconsin  Electric may, at its option and with proper  notice,  renew  for
another  ten  years or purchase the generating facility at  fair  value  or
allow the contract to expire.  Wisconsin Electric treats this contract as a
capital  lease.   The  leased facility and corresponding  obligation  under
capital  lease  were recorded at the estimated fair value  of  the  plant's
electric generating facilities.  The leased facility is being amortized  on
a straight line basis over the original 25-year term of the contract.

Beginning  with  commercial operation of LS Power's facility  in  September
1997,  imputed  interest  costs  on  the  purchase  power  obligation  were
$22.9  million  and  $6.5 million during 1998 and 1997,  respectively,  and
total  amortization costs of the leased facilities were  $5.7  million  and
$1.6  million  during  1998 and 1997, respectively.   The  long-term  power
purchase  contract  is  treated  as  an  operating  lease  for  rate-making
purposes.   As a result, the difference between the minimum lease  payments
and the sum of the imputed interest and amortization costs are recorded  as
a deferred regulatory asset (see Note A).  Due to the timing of the minimum
lease payments, Wisconsin Electric expects the regulatory asset to increase
to  approximately  $78  million by the year 2009 and the  total  obligation
under  capital  lease to increase to $160 million by the year  2005  before
each is reduced over the remaining life of the contract.  The minimum lease
payments are classified as purchased power expense on the Income Statement.
Interest  expense on the purchase power obligation, included  in  purchased
power  expense,  was $20.3 million and $5.6 million during 1998  and  1997,
respectively.

Provided below is a summary of Wisconsin Electric's nuclear fuel and leased
facilities  at December 31.

                                      
                                                     1998           1997
                                                     ----           ----
                                                   (Thousands of Dollars)
Nuclear Fuel                                                  
   Under capital lease                            $100,809        $ 95,464
   Accumulated provision for amortization          (62,888)        (59,783)
   In process/stock                                 49,739          54,538
                                                  --------        --------
Total Nuclear Fuel                                $ 87,660        $ 90,219
                                                  ========        ========
Leased Facilities                                                         
   Long-term purchase power commitment            $140,312        $140,312
   Accumulated provision for amortization           (7,305)         (1,625)
                                                  --------        --------
Total Leased Facilities                           $133,007        $138,687
                                                  ========        ========
                                                                            

Future  minimum  lease payments under the capital leases  and  the  present
value  of  the net minimum lease payments as of December 31,  1998  are  as
follows:


                                                   Purchase           
                                     Nuclear         Power            
                                   Fuel Lease     Commitment        Total
                                   ----------     ----------        -----
                                            (Thousands of Dollars)
                                                                              
   1999                             $ 21,678       $ 24,123       $ 45,801
   2000                               13,841         25,031         38,872
   2001                                7,433         25,968         33,401
   2002                                3,664         26,961         30,625
   2003                                1,071         27,954         29,025
Later Years                              -          560,191        560,191
                                    --------       --------       --------
Total Minimum Lease Payments          47,687        690,228        737,915
Less:  Estimated Executory Costs         -         (139,956)      (139,956)
                                    --------       --------       --------
Net Minimum Lease Payments            47,687        550,272        597,959
Less:  Interest                       (4,093)      (403,886)      (407,979)
                                    --------       --------       --------
Present Value of Net Minimum   
        Lease Payments                43,594        146,386        189,980
Less:  Due Currently                 (19,549)           -          (19,549)
                                    --------       --------       --------
                                    $ 24,045       $146,386       $170,431
                                    ========       ========       ========
                                                                           

FAIR  VALUE:    The carrying amount of Wisconsin Electric's long-term  debt
outstanding (excluding obligations under capital lease) was $1,459  million
and $1,371 million at December 31, 1998 and 1997, respectively, with a fair
value  of $1,544 million and $1,411 million, respectively.  The fair  value
of  the  first  mortgage bonds and debentures is estimated based  upon  the
market  value of the same or similar issues.  Book value approximates  fair
value for Wisconsin Electric's unsecured notes.


I - NOTES PAYABLE

Short-term notes payable balances and their corresponding weighted  average
interest rates at December 31 consist of:


                                 1998                 1997
                                 ----                 ----
                                    Interest            Interest
                           Balance      Rate   Balance      Rate
                           -------      ----   -------      ----
                                  (Thousands of Dollars)
                                                                
Banks                     $ 50,495     5.42%  $ 50,495     5.89%
Commercial paper            68,794     5.32%   192,138     5.84%
                          --------            --------          
                          $219,289            $242,633          
                          ========            ========          
                                                                

Unused lines of credit for short-term borrowing amounted to $128 million at
December  31, 1998, all of which supports commercial paper.  In support  of
various informal lines of credit from banks, Wisconsin Electric has  agreed
to  maintain unrestricted compensating balances or to pay commitment  fees;
neither the compensating balances nor the commitment fees are significant.


J - BENEFITS

Wisconsin   Electric   provides   defined   benefit   pension   and   other
postretirement  benefit  plans to employees.  The status  of  these  plans,
including a reconciliation of benefit obligations, a reconciliation of plan
assets and the funded status of the plans follows.  Also disclosed below is
the  aggregate  funded  status of those pension  and  other  postretirement
benefit  plans with accumulated net benefit obligations in excess  of  plan
assets.
<TABLE>
<CAPTION>
                                                                  Other Postretirement
                                            Pension Benefits            Benefits
                                            ----------------      --------------------
                                            1998        1997        1998        1997
                                            ----        ----        ----        ----
                                                    (Thousands of Dollars)
<S>                                        <C>         <C>        <C>         <C>
Change in Benefit Obligation                                                           
  Benefit Obligation at January 1          $649,256    $601,213   $ 148,181   $ 142,783
    Service cost                             12,408       9,216       2,654       1,911
    Interest cost                            46,261      45,613      11,676      10,343
    Plan participants' contributions            -           -         5,908       4,903
    Plan amendments                             -         1,379       3,737      (4,828)
    Actuarial loss                           51,512      35,985      22,283       6,359
    Benefits paid                           (45,001)    (44,150)    (15,603)    (13,290)
                                           --------    --------   ---------   ---------
  Benefit Obligation at December 31        $714,436    $649,256   $ 178,836   $ 148,181
                                                                                       
