Good afternoon, ladies and gentlemen. Thank you for waiting, and welcome to Wisconsin Energy’s conference call to review 2014 year-end results. This call is being recorded for rebroadcast and all participants are in a listen-only mode at this time. 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 discussion, the 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 at wisconsinenergy.com. A replay of our remarks will be available later today. And now, it’s my pleasure to introduce Mr. Gale Klappa, Chairman of the Board and Chief Executive Officer of Wisconsin Energy Corporation.

Colleen, thank you. Good afternoon, everyone, and thanks for joining us as we review our 2014 year end results. Let me begin, as always, by introducing the members of the Wisconsin Energy management team who are here with me today. We have Allen Leverett, President of Wisconsin Energy and CEO of our Generation Group; Pat Keyes, our Chief Financial Officer; Susan Martin, General Counsel; Steve Dickson, Controller; and Scott Lauber, our Treasurer. Pat will review our financial results in detail in just a moment. But as you saw from our news release this morning, we reported adjusted earnings of $2.65 a share for 2014. This compares with earnings of $2.51 a share for 2013. Our adjusted earnings exclude expenses of $0.06 a share related to our acquisition of the Integrys Energy Group. I'm very pleased to report to you that 2014 was another exceptional year for Wisconsin Energy. We delivered record financial results, we were named the most reliable utility in the Midwest for the fourth year in a row, extending our strong track record of network reliability and customer satisfaction. We invested nearly $740 million in our core business with all major projects on time and on budget. We achieved the safest year of operation in the history of the company, which dates back more than 100 years. And we announced the acquisition of Integrys Energy. We believe that the combination of our two companies will create the premier regulated utilities system in the Midwest, with superior service and competitive pricing for years to come. The benefits to all of our stakeholders are clear, compelling, and achievable. Turning now to the state of the economy, Wisconsin's unemployment rate declined to 5.2% at the end of 2014, well below the national average, and the state's lowest unemployment rate since 2008.…

Thank you, Gale. As Gale mentioned, for 2014, our adjusted earnings grew to $2.65 a share compared with $2.51 a share for 2013. Our GAAP earnings for 2014 were $2.59 a share, which includes $0.06 of costs associated with the acquisition of Integrys. Consistent with past practice, I will discuss operating income for our two business segments and then discuss other income, interest expense, and income taxes. Our consolidated operating income for the full year 2014 was $1.112 billion as compared with $1.080 billion in 2013. That's an increase of $32 million. Starting with the Utility Energy segment, operating income in 2014 totaled $770.2 million, an increase of $50.8 million over 2013. On the positive side, lower O&M spending, in part driven by lower benefits costs, increased our margins by $59.3 million. We also had a $28 million increase in revenues due to the second year of our Wisconsin rate order. On the negative side, depreciation expense increased by $20.4 million in 2014, primarily because our biomass plant was placed into service late in 2013. We estimate that weather resulted in a net $14.8 million decline. While we experienced cold winter weather in 2014, this was more than offset by our cool summer. Now, turning to our non-utility segment, operating income was up $1.1 million when compared to last year. This increase reflects new investments at our power the future plants. Our corporate and others segment showed an operating loss of $26.3 million, which is almost $20 million more than the prior year. During 2014, we incurred $14.6 million of external costs, primarily legal, banking and professional fees related to the Integrys acquisition. Taking the changes for these segments together, you arrive at a $32 million increase in operating income, or a $46.6 million increase adjusted for the $14.6 million…

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

[Operator Instructions] Your first question comes from the line of Julien Dumoulin-Smith with UBS.

Well, perhaps just a couple of quick questions here clarifying first on the guidance, can you give us at all kind of any sensitivities around timing of the transaction and the close, basically about a one month delay in the close would be your – anything at all would just be helpful just from a timeline perspective.

Julien, again, we’re trying to give you for 2015 our standalone guidance, because no one is certain at this point the exact closing date and let me just iterate that a little more. Right now, July 6 would be the longest date that’s been established out there, that’s by the Illinois Commerce Commission for a vote. So we’re saying we expect to close on the second half of 2015, much of the acquisition relates to acquiring natural gas distribution companies. Obviously, their sales are quite low in the third quarter. So we really unfortunately can’t give you any more precise information about the impact of one month or not, really it does depend upon the month of the season, depends upon the weather, but I don’t think it’s going to have a huge impact one way or another. We are still expecting to close in the second half.

Perhaps secondly, can you talk about a little bit of the drivers in the shift in capex here, just a little bit more around the increase, what drove that or where is it kind of usual rolling forward?

