Welcome to Wisconsin Energy's conference call to review first quarter 2009 results. (Operator Instructions). Before the conference call begins I will read the forward-looking language. All statements in this presentation other than historical facts, 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. 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 2009 first 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.

Colleen, thank you. Good afternoon everyone. Thank you for joining us on our conference call to review the company's 2009 first 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. Regeneration; Allen Leverett, our Chief Financial Officer; Jim Fleming, General Counsel; and Steve Dickson, Controller. Allen will review our financial results in detail in just a moment, but as you saw from our news release this morning, we reported earnings from continuing operations of $1.20 a share for the first quarter of 2009. This compares with $1.04 a share from the same period in 2008. Our stronger earnings this quarter were largely driven by a reduction in our cost of fuel and purchase power. On April 27, we filed with the Public Service Commission of Wisconsin to reduce retail prices for our electric customers in Wisconsin, in light of the significant drop we've seen in the cost of fuel, particularly natural gas and diesel. Based on actual fuel costs to date, and projected data for the remainder of this year, we expect that our annual fuel costs for 2009 would be about $67 million less than what we had been collecting in customer rates. Now, I would like to touch briefly on the impact of the ongoing recession across our service area. Generally our region has a well diversified industrial and commercial base which helps to mitigate the impact of most economic downturns. However, in this economy we're seeing three sectors that have been dramatically affected. They are ore mining, primary metals and paper production. Led by declines in this three sectors our electricity sales to large commercial and industrial customers dropped by 17.8% in the first quarter,…

Thank you, Gale. As Gale mentioned earlier, our first quarter 2009 earnings from continuing operations were $1.20 per share. I'll focus on operating income by segment and then touch on other income statement items. I will also discuss cash flows for the quarter and discuss our earnings guidance for 2009. You may want to refer to page six of the earnings package as I make my remarks. Our consolidated operating income was $243 million as compared to $218 million in the first quarter of 2008 or an increase of $25 million. Operating income in our utility energy segment totaled $260 million or an increase of $10 million versus last year. The largest single factor impacting our utility operating income related to favorable recoveries of fuel. In the first quarter of 2009, we experienced $28 million in favorable fuel recoveries, as compared to the first quarter of 2008, where we realized $14 million in unfavorable fuel recoveries. On a quarter-to-quarter comparison, this led to a $42 million favorable impact on operating income. In addition to the fuel recoveries, our first quarter 2009 benefited from $28 million of other pricing increases, largely related to the January, 2008, Wisconsin Retail Rate Order, net of bill credits. On the negative side, the decline in retail electric sales resulted in a $20 million reduction in operating income. We experienced $15 million in increased amortization related costs and we recorded a $10 million reduction in revenues, because of the PSCW mandated refund. Our depreciation expense increased $5 million on a quarter-to-quarter basis, due in large part to the wind additions in May, 2008. While 2009 has been slightly colder than normal, we estimate that weather had a negative $5 million impact, as compared to 2008, because the prior year experienced an extremely cold first quarter. Other…

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

(Operator instructions) Paul Ridzon from KeyBanc, please state your question.

One of the trends I think we have all been surprised by is the fact that industrial sales seemed to have less of an impact than people had feared, given that latter rates are set on monthly peak demand charges rather than absolute megawatt hours. Is that kind of how your rates are structured?

Paul, you are absolutely right. Particularly, with our large, commercial and industrial customers the demand component is a significant portion of their bill. And what we are seeing, anecdotally, with the pretty significant decline in kilowatt hour sales to major manufacturing firms. We are seeing them reduce weekend production. We are seeing them reduce second and third shift production. When they do run, they are running pretty much at full capacity. So you are absolutely right, in that. We haven't seen a significant margin erosion as one might expect if you just looked at an 18% decline in sales.

I guess the biggest risk is that they actually shutdown and what do you see as far as that trend?