Change in Plan Assets                                                                  
  Fair Value at January 1                  $761,881    $687,482   $  59,841      49,424
    Actual return on plan assets            104,264     114,294       8,515      10,555
    Employer contributions                    7,347       4,255      10,252       8,249
    Plan participants' contributions            -           -         5,908       4,903
    Benefits paid                           (45,001)    (44,150)    (15,603)    (13,290)
                                           --------    --------   ---------   ---------
  Fair Value at December 31                $828,491    $761,881   $  68,913   $  59,841
                                           --------    --------   ---------   ---------
Funded Status of Plans                                                                 
  Funded status at December 31             $114,055    $112,625   $(109,923)  $ (88,340)
  Unrecognized                                                                         
    Net actuarial (gain) loss              (119,025)   (123,094)      4,587     (14,458)
    Prior service cost                       31,284      34,344       2,582        (938)
    Net transition obligation (asset)       (27,207)    (31,009)     64,239      68,825
                                           --------    --------   ---------   ---------
  Net Accrued Benefit Cost                 $   (893)   $ (7,134)  $ (38,515)  $ (34,911)
                                           ========    ========   =========   =========
Funded Status of Plans with Net                                                        
 Benefit Obligations at December 31                                                    
    Fair value of plan assets              $    -      $   -      $  68,444   $  59,394
    Less:  Benefit obligation                   -          -       (178,563)   (147,919)
                                           --------     -------   ---------   ---------
  Net Benefit Obligation                   $    -      $   -      $(110,119)  $ (88,525)
                                           ========    ========   =========   =========
</TABLE> 

The  components  of  net periodic pension and other postretirement  benefit
costs  as  well as the weighted-average assumptions used in accounting  for
the plans include the following:
<TABLE>
<CAPTION>
                                                                          Other Postretirement
                                             Pension Benefits                  Benefits
                                         ------------------------      ------------------------
                                         1998      1997      1996      1998      1997      1996
                                         ----      ----      ----      ----      ----      ----
                                                          (Thousand of Dollars)
<S>                                     <C>       <C>       <C>       <C>       <C>       <C>    
Net Periodic Benefit Cost                                                                        
  Service cost                          $12,408   $ 9,216   $ 9,912   $ 2,654   $ 1,911   $ 2,436
  Interest cost                          46,261    45,613    41,454    11,677    10,343    10,456
  Expected return on plan assets        (56,822)  (51,592)  (48,494)   (5,008)   (4,085)   (3,708)
  Amortization of                                                                                
    Transition obligation (asset)        (3,801)   (3,802)   (3,802)    4,586     4,586     4,887
    Prior service cost                    3,061     3,061     1,755       217      (100)     (100)
    Actuarial loss (gain)                   -         -         -        (270)     (235)     (272)
                                        -------   -------   -------   -------   -------   -------
Net Periodic Benefit Cost               $ 1,107   $ 2,496   $   825   $13,856   $12,420   $13,699
                                        =======   =======   =======   =======   =======   =======
Weighted-Average Assumptions                                                                
at December 31 (%)                                                                               
  Discount rate                            6.75      7.25      7.75      6.75      7.25      7.75
  Expected return on plan assets           9.0       9.0       9.0       9.0       9.0       9.0
  Rate of compensation increase         4.75 to   4.75 to   4.75 to   4.75 to   4.75 to   4.75 to
                                           5.0       5.0       5.0       5.0       5.0       5.0
</TABLE> 

PENSION  PLANS:    Pension plan assets, the majority of  which  are  equity
securities, are held by pension trusts.  Other pension plan assets  include
corporate  and  government  bonds  and real  estate.   In  the  opinion  of
Wisconsin  Electric,  current pension trust assets and  amounts  which  are
expected  to be paid to the trusts in the future will be adequate  to  meet
pension payment obligations to current and future retirees.

OTHER  POSTRETIREMENT BENEFIT PLANS:   Wisconsin Electric  uses  Employees'
Benefit Trusts to fund a major portion of other postretirement benefits for
its employees.  The majority of the trusts' assets are mutual funds.

The  assumed health care cost trend rate at December 31, 1998 was 6.0%  for
those under age 65 and 6.8% for those over age 65, decreasing gradually  to
5.0%  in 2004 and thereafter.  Assumed health care cost trend rates have  a
significant effect on the amounts reported for the health care plans.

A one-percentage-point change in assumed health care cost trend rates would
have the following effects:

                                                         1%          1%     
                                                      Increase    Decrease
                                                      --------    --------
                                                     (Thousands of Dollars)
Effect on                                                                    
  Postretirement benefit obligation                    $17,058    ($14,957) 
  Total of service and interest cost components          1,650      (1,430) 


K - SEGMENT REPORTING

Wisconsin  Electric,  a  public  utility  incorporated  in  the  State   of
Wisconsin,  has organized its operating segments according  to  how  it  is
currently  regulated.  Operating segments are defined as components  of  an
enterprise about which separate financial information is available that  is
evaluated  regularly in deciding how to allocate resources or in  assessing
performance.   Wisconsin Electric's reportable operating  segments  include
electric, gas and steam utility segments.

The  electric  utility  segment derives its revenues from  the  generation,
transmission,  distribution  and sale of electric  energy  in  southeastern
(including metropolitan Milwaukee), east central and northern Wisconsin and
in  the  Upper Peninsula of Michigan.  The gas utility segment derives  its
revenues from the purchase, distribution and sale of natural gas to  retail
customers  and  the transportation of customer-owned gas in  four   service
areas in southeastern, east central, western, and northern Wisconsin.   The
steam   utility   segment  derives  its  revenues  from   the   production,
distribution and sale of steam to space heating and processing customers in
the Milwaukee area.

The  following  summarizes the reportable operating segments  of  Wisconsin
Electric for the years ended December 31.
<TABLE>
<CAPTION>                                        
                                          Reportable Operating Segments (a)
                                    Electric      Gas        Steam       Total
                                    --------      ---        -----       -----
                                              (Thousands of Dollars)
<S>                               <C>           <C>          <C>      <C>
1998                                                                  
   External revenues              $1,641,283    $293,250     $20,506  $1,955,039
   Intersegment revenues (b)             120       2,598         -         2,718
                                  ----------    --------     -------  ----------
Total Operating Revenues          $1,641,403    $295,848     $20,506  $1,957,757
                                  ==========    ========     =======  ==========

   Depreciation                   $  215,669    $ 23,272     $ 2,631  $  241,572
   Operating Income Taxes             92,582       1,055         333      93,970
   Operating Income (c)              251,582      19,180       2,934     273,696
   Segment Assets (d)              4,087,413     421,951      48,358   4,557,722
   Construction Expenditures         283,367      43,447       1,600     328,414
                                                                                
1997                                                                            
   External revenues              $1,411,962    $349,971     $22,315  $1,784,248
   Intersegment revenues (b)             153       5,201         -         5,354
                                  ----------    --------     -------  ----------
Total Operating Revenues          $1,412,115    $355,172     $22,315  $1,789,602
                                  ==========    ========     =======  ==========

   Depreciation                   $  213,785    $ 21,421     $ 2,492  $  237,698
   Operating Income Taxes             48,442       7,973       1,374      57,789
   Operating Income (c)              170,117      25,122       4,220     199,459
   Segment Assets (d)              3,900,889     392,865      45,131   4,338,885
   Construction Expenditures         236,384      22,977       1,006     260,367
                                                                                
1996                                                                            
   External revenues              $1,393,057    $361,101     $15,675  $1,769,833
   Intersegment revenues (b)             213       3,774         -         3,987
                                  ----------    --------     -------  ----------
Total Operating Revenues          $1,393,270    $364,875     $15,675  $1,773,820
                                  ==========    ========     =======  ==========

   Depreciation                   $  183,159    $ 18,246     $ 1,391  $  202,796
   Operating Income Taxes            110,752      14,516       1,359     126,627
   Operating Income (c)              269,068      33,204       3,572     305,844
   Segment Assets (d)              3,646,997     400,582      46,499   4,094,078
   Construction Expenditures         272,838      22,851      21,651     317,340
<FN>
(a) The  accounting policies of the operating segments are the same  as
    those  described in the summary of significant accounting  policies  
    (see Note A).

