Thank you for holding for today's Wisconsin Energy's 2008 third quarter conference call. (Operator Instructions)

Good afternoon and welcome to Wisconsin Energy's 2008 third quarter conference call. Before the conference call begins, I will read the forward-looking language. All statements in this presentation, other than historical facts, are forward-looking statements that involve risks and uncertainties which are subject to change at any time. Such statements are based on management's expectations at the time they are made. In addition to the assumptions and other factors referred to in connection with the statements, factors described in the company's latest Form 10-K and subsequent reports filed with the Securities and Exchange Commission could cause actual results to differ materially from those contemplated. During the discussions, referenced earnings per share will be based on diluted earnings per share unless otherwise noted. This conference is being recorded for rebroadcast and all participants are in a listen only mode at this time. After the presentation the conference will be open to analysts for questions and answers. In conjunction with this call, Wisconsin Energy has posted on its website a package of detailed financial information on its 2008 third quarter results at www.wisconsinenergy.com. A replay of our remarks will be available approximately two hours after the conclusion of this call. Now I would like to introduce Mr. Gale Klappa Chairman of the Board, President and Chief Executive Officer of Wisconsin Energy Corporation.

Good afternoon everyone thank you for joining us on our conference call to review the company's 2008 third quarter results. Let me begin as always by introducing the members of the Wisconsin Energy management team who are here with me today. We have Rick Kuester President and CEO of WE Generation, Allen Leverett our Chief Financial Officer, Jim Fleming our General Counsel, Jeff West Treasurer and Steve Dickson our Controller. Allen, of course, will review our financial results in detail in just a moment, but as you saw from our news release this morning, we reported net income from continuing operations of $0.65 a share in the third quarter of 2008. This compares with $0.70 a share last year. Earnings were down largely because of the shape of our power purchase payments for the energy we buy from the Point Beach Nuclear Units. As we discussed in our last earnings call, the Power Purchase Agreement is designed to reflect the change in market prices that occur through the year and market prices are usually higher during the summer months. However, the $0.65 a share we're reporting is clearly better than our financial plan, in large part because of lower than expected costs for diesel and natural gas during the quarter. Our service area has a well-diversified industrial base, which tends to help mitigate the impact of an economic downturn. However, in the quarter we did see a slight drop in electric sales and that has continued into October. The largest declines have occurred in two sectors where we've seen significant declines over the past several years, automotive and paper production. At the same time, we've seen sales increases in other areas namely chemicals, mining and parts of the service sector. As you would expect, we're also experiencing a slight increase…

As Gale mentioned earlier, our 2008 third quarter earnings from continuing operations was $0.65 per share. I will focus on operating income by segment and then touch on other income statement items. I will also discuss cash flows for the year-to-date and update our earnings guidance for the full year. Our consolidated operating income was $139 million as compared to $153 million in the third quarter of 2007, a decrease of $14 million. Operating income at our utility energy segment totaled $113 million, a decrease of $24 million versus last year. Now before I discuss the primary drivers, I would like to remind you of a couple of developments that caused significant changes in individual items in the income statement. First, in September of 2007, we sold our Point Beach Nuclear Plant and entered into a long-term Power Purchase Agreement with the new owner. Since we no longer own Point Beach our results this year do not include operating or maintenance costs related to the facility, nor do we incur any depreciation or decommissioning costs associated with the plant. Of course, our fuel and purchase power costs this year have increased as a result of the Power Purchase Agreement we now have. Also, as we mentioned in our quarterly conference calls this year, we expect to see a different quarterly distribution of costs and earnings this year as a direct result of the Power Purchase Agreement. Our income statement this quarter reflects $157 million of gained amortization relating to the gain of the Point Beach sale that is being used for the benefit of our customers. This includes a one-time refund of $62.5 million to our [first] wholesale customers, with the remainder issued in the form of bill credits to our Wisconsin Electric retail customers. I would now like to…

Allen, thank you very much. Overall, we're on track and focused on delivering value for our customers and stockholders.

