EXHIBIT 10G-3

                      WPS RESOURCES CORPORATION 
                     SHORT-TERM VARIABLE PAY PLAN


                       Effective January 1, 1998

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                       WPS RESOURCES CORPORATION
                     SHORT-TERM VARIABLE PAY PLAN

     1.   Purpose.

          The WPS Resources Corporation Short-Term Variable Pay Plan
(the "Plan") has been established effective January 1, 1998 to promote
the best interests of WPS Resources Corporation ("Company") and the
stockholders of the Company by (a) attracting and retaining key
employees possessing a strong interest in the above-average
performance of the Company and its subsidiaries and (b) encouraging
their continued loyalty, service and counsel.

     2.   Administration.

          (a)  The Plan will be administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee"). 
The Committee shall have full and final authority and discretion to
conclusively interpret the provisions of the Plan and to decide all
questions of fact arising under the Plan, including the authority and
discretion to:

               (1)    determine those employees who are eligible to
                      participate in the Plan for any year;

               (2)    review and from time to time revise the tables
                      and other factors on which incentive
                      compensation awards may be based;

               (3)    determine the amount (if any) awarded or to be
                      awarded under the Plan to any employee for any
                      year; and 

               (4)    to make all other determinations respecting the
                      administration, operation and interpretation of
                      the Plan that the Committee, in its sole
                      discretion, determines to be necessary or
                      appropriate.  

          (b)  An employee's participation in the Plan in any year,
and any amounts awarded to the employee under the Plan for any such
year, does not imply that the employee is entitled to participate in
or receive an award under the Plan for any subsequent year.

     3.   Designation of Participating Employees.

          For each calendar year for which this Plan is in effect, the
Committee shall designate:

          (a)  those employees of the Company and its subsidiaries who
are eligible to participate in the Plan for such year
("Participants");

          (b)  the Target Award applicable to each Participant for
such year (see Section 7); and

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          (c)  whether each Participant is a Utility Participant or a
Non-Utility Participant.

     4.   Award of Incentive Compensation.

          A Participant shall not have any right to an amount under
this Plan until such amount has been awarded by the Committee to the
Participant.  The incentive compensation (if any) awarded to a
Participant with respect to any calendar year will be an amount
determined by the Committee based on the all of the facts and
circumstances surrounding the Participant's employment, the Company's
financial performance, and the quality of the Company's non-financial
performance (e.g., customer satisfaction, response to customer
complaints and such other quality-based measurables or factors as the
Committee may in its discretion consider).  In determining the amount
of any incentive compensation to be awarded, the Committee may take
into account the amounts determined under two non-binding target
awards known as the Utility Performance Award and the Non-Utility
Performance Award.  In no event will the Committee make an award to a
Participant unless the Participant was employed on December 31 of the
year to which the award relates.

     5.   Utility Performance Award.

          (a)  A Participant's Utility Performance Award for any year
               equals:

               (1)    the Participant's Target Award for such year
                      multiplied by

               (2)    0.75 (if the Participant has been designated as
                      a Utility Participant) or 0.25 (if the
                      Participant has been designated as a Non-Utility
                      Participant), multiplied by

               (3)    the factor determined in accordance with Section
                      5(d) based upon Wisconsin Public Service
                      Corporation's Earned Rate of Return on Equity 
                      in relation to its Allowed Rate of Return on
                      Equity.

          (b)  The Committee, in its sole discretion, may adjust the
0.75 and 0.25 factors specified in Section 5(a)(ii) above.

          (c)  Definitions.

               (1)    "Allowed Rate of Return on Equity" means, with
                      respect to any calendar year, Wisconsin Public
                      Service Corporation's authorized return on
                      common shareholders equity as established by 
                      the State of Wisconsin Public Service
                      Commission's most recent rate order applicable
                      to such year.  

               (2)    "Earned Rate of Return on Equity" means, with
                      respect to any calendar year, the net income of
                      Wisconsin Public Service Corporation for the
                      calendar year as determined in accordance 
                      with generally accepted accounting principles
                      (GAAP) divided by the 

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                      twelve month average common stock equity of
                      Wisconsin Public Service Corporation as of
                      December 31 of such year.  Earned Rate of 
                      Return on Equity shall be stated as a 
                      percentage to the nearest one one-hundredth
                      (1/100) of one percent.  For this purpose,
                      Wisconsin Public Service Corporation's net
                      income and common stock equity shall be adjusted
                      in accordance with Wisconsin Public Service
                      Corporation's historic internal financial
                      reporting practices to calculate a return on
                      equity which is comparable to the "Allowed Rate
                      of Return on Equity" established by the State of
                      Wisconsin Public Service Commission.
                      Accordingly, and without limitation, the "net
                      income" of Wisconsin Public Service Corporation
                      shall be adjusted to exclude earnings generated
                      on Deferred Investment Tax Credit (DITC)
                      balances and the "common stock equity" of
                      Wisconsin Public Service Corporation shall be
                      increased by treating ESOP loan guarantees as
                      outstanding indebtedness.  The Committee may
                      also adjust the "net income" of Wisconsin Public
                      Service Corporation to exclude the effects of
                      extraordinary or non-recurring items. 

          (d)  The factor applicable for any year under Section
5(a)(iii) is determined from the following table (or any successor
table as adopted by the Committee) based upon the difference obtained
by subtracting the Company's Allowed Rate of Return on Equity for the
year from the Company's Earned Rate of Return on Equity for that year.
   

    Earned Rate of Return on Equity
Minus Allowed Rate of Return on Equity   Factor for Section 5(a)(iii)
--------------------------------------   ----------------------------

       Less than (0.15)*                            0.00
       (0.15)* - (0.01)*                            0.60
          0.00 - 0.14                               0.80
          0.15 - 0.29                               1.00
          0.30 - 0.44                               1.05
          0.45 - 0.59                               1.10
          0.60 - 0.74                               1.15
        0.75 and greater                            1.20

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

     * Numbers in parenthesis represent negative numbers, i.e. Earned
Rate of Return on Equity is less than Allowed Rate of Return on
Equity.

     6.   Non-Utility Performance Award.

          (a)  A Participant's Non-Utility Performance Award for any
year equals:

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               (1)    the Participant's Target Award for such year
                      multiplied by

               (2)    0.25 (if the Participant has been designated
                      as a Utility Participant) or 0.75 (if the
                      Participant has been designated as a Non-Utility
                      Participant), multiplied by 

               (3)    the factor determined in accordance with 
                      Section 6(d) based upon the ability of the
                      Company's non-utility businesses to meet or
                      exceed earnings per share and account 
                      retention/growth goals.

          (b)  The Committee, in its sole discretion, may adjust the
0.25 and 0.75 factors specified in Section 6(a)(ii) above.

          (c)  Definitions.

               (1)    "EPS Impact" means, with respect to any calendar
                      year, the fully diluted earnings per share of
                      the Company taking into account only the net
                      earnings of WPS Energy Services, Inc. and 
                      WPS Power Development, Inc., as calculated to
                      the nearest one-tenth of one cent in accordance
                      with FASB 128 or any successor pronouncement and
                      in a manner consistent with the methodology used
                      by the Company and its consolidated subsidiaries
                      for the purpose of reporting earnings per share
                      information generally.  For purposes of this
                      calculation, the Committee may adjust the
                      earnings taken into account to exclude the
                      effects of extraordinary or non-recurring items.
 
               (2)    "Account Retention" means, with respect to any
                      calendar year, the percentage of "Accounts"
                      actively served on January 1 of the calendar
                      year that the Company or its non-utility
                      subsidiaries continue to serve on December 31 of
                      the same calendar year, rounded to the nearest
                      one-tenth (1/10) of one percent. 

               (3)    "Account" means an actively served customer
                      account entered into by an agent or employee of
                      the customer who has the authority to contract
                      with WPS Energy Services, Inc. or WPS Power
                      Development, Inc. with respect to all or a
                      portion of the customer's business.  Where a
                      customer has multiple contracts with WPS Energy
                      Services, Inc. and/or WPS Power Development,
                      Inc., such contracts, although originating with
                      the same customer, may be considered separate
                      Accounts for purposes of this Plan to the extent
                      that the contracts are entered into or
                      authorized by different contacts at the customer
                      each of whom has independent authority to
                      contract with WPS Energy Services, Inc. and/or
                      WPS Power Development, Inc. 

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               (4)    "Account Growth" means, with respect to any
                      calendar year, (i) the total number of Accounts
                      on December 31 of the calendar year minus the
                      total number of Accounts on January 1 of the
                      calendar year, this amount divided by (ii) the
                      total number of Accounts on January 1 of the
                      calendar year.  This quotient shall be rounded
                      to the nearest one-tenth (1/10) of one percent.

          (d)  The factor applicable for any year under Section
6(a)(iii) is equal to the sum of the amounts determined from the
tables in Sections 6(d)(i) and 6(d)(ii) below (or any successor table
or tables as adopted by the Committee); provided that the table set
forth in Section 6(d)(ii) below shall not apply unless the EPS Impact
for the calendar year is at least $0.01.


               (1)    EPS Impact Table

                 EPS Impact             Factor for Section 6(a)(iii)
                 ----------             ----------------------------

               Less than $0.01                     0.00
               $0.01 - $0.019                      0.20
               $0.02 - $0.029                      0.40
               $0.03 - $0.039                      0.60
               $0.04 - $0.049                      0.80
               $0.05 - $0.059                      1.00
               $0.06 - $0.069                      1.10
               $0.07 - greater                     1.20

               (2)    Account Growth/Retention Table

                                  Account Growth

                <5%    5 - 9.9%     10 - 14.9%    15 - 19.9%     > 20%
                ---    --------     ----------    ----------     -----
   Account
  Retention
    >96%          0       0.05          0.10         0.15        0.20
92.1% - 96%    (0.05)       0           0.05         0.10        0.15
88.1% - 92%    (0.10)    (0.05)           0          0.05        0.10
84.1% - 88%    (0.15)    (0.10)        (0.05)          0         0.05
    < 84%      (0.20)    (0.15)        (0.10)       (0.05)         0
    -

     7.   Target Award

          (a)  The Target Award applicable to each Participant is
based upon the "Level" to which the Committee has assigned the
Participant:

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               Level                     Target Award
               -----                     ------------

                 1                     35% of Base Salary
                 2                     25% of Base Salary
                 3                     20% of Base Salary
                 4                     15% of Base Salary


          (b)  The Committee, in its sole discretion, may modify the
number of Levels or the Target Award that is applicable to a
particular Level.  The Target Award assigned to a particular Level is
relevant solely for purposes of the calculations described in Sections
5 and 6 above.  The establishment of a Target Award with respect to
any Participant does not imply that the Participant is or will become
entitled to incentive compensation in the amount of the Target Award.

          (c)  "Base Salary" means base salary paid to the Participant
by the Company and/or a consolidated subsidiary of the Company for
services performed by the Participant during the applicable calendar
year for which he or she has been designated as a Participant in the
Plan.  Base Salary shall include amounts that would have been paid to
the Participant as base salary but for the fact that the Participant
elected to defer such amounts as an elective contribution under a
Section 125, 129 or 401(k) arrangement or as a Voluntary Deferral
under the WPS Resources Corporation Deferred Compensation Plan.   Base
Salary shall not include extraordinary payments made to or on behalf
of the Participant, such as overtime, bonuses, meal allowances,
reimbursed expenses (including any tax "gross-up" payments),
termination pay, moving pay, commuting expenses, Mandatory Deferrals
under the WPS Resources Corporation Deferred Compensation Plan or
other non-elective deferred compensation payments or accruals, stock
options, the value of employer-provided fringe benefits or coverage,
any contributions on behalf of the Participant to a survivor's income
benefit plan or any other employee benefit plan within the meaning of
ERISA, all as determined in accordance with such uniform rules,
regulations or standards as may be prescribed by the Committee.  In
the case of an employee who is designated as a Participant after the
first day of the calendar year, the Committee may elect to apply the
foregoing definition with respect to the Base Salary received by the
Participant on and after the effective date of his or her
participation.  

     8.   Distribution.

          (a)  Unless deferred in accordance with Section 8(b) below,
incentive compensation amounts awarded under this Plan shall be paid
to the eligible Participant (less applicable withholding) as soon as
practicable following the date on which such payment has been
authorized by the Committee.  

          (b)  A Participant may, but need not, elect to defer the
receipt of all or any portion of the incentive compensation amounts
awarded to the Participant under this Plan.  If the Participant so
elects, the deferred portion of the Participant's incentive
compensation award will

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be credited to the Participant's Stock Account under the 
WPS Resources Corporation Deferred Compensation Plan ("Deferred
Compensation Plan") for later distribution in accordance with the
terms of the Deferred Compensation Plan and the Participant's
elections under that plan.  A Participant's election to defer all or
a portion of his award under this Plan for any year shall be given
effect only if the Participant's executed deferral election is
received by the Committee or its delegate prior to January 1 of the
calendar year during which the incentive compensation will be earned,
e.g., prior to January 1, 1999 for deferral of incentive compensation
amounts that may be earned in 1999.  Notwithstanding the foregoing,
(i) a Participant's deferral election with respect to the initial
(1998) calendar year may be made within 30 days of the date on which
the Plan document is approved by the Board of Directors, and (ii) in
the case of a Participant who is designated by the Committee as being
eligible to participate with respect to a particular calendar year
after the beginning of such year, the Participant's deferral election
for such year may be made within 30 days of the date on which the
Committee designates the Participant as being eligible to participate
in the Plan.   

     9.   Amendment or Termination.

          The Committee may amend, modify or terminate the Plan at any
time and for any reason, including, without limitation, the authority
to alter at any time during the calendar year the amount of incentive
compensation that is available or potentially available to
Participants with respect to the calendar year or the terms and
conditions under which such incentive compensation is or will become
payable.

     10.  Participant Rights Unsecured.

          The right of a Participant to receive a distribution of
incentive compensation awarded hereunder shall be an unsecured claim,
and the Participant shall not have any rights in or against any
specific assets of the Company or any of its subsidiaries.  The right
of a Participant to the payment of incentive compensation that has
been awarded or may be awarded under this Plan may not in any manner
be subject to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment or garnishment; provided that any
benefits awarded to the Participant but unpaid as of the date of the
Participant's death shall be paid to the Participant's estate.

     11.  Successor and Assigns.

          This Plan, with respect to any amount awarded to a
Participant by the Committee in accordance with Section 4, shall be
binding upon and inure to the benefit of the Company and its
subsidiaries, their successors and assigns and to the Participant and
the executor, administrator or legal representative of the
Participant's estate.

     12.  Governing Law.

          This Plan shall be governed by and construed in accordance
with the law of the State of Wisconsin.

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