(b) Wisconsin Electric accounts for intersegment revenues at  a  tariff
    rate established by the PSCW.

(c) Interest  income and expense are not recorded to  the  segments  to
    determine segment operating income.

(d) Common  utility plant is allocated to electric, gas  and  steam  to
    determine segment assets (see Note A).
</TABLE>

A  reconciliation of the totals reported for the operating segments to  the
applicable line items in the financial statements is as follows:

                                  
                                       1998        1997        1996
                                       ----        ----        ----
                                          (Thousands of Dollars)
Assets                                                               
   Reportable segments             $4,557,722  $4,338,885  $4,094,078
   Non-utility                          4,769       5,308       9,199
   Other - corporate (a)              206,451     323,647     403,883
                                   ----------  ----------  ----------
Total Assets                       $4,768,942  $4,667,840  $4,507,160
                                   ==========  ==========  ==========
Construction Expenditures                                            
   Reportable segments             $  328,414  $  260,367  $  317,340
   Non-utility                             68         282       2,492
                                   ----------  ----------  ----------
Total Construction Expenditures    $  328,482  $  260,649  $  319,832
                                   ==========  ==========  ==========

(a) Primarily  other property and investments, materials  and  supplies
    and deferred charges.



L - COMMITMENTS AND CONTINGENCIES

KIMBERLY  COGENERATION  EQUIPMENT:   In  conjunction  with  a  proposal  to
construct   a  cogeneration  facility  in  Kimberly,  Wisconsin,  Wisconsin
Electric  purchased three combustion turbines, three heat recovery  boilers
and  a  steam  turbine (the "Equipment").  Wisconsin Electric  carried  the
Equipment  at a cost of approximately $66.3 million, entertaining  numerous
proposals and projects for which the Equipment could be used.  During 1997,
Wisconsin Electric continued to review its options for use or sale  of  the
Equipment.   In  the  fourth quarter of 1997, WISVEST Corporation,  a  non-
utility  subsidiary of Wisconsin Energy, entered into the  final  phase  of
negotiations for a joint independent power project involving the Equipment.
Under  the  provisions of Statement of Financial Accounting Standards 
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets  to  Be  Disposed  Of,  Wisconsin Electric  refined  its  cash  flow
projection  for  the Equipment based upon this proposal.   As  measured  by
expected  gross  cash  flows  to be earned under  this  project,  Wisconsin
Electric  determined  that an impairment existed.  As a  result,  Wisconsin
Electric  recorded a $30.0 million impairment charge in the fourth  quarter
of  1997  which  was included in the Miscellaneous - Net Other  Income  and
Deductions  line  of the Income Statement.  During the  second  quarter  of
1998, WISVEST Corporation purchased the Equipment from Wisconsin Electric.

MANUFACTURED  GAS PLANT SITES:   Wisconsin Electric continues  a  voluntary
program  to  investigate the remediation of eleven former manufactured  gas
plant sites.  Wisconsin Electric currently estimates that future costs  for
detailed  site  investigation  and  remediation  will  be  $25  million  to
$40  million  over the next ten years.  Actual costs are uncertain  pending
the  results  of further site specific investigations and the selection  of
site specific remediation.

Of the eleven sites, Wisconsin Electric has begun remediation activities at
the  former  manufactured  gas  plant  site  in  the  City  of  Burlington,
Wisconsin.  Wisconsin Electric also expects to begin remediation in 1999 at
sites  in  Fort  Atkinson  and  Kenosha, Wisconsin.   Wisconsin  Electric's
expected remediation of these sites is anticipated to be accomplished at an
aggregate cost of between $6 million and $11 million.

In  Wisconsin  Electric's February 13, 1997 Rate Order, the PSCW  amplified
its  position  on  the recovery of manufactured gas plant site  remediation
costs.   It reiterated its position that such costs should be deferred  and
amortized  and  recovered, without carrying costs, in  future  rate  cases.
Since the timing and recovery of MGP remediation costs will be affected  by
the  biennial  rate  case  cycle, the timing and magnitude  of  remediation
expenditures, and their recovery may be affected.


M - TRANSACTIONS WITH ASSOCIATED COMPANIES

Managerial,  financial,  accounting,  legal,  data  processing  and   other
services  may  be rendered between associated companies and are  billed  in
accordance  with  service  agreements  approved  by  the  PSCW.   Wisconsin
Electric  received stockholder capital contributions from Wisconsin  Energy
of $100 million in 1997.
                                     
                                     
                                     
                                     
                     REPORT OF INDEPENDENT ACCOUNTANTS
                                    
To the Board of Directors and the
   Stockholder of Wisconsin Electric Power Company

In our opinion, the financial statements listed in the index appearing
under Item 14(a)(1) present fairly, in all material respects, the financial
position of Wisconsin Electric Power Company at December 31, 1998 and 1997,
and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.  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 of these statements in accordance with generally
accepted auditing standards which 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, assessing the accounting principles used and significant
estimates made by management and evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis for
the opinion expressed above.

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

Milwaukee, Wisconsin
January 27, 1999



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

None for Wisconsin Energy nor for Wisconsin Electric.



                                 PART III
                                 --------

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

WISCONSIN  ENERGY:    The  information  under  "Proposal  1:   Election  of
Directors  -  Terms  Expiring in Year 2002" and "Section  16(a)  Beneficial
Ownership  Reporting  Compliance" in Wisconsin  Energy's  definitive  Proxy
Statement  for its Annual Meeting of Stockholders to be held June  2,  1999
(the  "1999  Annual  Meeting Proxy Statement") is  incorporated  herein  by
reference.  Also see "Executive Officers of the Registrant" in  Part  I  of
this report.

WISCONSIN ELECTRIC:   The information under "Election  of  Directors"  and
"Section  16(a)  Beneficial Ownership Reporting  Compliance"  in  Wisconsin
Electric's  definitive  Information Statement for  its  Annual  Meeting  of
Stockholders to be held May 26, 1999 (the "1999 Annual Meeting  Information
Statement")  is  incorporated  herein by reference.   Also  see  "Executive
Officers of the Registrant" in Part I of this report.


ITEM 11.   EXECUTIVE COMPENSATION

WISCONSIN ENERGY:    The  information  under  "Corporate   Governance   -
Compensation   of   the   Board   of   Directors",   "Executive   Officers'
Compensation," "Severance Policy" and "Retirement Plans" in the 1999 Annual
Meeting Proxy Statement is incorporated herein by reference.

