10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2002

Commission	Registrant; State of Incorporation		IRS Employer
File Number	Address; and Telephone Number		Identification No.
001-09057	WISCONSIN ENERGY CORPORATION		39-1391525
		(A Wisconsin Corporation)
		231 West Michigan Street
		P.O. Box 2949
		Milwaukee, WI 53201
		(414) 221-2345

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that each Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes [X]    No [  ]

Indicate the number of shares outstanding of each of the Registrant's classes of common stock as of the latest practicable date (July 31, 2002):

Common Stock, $.01 Par Value 115,124,130 shares outstanding

		WISCONSIN ENERGY CORPORATION
		FORM 10-Q REPORT FOR THE QUARTER ENDED JUNE 30, 2002
		TABLE OF CONTENTS
Item			Page
	Introduction ...............................................................................................................................
	Part I -- Financial Information
1.	Financial Statements
	Consolidated Condensed Income Statements .....................................................................
	Consolidated Condensed Balance Sheets ............................................................................
	Consolidated Condensed Statements of Cash Flows ..........................................................
	Notes to Consolidated Condensed Financial Statements ....................................................
2.	Management's Discussion and Analysis of
	Financial Condition and Results of Operations ...................................................................
3.	Quantitative and Qualitative Disclosures About Market Risk ..................................................
	Part II -- Other Information
1.	Legal Proceedings .....................................................................................................................
4.	Submission of Matters to a Vote of Security Holders ..............................................................
6.	Exhibits and Reports on Form 8-K ...........................................................................................
	Signatures ..................................................................................................................................

INTRODUCTION

Wisconsin Energy Corporation is a diversified holding company, which conducts its operations primarily in three operating segments: a utility energy segment, a non-utility energy segment and a manufacturing segment. Unless qualified by their context when used in this document, the terms "Wisconsin Energy" or the "Company" refer to the holding company and all of its subsidiaries. The Company's primary subsidiaries are Wisconsin Electric Power Company ("Wisconsin Electric"), Wisconsin Gas Company ("Wisconsin Gas") and WICOR Industries, Inc. ("WICOR Industries").

Utility Energy Segment:   The utility energy segment consists of: Wisconsin Electric, which serves electric customers in Wisconsin and the Upper Peninsula of Michigan, gas customers in Wisconsin and steam customers in metro Milwaukee, Wisconsin; Wisconsin Gas, which serves gas customers in Wisconsin and water customers in suburban Milwaukee, Wisconsin; and Edison Sault Electric Company ("Edison Sault"), which serves electric customers in the Upper Peninsula of Michigan. Wisconsin Electric and Wisconsin Gas have combined common functions. In April 2002, the two companies began doing business under the trade name of "We Energies".

Non-Utility Energy Segment:   As of January 1, 2002, the non-utility energy segment consisted primarily of: Wisvest Corporation ("Wisvest"), which develops, owns and operates electric generating facilities and invests in other energy-related entities and W.E. Power, LLC ("We Power"), which is intended to construct and own the new generating capacity included in the Company's Power the Future strategy assuming all required regulatory approvals are obtained. In June 2002, Wisconsin Energy signed a definitive agreement to sell Wisvest's two existing non-utility power plants, located in the state of Connecticut.

Manufacturing Segment:   The manufacturing segment consists of WICOR Industries, an intermediary holding company, and its three primary subsidiaries: Sta-Rite Industries, Inc. ("Sta-Rite"), SHURflo Pump Manufacturing Co. ("SHURflo") and Hypro Corporation ("Hypro"), which are manufacturers of pumps, water treatment products and fluid handling equipment with manufacturing, sales and distribution facilities in the United States and several other countries.

Other:   Other non-utility operating subsidiaries of Wisconsin Energy include primarily Minergy Corp. ("Minergy"), which develops and markets recycling technologies, and Wispark LLC ("Wispark"), which develops and invests in real estate. Wisconsin Energy is divesting much of its portfolio of Wispark's assets, which is expected to significantly reduce the size of existing non-utility real estate operations.

The unaudited interim financial statements presented in this Form 10-Q have been prepared by Wisconsin Energy pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. Wisconsin Energy's financial statements should be read in conjunction with the financial statements and notes thereto included in Wisconsin Energy's 2001 Annual Report on Form 10-K.

PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WISCONSIN ENERGY CORPORATION
CONSOLIDATED CONDENSED INCOME STATEMENTS
(Unaudited)
				Three Months Ended June 30		Six Months Ended June 30
				2002	2001	2002	2001
				(Millions of Dollars, Except Per Share Amounts)
	Operating Revenues			$870.9	$862.2	$1,856.9	$2,219.4
	Operating Expenses
		Fuel and purchased power		142.2	163.3	290.5	343.8
		Cost of gas sold		98.5	114.5	298.3	630.0
		Cost of goods sold		141.7	118.0	255.7	227.0
		Other operation and maintenance		274.9	257.2	522.2	515.3
		Depreciation, decommissioning
			and amortization	79.0	86.8	157.1	174.3
		Property and revenue taxes		22.3	18.7	45.0	41.5
		Asset valuation charges		-	-	141.5	-
	Total Operating Expenses			758.6	758.5	1,710.3	1,931.9
	Operating Income			112.3	103.7	146.6	287.5
	Other Income, Net			16.3	37.1	39.8	49.7
	Financing Costs			57.4	64.1	115.9	129.5
	Income Before Income Taxes and
		Cumulative Effect of Change in
		Accounting Principle		71.2	76.7	70.5	207.7
	Income Taxes			25.8	30.6	29.3	84.3
	Income Before the Cumulative Effect of
		Change in Accounting Principle		45.4	46.1	41.2	123.4
	Cumulative Effect of Change in
		Accounting Principle, Net of Tax		-	-	-	10.5
	Net Income			$45.4	$46.1	$41.2	$133.9
				====	====	====	=====
	Earnings Per Share Before the Cumulative
		Effect of Change in Accounting Principle
			Basic	$0.39	$0.39	$0.36	$1.05
			Diluted	$0.39	$0.39	$0.35	$1.04
	Earnings Per Share
			Basic	$0.39	$0.39	$0.36	$1.14
			Diluted	$0.39	$0.39	$0.35	$1.13
	Weighted Average Common
		Shares Outstanding (Millions)
			Basic	115.3	117.6	115.2	117.8
			Diluted	116.4	118.5	116.2	118.6
	Dividends Per Share of Common Stock			$0.20	$0.20	$0.40	$0.40
	The accompanying Notes to Consolidated Condensed Financial Statements are an integral part
		of these financial statements.

WISCONSIN ENERGY CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
				(Unaudited)
				June 30, 2002	December 31, 2001
				(Millions of Dollars)
Assets
Property, Plant and Equipment
	Utility energy			$7,196.7	$7,075.3
	Non-utility energy			178.4	21.5
	Manufacturing			151.3	142.2
	Other			223.0	205.6
	Accumulated depreciation			(3,917.6)	(3,826.4)
				3,831.8	3,618.2
	Construction work in progress			224.0	380.2
	Leased facilities, net			113.1	116.0
	Nuclear fuel, net			72.5	73.6
			Net Property, Plant and Equipment	4,241.4	4,188.0
Investments				846.0	891.0
Current Assets
	Cash and cash equivalents			48.5	47.0
	Accounts receivable			485.6	434.2
	Other accounts receivable			-	116.4
	Accrued revenues			114.5	178.6
	Inventories, materials and supplies			398.8	431.0
	Assets held for sale			335.0	403.1
	Prepayments and other assets			207.9	104.6
			Total Current Assets	1,590.3	1,714.9
Deferred Charges and Other Assets
	Goodwill, net			832.3	832.1
	Other			729.0	702.7
			Total Deferred Charges and Other Assets	1,561.3	1,534.8
Total Assets				$8,239.0	$8,328.7
				======	======
Capitalization and Liabilities
Capitalization
	Common equity			$2,035.6	$2,056.1
	Preferred stock of subsidiary			30.4	30.4
	Company-obligated mandatorily redeemable
		preferred securities of subsidiary trust
		holding solely debentures of the Company		200.0	200.0
	Long-term debt			3,018.1	3,237.3
			Total Capitalization	5,284.1	5,523.8
Current Liabilities
	Long-term debt due currently			388.1	484.3
	Short-term debt			738.4	550.4
	Accounts payable			279.7	309.8
	Accrued liabilities			202.4	147.2
	Other			154.2	115.4
			Total Current Liabilities	1,762.8	1,607.1
Deferred Credits and Other Liabilities
	Accumulated deferred income taxes			534.0	547.2
	Other			658.1	650.6
			Total Deferred Credits and Other Liabilities	1,192.1	1,197.8
Total Capitalization and Liabilities				$8,239.0	$8,328.7
				======	======
The accompanying Notes to Consolidated Condensed Financial Statements are an integral part
	of these financial statements.

WISCONSIN ENERGY CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
				Six Months Ended June 30
				2002	2001
				(Millions of Dollars)
Operating Activities
	Net income			$41.2	$133.9
	Reconciliation to cash
		Depreciation, decommissioning and amortization		179.1	194.5
		Nuclear fuel expense amortization		14.7	15.3
		Equity in earnings of unconsolidated affiliates		(16.9)	(14.3)
		Asset valuation charges		141.5	-
		Deferred income taxes and investment tax credits, net		(100.9)	(6.9)
		Gains on asset sales		-	(27.5)
		Change in -	Accounts receivable and accrued revenues	18.0	210.4
			Other accounts receivable	116.4	-
			Inventories	31.6	43.3
			Other current assets	(2.1)	-
			Accounts payable	(32.3)	(155.6)
			Other current liabilities	95.4	(74.9)
		Other		(40.6)	(52.6)
Cash Provided by Operating Activities				445.1	265.6
Investing Activities
	Capital expenditures			(256.0)	(256.1)
	Acquisitions, net of cash acquired			(14.9)	-
	Proceeds from asset sales, net			51.5	108.1
	Return of investment from ATC			-	120.0
	Nuclear fuel			(9.5)	(3.3)
	Nuclear decommissioning funding			(8.8)	(8.8)
	Other			(12.3)	(18.4)
Cash Used in Investing Activities				(250.0)	(58.5)
Financing Activities
	Issuance of common stock			26.3	27.3
	Repurchase of common stock			(41.1)	(63.7)
	Dividends paid on common stock			(46.2)	(47.1)
	Issuance of long-term debt			28.5	1,014.8
	Retirement of long-term debt			(128.4)	(350.0)
	Change in short-term debt			(32.7)	(758.9)
Cash Used in Financing Activities				(193.6)	(177.6)
Change in Cash and Cash Equivalents				1.5	29.5
Cash and Cash Equivalents at Beginning of Period				47.0	40.5
Cash and Cash Equivalents at End of Period				$48.5	$70.0
				====	====
Supplemental Information - Cash Paid For
	Interest (net of amount capitalized)			$118.0	$119.3
	Income taxes (net of refunds)			$77.3	$131.4
The accompanying Notes to Consolidated Condensed Financial Statements are an integral part
	of these financial statements.

WISCONSIN ENERGY CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

GENERAL INFORMATION

1.

The accompanying unaudited consolidated condensed financial statements for Wisconsin Energy Corporation should be read in conjunction with Item 8, Financial Statements and Supplementary Data, in Wisconsin Energy's 2001 Annual Report on Form 10-K. In the opinion of management, all adjustments, normal and recurring in nature except as otherwise disclosed (See Note 4), necessary to a fair statement of the results of operations, cash flows and financial position of Wisconsin Energy, have been included in the accompanying income statements, statements of cash flows and balance sheets. The results of operations for the three and six month periods ended June 30, 2002 are not necessarily indicative, however, of the results which may be expected for the entire year 2002 because of seasonal and other factors.

2.

Wisconsin Energy has modified certain income statement, balance sheet and cash flow presentations. Prior year financial statement amounts have been reclassified to conform to their current year presentation. These reclassifications had no effect on net income or earnings per share.

RECENT ACCOUNTING PRONOUNCEMENTS

3.	Business Combinations and Goodwill:   In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets. The Standard was effective beginning January 1, 2002. Under SFAS 142, goodwill and other intangibles with indefinite lives are no longer subject to amortization. However, goodwill along with other intangibles are subject to new fair value-based rules for measuring impairment, and resulting write-downs, if any, are to be reflected as a change in accounting principle upon adoption and in operating expense in subsequent periods.
	The Company assessed the fair value of its SFAS 142 reporting units by considering future discounted cash flows with a discount rate based on a risk-adjusted weighted average cost of capital. This analysis was supplemented with a review of fair value based on public company trading multiples and merger and acquisition transaction multiples for similar companies. This evaluation utilized the information available in the circumstances, including reasonable and supportable assumptions and projections. Given consideration of these factors, the Company has determined that there is no impairment to the recorded goodwill balance for any of its reporting units at the date of adoption of SFAS 142. These impairment tests are required to be performed as of the January 1, 2002 adoption of SFAS 142 and at least annually thereafter. On an ongoing basis, absent any impairment indicators, the Company expects to perform its annual impairment tests during its third quarter.
	The adoption of SFAS 142 by Wisconsin Energy on January 1, 2002 resulted in an increase in net income of $5.2 million and $10.5 million, for the three and six month periods ended June 30, 2002, due to the elimination of goodwill and intangible asset amortization.
	The following table presents what reported net income, basic earnings per share and diluted earnings per share would have been had SFAS 142 been adopted at the beginning of fiscal 2001.

	Three Months Ended June 30		Six Months Ended June 30
	2002	2001	2002	2001
Net Income (Millions of Dollars)
Reported Net Income	$45.4	$46.1	$41.2	$133.9
Pro forma Net Income	$45.4	$51.6	$41.2	$145.0
Basic earnings per share
Reported Net Income	$0.39	$0.39	$0.36	$1.14
Pro forma Net Income	$0.39	$0.44	$0.36	$1.23
Diluted earnings per share
Reported Net Income	$0.39	$0.39	$0.35	$1.13
Pro forma Net Income	$0.39	$0.43	$0.35	$1.22

The following table presents the details of the Company's identifiable intangible assets which are included on the consolidated balance sheets in "Other Assets".

		Accumulated
	Gross Value	Amortization	Net Book Value
June 30, 2002	(Millions of Dollars)
Total amortizable intangible assets	$21.4	$5.4	$16.0
Total non-amortizable intangible assets	54.4	2.1	52.3
Total intangible assets	$75.8	$7.5	$68.3
	====	====	====
December 31, 2001
Total amortizable intangible assets	$21.0	$4.6	$16.4
Total non-amortizable intangible assets	54.4	2.1	52.3
Total intangible assets	$75.4	$6.7	$68.7
	====	====	====

	The amount of amortization expense included in operating income for identifiable intangibles was $0.8 million and $1.5 million for the six month periods ended June 30, 2002 and 2001, respectively. The estimated future annual intangible amortization expense for each of the next five fiscal years is estimated to be $1.6 million.
The following table presents the changes in goodwill during the first six months of fiscal 2002:

	Balance at			Balance at
Reporting Unit	12/31/01	Acquired	Adjustments (a)	6/30/02
Utility Energy	$442.9	$ -	$ -	$442.9
Non-Utility Energy	53.9	-	(53.9)	-
Manufacturing	389.2	2.3	(2.1)	389.4
	$886.0	$2.3	($56.0)	$832.3
	=====	====	=====	=====

(a) The adjustment for the non-utility energy reporting unit represents an impairment recorded in the first quarter of 2002 (See Note 4). The adjustment as of June 30, 2002 to the manufacturing reporting unit includes ($2.6) million relating to the final purchase accounting calculation for the VICO acquisition in July 2001 partially offset by $0.5 million of currency translation adjustments.

Asset Retirement Obligations:   In June 2001, the Financial Accounting Standards Board issued SFAS 143, Accounting for Asset Retirement Obligations. SFAS 143, which is effective for fiscal years beginning after June 15, 2002, requires entities to record the fair value of a legal liability for an asset retirement obligation in the period in which it is incurred. When the liability is recorded, the entity capitalizes the costs of the liability by increasing the carrying amount of the related long-lived asset. Each period the liability is accreted to its present value, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity settles the obligation for its recorded amount or incurs a gain or loss upon settlement. The Company expects to adopt SFAS 143 effective January 1, 2003.

The Company is performing a detailed assessment of the specific applicability and implications of SFAS 143. The scope of SFAS 143 includes decommissioning costs for Point Beach Nuclear Plant ("Point Beach") and may also apply to other facilities of the Company. Currently, nuclear decommissioning liabilities are accrued as depreciation expense, under an external sinking fund method, as these costs are recovered through rates over the expected service lives of the two generating units at Point Beach. SFAS 143 will require the Company to record the full fair value of the decommissioning liability and a corresponding asset, which will then be depreciated over the remaining expected service lives of the plant's generating units. Any changes in depreciation expense due to differing assumptions between SFAS 143 and those currently required by the Public Service Commission of Wisconsin ("PSCW") are not expected to be material and the Company would expect to seek recovery of th ese expenses in rates.

ASSET VALUATION CHARGES

4.

In the first quarter of 2002, the Company recorded a non-cash charge of $141.5 million ($92.0 million after tax or $0.79 per share) related primarily to non-utility investments which are held for sale (See Note 6). The Company determined in the first quarter of 2002 that the carrying value of these assets exceeded market values due to a significant decline in the non-regulated energy market due to many factors including lower forward electric price curves, tightening of credit to non-regulated energy companies and a soft economy. The Company estimated fair market value for one of the held for sale investments based on a definitive agreement to sell. The Company estimated the fair market value for the other investments based primarily on preliminary discussions with potential buyers and management's assessment of information about the market for these assets. The value of the assets held for sale, net of reserves, and the outstanding debt and liabilities related to the a ssets held for sale are reflected in current assets on the Company's consolidated balance sheets.

The ultimate timing, proceeds and any gain or loss on the sale of assets held for sale is dependent upon many factors, including, but not limited to, the independent power markets, forward electric price curves, the ability of independent power producers to obtain credit, the softening economy, the relative attractiveness of real estate for investment purposes, and interest rates.

ACQUSITIONS

 5. In April 2002, Sta-Rite completed the acquisition of Aermotor Pumps, Inc ("Aermotor"). Aermotor, with annual sales of approximately $50 million, manufactures a full line of water pumps and pump accessories for a variety of applications, including potable water, agriculture and irrigation, sump drainage, and sewage and effluent for the residential, industrial, commercial and mining markets. The aggregate purchase price for this transaction was approximately $14.9 million and was financed using corporate working capital and short-term borrowings. The acquisition was accounted for as a purchase, and the acquired company's results of operations were included in the consolidated financial statements from the acquisition date. The excess of the purchase price over the estimated fair value of the net assets of the acquired company is $2.3 million, which was recorded as goodwill.

ASSET SALES AND DIVESTITURES

 6. As previously reported, the Company is divesting certain non-core investments. In June 2002, Wisvest signed a definitive agreement with PSEG Fossil, LLC of New Jersey, a wholly owned subsidiary of Public Service Enterprise Group Incorporated, to sell its two existing non-utility power plants in Connecticut. The sale is expected to be completed in the second half of 2002. Proceeds from the Wisvest sales, and sales of real estate by Wispark, are expected to be used primarily to reduce debt. Wisconsin Energy held the following net assets for sale as of June 30, 2002 and December 31, 2001:

Assets Held For Sale	June 30, 2002	December 31, 2001
	(Millions of Dollars)
Non-Utility Energy	$311.8	$382.5
Other -- Real Estate	23.2	20.6
Total	$335.0	$403.1
	=====	=====

The decline in cost from December 31, 2001 is due primarily to the impairment charge (See Note 4).

COMMON EQUITY

 7. Comprehensive Income includes all changes in equity during a period except those resulting from investments by and distributions to owners. Wisconsin Energy had the following total Comprehensive Income during the six month periods ended June 30, 2002 and 2001:

	Six Months Ended June 30
Comprehensive Income	2002	2001
	(Millions of Dollars)
Net Income	$41.2	$133.9
Other Comprehensive Income (Loss)
Currency Translation Adjustments	1.6	(2.2)
Minimum Pension Liability	-	(0.7)
Unrealized Losses During the Period
on Derivatives Qualified as Hedges:
Unrealized losses due to cumulative
effect of change in accounting principle	-	(2.1)
Change in value	(2.8)	(2.6)
Reclassification to earnings	0.1	(0.5)
Net Unrealized Losses	(2.7)	(5.2)
Total Other Comprehensive Loss	(1.1)	(8.1)
Total Comprehensive Income	$40.1	$125.8
	====	=====

In 2000, the Board of Directors approved a common stock repurchase plan, which authorizes the Company to purchase through December 31, 2002 up to $400 million of its shares of common stock in the open market. During the first six months of 2002, Wisconsin Energy purchased approximately 1.7 million shares of common stock for $41.1 million. The Company currently retires the stock that is purchased pursuant to the repurchase plan.

During the first six months of 2002, Wisconsin Energy issued approximately 1.4 million new shares of common stock totaling $26.3 million related to the Company's dividend reinvestment plan, other benefit plans and the exercise of stock options.

DERIVATIVE INSTRUMENTS

8.

The Company follows SFAS 133, which requires that every derivative instrument be recorded on the balance sheet as an asset or liability measured at its fair value and that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met.

Wisvest-Connecticut, LLC, a wholly-owned subsidiary of Wisvest and an asset held for sale, has fuel oil contracts utilized to mitigate the commodity risk associated with generation costs. These contracts are defined as derivatives under SFAS 133 and do not qualify for hedge accounting treatment. During the three and six months ended June 30, 2002, the Company recorded non-cash, after tax income of $1.9 million or $0.02 per share and $14.2 million or $0.12 per share, respectively, to reflect the settlement of transactions and the increase in the value of existing contracts resulting from rising fuel oil prices.

NUCLEAR OPERATIONS

 9 Nuclear Insurance:   The Price-Anderson Act ("the Act"), as amended and extended to August 1, 2002, currently limits the total public liability for damages arising from a nuclear incident at a nuclear power plant. As of August 1, 2002, the United States Senate had not passed an amendment or extended the Act; however, existing nuclear plants remain covered by the Act.

SEGMENT INFORMATION

 10. Summarized financial information concerning Wisconsin Energy's reportable operating segments for the three and six month periods ended June 30, 2002 and 2001 is shown in the following table. Current year information is not comparable with the prior year due to the adoption of SFAS 142, which eliminated the amortization of goodwill, and due to the elimination of $305 million of intercompany notes between the Utility Energy Segment and Corporate in December 2001.

				Corporate and
	Reportable Operating Segments			Other (a) &
Wisconsin	Energy			Reconciling	Total
Energy Corporation	Utility	Non-Utility	Manufacturing	Eliminations	Consolidated
	(Millions of Dollars)
Three Months Ended
June 30, 2002
Operating Revenues (b)	$634.6	$38.7	$192.6	$5.0	$870.9
Operating Income (Loss)	$98.2	$0.6	$21.9	($8.4)	$112.3
Net Income (Loss)	$49.3	($2.1)	$10.2	($12.0)	$45.4
Capital Expenditures	$99.2	$17.0	$4.1	$22.5	$142.8
June 30, 2001
Operating Revenues (b)	$624.0	$67.4	$159.6	$11.2	$862.2
Operating Income (Loss)	$80.8	$9.3	$15.9	($2.3)	$103.7
Net Income (Loss)	$29.8	$20.0	$5.7	($9.4)	$46.1
Capital Expenditures	$97.9	$18.6	$6.0	$8.7	$131.2

Six Months Ended
June 30, 2002
Operating Revenues (b)	$1,416.3	$82.1	$343.5	$15.0	$1,856.9
Operating Income (Loss)	$270.3	($130.2)	$28.4	($21.9)	$146.6
Net Income (Loss)	$139.0	($79.4)	$11.2	($29.6)	$41.2
Capital Expenditures	$170.6	$42.3	$8.6	$34.5	$256.0
Total Assets	$6,344.3	$626.0	$937.0	$331.7	$8,239.0
June 30, 2001
Operating Revenues (b)	$1,669.8	$220.7	$305.0	$23.9	$2,219.4
Operating Income (Loss)	$248.1	$18.2	$26.7	($5.5)	$287.5
Cumulative Effect of Change in
Accounting Principle, Net	$ -	$10.5	$ -	$ -	$10.5
Net Income (Loss)	$112.2	$33.5	$8.2	($20.0)	$133.9
Capital Expenditures	$169.2	$41.8	$12.1	$33.0	$256.1
Total Assets	$6,264.8	$605.1	$848.8	$397.9	$8,116.6

(a)	Other includes all other non-utility activities, primarily non-utility real estate investment and development by Wispark and non-utility investment in recycling technology by Minergy as well as interest on corporate debt.
(b)	Intersegment revenues are not material.

COMMITMENTS AND CONTINGENCIES

11.	City of West Allis lawsuit:   As previously reported, in July 1999, a Milwaukee County Circuit Court jury issued a verdict against Wisconsin Electric Power Company awarding the plaintiffs, Giddings & Lewis Inc., Kearney & Trecker Corporation (now a part of Giddings & Lewis), and the City of West Allis, $4.5 million in compensatory damages and $100 million in punitive damages in an action alleging that Wisconsin Electric had deposited contaminated wastes at two sites owned by the plaintiffs in West Allis, Wisconsin. In September 2001, the Wisconsin Court of Appeals, District I, reversed the $100 million punitive damage judgment in its entirety, ordering a new trial on the issue of punitive damages only. In January 2002, the Wisconsin Supreme Court denied petitions for further review and ordered the Milwaukee County Circuit Court to retry the issue of punitive damages. After contested hearings on April 8, 2002, the plaintiffs returned to Wis consin Electric $117.7 million, consisting of the portion of the paid judgment pertaining to punitive damages and interest accrued on that amount. The new trial is scheduled to commence on October 21, 2002.
	On May 29, 2002, Wisconsin Electric and the City of West Allis entered into a Settlement Agreement and Release whereby Wisconsin Electric paid $8.7 million to the City of West Allis as full and final settlement of all damage claims by the City of West Allis against Wisconsin Electric. The Settlement Agreement was determined to be in the mutual best interests of the settling parties in order to avoid the burden, inconvenience and expense of continued litigation between the parties and does not constitute an admission of liability or wrongdoing by Wisconsin Electric with respect to any released claims. Wisconsin Electric is presently engaged in discussions with its insurers regarding coverage for the amounts paid in this Settlement; however, the outcome of those discussions is not certain at this time.
	The litigation continues with respect to the joint punitive damages claim of Giddings & Lewis, Inc. and Kearney & Trecker Corporation. With respect to the punitive damages claim of those parties, Wisconsin Electric continues to believe that it has meritorious arguments and continues to vigorously defend the action. As such, WisconsinElectric has not established a reserve for potential damages from this suit.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Factors:   A number of forward-looking statements are included in this document. When used, the terms "anticipate," "believe," "estimate," "expect," "forecast," "objective," "plan," "possible," "potential," "project" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to certain risks, uncertainties and assumptions which could cause actual results to differ materially from those that are described, including the factors that are noted throughout this document and below in "Factors Affecting Results, Liquidity and Capital Resources".

RESULTS OF OPERATIONS -- THREE MONTHS ENDED JUNE 30, 2002

CONSOLIDATED EARNINGS

Wisconsin Energy had net income of $0.39 per share during the second quarters of 2002 and 2001, respectively. Excluding net earnings of $0.02 per share from non-utility energy assets held for sale, adjusted earnings were $0.37 per share during the second quarter of 2002. Adjusted earnings for the second quarter of 2001 were $0.21 per share, excluding $0.14 per share of non-recurring gains from asset sales as well as net earnings of $0.04 per share from non-utility energy assets held for sale.

The Company's adjusted earnings for the second quarter of 2002 increased by $0.16 per share when compared to the second quarter of 2001. This increase reflects improved electric and gas margins during 2002 within the utility energy segment principally due to periods of favorable weather in the quarter, a shorter refueling outage at Point Beach than in the same period in 2001 and lower interest rates offset in part by a charge of $0.04 per share related to settlement of litigation with the City of West Allis. The elimination of goodwill and intangible amortization expenses due to the adoption of SFAS 142 on January 1, 2002, increased second quarter adjusted earnings of 2002 by $0.05 per share.

The following table compares Wisconsin Energy's diluted earnings per share by business segment during the second quarter of 2002 with similar information during the second quarter of 2001.

Contribution to			Three Months Ended June 30
Diluted Earnings Per Share		2002			2001
Utility Energy Segment	$0.42			$0.30
Manufacturing Segment	0.11			0.09
Non-Utility Energy Segment (a)	(0.04)			(0.01)
Corporate and Other (b)	(0.12)			(0.17)
Adjusted Earnings	0.37			0.21
Asset Sales (c)	-			0.14
Assets Held for Sale (d)	0.02			0.04
GAAP Earnings	$0.39			$0.39
	====			====

(a)	Excludes Wisvest-Connecticut whose results are included under Assets Held for Sale.
(b)	Includes the holding company, other non-utility companies and WICOR merger-related costs, primarily interest expense net of tax during 2002 and 2001 and goodwill amortization expense during 2001.
(c)	Represents non-recurring gains on asset sales during the second quarter of 2001 of $0.14 per share all of which is attributable to the non-utility energy segment.
(d)	Relates to the operations of Wisvest-Connecticut, which is being held for sale, and net SFAS 133 activity.

A more detailed analysis of earnings contributions by segment follows.

UTILITY ENERGY SEGMENT CONTRIBUTION TO NET INCOME

The utility energy segment contributed $49.3 million to net earnings during the second quarter of 2002, an increase of $19.5 million or 65.4% over the prior year second quarter. This increase reflects improved electric and gas margins and reduced financing costs, partially offset by the $8.7 million settlement of litigation with the City of West Allis. The following table summarizes the net income of this segment between the comparative quarters.

	Three Months Ended June 30
Utility Energy Segment	2002	2001	% Change
	(Millions of Dollars)
Operating Revenues
Electric	$467.0	$449.8	3.8%
Gas	162.9	170.4	(4.4%)
Other	4.7	3.8	23.7%
Total Operating Revenues	634.6	624.0	1.7%
Fuel and Purchased Power	122.3	126.2	(3.1%)
Cost of Gas Sold	98.5	115.0	(14.3%)
Gross Margin	413.8	382.8	8.1%
Other Operating Expenses
Other Operation and Maintenance	219.3	206.9	6.0%
Depreciation, Decommissioning
and Amortization	76.5	78.6	(2.7%)
Property and Revenue Taxes	19.8	16.5	20.0%
Operating Income	98.2	80.8	21.5%
Other Income, Net	7.3	4.7	55.3%
Financing Costs	26.6	36.8	(27.7%)
Income Before Income Taxes	78.8	48.7	61.8%
Income Taxes	29.6	18.9	56.6%
Net Income	$49.3	$29.8	65.4%
	====	====
WICOR merger related costs after tax (a)	$   -	$5.8	(100.0%)
	====	====
Earnings Excluding Merger Costs
Net Income	$49.3	$35.6	38.5%
	====	====
Contribution to Diluted Earnings Per Share	$0.42	$0.30	40.0%
	====	====

(a) Merger related costs represent WICOR acquisition purchase accounting entries, including goodwill amortization and interest expense for 2001.

Electric Utility Revenues, Gross Margin and Sales

The following table compares Wisconsin Energy's total electric utility operating revenues and gross margin during the second quarter of 2002 with similar information for the second quarter of 2001.

	Three Months Ended June 30
Electric Utility Operations	2002	2001	% Change
	(Millions of Dollars)
Electric Operating Revenues	$467.0	$449.8	3.8%
Fuel and Purchased Power
Fuel	68.5	73.6	(6.9%)
Purchased Power	51.8	51.4	0.8%
Total Fuel and Purchased Power	120.3	125.0	(3.8%)
Gross Margin	$346.7	$324.8	6.7%
	=====	=====

During the second quarter of 2002, total electric utility operating revenues increased by $17.2 million or 3.8% when compared with the second quarter of 2001. The increase was primarily due to higher overall electric megawatt-hour sales during the second quarter of 2002, especially to higher margin customers, resulting from the effects of warmer weather.

Electric gross margin increased 6.7% between the comparative periods primarily due to lower fuel and purchased power costs and favorable weather conditions in the second quarter of 2002. Between the comparative periods, total fuel and purchased power expenses decreased by $4.7 million or 3.8%. These reductions primarily resulted from lower gas prices and improved efficiencies in generation. Completion of the refueling outage at the Point Beach Nuclear Plant Unit 2 resulted in increased unit availability in the second quarter of 2002 and reduced fuel costs for Wisconsin Electric. A second refueling outage for Point Beach is scheduled to begin in September of 2002 for Unit 1. In addition, due to lower gas prices and additional availability of electricity in the Midwest, the cost of purchased power in the second quarter of 2002 was lower than it was in the second quarter of 2001.

The following table compares Wisconsin Energy's electric utility operating revenues and electric utility megawatt-hour sales by customer class during the second quarter of 2002 with similar information for the second quarter of 2001.

	Operating Revenues			Megawatt-Hour Sales
	Three Months Ended June 30			Three Months Ended June 30
Electric Utility Operations	2002	2001	% Change	2002	2001	% Change
	(Millions of Dollars)			(Thousands)
Customer Class
Residential	$165.0	$152.4	8.3%	1,945.5	1,781.3	9.2%
Small Commercial/Industrial	151.9	145.5	4.4%	2,131.9	2,068.0	3.1%
Large Commercial/Industrial	122.6	119.5	2.6%	2,828.9	2,722.6	3.9%
Other-Retail/Municipal	19.2	17.3	11.0%	504.7	447.3	12.8%
Resale-Utilities	3.4	11.6	(70.7%)	125.1	350.8	(64.3%)
Other-Operating Revenues	4.9	3.5	40.0%	-	-	-
Total	$467.0	$449.8	3.8%	7,536.1	7,370.0	2.3%
	=====	=====		=====	=====
Weather -- Degree Days (a)
Cooling (174 Normal)				241	168	43.5%

(a) As measured at Mitchell International Airport in Milwaukee, Wisconsin. Normal degree days are based upon a twenty-year moving average.

As noted above, total electric megawatt-hour sales increased by 2.3% during the second quarter of 2002 reflecting the impacts of warmer weather conditions in April and June, especially with respect to residential customers who are more weather sensitive than other customer classes. During the second quarter of 2002, the region experienced periods of unseasonably hot weather. As measured by cooling degree days, the second quarter of 2002 was 43.5% warmer than the second quarter of 2001 and 38.5% warmer than normal. Sales to large commercial/industrial customers, including Wisconsin Electric's largest customers, two iron ore mines, increased 3.9% between the comparative periods. Excluding these two mines, Wisconsin Energy's sales volumes to the remaining large commercial/industrial customers decreased by 1.0% between the comparative periods. Sales for resale to other utilities, the Resale-Utilities customer class, declined 64.3% between the periods due to a reduced demand for wholesale power.

Gas Utility Revenues, Gross Margin and Therm Deliveries

A comparison follows of Wisconsin Energy's gas utility operating revenues, gross margin and gas deliveries during the second quarter of 2002 with similar information for the second quarter of 2001. Gross margin is a better performance indicator for the gas utility than revenues because changes in the cost of gas sold flow through to revenue under gas cost recovery mechanisms that do not impact gross margin. Due primarily to a decline in the delivered cost of natural gas between the comparative periods, gas operating revenues decreased by $7.5 million or 4.4% offset by a $16.5 million or 14.3% decrease in purchased gas costs.

	Three Months Ended June 30
Gas Utility Operations	2002	2001	% Change
	(Millions of Dollars)
Gas Operating Revenues	$162.9	$170.4	(4.4%)
Cost of Gas Sold	98.5	115.0	(14.3%)
Gross Margin	$64.4	$55.4	16.2%
	====	====

For the three months ended June 30, 2002, gas gross margin increased by $9.0 million or 16.2% when compared to the three months ended June 30, 2001 due primarily to a weather-related increase in therm deliveries, especially to residential customers who are more weather sensitive and contribute higher margins per therm than other customer classes. In addition to the unseasonably warm weather discussed above, the region experienced periods of unusually cold weather during April and May of 2002. As measured by heating degree days, the second quarter of 2002 was 25.6% cooler than the second quarter of 2001 and 12.0% cooler than normal.

The following table compares Wisconsin Energy's gas utility gross margins and natural gas therm deliveries by customer class during the second quarter of 2002 with similar information for the second quarter of 2001.

	Gross Margin				Therm Deliveries
		Three Months Ended June 30			Three Months Ended June 30
Gas Utility Operations	2002		2001	% Change	2002	2001	% Change
	(Millions of Dollars)				(Millions)
Customer Class
Residential	$40.8		$33.8	20.7%	130.8	98.8	32.4%
Commercial/Industrial	11.5		10.2	12.7%	72.7	62.9	15.6%
Interruptible	0.4		0.4	0.0%	6.2	5.0	24.0%
Total Retail Gas	52.7		44.4	18.7%	209.7	166.7	25.8%
Transported Gas	9.2		8.8	4.5%	181.4	162.9	11.4%
Other-Operating	2.5		2.2	13.6%	-	-	-
Total	$64.4		$55.4	16.2%	391.1	329.6	18.7%
	====		====		====	====
Weather -- Degree Days (a)
Heating (950 Normal)					1,064	847	25.6%

(a) As measured at Mitchell International Airport in Milwaukee, Wisconsin. Normal degree days are based upon a twenty-year moving average.

Other Utility Energy Segment Items

Other Operation and Maintenance Expenses:   Other operation and maintenance expenses increased by $12.4 million or 6.0% during the second quarter of 2002 when compared with the second quarter of 2001. In the second quarter of 2002, the Company expensed $8.7 million for the settlement of litigation with the City of West Allis. In addition during the second quarter of 2002, bad debt expense increased $2.9 million compared to the second quarter of 2001 as state and federal funds for low income energy assistance were reduced from previous levels. The Company also experienced higher pension and other medical benefit expenses for the second quarter of 2002. Reductions in general administrative expenses partially offset cost increases in other areas of the Company.

Depreciation, Decommissioning and Amortization:   Depreciation, Decommissioning and Amortization expenses decreased by $2.1 million or 2.7% during the second quarter of 2002 due primarily to the adoption on January 1, 2002 of SFAS 142, which eliminated the amortization of goodwill and intangibles with indefinite lives.

Other Income, Net:   Other Income increased by $2.6 million or 55.3% during the second quarter of 2002 due primarily to increases in equity in earnings of unconsolidated affiliates.

Financing Costs:   Financing costs decreased by $10.2 million or 27.7% during the second quarter of 2002 due primarily to lower outstanding short-term debt balances and lower interest rates. In addition, in the second quarter of 2001 the utility energy segment had $5.0 million of interest expense related to intercompany notes. The intercompany notes were reversed in the fourth quarter of 2001 pursuant to a PSCW order.

MANUFACTURING SEGMENT CONTRIBUTION TO NET INCOME

The manufacturing segment contributed earnings of $13.0 million or $0.11 per share during the second quarter of 2002, excluding costs related to the WICOR merger, compared with $10.4 million or $0.09 per share during the second quarter of 2001. The following table compares the net earnings of the manufacturing segment between the comparative periods.

	Three Months Ended June 30
Manufacturing Segment	2002	2001	% Change
	(Millions of Dollars)
Operating Revenues
Domestic	$146.5	$124.1	18.0%
International	46.1	35.5	29.9%
Total Operating Revenues	192.6	159.6	20.7%
Cost of Goods Sold	141.7	114.8	23.4%
Gross Margin	50.9	44.8	13.6%
Other Operating Expenses	29.0	28.9	0.3%
Operating Income	21.9	15.9	37.7%
Other Income (Deductions), Net	(0.1)	-	(100.0%)
Financing Costs	4.9	5.5	(10.9%)
Income Before Income Taxes	16.9	10.4	62.5%
Income Taxes	6.7	4.7	42.6%
Net Income	$10.2	$5.7	78.9%
	====	====
WICOR merger related costs after tax (a)	$2.8	$4.7	(40.4%)
	====	====
Earnings Excluding Merger Costs
Net Income	$13.0	$10.4	25.0%
	====	====
Contribution to Diluted Earnings Per Share	$0.11	$0.09	22.2%
	====	====

(a) Merger related costs represent WICOR acquisition purchase accounting entries. The costs for 2002 include primarily interest expense and for 2001 include goodwill and intangible amortizations and interest expense.

Manufacturing operating revenues for the second quarter of 2002 were $192.6 million, a record level for second quarter sales and an increase of $33.0 million or 20.7% compared to the same period in 2001. Recent acquisitions contributed $23.6 million of sales growth in the second quarter of 2002. Excluding the impact of recent acquisitions, the Company experienced a 5.9% growth in its business. Domestic markets for water treatment sales grew 9.0% over the second quarter of 2001, which can be attributed to increased demand from both retail and original equipment manufacturing customers. During the second quarter of 2002, international sales for water systems in the European and Australian markets increased 22% over the second quarter of 2001.

The gross profit margins decreased to 26.4% for the second quarter in 2002 from 28.1% for the same period in 2001 due partially to changes in the customer and product mix, and increased customer rebates due to higher sales growth levels in 2002. For the second quarter, operating income for the manufacturing segment increased 37.7% over the same period in 2001. The increase in operating income for the second quarter was primarily due to business growth and recent acquisition contributions. In addition, operating income increased due to cost savings achieved through consolidation of operations which occurred in the first quarter of 2002, continued tight operating controls and the elimination of goodwill and intangible amortization due to adoption of SFAS 142, offset partially by incremental operating costs of new enterprise-wide systems.

NON-UTILITY ENERGY SEGMENT CONTRIBUTION TO NET INCOME

The operations of the non-utility energy segment have been reduced from the prior year as the Company has exited from operating energy marketing companies. In addition, the Company has continued a strategy of divesting non-core, non-utility energy assets. During the second quarter of 2002, the Company signed a definitive agreement with PSEG Fossil, LLC of New Jersey, a wholly owned subsidiary of Public Service Enterprise Group Incorporated, for the sale of two fossil-fueled power plants operated by Wisvest-Connecticut. The following table identifies the performance of key components of the non-utility energy segment between the second quarter of 2002 and the second quarter of 2001.

	Three Months Ended June 30
	2002	2001
	(Millions of Dollars)
Recurring Operations
Net Earnings (Loss) (a)	($4.2)	($0.7)
	=====	=====
Contribution to Diluted Earnings Per Share	($0.04)	($0.01)
	=====	=====
Assets Held for Sale
Wisvest Connecticut Operations	$0.2	$3.9
SFAS 133, net	1.9	0.3
Asset Sales	-	16.5
Net Earnings	$2.1	$20.7
	=====	=====
Contribution to Diluted Earnings Per Share	$0.02	$0.18
	=====	=====

(a) During April 2001, the operations of WICOR Energy, a subsidiary which engaged in natural gas purchasing and marketing , were merged into an unconsolidated affiliate of Wisconsin Energy. In May 2001, FieldTech, a subsidiary which provided meter reading and technology services for gas, electric and water utilities, was sold to an unrelated third party.

The increase in the loss from recurring operations primarily relates to increased start-up costs at We Power as it continues to develop power plants for the Power the Future initiative, and at Wisvest related to start-up costs for its Calumet power plant located in Chicago, Illinois, which was placed in service in June of 2002.

The decrease in earnings on assets held for sale can be broken down between operation of the assets and SFAS 133 gains or charges. During the second quarter of 2002, Wisvest assets held for sale had earnings of $0.2 million compared to earnings of $3.9 million in the same quarter of the prior year. This decline in earnings is directly related to lower retail market prices for electricity in the Northeast United States.

Under SFAS 133, Wisvest-Connecticut records the changes in fair market value related to fuel oil contracts associated with plants in the Northeast. During the second quarter of 2002, the Company recorded after-tax gains of $1.9 million on these contracts due to increases in fuel oil prices. During the second quarter of 2001, the Company recorded an after-tax gain of $0.3 million related to fuel oil contracts. Variability in earnings related to accounting for these oil contracts may continue until the Wisvest-Connecticut operations are sold. The sale is expected to close during 2002.

RESULTS OF OPERATIONS -- SIX MONTHS ENDED JUNE 30, 2002

CONSOLIDATED EARNINGS

Wisconsin Energy had net income of $0.35 per share during the first six months of 2002 compared with net income of $1.13 per share during the first six months of 2001. Adjusted earnings during the first six months of 2002 were $1.05 per share, which exclude the impact of a non-cash impairment charge of $0.79 per share incurred in the first quarter of 2002 related primarily to non-utility energy assets held for sale offset in part by net earnings of $0.09 per share from those assets. Adjusted earnings during the first six months of 2001 were $0.83 per share, which exclude a one-time cumulative gain of $0.09 per share due to the adoption of SFAS 133 on January 1, 2001, gains on asset sales of $0.14 per share as well as net earnings of $0.07 per share from non-utility energy assets held for sale.

The Company's adjusted earnings increased by $0.22 per share during the first six months of 2002 when compared to the first six months of 2001. This increase reflects improved electric and gas margins during 2002 within the utility energy segment principally due to the effects of weather and lower natural gas prices offset in part by costs associated with a settlement of litigation paid to the City of West Allis and costs associated with the early repayment of $103.4 million of long-term debt with a weighted average interest rate of 8.4%. In addition, amortization of goodwill and certain intangible expenses were discontinued effective January 1, 2002, with the adoption of SFAS 142, resulting in an increase in adjusted earnings of $0.09 per share.

The following table compares Wisconsin Energy's diluted earnings per share by business segment during the first six months of 2002 with similar information during the first six months of 2001.

Contribution to	Six Months Ended June 30
Diluted Earnings Per Share	2002	2001
Utility Energy Segment	$1.20	$1.04
Manufacturing Segment	0.14	0.15
Non-Utility Energy Segment (a)	(0.08)	(0.02)
Corporate and Other (b)	(0.21)	(0.34)
Adjusted Earnings	1.05	0.83
Asset Sales/Valuation Charges (c)	(0.79)	0.14
Assets Held for Sale (d)	0.09	0.16
GAAP Earnings	$0.35	$1.13
	====	====

(a)	Excludes Wisvest-Connecticut whose results are included under Assets Held for Sale.
(b)	Includes the holding company, other non-utility companies and WICOR merger-related costs, primarily interest expense net of tax during 2002 and 2001 and goodwill amortization expense during 2001.
(c)	Represents asset valuation charges of approximately $0.79 per share recorded during the three months ended March 31, 2002 primarily attributable to the non-utility energy segment. Also reflects non-recurring gains on asset sales of $0.14 per share during the second quarter of 2001which are attributable to the non-utility energy segment.
(d)	Relates to the operations of Wisvest-Connecticut, which is being held for sale, and net SFAS 133 activity.

The Company's total revenues decreased by $362.5 million or 16.3% for the first six months of 2002 compared to the first six months of 2001. The principal reasons for this decline include $253.5 million of lower revenues from the utility energy segment which primarily reflects the decline in purchased gas costs that flow through to customers and do not impact margin. In addition, non-utility energy segment revenues declined by $138.8 million reflecting primarily the Company's exit from operating non-utility energy marketing companies. A more detailed analysis of earnings contributions by segment follows.

UTILITY ENERGY SEGMENT CONTRIBUTION TO NET INCOME

Utility energy segment net income increased by $26.8 million or 23.9% between the first six months of 2002 and the first six months of 2001. This increase is primarily attributable to increases in electric and gas utility gross margins due to favorable weather conditions in 2002, improved recovery of electric fuel and purchased power costs as well as reduced operating and financing costs. The increase in gross margin was offset, in part, by the costs of a settlement of litigation with the City of West Allis of $8.7 million and costs associated with the early repayment of $103.4 million of long-term debt. The following table compares the contribution to net income of the utility energy segment during the six months ended June 30, 2002 with similar information for the six months ended June 30, 2001.

	Six Months Ended June 30
Utility Energy Segment	2002	2001	% Change
	(Millions of Dollars)
Operating Revenues
Electric	$909.8	$905.2	0.5%
Gas	493.3	751.4	(34.3%)
Other	13.2	13.2	0.0%
Total Operating Revenues	1,416.3	1,669.8	(15.2%)
Fuel and Purchased Power	239.2	260.0	(8.0%)
Cost of Gas Sold	298.3	557.5	(46.5%)
Gross Margin	878.8	852.3	3.1%
Other Operating Expenses
Other Operation and Maintenance	415.8	409.5	1.5%
Depreciation, Decommissioning
and Amortization	152.2	158.2	(3.8%)
Property and Revenue Taxes	40.5	36.5	11.0%
Operating Income	270.3	248.1	8.9%
Other Income, Net	10.5	14.4	(27.1%)
Financing Costs	54.8	76.1	(28.0%)
Income Before Income Taxes	226.0	186.4	21.2%
Income Taxes	87.0	74.2	17.3%
Net Income	$139.0	$112.2	23.9%
	=====	=====
WICOR merger related costs after tax (a)	$     -	$11.7	100.0%
	=====	=====
Earnings Excluding Merger Costs
Net Income	$139.0	$123.9	12.2%
	=====	=====
Contribution to Diluted Earnings Per Share	$1.20	$1.04	15.4%
	=====	=====

(a) Merger related costs during 2001 represent WICOR acquisition purchase accounting entries, including goodwill amortization and interest expense.

Electric Utility Revenues, Gross Margins and Sales

The following table compares Wisconsin Energy's actual total electric utility operating revenues and gross margin during the first six months of 2002 with similar information for the first six months of 2001.

	Six Months Ended June 30
Electric Utility Operations	2002	2001	% Change
	(Millions of Dollars)
Electric Operating Revenues	$909.8	$905.2	0.5%
Fuel and Purchased Power
Fuel	131.0	153.1	(14.4%)
Purchased Power	104.1	103.8	0.3%
Total Fuel and Purchased Power	235.1	256.9	(8.5%)
Gross Margin	$674.7	$648.3	4.1%
	=====	=====

During the first six months of 2002, total electric utility operating revenues increased by $4.6 million or 0.5% when compared with the first six months of 2001. In February and May 2001, Wisconsin Electric received emergency increases in rates to cover increased fuel and purchased power costs. These increases favorably impacted revenues in the first six months of 2002 by $28.2 million when compared to 2001. The increase in electric utility operating revenues was offset partially by a decrease in megawatt-hour sales during the first six months of 2002 resulting from the effects of the weakening economy and warm winter weather in the first quarter of 2002.

Between the comparative periods, total fuel and purchased power expenses decreased by $21.8 million or 8.5% primarily due to lower natural gas prices and improved efficiencies in generation. The completion of the Point Beach refueling outage during 2002 noted earlier resulted in increased unit availability and reduced fuel costs. The lower fuel and purchased power expenses offset much of the impact on electric revenues of the decline in electric megawatt-hour sales such that total gross margin on electric operating revenues increased by $26.4 million or 4.1% during the first six months of 2002. Even with the emergency increase in rates as described above, the Company estimates that it under-recovered fuel and purchased power costs by $4.4 million and $12.8 million for the six months ended June 30, 2002 and 2001, respectively.

The following table compares Wisconsin Energy's electric utility operating revenues and electric utility megawatt-hour sales by customer class during the first six months of 2002 with similar information for the first six months of 2001.

	Operating Revenues			Megawatt-Hour Sales
	Six Months Ended June 30			Six Months Ended June 30
Electric Utility Operations	2002	2001	% Change	2002	2001	% Change
	(Millions of Dollars)			(Thousands)
Customer Class
Residential	$332.2	$312.1	6.4%	3,927.9	3,714.4	5.7%
Small Commercial/Industrial	291.8	288.9	1.0%	4,193.6	4,222.6	(0.7%)
Large Commercial/Industrial	230.0	236.4	(2.7%)	5,244.8	5,551.7	(5.5%)
Other-Retail/Municipal	36.4	34.4	5.8%	955.0	908.7	5.1%
Resale-Utilities	6.5	26.2	(75.2%)	239.9	798.6	(70.0%)
Other-Operating Revenues	12.9	7.2	79.2%	-	-	-
Total	$909.8	$905.2	0.5%	14,561.2	15,196.0	(4.2%)
	=====	=====		======	======
Weather -- Degree Days (a)
Heating (4,254 Normal)				4,082	4,242	(3.8%)
Cooling (174 Normal)				241	168	43.5%

(a) As measured at Mitchell International Airport in Milwaukee, Wisconsin. Normal degree days are based upon a twenty-year moving average.

As noted above, total electric megawatt-hour sales decreased by 4.2% during the first six months of 2002 but varied within customer classes. Sales to residential customers increased by 5.7%. Residential customers are more weather sensitive and contribute higher margins per megawatt-hour than other customer classes. Sales to Wisconsin Electric's largest retail customers, two iron ore mines, declined by 191.2 thousand megawatt-hours or 18.5% between the comparative periods. Excluding these two mines, Wisconsin Energy's sales volumes to the remaining large commercial/industrial customers decreased by 2.6% between the comparative periods. Sales for resale to other utilities, the Resale-Utilities customer class, declined 70.0% between the periods due to a reduced demand for wholesale power.

Gas Utility Revenues, Gross Margin and Therm Deliveries

A comparison of Wisconsin Energy's gas utility operating revenues, gross margin and gas deliveries follows. Gross margin is a better performance indicator than revenues because changes in the cost of gas sold flow through to revenue under gas cost recovery mechanisms that do not impact gross margin. As can be seen below, gas operating revenues declined by $258.1 million or 34.3% between the first six months of 2002 and the first six months of 2001 offset by a $259.2 million or 46.5% decrease in purchased gas costs.

	Six Months Ended June 30
Gas Utility Operations	2002	2001	% Change
	(Millions of Dollars)
Gas Operating Revenues	$493.3	$751.4	(34.3%)
Cost of Gas Sold	298.3	557.5	(46.5%)
Gross Margin	$195.0	$193.9	0.6%
	=====	=====

Lower prices for natural gas drove most of the 34.3% decrease in operating revenues and the 46.5% decrease in the cost of gas sold during the first six months of 2002. As noted above, such gas cost decreases do not affect the margin earned on each therm of gas delivered as a result of the Company's gas cost recovery mechanisms. Gas gross margin reflects an increase of $2.0 million due to a rate increase that became effective December 20, 2001.

The following table compares Wisconsin Energy's gas utility gross margins and natural gas therm deliveries by customer class during the first six months of 2002 with similar information for the first six months of 2001.

		Gross Margin			Therm Deliveries
	Six Months Ended June 30					Six Months Ended June 30
Gas Utility Operations		2002	2001	% Change	2002		2001	% Change
		(Millions of Dollars)			(Millions)
Customer Class
Residential		$128.5	$126.9	1.3%	487.8		484.0	0.8%
Commercial/Industrial		38.5	37.9	1.6%	270.0		266.5	1.3%
Interruptible		1.1	1.2	(8.3%)	14.5		15.1	(4.0%)
Total Retail Gas		168.1	166.0	1.3%	772.3		765.6	0.9%
Transported Gas		22.4	23.0	(2.6%)	428.5		413.3	3.7%
Other-Operating		4.5	4.9	(8.2%)	-		-	-
Total		$195.0	$193.9	0.6%	1,200.8		1,178.9	1.9%
		=====	=====		=====		=====
Weather -- Degree Days (a)
Heating (4,254 Normal)					4,082		4,242	(3.8%)

(a) As measured at Mitchell International Airport in Milwaukee, Wisconsin. Normal degree days are based upon a twenty-year moving average.

During the first six months of 2002, total therm deliveries of natural gas increased by 1.9% but varied within customer classes. Volume deliveries for the residential and commercial customer classes increased by 0.8% and 1.3%, respectively.

Other Utility Segment Items

Other Operation and Maintenance Expenses:   Other operation and maintenance expenses increased by $6.3 million or 1.5% during the first six months of 2002 when compared with the first six months of 2001. The most significant changes in other operation and maintenance expenses include costs of $8.7 million for a settlement of litigation with the City of West Allis and increased employee benefit costs which were partially offset by cost reduction efforts during 2002.

Other Income, Net:   Other Income decreased by $3.9 million during the first six months of 2002 due primarily to one-time costs of $5.3 million ($3.5 million net of tax or $0.03 per share) from the early repayment of $103.4 million of long-term debt.

Financing Costs:   Financing costs decreased by $21.3 million or 28.0% during the first six months of 2002 due partially to lower outstanding short-term debt balances and lower interest rates. In addition, last year, the utility energy segment had $9.9 million of interest expense related to intercompany notes. The intercompany notes were reversed in the fourth quarter of 2001 pursuant to a PSCW order.

MANUFACTURING SEGMENT CONTRIBUTION TO NET INCOME

The manufacturing segment contributed $16.8 million to net income during the first six months of 2002, excluding costs related to the WICOR merger, compared with $17.5 million during the first half of 2001. The following table reconciles the change in the contribution to earnings by Wisconsin Energy's manufacturing segment between the first six months of 2002 and the first six months of 2001.

	Six Months Ended June 30
Manufacturing Segment	2002	2001	% Change
	(Millions of Dollars)
Operating Revenues
Domestic	$256.7	$232.4	10.5%
International	86.8	72.6	19.6%
Total Operating Revenues	343.5	305.0	12.6%
Cost of Goods Sold	255.7	220.4	16.0%
Gross Margin	87.8	84.6	3.8%
Other Operating Expenses	59.4	57.9	2.6%
Operating Income	28.4	26.7	6.4%
Other Income, Net	(0.1)	0.1	(200.0%)
Financing Costs	9.7	11.4	(14.9%)
Income Before Income Taxes	18.6	15.4	20.8%
Income Taxes	7.4	7.2	2.8%
Net Income	$11.2	$8.2	36.6%
	====	====
WICOR merger related costs after tax (a)	$5.6	$9.3	(39.8%)
	====	====
Earnings Excluding Merger Costs
Net Income	$16.8	$17.5	(4.0%)
	====	====
Contribution to Diluted Earnings Per Share	$0.14	$0.15	(6.7%)
	====	====

(a) Merger related costs represent WICOR acquisition purchase accounting entries. The expense for 2002 includes primarily interest expense and for 2001 includes goodwill and intangible amortizations and interest expense.

Manufacturing operating revenues increased by $38.5 million or 12.6% between the comparative periods. Recent acquisitions contributed sales of $35.0 million in 2002. Domestic sales in the R/V and Food and Beverage markets were up during the first six months of 2002, but other markets experienced flat or decreased sales due mainly to poor market and economic conditions. International sales increased 19.6% during the first six months of 2002 from the same period in 2001 half of which is due to recent acquisitions. Gross profit margin decreased to 25.6% for the first six months of 2002 from 27.7% for the same period in 2001 due partially to changes in the customer/product mix and increased customer rebates. Operating income was up 6.4% primarily due to recent acquisitions, cost savings achieved through consolidation of operations, the continuation of cost improvement programs and the elimination of goodwill and intangible amortization due to adoption of SFAS 142, offset partially by one t ime costs associated with consolidation of facilities in the first quarter of 2002.

NON-UTILITY ENERGY SEGMENT CONTRIBUTION TO NET INCOME

The operations of the non-utility energy segment have been reduced in the first six months of 2002 from the same period in the prior year as the Company has exited from operating energy marketing companies. In addition, the Company has continued a strategy of divesting non-core, non-utility energy assets. The following table identifies the performance of key components of the non-utility energy segment between the first six months of 2002 and the first six months of 2001.

	Six Months Ended June 30
	2002	2001
	(Millions of Dollars)
Recurring Operations
Net Earnings (Loss) (a)	($9.7)	($2.1)
	=====	=====
Contribution to Diluted Earnings Per Share	($0.08)	($0.02)
	=====	=====
Assets Held for Sale
Wisvest Connecticut Operations	($2.6)	$9.3
SFAS 133, net	14.2	9.8
Asset Sales/Valuations	(92.0)	16.5
Net Earnings	($80.4)	$35.6
	=====	=====
Contribution to Diluted Earnings Per Share	($0.70)	$0.30
	=====	=====

(a) During April 2001, the operations of WICOR Energy, a subsidiary which engaged in natural gas purchasing and marketing , were merged into an unconsolidated affiliate of Wisconsin Energy. In May 2001, FieldTech, a subsidiary which provided meter reading and technology services for gas, electric and water utilities, was sold to an unrelated third party.

The increase in the loss from recurring operations primarily relates to increased start-up costs at We Power, as it continues to develop power plants for the Power the Future initiative, and at Wisvest related to start-up costs for its Calumet power plant located in Chicago, Illinois, which was placed in service in June of 2002.

The decrease in earnings on assets held for sale can be broken down between operation of the assets and SFAS 133 gains or charges. During the first six months of 2002, Wisvest assets held for sale operated at a loss of $2.6 million compared to earnings of $9.3 million in the same period of the prior year. This decline in earnings is directly related to lower retail market prices for electricity in the Northeast United States.

Under SFAS 133, Wisvest-Connecticut records the changes in fair market value related to fuel oil contracts associated with plants in the Northeast. During the first six months of 2002, the Company recorded after-tax gains of $14.2 million on these contracts due to the increases in fuel oil prices. During the first six months of 2001, the Company recorded an after-tax gain of $10.5 million related to the cumulative effect of a change in accounting upon the adoption of SFAS 133 partially offset by after-tax charges of $0.7 million related to expiration of contracts. Variability in earnings related to accounting for these oil contracts may continue until the Wisvest-Connecticut operations are sold.

Asset Valuation Charges:   During the first quarter of 2002, the Company recorded an impairment charge of $92.0 million after-tax or $0.79 per share primarily related to the decline in value in non-utility energy assets held for sale. During the first quarter of 2002, the Company noted a significant decline in the market for non-utility energy assets which was a result of several factors, including the collapse of Enron Corporation and the resulting tightening and downgrading of credit related to independent power producers. In addition, the electric forward price curves for the region declined due to the decline in natural gas costs and increased generating capacity. With the decline in market values, the non-utility energy assets held for sale were written down to current fair value less costs to sell.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS

The following summarizes Wisconsin Energy's cash flows during the first six months of 2002 and 2001:

	Six Months Ended June 30
Wisconsin Energy Corporation	2002	2001
	(Millions of Dollars)
Cash Provided by (Used in)
Operating Activities	$445.1	$265.6
Investing Activities	($250.0)	($58.5)
Financing Activities	($193.6)	($177.6)

Operating Activities

Cash provided by operating activities increased to $445.1 million during the first six months of 2002 compared with $265.6 million during the same period in 2001. This increase was due in part to the return of a $100 million deposit plus accrued interest as a result of a favorable court ruling (See Note 11 in Item 1). The Company expects to pay income taxes of approximately $46.8 million related to the return of the deposit. In addition, lower natural gas prices and weather conditions during the first six months of 2002 resulted in a decline in working capital needs.

Investing Activities

During the first six months of 2002, Wisconsin Energy had cash outflows for investing activities of $250.0 million as compared to $58.5 million in 2001. This increase is directly related to a $56.6 million reduction in proceeds from asset sales during the first six months in 2002 compared to 2001. In addition, during the first six months of 2001, the Company received $120.0 million as a return of investment in the American Transmission Company LLC, the entity to which the Company transferred its electric utility transmission system assets on January 1, 2001. For the six months ended June 30, 2002 and 2001, capital expenditures totaled $256.0 million and $256.1 million, respectively.

Financing Activities

During the six months ended June 30, 2002, Wisconsin Energy used $193.6 million for financing activities compared with $177.6 million during the first six months of 2001. The primary uses of cash in the first six months of 2002 included $128.4 million for the repayment of long-term debt and $32.7 million for the repayment of short-term debt. In January 2002, the Company retired early $103.4 million of long-term debt with a weighted average interest rate of 8.4% and refinanced it through short-term debt at lower interest rates.

During the first six months of 2002, Wisconsin Energy purchased approximately 1.7 million shares of common stock for $41.1 million under a $400 million board-approved repurchase program that was initiated in 2000 and which is scheduled to expire on December 31, 2002, unless extended by the Wisconsin Energy board of directors. Also during the first six months of 2002, Wisconsin Energy issued approximately 1.4 million new shares of common stock aggregating $26.3 million related to the Company's dividend reinvestment plan, other benefit plans and the exercise of stock options.

CAPITAL RESOURCES AND REQUIREMENTS

Capital Resources

Cash requirements during the remaining six months of 2002 are expected to be met through a combination of internal sources of funds from operations, asset sales, short-term borrowings and existing lines of credit supplemented, if necessary, through the sale of debt securities.

The Company has access to outside capital markets and has been able to generate funds internally and externally to meet its capital requirements. Wisconsin Energy's ability to attract the necessary financial capital at reasonable terms is critical to the Company's overall strategic plan. Wisconsin Energy believes that it has adequate capacity to fund its operations for the foreseeable future through its borrowing arrangements and internally generated cash.

On June 30, 2002, Wisconsin Energy had $1.4 billion of available unused lines of bank back-up credit facilities on a consolidated basis. The Company had approximately $0.7 billion of total consolidated short-term debt outstanding on such date.

Wisconsin Energy and its subsidiaries, review their bank back-up credit facility needs on an ongoing basis and expect to be able to maintain adequate credit facilities to support their operations.

On April 9, 2002, Wisconsin Energy entered into an unsecured 364 day $300 million bank back-up credit facility to replace a credit facility that was expiring. The credit facility may be extended for an additional 364 days, subject to lender agreement. Assuming certain conditions are met, any outstanding loans under the facility can be converted to a one-year term loan. In addition to the WEC 364 day bank back-up credit facility, WEC has an unsecured three year $500 million bank back-up credit facility that will expire in April, 2003 and an unsecured five year $150 million bank back-up credit facility that will expire in August, 2003.

On June 26, 2002, Wisconsin Electric entered into an unsecured 364 day $230 million bank back-up credit facility to replace a credit facility that was expiring. The credit facility may be extended for an additional 364 days, subject to lender agreement.

On December 12, 2001, Wisconsin Gas entered into an unsecured 364 day $190 million bank back-up credit facility that replaced individual bank lines of credit that were expiring. The credit facility may be extended for an additional 364 days, subject to lender agreement.

The following table shows Wisconsin Energy's consolidated capitalization structure at June 30, 2002 and at December 31, 2001:

Capitalization Structure	June 30, 2002		December 31, 2001
	(Millions of Dollars)
Common Equity	$2,035.6	31.8%	$2,056.1	31.4%
Preferred Stock	30.4	0.5%	30.4	0.5%
Trust Preferred Securities	200.0	3.1%	200.0	3.0%
Long-Term Debt (including
current maturities)	3,406.2	53.1%	3,721.6	56.7%
Short-Term Debt	738.4	11.5%	550.4	8.4%
Total	$6,410.6	100.0%	$6,558.5	100.0%
	======	=====	======	=====

Access to capital markets at a reasonable cost is determined in large part by credit quality. The following table summarizes the current ratings of the debt securities of Wisconsin Energy and its subsidiaries by Standard & Poors Corporation ("S&P"), Moody's Investors Service ("Moody's") and Fitch. Commercial paper of WICOR Industries is unrated.

	S&P	Moody's	Fitch
Wisconsin Energy Corporation
Commercial Paper	A-2	P-1	F1
Unsecured Senior Debt	A-	A2	A
Wisconsin Electric Power Company
Commercial Paper	A-1	P-1	F1+
Secured Senior Debt	A	Aa2	AA
Unsecured Debt	A-	Aa3	AA-
Preferred Stock	BBB+	A2	AA-
Wisconsin Gas Company
Commercial Paper	A-1	P-1	F1+
Unsecured Senior Debt	A	Aa2	AA-
Wisconsin Energy Capital Corporation
Unsecured Debt	A-	A2	A
WEC Capital Trust I
Trust Preferred Securities	BBB	A3	A-

On July 18, 2002, Fitch announced it was lowering the ratings of Wisconsin Energy Corporation's Unsecured Senior Debt from A+ to A; Wisconsin Energy Capital Corporation Unsecured Debt from A+ to A; and WEC Capital Trust I Trust Preferred Securities from A to A-, as reflected in the above table. Fitch also changed the ratings outlook for Wisconsin Energy Corporation and Wisconsin Energy Capital Corporation from Negative to Stable and reaffirmed the Stable outlook and security ratings for Wisconsin Electric Power Company and Wisconsin Gas Company.

S&P's, Moody's and Fitch's current outlook for Wisconsin Energy and its subsidiaries is Stable.

Wisconsin Energy believes these ratings should provide a significant degree of flexibility in obtaining funds on competitive terms. However, these security ratings reflect the views of the rating agencies. An explanation of the significance of these ratings may be obtained from each rating agency. Such ratings are not a recommendation to buy, sell or hold securities, but rather an indication of creditworthiness. