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

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

| CommissionFile Number | Registrant;      State of Incorporation;Address; and Telephone    Number                                                                                        | IRS      EmployerIdentification No. |
|-----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|
|                  |                                                                                                                                                            |                                |
| 1-3016                | WISCONSIN      PUBLIC SERVICE CORPORATION(A Wisconsin      Corporation)700 North      Adams StreetP. O. Box      19001Green Bay, WI      54307-9001800-450-7260 | 39-0715160                          |

| Preferred      Stock, Cumulative, $100 par value |
|--------------------------------------------------|
|                                             |
|                                             | 5.00%      Series5.04%      Series | 5.08%      Series6.76%      Series | 6.88%      Series |   |

----

| Yes  [  ]                           No  [X] |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Yes  [  ]                           No  [X] |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Yes  [X]                           No  [  ] |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Large      accelerated filer [  ] | Accelerated      filer [  ]         |
|---------------------------------------------|-----------------------------------------------|
| Non-accelerated      filer [X]              | Smaller      reporting company [  ] |

| Yes  [  ]     No  [X] |
|------------------------------------------------------------------------------|

| State the      aggregate market value of the voting andnon-voting common      equity held by non-affiliates of the Registrant. |
|--------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                           |
| $0 as of June      30, 2008                                                                                                    |

| Number of      shares outstanding of each classof common stock, as of February 25,      2009                                                                                  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                          |   |
| Common Stock,      $4 par value, 23,896,962 shares.  Integrys Energy Group, Inc. is      the sole holder of Wisconsin Public Service Corporation Common      Stock. |

----

|                            |                                                     |
|---------------------------------|----------------------------------------------------------|
|                            |                                                     |   | Page |
|                            |                                                     |
| Forward-Looking      Statements | 1                                                        |
|                            |                                                     |
| PART      I                     | 2                                                        |
|                            |                                                     |   |   |
| ITEM      1.                    | BUSINESS                                                 | 2 |
|                            |                                                     |   |
|                            | A.                                                       | GENERAL | 2 |
|                            |                                                     |   |   |   |
|                            | B.                                                       | REGULATED      ELECTRIC UTILITY OPERATIONS | 2 |
|                            |                                                     |   |   |   |
|                            | C.                                                       | REGULATED      NATURAL GAS UTILITY OPERATIONS | 5 |
|                            |                                                     |   |   |   |
|                            | D.                                                       | ENVIRONMENTAL      MATTERS | 8 |
|                            |                                                     |   |   |   |
|                            | E.                                                       | CAPITAL      REQUIREMENTS | 8 |
|                            |                                                     |   |   |   |
|                            | F.                                                       | EMPLOYEES | 8 |
|                            |                                                     |   |   |
|                            | G.                                                       | AVAILABLE      INFORMATION | 9 |
|                            |                                                     |   |   |
| ITEM      1A.                   | RISK      FACTORS                                        | 10 |
|                            |                                                     |   |   |
| ITEM      1B                    | UNRESOLVED      STAFF COMMENTS                           | 13 |
|                            |                                                     |   |   |
| ITEM      2.                    | PROPERTIES                                               | 14 |
|                            |                                                     |   |   |
| ITEM      3.                    | LEGAL      PROCEEDINGS                                   | 16 |
|                            |                                                     |   |   |
| ITEM      4.                    | SUBMISSION OF      MATTERS TO A VOTE OF SECURITY HOLDERS | 16 |
|                            |                                                     |   |

| PART      II  | 16                                                                                                              |
|---------------|-----------------------------------------------------------------------------------------------------------------|
|          |                                                                                                            |   |   |   |
| ITEM      5.  | MARKET FOR      WPS'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF      EQUITY SECURITIES | 16 |
|          |                                                                                                            |   |
| ITEM      6.  | SELECTED      FINANCIAL DATA                                                                                    | 17 |
|          |                                                                                                            |   |   |
| ITEM      7.  | MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS                 | 18 |
|          |                                                                                                            |   |   |
| ITEM      7A. | QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                 | 40 |
|          |                                                                                                            |   |   |
| ITEM      8.  | FINANCIAL      STATEMENTS AND SUPPLEMENTARY DATA                                                                | 42 |
|          |                                                                                                            |   |
|          | A.                                                                                                              | Management      Report on Internal Control over Financial Reporting | 42 |
|          | B.                                                                                                              | Report of      Independent Registered Public Accounting Firm | 43 |
|          | C.                                                                                                              | Consolidated      Statements of Income | 45 |

----

|          | D.                                                                                                       | Consolidated      Balance Sheets                                                                     | 46                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|---------------|----------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          | E.                                                                                                       | Consolidated      Statements of Capitalization                                                       | 47                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|          | F.                                                                                                       | Consolidated      Statements of Common Shareholder's Equity                                          | 48                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|          | G.                                                                                                       | Consolidated      Statements of Cash Flows                                                           | 49                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|          | H.                                                                                                       | Notes to      Consolidated Financial Statements                                                      | 50                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|          |                                                                                                     | Note      1                                                                                          | Summary of      Significant Accounting      Policies                                                                                   | 50 |   |
|          |                                                                                                     | Note      2                                                                                          | Risk      Management      Activities                                                                                                   | 55 |   |
|          |                                                                                                     | Note      3                                                                                          | Property,      Plant, and      Equipment                                                                                               | 56 |   |
|          |                                                                                                     | Note      4                                                                                          | Acquisitions      and Sales of      Assets                                                                                             | 56 |   |
|          |                                                                                                     | Note      5                                                                                          | Jointly-Owned      Utility      Facilities                                                                                             | 56 |   |
|          |                                                                                                     | Note      6                                                                                          | Regulatory      Assets and      Liabilities                                                                                            | 57 |   |
|          |                                                                                                     | Note      7                                                                                          | Goodwill                                                                                                                               | 58 |   |
|          |                                                                                                     | Note      8                                                                                          | Leases                                                                                                                                 | 58 |   |
|          |                                                                                                     | Note      9                                                                                          | Short-Term      Debt and Lines of      Credit                                                                                          | 58 |   |
|          |                                                                                                     | Note      10                                                                                         | Long-Term      Debt                                                                                                                    | 59 |   |
|          |                                                                                                     | Note      11                                                                                         | Asset      Retirement      Obligations                                                                                                 | 60 |   |
|          |                                                                                                     | Note      12                                                                                         | Income      Taxes                                                                                                                      | 61 |   |
|          |                                                                                                     | Note      13                                                                                         | Commitments      and      Contingencies                                                                                                | 63 |   |
|          |                                                                                                     | Note      14                                                                                         | Guarantees                                                                                                                             | 67 |   |
|          |                                                                                                     | Note      15                                                                                         | Employee      Benefit      Plans                                                                                                       | 67 |   |
|          |                                                                                                     | Note      16                                                                                         | Preferred      Stock                                                                                                                   | 72 |   |
|          |                                                                                                     | Note      17                                                                                         | Common      Equity                                                                                                                     | 73 |   |
|          |                                                                                                     | Note      18                                                                                         | Stock-Based      Compensation                                                                                                          | 73 |   |
|          |                                                                                                     | Note      19                                                                                         | Fair      Value                                                                                                                        | 74 |   |
|          |                                                                                                     | Note      20                                                                                         | Miscellaneous      Income                                                                                                              | 76 |   |
|          |                                                                                                     | Note      21                                                                                         | Regulatory      Environment                                                                                                            | 76 |   |
|          |                                                                                                     | Note      22                                                                                         | Segments of      Business                                                                                                              | 78 |   |
|          |                                                                                                     | Note      23                                                                                         | Related Party      Transactions                                                                                                        | 80 |   |
|          |                                                                                                     | Note      24                                                                                         | Quarterly      Financial Information      (Unaudited)                                                                                  | 81 |   |
|          | I.                                                                                                       | Report of      Independent Registered Public Accounting Firm on  Financial      Statements | 82                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|          |                                                                                                     |                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| ITEM      9.  | CHANGES IN      AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL      DISCLOSURE           | 83                                                                                                   |
|          |                                                                                                     |                                                                                                 |
| ITEM      9A. | CONTROLS AND      PROCEDURES                                                                             | 83                                                                                                   |
|          |                                                                                                     |                                                                                                 |
| ITEM      9B. | OTHER      INFORMATION                                                                                   | 83                                                                                                   |
|          |                                                                                                     |                                                                                                 |
| PART      III | 84                                                                                                       |
|          |                                                                                                     |                                                                                                 |
| ITEM      10. | DIRECTORS,      EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                              | 84                                                                                                   |
|          |                                                                                                     |                                                                                                 |
| ITEM      11. | EXECUTIVE      COMPENSATION                                                                              | 85                                                                                                   |
|          |                                                                                                     |                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| ITEM      12. | SECURITY      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED      STOCKHOLDER MATTERS | 96                                                                                                   |
|          |                                                                                                     |                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| ITEM      13. | CERTAIN      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR      INDEPENDENCE                      | 98                                                                                                   |
|          |                                                                                                     |                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| ITEM      14. | PRINCIPAL      ACCOUNTING FEES AND SERVICES                                                              | 98                                                                                                   |

----

|                                                 |                                            |   |
|------------------------------------------------------|-------------------------------------------------|--------|
| PART      IV                                         | 100                                             |
|                                                 |                                            |   |
| ITEM      15.                                        | EXHIBITS AND      FINANCIAL STATEMENT SCHEDULES | 100    |
|                                                 |                                            |
| SIGNATURES                                           | 101                                             |
|                                                 |                                            |
| SCHEDULE II -      VALUATION AND QUALIFYING ACCOUNTS | 102                                             |
|                                                 |                                            |
| EXHIBIT      INDEX                                   | 103                                             |
|                                                 |                                            |

----

| Acronyms      Used in this Annual Report on Form 10-K |
|-------------------------------------------------------|
|                                                  |   |
| AFUDC                                                 | Allowance For      Funds Used During Construction |
| ATC                                                   | American      Transmission Company LLC |
| EPA                                                   | United States      Environmental Protection Agency |
| ESOP                                                  | Employee      Stock Ownership Plan |
| FASB                                                  | Financial      Accounting Standards Board |
| FERC                                                  | Federal      Energy Regulatory Commission |
| GAAP                                                  | United States      Generally Accepted Accounting Principles |
| IBS                                                   | Integrys      Business Support, LLC |
| IRS                                                   | United States      Internal Revenue Service |
| MERC                                                  | Minnesota      Energy Resources Corporation |
| MGU                                                   | Michigan Gas      Utilities Corporation |
| MISO                                                  | Midwest      Independent Transmission System Operator, Inc. |
| MPSC                                                  | Michigan      Public Service Commission |
| MPUCN/A                                               | Minnesota      Public Utility CommissionNot      Applicable |
| NSG                                                   | North Shore      Gas Company |
| NYMEX                                                 | New York      Mercantile Exchange |
| PEC                                                   | Peoples      Energy Corporation |
| PGL                                                   | The Peoples      Gas Light and Coke Company |
| PSCW                                                  | Public      Service Commission of Wisconsin |
| SEC                                                   | United States      Securities and Exchange Commission |
| SFAS                                                  | Statement of      Financial Accounting Standards |
| WDNR                                                  | Wisconsin      Department of Natural Resources |
| WPS                                                   | Wisconsin      Public Service Corporation |
| WRPC                                                  | Wisconsin      River Power Company |

----

| ● | Resolution of      pending and future rate cases and negotiations (including the recovery of      deferred costs) and other regulatory decisions impacting    WPS;                                                                                                                                                                                                                                                                                                                                                        |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | The impact of      recent and future federal and state regulatory changes, including      legislative and regulatory initiatives regarding deregulation and      restructuring of the electric and natural gas utility industries and      possible future initiatives to address concerns about global climate      change, changes in environmental, tax, and other laws and regulations to      which WPS and its subsidiary are subject, as well as changes in the      application of existing laws and regulations; |
| ● | Current and      future litigation, regulatory investigations, proceedings or inquiries,      including but not limited to, manufactured gas plant site cleanup and the      contested case proceeding regarding the Weston 4 air    permit;                                                                                                                                                                                                                                                                              |
| ● | The impacts      of changing financial market conditions, credit ratings, and interest      rates on the liquidity and financing efforts of WPS and its      subsidiary;                                                                                                                                                                                                                                                                                                                                                  |
| ● | The risks      associated with changing commodity prices (particularly natural gas and      electricity) and the available sources of fuel and purchased power,      including their impact on margins;                                                                                                                                                                                                                                                                                                                   |
| ● | Resolution of      audits or other tax disputes with the IRS, Wisconsin Department of      Revenue, Michigan Department of Treasury, or other taxing      authorities;                                                                                                                                                                                                                                                                                                                                                    |
| ● | The effects,      extent, and timing of additional competition or regulation in the markets      in which WPS and its subsidiary operate;                                                                                                                                                                                                                                                                                                                                                                                 |
| ● | Investment      performance of employee benefit plan assets;                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| ● | Advances in      technology;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| ● | Effects of      and changes in political and legal developments, as well as economic      conditions and the related impact on customer demand;                                                                                                                                                                                                                                                                                                                                                                           |
| ● | Potential      business strategies, including acquisitions, and construction or      disposition of assets or businesses, which cannot be assured to be      completed timely or within budgets;                                                                                                                                                                                                                                                                                                                          |
| ● | The risks      associated with the inability of WPS's and its subsidiary's counterparties      and customers to meet their obligations;                                                                                                                                                                                                                                                                                                                                                                                   |
| ● | The direct or      indirect effects of terrorist incidents, natural disasters, or responses      to such events;                                                                                                                                                                                                                                                                                                                                                                                                          |
| ● | The      effectiveness of risk management strategies and the use of financial and      derivative instruments;                                                                                                                                                                                                                                                                                                                                                                                                            |
| ● | Weather and      other natural phenomena, in particular the effect of weather on natural      gas and electricity sales after certain limits have been exceeded under      the decoupling mechanisms at WPS starting January 1,  2009;                                                                                                                                                                                                                                                                                    |
| ● | The effect of      accounting pronouncements issued periodically by standard-setting bodies;      and                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ● | Other factors      discussed elsewhere herein and in other reports filed by WPS and/or      Integrys Energy Group from time to time with the  SEC.                                                                                                                                                                                                                                                                                                                                                                        |

----

| Regulated Electric Utility Segment      Operating Statistics |   |
|--------------------------------------------------------------|--------|
|                                                         |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Operating revenues (Millions)                                |   |   |   |   |   |   |   |   |   |
| Residential                                                  |   | $ | 350.3 |   |   | $ | 340.8 |   |   | $ | 315.2 |   |
| Commercial and      industrial                               |   |   | 595.2 |   |   |   | 554.3 |   |   |   | 500.7 |   |
| Wholesale and      other                                     |   |   | 263.4 |   |   |   | 230.1 |   |   |   | 174.7 |   |
| Total                                                        |   | $ | 1,208.9 |   |   | $ | 1,125.2 |   |   | $ | 990.6 |   |
| Kilowatt-hour sales (Millions)                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                  |   |   | 2,794.8 |   |   |   | 2,895.7 |   |   |   | 2,871.1 |   |
| Commercial and      industrial                               |   |   | 8,060.4 |   |   |   | 8,173.4 |   |   |   | 8,125.1 |   |
| Wholesale and      other                                     |   |   | 4,565.8 |   |   |   | 3,730.5 |   |   |   | 3,733.3 |   |
| Total                                                        |   |   | 15,421.0 |   |   |   | 14,799.6 |   |   |   | 14,729.5 |   |
| Customers served (Approximate,      end of period)           |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                  |   |   | 380,300 |   |   |   | 378,300 |   |   |   | 374,900 |   |
| Commercial and      industrial                               |   |   | 54,600 |   |   |   | 54,000 |   |   |   | 53,500 |   |
| Wholesale and      other                                     |   |   | 600 |   |   |   | 700 |   |   |   | 600 |   |
| Total                                                        |   |   | 435,500 |   |   |   | 433,000 |   |   |   | 429,000 |   |

----

| Energy      Source                                                                                                                                               |   | 2008   |   |   | 2007   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Company-owned      generating plants                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|    Coal                                                                                                                                           |   |   | 60.4   | %      |   |   |   |   |   | 52.4 | % |   |   |   |
|    Natural      gas and fuel oil                                                                                                                  |   |   | 1.2    | %      |   |   |   |   |   | 2.2 | % |   |   |   |
|    Hydroelectric                                                                                                                                  |   |   | 1.2    | %      |   |   |   |   |   | 1.3 | % |   |   |   |
|    Wind                                                                                                                                           |   |   | 0.1    | %      |   |   |   |   |   | 0.1 | % |   |   |   |
|      Total      company-owned generating plants                                                                                         |   |   |   |   |   |   | 62.9 | % |   |   |   |   |   |   | 56.0 | % |
| Purchased      power                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Nuclear      (Kewaunee Power Station)                                                                                                          |   |   | 16.8   | %      |   |   |   |   |   |   | 19.3 | % |   |   |   |   |
|    Natural      gas (Fox Energy Center, LLC      and         Combined Locks      Energy Center, LLC) |   |   | 4.4    | %      |   |   |   |   |   |   | 3.4 | % |   |   |   |   |
|    Hydroelectric                                                                                                                                  |   |   | 2.3    | %      |   |   |   |   |   |   | 2.4 | % |   |   |   |   |
|    Other      (including MISO)                                                                                                                    |   |   | 13.6   | %      |   |   |   |   |   |   | 18.9 | % |   |   |   |   |
|      Total      purchased power                                                                                                         |   |   |   |   |   |   | 37.1 | % |   |   |   |   |   |   | 44.0 | % |

| Fuel      Type                |   | 2008   |   |   | 2007   |   |
|-------------------------------|--------|--------|--------|--------|--------|--------|
|         Coal        |   | $      | 1.78   |   |   | $      | 1.47 |   |
|         Natural gas |   |   | 9.74   |   |   |   | 7.36 |   |
|         Fuel oil    |   |   | 15.21  |   |   |   | 13.95 |   |

----

----

----

| Regulated      Natural Gas Segment Operating Statistics |   |
|---------------------------------------------------------|--------|
|                                                    |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Operating      Revenues (Millions)                      |   |   |   |   |   |   |   |   |   |
| Residential                                             |   | $ | 317.7 |   |   | $ | 277.7 |   |   | $ | 254.9 |   |
| Commercial      and industrial                          |   |   | 173.2 |   |   |   | 147.0 |   |   |   | 140.6 |   |
| Transportation                                          |   |   | 16.8 |   |   |   | 16.3 |   |   |   | 14.3 |   |
| Other                                                   |   |   | 31.7 |   |   |   | 30.0 |   |   |   | 34.0 |   |
| Total                                                   |   | $ | 539.4 |   |   | $ | 471.0 |   |   | $ | 443.8 |   |
| Therms      Delivered (Millions)                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                             |   |   | 258.1 |   |   |   | 239.4 |   |   |   | 217.0 |   |
| Commercial      and industrial                          |   |   | 168.0 |   |   |   | 157.0 |   |   |   | 149.1 |   |
| Other                                                   |   |   | 28.6 |   |   |   | 47.1 |   |   |   | 27.6 |   |
| Total therm      sales                                  |   |   | 454.7 |   |   |   | 443.5 |   |   |   | 393.7 |   |
| Transportation                                          |   |   | 354.8 |   |   |   | 344.5 |   |   |   | 332.2 |   |
| Total                                                   |   |   | 809.5 |   |   |   | 788.0 |   |   |   | 725.9 |   |
| Customers      Served (Approximate, end      of period) |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                             |   |   | 287,400 |   |   |   | 285,600 |   |   |   | 283,600 |   |
| Commercial      and industrial                          |   |   | 28,200 |   |   |   | 27,800 |   |   |   | 27,800 |   |
| Transportation      customers                           |   |   | 600 |   |   |   | 600 |   |   |   | 600 |   |
| Total                                                   |   |   | 316,200 |   |   |   | 314,000 |   |   |   | 312,000 |   |
| Average      therm price (Cents)                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                             |   |   | 123.09 |   |   |   | 116.00 |   |   |   | 117.47 |   |
| Commercial      and industrial                          |   |   | 103.10 |   |   |   | 93.63 |   |   |   | 94.30 |   |

----

| Source      (MDth)                               |   | Design      Peak-Day Availability |   | Year      of Contract Expiration |
|--------------------------------------------------|--------|-----------------------------------|--------|----------------------------------|
| Firm pipeline      capacity                      |   |                              | 228    |                             | 2017 |
| Firm      city-gate supply                       |   |                              | 6      |                             | 2009 |
| Contracted      natural gas in storage           |   |                              | 205    |                             | 2017 |
| Total      expected design peak-day availability |   |                              | 439    |                             |   |

| (MDth)                                                                                                                                          |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Natural gas      purchases                                                                                                                      |   |   | 45,315 |   |   |   | 40,544 |   |   |   | 40,809 |   |
| Customer-owned natural gas      received                                                                                                        |   |   | 35,428 |   |   |   | 34,406 |   |   |   | 33,253 |   |
| Underground storage –      net                                                                                                            |   |   | (157   | )      |   |   | 3,543  |   |   |   | (1,581 | ) |
| Contracted pipeline and storage      compressor fuel, franchise     requirements,      and unaccounted-for natural gas |   |   | 360    |   |   |   | 303    |   |   |   | 114 |   |
| Total                                                                                                                                           |   |   | 80,946 |   |   |   | 78,796 |   |   |   | 72,595 |   |

----

----

| · | Annual Report      on Form 10-K;                 |
|--------|-------------------------------------------------------|
| · | Quarterly      Reports on Form 10-Q;                  |
| · | Registration      statements, including prospectuses; |
| · | Current      Reports on Form 8-K; and                 |
| · | Any      amendments to these documents.               |

----

| · | Require the      payment of higher interest rates in future financings and possibly reduce      the potential pool of creditors; |
|--------|----------------------------------------------------------------------------------------------------------------------------------|
| · | Increase  borrowing      costs under its existing credit facility;                                                     |
| · | Limit  access      to the commercial paper market; and                                                                 |
| · | Require      provision of additional credit assurance, including cash margin calls, to      contract counterparties.             |

----

----

| · | Weather      conditions, seasonality, and temperature extremes; and                      |
|--------|------------------------------------------------------------------------------------------|
| · | Fluctuations      in economic activity and growth in WPS's regulated service      areas. |

----

----

| Type                                     | Name                             | Location                  |    Fuel   | RatedCapacity(Megawatts)                                            | (a)    |
|------------------------------------------|----------------------------------|---------------------------|--------------------------|---------------------------------------------------------------------|--------|
|                                     |                             |                      |                     |                                                                |   |
| Steam                                    | Columbia      Units 1 and 2 | Portage,      WI          | Coal                     | 355.6                                                               | (b)    |
|                                     | Edgewater      Unit 4       | Sheboygan,      WI        | Coal                     |    101.9                                             | (b)    |
|                                     | Pulliam (4      units)           | Green Bay,      WI        | Coal                     | 326.8                                                               |   |
|                                     | Weston Units      1, 2, and 3    | Wausau,      WI           | Coal                     | 471.2                                                               |   |
|                                     | Weston Unit      4               | Wausau,      WI           | Coal                     |    374.8                                             | (b)    |
| Total      Steam                         |                             |                      |                     | 1,630.3                                                             |   |
|                                     |                             |                      |                     |                                                                |   |
| Combustion                               | De Pere Energy      Center       | De Pere,      WI          | Natural      Gas         | 170.4                                                               |   |
|   Turbine      and             | Eagle      River                 | Eagle River,      WI      | Distillate      Fuel Oil | 4.2                                                                 |   |
|   Diesel                       | Juneau      #31                  | Adams County,      WI     | Distillate      Fuel Oil | 6.3                                                                 | (b)    |
|                                     | Oneida      Casino               | Green Bay,      WI        | Distillate      Fuel Oil | 3.5                                                                 |   |
|                                     | Pulliam      #31                 | Green Bay,      WI        | Natural      Gas         |           81.2                                  |   |
|                                     | West Marinette      #31          | Marinette,      WI        | Natural      Gas         | 36.0                                                                |   |
|                                     | West Marinette      #32          | Marinette,      WI        | Natural      Gas         | 34.2                                                                |   |
|                                     | West Marinette      #33          | Marinette,      WI        | Natural      Gas         | 51.7                                                                | (b)    |
|                                     | Weston      #31                  | Marathon      County, WI  | Natural      Gas         | 16.9                                                                |   |
|                                     | Weston      #32                  | Marathon      County, WI  | Natural      Gas         |      46.8                                  |   |
| Total      Combustion Turbine and Diesel |                             |                      |    451.2  |                                                                |
|                                     |                             |                      |                     |                                                                |   |
| Hydroelectric                            | Alexander                        | Lincoln      County, WI   | Hydro                    | 2.2                                                                 |   |
|                                     | Caldron      Falls               | Marinette      County, WI | Hydro                    | 6.7                                                                 |   |
|                                     | Castle      Rock                 | Adams County,      WI     | Hydro                    | 12.0                                                                | (b)    |
|                                     | Grand      Rapids                | Menominee      County, WI | Hydro                    | 4.0                                                                 |   |
|                                     | Grandfather      Falls           | Lincoln      County, WI   | Hydro                    | 17.3                                                                |   |
|                                     | Hat      Rapids                  | Oneida County,      WI    | Hydro                    | 0.7                                                                 |   |
|                                     | High      Falls                  | Marinette      County, WI | Hydro                    | 1.6                                                                 |   |
|                                     | Jersey                           | Lincoln      County, WI   | Hydro                    | -                                                                   |   |
|                                     | Johnson      Falls               | Marinette      County, WI | Hydro                    | 1.0                                                                 |   |
|                                     | Merrill                          | Lincoln      County, WI   | Hydro                    | 1.0                                                                 |   |
|                                     | Otter      Rapids                | Vilas County,      WI     | Hydro                    | 0.3                                                                 |   |
|                                     | Peshtigo                         | Marinette      County, WI | Hydro                    | 0.3                                                                 |   |
|                                     | Petenwell                        | Adams County,      WI     | Hydro                    | 13.3                                                                | (b)    |
|                                     | Potato      Rapids               | Marinette      County, WI | Hydro                    | 0.4                                                                 |   |
|                                     | Sandstone      Rapids            | Marinette      County, WI | Hydro                    | 1.1                                                                 |   |
|                                     | Tomahawk                         | Lincoln      County, WI   | Hydro                    | 2.4                                                                 |   |
|                                     | Wausau                           | Marathon      County, WI  | Hydro                    |       3.0                             |   |
| Total      Hydroelectric                 |                             |                      |                     |     67.3                                        |   |
|                                     |                             |                      |                     |                                                                |   |
| Wind                                     | Glenmore (2      units)          | Brown County,      WI     | Wind                     |            - |   |
|                                     | Lincoln                          | Kewaunee      County, WI  | Wind                     |        1.0                       |   |
| Total      Wind                          |                             |                      |                     |        1.0                       |   |
|                                     |                             |                      |                     |                                                                |   |
| Total      System                        |                             |                      |                     | 2,149.8                                                             |   |

| (a)    | Based on      capacity ratings for July 2009.  As a result of continually      reaching demand peaks in the summer months, primarily due to air      conditioning demand, the summer period is the most relevant for capacity      planning purposes.                                                       |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b)    | These      facilities are jointly owned by WPS and various other      utilities.  The capacity indicated for each of these units is      equal to WPS’s portion of total plant capacity based on its percent of      ownership, with the exception of Petenwell and Castle Rock, as discussed      below.  |
|   | -                                                                                                                                                                                                                                                                                                                               | Wisconsin      Power and Light Company operates the Columbia and Edgewater units, and WPS      holds a 31.8% ownership interest in these facilities. |
|   |                                                                                                                                                                                                                                                                                                                            |   |
|   | -                                                                                                                                                                                                                                                                                                                               | WRPC owns and      operates the Castle Rock, Petenwell, and Juneau units.  WPS      holds a 50% ownership interest in WRPC; however, WPS is entitled to 66.7%      of total capacity at Petenwell and CastleRock. |

----

|   |   |                                                                                                                                                                                         |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | -      | WPS operates      the West Marinette 33 unit and holds a 68% ownership interest in the      facility, while Marshfield Electric and Water Department holds the      remaining 32% ownership. |
|   |   |                                                                                                                                                                                         |
|   | -      | WPS operates      the Weston 4 facility and holds a 70% ownership in this facility, while      Dairyland Power Cooperative holds the remaining  30%.                                         |

| ● | Approximately      7,800 miles of natural gas distribution mains located in Michigan and      Wisconsin, |
|---------|----------------------------------------------------------------------------------------------------------|
| ● | Approximately      190 miles of natural gas transmission mains located in Michigan and      Wisconsin,   |
| ● | 51 natural      gas distribution and transmission gate stations, and                                     |
| ● | Approximately      294,000 natural gas lateralservices.                                                  |

----

|   | PART      II |
|--------|--------------|

| ITEM      5. | MARKET      FOR WPS'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES      OF EQUITY SECURITIES |
|--------------|-----------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|
| ITEM 6.  SELECTED      FINANCIAL DATA                                                                                                                         |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |
|                                                                                                                                                                    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |
| WISCONSIN PUBLIC SERVICE      CORPORATION                                                                                                                               |   |
| COMPARATIVE FINANCIAL STATEMENTS      AND                                                                                                                               |   |
| FINANCIAL STATISTICS (2004 TO      2008)                                                                                                                                |   |
|                                                                                                                                                                    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |
|                                                                                                                                                                    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |
| As of or for Year Ended December      31                                                                                                                                |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |
| (Millions, except weather      information)                                                                                                                             |   | 2008   |    |   | 2007   |   |    | 2006   |   |   | 2005    |   |   | 2004   |    |
|                                                                                                                                                                    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |
| Operating      revenues                                                                                                                                                 |   | $      | 1,748.4 |   |   | $      | 1,596.1 |   |   | $      | 1,434.4 |   |   | $      | 1,454.9 |   |   | $ | 1,222.1 |   |
| Earnings on common      stock                                                                                                                                           |   |   | 129.2   |   |   |   | 110.2   |   |   |   | 99.0    |   |   |   | 81.4    |   |   |   | 104.8 |   |
| Totalassets                                                                                                                                                             |   |   | 3,313.7 |   |   |   | 3,017.6 |   |   |   | 2,956.6 |   |   |   | 2,686.5 |   |   |   | 2,768.6 |   |
| Long-term debt (excluding current      portion)                                                                                                                         |   |   | 880.7   |   |   |   | 756.1   |   |   |   | 631.6   |   |   |   | 507.6   |   |   |   | 508.0 |   |
|                                                                                                                                                                    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Weather information      *                                                                                                                                              |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Cooling degree      days                                                                                                                                                |   |   | 464     |   |   |   | 634     |   |   |   | 521     |   |   |   | 649     |   |   |   | 328 |   |
| Cooling degree days as a percent      of normal                                                                                                                         |   |   | 93.9    | %      |   |   | 128.6   | %      |   |   | 110.1   | %      |   |   | 135.2   | % |   |   | 66.7 | % |
| Heating degree      days                                                                                                                                                |   |   | 7,969   |   |   |   | 7,102   |   |   |   | 6,785   |   |   |   | 7,401   |   |   |   | 7,546 |   |
| Heating degree days as a percent      of normal                                                                                                                         |   |   | 104.6   | %      |   |   | 93.2    | %      |   |   | 88.5    | %      |   |   | 96.2    | % |   |   | 97.6 | % |
|                                                                                                                                                                    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| * Normal heating and cooling      degree days are based on a 20-year average of monthly temperatures from      the Green Bay Weather                               |   |
|   Station. Daily degree      days are calculated by subtracting the 24-hour average daily temperature      from 65° Fahrenheit. Heating degree days |   |   |    |   |   |   |
|   result if temperatures are      less than 65° Fahrenheit, and cooling degrees result if temperatures are      more than 65° Fahrenheit.                |   |
|                                                                                                                                                                    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |

----

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

| · | Weston 4,      a 537-megawatt coal-fired base-load power plant located near Wausau,      Wisconsin, was completed and became operational June 30,      2008.  WPS holds a 70% ownership interest in the Weston 4      power plant.                                  |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                         |
| · | WPS's      purchase of a 99-megawatt wind generation project to be constructed in      2009 in Howard County, Iowa.                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                         |
| · | The      investment of approximately $79 million to connect WPS's natural gas      distribution system to the Guardian II natural gas pipeline to be      completed in 2009.                                                                                                            |
|   |                                                                                                                                                                                                                                                                                         |
| · | Continued      investment in environmental projects to improve air quality and meet the      requirements set by environmental regulators.  Capital projects      to construct and upgrade equipment to meet or exceed required      environmental standards are planned eachyear. |

| · | IBS, a wholly      owned service company of Integrys Energy Group, became operational on      January 1, 2008.  IBS was formed to achieve a significant      portion of the cost synergies anticipated from Integrys Energy Group's      merger with PEC through the consolidation and efficient delivery of      various support services, and to provide more consistent and transparent      allocation of costs throughout Integrys Energy Group and its      subsidiaries. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| · | "Operational      Excellence" initiatives were implemented to provide top performance in the      areas of project management, process improvement, and contract      administration and compliance in order to reduce costs and manage projects      and activities within appropriate budgets, schedules, and      regulations. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Contract      administration and formal project management tools to better manage the      costs of our construction expenditure programs.  These cost      reduction initiatives will provide competitively priced energy and energy      related services.                                                                                                                                                                                                                                                                                                                                                |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| · | Managing      operations to minimize the impact on the environment.  Our      Weston 4 facility, completed in 2008, is one of the most efficient      pulverized coal electric generation units in the country with      state-of-the-art environmental controls which allow us to reduce the      amount of emissions produced.  We also expect to maintain or      decrease the amount of greenhouse gases released per megawatt-hour      generated, and support research and development initiatives that will      enable further progress toward decreasing our carbon      footprint. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| · | Effectively      operating a mixed portfolio of generation assets and investing in new      generation, such as Weston 4 and wind projects, ensures continued      reliability for our customers.                                                                                                                                                                                                                                                                                                                                                                                                                |

|                                |   | Year Ended December 31, |   |   |   |   |   |   |   |
|-------------------------------------|--------|-------------------------|--------|--------|--------|--------|--------|--------|--------|
| (Millions)                          |   | 2008                    |   |   | 2007   |   |   | 2006   |   |   | Change      in2008      Over 2007 |   |   | Change      in2007      Over 2006 |   |
| Electric      utility operations    |   | $                       | 88.6   |   |   | $      | 80.1   |   |   | $ | 81.3 |   |   |   | 10.6 | % |   |   | (1.5 | )% |
| Natural gas      utility operations |   |                    | 32.0   |   |   |   | 23.1   |   |   |   | 9.6 |   |   |   | 38.5 | % |   |   | 140.6 | % |
| Other      operations               |   |                    | 8.6    |   |   |   | 7.0    |   |   |   | 8.1 |   |   |   | 22.9 | % |   |   | (13.6 | )% |
|                                |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings on      common stock       |   | $                       | 129.2  |   |   | $      | 110.2  |   |   | $ | 99.0 |   |   |   | 17.2 | % |   |   | 11.3 | % |

----

| ·                                             | A combined      $17.8 million ($10.7 million after-tax) decrease in electric      maintenance expense and costs to achieve merger synergies related to      Integrys Energy Group's merger with PEC.                                                                                                                                                                                                                        |
|----------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                             | An      approximate $10 million ($6 million after-tax) increase in      margin from the 2008 retail electric rate increase effective January 16,      2008, and the full benefit of the 2007 retail electric rate increase      effective January 12, 2007.                                                                                                                                                                 |
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                             | An      approximate $10 million ($6 million after-tax) increase in      margin driven by higher contracted sales volumes to a large wholesale      customer year-over-year.                                                                                                                                                                                                                                                 |
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                             | An      approximate $5 million ($3 million after-tax) increase in      regulated electric utility margin year-over-year, driven by fuel and      purchased power costs that were approximately $1 million lower than      what was recovered in rates during 2008, compared with fuel and purchased      power costs that were approximately $4 million higher than what was      recovered in rates during 2007. |
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| The above      increases were partially offset by: |
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                             | A      $12.7 million ($7.6 million after-tax) increase in electric      transmission expenses, primarily related to      higher rates charged by MISO and ATC due to additional transmission      costs.                                                                                                                                                                                                               |
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                             | An increase      in depreciation and amortization expense of $4.1 million      ($2.5 million after-tax) driven by depreciation related to Weston 4,      which was placed in service for accounting purposes in April      2008.                                                                                                                                                                                            |
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                             | An      approximate $11 million ($6.6 million after-tax) decrease in      margin due to a decline in residential and commercial and industrial sales      volumes as a result of cooler weather during the cooling season and      customer conservation efforts.                                                                                                                                                           |

| · | A combined      $34.7 million after-tax increase in operating and maintenance      expense, depreciation expense, and taxes other than income      taxes.                                                                                                                                                                                                                                                                                                                                      |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| · | The decrease      in earnings was partially offset by a $34.2 million after-tax      increase in electric margin, a result of the 2007 retail electric rate      increase effective January 12, 2007, the accrual of the refund of the      Kewaunee nonqualified decommissioning trust fund to wholesale customers in      2006, and an increase in volumes driven by favorable weather, partially      offset by higher fuel and purchased power costs that exceeded recovery in      rates. |

| · | An      approximate $8 million ($4.8 million after-tax) increase in margin due to      an increase in natural gas throughput volumes sold, primarily related to      colder weather during 2008 compared with 2007, partially offset by      customer conservation efforts and a larger number of customer      disconnections. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                            |
| · | A $2.9      million ($1.7 million after-tax) decrease in employee benefit costs      resulting from plan design changes and synergies related to Integrys      Energy Group's merger with PEC.                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                            |
| · | A $2.6      million ($1.6 million after-tax) increase in miscellaneous income related      to AFUDC.                                                                                                                                                                                                                            |

----

| · | Increased      volumes due to colder weather during the 2007 heating    season. |
|--------|---------------------------------------------------------------------------------|
|   |                                                                            |
| · | A natural gas      rate increase effective January 12,2007.                     |

|                                                 |   | Year EndedDecember 31, |     |   |   |   |     |   |   |
|------------------------------------------------------|--------|-----------------------------|----------|--------|--------|--------|----------|--------|--------|
|                                                 |   |                        |     |   |   |   |     |   |   |   |   |   |   |   |   |
|                                                 |   | 2008                        |     |   | 2007   |   |     | 2006   |   |   | Change      in2008      Over 2007 |   |   | Change      in2007      Over 2006 |   |
|                                                 |   |                        |     |   |   |   |     |   |   |   |   |   |   |   |   |
| Revenues                                             |   | $                           | 1,208.9  |   |   | $      | 1,125.2  |   |   | $ | 990.6 |   |   |   | 7.4 | % |   |   | 13.6 | % |
| Fuel and      purchased power costs                  |   |                        | 589.9    |   |   |   | 574.6    |   |   |   | 497.0 |   |   |   | 2.7 | % |   |   | 15.6 | % |
| Margins                                              |   |                        | 619.0    |   |   |   | 550.6    |   |   |   | 493.6 |   |   |   | 12.4 | % |   |   | 11.5 | % |
|                                                 |   |                        |     |   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating and      maintenance expense               |   |                        | 336.2    |   |   |   | 283.5    |   |   |   | 229.2 |   |   |   | 18.6 | % |   |   | 23.7 | % |
| Depreciation      and amortization expense           |   |                        | 78.5     |   |   |   | 74.4     |   |   |   | 73.2 |   |   |   | 5.5 | % |   |   | 1.6 | % |
| Taxes other      than income taxes                   |   |                        | 40.4     |   |   |   | 38.9     |   |   |   | 36.6 |   |   |   | 3.9 | % |   |   | 6.3 | % |
|                                                 |   |                        |     |   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income                                |   |                        | 163.9    |   |   |   | 153.8    |   |   |   | 154.6 |   |   |   | 6.6 | % |   |   | (0.5 | )% |
|                                                 |   |                        |     |   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Miscellaneous      income                            |   |                        | 5.8      |   |   |   | 6.2      |   |   |   | 2.6 |   |   |   | (6.5 | )% |   |   | 138.5 | % |
| Interest      expense                                |   |                        | (33.4    | )      |   |   | (29.5    | )      |   |   | (26.9 | ) |   |   | 13.2 | % |   |   | 9.7 | % |
| Other      expense                                   |   |                        | (27.6    | )      |   |   | (23.3    | )      |   |   | (24.3 | ) |   |   | 18.5 | % |   |   | (4.1 | )% |
|                                                 |   |                        |     |   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income before      taxes                             |   | $                           | 136.3    |   |   | $      | 130.5    |   |   | $ | 130.3 |   |   |   | 4.4 | % |   |   | 0.2 | % |
|                                                 |   |                        |     |   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales      in kilowatt-hours                         |   |                        |     |   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Residential                                    |   |                        | 2,794.8  |   |   |   | 2,895.7  |   |   |   | 2,871.1 |   |   |   | (3.5 | )% |   |   | 0.9 | % |
|  Commercial      and industrial                 |   |                        | 8,060.4  |   |   |   | 8,173.4  |   |   |   | 8,125.1 |   |   |   | (1.4 | )% |   |   | 0.6 | % |
|  Wholesale                                      |   |                        | 4,529.0  |   |   |   | 3,694.1  |   |   |   | 3,696.9 |   |   |   | 22.6 | % |   |   | (0.1 | )% |
|  Other                                          |   |                        | 36.8     |   |   |   | 36.4     |   |   |   | 36.4 |   |   |   | 1.1 | % |   |   | - | % |
|    Total      sales in kilowatt-hours |   |                        | 15,421.0 |   |   |   | 14,799.6 |   |   |   | 14,729.5 |   |   |   | 4.2 | % |   |   | 0.5 | % |
|                                                 |   |                        |     |   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weather                                              |   |                        |     |   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Heating      degree days                       |   |                        | 7,969    |   |   |   | 7,102    |   |   |   | 6,785 |   |   |   | 12.2 | % |   |   | 4.7 | % |
|  Cooling      degree days                       |   |                        | 464      |   |   |   | 634      |   |   |   | 521 |   |   |   | (26.8 | )% |   |   | 21.7 | % |

----

| · | A 4.2%      increase in electric sales volumes, which resulted in an approximate      $33 million increase in revenue year-over-year, related      to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | A 22.6%      increase in wholesale volumes year-over-year, which drove an      approximate$52 million      increase in revenue.  There was an approximate $40 million      increase in opportunity sales year-over-year as the electric utility had      more low-cost generation with Weston 4 becoming commercially operational      in 2008, combined with available capacity due to lower sales volumes to      residential customers.  In addition, WPS experienced an      approximate $12 million increase in wholesale revenue, driven by      higher contracted sales volumes to a large wholesale customer      year-over-year. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | The increase      in revenue related to wholesale volumes was partially offset by a 3.5%      decrease in residential sales volumes and a 1.4% decrease in commercial      and industrial sales volumes year-over-year, which drove an approximate      $19 million decrease in revenue.  Of this decrease in      revenue, approximately $12 million related to energy conservation      efforts on the part of residential customers, which we believe was the      result of high energy prices and the general economic      slowdown.  Approximately $4 million related to decreased      demand by our commercial and industrial customers in the third and fourth      quarters of 2008 as the economy worsened.  In addition, cooler      weather during the 2008 cooling season compared with 2007 contributed      approximately $3 million to the decrease in  revenue. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| · | An interim      fuel surcharge approved by the PSCW for WPS's retail electric customers      effective March 22, 2008, related to higher fuel and purchased      power costs.  In addition, a surcharge increase was approved by      the PSCW effective July 4, 2008. Both orders had an      overall impact on revenue of approximately      $25 million.  Contributing factors in this rate change were      increased purchased power costs due to lower-than-expected generation from      the new Weston 4 power plant during the start-up phases, increased coal      and coal transportation costs, and increased natural gas      costs.  On September 30, 2008, the PSCW reopened the 2008 fuel      surcharge to review forecasted fuel costs as WPS's current and anticipated      annual fuel costs were below those projected in the fuel      surcharge.  As a result of these lower costs, WPS accrued at      December 31, 2008 a refund payable in 2009 to its electric customers of      approximately $5 million, which is already excluded from the $25 million      noted above.  See Note 21, "Regulatory      Environment," for more information      on WPS's interim fuel surcharges. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| · | A retail      electric rate increase, effective January 16, 2008, which contributed an      approximate $23 million increase in revenue.  The full      benefit of the 2007 retail electric rate increase, effective January 12,      2007, also contributed to the increase in revenue      year-over-year.  Per the PSCW's order approving Integrys Energy      Group's merger with PEC, WPS was not permitted to increase its base rates      for natural gas or electric service prior to January 1,      2009.  However, WPS was allowed to adjust rates for changes in      purchased power costs as well as fuel costs related to electric generation      due to changes in NYMEX natural gas futures prices, delivered coal prices,      and transmission costs.  The increase also included recovery of      deferred 2005 and 2006 MISO Day 2 costs over a one-year      period.  See Note 21, "Regulatory      Environment," for more information      on WPS's interim rate increase.                                                                                                                                                                                                                             |

----

| · | On January      11, 2007, the PSCW issued a final written order authorizing a retail      electric rate increase of $56.7 million (6.6%), effective      January 12, 2007, for Wisconsin electric    customers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| · | On a per-unit      basis, fuel and purchased power costs were approximately 17% higher during      the year ended December 31, 2007, compared with the same period in      2006.  In addition, sales volumes increased 0.5%, primarily      related to an increase in sales volumes to residential and commercial and      industrial customers, driven by warmer weather during the cooling season      and colder weather during the heating season (a portion of heating load is      electric) in 2007, compared with 2006.  The increase in sales      volumes related to weather was partially offset by an approximate 2%      decrease in weather normalized residential and commercial and industrial      customer usage, driven by customer conservation resulting from higher      energy costs and weaker general economic  conditions. |

| · | A      $54.0 million partial refund to Wisconsin retail customers for 2007      of their portion of proceeds from the liquidation of the Kewaunee      nonqualified decommissioning trust fund.  Pursuant to regulatory      accounting, the decrease in the 2007 margin related to the refund was      offset by a corresponding decrease in operating and maintenance expense in      2007 and, therefore, did not have an impact on 2007      earnings.  WPS completed this refund in 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |
| · | An      approximate $10 million increase in margin from the 2008 retail      electric rate increase effective January 16, 2008, and the full benefit of      the 2007 retail electric rate increase effective January 12,      2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |
| · | An      approximate $10 million increase in margin driven by higher      contracted sales volumes to a large wholesale customer      year-over-year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| · | An      approximate $5 million increase in regulated electric utility margin      year-over-year driven by fuel and purchased power costs that were      approximately $1 million lower than what was recovered in rates      during 2008, compared with fuel and purchased power costs that were      approximately $4 million higher than what was recovered in rates      during 2007.  As a result of approximately $23 million of      under-recovered fuel and purchased power costs in the first quarter of      2008, the PSCW approved an interim rate surcharge effective      March 22, 2008, and subsequently approved a higher final      surcharge effective July 4, 2008.  The $5 million increase in      electric margin includes lower fuel costs from the fuel window reset and      the net impact of the refund accrued at December 31, 2008 payable in 2009      to electric customers from the reopening of the 2008 fuel surcharge on      September 30, 2008, by the PSCW. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| · | These      increases in the electric margin at WPS were offset by an approximate      $11 million decrease in margin due to a decline in residential and      commercial and industrial sales volumes.  Of this decrease,      approximately $8 million related to energy conservation efforts on      the part of residential customers, which we believe was the result of high      energy prices and the general economic slowdown.  Approximately      $1 million related to decreased demand by our commercial and      industrial customers in the third and fourth quarters of 2008 as the      economy worsened.  In addition, cooler weather during the 2008      cooling season compared with 2007 contributed approximately      $2 million to the decrease in grossmargin.                                                                                                                                                                                                             |

----

| · | WPS's margin      was positively impacted by the retail electric rate increases discussed      above and by higher electric sales volumes to residential and commercial      and industrial customers related to weather.  Favorable weather      during both the heating and cooling seasons positively impacted margin by      an estimated $6 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| · | The      year-over-year change in WPS's margin was also positively impacted by a      $16.2 million decrease in the 2006 margin related to the accrual of      the refund to wholesale customers in 2006 of their portion of the Kewaunee      nonqualified decommissioning trust fund.  Pursuant to regulatory      accounting, the decrease in the 2006 margin related to this refund was      offset by a corresponding decrease in operating and maintenance expenses      in 2006 and, therefore, did not have an impact on earnings.  No      such accrual to wholesale customers occurred in 2007; however, the payment      of the refund was made in 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| · | Partially      offsetting the increase in WPS's margin, fuel and purchased power costs      were 3.7% higher than what was recovered in rates during the year ended      December 31, 2007, compared with fuel and purchased power costs that      were 10.5% less than what was recovered in rates during the same period in      2006, driving a $14.4 million negative variance in WPS's electric      margin.  In 2007, fuel and purchased power prices were above      what was projected in the rate case primarily due to higher than      anticipated commodity costs and the market effects of unplanned plant      outages.  On October 6, 2007, lightning hit Weston 3, and the      unit returned to full service on January 14, 2008.  The      unscheduled outage did not have a significant impact on the electric      utility margin as the PSCW approved deferral of unanticipated fuel and      purchased power costs directly related to the outage.  The      outage did, however, cause the price of purchased power from other sources      to increase.  Excluding the additional purchased power which      resulted from the Weston 3 outage, fuel and purchased power costs at WPS      increased 17% in 2007, compared to the same period in 2006, primarily      related to the higher per-unit cost of fuel and purchased power required      from the market to serve WPS'scustomers. |

| The increase      in operating expenses was driven by:               |                                                                                                                                                                                                                                                                                                                                                                                                  |
|----------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                                               | A      $54.0 million year-over-year increase related to the partial      amortization in 2007 of the regulatory liability previously recorded for      WPS's obligation to refund proceeds received from the liquidation of the      Kewaunee nonqualified decommissioning trust fund to Wisconsin retail      electric ratepayers.                                                              |
|                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                                               | A      $12.7 million increase in electric transmission expenses, primarily      related to higher rates charged by MISO and ATC due to additional      transmission costs.                                                                                                                                                                                                                       |
|                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                                               | A      $6.1 million increase in cost of capital and depreciation expense      charged by IBS for assets transferred from WPS to IBS in the beginning of      2008 and reported as operating and maintenance expense in      2008.  Similar costs were reported as depreciation and      amortization expense in 2007, prior to the start-up ofIBS.                                     |   |
|                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                  |
| ·                                                               | A      $4.1 million increase in depreciation and amortization expense,      primarily related to $9.2 million of depreciation expense related to      Weston 4 being placed in service for accounting purposes in April 2008,      partially offset by a decrease in depreciation related to assets      transferred to IBS and reported in operating and maintenance expense in      2008. |
|                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                  |
| These      increases in operating expenses were partially offset by: |                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                  |