WISCONSIN ELECTRIC:    The  information under  "Compensation,"  "Severance
Policy"  and  "Retirement  Plans" in the 1999  Annual  Meeting  Information
Statement is incorporated herein by reference.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

WISCONSIN ENERGY:   The security ownership information under  "WEC  Common
Stock Ownership" in the 1999 Annual Meeting Proxy Statement is incorporated
herein by reference.

WISCONSIN ELECTRIC:   All of Wisconsin Electric's Common  Stock  (100%  of
such  class)  is owned by the parent company, Wisconsin Energy Corporation,
231  West Michigan Street, P.O. Box 2949, Milwaukee, Wisconsin  53201.  The
directors,  director nominees and executive officers of Wisconsin  Electric
do  not  own  any  of  the  voting securities of Wisconsin  Electric.   The
information  concerning  their  beneficial ownership  of  Wisconsin  Energy
Corporation stock set forth under "Stock ownership of Directors, Nominees 
and Executive Officers" in  the  1999 Annual Meeting Information Statement 
is incorporated herein by reference.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None for Wisconsin Energy nor for Wisconsin Electric.



                               PART IV
                               -------

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

(a) 1.  FINANCIAL STATEMENTS AND REPORTS OF INDEPENDENT ACCOUNTANTS
        INCLUDED IN PART II OF THIS REPORT

    WISCONSIN ENERGY CORPORATION

     Consolidated Income Statement for the three years ended December 31, 1998.
     Consolidated Statement of Cash Flows for the three years ended 
         December 31, 1998.
     Consolidated Balance Sheet at December 31, 1998 and 1997.
     Consolidated Capitalization Statement at December 31, 1998 and 1997.
     Consolidated Common Stock Equity statement for the three years ended
         December 31, 1998.
     Notes to Financial Statements.
     Report of Independent Accountants.

    WISCONSIN ELECTRIC POWER COMPANY

     Income Statement for the three years ended December 31, 1998.
     Statement of Cash Flows for the three years ended December 31, 1998.
     Balance Sheet at December 31, 1998 and 1997.
     Capitalization Statement at December 31, 1998 and 1997.
     Common Stock Equity Statement for the three years ended 
         December 31, 1998.
     Notes to Financial Statements.
     Report of Independent Accountants.

   2.   FINANCIAL STATEMENT SCHEDULES INCLUDED IN PART IV OF THIS REPORT
         
    WISCONSIN ENERGY CORPORATION

     Schedule  I  Condensed Parent Company Financial  Statements  for  the
     three  years  ended December 31, 1998.  Other schedules  are  omitted
     because of the absence of conditions under which they are required or
     because the required information is given in the financial statements
     or notes thereto.
      
    WISCONSIN ELECTRIC POWER COMPANY

     Financial  statement schedules are omitted because of the absence  of
     conditions  under  which they are required or  because  the  required
     information is given in the financial statements or notes thereto.
      
   3.   EXHIBITS AND EXHIBIT INDEX

     See  the Exhibit Index included as the last part of this report,  which
     is  incorporated  herein  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 two asterisks  (**)
     following the description of the exhibit.

(b)  REPORTS ON FORM 8-K

     No  reports  on  Form 8-K were filed by Wisconsin Energy  or  Wisconsin
     Electric during the quarter ended December 31, 1998.




                       WISCONSIN ENERGY CORPORATION
                                     
                             INCOME STATEMENT
                           (Parent Company Only)
                                     
                   SECHEDULE I - CONDENSED PARENT COMPANY
                           FINANCIAL STATEMENTS
                                     
                                                                      
                                        Year Ended December 31
                                        ----------------------
                                    1998         1997         1996
                                    ----         ----         ----
                                         (Thousands of Dollars)
                                                                      
Miscellaneous Income             $  1,921      $ 3,298     $  1,576
                                                                      
Miscellaneous Expense               1,943          886          384
                                                                      
Interest Expense                    3,193           67           43
                                                                      
Merger Expense                        480        9,968            -
                                 --------      -------     --------  
                                   (3,695)      (7,623)       1,149
                                                                      
Income Taxes                       (1,054)      (2,222)         303
                                 --------      -------     --------  
                                   (2,641)      (5,401)         846
                                                                      
Equity in Subsidiaries' Earnings  190,773       66,117      217,289
                                 --------      -------     -------- 
Net Income                       $188,132      $60,716     $218,135
                                 ========      =======     ========    
                                                                      
See accompanying notes to condensed parent company financial statements.
                      (continued on next page)
                                                                      
                                     
                                     
                       WISCONSIN ENERGY CORPORATION
                          STATEMENT OF CASH FLOWS
                           (Parent Company Only)
                                     
                   SCHEDULE I - CONDENSED PARENT COMPANY
                      FINANCIAL STATEMENTS - (cont'd)
                                     
                                              Year Ended December 31
                                          ------------------------------
                                          1998        1997          1996
                                          ----        ----          ----
                                              (Thousands of Dollars)
Operating Activities                                                      
  Net income                             $188,132    $ 60,716     $218,135
  Reconciliation to cash                                                  
     Equity in subsidiaries' earnings    (190,773)    (66,117)    (217,289)
     Dividends from subsidiaries          179,001     213,692      167,889
     Other                                   (679)     10,203       (3,794)
                                         --------    --------     --------
Cash Provided by Operating Activities     175,681     218,494      164,941
                                                                          
Investing Activities                                                      
  Equity investment in subsidiaries - net (19,000)   (133,000)      (3,101)
net
  Change in notes receivable -                                            
     associated companies                 (43,100)     42,000      (17,975)
  Other                                     2,691          75          195
                                         --------    --------     --------
Cash Used in Investing Activities         (59,409)    (90,925)     (20,881)
                                                                          
Financing Activities                                                      
  Sale of common stock                     10,275      29,586       23,180
  Dividends on common stock              (177,397)   (172,714)    (167,236)
  Change in notes payable                  66,562         -            -
  Change in notes payable -                                               
     associated companies                 (15,550)     15,550          -
                                         --------    --------     --------
Cash Used in Financing Activities        (116,110)   (127,578)    (144,056)
                                         --------    --------     --------  
Change in Cash and Cash Equivalents      $    162    $     (9)    $      4
                                         ========    ========     ========
  Cash Paid For                                                           
     Interest                            $  2,984    $     -      $     -
     Income taxes                          (2,235)        345          (40)
                                                                          
See accompanying notes to condensed parent company financial statements.
                         (continued on next page)



                       WISCONSIN ENERGY CORPORATION
                                     
                               BALANCE SHEET
                           (Parent Company Only)
                                     
                   SCHEDULE I - CONDENSED PARENT COMPANY
                      FINANCIAL STATEMENTS - (cont'd)
                                     
                                                                       
                                                    December 31
                                                -------------------
                                                1998           1997
                                                ----           ----
                                               (Thousands of Dollars)
                   Assets                                             
                                                                      
 Current Assets                                                       
   Cash and cash equivalents                 $      171     $        9
   Accounts and notes receivable                                      
      from associated companies                  43,914            641
   Other                                          2,113          2,943
                                             ----------     ----------
        Total Current Assets                     46,198          3,593
                                                                      
 Property and Investments                                             
   Investment in subsidiary companies         1,927,726      1,878,464
   Other                                            844            681
                                             ----------     ----------
        Total Property and Investments        1,928,570      1,879,145
                                                                      
 Deferred Charges                                11,209          9,375
                                             ----------     ----------
 Total Assets                                $1,985,977     $1,892,113
                                             ==========     ==========
                                                                      
           Liabilities and Equity                                     
                                                                      
 Current Liabilities                                                  
   Accounts and notes payable                $   66,772     $      324
   Accounts and notes payable                                         
      to associated companies                       113         15,770
   Other                                            571            536
                                             ----------     ----------
        Total Current Liabilities                67,456         16,630
                                                                      
 Deferred Credits                                12,627          9,762
                                                                      
 Stockholders' Equity                                                 
   Common stock                                 763,141        733,573
   Retained earnings                            143,901        153,757
   Undistributed subsidiaries' earnings         998,852        978,391
                                             ----------     ----------
        Total Stockholders' Equity            1,905,894      1,865,721
                                             ----------     ----------
 Total Liabilities and Equity                $1,985,977     $1,892,113
                                             ==========     ==========

See accompanying notes to condensed parent company financial statements.
                       (continued on next page)
                                     
                                     
                                     
                       WISCONSIN ENERGY CORPORATION  
                       NOTES TO FINANCIAL STATEMENTS
                           (Parent Company Only)
                                     
                   SCHEDULE I - CONDENSED PARENT COMPANY
                      FINANCIAL STATEMENTS - (cont'd)
                                     
1.The condensed parent company financial statements and notes should be
  read in conjunction with the consolidated financial statements and notes of
  Wisconsin Energy Corporation appearing in this Annual Report on Form 10-K.

2.Various  financing  arrangements and regulatory  requirements  impose
  certain restrictions on the ability of Wisconsin Electric Power Company, a
  utility  subsidiary of Wisconsin Energy Corporation to transfer funds  to
  Wisconsin  Energy  Corporation in the form of cash dividends,  loans,  or
  advances.   Under  Wisconsin law, Wisconsin Electric is  prohibited  from
  loaning  funds,  either  directly  or indirectly,  to  Wisconsin  Energy.
  Wisconsin Energy Corporation does not believe that such restrictions will
  affect its operations.



                    CONSENT OF INDEPENDENT ACCOUNTANTS

We  hereby  consent to the incorporation by reference in  the  Registration
Statements   and   Prospectuses  constituting  part  of  the   Registration
Statements listed below of Wisconsin Energy Corporation of our report dated
January 27, 1999 appearing in this Form 10-K.

    1.  Registration Statement on Form S-3 (Registration No.  333-24277)  -
        Stock Plus Investment Plan.

    2.  Registration Statement on Form S-8 (Registration No.  333-60383)  -
        Employee Retirement Savings Plan.

    3.  Registration  Statement on Form S-8 (Registration No.  33-65225)  -
        1993 Omnibus Stock Incentive Plan.

    4.  Registration Statement on Form S-3 (Registration No.  333-73137)  -
        Trust Preferred Securities.

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

Milwaukee, Wisconsin
March 29, 1999



               CONSENT OF INDEPENDENT ACCOUNTANTS

We  hereby  consent  to the incorporation  by  reference  in  the
Prospectuses  constituting part of the Registration Statement  on
Form  S-3 (No. 333-40319) of Wisconsin Electric Power Company  of
our report dated January 27, 1999 appearing in this Form 10-K.

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

Milwaukee, Wisconsin
March 29, 1999



                                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, therunto duly authorized.

                                 WISCONSIN ENERGY CORPORATION
                                 
                             By  /s/R. A. Abdoo
                                 ----------------------------
Date:   March 25, 1999           R. A. Abdoo, Chairman of the Board
                                 and Chief Executive Officer

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

/s/R. A. Abdoo                                       March 25, 1999
---------------------------------------------
R. A. Abdoo, Chairman of the Board, President        
and Chief Executive Officer and Director             
- Principal Executive Officer                        
                                                     
/s/R. R. Grigg                                       March 25, 1999
---------------------------------------------
R. R. Grigg, Vice President and Director             
                                                     
/s/C. H. Baker                                       March 25, 1999
---------------------------------------------
C. H. Baker, Treasurer and Chief Financial           
Officer - Principal Financial Officer                
                                                     
/s/A. K. Klisurich                                   March 25, 1999
---------------------------------------------
A. K. Klisurich, Controller -                        
Principal Accounting Officer                         
                                                     
/s/J. F. Ahearne                                     March 25, 1999
---------------------------------------------
J. F. Ahearne, Director                              
                                                     
/s/J. F. Bergstrom                                   March 25, 1999
---------------------------------------------
J. F. Bergstrom, Director                            
                                                     
/s/ B. L. Bowles                                     March 25, 1999
---------------------------------------------
B. L. Bowles, Director                               
                                                     
/s/R. A. Cornog                                      March 25, 1999
---------------------------------------------
R. A. Cornog, Director                               
                                                     
/s/G. B. Johnson                                     March 25, 1999
---------------------------------------------
G. B. Johnson, Director                              
                                                     
/s/J. N. MacDonough                                  March 25, 1999
---------------------------------------------
J. N. MacDonough, Director                           
                                                     
/s/ J. B. North                                      March 25, 1999
---------------------------------------------
J. B. North, Director                                
                                                     
/s/F. P. Stratton, Jr.                               March 25, 1999
---------------------------------------------
F. P. Stratton, Jr., Director                        



                                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, therunto duly authorized.

                                   WISCONSIN ELECTRIC POWER COMPANY
                                By /s/R. A. Abdoo
                                   ------------------------------------
Date:   March 25, 1999             R. A. Abdoo, Chairman of the Board
                                   and Chief Executive Officer

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

/s/R. A. Abdoo                                       March 25, 1999
---------------------------------------------
R. A. Abdoo, Chairman of the Board, Chief            
Executive Officer and Director - Principal
Executive Officer
                                                     
/s/R. R. Grigg                                       March 25, 1999
---------------------------------------------
R. R. Grigg, President, Chief Operating Officer      
and Director
                                                     
/s/D. K. Porter                                      March 25, 1999
---------------------------------------------
D. K. Porter, Senior Vice President and Director     
                                                     
/s/C. H. Baker                                       March 25, 1999
---------------------------------------------
C. H. Baker, Vice President - Finance, Chief         
Financial Officer - Principal Financial Officer
                                                     
/s/A. K. Klisurich                                   March 25, 1999
---------------------------------------------
A. K. Klisurich, Controller - Principal              
Accounting Officer
                                                     
/s/J. F. Ahearne                                     March 25, 1999
---------------------------------------------
J. F. Ahearne, Director                              
                                                     
/s/J. F. Bergstrom                                   March 25, 1999
---------------------------------------------
J. F. Bergstrom, Director                            
                                                     
/s/ B. L. Bowles                                     March 25, 1999
---------------------------------------------
B. L. Bowles, Director                               
                                                     