(Operator Instructions) Your first call comes from Greg Gordon – Citigroup

Two questions. One is, as you look at the dividend policy of the company, you did state pretty much the same philosophy on the second quarter call as you're stating now in terms of what you plan on recommending to the Board. Has your point of view on what a reasonable level of dividend policy in '09 should look like changed at all in the last three months, given how much tighter market conditions have gotten on credit?

Gregg, not really. I mean we tend to look at things in three to five year increments to the degree that we have certainty and we really are making a dividend decision and recommendation to the Board based on not just a six month look or not just a one year look, but on how we see the business evolving over the next three to five years. So, if anything, we've been boringly consistent about that. I mean clearly, we've taken into account what we're seeing in the credit markets, but as Allen mentioned to you during his portion of the call, our liquidity situation is in good shape. We have some flexibility in terms of the next 14 months and the debt offerings. We don't need to issue any additional equity. So, certainly we've taken a look at it and factored in the current credit conditions, but it has not changed our long-term three to five year view. Greg Gordon – Citigroup: So, all things being equal, the payout ratio that you would have thought appropriate in August is the same payout ratio you would recommend today if you were going to the Board with that recommendation?

That is exactly right, Greg.

The second question for Allen, can you reiterate what you said about where you thought you'd be on fuel recovery going into the summer and where you think you'll be now? And can you tell us whether the majority of that benefit has already occurred in the peak summer months and how much of that do you think is going to flow through into Q4, given the decline in gas prices?

Sure, I'd be happy too. Just by way of context, again on the July 31 call, at that point Greg, we expected our under-recovery for the calendar year 2008 to be between $20 million and $40 million, and we now sitting here today, our latest projection would be essentially to be in a fully recovered position for calendar year 2008. And that was very much driven really by three things. First, the move in the natural gas strip. I think it was approximately $14 per million back in July when we did that projection. It's about half that or $7 per million now. Fuel oil went from roughly $4 a gallon in July to roughly $2 now. And, we also over the course of the summer because of the mild weather, just in from a volume standpoint, we burned much less natural gas than we expected. So, that's really what moves you from the 20 to 40 to the roughly fully recovered. In terms of the timing, Greg, within the year, if you look through the end of the third quarter, say, year-to-date and look at your fuel recovery situation, we were approximately $24.1 million under-recovered on fuel, year-to-date through the end of September 30, under-recovered $24 million. So, essentially when you look at the fourth quarter, we would expect to have that turn and come to roughly a neutral position by the end of the year.

Greg, Allen's exactly right and just one other point that might be helpful. We have an agreement in place for this calendar year with the Wisconsin Public Service Commission, that if, if fuel prices where to stay very low and we some how made up all of the deficit fuel recovery and over-recovered, we would return to customers the over-recovery. So, anything above fully recovered would not float through to earnings, would instead it would roll back to customers next year. Greg Gordon – Citigroup: So you wouldn't keep the benefit inside the debt [inaudible] then.

We would keep the benefit up to fully recovered. Anything above full recovery, there would be no debt [inaudible] this year if you will, it would all above fully recovered, go back to customers. Greg Gordon – Citigroup: Right, because my understanding of the new rules is that there is a 2% bandwidth.

Well, there's a 2% bandwidth in place today, and the new rules are really not in a position to become new rules yet. I think the Wisconsin Commission's now decided to step back, take another look and perhaps seek some guidance from the legislature. But, there is a 2% bandwidth or sorts in effect today. Greg Gordon – Citigroup: So the proposed changes in the fuel rules that we were looking at potentially getting codified this year are now sort of been put on hold.

That is correct. Greg Gordon – Citigroup: And in their place you have a short-term patch, which basically says, if you get back to fully recovered that's where you stay.

For this calendar year, that is correct.

And then Greg maybe one other point of, just point of background, if you look at the fourth quarter of '07 and compare it on really a consistent basis to what we would expect in '08, it's a pretty similar pattern. So we would see on an apples-to-apples, about a $20 million turn last year in the fourth quarter and we're expecting about that kind of swing in the fourth quarter this year to bring us back to that hopefully fully recovered position for the calendar year.