We stay in pretty good close touch with our customers at the moment and we did see this happen obviously late last week. We have one major additional shutdown and that's the engine plant that has been a long time Chrysler engine manufacturing plant near Kenosha. That's one of our 20 largest customers. Obviously, Chrysler went into bankruptcy. That plant will not operate, nor will any other Chrysler plant until Chrysler emerges from bankruptcy. And then the current thinking is that that plant will shutdown permanently at the end of 2010. Although, the state is making a major effort to try to extend the life of the plant, but the only major customer that I see at risk in terms of complete shutdown at the moment would be the one we saw announced last week and that's Chrysler.

And what are the wholesale markets currently offering as far as margins relative to kind of the special rates that these large industrials get?

Well, really that's not a very big impact if any impact on our earnings, because if you think about where our earnings come from, probably 90% to 92% of our earnings are coming from our retail regulated operations. We have formulary tariffs for our wholesale power business. And so, the month-to-month or day-to-day gyrations in the wholesale market are not having a major impact on us. But I will say and I'm looking at Rick to see if he has any additional information. We have seen a major decline in the MISO prices across the first quarter. We have very, very efficient new natural gas units at Port Washington, they are among the most efficient in the country, and there were times, when our natural gas units were being dispatched into the MISO market ahead of our base load coal. So, really the world has kind of turned upside down with natural gas prices at $3. But in terms of just day-to-day impacts of the MISO market not a huge impact on earnings.

Okay. Allen talked about a $10 million offsetting impact of MISO refund relative to the fuel refund to customers. What was that item?

It's called revenue sufficiency guarantee money. Essentially, its dollars that generators are paid to make sure that the system is well supported and functioning well, and, that proper reserves are in place in any given hour. And FERC ordered basically a recalculation of RSG payments to generators, compared to what MISO had been paying to generators. Those dollars, theoretically, are being collected by MISO from those who owe the money, which is largely power marketers and the dollars will flow to the generators we believe over the course of the remainder of 2009. Allen?

Yes, originally, Paul, we had expected to just flow those dollars back to customers as we received them. What the Commission ordered us to do, instead of that is say, all right, look, you anticipate $10 million from the stream of revenues later in the year, go ahead and give back the $10 million now and then obviously the company will retain those $10 million later in the year to offset the $10 million that we are giving to customers this month.

So in essence there are two different fuel actions taking place. This month, there is a one-time refund to customers for fuel [over] recovery in 2008 and for this particular refund that we talked about the RSG revenues and then in addition to that the lower ongoing fuel recovery rate went into effect on May 1. Is that responsive and helpful?

Yes. So we should continue to see April benefit from lower fuel in the second quarter?

The answer is yes.

Leslie Rich from Columbia Management, please state your question.

Allen was zipping through those percentage declines in the different customer classes.

He zips pretty good.

Yeah, he is very zippy. And I want to make sure I understand your current expectations versus previous. I believe at the beginning of the year, you had forecasted 3% decline in total retail sales. Is that still your current thinking, or you are thinking it's going to be down 6%?

Our original forecast for the entire retail across all classes, Leslie, so residential, commercial and industrial, small as well as large, including the mines, the original forecast was for about 4% reduction overall. And what I would say today again on the same basis, about an 8% reduction.

Across all classes?

Yes.

Okay and then that translates into about $20 million pre-tax?

It roughly translates into about $40 million. My assumption is that we can offset about $20 million of that within the business and then the other $20 million is assumed to be offset with fuel.

That would be the first quarter fuel positive recovery.

Then [Cedilla Merky with CDP US], please state your question.

Couple of things, one, can you, given the changes in gas prices and everything like that, when the coal units go into operation, what are you currently kind of estimating are the fuel savings associated with displacing purchase power (inaudible) with natural gas?

I am we have the precise number in the room with us, but our 2.8% requested rate increase for 2010 reflects both the increased investment costs as the units come into service, but it also reflects the fact that our two new coal units will dispatch a very significant amount of time and lower our fuel costs. So, the net of the two is about a 2.8% increase.

Okay. And secondarily, what's the latest with regards to your carbon sequestration [pilot project] update?

Glad you asked that question. In fact, we'll be having our annual stockholders meeting day after tomorrow and we plan to update our stockholders on the progress of the test. It is certainly promising. We've had over 3,600 hours of operation of the technology. And late last fall for the first time, technology achieved the kind of results in the field that we have seen it achieved in the laboratory. In other words, it was capturing more than 90% of the carbon from the emission stream that was being captured. So very promising, we believe the testing now will extend several more months. All the partners of the project have agreed to continue the testing on into probably the end of 2009 at our Pleasant Prairie Plant. Then we are all comfortable enough with the results that we are seeing that a commitment has been made to scale up the technology by a factor of 10. Install that scaled up technology at American Electric Power's Mountaineer Plant in West Virginia. So that would be the next step. And by the way, and Rick's pointing it out, that particular plant in West Virginia that AEP owns has the geologic capability of sequestering the CO2. So that also would be the next step in commercialization of the technology, but overall pretty promising.

Justin Maurer with Lord Abbett, please state your question.

Good afternoon, guys. Couple of follow-ups to Paul's questions; first, on the industrial customers, just so that I understand the way the rates are structured. Again, you talked a little bit about that they are not working weekends or working more shifts, is there anything they can do to lower their costs, if you will, by scheduling differently? Or is it kind of a fixed cost to them to a certain extent anyway?

Well, some of our customers are on different versions of real-time pricing. So they can react to market prices. But the truth of the matter is many of our large industrial customers don't have with their running a lot of capability to shift. For example, one of our large customers melts steel and when they are operating that melter is operating full bore. So yes, there are little things that can be done around the edges. But what our customers are looking at, and you would expect this, is they are looking at what maximizes their total production costs. In other words, they are looking at labor, they are looking at overtime, so they are looking at the whole package of their costs and saying when should I run to minimize my cost and maximize my production? And right now what we are seeing them do, largely, is run weekdays during the day. So eight hour shifts during weekdays. And I wouldn't frankly expect unless the economy gets materially worse for that to change.

Okay. Is there a way to frame it up though, to say okay, of our average customer, to the extent there is such a thing that two-thirds of their cost is fixed, if you will, a third is variable or is it not that straightforward?

Justin, I wish it was that straightforward, but for each different customer, it really is different.

Everybody is trying to guesstimate kind of the direction of the economy as we move into the spring, that there was a huge shutdown in November- December or January-February, maybe a little bit late in March. Where do you get a sense, like you said you are very close contact with your customers, are they seeing not great, but reasonable sequential improvement as we get into April here, early May or is it still kind of choppy?

Justin, I don't think we are seeing any material sequential improvement. What I think we are seeing and we are now looking at data literally each day and each week. For the past four weeks, we have seen very good stabilization. If you look at our forecasts and you look at what's actually happening in the industrial sector, the last four weeks, we have been about dead on. As I mentioned earlier in our prepared remarks, I think we are seeing clear signs of stabilization, but at a lower level. So to put it to vernacular, I'm thinking and hoping that we are scraping along the bottom right now.

Then just so I am clear on the fuel recovery and the rebate, so the up front portion of that was already paid in the first quarter in March, correct? And then balance of that will unwind, if you will, as we go through the rest of the year?

There are two refunds, Justin. There is one refund that's roughly $8.6 million that was associated with 2008. So that was accrued for in 2008. The dollars were collected in 2008 and those dollars are being returned to customers this month. So there are $10 million. And that's the $10 million charge that we took in the first quarter of this year. So we go ahead and give that $10 million back in May, and then the company expects though to receive the $10 million throughout the remainder of the year.

Okay. So to Paul's question of the second quarter, those two amounts would net each other, although, I guess you took the charge in the first quarter so you're still benefit?

Once again, Andrew Levi with Incremental Capital, please state your question.

Did you give guidance for the second quarter, did I miss that?

Allen gave you a range of guidance. I think he can repeat it for you.

I'm sorry you missed it Andy, I can repeat it. It's $0.38 to $0.43 Andy for the quarter.

There you go, that's why the stock came in. And second question; then you mentioned about $0.75 of incremental earnings for 2010, is that what you said, too?

What I said was we have two coal units that we are building. And I would expect at this point at least that both of those units would be online for all of calendar year 2011. So, given that we would expect $0.75 of incremental earnings in 2011 for those coal units and then some of that $0.75 will then materialize in 2010 based on the final timings of Unit 1 and Unit 2. But in 2011, if you assume both are online for full-year that's $0.75 of earnings incremental.

What we are trying to do Andy is to give you sense of additional earnings from power of the future, once all the units are completed are in their first full-year of operation.

Scott Engstrom with Blenheim Capital Management, please state your question.

Just further nuisance on the new retail volume forecast you have. I assume your initial forecast, for example, called for a weak first half and maybe a better flat or stable second half. I'm wondering how much of the new forecast really represents the kind of a plunge here in the first quarter, or how much of it reflects less optimism on the second half of the year?

Well, to tell you the truth, Scott, it was a bit of both. Let me explain what I mean by that. If you look at the forecast, our original forecast for the first quarter, for residential, we were just slightly worse than that forecast. In fact, on a weather normalized basis, you might make the case that we are actually in line with the weather normalized forecast. On small commercial and industrial we are actually a bit better than our forecast for the first quarter. Then as you heard from our prepared remarks on large commercial and industrial, we were quite a bit worse. So for residential and small C&I, I expect the back half to be worse than what we had originally expected, therefore quite a bit worse than last year. And the reason we believe that is because of what we are seeing with unemployment trends. Our original underlining forecast had about 8%, 8.5% unemployment. It's likely to go say 9%, 9.5%. I think our state currently is at around 9%. Generally, what we see with electric sales, there is a bit of a lag effect. So what I'm saying is, if underlying unemployment is going to be that much worse in the back half of the year, we should see some really further degradation versus our original forecast for those two classes, but large C&I, worse thing in that right now. We saw it in the first quarter. So I would hope to begin to see a little bit of improvement there, but its improvement relative to a much lower forecast now within the year.

Obviously, we are trying to be appropriately conservative against what we are seeing. Particularly, I mean, we are kind of in uncharted territory. We have looked back in our records and this company has been very good at keeping records for decades. And we have not seen, and I don't think many companies have, this kind of precipitous decline in this shorter period of time ever. So we want to make sure we are appropriately conservative in terms of estimating what the second half looks like and it looks flat. It looks worse from a small C&I standpoint.

Could you just remind me what's your flexibility then as with respect to the rate case filing, on volumes?

We are very early in the rate case process. In fact, hearing dates have not yet been set, so there will be plenty of time over the course of the next four to five months as testimony is prepared, as rebuttal is put in, and as hearings take place, for us to refine our forecast and we would expect exactly to do that. We just filed the case in March and we will know much more three or four months down the road as we see more of what's happening in the real world and in the economy. So, we will refine our numbers in the rate case as we move forward and the process gives us plenty of opportunity to do so.

(inaudible) of Wisconsin, please state your question.

We're just talking about the rate requests. I missed the amounts that you mentioned before for the requests you are asking for?

Okay. I'll be happy to go over that again for you. Get back to the page where we have listed each one of them. [Dan], we made the filing on March 13, on our normal cycle with the Wisconsin Commission. For the electric business a $76.5 million or 2.8% increase, for Wisconsin Gas, $38.9 million or a 4.6% increase, for the gas operations of Wisconsin Electric, $22.1 million or a 3.6% increase, and then we have two small steam utilities, and for the two steam utilities $2.7 million.

Okay. Then as far as your request to change the fuel recovery for the declines that you've seen, will that go into effect sooner or when do you expect to see the impact from that part?

In fact, Dan it's already in effect. We filed right at the end of April for a fuel cost reduction going forward. So reduction in the fuel cost recovery rate. The Commission acted with more speed and turned that request around and the new lower fuel recovery rates went into effect, May 1.

So we filed April 27, I believe and the new rates went in May 1 for fuel.

I was curious looking at the income statement. It looks like the other O&M was down about $35 million. What was driving that decline?

In terms of O&M, and unfortunately, it's not a very simple story; if you adjust we had a one time amortization of a regulatory asset in the first quarter of last year. So if you adjust for that that was about $44 million. So if you adjust for that, O&M was actually up about $25 million. But then, when you look at that $25 million, $15 million of that $25 million was associated with the increased amortization costs that I talked about. Of that $15,million roughly half was related to transmission, half was related to amortization of the [PTF] costs, and then the other $10 million was related to just O&M that was sprinkled throughout the business that was really no one big category that was driving that.

Okay.

Day-to-day O&M was almost flat.

Okay. I was curious on the Bechtel. I think I asked you last time, if you had gotten any sort of breakdown as to the various claims, and how much was related to each one. Have you been able to obtain that information from Bechtel yet? And if so, are you able to share that with us?

Good question, Dan. At this point there has been no additional breakdown of the elements of the claim.

Okay. And then the last thing I was curious about is kind of related to, looks like you have about $800 million of short term debt, and so, I was curious, is that draws on your bank line or is that CP, or what's that?

It's commercial paper, Dan. And at this point, my financing plan for 2009 wouldn't call for any permanent or term financing at the holding company. The plan does call for about $250 million worth of term financing at Wisconsin Electric Power Company. And then what I would expect to do in calendar 2010, or late this year, essentially coincident with the in service date of the coal plant is do the permanent financing for the coal plants. That would be around $900 million if you put the two units together. So essentially, that $900 million will be used to pay-off short-term debt at the holding company. This year, expect a very modest amount of term financing, only about $250 million and that of the utility.

Okay. Thank you.

You are welcome. And the bank lines are undrawn. Operator, do we have any other questions?

(Operator Instructions) [Julian Vermilion-Smith] with UBS. Please state you question.

Just wanted to follow-up, last year you guys had talked a bit about potential legislation in Wisconsin and adjusting the fuel clause. Any updates on that front?

Very good question. The Wisconsin Commission does believe they need some legislative change to make it clear that they have the authority to change the administrative operation of the fuel. There is some discussion that the administration will have a complete energy package, a state energy package that would be presented to the legislature later this year. We believe that if the administration does follow through with an energy package piece of legislation that provides fuel rules or at least the authority for the Commission to change the fuel rules administratively would be in that package. There is also some discussion about potentially having a separate line item in the Governor's budget bill that might give the authority to the Commission to administratively change the fuel rules. So everything is in a bit of a state of flux as you can imagine, as the legislature is in a session, but if I were a betting man, I would say that before the end of the year, there would be something in front of the state legislature to clarify the Commission's authority to essentially change administratively the operation of the fuel rules.

Thank you. From that regard, would you assume that going forward in 2010 say, in that time frame, the rules would be adjusted? Would there be sort of a sufficient amount of time for the Commission to come back and make that change official?

I believe there would be. There would be time so that for the calendar year 2010 we would be all operating under revised fuel rules.

There appear to be no further questions at this time. I will turn the conference back over to Mr. Klappa for any additional or closing remarks.

Well that concludes our conference call for today. We appreciate you taking part. If you have any additional questions, don't hesitate to call Colleen Henderson in our Investor Relations office and her number is 414-221-2592. Thank you very much. Have a good day.

And that does conclude today's conference call. Thank you all for your participation.