/s/R. A. Cornog                                      March 25, 1999
---------------------------------------------
R. A. Cornog, Director                               
                                                     
/s/G. B. Johnson                                     March 25, 1999
---------------------------------------------
G. B. Johnson, Director                              
                                                     
/s/J. N. MacDonough                                  March 25, 1999
---------------------------------------------
J. N. Macdonough, Director                           
                                                     
/s/J. B. North                                       March 25, 1999
---------------------------------------------
J. B. North, Director                                
                                                     
/s/F. P. Stratton, Jr.                               March 25, 1999
---------------------------------------------
F. P. Stratton, Jr., Director                        
                                     


                       WISCONSIN ENERGY CORPORATION
                     WISCONSIN ELECTRIC POWER COMPANY
                               EXHIBIT INDEX
                                    to
                        Annual Report on Form 10-K
                   For the year ended December 31, 1998
                                     
The following exhibits are filed with or incorporated by reference in the
report with respect to Wisconsin Energy and/or Wisconsin Electric as
denoted by an "X" in the last two columns.  (An asterisk (*) indicates
incorporation by reference pursuant to Exchange Act Rule 12b-32.)

                                                              
                                                Wisconsin  Wisconsin
Number                    Exhibit                 Energy    Electric
------   -------------------------------------  ---------  ---------
                                                              
  3      Articles of Incorporation and By-laws                
                                                              
         3.1 *   Restated Articles of                X        
                 Incorporation of Wisconsin
                 Energy Corporation, as amended
                 and restated effective June
                 12, 1995.  (Exhibit (3)-1 to
                 Wisconsin Energy Corporation's
                 Quarterly Report on Form 10-Q
                 for the quarter ended June 30,
                 1995, File No. 1-9057.)
                                                              
         3.2 *   Bylaws of Wisconsin Energy          X        
                 Corporation, as amended to
                 December 17, 1997.  (Exhibit
                 3.2 to Wisconsin Energy
                 Corporation's Annual Report on
                 Form 10-K for the year ended
                 December 31, 1997, File No. 
                 1-9057.)
                                                              
         3.3 *   Restated Articles of                         X
                 Incorporation of Wisconsin
                 Electric, as amended and
                 restated effective
                 January 10, 1995.  (Exhibit
                 (3)-1 to Wisconsin Electric's
                 Annual Report of Form 10-K for
                 the year ended December 31, 1994, 
                 File No. 1-1245.)
                                                              
         3.4 *   Bylaws of Wisconsin Electric,                X
                 as amended to December 17, 1997. 
                 (Exhibit 3.2 to Wisconsin Electric's
                 Annual Report on Form 10-K for
                 the year ended December 31,
                 1997, File No. 1-1245.)
                                                              
                                                              
  4      Instruments defining the rights of security        
         holders, including indentures
                                                              
         4.1 *   Reference is made to Article        X        X
                 III of the Restated Articles
                 of Incorporation.  (Exhibits
                 3.1 and 3.3 herein.)

         Mortgage, Indenture, Supplemental Indenture or     
         Securities Resolution:
                                                              
         4.2 *   Mortgage and Deed of Trust of       X        X
                 Wisconsin Electric, dated
                 October 28, 1938 (Exhibit B-1
                 under File No. 2-4340.)
                                                              
         4.3 *   Second Supplemental Indenture       X        X
                 of Wisconsin Electric, dated
                 June 1, 1946 (Exhibit 7-C
                 under File No. 2-6422.)
                                                              
         4.4 *   Third Supplemental Indenture        X        X
                 of Wisconsin Electric, dated
                 March 1, 1949 (Exhibit 7-C
                 under File No. 2-8456.)
                                                              
         4.5 *   Fourth Supplemental Indenture       X        X
                 of Wisconsin Electric, dated
                 June 1, 1950 (Exhibit 7-D
                 under File No. 2-8456.)
                                                              
         4.6 *   Fifth Supplemental Indenture        X        X
                 of Wisconsin Electric, dated
                 May 1, 1952 (Exhibit 4-G under
                 File No. 2-9588.)
                                                              
         4.7 *   Sixth Supplemental Indenture        X        X
                 of Wisconsin Electric, dated
                 May 1, 1954 (Exhibit 4-H under
                 File No. 2-10846.)
                                                              
         4.8 *   Seventh Supplemental Indenture      X        X
                 of Wisconsin Electric, dated
                 April 15, 1956 (Exhibit 4-I
                 under File No. 2-12400.)
                                                              
         4.9 *   Eighth Supplemental Indenture       X        X
                 of Wisconsin Electric, dated
                 April 1, 1958 (Exhibit 2-I
                 under File No. 2-13937.)
                                                              
         4.10 *  Ninth Supplemental Indenture        X        X
                 of Wisconsin Electric, dated
                 November 15, 1960 (Exhibit 2-J
                 under File No. 2-17087
                                                              
         4.11 *  Tenth Supplemental Indenture        X        X
                 of Wisconsin Electric, dated
                 November 1, 1966 (Exhibit 2-K
                 under File No. 2-25593.)
                                                              
         4.12 *  Eleventh Supplemental               X        X
                 Indenture of Wisconsin
                 Electric, dated November 15,
                 1967 (Exhibit 2-L under File
                 No. 2-27504.)
                                                              
         4.13 *  Twelfth Supplemental Indenture      X        X
                 of Wisconsin Electric, dated
                 May 15, 1968 (Exhibit 2-M
                 under File No. 2-28799.)
                                                              
         4.14 *  Thirteenth Supplemental             X        X
                 Indenture of Wisconsin
                 Electric, dated May 15, 1969
                 (Exhibit 2-N under File 
                 No. 2-32629.)
                                                              
         4.15 *  Fourteenth Supplemental             X        X
                 Indenture of Wisconsin
                 Electric, dated November 1,
                 1969 (Exhibit 2-O under File
                 No. 2-34942.)
                                                              
         4.16 *  Fifteenth Supplemental              X        X
                 Indenture of Wisconsin
                 Electric, dated July 15, 1976
                 (Exhibit 2-P under File 
                 No. 2-54211.)
                                                              
         4.17 *  Sixteenth Supplemental              X        X
                 Indenture of Wisconsin
                 Electric, dated January 1,
                 1978 (Exhibit 2-Q under File
                 No. 2-61220.)
                                                              
         4.18 *  Seventeenth Supplemental            X        X
                 Indenture of Wisconsin
                 Electric, dated May 1, 1978
                 (Exhibit 2-R under File 
                 No. 2-61220.)
                                                              
         4.19 *  Eighteenth Supplemental             X        X
                 Indenture of Wisconsin
                 Electric, dated May 15, 1978
                 (Exhibit 2-S under File 
                 No. 2-61220.)
                                                              
         4.20 *  Nineteenth Supplemental             X        X
                 Indenture of Wisconsin
                 Electric, dated August 1, 1979
                 (Exhibit (a)2(a) under File
                 No. 1-1245, 9/30/79 Wisconsin
                 Electric Form 10-Q.)
                                                              