Your next question comes from Michael Lapides – Goldman Sachs.

I actually have two questions. One, on the south Oak Creek environmental CapEx, are there any challenges left over related to that or any rumblings of kind of any of the parties potentially appealing the PSCW opinion or order?

Good question, Michael, the answer is, no. There was an environmental group that opposed the [AC] upgrade. They asked the commission for reconsideration, but the commission denied that reconsideration and I believe all is clear and there is nothing pending whatsoever in terms of any legal challenge.

And Allen, on short-term debt balance, and I apologize, you talked about it in your prepared remarks, and I'm not sure I captured it all. Can you talk a little about plans for treating the $914 million on the short-term debt, over the next 12 to 14 months?

You're right on an actual basis. We were at approximately $914 at the end of the third quarter, however, on the very next day after the end of the quarter on October 1st, we closed on $300 million worth of term financing at Wisconsin Electric and we used that to pay down commercial paper. So, if you looked at our pro forma balances, if you will on September 30, so pro forma for that security issuance, Michael, we were at $391 million at Wisconsin Energy and $148 million at Wisconsin Electric, which if you look at that on a percentage of the debt that we had outstanding at September 30, we had roughly $4.6 billion worth of debt outstanding. So, those pro forma [CP] balances, would represent about 13.5% of our outstanding debt and roughly 8% of our total capitalization. In terms of security issuances that I would expect for the remainder of 2008 and 2009 combined, we would hope to do on the order of another 300 million of term financing at the holding company and another 500 million of term financing at Wisconsin Electric. But, I would just stress, Michael that that's over a 14-month period that we would be looking at doing those financings and we really have a fair amount of flexibility in terms of when we time those within that 14-month window. Is that helpful?

That's extremely helpful. Last question, pension cash requirements for the next 12 to 14 months?

Yes, and maybe to just sort of put that into context. We made a contribution in January of this year to the qualified plans $48 million. So, that's a gross of tax benefit figure, a $48 million contribution. As I sit here today, I would expect in calendar 2009 that we would make approximately a $180 million contribution. So, up quite a bit in '09 as compared to '08. However, I would just reemphasize what Gale already said in his response to the dividend question that Greg Gordon asked. We look at pension contributions, as well dividend decisions over a multi year basis, so you should not conclude that because we've had a big pick up in the projected pension contribution in '09 as compared in '08, that that somehow impacts our dividend decision.

Allen's exactly right. We're looking at this, as we've mentioned on a three to five year basis, and I mean, clearly the market conditions are such that many, many companies are going to have to make significant cash contributions to their pension plans next year.

Your next question comes from Paul Ridzon – KeyBanc Capital Markets. Paul Ridzon – KeyBanc Capital Markets: Had a question, you gave I think $0.53 to $0.57 guidance for the third quarter. Could you just outline the [delta's] versus plan. I realize fuel must be a really big piece of that.

Fuel's the biggest piece.

Almost all of the swing, Paul, as we sort of said, well alright, plan would be $0.53 to $0.57. Almost all of the swing between the $0.53 to $0.57 and the $0.65 actual is what happened with fuel, because we had a very pleasant surprise, I guess if you will, on fuel recovery. But, it was a surprise nonetheless.

And clearly, none of us anticipated the incredible volatility in the fuel markets, particularly with the crash of natural gas prices. The two things that helped us the most really were the huge decline in the natural gas strip and the fact that the diesel fuel surcharges that were being passed through to us from the railroads for moving coal to our power plants. Those diesel fuel charges already declined as well, as really as oil prices decline. So, a very positive surprise and our units operated quite well during the summer. So, put those together and we've had a very positive movement in fuel recovery. Paul Ridzon – KeyBanc Capital Markets: What was the delta in the three Q fuel balance?

I'm sorry, Paul, say again Paul Ridzon – KeyBanc Capital Markets: How much did the fuel balance change in the third quarter?

From the end of the second quarter? We were about, about $3 million. We were expecting much less – we were expecting a greater under-recovery in the third quarter. I think we ended Q2 at about $21 million of fuel under-recovery for the year-to-date. We're now at 24.1.

And the projected under-recovery for the quarter was much, much greater than that.

Much greater.

One other, maybe point of background, Paul, and I don't know if it will be helpful or not, of course, the weather was milder than normal in the third quarter. That certainly helped fuel recovery as we mentioned, but obviously adversely impacts margin otherwise, but we were able to offset that with better experience than we expected on O&M. So, the O&M and the weather effects were almost neutral when taken together. And, then the big swing that you're left with is fuel recovery.

And Paul, the other reason that we were projecting a much larger under-recovery for Q3, again as we mentioned earlier in the script, was because of the shape of our power purchase payments for the Point Beach Units. If you turn back the clock a year ago, we still owned the Point Beach units. This year we have a Power Purchase Agreement after the sale of the units, and as I mentioned the shape of that Power Purchase Agreement has us paying higher purchase power costs in the summer than in the shoulder periods. Paul Ridzon – KeyBanc Capital Markets: Did you actually absorb fuel under-recovery in the third quarter, but to a lesser extent than planned?

That is a good way to describe it. Paul Ridzon – KeyBanc Capital Markets: And do you use five year pension smoothing or what is your smoothing method?

When we determine the actuarial value of assets, I believe we used two year smoothing when we look at the actuarial value of assets for the purposes of funding. Now, when you look at say [AS 87 expenses, which would be more in the GAAP treatment, you would do smoothing of gains and losses and so if you’re in a position where in a year you earn more than your actuarial return assumption or you earn less, you then smooth that in to income over four years. But for the purposes of funding and the actuarial value of assets, you do that over two years. Does that help? Paul Ridzon – KeyBanc Capital Markets: Yes it does.

Your next question comes from Gary Lenhoff – Ironworks Capital. Gary Lenhoff – Ironworks Capital: You may have addressed this before and I just missed it, but can you tell us as of the most recent date you have, what the performance of pension assets has been?

Sure, as a matter of fact, we have that right here in the room with us.

Yes, Gary, these guys, I tend to get a report every day. Through the end of yesterday, our return was minus 26.7%, so the asset return was minus 26.7 through the end of yesterday, and maybe as some additional context, Michael, he just asked me about the funding assumption for next year. And that funding assumption one $180 million was based on the assumption that we would experience a minus 25% return this year, but that the liability discount rate would be 6.5%. So although our experience year-to-date is just a little more negative than minus 25, if we’re going run the numbers today in terms of the appropriate liability discount rate, the liability discount rate would be closer to seven which would reduce the present value of the liabilities. So, net, even with the performance through today or through yesterday rather, I would expect that we will still be looking at about a $180 million contribution. Gary Lenhoff – Ironworks Capital: So, if I'm thinking about this correctly, the value of the assets is down about $250 million, which at your expected return assumption is about $20 million, $21 million or so of additional pension expense if we though about it on a cash basis.

On a cash basis, yes. Gary Lenhoff – Ironworks Capital: That’s helpful thanks very much.

Your next question is from [Ted Hine] – Catapult Capital. [Ted Hine] - Catapult Capital: Had a few quick questions. First just on whether year-to-date, where are you guys, ahead or behind kind of compared to normal?

While Allen looks at his numbers, let me mention one thing to you about the summer. We had a cool summer this year, fairly normal summer last year. But to put this summer's experience in perspective, we did not have one single 90-degree day in Wisconsin the entire summer. So, you've heard of the endless summer, well this is was a summer that never started. Well, Allen, do we have nine months…

If you look at in margin level, [Ted], which is probably the most relevant for your purposes, if you look nine months ended September 30, we were about $7 million below normal on margin or in other words if we’d experienced normal weather through the end of September we would have expected our margins to have been in about $7 million higher than normal – than actual. Through the end of September of '07, so September 30, 2007, it was essentially normal, so if you’re looking at either a comparison to last year’s weather or a comparison to normal, it’s about a $7 million negative swing. [Ted Hine] - Catapult Capital: Compared to plan at the guidance at the beginning of the year, you're just slightly behind and you’re obviously making it up with better fuel recoveries?

That’s correct, yes.

And better O&M, yes. [Ted Hine] - Catapult Capital: And better O&M. And just secondly, Allen, I know that you mentioned at some previous conferences you expected to be I think $15 million under-recovered in 2009. Is that kind of still where you expect to be or has your outlook changed on that?

At the moment, [Ted], that’s still the number we’re using for planning purposes, but I would add one thing. In our fuel clause next year will be in the neighborhood of $1.3 billion. So, to be any more precise than a $15 million current projected under-recovery for our base plan, we’re not going to get any more precise than that. And it will change $15 million times between now and next year, again because of the volatility of the fuel markets and the size of our fuel clause. [Ted Hine] - Catapult Capital: But the $15 million bogey is still the best one to use at this point?

That’s unchanged from what Allen mentioned back in September, yes.

We still view that as reasonable planning assumption.

Right.

Your next question comes from Dan Jenkins – State of Wisconsin Investment Board. Dan Jenkins – State of Wisconsin Investment Board: Just a few questions here. First, I forget, could you remind when does this amortization at a gain end? Does that end at the end of this year or does it still have another year to run after that?

Just a quick review on that. We’re essentially providing credits if you will, in three jurisdictions, Wisconsin, Michigan, and [inaudible]. Michigan and [inaudible] are done now and I would not expect – well, there won’t be any more credits in Michigan and [inaudible] related to Point Beach. So, the only credit that would remain would be in the Wisconsin jurisdiction and those were the bulk of the credits. So sitting here today Dan, I would expect that really you would continue to see credits for the remainder of this year, as well as calendar ’09, ’10, and there could be a very tiny amount that would lapse over into the early part of 2011. But I certainly would expect to see credits for the remainder of this year, '09 and '10.

And that is exactly what the Wisconsin commission envisioned, at least a three year amortization if you will, of the credits onto customer bills. And I think Allen is right, we may see some additional small amount of credit move into 2011, depending upon energy sales and depending upon the interest that’s earned in this restricted account. But certainly for three years, eight, nine, and 10 and maybe a chunk into ’11. Dan Jenkins – State of Wisconsin Investment Board: That's pretty much like a straight line amortization, so the –

The amount of credit, obviously, if you have this based on energy usage so you can get variability there. But also even at target – even at the budget if you will on energy sales or at least the budget they set rates based on, there was a downward pattern in credits as you go over that roughly four-year period.

The biggest credit amounts will be this year and then it will step down next year. And then, there will be another step down in 2010. Dan Jenkins – State of Wisconsin Investment Board: So it was front-end loaded then.

Exactly.

To some degree, yes.

Yes. Dan Jenkins – State of Wisconsin Investment Board: On the financing needs, I know you have $320 million that matures in December and it sounds like you used that $300 million you issued at the first of this month to pay down short-term debt. Would you anticipate returning to the market or taking short-term debt back up or how you would manage that maturity?

Well, at this point looking at the financing plan over the next 14 months, $300 million at the whole debt, $500 million in term financing at the utility. I have a fair amount of flexibility within that 14 month window, so we’ll look at conditions and pick what we think are appropriating timing for those offerings, although, my philosophy is sort of a more dollar cost average. So I certainly wouldn’t expect to go out and do all the $800 million within a very compacted period of time. I think we would try to spread it out a bit more over the period, because candidly I don’t know which way spreads or treasury yields are headed. Dan Jenkins – State of Wisconsin Investment Board: On your cash flow statement, what was going on with the differed taxes and the working capital changes from this year versus last year's? Is the deferred taxes related to the amortization of the debt?

In terms of cash taxes, let me address that and then I'm going to ask Steve Dickson to talk about the working capital component of it, Dan. But on the cash taxes question, what's really our deferred taxes, which is of course related to cash taxes, we had a lower cash tax rate in 2008 because we were able to recognize quite a bit – we were able to go ahead and expense for tax purposes, items that previously would have been depreciated for tax purposes over a longer period of time. So, another way to think about that is we basically were able to advance some deductions for tax purposes that reduces cash taxes and then of course, results in a buildup in the deferred tax liability.

This was a result of a very thorough tax depreciation study that we completed.

And, Dan, as you look at the consolidated condensed statement of cash flow, I assume the line item you're looking at is working capital and other where it looks like it increased about $226 million between years, the two biggest drivers really to deferred costs and then deferred revenue. On the deferred costs, last year we in a position where we incurred high fuel cost and we deferred them on our balance sheet as we requested recovery of those, and so that was a cash outflow. This year with the new rate order, we are amortizing a lot of those costs, so the swing related to deferred cost is about $130 million this year compared to last year. The second largest component relates to the deferred revenue. As Al and Gale mentioned, we're collecting cash carry costs in the power of the future plans, that is as construction of progress balances grow, the amount of cash that we collect increases and that is about $33 million. So those are the two largest items in that account. Dan Jenkins – State of Wisconsin Investment Board: It sounds like since the recovery of fuel costs, what kind of reverse in the fourth quarter would you expect to see that then expand even more in the fourth quarter.

I think that's two different things, Allen was talking about the ongoing fuel costs. The costs that we deferred last year did not go through fuel expense, and so that was not in the calculation last year. What we would expect to see in the fourth quarter is a continue amortization of the regulatory assets and so that's a non-cash item, which will increase cash flow. And I don't think we had significant deferred items in the fourth quarter last year, so we won't see a huge change. Dan Jenkins – State of Wisconsin Investment Board: The last thing I was wondering about is on your sales numbers for the third quarter, you actually had negative revenues from wholesale other, which seems somewhat unusual. I was wondering if you could explain.

I don't have that CapEx detail.

Yes, Dan, as Allen mentioned in his discussion, in the third quarter we made a one-time refund to our preferred wholesale customers and that was for their share of the amortization of the gain and that was $62.5 million. Where that was reflected on our income statement was we reduced our revenues, our wholesales revenues by $62.5 million, and then we increased the amortization of the gain. So, on the income statement it was neutral, but GAAP requires us to show refunds as a reduction of revenues and so that's why it looks like negative revenues for that customer class.

Your next question from [Steve Gambuzo] – Longboat Capital Steve Gambuzo] – Longboat Capital: A question on the pension funding. How does that $180 million compare to the amount of kind of non-cash accrued pension expense embedded in your rate, because I would imagine that it's really the differential between those two numbers that is really kind of the outflow in the cash flow statement. Is that right?

I believe the pension expense that was in the last rate case was probably on the order of $30 million. Steve Gambuzo] – Longboat Capital: So, that's how much is non-cash accrual as in your rate structure?

That's how much is included in rates and therefore you recover in cash, so that's the $30 million. And then the deficit that you're in effect are having to fund above that, is the difference between the 180 and 30 or 150 million, if I'm following you. And then, of course, you know that [Steve], but just to remind everybody on the call, the 180 is tax deductible so I take gross 180 and then will tax benefit that 180, so I'll get a deduction for 180 on the tax return.

Your next question comes from Maurice May – Power Insights Maurice May – Power Insights: I'm old fashioned and I have another question on dividends. Your previous comments I recall as being a dividend payout target of some 50 to 60%, is that what it was?

Maury, what we've said is that we have a near-term policy, which we are now revisiting, and that near-term policy basically is tied to what we believe we can afford during this period of heavy construction spending and that is trying to grow the dividend about half the rate of earnings per share growth. Now we're revisiting that, but we have not yet publicly discussed what the new dividend payout ratio range would look like. That's something we're going to have a very thorough discussion with our Board about in early December and hope to communicate with you after that.

Your next question comes from Alex Kania – Merrill Lynch Alex Kania – Merrill Lynch: Just some thoughts I'd like to hear from you guys on just the breakdown on your retail sales about how you think weather versus some of the economic factors, especially on a pretty quick crazy quarter with respect to weather, but just what your thoughts are just generally on fundamental demand and trends you've been seeing recently.

I'd be happy to discuss that. First of all, in general terms just to kind of set the playing field, manufacturing demand for electricity is not very weather-sensitive, and you heard us talk earlier about some of the pluses and minuses we're seeing in our base of manufacturing customer. So, in looking at roughly 37, 38% of our total retail sales being to manufacturing customers, we're only down about 1% so far this year in terms of energy consumption by our manufacturing base. Clearly, paper production and automotive and automotive parts are deteriorating no question about that, but we've seen other bright spots and we continue to see interesting growth in the commercial or non-manufacturing segment of our customer base. There's a significant expansion here in healthcare. We have several new hospitals, several new medical research centers being built so we really see some interesting expansions that has offset some of the weakness in the non-manufacturing base. So, down about 1% on the manufacturing side so far. In the commercial or non-manufacturing side, a little more weather sensitive but we're seeing some growth offset other weakness, and then residential really is tied to two things, your household formation and customer growth and the weather and the residentially obviously swings very much with the weather. I mentioned earlier that we're still seeing positive customer growth. That is not the case in other parts of the country, but we're still seeing slower, but positive customer growth about up one-half of 1% over the last 12 months, and a fair amount of conversions on the natural gas side from propane to natural gas. So, I would look at the weakness that we saw so far this year particularly this summer in residential demand as purely weather driven.

Our next question from [Paul Paterson] – Glenrock Associates] [Paul Peterson] – Glenrock Associates: Almost all my questions have been asked, but the only thing I wanted to follow up was, when you were talking to Greg about the legislature looking at the new fuels or I guess the PSC going to the legislature, could you just elaborate a little bit more about what that looks like now. Is there a bill or when would that happen or...

I would be happy to elaborate. The answer is we're not certain. The Commission is still considering what path to take and what specific actions to move forward on. My sense is, although the commission has not made a final decision, that there is some uncertainty about whether the Commission has the administrative authority under Wisconsin law to change the fuel rules. And in light of that uncertainty, they may submit to the legislature a proposed changed in the fuel rules for the legislature to vote on. That’s the current discussion at the Commission. Does the Commission have the legislative authority under the law to make an administrative change in the fuel rules or not. So I would expect that if the Commission makes a final decision that they need to go to the legislature for a change in the fuel rules. If they would probably propose the change to the legislature in the form of a bill or part of an energy package that might be submitted in the spring. That’s my current guess, but no final decision has yet been made by the commission. Forward on my sense is although the commission has not made a final decision. That there is some uncertainty about whether the commission has the administrative authority under Wisconsin law to change the fuel rules. And in light of that uncertainty they may submit to the legislature a proposed changed in the fuel rules for the legislature to vote on. That’s the current discussion at the commission. Does the commission have the legislative authority under the law to make an administrative change in the fuel rules or not. So I would expect that if the commission makes a final decision that they need to go to the legislature for a change in the fuel rules. If they would probably propose the change to the legislature in the form of a bill or part of an energy package that might be submitted in the spring. That’s my current guess but no final decision has yet been made by the commission. [Paul Peterson] – Glenrock Associates: So it’s going to be some time before it’s resolved it sounds like?

I would think we’ll see some sort of resolution next year. If I were a betting man that would be my bet.

Your next question is from Rick [Inaudible] – Duff Capital Advisors Rick – Duff Capital Advisors: I was just wondering kind of a different topic, can you update us on the carbon capture pilot that’s going out at your coal plant?