Couple of things. About two thirds of our overall capital spending over the course of the several years, we will be focused on upgrading our ageing electric and natural gas distribution networks, particularly the electric distribution networks. And that’s very much age-driven. If you look at the reliability of the equipment in our industry, which as you know is incredibly reliable, you start to see the significant uptick in failure rates after the equipment reaches age 50. So we are focusing our upgrades, we are focusing our replacements on equipment that is reaching or passing that age. And we’re seeing more equipment and we are seeing more investment requirement related to upgrading those electric distribution networks. I think overall, if you look at our rolling 10-year capital plan, it’s up pan about $100 million from the last 10-year plan.

Julien, this is Pat, let me just add a couple of things. I think if you look at 2014 versus 2013, I think I said about $50 million round number in additional capital spend and about half of that we had projected because, as Gale mentioned, that’s largely driven by delivery of the future. If you look at the last number we had in our investor presentation that we ended up the year about $25 million ahead of that and that increment is largely driven by gas lateral expansions as people got off for propane, we grew our gas distribution spending to help facilitate those customers conversion.

Perhaps just lastly, can you comment on weather normalized trends, I know you can to a certain extent, but just expand on 2015, if you will, a little bit, and what may be some of the key drivers might be if you think about sensitizing it?

Sure, be happy to Julien. Let me start with the large commercial and industrial customers, our large customer group. And that’s an interesting statistic that we did not put in the script, but I think is worth mentioning. If you look at our delivered volumes of electricity to our large customers for 2014 and include the iron ore mines up in the Upper Peninsula, which we’re still responsible for delivery regardless of where their supply comes from, if you look at that customer segment, weather normal, it was actually up 3.8% during 2014. That’s pretty strong industrial growth in 2014. We are projecting virtually flat for that customer segment in 2015, coming off that big uptick in 2014, and that’s based really on the input we received from our large customers when we interviewed them in the fall of the year as we finalize our forecast. So in essence, what we are expecting on the large commercial and industrial side of our business is to sustain the growth that occurred in 2014 to probably stay pretty close to that level. That’s really the insight that I would give you on our large commercial and industrial. And then in essence, for residential weather normal, for commercial weather normal, basically a little bit of growth offset by conservation and a net-net of flat.

Your next question comes from the line of Jonathan Arnold with Deutsche Bank.

Just firstly on transmission, it looked like the number ticked down in the fourth quarter, why would that be?

There’s a very good reason for that and will let Pat answer as to why.

Jonathan, as you know, there is a possibility that the ROEs are going to be adjusted for the ATC and others across the country for that matter. So it’s part of our – we have taken – we reserved against that possibility.

Can you quantify that, how much of the impact it was on the quarter?

I think we’ve talked about in the past, if you kind of use the guidelines of the Massachusetts ruling, 10.57 to 11.74 ROE, that’s somewhere between $0.01 and $4.5. We kind of took a look at that and use that as our guidance. We were probably closer to the $0.01 side of it, but that was kind of a yardstick, if you will, we used to kind of beside where we are going to, how appropriate was to reserve.

So basically, we took a small charge in the fourth quarter and then we embedded an estimate of slightly lower ROEs in our 2015 guidance to you. So the numbers that Pat showed you or mentioned to you, in our 2015 guidance band of $2.67 to $2.77, that assumes also a slightly lower at the top end and bottom end slightly lower ROE outcome once FERC decides the MISO case in, we think, the second half.

Just to be clear, did you use the New England number or did you take the New England methodology and mark it to today, I guess, plus the 50 basis points?

Using the New England number as a guidepost, we based our analysis on a different way, I guess, is the simplest way to say it. The other way to look at it, I’ll add on Gale’s 2015 point, I mean we obviously got a range of guidance and part of the driver of that range of guidance is where will that return fall in.

I’m still not quite clear, you say did you use the 10.57 or did you use that to mark it?

What we really did was we said, okay, at one end of the spectrum, and we’re not going to be precise, Jonathan, about the spectrum, but at one end of the spectrum, the decline could be X cents, at the lower end of the spectrum, it could be Y cents, and we embedded the X and the Y in the guidance we have given you.

One other, we noticed there was an order to show cause out of the MPSC with relation to the Upper Peninsula I think yesterday, could you comment on that?

Sure, would be happy to. First of all, I want to make sure everyone understands that this particular order that came out yesterday afternoon is a separate docket completely from our merger docket. So we really don’t see any real link between the two. And we’ve just had a quick review obviously of the order itself, but couple of points. First of all, we believe the Michigan Commission wants some very broad input from a whole range of parties on units that receive or could receive the SSR, the subsidy, the system support resource payments from MISO and where the state authority starts and ends and where the federal authority starts and ends for units that have these SSR payments or could have these SSR payments in the future. So that I think is the nut of where the intent of that particular docket that the Commission opened is and we’ll be happy to work with the Commission, we’ll be happy to provide our input. But also I want to assure you that there is no issue with making sure that we have adequate supply for as long as we own the assets in the Upper Peninsula to meet customer needs. That really is our intention, obviously we will keep the Presque Isle units open under MISO direction for as long as they need to be.

So there’s no kind of sense that they’re going cold on the settlement or anything like that?

I’m sorry, just the opposite. I mean, if you think about how the settlement was put together, the Governor’s office, the Michigan State Attorney General, the PSC staff and the iron ore mines are all parties to the settlement. And certainly, from everything we are sensing and everything we can tell are fully, fully on board with the settlement. This is a separate docket entirely.

Your next question comes from the line of Paul Ridzon with KeyBanc.

The fourth quarter ATC kind of booked reserve for the full year or is it just related to the fourth quarter?

No, for the entire year. In fact, back to November of 2013.

And have the mines come back to your service?

Mines are home as of February 1.

And is that baked into your guidance or is that...?

Well, no, because under the way rates have been set, associated with serving the mines will be deferred on our balance sheet.

Deferred until the next rate case or...?

Yes, deferred, the margin and the cost – the cost and then resulting in the margin will be deferred until the next rate case.

And weather for the year was $0.03 positive versus normal?

Correct.

And then lastly, what do you think as far as continued growth out of the sand mining industry, given that this is frac sand?

Very interesting question and actually there’s been a lot of analysis over the last couple of months, particularly as oil prices began to crater, about the impact in the western part of the state on the huge expansion we’ve seen in frac sand mining. And for right now, we’re actually not seeing any downturn at all in frac sand production in the western part of the state. And when we talk with the frac sand producers, they’re still quite optimistic. Now, I would say the growth is going to level off and we’re not going to see for the near term any significant additional growth, but they’re not seeing any downturn either. And I think that’s in part because Wisconsin has now become the number one supplier of frac sand in the country. It’s the quality of the sand, it’s the ease of getting that sand to market from where the sand mines are. So we’re not seeing any real deterioration at this point and the customers that we are talking to out there don’t expect to see any 2015 deterioration as well.

So we’ve got a cost advantage to actually support them?

I think they’ve got a cost and quality advantage.

Your next question comes from the line of Brian Russo with Ladenburg Thalmann.

My questions were asked and been answered. Thank you.

Your next question comes from the line of Michael Lapides with Goldman Sachs.

Real quick one, how should we think about what the value of the distribution assets in the Upper Peninsula are? I’m trying to think through the cash you’ll receive from that potential sale and then the amount that could potentially be rebated back to customers.

I think we’ll just give you a ballpark number here, and again, this is a very, very small part of our business. But the book value of the distribution assets is going to be in the neighborhood of $100 million.

One other totally unrelated, total short-term debt at the end of the year is kind of that high point if I look relative to prior quarters, even prior year end, does kind of comparing year over year to past years, how should we think about what your plan for that is, what’s driving that et cetera?

Well, I’m looking at Scott and Pat here. For one thing, we tend to tick up in Q4 anyway because of the buildup of natural gas inventories. Total short-term debt is going to be a little higher. If you’re looking at it compared to Q3, it’s always going to be higher. Really, I don’t see any significant difference here, we were able to push off a bond offering, given our stronger cash flows during 2014, but we are kind of in a normal pattern here. Scott?

Yeah, the short-term debt is really at the two utilities. So we’ve have plenty of room and we have a lot of cash, we have some cash ex that holding company. So it’s really just a timing of when we do debt issuance at future.

Finally, can you talk about the impact of bonus depreciation on 2015 cash flow, how that impacts your EPS guidance?

We certainly can talk about the cash flows, there won’t be any real immediate impact on EPS. But Pat, how about talk about the cash benefit from bonus depreciation?

Michael, for us, that’s about $115 million this upcoming year. So as Gale mentioned, because that was not part of the rate case and we’re not going in for the rate case, there isn’t any impact on it for this year that helps where you’re heading on the rate base, I should be more clear.

Got it. It would impact further down the road, but not in the immediate term?

That’s correct, probably 2017. And remember, having said that, Gale also mentioned that our revised capital is up about $100 million, so net-net, it’s probably in the same place.

Yeah. And finally, can you actually just give us the walk 2015, 2016 and 2017 annual capex?

Let’s see if we broke it down in the materials we brought into the room of year by year, I can tell you that over the period, as I mentioned earlier, about two thirds of the capital spending will be tied to our distribution networks. We will have a disproportionate amount of capital spending this year because this is our big spending year for the western Wisconsin natural gas expansion, that 85 mile lateral that I mentioned and that’s $170 million, $180 million, so you’ll see more spending on natural gas distribution in our, what we call our lifesaver chart, where we have the colors in the bars, you’ll see 2015 being an outsized year for natural gas distribution spending. But over the period of time, you’re going to see about two thirds of the capital spend be on upgrading our distribution networks, particularly electric.

Michael, if you allow me to expand on the lifesaver theme and add some color to Gale’s comments, at the utilities now, it’s only there, that’s the number I got in front of me, was about $700 million in 2014, and then will be around $770 million in 2015 with the largest part of the delta being the west central, and then we kind of flatten out to some $600 million, $650 million two years after that in 2016, 2017, if that helps.

Got it. Last one, you’re spending a little bit of capital at Oak Creek at the power the future plan, how should we think over a multi-year period what happens to the earnings trajectory of the power the future assets, I mean is that a flat earnings stream, is this going to drive a little bit of earnings growth, is there some natural earnings growth embedded in the contracts or in the lease structure, how should we think about it?

The simplest way to think about it is a slightly rising slope on a slightly rising stream of income from the power the future units. There are two reasons. One, there is some maintenance capital that we normally need to spend, you anybody needs to spend on power plants. So there will be small amounts of additional capital is the maintenance capital is spent. Then we’re probably looking on a close to $90 million or so for the two projects that we are seeking Commission approval for, related to the additional cold storage capability and the plant modifications for fuel blending, which we covered in the script, so that would add to earnings. And then just in general, as we amortize the debt and the revenue stream stays the same, you would expect slightly higher annual earnings as you amortize and pay down the debt. So I would look at it as a gently rising stream.

Your next question comes from the line of Paul Patterson with Glenrock Associates.

I just wanted to follow-up on Jonathan Arnold's question with respect to the show cause order because I'm a little confused. First of all, it doesn't seem like they've referenced the settlement at all. But the settlement, as I understand it, was supposed to deal with the concerns about reliability regarding the Upper Peninsula, correct?

Yes, correct.

And it was pretty thorough, like you said, all of the things you said. But then when you read this, they say that, at present, Wisconsin Electric is unable to provide the Commission with assurance of reliable supply of electric service given it has announced its intention to retire the PIPP, the Presque Isle. And they emphasize this urgent problem with constrained capacity on the Upper Peninsula will continue for years. What I don't understand is you guys are supposed to be selling this asset and what have you, it will be sort of the up goes issue, I would think. I'm just a little confused as to, A, I know it's their order and what have you, but if you could give us any insight that you have on this and that. They seem to be making an issue about something that the settlement was designed to deal with and they're not referring to the settlement. It just seems odd. It just seems like it's coming out of nowhere, if you know what I'm saying.

You are asking a very good question, our view after reading the order and having some discussions, our view is that this docket is all about a much narrower policy issue related to these systems support resource payments. We don’t think it has anything to do with a broader docket. There are a number of units as you know in Michigan now, not just ours, not just the Presque Isle plant, but there are a number of units getting these systems support resource payments either because the owner had planned to suspend or retire the units. So our view is while I understand your confusion, our view is this really a much narrower docket associated with where are the state authorities, where are the federal authorities as it relates to these units that either could get or are receiving SSR payments. I hope that helps.

It does help. What I'm a little confused about is why are they only asking you to show cause? It just seems like, why not get those other – I could understand a broader investigation, like they want to keep on top of it, et cetera. I just don't understand why it's like, we're asking Wisconsin Energy to show cause as to what the issue is, particularly if it looks like in the near future you guys aren't really going to be in the picture anywhere near to the degree you are.

Well, I think maybe they got us on speed dial, you never know.

Okay, I don't mean to make too much of it. I'm just a little confused by it, that's all.

There may be one other reason to that. In terms of the magnitude of the SSR payments, Presque Isle is clearly, the units that are getting the biggest payments by far, so that may have been part of their thinking. I’m speculating on that, because we really don’t know, want to know more, until we get further into it.

Okay. But just, generally, though, as far as you guys see it, the settlement is perfectly in place. You've heard no pushback or any issue associated with that and things are proceeding well with respect to the merger processes you're seeing. We shouldn't think anything else of it than just what you said, right? Everything else with respect to the merger and the constraint, the Upper Peninsula power reliability issues, all those you think are moving well, correct?

I couldn’t have said it better myself.

Okay, good. Thanks so much for the clarity. The rest of the stuff was answered, thank you. Just one thing – longer term, with respect to sales growth, do you guys have an updated outlook outside of 2015 which you guys already shared with us, what you think is going to be happening here?

We’re still looking longer term and a lot of the estimates we provided you longer term for capex et cetera are assuming about 0.5% electric sales growth annually.

Your next question comes from the line of Dan Jenkins with the State of Wisconsin Investment Board.

First, I just had a bit of a follow-up on the sands customers, the frac sands, any impact. I was just curious if you could let us know like how big is that revenue as part of the industrial, how big of a segment is that?

Let me clarify, good question Dan, let me clarify one thing. We largely do not serve electricity in that region. So from a standpoint of the sand mining growth and the sand mining production, it’s largely related to our natural gas distribution network. And of course, we’re now to help certain of the sand mines, we’re now building this 85 mile lateral that will increase our capacity to serve the sand mines. Scott, do you have an estimate of our total industrial, for example, our total industrial deliveries of natural gas?

Yes, if you look at the volumes, it’s a couple of percent.

About 2%.

...in the sand area and that grew about 30% last year.

Yeah, it was way up last year as Scott was saying 30% increase to the sand mining industry.

Okay. So it's more the margin and the volume than the overall total has been more the impact so far?

I would agree with that, yes.

Another question I had is, just looking at the cash flow statement, you had about an $80 million swing in working capital. I was wondering if you could give a little more color on what was driving that.

A lot of that is natural gas inventory, but Steve Dickson, do you have a breakdown for us?

No, you’re absolutely right, Gale. Gas and storage was about $71 million cash items, but the gas and storage, last year because it was so cold in the fourth quarter, in December, we drilled down balances and that was a positive cash flow. This year, two things, we build out inventories and the price at the end of this year is higher than last year. So that was the big driver.

Okay. And then you mentioned that the lower medical and benefit cost was a big driver. I was wondering, is that due to a change in your policy or is it more of a valuation thing related to interest rate changes, or what's going on there?

Last year, good question again Dan, Dan you’re on your game today. Last year was the first year, 2014 was the first year where all of our employees were receiving medical tariffs on high deductible plans. And we think that did have a positive impact. Also, just our medical experience, last year was better than normal. So it will be interesting to see how 2015 plays out, because we did have a very positive year in terms of medical benefit costs. And again, we are not sure how much of that relates to the fact that every employee is on a high deductible plan and how much of it was just a very good healthcare experience year. We have a lot of initiatives underway in the company on understanding exactly where you are individually with your health, we are really promoting wellness and it was good to see the results of 2014.

On page nine, just looked at the fourth quarter revenues, other operating revenues, you had a $21 million increase there. Is that what's going on there? I know you all said that Treasury grant thing or is there something related to that?

Dan, I’ll let Steve answer that question for you.

Dan, we announced that we have the SSR agreements and we started recognizing revenue associated with that. So in the fourth quarter, about $20 million of that increase relates to SSR revenues. That’s probably an escrow to 2015.

Your next question comes from the line of Dan Fidell with US Capital Advisors.

Thanks for taking my question here. Most of my questions have been asked and answered, but just a quick question on the Integrys approval process. Certainly thanks for the timing detail in the script. There have been more than a few moving parts going on, both politically and personnel-wise in Illinois of late. A bit unusual I think for the state overall, but also to have that happen in the middle of a merger. How, if at all, do those shifts impact the approval process as it applies to you guys? Is there any additional thoughts you might have on that?

No, well, actually we don’t think there is any significant impact at all in that, when we first applied in the State of Illinois for approval, as you know there is a very large professional staff operating for the Illinois Commerce Commission, they have been down this road before in terms of two natural gas distribution companies being acquired in the last six years in Illinois. The staff proposed to an ALJ, by hearing schedule and a schedule for a Commission decision, and really we’ve seen all the parties stick to the schedule. So far it’s been a process that’s unfolded very smoothly and very much to our expectations in terms of timing. And there is no indication at all that the July 6 date is anything different.

Your next question comes from the line of Michael Weinstein with UBS.

Hi guys. I figured I'd just jump in there, too, as well. But I think my questions have all been answered so way at the bottom of the pack.