----

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | An      $11.6 million decrease in electric maintenance expenses, primarily      due to major planned outages at the Weston 2 and Weston 3 generation      stations, the De Pere Energy Center, and the Pulliam generation station,      as well as several unplanned outages at the Weston 3 generation station in      2007, compared with fewer outages in 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| · | A decrease in      external costs to achieve merger synergies of $6.2 million related to      Integrys Energy Group's merger with PEC, from $11.4 million in 2007,      to $5.2 million in 2008.  This decrease occurred primarily      because all external costs to achieve merger synergies incurred from      July 2006 through March 2007 were reallocated in 2007 from Integrys      Energy Group to the other reportable segments, including WPS as part of      the regulated electric segment.  These reportable segments are      the beneficiaries of the synergy savings resulting from the costs to      achieve.  In addition, the reduction in 2008 external costs to      achieve merger synergies was due to less integration work required in 2008      compared with 2007. |   |

| · | Regulated      electric maintenance expenses increased $15.3 million, driven by      longer than anticipated planned outages and a higher number of unplanned      outages year-over-year, which included major overhauls planned at the      Weston 2 and Weston 3 generation stations and the De Pere Energy      Center, planned major turbine and generator work performed at the Pulliam      electric generation station, and several unplanned outages at the Weston 3      generation station.                                                                            |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| · | Regulated      electric transmission expenses increased $14.2 million, primarily      related to higher rates charged by MISO and ATC due to additional      transmission investment.                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| · | The regulated      electric segment of WPS was allocated external costs to achieve merger      synergies (related to the Integrys Energy Group's merger with PEC) of      $11.4 million for the year ended December 31,    2007.                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| · | Amortization      in 2006 of the regulatory liability recorded for WPS's obligation to      refund proceeds received from the liquidation of the Kewaunee nonqualified      decommissioning trust fund to wholesale electric ratepayers contributed      $16.2 million to the increase in operating and maintenance      expense.  Pursuant to regulatory accounting, the 2006 increase      in operating and maintenance expense related to this refund was offset by      a corresponding increase in 2006 margin and, therefore, did not have an      impact on earnings. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| · | Lower      pension, postretirement, and other employee benefit costs partially offset      the above increase in regulated electric operating and maintenance      expense.                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| · | An increase      in depreciation expense related to continued capital investment at the      electric utility, while the increase in taxes other than income reflected      an increase in salesyear-over-year.                                                                                                                                                                                                                                                                                                                                                                             |

----

| · | The increase      in miscellaneous income was primarily a result of increased interest      income of $2.9 million received related to the construction of      transmission facilities WPS was funding on ATC's behalf pending the      start-up of Weston 4.                                       |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                           |
| · | The increase      in interest expense was driven by an increase in the average amount of      both short-term and long-term debt outstanding and higher average      short-term interest rates.  The increased borrowings were      primarily utilized to fund the construction of    Weston 4. |

|                                         |   | Year EndedDecember 31, |   |   |   |   |   |   |   |
|----------------------------------------------|--------|-----------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                         |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                         |   | 2008                        |   |   | 2007   |   |   | 2006   |   |   | Change      in2008      Over 2007 |   |   | Change      in2007      Over 2006 |   |
|                                         |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                     |   | $                           | 539.4  |   |   | $      | 471.0  |   |   | $ | 443.8 |   |   |   | 14.5 | % |   |   | 6.1 | % |
| Purchased      natural gas costs             |   |                        | 382.3  |   |   |   | 322.2  |   |   |   | 319.8 |   |   |   | 18.7 | % |   |   | 0.8 | % |
| Margins                                      |   |                        | 157.1  |   |   |   | 148.8  |   |   |   | 124.0 |   |   |   | 5.6 | % |   |   | 20.0 | % |
|                                         |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating and      maintenance expense       |   |                        | 66.8   |   |   |   | 68.8   |   |   |   | 65.1 |   |   |   | (2.9 | )% |   |   | 5.7 | % |
| Depreciation      and amortization expense   |   |                        | 20.9   |   |   |   | 22.1   |   |   |   | 22.6 |   |   |   | (5.4 | )% |   |   | (2.2 | )% |
| Taxes other      than income taxes           |   |                        | 6.2    |   |   |   | 6.5    |   |   |   | 6.9 |   |   |   | (4.6 | )% |   |   | (5.8 | )% |
|                                         |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income                        |   |                        | 63.2   |   |   |   | 51.4   |   |   |   | 29.4 |   |   |   | 23.0 | % |   |   | 74.8 | % |
|                                         |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Miscellaneous      income                    |   |                        | 2.4    |   |   |   | 0.4    |   |   |   | 0.4 |   |   |   | 500.0 | % |   |   | - | % |
| Interest      expense                        |   |                        | (9.0   | )      |   |   | (11.1  | )      |   |   | (10.4 | ) |   |   | (18.9 | )% |   |   | 6.7 | % |
| Other      expense                           |   |                        | (6.6   | )      |   |   | (10.7  | )      |   |   | (10.0 | ) |   |   | (38.3 | )% |   |   | 7.0 | % |
|                                         |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income before      taxes                     |   | $                           | 56.6   |   |   | $      | 40.7   |   |   | $ | 19.4 |   |   |   | 39.1 | % |   |   | 109.8 | % |
|                                         |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Throughput      in therms                    |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Residential                            |   |                        | 258.1  |   |   |   | 239.4  |   |   |   | 217.0 |   |   |   | 7.8 | % |   |   | 10.3 | % |
|  Commercial      and industrial         |   |                        | 147.9  |   |   |   | 133.9  |   |   |   | 124.6 |   |   |   | 10.5 | % |   |   | 7.5 | % |
|  Interruptible                          |   |                        | 20.1   |   |   |   | 23.1   |   |   |   | 24.5 |   |   |   | (13.0 | )% |   |   | (5.7 | )% |
|  Interdepartmental                      |   |                        | 28.6   |   |   |   | 47.1   |   |   |   | 27.6 |   |   |   | (39.3 | )% |   |   | 70.7 | % |
|  Transport                              |   |                        | 354.8  |   |   |   | 344.5  |   |   |   | 332.2 |   |   |   | 3.0 | % |   |   | 3.7 | % |
|    Total      sales in therms |   |                        | 809.5  |   |   |   | 788.0  |   |   |   | 725.9 |   |   |   | 2.7 | % |   |   | 8.6 | % |
|                                         |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weather                                      |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Heating      degree days               |   |                        | 7,969  |   |   |   | 7,102  |   |   |   | 6,785 |   |   |   | 12.2 | % |   |   | 4.7 | % |

| · | An      approximate $50 million increase in revenue driven by the approximate      15.9% increase in the per-unit cost of natural gas in 2008, compared with      2007.                                    |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                            |
| · | An      approximate $38 million increase in revenue from colder weather      during the 2008 heating season compared with 2007, evidenced by the 12.2%      year-over-year increase in heating degreedays. |

----

| · | An      approximate $1 million increase in revenue from WPS receiving the      benefit of its 2007 retail natural gas rate increase for the full year of      2008, whereas this rate increase did not benefit 2007 natural gas utility      results until its January 12, 2007 effective date. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                 |
| · | The increase      in revenue was partially offset by an approximate $22 million      decrease in revenue driven by lower year-over-year natural gas throughput      volumes normalized for the impact of weather driven by:                                                                     |
|   |                                                                                                                                                                                                                                                                                                 |
|   | -                                                                                                                                                                                                                                                                                                    | An      approximate $16 million decrease in revenue related to lower volumes,      sold to WPS's electric utility segment.  The decrease in volumes      sold to the electric utility segment was a result of a decrease in the      need for the electric utility to run its peaking generation units during      the 2008 summer cooling season because of cooler year-over-year      weather.  In addition, electricity was available from Weston 4,      WPS’s coal-fired generating facility that became commercially operational      in June 2008. |
|   |                                                                                                                                                                                                                                                                                                 |
|   | -                                                                                                                                                                                                                                                                                                    | An      approximate $4 million decrease in revenue related to lower volumes,      normalized for the impact of weather, sold to WPS’s residential customers,      driven by customer conservation efforts and a larger number of customer      disconnections, which we believe resulted from high energy prices and a      general slowdown in the economy. |
|   |                                                                                                                                                                                                                                                                                                 |   |
|   | -                                                                                                                                                                                                                                                                                                    | An      approximate $2 million decrease in revenue related to lower demand,      excluding the impact of weather, by our commercial and industrial      customers, as the economyworsened. |

| · | On January      11, 2007, the PSCW issued a final written order to WPS authorizing a      retail natural gas rate increase of $18.9 million (3.8%), effective      January 12, 2007.  See Note 21, "Regulatory      Environment," for more information      related to the retail natural gas rate increase at WPS.                                                                                                                                                                                                                                                                                   |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| · | An 8.6%      increase in natural gas throughput volumes.  The increase in      natural gas throughput volumes was driven by a 10.3% increase in      residential volumes and a 70.7% increase in natural gas volumes sold to      the electric utility.  The increase in sales volumes to      residential customers was driven in part by colder year-over-year weather      during the 2007 heating season.  The increase in natural gas      volumes sold to the electric utility was driven by an increase in the need      for the electric utility to run its peaking generation    units. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| · | Natural gas      prices were 10.1% lower on a per-unit basis, compared to 2006, resulting      in a decrease in natural gas utility revenue, which partially offset the      overall increase in natural gas utility revenue at  WPS.                                                                                                                                                                                                                                                                                                                                                                                          |

| · | A 2.7%      increase in natural gas throughput volumes which had an approximate      $8 million positive impact on natural gas utility      margins.  Colder year-over-year weather conditions during the      heating season had an approximate $10 million positive impact on      margins.  Partially offsetting the positive impact of colder      weather conditions, were energy conservation efforts by residential      customers and a larger number of customer disconnections year-over-year      which had an approximate $2 million impact on  margins. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |                                                                                                                                                                                                                                                                                |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | An      approximate $1 million impact from WPS receiving the benefit of its      2007 retail natural gas rate increase for all of 2008, whereas this rate      increase did not benefit 2007 natural gas utility results until its      January 12, 2007, effective date. |   |

| · | The retail      natural gas rate increase as discussed above.                                                                                                                                                                                                                                                           |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                    |
| · | An increase      in throughput volumes to higher margin residential customers due in part      to colder year-over-year weather during the heating season.  The      increase in throughput volumes sold to the electric utility did not have a      significant impact on WPS's natural gas utility  margin. |

| · | A      $2.6 million increase in AFUDC related to the construction of natural      gas laterals for connection to the Guardian IIpipeline.                     |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                               |
| · | A decrease in      interest expense resulting from a decrease in short-term borrowing levels      and a decrease in interest rates for the natural gas    segment. |

----

|                     |   |   | Year Ended      December 31,  |   |   |   | Change      in2008      Over  |   |   |   | Change      in2007      Over  |   |
|--------------------------|--------|--------|-----------------------------------------|--------|--------|--------|------------------------------------|--------|--------|--------|------------------------------------|--------|
| (Millions)               |   |   | 2008                               |   |   |   | 2007                          |   |   |   | 2006                          |   |   |   | 2007  |   |   |   | 2006  |   |
|                     |   |   |                                    |   |   |   |                               |   |   |   |                               |   |   |   |   |   |   |   |   |   |
| Operating      income    |   | $      | 0.7                                     |   |   | $      | 0.8                                |   |   | $      | 1.0                                |   |   |   | (12.5 | )% |   |   | (20.0 | )% |
|                     |   |   |                                    |   |   |   |                               |   |   |   |                               |   |   |
| Other      income        |   |   | 11.8                                    |   |   |   | 8.1                                |   |   |   | 9.7                                |   |   |   | 45.7 | % |   |   | (16.5 | )% |
|                     |   |   |                                    |   |   |   |                               |   |   |   |                               |   |   |
| Income before      taxes |   | $      | 12.5                                    |   |   | $      | 8.9                                |   |   | $      | 10.7                               |   |   |   | 40.4 | % |   |   | (16.8 | )% |

| · | A      $1.5 million increase in income from WPS’s ownership in both WPS      Investments, LLC (a consolidated subsidiary of Integrys Energy Group that      owns an approximate 34% interest in ATC) and WRPC. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                      |
| · | A      $1.6 million decrease in interest expense related to lower returns on      deferred compensation plans.                                                                                                       |
|   |                                                                                                                                                                                                                      |
| · | A      $1.2 million increase from various land and building sales in      2008.                                                                                                                                      |

|                    |   | Year      Ended December 31, |   |
|-------------------------|--------|-----------------------------------|--------|
|                    |   | 2008                              |   |   | 2007 |   |   | 2006 |   |
|                    |   |                              |   |   |   |   |   |   |   |
| Effective Tax      Rate |   |                              | 35.6   | % |   |   | 37.1 | % |   |   | 36.3 | % |

----

| ● | Capital      expenditures in 2008 of $275.4 million, in part due to      $71.3 million related to the construction of the Crane Creek Wind      Farm, $55.6 million for natural gas service laterals to the Guardian      II natural gas transmission pipeline, $48.0 million related to the      construction of Weston 4, $12.3 million related to the purchase      of new line transformers, and capital expenditures related to electric and      natural gas service for new and existing customers. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ● | An offset of      $99.5 million from depreciation and amortization expense in      2008.                                                                                                                                                                                                                                                                                                                                                                                                                                            |

----

| · | A      year-over-year decrease in cash related to working capital of $122.2      million.  This decrease was primarily the result of an increase      in the average price of natural gas in inventory in 2008, compared to      2007, driven by extremely high natural gas prices during the summer months      of 2008, when inventory is generally injected into      storage.  Also contributing to the decrease in cash related to      working capital was a decrease in accounts payable, due in part to less      purchased power and capital expenditures costs related to the Weston 4      generation facility, as it became commercially operational in June      2008. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| · | The decrease      in cash provided by operating activities was partially offset      by:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | A $78.0      million decrease in net refunds of regulatory assets and liabilities,      driven by a decrease in the refund to ratepayers in 2008, compared to      2007, of proceeds WPS received from the liquidation of the nonqualified      decommissioning trust fund upon the sale of the Kewaunee Power      Station. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | An $11.6      million year-over-year decrease in pension and other postretirement      funding.  The contribution requirements for pension benefits are      determined by the PSCW and, as such, funding requirements change from year      to year. |

----

| Reportable      Segment (millions) |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Electric      utility              |   | $      | 190.0  |   |   | $      | 191.2  |   |   | $ | 268.4 |   |
| Natural gas      utility           |   |   | 85.4   |   |   |   | 29.9   |   |   |   | 34.5 |   |
| WPS      consolidated              |   | $      | 275.4  |   |   | $      | 221.1  |   |   | $ | 302.9 |   |

----

| Credit      Ratings                                                                                                                                                                                                             | Standard      & Poor's | Moody's         |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------|-----------------|
|         Issuer credit rating   First      Mortgage Bonds   Senior      secured debt        Preferred stock        Commercial paper        Credit facility | AA+A+BBB+A-2N/A            | A1Aa3Aa3A3P-1A1 |

----

|                                                              |   |                        |    |   | Payments      Due By Period |   |
|-------------------------------------------------------------------|--------|-----------------------------|---------|--------|-----------------------------|--------|
| (Millions)                                                        |   | Total      AmountsCommitted |    |   | 2009                        |   |   |   | 2010-2011 |   |   |   | 2012      - 2013 |   |   | 2014      and Thereafter |   |
|                                                              |   |                        |    |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term      debt principal and interest payments      (1) |   | $                           | 1,337.3 |   |                        | $      | 48.4 |   |   | $ | 246.8 |   |   | $ | 367.6 |   |   | $ | 674.5 |   |
| Operating      lease obligations                                  |   |                        | 12.5    |   |                        |   | 4.3 |   |   |   | 5.6 |   |   |   | 2.0 |   |   |   | 0.6 |   |
| Commodity      purchase obligations (2)                           |   |                        | 2,362.4 |   |                        |   | 436.3 |   |   |   | 720.7 |   |   |   | 545.5 |   |   |   | 659.9 |   |
| Purchase      orders (3)                                          |   |                        | 372.4   |   |                        |   | 372.3 |   |   |   | 0.1 |   |   |   | - |   |   |   | - |   |
| Pension and      other postretirement funding obligations (4)     |   |                        | 240.4   |   |                        |   | 12.5 |   |   |   | 48.9 |   |   |   | 89.2 |   |   |   | 89.8 |   |
| Total      contractual cash obligations                           |   | $                           | 4,325.0 |   |                        | $      | 873.8 |   |   | $ | 1,022.1 |   |   | $ | 1,004.3 |   |   | $ | 1,424.8 |   |

|   | (1)      Represents bonds and notes issued by WPS.  WPS records      all principal obligations on the balancesheet. |
|--------|-------------------------------------------------------------------------------------------------------------------------------|

|   | (2)      The costs of commodity purchase obligations are expected to be      recovered in future customer rates. |
|--------|------------------------------------------------------------------------------------------------------------------|

|   | (3)      Includes obligations related to normal business operations and large      construction obligations. |
|--------|--------------------------------------------------------------------------------------------------------------|

|   | (4)      Obligations for certain pension and other postretirement benefit      plans cannot be estimated beyond2011. |
|--------|----------------------------------------------------------------------------------------------------------------------|

| (Millions)                                                            |   |   |   |
|-----------------------------------------------------------------------|--------|--------|--------|
|    Wind      generation projects                       |   | $      | 247.1  |   |
|    Environmental      projects                         |   |   | 171.4  |   |
|    Electric      and natural gas distribution projects |   |   | 127.6  |   |
|    Other      projects                                 |   |   | 162.0  |   |
| Total capital      expenditures                                       |   | $      | 708.1  |   |

----

----

----

| Actuarial      Assumption(Millions,      except percentages) |   | Percentage-Point      Change in Assumption |   |   | Impact      on Projected BenefitObligation |   |   | Impact      on 2008 Pension Cost |   |
|--------------------------------------------------------------|--------|--------------------------------------------|--------|--------|--------------------------------------------|--------|--------|----------------------------------|--------|
| Discount      rate                                           |   |                                       | (0.5   | )      |                                       | $      | 31.0   |                             |   | $ | (0.2 | ) |
| Discount      rate                                           |   |                                       | 0.5    |   |                                       |   | (29.5  | )                                |   |   | - |   |
| Rate of      return on plan assets                           |   |                                       | (0.5   | )      |                                       |   | N/A    |                             |   |   | 2.6 |   |
| Rate of      return on plan assets                           |   |                                       | 0.5    |   |                                       |   | N/A    |                             |   |   | (2.6 | ) |

----

| Actuarial      Assumption(Millions,      except percentages) |   | Percentage-Point      Change in Assumption |   |   | Impact      on Postretirement Benefit Obligation |   |   | Impact      on 2008 Postretirement Benefit Cost |   |
|--------------------------------------------------------------|--------|--------------------------------------------|--------|--------|--------------------------------------------------|--------|--------|-------------------------------------------------|--------|
| Discount      rate                                           |   |                                       | (0.5   | )      |                                             | $      | 18.0   |                                            |   | $ | 1.6 |   |
| Discount      rate                                           |   |                                       | 0.5    |   |                                             |   | (16.9  | )                                               |   |   | (1.5 | ) |
| Health care      cost trend rate                             |   |                                       | (1.0   | )      |                                             |   | (31.6  | )                                               |   |   | (4.3 | ) |
| Health care      cost trend rate                             |   |                                       | 1.0    |   |                                             |   | 38.7   |                                            |   |   | 5.9 |   |
| Rate of      return on plan assets                           |   |                                       | (0.5   | )      |                                             |   | N/A    |                                            |   |   | 0.8 |   |
| Rate of      return on plan assets                           |   |                                       | 0.5    |   |                                             |   | N/A    |                                            |   |   | (0.8 | ) |

----

----

| ITEM 7A.  | QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT  MARKET RISK |
|----------------|-----------------------------------------------------------------------|

----

----

----

----

----

| ITEM 8.  FINANCIAL      STATEMENTS AND SUPPLEMENTARY DATA   |   |   |    |   |   |   |    |   |   |
|-----------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|                                                                  |   |   |    |   |   |   |    |   |   |
| C. CONSOLIDATED STATEMENTS OF      INCOME                        |   |
|                                                                  |   |   |    |   |   |   |    |   |   |
| Year Ended December      31                                           |   |   |    |   |   |   |    |   |   |
| (Millions)                                                            |   | 2008   |    |   | 2007   |   |    | 2006   |   |
|                                                                  |   |   |    |   |   |   |    |   |   |
| Operating      revenues                                               |   |   |    |   |   |   |    |   |   |
| Electric                                                              |   | $      | 1,209.0 |   |   | $      | 1,125.1 |   |   | $ | 990.6 |   |
| Natural gas                                                           |   |   | 539.4   |   |   |   | 471.0   |   |   |   | 443.8 |   |
| Total operating      revenues                                         |   |   | 1,748.4 |   |   |   | 1,596.1 |   |   |   | 1,434.4 |   |
|                                                                  |   |   |    |   |   |   |    |   |   |   |   |   |
| Electric production      fuels                                        |   |   | 204.4   |   |   |   | 162.6   |   |   |   | 142.6 |   |
| Purchased    power                                                    |   |   | 384.6   |   |   |   | 411.1   |   |   |   | 353.5 |   |
| Natural gas purchased for      resale                                 |   |   | 382.3   |   |   |   | 322.2   |   |   |   | 319.8 |   |
| Operating and maintenance      expense                                |   |   | 403.2   |   |   |   | 352.3   |   |   |   | 294.2 |   |
| Depreciation and amortization      expense                            |   |   | 99.5    |   |   |   | 96.4    |   |   |   | 95.8 |   |
| Taxes other than income      taxes                                    |   |   | 46.6    |   |   |   | 45.5    |   |   |   | 43.5 |   |
| Operating      income                                                 |   |   | 227.8   |   |   |   | 206.0   |   |   |   | 185.0 |   |
|                                                                  |   |   |    |   |   |   |    |   |   |   |   |   |
| Miscellaneous      income                                             |   |   | 21.6    |   |   |   | 17.6    |   |   |   | 15.8 |   |
| Interest      expense                                                 |   |   | (44.0   | )      |   |   | (43.5   | )      |   |   | (40.4 | ) |
| Other    expense                                                      |   |   | (22.4   | )      |   |   | (25.9   | )      |   |   | (24.6 | ) |
|                                                                  |   |   |    |   |   |   |    |   |   |   |   |   |
| Income before      taxes                                              |   |   | 205.4   |   |   |   | 180.1   |   |   |   | 160.4 |   |
| Provision for income      taxes                                       |   |   | 73.1    |   |   |   | 66.8    |   |   |   | 58.3 |   |
| Net income                                                            |   |   | 132.3   |   |   |   | 113.3   |   |   |   | 102.1 |   |
|                                                                  |   |   |    |   |   |   |    |   |   |   |   |   |
| Preferred stock dividend      requirements                            |   |   | 3.1     |   |   |   | 3.1     |   |   |   | 3.1 |   |
| Earnings on common      stock                                         |   | $      | 129.2   |   |   | $      | 110.2   |   |   | $ | 99.0 |   |
|                                                                  |   |   |    |   |   |   |    |   |   |   |   |   |
| The accompanying notes are an      integral part of these statements. |   |   |    |   |   |   |    |   |   |   |   |   |
|                                                                  |   |   |    |   |   |   |    |   |   |   |   |   |

----

| ITEM 8.  FINANCIAL      STATEMENTS AND SUPPLEMENTARY DATA                                                                                                      |   |   |    |   |   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                                                                                                                                     |   |   |    |   |   |   |
| D. CONSOLIDATED BALANCE      SHEETS                                                                                                                                 |   |
|                                                                                                                                                                     |   |   |    |   |   |   |
| At December    31                                                                                                                                                        |   |   |    |   |   |   |
| (Millions)                                                                                                                                                               |   | 2008   |    |   | 2007   |   |
|                                                                                                                                                                     |   |   |    |   |   |   |
| Assets                                                                                                                                                                   |   |   |    |   |   |   |
| Cash and cash      equivalents                                                                                                                                           |   | $      | 9.0     |   |   | $      | 4.1 |   |
| Accounts receivable and accrued      unbilled revenues, net of reserves of $4.8 and $4.0,      respectively                                                              |   |   | 254.6   |   |   |   | 326.8 |   |
| Receivables from related      parties                                                                                                                                    |   |   | 40.6    |   |   |   | 14.6 |   |
| Inventories                                                                                                                                                              |   |   | 114.9   |   |   |   | 81.4 |   |
| Assets from risk management      activities                                                                                                                              |   |   | 7.3     |   |   |   | 14.2 |   |
| Regulatory      assets                                                                                                                                                   |   |   | 34.4    |   |   |   | 49.3 |   |
| Materials and supplies, at average      cost                                                                                                                             |   |   | 25.8    |   |   |   | 24.3 |   |
| Prepaid federal income      tax                                                                                                                                          |   |   | 3.0     |   |   |   | 46.5 |   |
| Prepaid gross receipts      tax                                                                                                                                          |   |   | 39.4    |   |   |   | 34.9 |   |
| Other current      assets                                                                                                                                                |   |   | 14.2    |   |   |   | 7.2 |   |
| Current    assets                                                                                                                                                        |   |   | 543.2   |   |   |   | 603.3 |   |
|                                                                                                                                                                     |   |   |    |   |   |   |   |   |
| Property, plant, and equipment,      net of accumulated depreciation of $1,107.7 and $1,071.2,      respectively                                                         |   |   | 2,226.7 |   |   |   | 2,074.9 |   |
| Regulatory      assets                                                                                                                                                   |   |   | 400.2   |   |   |   | 172.8 |   |
| Receivables from related      parties                                                                                                                                    |   |   | 27.4    |   |   |   | 48.2 |   |
| Other                                                                                                                                                                    |   |   | 116.2   |   |   |   | 118.4 |   |
| Totalassets                                                                                                                                                              |   | $      | 3,313.7 |   |   | $      | 3,017.6 |   |
|                                                                                                                                                                     |   |   |    |   |   |   |   |   |
| Liabilities and Shareholders'      Equity                                                                                                                                |   |   |    |   |   |   |   |   |
| Short-term    debt                                                                                                                                                       |   | $      | 60.0    |   |   | $      | 60.7 |   |
| Accounts      payable                                                                                                                                                    |   |   | 123.2   |   |   |   | 186.0 |   |
| Payables to related      parties                                                                                                                                         |   |   | 22.5    |   |   |   | 52.1 |   |
| Liabilities from risk management      activities                                                                                                                         |   |   | 12.8    |   |   |   | 6.0 |   |
| Regulatory      liabilities                                                                                                                                              |   |   | 16.6    |   |   |   | 21.9 |   |
| Other current      liabilities                                                                                                                                           |   |   | 49.8    |   |   |   | 73.7 |   |
| Current      liabilities                                                                                                                                                 |   |   | 284.9   |   |   |   | 400.4 |   |
|                                                                                                                                                                     |   |   |    |   |   |   |   |   |
| Long-term debt to      parent                                                                                                                                            |   |   | 9.9     |   |   |   | 10.5 |   |
| Long-term    debt                                                                                                                                                        |   |   | 870.8   |   |   |   | 745.6 |   |
| Deferred income      taxes                                                                                                                                               |   |   | 198.8   |   |   |   | 161.4 |   |
| Deferred investment tax      credits                                                                                                                                     |   |   | 10.7    |   |   |   | 11.9 |   |
| Regulatory      liabilities                                                                                                                                              |   |   | 232.3   |   |   |   | 252.9 |   |
| Environmental remediation      liabilities                                                                                                                               |   |   | 73.9    |   |   |   | 67.5 |   |
| Pension and other postretirement      benefit obligations                                                                                                                |   |   | 315.8   |   |   |   | 68.6 |   |
| Payables to related      parties                                                                                                                                         |   |   | 10.5    |   |   |   | 19.2 |   |
| Other                                                                                                                                                                    |   |   | 79.9    |   |   |   | 81.8 |   |
| Long-term      liabilities                                                                                                                                               |   |   | 1,802.6 |   |   |   | 1,419.4 |   |
|                                                                                                                                                                     |   |   |    |   |   |   |   |   |
| Commitments and      contingencies                                                                                                                                       |   |   |    |   |   |   |   |   |
|                                                                                                                                                                     |   |   |    |   |   |   |   |   |
| Preferred stock with no mandatory      redemption - $100 par value; 1,000,000 shares     authorized;      511,882 shares issued and outstanding |   |   | 51.2    |   |   |   | 51.2 |   |
| Common stock - $4 par value;      32,000,000 shares authorized; 23,896,962 shares issued      and     outstanding                               |   |   | 95.6    |   |   |   | 95.6 |   |
| Additional paid-in      capital                                                                                                                                          |   |   | 707.4   |   |   |   | 713.8 |   |
| Retained      earnings                                                                                                                                                   |   |   | 372.0   |   |   |   | 337.2 |   |
| Total liabilities and      shareholders' equity                                                                                                                          |   | $      | 3,313.7 |   |   | $      | 3,017.6 |   |
|                                                                                                                                                                     |   |   |    |   |   |   |   |   |
| The accompanying notes are an      integral part of these statements.                                                                                                    |   |   |    |   |   |   |   |   |
|                                                                                                                                                                     |   |   |    |   |   |   |   |   |

----

| ITEM 8. FINANCIAL STATEMENTS      AND SUPPLEMENTARY DATA         |   |   |   |   |
|-----------------------------------------------------------------------|--------|--------|--------|--------|
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| E. CONSOLIDATED STATEMENTS OF      CAPITALIZATION                |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| At December    31                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| (Millions, except share      amounts)                                 |   |   | 2008   |   |   | 2007 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock      equity                                              |   |   |   |   |   |   |   |   |   |   |
| Common stock, $4 par value,      32,000,000 shares authorized,        |   |   |   |   |   |   |   |
| 23,896,962 shares      outstanding                                    |   |   | $      | 95.6   |   |   | $ | 95.6 |   |
| Additional paid in      capital                                       |   |   |   |   |   |   | 707.4 |   |   |   | 713.8 |   |
| Retained      earnings                                                |   |   |   |   |   |   |   |   | 372.0 |   |   |   | 337.2 |   |
| Total common stock      equity                                        |   |   |   |   |   |   | 1,175.0 |   |   |   | 1,146.6 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred    stock                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative, $100 par value,      1,000,000 shares authorized          |   |   |   |   |   |   |   |   |   |
| with no mandatory redemption      -                                   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   | Series |   |   | Shares      Outstanding |   |   |   |   |   |   |   |   |   |
|                                                                  |   |   | 5.00   | %      |   |   | 131,916 |   |   |   | 13.2 |   |   |   | 13.2 |   |
|                                                                  |   |   | 5.04   | %      |   |   | 29,983 |   |   |   | 3.0 |   |   |   | 3.0 |   |
|                                                                  |   |   | 5.08   | %      |   |   | 49,983 |   |   |   | 5.0 |   |   |   | 5.0 |   |
|                                                                  |   |   | 6.76   | %      |   |   | 150,000 |   |   |   | 15.0 |   |   |   | 15.0 |   |
|                                                                  |   |   | 6.88   | %      |   |   | 150,000 |   |   |   | 15.0 |   |   |   | 15.0 |   |
| Total preferred      stock                                            |   |   |   |   |   |   |   | 51.2 |   |   |   | 51.2 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term debt to      parent                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   | Year Due |   |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   | 2015 |   |   |   | 4.0 |   |   |   | 4.3 |   |
|                                                                  |   |   |   |   |   | 2016 |   |   |   | 5.9 |   |   |   | 6.2 |   |
| Total long-term debt to      parent                                   |   |   |   |   |   |   |   | 9.9 |   |   |   | 10.5 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term    debt                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| First Mortgage      Bonds                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   | Series |   |   | Year Due |   |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |   | 7.125  | %      |   | 2023 |   |   |   | 0.1 |   |   |   | 0.1 |   |
|   Senior      Notes                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   | Series |   |   | Year Due |   |   |   |   |   |   |   |   |   |
|                                                                  |   |   | 6.125  | %      |   | 2011 |   |   |   | 150.0 |   |   |   | 150.0 |   |
|                                                                  |   |   | 4.875  | %      |   | 2012 |   |   |   | 150.0 |   |   |   | 150.0 |   |
|                                                                  |   |   | 3.95   | %      |   | 2013 |   |   |   | 22.0 |   |   |   | 22.0 |   |
|                                                                  |   |   | 4.80   | %      |   | 2013 |   |   |   | 125.0 |   |   |   | 125.0 |   |
|                                                                  |   |   | 6.375  | %      |   | 2015 |   |   |   | 125.0 |   |   |   | - |   |
|                                                                  |   |   | 5.65   | %      |   | 2017 |   |   |   | 125.0 |   |   |   | 125.0 |   |
|                                                                  |   |   | 6.08   | %      |   | 2028 |   |   |   | 50.0 |   |   |   | 50.0 |   |
|                                                                  |   |   | 5.55   | %      |   | 2036 |   |   |   | 125.0 |   |   |   | 125.0 |   |
| Total First Mortgage Bonds and      Senior Notes                      |   |   |   | 872.1  |   |   |   | 747.1 |   |
| Unamortized discount on long-term      debt, net                      |   |   |   | (1.3   | )  |   |   | (1.5 | )  |
| Total long-term      debt                                             |   |   |   |   |   |   |   | 870.8 |   |   |   | 745.6 |   |
| Total      capitalization                                             |   |   |   |   |   |   |   |   |   | $ | 2,106.9 |   |   | $ | 1,953.9 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The accompanying notes are an      integral part of these statements. |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| ITEM 8. FINANCIAL STATEMENTS      AND SUPPLEMENTARY DATA                      |   |                 |   |   |
|------------------------------------------------------------------------------------|--------|----------------------|--------|--------|
|                                                                               |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| F. CONSOLIDATED STATEMENTS OF      COMMON SHAREHOLDER'S EQUITY                |   |
|                                                                               |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                               |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |
|                                                                               |   |   Comprehensive |   |   |   |   |   |   Common |   |   | AdditionalPaid      in |   |   | Retained |   |   |  OtherComprehensive |   |
| (Millions)                                                                         |   | Income               |   |   | Total |   |   | Stock |   |   | Capital |   |   | Earnings |   |   | Income    (Loss) |   |
|                                                                               |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31,      2005                                                  |   |                 |   |   | $ | 996.5 |   |   | $ | 95.6 |   |   | $ | 595.8 |   |   | $ | 308.9 |   |   | $ | (3.8 | ) |
| Earnings on common      stock                                                      |   | $                    | 99.0   |   |   |   | 99.0 |   |   |   | - |   |   |   | - |   |   |   | 99.0 |   |   |   | - |   |
| Other comprehensive income -      minimum pension liability (net of taxes of $2.5) |   |                 | 3.8    |   |   |   | 3.8 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3.8 |   |
| Comprehensive      income                                                          |   | $                    | 102.8  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net equity infusions from      parent                                              |   |                 |   |   |   |   | 85.0 |   |   |   | - |   |   |   | 85.0 |   |   |   | - |   |   |   | - |   |
| Dividends to      parent                                                           |   |                 |   |   |   |   | (88.0 | ) |   |   | - |   |   |   | - |   |   |   | (88.0 | ) |   |   | - |   |
| Adjustments to initially apply      SFAS No. 158 (net of taxes of $0.1)            |   |                 |   |   |   |   | (0.2 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (0.2 | ) |
| Other                                                                              |   |                 |   |   |   |   | 3.9 |   |   |   | - |   |   |   | 4.3 |   |   |   | (0.4 | ) |   |   | - |   |
|                                                                               |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31,      2006                                                  |   |                 |   |   |   | $ | 1,100.0 |   |   | $ | 95.6 |   |   | $ | 685.1 |   |   | $ | 319.5 |   |   | $ | (0.2 | ) |
| Earnings on common      stock                                                      |   | $                    | 110.2  |   |   |   | 110.2 |   |   |   | - |   |   |   | - |   |   |   | 110.2 |   |   |   | - |   |
| Comprehensive      income                                                          |   | $                    | 110.2  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net equity infusions from      parent                                              |   |                 |   |   |   |   | 25.0 |   |   |   | - |   |   |   | 25.0 |   |   |   | - |   |   |   | - |   |
| Dividends to      parent                                                           |   |                 |   |   |   |   | (91.2 | ) |   |   | - |   |   |   | - |   |   |   | (91.2 | ) |   |   | - |   |
| Adjustments to SFAS No. 158 (net      of taxes of $0.1)                            |   |                 |   |   |   |   | 0.2 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.2 |   |
| Other                                                                              |   |                 |   |   |   |   | 2.4 |   |   |   | - |   |   |   | 3.7 |   |   |   | (1.3 | ) |   |   | - |   |
|                                                                               |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31,      2007                                                  |   |                 |   |   |   | $ | 1,146.6 |   |   | $ | 95.6 |   |   | $ | 713.8 |   |   | $ | 337.2 |   |   | $ | - |   |
| Earnings on common      stock                                                      |   | $                    | 129.2  |   |   |   | 129.2 |   |   |   | - |   |   |   | - |   |   |   | 129.2 |   |   |   | - |   |
| Comprehensive      income                                                          |   | $                    | 129.2  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net return of capital to      parent                                               |   |                 |   |   |   |   | (10.0 | ) |   |   | - |   |   |   | (10.0 | ) |   |   | - |   |   |   | - |   |
| Dividends to      parent                                                           |   |                 |   |   |   |   | (93.9 | ) |   |   | - |   |   |   | - |   |   |   | (93.9 | ) |   |   | - |   |
| Other                                                                              |   |                 |   |   |   |   | 3.1 |   |   |   | - |   |   |   | 3.6 |   |   |   | (0.5 | ) |   |   | - |   |
|                                                                               |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31,      2008                                                  |   |                 |   |   |   | $ | 1,175.0 |   |   | $ | 95.6 |   |   | $ | 707.4 |   |   | $ | 372.0 |   |   | $ | - |   |
|                                                                               |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                               |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The accompanying notes are an      integral part of these statements.              |   |                 |   |   |   |   |   |   |   |   |
|                                                                               |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| ITEM 8. FINANCIAL STATEMENTS      AND SUPPLEMENTARY DATA                         |   |   |   |   |
|---------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                                                                  |   |   |   |   |   |   |   |   |   |
| G. CONSOLIDATED STATEMENTS OF      CASH FLOWS                                    |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |
| Year Ended December      31                                                           |   |   |   |   |   |   |   |   |   |
| (Millions)                                                                            |   | 2008   |   |   | 2007 |   |   | 2006 |   |
| Operating      Activities:                                                            |   |   |   |   |   |   |   |   |   |
| Net Income                                                                            |   | $      | 132.3  |   |   | $ | 113.3 |   |   | $ | 102.1 |   |
| Adjustments to reconcile net      income to net cash provided by operating activities |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization      expense                                            |   |   | 99.5   |   |   |   | 96.4 |   |   |   | 95.8 |   |
| Refund of nonqualified      decommissioning fund                                      |   |   | (0.5   | )      |   |   | (70.6 | ) |   |   | (54.5 | ) |
| Recovery of MISO Day 2      expenses                                                  |   |   | 19.8   |   |   |   | - |   |   |   | - |   |
| Recovery of Kewaunee outage      expenses                                             |   |   | 10.1   |   |   |   | 18.0 |   |   |   | 9.5 |   |
| Weston 3 outage      expenses                                                         |   |   | 0.4    |   |   |   | (22.7 | ) |   |   | - |   |
| Recoveries and refunds of other      regulatory assets and liabilities                |   |   | 7.7    |   |   |   | 11.7 |   |   |   | 4.8 |   |
| Deferred income taxes and      investment tax credit                                  |   |   | 12.6   |   |   |   | 21.5 |   |   |   | 20.7 |   |
| Bad debt      expense                                                                 |   |   | 9.4    |   |   |   | 7.8 |   |   |   | 7.7 |   |
| Allowance for equity funds used      during construction                              |   |   | (7.0   | )      |   |   | (1.2 | ) |   |   | (0.7 | ) |
| Pension and other postretirement      expense                                         |   |   | 6.8    |   |   |   | 24.6 |   |   |   | 37.0 |   |
| Pension and other postretirement      funding                                         |   |   | (23.5  | )      |   |   | (35.1 | ) |   |   | (43.2 | ) |
| Assumption of pension and other      postretirement liabilities of MERC and MGU       |   |   | -      |   |   |   | - |   |   |   | 33.6 |   |
| Equity income, net of      dividends                                                  |   |   | (0.8   | )      |   |   | (3.2 | ) |   |   | (2.2 | ) |
| Other, net                                                                            |   |   | 23.4   |   |   |   | 21.3 |   |   |   | 25.9 |   |
| Changes in-                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts receivable and accrued      unbilled revenues                                |   |   | (53.6  | )      |   |   | (38.4 | ) |   |   | 5.0 |   |
| Inventories                                                                           |   |   | (31.8  | )      |   |   | 20.9 |   |   |   | (2.2 | ) |
| Prepaid federal income      taxes                                                     |   |   | 43.5   |   |   |   | (14.9 | ) |   |   | (14.0 | ) |
| Other current      assets                                                             |   |   | (5.3   | )      |   |   | 5.8 |   |   |   | (13.6 | ) |
| Accounts      payable                                                                 |   |   | (74.7  | )      |   |   | 24.8 |   |   |   | (2.7 | ) |
| Accrued    taxes                                                                      |   |   | (3.8   | )      |   |   | 2.3 |   |   |   | 0.5 |   |
| Other current      liabilities                                                        |   |   | (4.1   | )      |   |   | (8.1 | ) |   |   | 7.9 |   |
| Net cash provided by operating      activities                                        |   |   | 160.4  |   |   |   | 174.2 |   |   |   | 217.4 |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Investing      Activities:                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital      expenditures                                                             |   |   | (275.4 | )      |   |   | (221.1 | ) |   |   | (302.9 | ) |
| Proceeds from sale of      property                                                   |   |   | 7.3    |   |   |   | - |   |   |   | - |   |
| Assets transferred to      IBS                                                        |   |   | 8.5    |   |   |   | - |   |   |   | - |   |
| Restricted cash for repayment of      long-term debt                                  |   |   | -      |   |   |   | 22.0 |   |   |   | (22.0 | ) |
| Cash paid for transmission      interconnection                                       |   |   | (17.4  | )      |   |   | (23.9 | ) |   |   | (11.6 | ) |
| Proceeds received from      transmission interconnection                              |   |   | 99.7   |   |   |   | - |   |   |   | - |   |
| Other                                                                                 |   |   | 4.7    |   |   |   | 6.0 |   |   |   | 15.3 |   |
| Net cash used for investing      activities                                           |   |   | (172.6 | )      |   |   | (217.0 | ) |   |   | (321.2 | ) |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Financing      Activities:                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Short-term debt -      net                                                            |   |   | (0.7   | )      |   |   | 12.7 |   |   |   | (37.0 | ) |
| Issuance of long-term      debt                                                       |   |   | 125.0  |   |   |   | 125.0 |   |   |   | 147.0 |   |
| Payments of long-term      debt                                                       |   |   | (0.6   | )      |   |   | (22.5 | ) |   |   | (0.5 | ) |
| Dividends to      parent                                                              |   |   | (93.9  | )      |   |   | (91.2 | ) |   |   | (88.0 | ) |
| Net equity contributions (to) from      parent                                        |   |   | (10.0  | )      |   |   | 25.0 |   |   |   | 85.0 |   |
| Preferred stock      dividends                                                        |   |   | (3.1   | )      |   |   | (3.1 | ) |   |   | (3.1 | ) |
| Other                                                                                 |   |   | 0.4    |   |   |   | 0.2 |   |   |   | (1.3 | ) |
| Net cash provided by financing      activities                                        |   |   | 17.1   |   |   |   | 46.1 |   |   |   | 102.1 |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in cash and cash      equivalents                                              |   |   | 4.9    |   |   |   | 3.3 |   |   |   | (1.7 | ) |
| Cash and cash equivalents at      beginning of year                                   |   |   | 4.1    |   |   |   | 0.8 |   |   |   | 2.5 |   |
| Cash and cash equivalents at end      of year                                         |   | $      | 9.0    |   |   | $ | 4.1 |   |   | $ | 0.8 |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| The accompanying notes are an      integral part of these statements.                 |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |

----

| (Millions)                      |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|---------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Cash paid for      interest     |   | $      | 42.7   |   |   | $      | 37.6   |   |   | $ | 32.4 |   |
| Cash paid for      income taxes |   |   | 59.1   |   |   |   | 30.8   |   |   |   | 37.2 |   |

| (Millions)                                              |   |   | 2008  |   |   |   | 2007  |   |   |   | 2006  |   |
|---------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|--------|------------|--------|
| Construction      costs funded through accounts payable |   | $      | 20.6       |   |   | $      | 26.1       |   |   | $      | 32.0       |   |

----

----

| Annual      Utility Composite Depreciation Rates |   | 2008   |   |   | 2007   |   |   | 2006 |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|------|--------|
| Electric                                         |   |   | 3.09   | %      |   |   | 3.35   | %    |   |   | 3.36 | % |
| Natural      gas                                 |   |   | 3.39   | %      |   |   | 3.52   | %    |   |   | 3.57 | % |

----

----

----

 
 SFAS No. 161requires enhanced disclosures about (1) how and why an entity usesderivative instruments, (2) how derivative instruments and related hedgeditems are accounted for under SFAS No. 133, as amended, and (3) howderivative instruments and related hedged items affect an entity's financialposition, financial performance, and cash flows.
  SFASNo. 161 is effective for WPS for the reporting period ending March 31, 2009, and willresult in expandeddisclosures for derivatives instruments.

|                               |   | Assets |   |   | Liabilities |   |
|------------------------------------|--------|--------|--------|--------|-------------|--------|
| (Millions)                         |   | 2008   |   |   | 2007        |   |   | 2008 |   |   | 2007 |   |
| Commodity      contracts           |   | $      | 0.5    |   |        | $      | 1.2 |   |   | $ | 8.9 |   |   | $ | 1.6 |   |
| Financial      transmission rights |   |   | 6.8    |   |        |   | 13.0 |   |   |   | 4.1 |   |   |   | 4.4 |   |
| Total                              |   | $      | 7.3    |   |        | $      | 14.2 |   |   | $ | 13.0 |   |   | $ | 6.0 |   |
| Balance      Sheet Presentation    |   |   |   |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Current                            |   | $      | 7.3    |   |        | $      | 14.2 |   |   | $ | 12.8 |   |   | $ | 6.0 |   |
| Other      long-term               |   |   | -      |   |        |   | - |   |   |   | 0.2 |   |   |   | - |   |
| Total                              |   | $      | 7.3    |   |        | $      | 14.2 |   |   | $ | 13.0 |   |   | $ | 6.0 |   |

----

| (Millions)                                |   | December 31,      2008 |   |   | December 31,      2007 |   |
|-------------------------------------------|--------|-----------------------------|--------|--------|-----------------------------|--------|
| Cash      collateral provided to others   |   | $                           | 13.1   |   |                        | $      | 6.5 |   |
| Cash      collateral received from others |   |                        | -      |   |                        |   | - |   |

| (Millions)                                     |   | 2008   |    |   | 2007   |   |
|------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Electric      utility *                        |   | $      | 2,566.2 |   |   | $      | 2,032.9 |   |
| Natural gas      utility                       |   |   | 606.7   |   |   |   | 576.8 |   |
| Total utility      plant                       |   |   | 3,172.9 |   |   |   | 2,609.7 |   |
| Less:  Accumulated      depreciation |   |   | 1,100.8 |   |   |   | 1,064.8 |   |
| Net                                            |   |   | 2,072.1 |   |   |   | 1,544.9 |   |
| Construction      work in progress *           |   |   | 145.9   |   |   |   | 520.7 |   |
| Net utility      plant                         |   |   | 2,218.0 |   |   |   | 2,065.6 |   |
|                                           |   |   |    |   |   |   |   |   |
| Nonutility      plant                          |   |   | 15.6    |   |   |   | 15.5 |   |
| Less:  Accumulated      depreciation |   |   | 6.9     |   |   |   | 6.4 |   |
| Net                                            |   |   | 8.7     |   |   |   | 9.1 |   |
| Construction      work in progress             |   |   | -       |   |   |   | 0.2 |   |
| Net      nonutility plant                      |   |   | 8.7     |   |   |   | 9.3 |   |
|                                           |   |   |    |   |   |   |   |   |
| Total      property, plant, and equipment      |   | $      | 2,226.7 |   |   | $      | 2,074.9 |   |

----

| (Millions,      except for percentages and megawatts) | Weston      4 | West      MarinetteUnit      No. 33 | Columbia      EnergyCenterUnits      1 and 2 | EdgewaterUnit      No. 4 |
|-------------------------------------------------------|---------------|------------------------------------------|----------------------------------------------|-------------------------------|
| Ownership                                             | 70.0%         | 68.0%                                    | 31.8%                                        | 31.8%                         |
| WPS's      share of rated capacity (megawatts)        | 374.8         |   51.7                         |   355.6                            | 101.9                         |
| Utility      plant in service                         | $611.9        | $18.3                                    | $159.5                                       | $33.8                         |
| Accumulated      depreciation                         | $      40.4   | $      9.3                               | $  99.5                            | $22.4                         |
| In-service      date                                  | 2008          | 1993                                     | 1975      and 1978                           | 1969                          |

| (Millions)                                                         |   | 2008   |   |   | 2007   |   |
|--------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                               |   |   |   |   |   |   |
| Regulatory      assets                                             |   |   |   |   |   |   |
| Pension and      other postretirement benefit related items        |   | $      | 246.8  |   |   | $      | 10.9 |   |
| Environmental      remediation costs (net of insurance recoveries) |   |   | 74.1   |   |   |   | 70.0 |   |
| De Pere      Energy Center                                         |   |   | 35.8   |   |   |   | 38.2 |   |
| Nuclear      costs                                                 |   |   | 24.1   |   |   |   | 34.7 |   |
| Weston 3      lightning strike                                     |   |   | 22.3   |   |   |   | 22.7 |   |
| Derivatives                                                        |   |   | 13.6   |   |   |   | 6.4 |   |
| Reserve for      uncollectible accounts                            |   |   | 4.8    |   |   |   | 4.0 |   |
| Asset      retirement obligations                                  |   |   | 4.3    |   |   |   | 4.0 |   |
| Energy      recoveries                                             |   |   | 3.6    |   |   |   | 3.4 |   |
| Income tax      related items                                      |   |   | 1.1    |   |   |   | 1.2 |   |
| MISO      costs                                                    |   |   | -      |   |   |   | 19.1 |   |
| Other                                                              |   |   | 4.1    |   |   |   | 7.5 |   |
| Total                                                              |   | $      | 434.6  |   |   | $      | 222.1 |   |
| Balance      Sheet Presentation                                    |   |   |   |   |   |   |   |   |
| Current                                                            |   | $      | 34.4   |   |   | $      | 49.3 |   |
| Long-term                                                          |   |   | 400.2  |   |   |   | 172.8 |   |
| Total                                                              |   | $      | 434.6  |   |   | $      | 222.1 |   |
|                                                               |   |   |   |   |   |   |   |   |
| Regulatory      liabilities                                        |   |   |   |   |   |   |   |   |
| Cost of      removal reserve                                       |   | $      | 202.0  |   |   | $      | 193.1 |   |
| Pension and      other postretirement benefit related items        |   |   | 21.1   |   |   |   | 50.8 |   |
| ATC and MISO      refunds                                          |   |   | 9.6    |   |   |   | 5.3 |   |
| Energy      refunds                                                |   |   | 6.2    |   |   |   | 1.9 |   |
| Derivatives                                                        |   |   | 4.8    |   |   |   | 13.3 |   |
| Income tax      related items                                      |   |   | 1.8    |   |   |   | 4.3 |   |
| Other                                                              |   |   | 3.4    |   |   |   | 6.1 |   |
| Total                                                              |   | $      | 248.9  |   |   | $      | 274.8 |   |
| Balance      Sheet Presentation                                    |   |   |   |   |   |   |   |   |
| Current                                                            |   | $      | 16.6   |   |   | $      | 21.9 |   |
| Long-term                                                          |   |   | 232.3  |   |   |   | 252.9 |   |
| Total                                                              |   | $      | 248.9  |   |   | $      | 274.8 |   |

----

| Year      ending December 31 |   |   |   |
|-----------------------------------|--------|--------|--------|
| (Millions)                        |   |   |   |
|                              |   |   |   |
| 2009                              |   | $      | 4.3    |   |
| 2010                              |   |   | 3.4    |   |
| 2011                              |   |   | 2.2    |   |
| 2012                              |   |   | 1.0    |   |
| 2013                              |   |   | 1.0    |   |
| Later      years                  |   |   | 0.6    |   |
| Total      payments               |   | $      | 12.5   |   |

| (Millions,      except for percentages)                    |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Commercial      paper outstanding                          |   | $      | 50.0   |   |   | $      | 50.7   |   |   | $ | 38.0 |   |
| Average      discount rate on outstanding commercial paper |   |   | 5.27   | %      |   |   | 5.65   | %      |   |   | 5.47 | % |
| Short-term      notes payable outstanding                  |   | $      | 10.0   |   |   | $      | 10.0   |   |   | $ | 10.0 |   |
| Average      interest rate on short-term notes payable     |   |   | 1.86   | %      |   |   | 5.20   | %      |   |   | 5.30 | % |

----

| (Millions)                                                                                 | Maturity |   | 2008   |   |   | 2007   |   |
|--------------------------------------------------------------------------------------------|----------|--------|--------|--------|--------|--------|--------|
| Revolving      credit facility (1)                                                         | 6/02/10  |   | $      | 115.0  |   |   | $      | 115.0 |   |
| Revolving      short-term notes payable (2)                                                | 5/13/09  |   |   | 10.0   |   |   |   | 10.0 |   |
| Total      short-term credit capacity                                                      |     |   |   | 125.0  |   |   |   | 125.0 |   |
|                                                                                       |     |   |   |   |   |   |   |   |   |
| Less:                                                                                      |     |   |   |   |   |   |   |   |   |
| Letters of      credit issued inside credit facilities                                     |     |   |   | 3.8    |   |   |   | 3.8 |   |
| Loans      outstanding under the credit agreements   and      notes payable |     |   |   | 10.0   |   |   |   | 10.0 |   |
| Commercial      paper outstanding                                                          |     |   |   | 50.0   |   |   |   | 50.7 |   |
| Available      capacity under existing agreements                                          |     |   | $      | 61.2   |   |   | $      | 60.5 |   |

----

| Year      ending December 31 (Millions) |   |   |   |
|---------------------------------------------------|--------|--------|--------|
|                                              |   |   |   |
| 2009                                              |   | $      | -      |   |
| 2010                                              |   |   | -      |   |
| 2011                                              |   |   | 150.0  |   |
| 2012                                              |   |   | 150.0  |   |
| 2013                                              |   |   | 147.0  |   |
| Later      years                                  |   |   | 425.1  |   |
| Total      payments                               |   | $      | 872.1  |   |

| (Millions)                                                  |   |   |   |
|-------------------------------------------------------------|--------|--------|--------|
| Asset      retirement obligations at December 31, 2005 |   | $      | 7.7    |   |
| Accretion                                                   |   |   | 0.4    |   |
| Asset      retirement obligations at December 31, 2006 |   |   | 8.1    |   |
| Accretion                                                   |   |   | 0.5    |   |
| Asset      retirement obligations at December 31, 2007 |   |   | 8.6    |   |
| Accretion                                                   |   |   | 0.5    |   |
| Asset      retirement obligations transferred in sales      |   |   | (0.1   | ) |
| Asset      retirement obligations at December 31, 2008 |   | $      | 9.0    |   |

----

| (Millions)                                                                                          |   | 2008   |   |   | 2007   |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                                                |   |   |   |   |   |   |
| Deferred      tax assets:                                                                           |   |   |   |   |   |   |
| Plant      related                                                                                  |   | $      | 28.8   |   |   | $      | 35.6 |   |
| Employee      benefits                                                                              |   |   | 42.7   |   |   |   | 42.8 |   |
| Other                                                                                               |   |   | 3.8    |   |   |   | 3.6 |   |
| Total      deferred tax assets                                                                      |   | $      | 75.3   |   |   | $      | 82.0 |   |
|                                                                                                |   |   |   |   |   |   |   |   |
| Deferred      tax liabilities:                                                                      |   |   |   |   |   |   |   |   |
| Plant      related                                                                                  |   | $      | 242.7  |   |   | $      | 222.0 |   |
| Regulatory      deferrals                                                                           |   |   | 17.9   |   |   |   | 30.6 |   |
| Deferred      income and deductions                                                                 |   |   | 5.4    |   |   |   | 3.7 |   |
| Total      deferred tax liabilities                                                                 |   | $      | 266.0  |   |   | $      | 256.3 |   |
|                                                                                                |   |   |   |   |   |   |   |   |
| Consolidated      Balance Sheet Presentation:                                                       |   |   |   |   |   |   |   |   |
| Current      deferred tax assets – included in other current assets                           |   | $      | 8.1    |   |   | $      | - |   |
| Current      deferred tax liabilities –  included in other current      liabilities |   |   | -      |   |   |   | 12.9 |   |
| Long-term      deferred tax liabilities                                                             |   |   | 198.8  |   |   |   | 161.4 |   |
| Net deferred      tax liabilities                                                                   |   | $      | 190.7  |   |   | $      | 174.3 |   |

----

| (Millions,      except for percentages) |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                    |   | Rate   |   |   | Amount |   |   | Rate   |   |   | Amount |   |   | Rate |   |   | Amount |   |
|                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Statutory      federal income tax       |   |   | 35.0   | %      |   | $      | 71.9   |   |   |   | 35.0 | % |   | $ | 63.0 |   |   |   | 35.0 | % |   | $ | 56.1 |   |
| State income      taxes, net            |   |   | 4.3    |   |   |   | 8.9    |   |   |   | 4.9 |   |   |   | 8.9 |   |   |   | 5.1 |   |   |   | 8.1 |   |
| Unrecognized      tax benefits          |   |   | -      |   |   |   | -      |   |   |   | (0.6 | ) |   |   | (1.0 | ) |   |   | - |   |   |   | - |   |
| Benefits and      compensation          |   |   | (1.3   | )      |   |   | (2.6   | )      |   |   | (1.9 | ) |   |   | (3.4 | ) |   |   | (2.5 | ) |   |   | (4.1 | ) |
| Investment tax      credit              |   |   | (0.6   | )      |   |   | (1.2   | )      |   |   | (0.5 | ) |   |   | (1.0 | ) |   |   | (0.4 | ) |   |   | (0.7 | ) |
| Federal tax      credits                |   |   | -      |   |   |   | -      |   |   |   |   |   |   |   |   |   |   |   | (0.2 | ) |   |   | (0.3 | ) |
| Other      differences, net             |   |   | (1.8   | )      |   |   | (3.9   | )      |   |   | 0.2 |   |   |   | 0.3 |   |   |   | (0.7 | ) |   |   | (0.8 | ) |
| Effective      income tax               |   |   | 35.6   | %      |   | $      | 73.1   |   |   |   | 37.1 | % |   | $ | 66.8 |   |   |   | 36.3 | % |   | $ | 58.3 |   |
|                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      provision                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                                 |   |   |   |   |   | $      | 46.0   |   |   |   |   |   |   | $ | 37.1 |   |   |   |   |   |   | $ | 31.0 |   |
| State                                   |   |   |   |   |   |   | 14.5   |   |   |   |   |   |   |   | 8.4 |   |   |   |   |   |   |   | 6.6 |   |
| Total      current provision            |   |   |   |   |   |   | 60.5   |   |   |   |   |   |   |   | 45.5 |   |   |   |   |   |   |   | 37.6 |   |
|                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred      provision                 |   |   |   |   |   |   | 13.8   |   |   |   |   |   |   |   | 22.5 |   |   |   |   |   |   |   | 21.4 |   |
| Unrecognized      tax benefits          |   |   |   |   |   |   | -      |   |   |   |   |   |   |   | (1.0 | ) |   |   |   |   |   |   | - |   |
| Interest                                |   |   |   |   |   |   | -      |   |   |   |   |   |   |   | 0.8 |   |   |   |   |   |   |   | - |   |
| Investment tax      credit restored     |   |   |   |   |   |   | (1.2   | )      |   |   |   |   |   |   | (1.0 | ) |   |   |   |   |   |   | (0.7 | ) |
| Total      income tax expense           |   |   |   |   |   | $      | 73.1   |   |   |   |   |   |   | $ | 66.8 |   |   |   |   |   |   | $ | 58.3 |   |

| (Millions)                                                               |   | 2008   |   |   | 2007   |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Balance at      January 1                                           |   | $      | 0.8    |   |   | $      | 3.5 |   |
|   Increase      related to tax positions taken in prior years  |   |   | 0.2    |   |   |   | 0.2 |   |
|   Decrease      related to tax positions taken in prior years  |   |   | (0.6   | )      |   |   | (0.4 | ) |
|   Increase      related to tax positions taken in current year |   |   | -      |   |   |   | 0.2 |   |
|   Increase      related to settlements                         |   |   | 0.2    |   |   |   | - |   |
|   Decrease      related to settlements                         |   |   | -      |   |   |   | (2.7 | ) |
| Balance at      December 31                                         |   | $      | 0.6    |   |   | $      | 0.8 |   |

| ● | Wisconsin      Department of Revenue – WPS has agreed to statute extensions for tax years      covering 2001 and 2002. |
|---------|------------------------------------------------------------------------------------------------------------------------------|

----

| ● | IRS –      Integrys Energy Group and consolidated subsidiaries has an open      examination for the 2006 and 2007 tax years. |
|---------|------------------------------------------------------------------------------------------------------------------------------------|
| ● | Wisconsin      Department of Revenue – WPS has an open examination for the 2001 through      2006 tax years.                 |

| ● | WPS's      electric utility segment has obligations related to coal supply and      transportation that extend through 2016 and total $598.2 million,      obligations of $1.3 billion for either capacity or energy related to      purchased power that extend through 2027, and obligations for other      commodities totaling $14.3 million, which extend through      2013. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | WPS's natural      gas utility segment has obligations related to natural gas supply and      transportation contracts totaling $469.4 million, some of which      extend through 2023.                                                                                                                                                                                                |
| ● | WPS also has      commitments in the form of purchase orders issued to various vendors,      which totaled $372.4 million.  A significant portion of      these commitments relate to large construction  projects.                                                                                                                                                          |

| ● | issue notices      of violation (NOV) asserting that a violation of the Clean Air Act      occurred, |
|---------|------------------------------------------------------------------------------------------------------|

----

| ● | seek      additional information from WPS, WP&L, and/or third parties who have      information relating to the boilers, and/or |
|---------|-------------------------------------------------------------------------------------------------------------------------------------|
| ● | close out the      investigation.                                                                                                   |

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

----

----

----

| (Millions)                              |   | Total      AmountsCommitted      atDecember 31,      2008 |   |   | Expiration      Less Than1      Year |   |
|-----------------------------------------|--------|----------------------------------------------------------------|--------|--------|--------------------------------------|--------|
| Standby      letters of credit (1)      |   | $                                                              | 3.9    |   |                                 | $      | 3.9 |   |
| Other      guarantees (2)               |   |                                                           | 1.5    |   |                                 |   | 1.5 |   |
|    Total      guarantees |   | $                                                              | 5.4    |   |                                 | $      | 5.4 |   |

| (1) | At WPS's request, financial      institutions have issued standby letters of credit for the benefit of      third parties that have extended credit to WPS.  These amounts      are not reflected on the Consolidated Balance    Sheets. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Consists of a liability related to      WPS's agreement to indemnify Dominion for certain costs arising from the      resolution of design basis documentation issues incurred prior to Kewaunee      nuclear power plant's scheduled maintenance period in 2009.  As      of December 31, 2008, WPS had paid $7.4 million to Dominion      related to this guarantee, reducing the liability to      $1.5 million.  WPS expects to make payments for the entire      remaining liability amount over the duration of the      guarantee. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ● | Closure of      the defined benefit pension plans to non-union new hires, effective      January 1, 2008;                                                                                                                                                        |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | A freeze in      defined benefit pension service accruals for non-union employees,      effective January 1, 2013;                                                                                                                                               |
| ● | A freeze in      compensation amounts used for determining defined benefit pension amounts      for non-union employees, effective January 1,2018;                                                                                                               |
| ● | Revised      eligibility requirements for retiree medical benefits for employees hired      on or after January 1, 2008, and the introduction of an annual      premium reduction credit for employees eligible to retire after      December 31, 2012; and |
| ● | Closure of      the retiree dental and life benefit programs to all new hires, effective      January 1, 2008, and elimination of these benefits for any existing      employees who are not eligible to retire before December 31,      2012.              |

----

|                                               |   | Pension Benefits |   |   | Other Benefits |   |
|----------------------------------------------------|--------|------------------|--------|--------|----------------|--------|
| (Millions)                                         |   | 2008             |   |   | 2007           |   |   | 2008 |   |   | 2007 |   |
| Reconciliation      of benefit obligation          |   |             |   |   |           |   |   |   |   |   |   |   |
| Obligation at      January 1                  |   | $                | 747.0  |   |           | $      | 784.8 |   |   | $ | 250.4 |   |   | $ | 292.1 |   |
| Service      cost                                  |   |             | 11.6   |   |           |   | 24.0 |   |   |   | 6.2 |   |   |   | 6.8 |   |
| Interest      cost                                 |   |             | 35.5   |   |           |   | 45.4 |   |   |   | 16.6 |   |   |   | 16.5 |   |
| Plan      amendments                               |   |             | -      |   |           |   | - |   |   |   | - |   |   |   | (21.4 | ) |
| Plan      curtailment                              |   |             | -      |   |           |   | (0.7 | ) |   |   | - |   |   |   | (0.6 | ) |
| Transfer to      IBS                               |   |             | (186.4 | )      |           |   | - |   |   |   | - |   |   |   | - |   |
| Actuarial      (gain) loss, net                    |   |             | 24.0   |   |           |   | (62.1 | ) |   |   | 1.3 |   |   |   | (32.8 | ) |
| Benefit      payments                              |   |             | (33.0  | )      |           |   | (44.4 | ) |   |   | (11.9 | ) |   |   | (11.3 | ) |
| Federal      subsidy on benefits paid              |   |             | -      |   |           |   | - |   |   |   | 0.8 |   |   |   | 1.1 |   |
| Other                                              |   |             | -      |   |           |   | - |   |   |   | 12.7 |   |   |   | - |   |
| Obligation at      December 31                |   | $                | 598.7  |   |           | $      | 747.0 |   |   | $ | 276.1 |   |   | $ | 250.4 |   |
|                                               |   |             |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Reconciliation      of fair value of plan assets   |   |             |   |   |           |   |   |   |   |   |   |   |   |
| Fair value of      plan assets at January 1   |   | $                | 704.5  |   |           | $      | 674.0 |   |   | $ | 223.8 |   |   | $ | 212.8 |   |
| Actual return      on plan assets                  |   |             | (136.0 | )      |           |   | 47.7 |   |   |   | (50.2 | ) |   |   | 14.1 |   |
| Employer      contributions                        |   |             | 15.6   |   |           |   | 27.0 |   |   |   | 7.9 |   |   |   | 8.1 |   |
| Plan      acquisitions – MGU and MERC        |   |             | -      |   |           |   | 0.2 |   |   |   | - |   |   |   | - |   |
| Benefit      payments                              |   |             | (33.0  | )      |           |   | (44.4 | ) |   |   | (11.9 | ) |   |   | (11.2 | ) |
| Transfer to      affiliates                        |   |             | (171.3 | )      |           |   | - |   |   |   | - |   |   |   | - |   |
| Other                                              |   |             | -      |   |           |   | - |   |   |   | 5.8 |   |   |   | - |   |
| Fair value of      plan assets at December 31 |   | $                | 379.8  |   |           | $      | 704.5 |   |   | $ | 175.4 |   |   | $ | 223.8 |   |

|                        |   | Pension Benefits |   |   | Other Benefits |   |
|-----------------------------|--------|------------------|--------|--------|----------------|--------|
| (Millions)                  |   | 2008             |   |   | 2007           |   |   | 2008 |   |   | 2007 |   |
| Noncurrent      assets      |   | $                | -      |   |           | $      | - |   |   | $ | - |   |   | $ | 2.6 |   |
| Current      liabilities    |   |             | 3.8    |   |           |   | 2.9 |   |   |   | - |   |   |   | 0.2 |   |
| Noncurrent      liabilities |   |             | 215.1  |   |           |   | 39.6 |   |   |   | 100.7 |   |   |   | 29.0 |   |
| Net      liability          |   | $                | 218.9  |   |           | $      | 42.5 |   |   | $ | 100.7 |   |   | $ | 26.6 |   |

|                                |   | December 31, |   |
|-------------------------------------|--------|-------------------|--------|
| (Millions)                          |   | 2008              |   |   | 2007 |   |
| Projected      benefit obligation   |   | $                 | 598.7  |   |   | $ | 35.7 |   |
| Accumulated      benefit obligation |   |              | 555.1  |   |   |   | 32.9 |   |
| Fair value of      plan assets      |   |              | 379.8  |   |   |   | - |   |

----

|                             |   | Pension Benefits |   |   | Other Benefits |   |
|----------------------------------|--------|------------------|--------|--------|----------------|--------|
| (Millions)                       |   | 2008             |   |   | 2007           |   |   | 2008 |   |   | 2007 |   |
| Net      regulatory assets       |   |             |   |   |           |   |   |   |   |   |   |   |
| Net actuarial      loss (gain)   |   | $                | 183.8  |   |           | $      | (20.4 | ) |   | $ | 47.2 |   |   | $ | (15.5 | ) |
| Prior service      cost (credit) |   |             | 21.7   |   |           |   | 26.3 |   |   |   | (27.9 | ) |   |   | (31.4 | ) |
| Transition      obligation       |   |             | -      |   |           |   | - |   |   |   | 0.9 |   |   |   | 1.1 |   |
| Total                            |   | $                | 205.5  |   |           | $      | 5.9 |   |   | $ | 20.2 |   |   | $ | (45.8 | ) |

|                                             |   | Pension Benefits |   |   | Other Benefits |   |
|--------------------------------------------------|--------|------------------|--------|--------|----------------|--------|
| (Millions)                                       |   | 2008             |   |   | 2007           |   |   | 2006 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Net      periodic benefit cost                   |   |             |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service      cost                                |   | $                | 10.7   |   |           | $      | 18.0 |   |   | $ | 18.4 |   |   | $ | 5.5 |   |   | $ | 6.1 |   |   | $ | 6.5 |   |
| Interest      cost                               |   |             | 35.0   |   |           |   | 34.4 |   |   |   | 32.8 |   |   |   | 13.2 |   |   |   | 13.2 |   |   |   | 14.2 |   |
| Expected      return on plan assets              |   |             | (44.4  | )      |           |   | (40.2 | ) |   |   | (36.1 | ) |   |   | (14.3 | ) |   |   | (13.2 | ) |   |   | (12.8 | ) |
| Amortization      of transition obligation       |   |             | -      |   |           |   | - |   |   |   | 0.2 |   |   |   | 0.2 |   |   |   | 0.3 |   |   |   | 0.4 |   |
| Amortization      of prior service cost (credit) |   |             | 4.6    |   |           |   | 4.6 |   |   |   | 4.7 |   |   |   | (3.5 | ) |   |   | (2.3 | ) |   |   | (1.9 | ) |
| Amortization      of net loss (gain)             |   |             | 0.4    |   |           |   | 3.0 |   |   |   | 6.7 |   |   |   | (0.6 | ) |   |   | 0.8 |   |   |   | 3.9 |   |
| Curtailment      gain                            |   |             | -      |   |           |   | - |   |   |   | - |   |   |   | - |   |   |   | (0.1 | ) |   |   | - |   |
| Net periodic      benefit cost                   |   | $                | 6.3    |   |           | $      | 19.8 |   |   | $ | 26.7 |   |   | $ | 0.5 |   |   | $ | 4.8 |   |   | $ | 10.3 |   |

|                                                |   | Pension Benefits |   |   | Other Benefits |   |
|-----------------------------------------------------|--------|------------------|--------|--------|----------------|--------|
|                                                |   | 2008             |   |   | 2007           |   |   | 2008 |   |   | 2007 |   |
| Discount      rate                                  |   |             | 6.45   | %      |           |   | 6.40 | % |   |   | 6.50 | % |   |   | 6.50 | % |
| Rate of      compensation increase                  |   |             | 4.27   | %      |           |   | 4.36 | % |   |   | N/A |   |   |   | N/A |   |
| Assumed      medical cost trend rate (under age 65) |   |             | N/A    |   |           |   | N/A |   |   |   | 9.0 | % |   |   | 10.0 | % |
| Ultimate      trend rate                            |   |             | N/A    |   |           |   | N/A |   |   |   | 5.0 | % |   |   | 5.0 | % |
| Ultimate      trend rate reached in                 |   |             | N/A    |   |           |   | N/A |   |   | 2013 |   |   | 2013 |   |
| Assumed      medical cost trend rate (over age 65)  |   |             | N/A    |   |           |   | N/A |   |   |   | 9.5 | % |   |   | 10.5 | % |
| Ultimate      trend rate                            |   |             | N/A    |   |           |   | N/A |   |   |   | 5.5 | % |   |   | 5.5 | % |
| Ultimate      trend rate reached in                 |   |             | N/A    |   |           |   | N/A |   |   | 2013 |   |   | 2013 |   |
| Assumed      dental cost trend rate                 |   |             | N/A    |   |           |   | N/A |   |   |   | 5.0 | % |   |   | 5.0 | % |

----

|                               |   | Pension Benefits |   |
|------------------------------------|--------|------------------|--------|
|                               |   | 2008             |   |   | 2007 |   |   | 2006 |   |
| Discount      rate                 |   |             | 6.40   | % |   |   | 5.87 | % |   |   | 5.65 | % |
| Expected      return on assets     |   |             | 8.50   | % |   |   | 8.50 | % |   |   | 8.50 | % |
| Rate of      compensation increase |   |             | 4.27   | % |   |   | 5.50 | % |   |   | 5.50 | % |

|                                                |   | Other Benefits |   |
|-----------------------------------------------------|--------|----------------|--------|
|                                                |   | 2008           |   |   | 2007 |   |   | 2006 |   |
| Discount      rate                                  |   |           | 6.50   | % |   |   | 5.87 | % |   |   | 5.65 | % |
| Expected      return on assets                      |   |           | 8.50   | % |   |   | 8.50 | % |   |   | 8.50 | % |
| Assumed      medical cost trend rate (under age 65) |   |           | 10.0   | % |   |   | 8.0 | % |   |   | 9.0 | % |
| Ultimate      trend rate                            |   |           | 5.0    | % |   |   | 5.0 | % |   |   | 5.0 | % |
| Ultimate      trend rate reached in                 |   | 2013           |   |   | 2010 |   |   | 2010 |   |
| Assumed      medical cost trend rate (over age 65)  |   |           | 10.5   | % |   |   | 10.0 | % |   |   | 11.0 | % |
| Ultimate      trend rate                            |   |           | 5.5    | % |   |   | 6.5 | % |   |   | 6.5 | % |
| Ultimate      trend rate reached in                 |   | 2013           |   |   | 2011 |   |   | 2011 |   |
| Assumed      dental cost trend rate                 |   |           | 5.0    | % |   |   | 5.0 | % |   |   | 5.0 | % |

|                                                                                                                      |   | One-Percentage-Point |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|----------------------|--------|
| (Millions)                                                                                                                |   | Increase             |   |   | Decrease |   |
| Effect on      total of service and interest cost components of net periodic      postretirement health care benefit cost |   | $                    | 3.6    |   |   | $ | (2.8 | ) |
| Effect on the      health care component of the accumulated      postretirement benefit obligation                        |   |                 | 38.7   |   |   |   | (31.6 | ) |

|                   |   | Pension Benefits Assets |   |   | Other Benefits Assets                               |   |
|------------------------|--------|-------------------------|--------|--------|-----------------------------------------------------|--------|
|                   |   | Target      Allocation  |   |   | Percentage      of Plan Assets at December 31, |   |   | Target      Allocation |   |   | Percentage      of Plan Assets at December 31, |   |
| Asset      category    |   | 2008                    |   |   | 2008                                                |   |   | 2007 |   |   | 2008 |   |   | 2008 |   |   | 2007 |   |
| Equity      securities |   |                    | 64     | %      |                                                |   | 56 | % |   |   | 59 | % |   |   | 65 | % |   |   | 50 | % |   |   | 62 | % |
| Debt      securities   |   |                    | 33     | %      |                                                |   | 40 | % |   |   | 35 | % |   |   | 35 | % |   |   | 50 | % |   |   | 38 | % |
| Real      estate       |   |                    | 3      | %      |                                                |   | 4 | % |   |   | 6 | % |   |   | - | % |   |   | - | % |   |   | - | % |
| Total                  |   |                    | 100    | %      |                                                |   | 100 | % |   |   | 100 | % |   |   | 100 | % |   |   | 100 | % |   |   | 100 | % |

----

| (Millions) |   | Pension      Benefits |   |   | Other      Benefits |   |   | Federal      Subsidies |   |
|------------|--------|-----------------------|--------|--------|---------------------|--------|--------|------------------------|--------|
| 2009       |   | $                     | 31.7   |   |                | $      | 15.1   |                   |   | $ | (0.8 | ) |
| 2010       |   |                  | 34.6   |   |                |   | 16.3   |                   |   |   | (0.9 | ) |
| 2011       |   |                  | 32.4   |   |                |   | 17.3   |                   |   |   | (0.9 | ) |
| 2012       |   |                  | 33.8   |   |                |   | 18.0   |                   |   |   | (1.0 | ) |
| 2013       |   |                  | 35.3   |   |                |   | 18.6   |                   |   |   | (1.0 | ) |
| 2014-2018  |   |                  | 195.8  |   |                |   | 104.4  |                   |   |   | (5.9 | ) |

|                                  |   |   |   |   | 2008                    |   |    | 2007                |   |
|---------------------------------------|--------|--------|--------|--------|-------------------------|--------|---------|---------------------|--------|
| (Millions,      except share amounts) |   | Series |   |   | Shares      Outstanding |   |    | Carrying      Value |   |   | Shares      Outstanding |   |   | Carrying      Value |   |
|                                  |   |   | 5.00   | %      |                    |   | 131,916 |                |   | $ | 13.2 |   |   |   | 131,916 |   |   | $ | 13.2 |   |
|                                  |   |   | 5.04   | %      |                    |   | 29,983  |                |   |   | 3.0 |   |   |   | 29,983 |   |   |   | 3.0 |   |
|                                  |   |   | 5.08   | %      |                    |   | 49,983  |                |   |   | 5.0 |   |   |   | 49,983 |   |   |   | 5.0 |   |
|                                  |   |   | 6.76   | %      |                    |   | 150,000 |                |   |   | 15.0 |   |   |   | 150,000 |   |   |   | 15.0 |   |
|                                  |   |   | 6.88   | %      |                    |   | 150,000 |                |   |   | 15.0 |   |   |   | 150,000 |   |   |   | 15.0 |   |
| Total                                 |   |   |   |   |                    |   | 511,882 |                |   | $ | 51.2 |   |   |   | 511,882 |   |   | $ | 51.2 |   |

----

----

|                             |   | 2008         |   |   | 2007         |   |   | 2006         |   |
|----------------------------------|--------|--------------|--------|--------|--------------|--------|--------|--------------|--------|
| Weighted-average      fair value |   | $            | 4.52   |   |         | $      | 7.80   |         |   | $ | 6.04 |   |
| Expected      term               |   | 7      years |   |   | 7      years |   |   | 6      years |   |
| Risk-free      interest rate     |   |         | 3.40   | %      |         |   | 4.65   | %            |   |   | 4.42 | % |
| Expected      dividend yield     |   |         | 5.00   | %      |         |   | 4.50   | %            |   |   | 4.90 | % |
| Expected      volatility         |   |         | 17     | %      |         |   | 17     | %            |   |   | 17 | % |

|                         |   | 2008         |   |   | 2007         |   |   | 2006         |   |
|------------------------------|--------|--------------|--------|--------|--------------|--------|--------|--------------|--------|
| Expected      term           |   | 3      years |   |   | 3      years |   |   | 3      years |   |
| Risk-free      interest rate |   |         | 2.18   | %      |         |   | 4.71   | %            |   |   | 4.74 | % |
| Expected      dividend yield |   |         | 5.50   | %      |         |   | 4.50   | %            |   |   | 4.90 | % |
| Expected      volatility     |   |         | 17.3   | %      |         |   | 14.5   | %            |   |   | 14.4 | % |

| (Millions)                                                     |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Total  |   |
|----------------------------------------------------------------|--------|--------------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------|--------|
| Assets                                                         |   |         |   |   |         |   |   |         |   |   |   |   |
|     Risk      management assets            |   | $            | 0.4    |   |         | $      | 0.1    |         |   | $      | 6.8    |   |   | $ | 7.3 |   |
| Liabilities                                                    |   |         |   |   |         |   |   |         |   |   |   |   |   |   |   |   |
|      Risk      management liabilities |   |         | 8.8    |   |         |   | 0.1    |         |   |   | 4.1    |   |   |   | 13.0 |   |

----

| (Millions)                                                                                              |   | Year Ended December 31,      2008 |   |
|---------------------------------------------------------------------------------------------------------|--------|----------------------------------------|--------|
| Balance at beginning of      period                                                                     |   | $                                      | 8.6    |   |
| Net realized gain included in      earnings                                                             |   |                                   | 9.2    |   |
| Net unrealized loss recorded as      regulatory     assets      or liabilities |   |                                   | (8.2   | ) |
| Net purchases and      settlements                                                                      |   |                                   | (6.9   | ) |
| Balance at December 31,      2008                                                                  |   | $                                      | 2.7    |   |

|                 |   | 2008                 |   |   | 2007      |   |
|----------------------|--------|----------------------|--------|--------|-----------|--------|
| (Millions)           |   | Carrying Amount |   |   | FairValue |   |   | Carrying Amount |   |   | FairValue |   |
|                 |   |                 |   |   |      |   |   |   |   |   |   |   |
| Long-term      debt  |   | $                    | 870.8  |   |      | $      | 881.2 |   |   | $ | 745.6 |   |   | $ | 765.2 |   |
| Preferred      stock |   |                 | 51.2   |   |      |   | 46.1 |   |   |   | 51.2 |   |   |   | 49.6 |   |

----

| (Millions)                                       |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Equity      earnings on investments              |   | $      | 12.0   |   |   | $      | 11.0   |   |   | $ | 12.6 |   |
| Equity      AFUDC                                |   |   | 5.2    |   |   |   | 0.9    |   |   |   | 0.6 |   |
| Weston 4      ATC interconnection agreement |   |   | 2.5    |   |   |   | 3.9    |   |   |   | 1.0 |   |
| Gain on sale      of property                    |   |   | 1.3    |   |   |   | 0.1    |   |   |   | - |   |
| Other                                            |   |   | 0.6    |   |   |   | 1.7    |   |   |   | 1.6 |   |
| Total      miscellaneous income                  |   | $      | 21.6   |   |   | $      | 17.6   |   |   | $ | 15.8 |   |

----

| ● | WPS will not      have a base rate increase for natural gas or electric service prior to      January 1, 2009. WPS was allowed to adjust rates for changes in      purchased power costs as well as fuel costs related to electric generation      due to changes in the NYMEX natural gas futures prices, coal prices, and      transportation costs for coal. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | WPS was      required to seek approval for the formation of a service company within      120 days of the closing of the merger.  All required regulatory      approvals were received and IBS became operational on January 1,      2008.                                                                                                                      |
| ● | WPS will not      recover merger related transaction costs.  Recovery of merger      related transition costs in 2009 and later years will be limited to the      verified synergy savings in those years.                                                                                                                                                      |

----

| ● | WPS will hold      ratepayers harmless from any increase in interest and preferred stock      costs attributable to nonutility activities, provided that the authorized      capital structure is consistent with the authorized  costs. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | WPS will not      pay dividends to Integrys Energy Group in an amount greater than 103% of      the prior year's dividend.                                                                                                               |

| ● | The PSCW      ruled that WPS's Wisconsin customers were entitled to be refunded      approximately 85% of the proceeds over a two-year period beginning on      January 1, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | The MPSC      ruled that WPS's Michigan customers were entitled to be refunded      approximately 2% of the proceeds over a 60-month period, beginning in the      third quarter of 2005.  Subsequently, the MPSC issued an order      authorizing WPS to amortize the approximately $2 million remaining      balance of the refund simultaneously with the amortization of      approximately $2 million of the 2005 power supply under collections      from January 2007 through July 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ● | The FERC      ruled that WPS's wholesale customers were entitled to be refunded the      remaining 13% of the proceeds.  A refund of approximately      $3 million was made to one customer in the second quarter of 2006,      which was offset by approximately $1 million related to both the loss      WPS recorded on the sale of Kewaunee and costs incurred related to the      2005 Kewaunee outage.  Pursuant to the FERC order settlement      received on August 14, 2007, WPS completed lump-sum payments to the      remaining FERC customers of approximately $16 million (including      interest), representing their contributions to the nonqualified      decommissioning trust fund during the period in which they received      service from WPS.  The settlement would also require these FERC      customers to make two separate lump-sum payments to WPS with respect to      the loss from the sale of Kewaunee and the 2005 Kewaunee power      outage.  Payments made to WPS total approximately      $1 million and $8 million, respectively, and were netted against      the $16 million refund due to these  customers. |

----

|                                         |   | Regulated      Utilities |    |   |                             |   |   |         |   |   |           |   |
|----------------------------------------------|--------|--------------------------|---------|--------|----------------------------------|--------|--------|--------------|--------|--------|----------------|--------|
| 2008      (Millions)                         |   | ElectricUtility      (1) |    |   | Natural      GasUtility      (1) |   |   | TotalUtility |   |   | Other      (2) |   |   | Reconciling      Eliminations |   |   | WPSConsolidated |   |
|                                         |   |                     |    |   |                             |   |   |         |   |   |           |   |   |   |   |   |   |   |
| Income      Statement                        |   |                     |    |   |                             |   |   |         |   |   |           |   |   |   |   |   |   |   |
| Operating revenues                           |   | $                        | 1,208.9 |   |                             | $      | 539.4  |         |   | $      | 1,748.3        |   |   | $ | 1.5 |   |   | $ | (1.4 | ) |   | $ | 1,748.4 |   |
| Depreciation and amortization      expense   |   |                     | 78.5    |   |                             |   | 20.9   |         |   |   | 99.4           |   |   |   | 0.6 |   |   |   | (0.5 | ) |   |   | 99.5 |   |
| Miscellaneous income                         |   |                     | 5.8     |   |                             |   | 2.4    |         |   |   | 8.2            |   |   |   | 13.4 |   |   |   | - |   |   |   | 21.6 |   |
| Interest expense                             |   |                     | 33.4    |   |                             |   | 9.0    |         |   |   | 42.4           |   |   |   | 1.6 |   |   |   | - |   |   |   | 44.0 |   |
| Provision for income    taxes                |   |                     | 45.6    |   |                             |   | 23.6   |         |   |   | 69.2           |   |   |   | 3.9 |   |   |   | - |   |   |   | 73.1 |   |
| Preferred stock dividend      requirements   |   |                     | 2.1     |   |                             |   | 1.0    |         |   |   | 3.1            |   |   |   | - |   |   |   | - |   |   |   | 3.1 |   |
| Earnings on common stock                     |   |                     | 88.6    |   |                             |   | 32.0   |         |   |   | 120.6          |   |   |   | 8.6 |   |   |   | - |   |   |   | 129.2 |   |
| Total      assets                            |   |                     | 2,527.0 |   |                             |   | 686.8  |         |   |   | 3,213.8        |   |   |   | 99.9 |   |   |   | - |   |   |   | 3,313.7 |   |
| Cash      expenditures for long-lived assets |   |                     | 190.0   |   |                             |   | 85.4   |         |   |   | 275.4          |   |   |   | - |   |   |   | - |   |   |   | 275.4 |   |

| (1)   | Includes only      utility operations. |
|-----------------|----------------------------------------|

| (2)   | Nonutility      operations are included in the Othercolumn. |
|-----------------|-------------------------------------------------------------|

|                                         |   | Regulated      Utilities |    |   |                             |   |   |         |   |   |           |   |
|----------------------------------------------|--------|--------------------------|---------|--------|----------------------------------|--------|--------|--------------|--------|--------|----------------|--------|
| 2007      (Millions)                         |   | ElectricUtility      (1) |    |   | Natural      GasUtility      (1) |   |   | TotalUtility |   |   | Other      (2) |   |   | Reconciling      Eliminations |   |   | WPSConsolidated |   |
|                                         |   |                     |    |   |                             |   |   |         |   |   |           |   |   |   |   |   |   |   |
| Income      Statement                        |   |                     |    |   |                             |   |   |         |   |   |           |   |   |   |   |   |   |   |
| Operating revenues                           |   | $                        | 1,125.2 |   |                             | $      | 471.0  |         |   | $      | 1,596.2        |   |   | $ | 1.3 |   |   | $ | (1.4 | ) |   | $ | 1,596.1 |   |
| Depreciation and amortization      expense   |   |                     | 74.4    |   |                             |   | 22.1   |         |   |   | 96.5           |   |   |   | 0.4 |   |   |   | (0.5 | ) |   |   | 96.4 |   |
| Miscellaneous income                         |   |                     | 6.2     |   |                             |   | 0.4    |         |   |   | 6.6            |   |   |   | 11.0 |   |   |   | - |   |   |   | 17.6 |   |
| Interest expense                             |   |                     | 29.5    |   |                             |   | 11.1   |         |   |   | 40.6           |   |   |   | 2.9 |   |   |   | - |   |   |   | 43.5 |   |
| Provision for income    taxes                |   |                     | 48.2    |   |                             |   | 16.7   |         |   |   | 64.9           |   |   |   | 1.9 |   |   |   | - |   |   |   | 66.8 |   |
| Preferred stock dividend      requirements   |   |                     | 2.2     |   |                             |   | 0.9    |         |   |   | 3.1            |   |   |   | - |   |   |   | - |   |   |   | 3.1 |   |
| Earnings on common stock                     |   |                     | 80.1    |   |                             |   | 23.1   |         |   |   | 103.2          |   |   |   | 7.0 |   |   |   | - |   |   |   | 110.2 |   |
| Total      assets                            |   |                     | 2,279.9 |   |                             |   | 623.4  |         |   |   | 2,903.3        |   |   |   | 114.3 |   |   |   | - |   |   |   | 3,017.6 |   |
| Cash      expenditures for long-lived assets |   |                     | 191.2   |   |                             |   | 29.9   |         |   |   | 221.1          |   |   |   | - |   |   |   | - |   |   |   | 221.1 |   |

| (1)   | Includes only      utility operations. |
|-----------------|----------------------------------------|

| (2)   | Nonutility      operations are included in the Othercolumn. |
|-----------------|-------------------------------------------------------------|

|                                         |   | Regulated      Utilities |   |   |                             |   |   |         |   |   |           |   |
|----------------------------------------------|--------|--------------------------|--------|--------|----------------------------------|--------|--------|--------------|--------|--------|----------------|--------|
| 2006      (Millions)                         |   | ElectricUtility      (1) |   |   | Natural      GasUtility      (1) |   |   | TotalUtility |   |   | Other      (2) |   |   | Reconciling      Eliminations |   |   | WPSConsolidated |   |
|                                         |   |                     |   |   |                             |   |   |         |   |   |           |   |   |   |   |   |   |   |
| Income      Statement                        |   |                     |   |   |                             |   |   |         |   |   |           |   |   |   |   |   |   |   |
| Operating revenues                           |   | $                        | 990.6  |   |                             | $      | 443.8  |         |   | $      | 1,434.4        |   |   | $ | 1.4 |   |   | $ | (1.4 | ) |   | $ | 1,434.4 |   |
| Depreciation and amortization      expense   |   |                     | 73.2   |   |                             |   | 22.6   |         |   |   | 95.8           |   |   |   | 0.5 |   |   |   | (0.5 | ) |   |   | 95.8 |   |
| Miscellaneous income                         |   |                     | 2.6    |   |                             |   | 0.4    |         |   |   | 3.0            |   |   |   | 12.8 |   |   |   | - |   |   |   | 15.8 |   |
| Interest expense                             |   |                     | 26.9   |   |                             |   | 10.4   |         |   |   | 37.3           |   |   |   | 3.1 |   |   |   | - |   |   |   | 40.4 |   |
| Provision for income    taxes                |   |                     | 46.9   |   |                             |   | 8.8    |         |   |   | 55.7           |   |   |   | 2.6 |   |   |   | - |   |   |   | 58.3 |   |
| Preferred stock dividend      requirements   |   |                     | 2.1    |   |                             |   | 1.0    |         |   |   | 3.1            |   |   |   | - |   |   |   | - |   |   |   | 3.1 |   |
| Earnings on common stock                     |   |                     | 81.3   |   |                             |   | 9.6    |         |   |   | 90.9           |   |   |   | 8.1 |   |   |   | - |   |   |   | 99.0 |   |
| Cash      expenditures for long-lived assets |   |                     | 268.4  |   |                             |   | 34.5   |         |   |   | 302.9          |   |   |   | - |   |   |   | - |   |   |   | 302.9 |   |

| (1)   | Includes only      utility operations. |
|-----------------|----------------------------------------|

| (2)   | Nonutility      operations are included in the Othercolumn. |
|-----------------|-------------------------------------------------------------|

----

| (Millions)                                                    |   | 2008   |   |   | 2007   |   |
|---------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                          |   |   |   |   |   |   |
| Notes payable      (1)                                        |   |   |   |   |   |   |
|     Integrys      Energy Group            |   | $      | 9.9    |   |   | $      | 10.5 |   |
|                                                          |   |   |   |   |   |   |   |   |
| Benefit costs      (2)                                        |   |   |   |   |   |   |   |   |
|     Receivables      from related parties |   |   | 28.4   |   |   |   | 48.7 |   |
|     Payables      to related parties      |   |   | -      |   |   |   | 7.1 |   |
|                                                          |   |   |   |   |   |   |   |   |
| Liability      related to income tax allocation               |   |   |   |   |   |   |   |   |
|     Integrys      Energy Group            |   |   | 12.1   |   |   |   | 13.9 |   |

----

| (Millions)                                                                                                                                                                |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |
| Electric      transactions                                                                                                                                                |   |   |   |   |   |   |   |   |   |
|     Sales      to Upper Peninsula Power Company                                                                                                       |   | $      | 43.9   |   |   | $      | 43.0   |   |   | $ | 40.6 |   |
|     Purchases      from Upper Peninsula Power Company                                                                                                 |   |   | -      |   |   |   | -      |   |   |   | 0.8 |   |
|                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Natural gas      transactions                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|     Sales      to Integrys Energy Services                                                                                                            |   |   | 0.8    |   |   |   | 5.2    |   |   |   | 11.8 |   |
|     Purchases      from Integrys Energy Services                                                                                                      |   |   | 8.7    |   |   |   | 3.2    |   |   |   | 7.3 |   |
|                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense (1)                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|     Integrys      Energy Group                                                                                                                        |   |   | 0.8    |   |   |   | 0.9    |   |   |   | 0.9 |   |
|                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Transactions      with equity method investments                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
|     Charges      from ATC for network transmission services                                                                                           |   |   | 82.2   |   |   |   | 73.3   |   |   |   | 59.4 |   |
|      Net      amounts received from (advanced to) ATC for         transmission      interconnection |   |   | 82.3   |   |   |   | (23.9  | )      |   |   | (11.6 | ) |
|     Charges      to ATC for services and construction                                                                                                 |   |   | 10.6   |   |   |   | 96.1   |   |   |   | 124.1 |   |
|     Net      proceeds from WRPC sales of energy to MISO                                                                                               |   |   | 5.8    |   |   |   | 6.0    |   |   |   | 4.2 |   |
|     Purchases      of energy from WRPC                                                                                                                |   |   | 4.7    |   |   |   | 4.7    |   |   |   | 4.1 |   |
|     Revenues      from services provided to WRPC                                                                                                      |   |   | 0.8    |   |   |   | 1.0    |   |   |   | 1.5 |   |
|     Income      from WPS Investments (3)                                                                                                              |   |   | 9.8    |   |   |   | 8.7    |   |   |   | 9.3 |   |

| (1) | WPS Leasing      is a consolidated subsidiary of WPS with a note payable to WPS's      parent company, Integrys EnergyGroup. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------|

| (2) | WPS serves as      plan sponsor and administrator for certain other postretirement benefit      plans.  Accordingly, WPS's Consolidated Balance Sheets reflect      the liabilities associated with these plans.  The net periodic      benefit cost associated with the plans and the portions of the funded      status not yet recognized in income are allocated among Integrys Energy      Group's subsidiaries.  Prior to 2008, the liabilities related to      the qualified and non-qualified pension plans and the other postretirement      plans of Integrys Energy Group (excluding Upper Peninsula Power Company’s,      MGU’s and MERC’s Supplemental Employee Retirement Plans and PEC’s pension      and other postretirement plans) were recorded on WPS’s Consolidated      Balance Sheets. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | WPS Investments      is a consolidated subsidiary of Integrys Energy Group that is jointly      owned by Integrys Energy Group, WPS, and UPPCO.  At      December 31, 2008, WPS had a 14.1% interest in WPS Investments      accounted for under the equity method. WPS's percentage ownership      interests have continued to decrease as additional equity contributions      are made by Integrys Energy Group to WPS  Investments. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (Millions)                    |   |   | Three      Months Ended  |   |
|-------------------------------|--------|--------|-------------------------------|--------|
|                          |   |   | 2008                     |   |
|                          |   |   | March                    |   |   | June  |   |   | September  |   |   |   | December  |   |   |   | Total  |   |
| Operating      revenues       |   | $      | 515.7                         |   | $ | 386.9 |   | $ | 409.2 |   |   | $ | 436.6 |   |   | $ | 1,748.4 |   |
| Operating      income         |   |   | 53.6                          |   |   | 40.4 |   |   | 85.2 |   |   |   | 48.6 |   |   |   | 227.8 |   |
| Earnings on      common stock |   |   | 30.1                          |   |   | 21.3 |   |   | 50.6 |   |   |   | 27.2 |   |   |   | 129.2 |   |
|                          |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   |   | 2007                          |   |   |
|                          |   |   | March                    |   |   |  June |   |   | September  |   |   |   | December  |   |   |   | Total  |   |   |
| Operating      revenues       |   | $      | 459.6                         |   | $ | 353.5 |   | $ | 365.8 |   |   | $ | 417.2 |   |   | $ | 1,596.1 |   |
| Operating      income         |   |   | 60.5                          |   |   | 28.9 |   |   | 61.5 |   |   |   | 55.1 |   |   |   | 206.0 |   |
| Earnings on      common stock |   |   | 32.2                          |   |   | 13.8 |   |   | 33.6 |   |   |   | 30.6 |   |   |   | 110.2 |   |

----

----

----

| ITEM      10. | DIRECTORS,      EXECUTIVE OFFICERS AND CORPORATEGOVERNANCE |
|---------------|------------------------------------------------------------|

| As      of January 1, 2009Name      and Age      (1) | Position      and BusinessExperience      During Past Five Years | EffectiveDate                                                                                                                                                                                                           |
|------------------------------------------------------|------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                 |                                                             |                                                                                                                                                                                                                    |   |
| Larry L.      Weyers                                 | 63                                                               | Executive      Chairman of Integrys Energy Group and Chairman and Director    of      WPS                                                                                                           | 01-01-09 |
|                                                 |                                                             | Chairman,      President and Chief Executive Officer of Integrys EnergyGroup    (previously      named WPS Resources Corporation) and Chairman and    Director      of WPS | 05-15-08 |
|                                                 |                                                             | President and      Chief Executive Officer of Integrys Energy Group and    Chairman      and Director of WPS                                                                                        | 02-21-07 |
|                                                 |                                                             | Chairman,      President and Chief Executive Officer of Integrys EnergyGroup    and      Chairman and Chief Executive Officer and Director of WPS                                                   | 08-15-04 |
|                                                 |                                                             | Chairman,      President and Chief Executive Officer of Integrys EnergyGroup    and      WPS                                                                                                        | 04-14-02 |
|                                                 |                                                             |                                                                                                                                                                                                                    |   |
| Charles A.      Schrock                              | 55                                                               | President and      Chief Executive Officer of Integrys Energy Group and    Director      of WPS (2)                                                                                                 | 01-01-09 |
|                                                 |                                                             | President,      Chief Executive Officer and Director of WPS                                                                                                                                                             | 05-31-08 |
|                                                 |                                                             | President and      Director of WPS                                                                                                                                                                                      | 02-21-07 |
|                                                 |                                                             | President and      Chief Operating Officer – Generation                                                                                                                                                           | 08-15-04 |
|                                                 |                                                             | Senior Vice      President of Integrys Energy Group                                                                                                                                                                     | 09-14-03 |
|                                                 |                                                             |                                                                                                                                                                                                                    |   |
| Phillip M.      Mikulsky                             | 60                                                               | Executive Vice      President – Corporate Development and Shared    Services      at Integrys Energy Group and Director of WPS                                                                | 09-21-08 |
|                                                 |                                                             | Executive Vice      President and Chief Development Officer at Integrys    Energy      Group and Director of WPS                                                                                    | 02-21-07 |
|                                                 |                                                             | Executive Vice      President – Development at Integrys Energy Group                                                                                                                                              | 09-12-04 |
|                                                 |                                                             | Senior Vice      President – Development at Integrys Energy Group                                                                                                                                                 | 02-12-98 |
|                                                 |                                                             |                                                                                                                                                                                                                    |   |
| Lawrence T.      Borgard                             | 47                                                               | President and      Chief Operating Officer – Integrys Gas Group (3)      and    Director      of WPS                                                                                          | 02-21-07 |
|                                                 |                                                             | President and      Chief Operating Officer – Energy Delivery                                                                                                                                                      | 08-15-04 |
|                                                 |                                                             | Vice President      – Distribution and Customer Service                                                                                                                                                           | 11-25-01 |
|                                                 |                                                             |                                                                                                                                                                                                                    |   |
| Joseph P.      O'Leary                               | 54                                                               | Senior Vice      President and Chief Financial Officer of Integrys Energy    Group      and WPS and Director of WPS                                                                                 | 02-21-07 |
|                                                 |                                                             | Senior Vice      President and Chief Financial Officer of Integrys Energy Group and      WPS                                                                                                                            | 06-04-01 |
|                                                 |                                                             |                                                                                                                                                                                                                    |   |
| Thomas P.      Meinz                                 | 62                                                               | Executive Vice      President and Chief External Affairs Officer and    Director      of WPS                                                                                                        | 05-15-08 |
|                                                 |                                                             | Executive Vice      President – External Affairs of Integrys Energy Group    and      Director of WPS                                                                                         | 02-21-07 |
|                                                 |                                                             | Executive Vice      President – Public Affairs                                                                                                                                                                    | 09-12-04 |
|                                                 |                                                             | Senior Vice      President – Public Affairs                                                                                                                                                                       | 01-07-01 |
|                                                 |                                                             |                                                                                                                                                                                                                    |   |
| William D.      Laakso (4)                           | 46                                                               | Vice President      – Human Resources – Integrys Energy Group and Director of    WPS                                                                                                                        | 09-21-08 |   |
|                                                 |                                                             | Director of      WPS                                                                                                                                                                                                    | 08-25-08 |   |
|                                                 |                                                             | Interim Vice      President – Human Resources of IBS                                                                                                                                                              | 05-15-08 |   |
|                                                 |                                                             | Director –      Workforce and Organizational Development                                                                                                                                                          | 08-12-07 |   |
|                                                 |                                                             | Director of      Organizational Development                                                                                                                                                                             | 12-12-05 |   |
|                                                 |                                                             | Vice President      – Operations/Clinical Director – Employee Resource Center,      Inc.                                                                                                                    | 02-04-02 |   |
|                                                 |                                                             |                                                                                                                                                                                                                    |   |

