Customer Presentation June 22, 2010 Allen Leverett – Executive Vice President and Chief Financial Officer

2 Key Areas to be Covered  Update on Power the Future Program  Renewable Mandate in Wisconsin  Sales and Supply Outlook for 2010  Bill Credits Related to Point Beach Sale  Environmental Regulation and Legislation

3 Power the Future Plan  Retire obsolete coal capacity and replace it with state of the art equipment  Add environmental controls to remaining units  Add natural gas combined cycle and renewable capacity  Upgrade the distribution system

4 Power the Future Plan Status Approved by PSCW in 2002 Capacity 1,090 MW Investment $664 million In Service Dates Unit 1 – July 2005 Unit 2 – May 2008 Cost Per Unit of Capacity $609/kW Natural Gas

5 Power the Future Plan Status Approved by PSCW in 2003 Capacity 1,030 MW 1 Investment $2.0 billion 1 In Service Dates Unit 1 – February 2010 Unit 2 – Fall 2010 Cost Per Unit Approximately of Capacity $1,957/kW 1 Approximately $350 million is being invested in the coal units by MG&E and WPPI for 200 MW of capacity. Coal

6 Oak Creek Expansion Contractor Claims  In December 2008, Bechtel submitted claims for schedule relief and additional costs  Bechtel was seeking $517 million for the alleged effects of severe weather, changed local labor conditions and other factors  All claims in arbitration with Bechtel were settled in December 2009  Settlement includes payment of $72 million  Our company is responsible for approximately $62 million of this amount

7 Oak Creek Project Performance  Unit 1 was turned over on February 2  Measured performance was excellent  Net Unit Power MW (1% better than guarantee)  Net Unit Heat Rate – 8,390 Btu/KW-hr (5% better than guarantee)  One of the most efficient coal-fired units in the country  Emissions – All emissions parameters were within permitted limits

8 Power the Future Dramatic Change in Environmental Performance  Compared to the year –Power plant capacity up 50% –Emissions of nitrogen oxide sulfur dioxide down 70% mercury

9 Power the Future Supporting Wisconsin Jobs Labor$1.00 billion Suppliers 0.32 billion Estimated Wisconsin Impact$1.32 billion

10 Projected Electric Generation Mix in 2011

11 Renewable Portfolio Standard in Wisconsin  Total Renewable Energy Requirement TWh TWh Required Percentage of Wisconsin Electric’s Retail Sales

12 Electric Sales in the First Quarter of 2010 AnnualFirst Quarter 2010 Forecast vs Normalized 2010 Normalized vs Normalized 2010 Forecast vs Normalized Residential- 0.2%0.3%-1.0% Small C&I- 3.0%-1.7%-3.2% Large C&I (ex. Mines) 1.7%0.5%2.6% Total Large C&I 1.6%7.8%6.0% Total Retail- 0.4%2.2%0.7%

13 Summer Power Supply  We expect all plants to be operational  Generation reserves meet regulatory requirement  Adequate energy supply to meet peak demand in June, July and August  Voluntary load reduction programs  Power Market Incentives SM  Dollars for Power SM  PMI Pool SM

14 Keeping the Lights On Best in the Midwest  Named the most reliable utility in the Midwest – again  Sixth time in the past eight years that We Energies has received the ReliabilityOne TM award  In 2009, customer outages ran 18 percent below 2008 – our best reliability in the modern era

15 Overall Retail Electric Prices  Completed 2009 with our retail electric rates approximately 4 percent below the national average Department of Energy Information Administration database Cents per kWh

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17 Point Beach Bill Credits  Credits from the sale of the Point Beach nuclear plant have been provided to customers since 2008  All remaining credits will be provided this year  A total of $709 million in credits were allocated to Wisconsin customers by the PSCW  $516 million of these were provided over the course of 2008 and 2009  Electric bills will be impacted in 2011 due to the sunset of the credits  General Primary – 12 to 14%  General Secondary – 7 to 9%  Residential – 4 to 5%

18 Possible Timeline for Environmental Regulatory Requirements for the Utility Industry Ozone PM 2.5 '08'09'10 '11'12'13 '14 '15 '16 '17 Beginning CAIR Phase I Seasonal NOx Cap HAPs MACT proposed rule Beginning CAIR Phase II Seasonal NOx Cap Revised Ozone NAAQS Begin CAIR Phase I Annual SO 2 Cap -- adapted from Wegman (EPA 2003) Updated Beginning CAIR Phase II Annual SO 2 & NOx Caps Next PM- 2.5 NAAQS Revision Next Ozone NAAQS Revision SO 2 Primary NAAQS SO 2 /NO 2 Secondary NAAQS NO 2 Primary NAAQS SO 2 /NO 2 New PM-2.5 NAAQS Designations CAMR & Delisting Rule vacated Hg/HAPS Final EPA Nonattainment Designations PM-2.5 SIPs due (‘06) Proposed CAIR Replacement Rule Expected HAPS MACT final rule expected CAIR Vacated HAPS MACT Compliance 3 yrs after final rule CAIR Remanded CAIR Begin CAIR Phase I Annual NOx Cap PM-2.5 SIPs due (‘97) 316(b) proposed rule expected 316(b) final rule expected 316(b) Compliance 3-4 yrs after final rule Effluent Guidelines proposed rule expected Water Effluent Guidelines Final rule expected Effluent Guidelines Compliance 3-5 yrs after final rule Begin Compliance Requirements under Final CCB Rule (ground water monitoring, double monitors, closure, dry ash conversion) Ash Proposed Rule for CCBs Management Final Rule for CCBs Mgmt Final CAIR Replacement Rule Expected Compliance with CAIR Replacement Rule CO 2 CO 2 Regulation Reconsidered Ozone NAAQS

19 Carbon Legislation  We do not expect legislation to be enacted this year  A House bill was narrowly approved ( ) last year  Senate proponents have been unable to secure 60 votes required to move a bill  Efforts underway in House and Senate to limit the EPA’s regulation of greenhouse gases  This is not likely to succeed  This legislation is likely to be back on the table next year