         4.21 *  Twentieth Supplemental              X        X
                 Indenture of Wisconsin
                 Electric, dated November 15,
                 1979 (Exhibit (a)2(a) under
                 File No. 1-1245, 12/31/79
                 Wisconsin Electric Form 10-K.)
                                                              
         4.22 *  Twenty-First Supplemental           X        X
                 Indenture of Wisconsin
                 Electric, dated April 15, 
                 1980 (Exhibit (4)-21 under File 
                 No. 2-69488.)
                                                              
         4.23 *  Twenty-Second Supplemental          X        X
                 Indenture of Wisconsin
                 Electric, dated December 1,
                 1980 (Exhibit (4)-1 under File
                 No. 1-1245, 12/31/80 Wisconsin
                 Electric Form 10-K.)
                                                              
         4.24 *  Twenty-Third Supplemental           X        X
                 Indenture of Wisconsin
                 Electric, dated September 15,
                 1985 (Exhibit (4)-1 under File
                 No. 1-1245, 9/30/85 Wisconsin
                 Electric Form 10-Q.)
                                                              
         4.25 *  Twenty-Fourth Supplemental          X        X
                 Indenture of Wisconsin
                 Electric, dated September 15,
                 1985 (Exhibit (4)-1 under File
                 No. 1-1245, 9/30/85 Wisconsin
                 Electric Form 10-Q.)
                                                              
         4.26 *  Twenty-Fifth Supplemental           X        X
                 Indenture of Wisconsin
                 Electric, dated December 15,
                 1986 (Exhibit (4)-25 under
                 File No. 1-1245, 12/31/86
                 Wisconsin Electric Form 10-K.)
                                                              

         4.27 *  Twenty-Sixth Supplemental           X        X
                 Indenture of Wisconsin
                 Electric, dated January 1,
                 1988 (Exhibit 4 under File 
                 No. 1-1245, 1/26/88 Wisconsin
                 Electric Form 8-K.)
                                                              
         4.28 *  Twenty-Seventh Supplemental         X        X
                 Indenture of Wisconsin
                 Electric, dated April 15, 
                 1988 (Exhibit 4 under File 
                 No. 1-1245, 3/31/88 Wisconsin
                 Electric Form 10-Q.)
                                                              
         4.29 *  Twenty-Eighth Supplemental          X        X
                 Indenture of Wisconsin
                 Electric, dated September 1,
                 1989 (Exhibit 4 under File 
                 No. 1-1245, 9/30/89 Wisconsin
                 Electric Form 10-Q.)
                                                              
         4.30 *  Twenty-Ninth Supplemental           X        X
                 Indenture of Wisconsin
                 Electric, dated October 1,
                 1991 (Exhibit 4-1 under File
                 No. 1-1245, 12/31/91 Wisconsin
                 Electric Form 10-K.)
                                                              
         4.31 *  Thirtieth Supplemental              X        X
                 Indenture of Wisconsin
                 Electric, dated December 1,
                 1991 (Exhibit 4-2 under File
                 No. 1-1245, 12/31/91 Wisconsin
                 Electric Form 10-K.)
                                                              
         4.32 *  Thirty-First Supplemental           X        X
                 Indenture of Wisconsin
                 Electric, dated August 1, 1992
                 (Exhibit 4-1 under File No. 
                 1-1245, 6/30/92 Wisconsin
                 Electric Form 10-Q.)
                                                              
         4.33 *  Thirty-Second Supplemental          X        X
                 Indenture of Wisconsin
                 Electric, dated August 1, 1992
                 (Exhibit 4-2 under File 
                 No. 1-1245, 6/30/92 Wisconsin
                 Electric Form 10-Q.)
                                                              
         4.34 *  Thirty-Third Supplemental           X        X
                 Indenture of Wisconsin
                 Electric, dated October 1,
                 1992 (Exhibit 4-1 under File
                 No. 1-1245, 9/30/92 Wisconsin
                 Electric Form 10-Q.)
                                                              
         4.35 *  Thirty-Fourth Supplemental          X        X
                 Indenture of Wisconsin
                 Electric, dated November 1,
                 1992 (Exhibit 4-2 under File
                 No. 1-1245, 9/30/92 Wisconsin
                 Electric Form 10-Q.)
                                                              
         4.36 *  Thirty-Fifth Supplemental           X        X
                 Indenture of Wisconsin
                 Electric, dated December 15,
                 1992 (Exhibit 4-1 under File
                 No. 1-1245, 12/31/92 Wisconsin
                 Electric Form 10-K.)
                                                              
         4.37 *  Thirty-Sixth Supplemental           X        X
                 Indenture of Wisconsin
                 Electric, dated January 15,
                 1993 (Exhibit 4-2 under File
                 No. 1-1245, 12/31/92 Wisconsin
                 Electric Form 10-K.)
                                                              
         4.38 *  Thirty-Seventh Supplemental         X        X
                 Indenture of Wisconsin
                 Electric, dated March 15, 1993
                 (Exhibit 4-3 under File 
                 No. 1-1245, 12/31/92 Wisconsin
                 Electric Form 10-K.)
                                                              
         4.39 *  Thirty-Eighth Supplemental          X        X
                 Indenture of Wisconsin
                 Electric, dated August 1, 1993
                 (Exhibit (4)-1 under File
                 No. 1-1245, 6/30/93 Wisconsin
                 Electric Form 10-Q.)
                                                              
         4.40 *  Thirty-Ninth Supplemental           X        X
                 Indenture of Wisconsin
                 Electric, dated September 15,
                 1993 (Exhibit (4)-1 under File
                 No. 1-1245, 9/30/93 Wisconsin
                 Electric Form 10-Q.)
                                                              
         4.41 *  Fortieth Supplemental               X        X
                 Indenture of Wisconsin
                 Electric, dated January 1,
                 1996 (Exhibit (4)-1 under File
                 No. 1-1245, 1/1/96 Wisconsin
                 Electric Form 8-K.)
                                                              
         4.42 *  Indenture for Debt Securities       X        X
                 of Wisconsin Electric (the
                 "Indenture"), dated December
                 1, 1995 (Exhibit (4)-1 under
                 File No. 1-1245, 12/31/95
                 Wisconsin Electric Form 10-K.)
                                                              
         4.43 *  Securities Resolution No. 1 of      X        X
                 Wisconsin Electric under the
                 Indenture, dated December 5,
                 1995 (Exhibit (4)-2 under File
                 No. 1-1245, 12/31/95 Wisconsin
                 Electric Form 10-K.)
                                                              
         4.44 *  Securities Resolution No. 2 of      X        X
                 Wisconsin Electric under the
                 Indenture, dated November 12,
                 1996 (Exhibit 4.44 under File
                 No. 1-9057, 12/31/96 Wisconsin
                 Energy Corporation Form 10-K.)
                                                              
         4.45 *  Securities Resolution No. 3 of      X        X
                 Wisconsin Electric under the
                 Indenture, dated May 27, 1998
                 (Exhibit (4)-1 under File 
                 No. 1-1245, 6/30/98 Wisconsin
                 Electric Form 10-Q.)
                                                              
                 All agreements and instruments               
                 with respect to long-term debt
                 not exceeding 10 percent of
                 the total assets of the
                 Registrant and its
                 subsidiaries on a consolidated
                 basis have been omitted as
                 permitted by related
                 instructions.  The Registrant
                 agrees pursuant to Item
                 601(b)(4) of Regulation S-K to
                 furnish to the Securities and
                 Exchange Commission, upon
                 request, a copy of all such
                 agreements and instruments.
                                                              
                                                              
 10      Material Contracts                                   
                                                              
         10.1 *  Employment arrangement with         X        X
                 Michael B. Sellman as Chief
                 Nuclear Officer of Wisconsin
                 Electric, effective March 2,
                 1998.  (Exhibit 10.1 to
                 Wisconsin Energy Corporation's
                 Annual Report on Form 10-K for
                 the year ended December 31,
                 1997, File No. 1-9057.) ** See
                 Note.
                                                              
         10.2 *  Supplemental Executive              X        
                 Retirement Plan of Wisconsin
                 Energy Corporation (as amended
                 and restated as of January 1,
                 1996). (Exhibit (10)-1 to
                 Wisconsin Energy Corporation's
                 Annual Report on Form 10-K for
                 the year ended December 31,
                 1995, File No. 1-9057.)**  See
                 Note.
                                                              
         10.3 *  Amended Non-Qualified Trust         X        X
                 Agreement by and between
                 Wisconsin Energy Corporation
                 and Firstar Trust Company
                 dated January 26, 1996,
                 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.  (Exhibit (10)-2
                 to Wisconsin Energy
                 Corporation's Annual Report on
                 Form 10-K for the year ended
                 December 31, 1995, File 
                 No. 1-9057.)**  See Note.
                                                              
         10.4 *  Executive Deferred                  X        
                 Compensation Plan of Wisconsin
                 Energy Corporation, effective
                 January 1, 1989, as amended
                 and restated as of January 1,
                 1996.  (Exhibit (10)-3 to
                 Wisconsin Energy Corporation's
                 Annual Report on Form 10-K for
                 the year ended December 31,
                 1995, File No. 1-9057.)**  See
                 Note.
                                                              
         10.5 *  Directors' Deferred                 X        
                 Compensation Plan of Wisconsin
                 Energy Corporation, effective
                 January 1, 1987, and as
                 restated as of January 1,
                 1996.  (Exhibit (10)-4 to
                 Wisconsin Energy Corporation's
                 Annual Report on Form 10-K for
                 the year ended December 31,
                 1995, File No. 1-9057.)**  See
                 Note.
                                                              
         10.6 *  Forms of Stock Option               X        
                 Agreements under 1993 Omnibus
                 Stock Incentive Plan. (Exhibit
                 (10)-5 to Wisconsin Energy
                 Corporation's Annual Report on
                 Form 10-K for the year ended
                 December 31, 1995, File 
                 No. 1-9057.)**  See Note.
                                                              
         10.7 *  Supplemental Benefits               X        X
                 Agreement between Wisconsin
                 Energy Corporation and Calvin
                 H. Baker dated November 21,
                 1994. (Exhibit (10)-7 to
                 Wisconsin Energy Corporation's
                 Annual Report on Form 10-K for
                 the year ended December 31,
                 1995, File No. 1-9057.)**  See
                 Note.
                                                              
         10.8 *  Supplemental Benefits               X        X
                 Agreement between Wisconsin
                 Energy Corporation and Richard
                 A. Abdoo dated November 21,
                 1994, and April 26, 1995
                 letter agreement.  (Exhibit
                 (10)-1 to Wisconsin Energy
                 Corporation's 6/30/95 10-Q.)**
                 See Note.
                                                              
         10.9 *  Wisconsin Energy Corporation        X        X
                 Senior Executive Severance
                 Policy, as adopted effective
                 April 28, 1995 and amended on
                 July 26, 1995.  (Exhibit 
                 (10)-3 to Wisconsin Energy
                 Corporation's 6/30/95 10-Q.)**
                 See Note.
                                                              
         10.10   1993 Ombibus Stock Incentive        X        
                 Plan adopted by the Board of
                 Directors on December 15,
                 1993, approved by shareholders
                 at the Annual Meeting of
                 Stockholders held on May 11,
                 1994, and amended by the Board
                 of Directors on May 19, 1998
                 offering performance-based
                 incentives and other  equity
                 interests in Wisconsin Energy
                 Corporation to directors,
                 officers and other key
                 employees.  **  See Note.
                                                              
         10.11   1998 Revised forms of award         X        
                 agreements under 1993 Omnibus
                 Stock Incentive Plan, as
                 amended, for non-qualified
                 stock option awards to non-
                 employee directors, restricted
                 stock awards, incentive stock
                 option awards and non-
                 qualified stock option
                 awards.** See Note.
                                                              
         10.12*  Short-Term Performance Plan of      X        
                 Wisconsin Energy Corporation
                 effective January 1, 1992.
                 (Exhibit 10-3 to Wisconsin
                 Energy Corporation's 1991 Form
                 10-K in File No. 1-9057.)**
                 See Note.
                                                              
         10.13*  Service Agreement dated             X        X
                 January 1, 1987, between
                 Wisconsin Electric, Wisconsin
                 Energy Corporation and other
                 non-utility affiliated
                 companies.  (Exhibit (10)-(a)
                 to Wisconsin Electric's
                 Current Report on Form 8-K
                 dated January 2, 1987 in File
                 No. 1-1245.)
                                                              
         Note:  Two asterisks (**) identify                   
         management contracts and executive
         compensation plans or arrangements
         required to be filed as exhibits
         pursuant to Item 14(c) of Form 10-K.
         Certain compensatory plans in which
         directors or executive officers of
         Wisconsin Electric are eligible to
         participate are not filed as Wisconsin
         Electric exhibits in reliance on the
         exclusion in Item 601(b)(10)(iii)(B)(6)
         of Regulation S-K.
                                                              
                                                              
 21      Subsidiaries of the registrant                       
                                                              
         21.1    Subsidiaries of Wisconsin           X        
                 Energy Corporation
                                                              
                                                              
 23      Consents of experts and counsel                      
                                                              
         23.1    PricewaterhouseCoopers LLP -        X        X
                 Milwaukee, WI Consent of
                 Independent Accountants
                 appearing in this Annual
                 Report on Form 10-K for the
                 year ended December 31, 1998.
                                                              
                                                              
 27      Financial data schedule                           
                                                             
         27.1    Financial Data Schedule for         X       X
                 the fiscal year ended
                 December 31, 1998.
                                                             
                                                             
 99      Additional exhibits                               
                                                             
         99.1    Information furnished in lieu       X       
                 of the Form 11-K Annual
                 Report for Employee
                 Retirement Savings Plan for
                 the year ended December 31,
                 1998.  (To be filed by
                 amendment.)