----

| Diane L.      Ford      | 55     | Vice President      and Corporate Controller of Integrys Energy Group and    WPS                                   | 02-21-07 |
|-------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------|----------|
|                    |   | Vice President      – Controller and Chief Accounting Officer of Integrys Energy    Group      and WPS       | 07-11-99 |
|                    |   |                                                                                                                                   |     |
| Bradley A.      Johnson | 54     | Vice President      and Treasurer of Integrys Energy Group and Treasurer    of      WPS                            | 02-21-07 |
|                    |   | Vice President      and Treasurer of Integrys Energy Group and WPS                                                                     | 07-18-04 |
|                    |   | Treasurer of      Integrys Energy Group and WPS                                                                                        | 06-23-02 |
|                    |   |                                                                                                                                   |     |
| Barth J.      Wolf      | 51     | Vice      President, Chief Legal Officer, and Secretary of Integrys      Energy    Group      and Secretary of WPS | 07-31-07 |
|                    |   | Vice President      – Legal Services and Chief Compliance Officer of IBS                                                         | 02-21-07 |
|                    |   | Secretary and      Manager – Legal Services of Integrys Energy Group and    WPS                              | 09-19-99 |

| (1)    | All ages are      as of January 1, 2009.  None of the executives listed above      are related by blood, marriage, or adoption to any of the other officers      listed or to any director of WPS.  Each officer holds office      until his or her successor has been duly elected and qualified, or until      his or her death, resignation, disqualification, or    removal. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| (2)    | Continues to      serve as President and Chief Executive Officer of WPS.                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| (3)    | The Integrys      Gas Group includes PGL, NSG, MERC, and MGU.                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| (4)    | Prior to      joining Integrys Energy Group, William D. Laakso’s responsibilities at      Employee Resource Center, Inc. (ERC) included leadership of ERC’s      management team and duties of Clinical Director.  ERC provides      employee assistance programs to over 200 corporate customers in Northeast      Wisconsin and covers 75,000 employees and their  dependents.    |

----

----

| Named      Executive Officer | Payout      Levels(as      a percent of adjustedgross      base salary) | Measurement      Weightings(as      a percent of total payout) |
|------------------------------|-------------------------------------------------------------------------|----------------------------------------------------------------|
| Threshold                    | Target                                                                  | Superior                                                       | NetIncome      (1) | Operational      Measures (1)      (2) |
| Diane L.      Ford           | -                                                                       | 45                                                             | 112.5 | 70 | 30 |
| Bradley A.      Johnson      | -                                                                       | 40                                                             | 100 | 70 | 30 |
| Barth J.      Wolf           | -                                                                       | 45                                                             | 112.5 | 70 | 30 |

----

| Named      Executive Officer | Annual      Percentage Credit Earned in 2008 | Accumulated      Total Service Credits Earned as ofDecember 31,      2008 |
|------------------------------|----------------------------------------------|--------------------------------------------------------------------------------|
| Diane L.      Ford           | 15%                                          | 512%                                                                           |
| Bradley A.      Johnson      | 15%                                          | 439%                                                                           |
| Barth J.      Wolf           | 15%                                          | 301%                                                                           |

----

| Named      Executive Officer | Life      Insurance Coverage ($) |
|------------------------------|----------------------------------|
| Diane L.      Ford           |    500,000        |
| Bradley A.      Johnson      | 1,000,000                        |
| Barth J.      Wolf           | 1,000,000                        |

----

| Name      andPrincipal      Position                                                                   | Year     | Salary      ($)(1) | Bonus($) | Stock      Awards ($)(2)  | Option      Awards ($)(3) | Non-Equity      Incentive Plan Compensa-tion($)(4) | Change      in Pension Value and Nonqualified Deferred Compensa-tion Earnings      ($)(5) | All      Other Compensation($)(6) | Total($)         |
|--------------------------------------------------------------------------------------------------------|----------|--------------------|----------|---------------------------|---------------------------|----------------------------------------------------|-------------------------------------------------------------------------------------------|-----------------------------------|------------------|
| (a)                                                                                                    | (b)      | (c)                | (d)      | (e)                       | (f)                       | (g)                                                | (h)                                                                                       | (i)                               | (j)              |
|                                                                                                   |     |               |     |                      |                      |                                               |                                                                                      |                              |             |
| Diane L.      Ford   Vice      President and   Corporate      Controller | 20082007 | 255,000231,288     | -2,100   | 225,720  84,194 | 112,62968,856             | 80,983123,929                                      | 273,97474,968                                                                             | 13,34714,714                      | 961,653600,049   |
|                                                                                                   |     |               |     |                      |                      |                                               |                                                                                      |                              |             |
| Bradley A.      Johnson    Treasurer                                               | 20082007 | 240,000220,327     | -1,950   | 157,52158,847             | 82,99745,595              | 67,750104,915                                      | 254,34274,088                                                                             | 13,15014,893                      | 815,760520,615   |
|                                                                                                   |     |               |     |                      |                      |                                               |                                                                                      |                              |             |
| Barth J.      Wolf    Secretary                                                    | 20082007 | 290,000233,038     | -1,950   | 101,61850,210             | 45,56232,259              | 92,098171,571                                      | 658,57844,886                                                                             | 14,01515,202                      | 1,201,871549,116 |

| (1)   | Includes      amounts deferred into the Integrys Energy Group Deferred Compensation      Plan.  See the Nonqualified Deferred Compensation Table for 2008      for more information. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Amounts shown      in column (e) reflect the dollar value of the compensation cost of all      outstanding stock awards recognized over the requisite service period,      computed in accordance with SFAS No. 123(R).  For information      regarding assumptions made in valuing stock awards see Note 18, "Stock Based      Compensation." |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | Amounts shown      in column (f) reflect the dollar value of the compensation cost of all      outstanding option awards recognized over the requisite service period,      computed in accordance with SFAS No. 123(R).  For information      regarding assumptions made in valuing stock option awards see Note 18,      "Stock Based      Compensation." |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | Non-equity      incentive compensation is payable annually in the first quarter of the      next fiscal year following the year in which it was earned, and may be      deferred at the election of the named executive      officer.  Payment is calculated based on the measurement      outcomes and as a percent of adjusted gross earnings from the company for      services performed during the payroll year.  Various      extraordinary payments and the prior year payout are excluded in the      calculation. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5)   | The      calculation of above-market earnings on non-qualified deferred      compensation is based on the difference between 120% of the applicable      federal long-term rate (AFR) and the rate of return received on Reserve      Accounts A and B.  Provided below are the actual rates of return      used in the calculation:  Note that Reserve Account A was frozen      to new deferrals beginning on January 1, 1996.  Reserve Account      B was frozen to new deferrals beginning on April 1,  2008. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Time      Period                       |   | AFR      120% |   |   | Res      A - Daily |   |   | Res      B - Daily |   |
|----------------------------------------|--------|---------------|--------|--------|--------------------|--------|--------|--------------------|--------|
| October 2007 –      March 2008   |   |          | 5.86   | %      |               |   | 5.8555 | %                  |   |   | 5.8273 | % |
| April 2008 –      September 2008 |   |          | 5.29   | %      |               |   | 8.0114 | %                  |   |   | 5.8273 | % |
| October 2008 –      March 2009   |   |          | 5.19   | %      |               |   | 8.9302 | %                  |   |   | 6.3427 | % |

----

| (6)   | Reflects other      compensation items consisting of life insurance premiums, imputed income      from life insurance benefits, restricted stock dividends and ESOP matching      contributions.  For individual items included in column (i) that      were in excess of $10,000, see the table below reflecting ESOP matching      contributions.  For individual items included in column (i) that      were in excess of $10,000 for Mr. Schrock and Mr. O’Leary, see      the Proxy Statement under the caption "Executive Compensation – Summary      Compensation Table for 2008." |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Named      Executive Officer |   | ESOP      ($) |   |
|------------------------------|--------|---------------|--------|
| Diane L.      Ford           |   |          | 10,291 |   |
| Bradley A.      Johnson      |   |          | 10,224 |   |
| Barth J.      Wolf           |   |          | 10,575 |   |

| Name                    | Grant      Date | Estimated      Future Payouts Under Non-Equity Incentive Plan AwardsAnnual      Incentive Plan (1) | Estimated      Future Payouts Under Equity Incentive Plan AwardsPerformance      Share Program | All      Other Stock Awards:  Number of Shares of Stock or Units      (#)Restricted      Stock Program | All      Other Option Awards:  Number of Securities Underlying Options      (#)Stock      Option Program | Exercise      or Base Price Option Awards ($/Sh) | Grant      Date Fair Value of Stock and Option Awards($)      (2) |
|-------------------------|-----------------|----------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|-------------------------------------------------------------------|
| Threshold      ($)      | Target($)       | Maximum      ($)                                                                                   | Threshold      (#)                                                                             | Target      (#)                                                                                                  | Maximum      (#)                                                                                                   |
| (a)                     | (b)             | (c)                                                                                                | (d)                                                                                            | (e)                                                                                                              | (f)                                                                                                                | (g)                                              | (h)                                                               | (i) | (j) | (k) | (l) |
| Diane L.      Ford      | 2008            | -                                                                                                  | 114,750                                                                                        | 286,875                                                                                                          |                                                                                                               |                                             |                                                              |   |   |   |   |
| 2/14/08                 |            |                                                                                               |                                                                                           | 1,274                                                                                                            | 2,548                                                                                                              | 5,096                                            |                                                              |   |   | 125,413 |
| 2/14/08                 |            |                                                                                               |                                                                                           |                                                                                                             |                                                                                                               |                                             | 907                                                               |   |   | 43,863 |
| 2/14/08                 |            |                                                                                               |                                                                                           |                                                                                                             |                                                                                                               |                                             |                                                              | 13,882 | 48.36 | 62,747 |
| Bradley A.      Johnson | 2008            | -                                                                                                  | 96,000                                                                                         | 240,000                                                                                                          |                                                                                                               |                                             |                                                              |   |   |   |   |
| 2/14/08                 |            |                                                                                               |                                                                                           | 1,115                                                                                                            | 2,230                                                                                                              | 4,460                                            |                                                              |   |   | 109,761 |
| 2/14/08                 |            |                                                                                               |                                                                                           |                                                                                                             |                                                                                                               |                                             | 794                                                               |   |   | 38,398 |
| 2/14/08                 |            |                                                                                               |                                                                                           |                                                                                                             |                                                                                                               |                                             |                                                              | 12,154 | 48.36 | 54,936 |
| Barth J.      Wolf      | 2008            | -                                                                                                  | 130,500                                                                                        | 326,250                                                                                                          |                                                                                                               |                                             |                                                              |   |   |   |   |
| 2/14/08                 |            |                                                                                               |                                                                                           | 1,347                                                                                                            | 2,695                                                                                                              | 5,390                                            |                                                              |   |   | 132,648 |
| 2/14/08                 |            |                                                                                               |                                                                                           |                                                                                                             |                                                                                                               |                                             | 959                                                               |   |   | 46,377 |
| 2/14/08                 |            |                                                                                               |                                                                                           |                                                                                                             |                                                                                                               |                                             |                                                              | 14,686 | 48.36 | 66,381 |

| (1)   | Based on 2008      Executive Incentive Plan payout percentages.  For more      information, see the Proxy Statement under the caption "Executive      Compensation – Compensation Discussion and Analysis – Key Components of      the Executive Compensation Program – Short-Term Incentive      Compensation. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Performance      shares are valued at target payout using the value derived from a Monte      Carlo simulation.  Restricted stock is valued at $48.36, the      closing stock price on the grant date.  Stock options are valued      at $4.52 on an accounting expense basis based on a proprietary "advance      lattice" option pricing model. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name                                                                    |                                                    Options      Awards      (1)                                                     |                                Stock      Awards      (2)                               |
|-------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Number      of securities underlying unexercised options (#)Exercisable | Number      of securities underlying unexercised options (#)Unexercisable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Equity      incentive plan awards:  Number of securities underlying      unexercised unearned options(#)                                                                                                                                                                                                                                                                                       | Option      exercise price($) | Option      expiration date | Number      of shares or units of stock thathave      not vested (#) | Market      value of shares or units of stock thathave      not vested($) | Equity      incentive plan awards: Number of unearned shares, unitsor      other rights that have not vested (#) (3) | Equity      incentive plan awards:  Market or payout value of unearned      shares, units or other rights that have not vested ($)  (3) |
| (a)                                                                     | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | (c)                                                                                                                                                                                                                                                                                                                                                                                                      | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
| Diane L.      Ford                                                      | 6,244                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | -                                                                                                                                                                                                                                                                                                                                                                                                        | - | 34.09 | 12/13/2011 | 1,278 | 54,928 | 5,386 | 231,490 |
| 6,382                                                                   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | -                                                                                                                                                                                                                                                                                                                                                                                                        | 37.96 | 12/12/2012 |   |   |   |   |
| 6,332                                                                   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | -                                                                                                                                                                                                                                                                                                                                                                                                        | 44.73 | 12/10/2013 |   |   |   |   |
| 7,433                                                                   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | -                                                                                                                                                                                                                                                                                                                                                                                                        | 48.11 | 12/7/2014 |   |   |   |   |
| 6,027                                                                   | 2,009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | -                                                                                                                                                                                                                                                                                                                                                                                                        | 54.85 | 12/7/2015 |   |   |   |   |
| 4,566                                                                   | 4,564                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | -                                                                                                                                                                                                                                                                                                                                                                                                        | 52.73 | 12/7/2016 |   |   |   |   |
| 780                                                                     | 2,339                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | -                                                                                                                                                                                                                                                                                                                                                                                                        | 58.65 | 5/17/2017 |   |   |   |   |
| -                                                                       | 13,882                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | -                                                                                                                                                                                                                                                                                                                                                                                                        | 48.36 | 2/14/2018 |   |   |   |   |
| Bradley A.      Johnson                                                 | 2,449                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | -                                                                                                                                                                                                                                                                                                                                                                                                        | - | 37.96 | 12/12/2012 | 1,125 | 48,353 | 4,650 | 199,857 |
| 4,577                                                                   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | -                                                                                                                                                                                                                                                                                                                                                                                                        | 44.73 | 12/10/2013 |   |   |   |   |
| 6,071                                                                   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | -                                                                                                                                                                                                                                                                                                                                                                                                        | 48.11 | 12/7/2014 |   |   |   |   |
| 4,869                                                                   | 1,622                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | -                                                                                                                                                                                                                                                                                                                                                                                                        | 54.85 | 12/7/2015 |   |   |   |   |
| 3,816                                                                   | 3,814                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | -                                                                                                                                                                                                                                                                                                                                                                                                        | 52.73 | 12/7/2016 |   |   |   |   |
| 768                                                                     | 2,303                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | -                                                                                                                                                                                                                                                                                                                                                                                                        | 58.65 | 5/17/2017 |   |   |   |   |
| -                                                                       | 12,154                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | -                                                                                                                                                                                                                                                                                                                                                                                                        | 48.36 | 2/14/2018 |   |   |   |   |
| Barth J.      Wolf                                                      | 2,530                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | -                                                                                                                                                                                                                                                                                                                                                                                                        | - | 34.09 | 12/13/2011 | 1,264 | 54,327 | 4,988 | 214,384 |
| 4,119                                                                   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | -                                                                                                                                                                                                                                                                                                                                                                                                        | 37.96 | 12/12/2012 |   |   |   |   |
| 4,463                                                                   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | -                                                                                                                                                                                                                                                                                                                                                                                                        | 44.73 | 12/10/2013 |   |   |   |   |
| 5,156                                                                   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | -                                                                                                                                                                                                                                                                                                                                                                                                        | 48.11 | 12/7/2014 |   |   |   |   |
| 4,869                                                                   | 1,622                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | -                                                                                                                                                                                                                                                                                                                                                                                                        | 54.85 | 12/7/2015 |   |   |   |   |
| 3,392                                                                   | 3,391                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | -                                                                                                                                                                                                                                                                                                                                                                                                        | 52.73 | 12/7/2016 |   |   |   |   |
| 742                                                                     | 2,225                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | -                                                                                                                                                                                                                                                                                                                                                                                                        | 58.65 | 5/17/2017 |   |   |   |   |
| -                                                                       | 14,686                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | -                                                                                                                                                                                                                                                                                                                                                                                                        | 48.36 | 2/14/2018 |   |   |   |   |

| Grant      Date | Full      Vesting Date | Expiration      Date  |
|-----------------|------------------------|-----------------------|
| 12/13/2001      | 12/13/2005             | 12/13/2011            |
| 12/12/2002      | 12/12/2006             | 12/12/2012            |
| 12/10/2003      | 12/10/2007             | 12/10/2013            |
| 12/08/2004      | 12/08/2008             | 12/08/2014            |
| 12/07/2005      | 12/07/2009             | 12/07/2015            |
| 12/07/2006      | 12/07/2010             | 12/07/2016            |
| 5/17/2007       |   5/17/2011  |   5/17/2017 |
| 2/14/2008       |  2/14/2012        |  2/14/2018       |

| (2)   | Integrys      Energy Group stock price on December 31, 2008 was    $42.98. |
|-----------------|---------------------------------------------------------------------------------|

| (3)   | Included in      columns (i) and (j) above are the performance shares that may still      be paid out as of December 31, 2008.   Subsequent to      December 31, 2008, no payout occurred on performance shares for the      performance period of 2006-2008 because total shareholder return results      were below threshold requirements.  The number of unearned      performance shares attributable to each named executive officer as a      result of the threshold requirements not being achieved, along with the      corresponding market value of such shares, is as  follows: |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Named      Executive Officer |   | #      UnearnedShares |   |   | Market      or payout value ofunearned      shares ($) |   |
|------------------------------|--------|-----------------------|--------|--------|--------------------------------------------------------|--------|
| Diane L.      Ford           |   |                  | 1,121  |   |                                                   |   | 48,181 |   |
| Bradley A.      Johnson      |   |                  | 905    |   |                                                   |   | 38,897 |   |
| Barth J.      Wolf           |   |                  | 905    |   |                                                   |   | 38,897 |   |

----

| Name                                           | Option Awards                       | Stock Awards (1)                                  |
|------------------------------------------------|-------------------------------------|---------------------------------------------------|
| Number      of shares acquired on exercise (#) | Value      realized on exercise ($) | Number      ofshares      acquired on vesting (#) | Value      realized on vesting ($) |
| (a)                                            | (b)                                 | (c)                                               | (d) | (e) |
| Diane L.      Ford                             | -                                   | -                                                 | 164 | 7,249 |
| Bradley A.      Johnson                        | -                                   | -                                                 | 145 | 6,442 |
| Barth J.      Wolf                             | -                                   | -                                                 | 133 | 5,948 |

| (1)   | No payout was      made on performance shares in 2008 based on total shareholder return for      the performance period ending December 31, 2008, not meeting the threshold      payout level.  These performance shares had a performance period      of 2006-2008. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Name                    | Plan      Name(1)    | Number      of years of credited service(#)(2) | Present      value of accumulated benefits($)(3) | Payments      during last fiscal year($) |
|-------------------------|----------------------|------------------------------------------------|--------------------------------------------------|------------------------------------------|
| (a)                     | (b)                  | (c)                                            | (d)                                              | (e)                                      |
| Diane L.      Ford      | Retirement      Plan | 33                                             | 1,114,197                                        | -                                        |
| Restoration      Plan   | 33                   | 439,009                                        | -                                                |
| SERP                    | 33                   | 6,725                                          | -                                                |
| Total                   |                 | 1,559,931                                      | -                                                |
|                    |                 |                                           |                                             |                                     |
| Bradley A.      Johnson | Retirement      Plan | 29                                             | 839,327                                          | -                                        |
| Restoration      Plan   | 29                   | 381,939                                        | -                                                |
| SERP                    | 29                   | 129,048                                        | -                                                |
| Total                   |                 | 1,350,314                                      | -                                                |
|                    |                 |                                           |                                             |                                     |
| Barth J.      Wolf      | Retirement      Plan | 20                                             | 642,086                                          | -                                        |
| Restoration      Plan   | 20                   | 258,057                                        | -                                                |
| SERP                    | 20                   | 303,930                                        | -                                                |
| Total                   |                 | 1,204,073                                      | -                                                |

|        (1) | For a      description of the material terms and conditions of the above named plans,      see the Proxy Statement under the caption "Executive Compensation –      Compensation Discussion and Analysis – Key Components of the Executive      Compensation Program – OtherBenefits." |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Full years of      credited service only.  Actual plan benefits are calculated      taking into account full and fractional years of credited      service. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (3)   | Change in      pension value during 2008 and present value of accumulated benefit at      year-end: |
|-----------------|-----------------------------------------------------------------------------------------------------|

|   | Retirement      Plan |
|--------|----------------------|

| Name                    |   | Executive      Contributions in last fiscal year($)(1) |   |   | Registrant      contributions in last fiscal year($)(1) |   |   | Aggregate      earnings in last fiscal year($)(2) |   |   | Aggregate      withdrawal/distributions      ($) |   |   | Aggregate      balance at last fiscal year end ($)(3) |   |
|-------------------------|--------|--------------------------------------------------------|--------|--------|---------------------------------------------------------|--------|--------|---------------------------------------------------|--------|--------|--------------------------------------------------|--------|--------|-------------------------------------------------------|--------|
| (a)                     |   | (b)                                                    |   |   | (c)                                                     |   |   | (d)                                               |   |   | (e)                                              |   |   | (f)                                                   |   |
| Diane L.      Ford      |   |                                                   | 25,525 |   |                                                    |   | -      |                                              |   |   | (160,457                                         | )      |   |                                                  | -      |   |   |   | 994,907 |   |
| Bradley A.      Johnson |   |                                                   | 17,650 |   |                                                    |   | -      |                                              |   |   | (31,077                                          | )      |   |                                                  | -      |   |   |   | 885,478 |   |
| Barth J.      Wolf      |   |                                                   | 20,300 |   |                                                    |   | -      |                                              |   |   | (43,010                                          | )      |   |                                                  | -      |   |   |   | 607,176 |   |

| (1)   | Deferrals into      the Deferred Compensation Plan were made from compensation earned in 2008      and are reported in column (c) of the Summary Compensation Table for 2008,      with the exception of equity and non-equity incentive plan compensation      earned in 2007, but paid out and deferred in 2008.  These      amounts are as follows: |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name                    |   | 2007      Annual Incentive Plan |    |   | 2007      Annual Incentive Plan 5% Premium |   |   | 2008 Performance Share      Payout |   |
|-------------------------|--------|---------------------------------|---------|--------|--------------------------------------------|--------|--------|------------------------------------|--------|
| Diane L.      Ford      |   |                            | 123,929 |   |                                       |   | -      |                               |   |   | - |   |
| Bradley A.      Johnson |   |                            | 104,915 |   |                                       |   | -      |                               |   |   | - |   |
| Barth J.      Wolf      |   |                            | 128,678 |   |                                       |   | -      |                               |   |   | - |   |

| (2)   | Above market earnings received on      Reserve Accounts A and B are reported in column (h) of theSummary Compensation Table for      2008. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | The aggregate      balance includes amounts shown in footnote (1) and the above market      earnings on Reserve Accounts A and B, which are included in column (h) of      the Summary Compensation Table for2008. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Name                    |   | Aggregate      earnings for Reserve Ain      lastfiscal      year ($) |   |   | Aggregate      earnings for Reserve Bin      lastfiscal      year ($) |   |   | Aggregate      earnings for Mutual Funds in lastfiscal      year ($) |   |   | Aggregate      earnings for company stock in last fiscal year ($) |   |   | Aggregate      earningsin      last fiscalyear      ($) |    |
|-------------------------|--------|-----------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------|--------|--------|---------------------------------------------------------|---------|
| Diane L.      Ford      |   |                                                                  | 8,504  |   |                                                                  |   | 8,166  |                                                                 |   |   | (121,808                                                          | )      |   |                                                    | (55,319 | ) |   |   | (160,457 | ) |
| Bradley A.      Johnson |   |                                                                  | 4,018  |   |                                                                  |   | 22,681 |                                                                 |   |   | (1,471                                                            | )      |   |                                                    | (56,305 | ) |   |   | (31,077 | ) |
| Barth J.      Wolf      |   |                                                                  | -      |   |                                                                  |   | 11,831 |                                                                 |   |   | (5,982                                                            | )      |   |                                                    | (48,859 | ) |   |   | (43,010 | ) |

| Type      of Termination     |   | Diane      L.Ford (1) |      |   | Bradley A. Johnson (2) |   |      | Barth      J.Wolf (2) |   |
|------------------------------|--------|-----------------------|-----------|--------|------------------------|--------|-----------|-----------------------|--------|
| Retirement      (3)          |   |                  | 2,332,465 |   |                   |   | -         |                  |   |   | - |   |
| Change In      Control (CIC) |   |                  | 1,216,865 |   |                   |   | 1,808,243 |                  |   |   | 2,117,446 |   |

| (1)   | Ms. Ford is      currently eligible for retirement under the pension program, as specified      in the plan documents.  Termination for reasons that are      voluntary/involuntary/for cause would be treated the      same as retirement. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (2)   | Mr. Johnson      and Mr. Wolf were not retirement eligible as of December 31,      2008. |
|-----------------|------------------------------------------------------------------------------------------|

| (3)   | Included in      the value shown is the present value of future retirement benefit      payments.  Under the Pension Restoration Plan and the      Supplemental Retirement Plan, certain participants will be paid a monthly      benefit (for a fixed number of payments or a lifetime      annuity).  The present value of future monthly benefit payments      was determined using an interest rate and mortality table consistent with      assumptions used for financial reporting under SFAS No.      87.  Also included in the total is the enhanced value for any      outstanding equity grants. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ITEM      12. | SECURITY      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED      STOCKHOLDER MATTERS |
|---------------|----------------------------------------------------------------------------------------------------------|

----

|                                                                                                           |   | Amount      and Nature of Shares Beneficially Owned February      2, 2009 |      |
|----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------|-----------|
| Name      and Title                                                                                            |   | Aggregate      Number of Shares Beneficially Owned                             |      |   | Number      of Shares Subject to Stock Options |   |   | Percent      of Shares |   |
| Lawrence T.      Borgard, Director                                                                             |   |                                                                           | 76,641    |   |   |   | 53,435 |   |   |   | * |   |
| Phillip M.      Mikulsky, Director      (1)                                                                    |   |                                                                           | 203,805   |   |   |   | 164,416 |   |   |   | * |   |
| Thomas P.      Meinz, Director (2)                                                                             |   |                                                                           | 96,183    |   |   |   | 74,395 |   |   |   | * |   |
| Larry L.      Weyers, Director                                                                                 |   |                                                                           | 581,406   |   |   |   | 531,474 |   |   |   | * |   |
| William D.      Laakso, Director                                                                               |   |                                                                           | 546       |   |   |   | - |   |   |   | * |   |
| Joseph P.      O'Leary    Senior      Vice President, Chief Financial Officer and Director |   |                                                                           | 133,768   |   |   |   | 119,771 |   |   |   | * |   |
| Charles A.      Schrock    President      and Director                                     |   |                                                                           | 107,511   |   |   |   | 88,576 |   |   |   | * |   |
| Diane L.      Ford   Vice      President and Corporate Controller                               |   |                                                                           | 52,979    |   |   |   | 41,235 |   |   |   | * |   |
| Barth J.      Wolf    Secretary                                                            |   |                                                                           | 34,818    |   |   |   | 28,943 |   |   |   | * |   |
| Bradley A.      Johnson    Treasurer                                                       |   |                                                                           | 36,014    |   |   |   | 25,589 |   |   |   | * |   |
| All 10      directors and executive officers as a group (3)                                                    |   |                                                                           | 1,323,671 |   |   |   | 1,127,834 |   |   |   | 1.7 | % |

|   |  * | Less than 1%      of Integrys Energy Group outstanding shares of common  stock |
|--------|---------|--------------------------------------------------------------------------------|

|   | (1) | Includes 7,501      shares owned in a joint trust withspouse. |
|--------|-----|---------------------------------------------------------------|

|   | (2) | Includes 3,971      shares owned in a joint trust withspouse. |
|--------|-----|---------------------------------------------------------------|

|   | (3) | Aggregate      Number of Shares Beneficially Owned includes shares of common stock held      in the Employee Stock Ownership Plan and Trust, the WPS Deferred      Compensation Trust, and all stock options, which are exercisable within      60 days of February 2, 2009.  Each director or officer has      sole voting and investment power with respect to the shares reported,      unless otherwise noted.  No voting or investment power exists      related to the stock options reported until  exercised. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM      14.  | PRINCIPAL      ACCOUNTING FEES AND SERVICES |
|---------------------|---------------------------------------------|

| Fees                                     |   | 2008   |    |   | 2007   |   |
|------------------------------------------|--------|--------|---------|--------|--------|--------|
| Audit Fees      (a)                      |   | $      | 804,659 |   |   | $      | 772,532 |   |
| Audit Related      Fees (b)              |   |   | 500     |   |   |   | 83,470 |   |
| All Other      Fees (c)                  |   |   | 590     |   |   |   | 2,065 |   |
|           Total Fees |   | $      | 805,749 |   |   | $      | 858,067 |   |

| a)   | Audit Fees. Consists of      aggregate fees for the audits of the annual consolidated financial      statements, reviews of the interim condensed consolidated financial      statements included in quarterly reports, and audits of the effectiveness      of, and management's assessment of the effectiveness of, internal control      over financial reporting.  Audit fees also include services that      are normally provided by Deloitte & Touche in connection with      statutory and regulatory filings or engagements, including comfort      letters, |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | consents and      other services related to SEC matters, and consultations arising during      the course of the audits and reviews concerning financial accounting and      reporting standards. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b)   | Audit Related Fees.      Consists of fees billed for assurance and related services that are      reasonably related to the performance of the audit or review of the      consolidated financial statements or internal control over financial      reporting and are not reported under "Audit  Fees." |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c)   | All Other Fees.      Consists of other fees for services provided to WPS by Deloitte &      Touche LLP for products and services other than the services reported      above.  All Other Fees are for software licensing and training      provided in 2008 and 2007.  The nature of the software license      fees, which include support, learning services, and training, has been      deemed as permissible non-attestservices. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM      15. | EXHIBITS      AND FINANCIAL STATEMENT SCHEDULES |
|---------------|-------------------------------------------------|

| Documents      filed as part of this report: |
|----------------------------------------------|
|                                         |   |
| (1)                                          | Consolidated      Financial Statements included in Part II at Item 8  above: |
|                                         |   |
|                                         | Description | Pages in 10-K |
|                                         |   |   |
|                                         | Consolidated      Statements of Income for the three years ended December 31, 2008,      2007, and 2006 | 45 |
|                                         |   |
|                                         | Consolidated      Balance Sheets as of December 31, 2008 and 2007 | 46 |
|                                         |   |
|                                         | Consolidated      Statements of Capitalization as of December 31, 2008 and      2007 | 47 |
|                                         |   |
|                                         | Consolidated      Statements of Common Shareholder's Equity for the three years ended      December 31, 2008, 2007, and 2006 | 48 |
|                                         |   |
|                                         | Consolidated      Statements of Cash Flows for the three years ended December 31, 2008,      2007, and 2006 | 49 |
|                                         |   |
|                                         | Notes to      Consolidated Financial Statements | 50 |
|                                         |   |   |
|                                         | Report of      Independent Registered Public Accounting Firm | 82 |
|                                         |   |   |
| (2)                                          | Financial      Statement Schedules.The following      financial statement schedules are included in Part IV of this      report.  Schedules not included herein have been omitted because      they are not applicable or the required information is shown in the      financial statements or notes thereto. |
|                                         |   |
|                                         | Description | Pages in 10-K |
|                                         |   |   |
|                                         | Schedule II      WPS Valuation and Qualifying Accounts | 102 |
|                                         |   |   |
| (3)                                          | Listing of      all exhibits, including those incorporated by reference. See Exhibit      Index  |

----

|   | SIGNATURES |
|--------|------------|

|   |   | WISCONSIN      PUBLIC SERVICE CORPORATION |
|--------|--------|-------------------------------------------|
|   |
|   |   |                                      | (Registrant) |
|   |   |                                      |   |
|   |   | By:                                       | /s/      Charles A. Schrock  |
|   |   |                                      | Charles A.      SchrockPresident and      Chief Executive Officer |

| Signature                                                          | Title                                                                                              | Date                   |
|--------------------------------------------------------------------|----------------------------------------------------------------------------------------------------|------------------------|
|                                                               |                                                                                               |                   |
| Lawrence T.      Borgard *                                         | Director                                                                                           |                   |
| William D.      Laakso *                                           | Director                                                                                           |                   |
| Thomas P.      Meinz *                                             | Director                                                                                           |                   |
| Phillip M.      Mikulsky *                                         | Director                                                                                           |                   |
| Joseph P.      O'Leary *                                           | Director                                                                                           |                   |
| Charles A.      Schrock *                                          | Director                                                                                           |                   |
| Larry L.      Weyers *                                             | Director and      Chairman                                                                         |                   |
|                                                               |                                                                                               |                   |
|   /s/      Charles A. Schrock                                 | President,      Chief Executive Officer and Director(principal      executive officer)             | February 25,      2009 |
| Charles A.      Schrock                                            |                                                                                               |                   |
|                                                               |                                                                                               |                   |
|   /s/      Joseph P. O'Leary                                  | Senior Vice      President, Chief Financial Officer and Director(principal      financial officer) | February 25,      2009 |
| Joseph P.      O'Leary                                             |                                                                                               |                   |
|                                                               |                                                                                               |                   |
|   /s/      Diane L. Ford                                      | Vice      President and Corporate Controller(principal      accounting officer)                    | February 25,      2009 |
| Diane L.      Ford                                                 |                                                                                               |                   |
|                                                               |                                                                                               |                   |
|                                                               |                                                                                               |                   |
|                                                               |                                                                                               |                   |
| * By: /s/      Diane L. Ford                                  |                                                                                               |                   |
|         Diane      L. Ford | Attorney-in-Fact                                                                                   | February 25,      2009 |

----

|                                                                                                |   |        |   |   |        |   |   |           |   |   |        |   |
|-----------------------------------------------------------------------------------------------------|--------|-------------|--------|--------|-------------|--------|--------|----------------|--------|--------|-------------|--------|
| SCHEDULE II                                                                                         |   |        |   |   |        |   |   |           |   |   |        |   |
| WISCONSIN PUBLIC SERVICE      CORPORATION                                                           |   |        |   |   |        |   |   |
| VALUATION AND QUALIFYING      ACCOUNTS                                                              |   |        |   |   |        |   |   |
|                                                                                                |   |        |   |   |        |   |   |           |   |   |        |   |
| Allowance for Doubtful      Accounts                                                                |   |
| Years Ended December 31, 2008,      2007, and 2006                                                  |   |
| (In    millions)                                                                                    |   |
|                                                                                                |   |        |   |   |        |   |   |           |   |   |        |   |
|                                                                                                |   |        |   |   |        |   |   |           |   |   |        |   |
|                                                                                                |   | Balance at  |   |   | Additions   |   |   |           |   |   |        |   |
|                                                                                                |   | Beginningof |   |   | Charged to  |   |   |           |   |   | Balance at  |   |
| Fiscal Year                                                                                         |   | Year        |   |   | Expense (1) |   |   | Reductions (2) |   |   | End of Year |   |
|                                                                                                |   |        |   |   |        |   |   |           |   |   |        |   |
| 2006                                                                                                |   | $           | 8.5    |   |        | $      | 7.7    |           |   | $      | 9.2         |   |   | $ | 7.0 |   |
|                                                                                                |   |        |   |   |        |   |   |           |   |   |        |   |   |   |   |   |
| 2007                                                                                                |   | $           | 7.0    |   |        | $      | 7.8    |           |   | $      | 10.8        |   |   | $ | 4.0 |   |
|                                                                                                |   |        |   |   |        |   |   |           |   |   |        |   |   |   |   |   |
| 2008                                                                                                |   | $           | 4.0    |   |        | $      | 9.4    |           |   | $      | 8.6         |   |   | $ | 4.8 |   |
|                                                                                                |   |        |   |   |        |   |   |           |   |   |        |   |   |   |   |   |
|                                                                                                |   |        |   |   |        |   |   |           |   |   |        |   |   |   |   |   |
| (1) Net of      recoveries.                                                                         |   |        |   |   |        |   |   |           |   |   |        |   |   |
| (2) Represents amounts written off to      the reserve, net of adjustments to regulatory    assets. |   |
|                                                                                                |   |        |   |   |        |   |   |           |   |   |        |   |   |   |   |   |

----

| ExhibitNumber | Description of Documents                                                                                                                                                                                                                                                                                                                                                                                                                               |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 2.1*          | Asset      Contribution Agreement between ATC and Wisconsin Electric Power Company,      Wisconsin Power and Light Company, WPS, Madison Gas & Electric Co.,      Edison Sault Electric Company, South Beloit Water, Gas and Electric      Company, dated as of December 15, 2000.  (Incorporated by      reference to Exhibit 2A-3 to Integrys Energy Group's and WPS's Form 10-K      for the year ended December 31, 2000.) |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 3.1           | Articles of      Incorporation of WPS as effective May 26, 1972 and amended through May 31,      1988 (Incorporated by reference to Exhibit 3A to Form 10-K for the year      ended December 31, 1991); Articles of Amendment to Articles of      Incorporation dated June 9, 1993. (Incorporated by reference to Exhibit 3      to Form 8-K filed June 10, 1993.)                                                                                |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 3.2           | By-Laws of      WPS, as amended through February 21, 2007.  (Incorporated by      reference to Exhibit 3.6 to WPS's Form 8-K filed February 27,      2007.)                                                                                                                                                                                                                                                                                  |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.1    | First      Mortgage and Deed of Trust, dated as of January 1, 1941 from WPS to U.S.      Bank National Association (successor to First Wisconsin Trust Company),      Trustee (Incorporated by reference to Exhibit 7.01 - File No. 2-7229);      Supplemental Indenture, dated as of November 1, 1947 (Incorporated by      reference to Exhibit 7.02 - File No. 2-7602); Supplemental Indenture,      dated as of November 1, 1950 (Incorporated by reference to Exhibit 4.04 -      File No. 2-10174); Supplemental Indenture, dated as of May 1, 1953      (Incorporated by reference to Exhibit 4.03 - File No. 2-10716);      Supplemental Indenture, dated as of October 1, 1954 (Incorporated by      reference to Exhibit 4.03 - File No. 2-13572); Supplemental      Indenture, dated as of December 1, 1957 (Incorporated by reference to      Exhibit 4.03 - File No. 2-14527); Supplemental Indenture, dated as of      October 1, 1963 (Incorporated by reference to Exhibit 2.02B -      File No. 2-65710); Supplemental Indenture, dated as of June 1, 1964      (Incorporated by reference to Exhibit 2.02B - File No. 2-65710);      Supplemental Indenture, dated as of November 1, 1967 (Incorporated by      reference to Exhibit 2.02B - File No. 2-65710); Supplemental Indenture,      dated as of April 1, 1969 (Incorporated by reference to Exhibit 2.02B -      File No. 2-65710); Fifteenth Supplemental Indenture, dated as of May 1,      1971 (Incorporated by reference to Exhibit 2.02B - File No. 2-65710);      Sixteenth Supplemental Indenture, dated as of August 1, 1973      (Incorporated by reference to Exhibit 2.02B - File No. 2-65710);      Seventeenth Supplemental Indenture, dated as of September 1, 1973      (Incorporated by reference to Exhibit 2.02B - File No. 2-65710);      Eighteenth Supplemental Indenture, dated as of October 1, 1975      (Incorporated by reference to Exhibit 2.02B - File No. 2-65710);      Nineteenth Supplemental Indenture, dated as of February 1, 1977      (Incorporated by reference to Exhibit 2.02B - File No. 2-65710);      Twentieth Supplemental Indenture, dated as of July 15, 1980 (Incorporated      by reference to Exhibit 4B to Form 10-K for the year ended      December 31, 1980); Twenty-First Supplemental Indenture, dated as of      December 1, 1980 (Incorporated by reference to Exhibit 4B to      Form 10-K for the year ended December 31, 1980); Twenty-Second      Supplemental Indenture dated as of April 1, 1981 (Incorporated by      reference to Exhibit 4B to Form 10-K for the year ended December 31,      1981); Twenty-Third |

----

----

| 4.2          | Indenture,      dated as of December 1, 1998, between WPS and U.S. Bank National      Association (successor to Firstar Bank Milwaukee, N.A., National      Association) (Incorporated by reference to Exhibit 4A to Form 8-K filed      December 18, 1998); First Supplemental Indenture, dated as of      December 1, 1998 between WPS and Firstar Bank Milwaukee, N.A.,      National Association (Incorporated by reference to Exhibit 4C to Form 8-K      filed December 18, 1998); Second Supplemental Indenture, dated as of      August 1, 2001 between WPS and Firstar Bank, National Association      (Incorporated by reference to Exhibit 4C of Form 8-K filed August 24,      2001); Third Supplemental Indenture, dated as of December 1, 2002      between WPS and U.S. Bank National Association (Incorporated by reference      to Exhibit 4C of Form 8-K filed December 16, 2002); Fourth      Supplemental Indenture, dated as of December 8, 2003, by and between      WPS and U.S. Bank National Association (successor to Firstar Bank,      National Association and Firstar Bank Milwaukee, N.A., National      Association)  (Incorporated by reference to Exhibit 4.1 to Form      8-K filed December 9, 2003); Fifth Supplemental Indenture, dated as      of December 1, 2006, by and between WPS and U.S. Bank National      Association (successor to Firstar Bank, National Association and Firstar      Bank Milwaukee, N.A., National Association)  (Incorporated by      reference to Exhibit 4.1 to Form 8-K filed November 30, 2006); Sixth      Supplemental Indenture, dated as of December 1, 2006, by and between      WPS and U.S. Bank National Association (successor to Firstar Bank,      National Association and Firstar Bank Milwaukee, N.A., National      Association) (Incorporated by reference to Exhibit 4.2 to Form 10-K for      the year ended December 31, 2006); Seventh Supplemental Indenture,      dated as of November 1, 2007, by and between WPS and U.S. Bank      National Association (successor to Firstar Bank, National Association and      Firstar Bank Milwaukee, N.A., National Association) (Incorporated by      reference to Exhibit 4.1 to Form 8-K filed November 16, 2007); and Eighth      Supplemental Indenture, dated as of December 1, 2008, by and between      WPS and U.S. Bank National Association (successor to Firstar Bank,      National Association and Firstar Bank Milwaukee, N.A., National      Association) (Incorporated by reference to Exhibit 4.1 to Form 8-K filed      December 4, 2008).  References to periodic reports are to those      of WPS (File No. 1-3016). |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.1         | Joint Power      Supply Agreement among WPS, Wisconsin Power and Light Company, and Madison      Gas and Electric Company, dated February 2, 1967.  (Incorporated      by reference to Exhibit 4.09 in File No. 2-27308.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.2*        | Joint Power      Supply Agreement among WPS, Wisconsin Power and Light Company, and Madison      Gas and Electric Company dated July 26,      1973.  (Incorporated by reference to Exhibit 5.04A in File      No. 2-48781.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.3*      # | Joint Plant      Agreement by and between WPS and Dairyland Power Cooperative, dated as of      November 23, 2004.  (Incorporated by reference to Exhibit 10.19      to Integrys Energy Group's and WPS's Form 10-K for the year ended      December 31, 2004.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.4         | Basic      Generating Agreement, Unit 4, Edgewater Generating Station, dated June 5,      1967, between Wisconsin Power and Light Company and      WPS.  (Incorporated by reference to Exhibit 4.10 in File No.      2-27308.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.5         | Agreement for      Construction and Operation of Edgewater 5 Generating Unit, dated      February 24, 1983, between Wisconsin Power and Light Company,      Wisconsin Electric Power Company, and WPS.  (Incorporated by      reference to Exhibit 10C-1 to WPS's Form 10-K for the year ended      December 31, 1983.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.6         | Amendment No.      1 to Agreement for Construction and Operation of Edgewater 5 Generating      Unit, dated December 1, 1988.  (Incorporated by reference      to Exhibit 10C-2 to WPS's Form 10-K for the year ended December 31,      1988.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

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|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.7   | Revised      Agreement for Construction and Operation of Columbia Generating Plant      among WPS, Wisconsin Power and Light Company, and Madison Gas and Electric      Company, dated July 26, 1973.  (Incorporated by reference to      Exhibit 5.07 in File No. 2-48781.)                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.8+  | Form of Key      Executive Employment and Severance Agreement entered into between Integrys      Energy Group and each of the following:  Lawrence T. Borgard,      Diane L. Ford, Bradley A. Johnson, Thomas P. Meinz, Joseph P. O'Leary,      Mark A. Radtke, Charles A. Schrock, and Barth J.      Wolf.  (Incorporated by reference to Exhibit 10.2 to Integrys      Energy Group's Form 10-K for the year ended December 31,      2008.) |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.9+  | Form of      Integrys Energy Group Performance Stock Right Agreement. (Incorporated by      reference to Exhibit 10.2 to Integrys Energy Group's and WPS's Form 8-K      filed December 13, 2005.)                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.10+ | Form of      Integrys Energy Group 2007 Omnibus Incentive Compensation Plan Performance      Stock Right Agreement approved May 17, 2007.  (Incorporated by      reference to Exhibit 10.5 to Integrys Energy Group's Form 10-K for the      year ended December 31, 2007 [File No. 1-11337].)                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.11+ | Form of      Integrys Energy Group 2007 Omnibus Incentive Compensation Plan Performance      Stock Right Agreement approved February 14, 2008.  (Incorporated      by reference to Exhibit 10.6 to Integrys Energy Group's Form 10-K for the      year ended December 31, 2007 [File No. 1-11337].)                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.12+ | Form of      Integrys Energy Group 2005 Omnibus Incentive Compensation Plan Restricted      Stock Award Agreement.  (Incorporated by reference to Exhibit      10.1 to Integrys Energy Group Form 8-K filed December 13,      2006.)                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.13+ | Form of      Integrys Energy Group 2007 Omnibus Incentive Compensation Plan Restricted      Stock Award Agreement approved May 17, 2007.  (Incorporated by      reference to Exhibit 10.8 to Integrys Energy Group's Form 10-K for the      year ended December 31, 2007 [File No. 1-11337].)                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.14+ | Form of      Integrys Energy Group 2007 Omnibus Incentive Compensation Plan Restricted      Stock Award Agreement approved February 14, 2008.  (Incorporated      by reference to Exhibit 10.9 to Integrys Energy Group's Form 10-K for the      year ended December 31, 2007 [File No. 1-11337].)                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.15+ | Form of      Integrys Energy Group 2007 Omnibus Incentive Compensation Plan      NonQualified Stock Option Agreement approved May 17,      2007.  (Incorporated by reference to Exhibit 10.10 to Integrys      Energy Group's Form 10-K for the year ended December 31, 2007 [File      No. 1-11337].)                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.16+ | Form of      Integrys Energy Group 2007 Omnibus Incentive Compensation Plan      NonQualified Stock Option Agreement approved February 14,      2008.  (Incorporated by reference to Exhibit 10.11 to Integrys      Energy Group's Form 10-K for the year ended December 31, 2007 [File      No. 1-11337].)                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.17+ | Integrys      Energy Group 1999 Stock Option Plan.  (Incorporated by reference      to Exhibit 10-2 in Integrys Energy Group's Form 10-Q for the quarter ended      June 30, 1999, filed August 11, 1999.)                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.18+ | Integrys      Energy Group Deferred Compensation Plan as Amended and Restated Effective      April 1, 2008.  (Incorporated by reference to Exhibit 10.14 to      Integrys Energy Group's Form 10-K for the year ended December 31,      2007 [File No. 1-11337].)                                                                                                                                                                                                 |

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.19+ | Integrys      Energy Group 2001 Omnibus Incentive Compensation      Plan.  (Incorporated by reference to Exhibit 10.16 to Integrys      Energy Group's and WPS's Form 10-K for the year ended December 31,      2005, filed February 28, 2006.)                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.20+ | Integrys      Energy Group, Inc. 2005 Omnibus Incentive Compensation      Plan.  (Incorporated by reference to Exhibit 10.2 to Integrys      Energy Group's and WPS's Form 10-Q filed August 4,  2005.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.21+ | Integrys      Energy Group, Inc. 2007 Omnibus Incentive Compensation      Plan.  (Incorporated by reference to Exhibit 10.17 to Integrys      Energy Group's Form 10-K for the year ended December 31, 2007 [File      No. 1-11337].)                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.22+ | Integrys      Energy Group Pension Restoration and Supplemental Retirement Plan, as      Amended and Restated Effective April 1, 2008.  (Incorporated by      reference to Exhibit 10.1 to Integrys Energy Group's Form 8-K filed April      15, 2008.)                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.23  | Five Year      Credit Agreement among Wisconsin Public Service Corporation, as Borrower,      The Lenders Identified Herein, U.S. Bank National Association, as      Syndication Agent, Wells Fargo Bank National Association, as      Co-Documentation Agent, JPMorgan Chase Bank, N.A., as Co-Documentation      Agent, UBS Securities LLC, as Co-Documentation Agent, Citibank, N.A., as      Administrative Agent and Citigroup Global Markets, Inc. and U.S. Bank      National Association, as Co-Lead Arrangers and Book Managers dated as of      June 2, 2005.  (Incorporated by reference to Exhibit 10.22 to      WPS's Form 10-K filed February 28, 2008 [File No.  1-3016].) |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 12     | WPS Ratio of      Earnings to Fixed Charges and Ratio of Earnings to Fixed Charges and      Preferred Dividends.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 21     | Subsidiaries      of WPS.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 23     | Consent of      Independent Registered Public Accounting Firm for WPS.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 24     | Powers of      Attorney.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 31.1   | Certification      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley      Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of      1934 for WPS.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 31.2   | Certification      of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley      Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of      1934 for WPS.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 32     | Written      Statement of the Chief Executive Officer and Chief Financial Officer      Pursuant to 18 U.S.C. Section 1350 for WPS.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 99     | Proxy      Statement for Integrys Energy Group's 2009 Annual Meeting of      Shareholders.  [To be filed with the SEC under Regulation 14A      within 120 days after December 31, 2008; except to the extent      specifically incorporated by reference, the Proxy Statement for the 2009      Annual Meeting of Shareholders shall not be deemed to be filed with the      SEC as part of this Annual Report on Form10-K.]                                                                                                                                                                                                                                                   |

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| *      | Schedules and      exhibits to this document are not filed therewith.  The      registrant agrees to furnish supplementally a copy of any such schedule or      exhibit to the SEC upon request.                                                                                                 |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                       |
| +      | A management      contract or compensatory plan or arrangement.                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                       |
| #      | Portions of      this exhibit have been redacted and are subject to a confidential      treatment request filed with the Secretary of SEC pursuant to Rule 24b-2      under the Securities and Exchange Act of 1934, as amended.  The      redacted material was filed separately with the  SEC. |

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