We’ll be happy to give you the data we have at the moment. Remember we have a one-year experiment here. The manufacturer had some technical difficulty in the early stages with some aspects of the technology, particularly the chilled ammonia piece. And that has now been rectified and data collection is underway and Rick I would expect sometime early next year we’ll see some specific data, but I understand they’ve been reasonably pleased with the performance.

Yes, I think that’s right Gale, and of course this is being funded by a consortium and that data probably will take a while to work its way through that before it becomes public.

We will certainly as part of our commitment that the group of utilities through the Electric Power Research Institute in Austin, which is the manufacturer, we will make a public report on the on this data, as we collect the data and as we understand the efficiencies of the technology, and the effectiveness of capturing the carbon with this chilled ammonia process. Rick – Duff Capital Advisors: So basically that beginning problem, because I think last call or one of the more recent times you’d indicated about this time you’d have a much better sense. It seems like it’s a two three-month delay in that.

Exactly right, because there was about a two to three month delay in getting consistent operation of the technology in light of just some of the startup issues they had. But they’ve overcome those issues and again the sense we get is that they’re pretty pleased with the performance, so we’ll know a lot more I’m sure early next year.

Your ext question comes from Greg Gordon – Citi Group Greg Gordon – Citi Group: Pension you’ve told us about your projected cash obligations you have $30 million in rates in terms of operating expenses from the last rate plan. Relative to FAS 87, what would you project to be your increase if any in FAS 87 pension expense next year as you look at it today and as the regulatory mechanism that mitigates the impact on earnings between rate cases?

Well, certainly we'll start with the second question first. We run a two-year cycle, so in Wisconsin your pension expense is sort of is what it is, the one that’s included in rates and there is no true offer of anything. So if you have either a big increase or big decrease that that's just something that you have to plan around as a company. So, there’s not any true up mechanisms.

Not between rate cases.

Not between rate cases, but obviously when you five a rate case say next spring, you put in your latest projection for 10 and 11 and then they’ll set rates on that. And in terms of an annual increase because of the smoothing, I don’t know, Steve, did you want to take a crack at what that increase might be?

There’s so many factors that go into pension expense and the smoothing of returns, down to the asset discount rates changes in asset class. This year we think we’ll have about $22 million, $24 million pension expense. Next year we expect to see an increase, but at this time we’re not in a position to say.

There’s one big variable obviously Greg in addition to the asset returns is where that liability discount rate turns out. And so you can get moved – very big move in pension expense based on what happens to that liability rate. So it’s a little hard and I mean, I'll certainly be happy when we do our February call to talk about what we project and what the key assumptions are then, but it’s still a little early.

Right now, as I think Allen mentioned earlier, if the year were to end today we would actually be helped a little bit by the difference in our assumption on the discount rate versus where the discount rate really appears to be. So we will be happy to discuss in great detail with you on the call, but at the moment we’re not panicking over this because again, I think we have some conservative assumptions and that discount rate could make a huge difference. Greg Gordon – Citi Group: My understanding is that you would amortize the under-recovered balance you’re saying over, is it a four-year period?

A four-year smoothing of the asset returns yes. Greg Gordon – Citi Group: But to the extent your discount rate goes up that reduces the projected benefit obligation by a pretty meaningful amount and that’s an offsetting factor in the impact on earnings, correct?

Absolutely, right. Greg Gordon – Citi Group: And how does that offset is that also smoothed over a four-year period or is that booked in, is that offsetting the production in the [PBO] book just in the period?

Off the top of my head I don’t know the period over which you do the effect liability smoothing. I think it’s’ more than four years though, Greg. Greg Gordon – Citi Group: But there’s a big mitigating factor to the extent that interest rates stay high?

You are correct.

Yes, you have to be careful what you hope for, but yes, that’s right if you have high interest rate.

Well that concludes our conference call for today ladies and gentlemen. We appreciate your participating. If you have any other questions, Colleen Henderson will be available in our investor relations office at area code 414 221 2592. Thank you again, good afternoon everybody.

This concludes today's conference call. Than you for joining and have a great day.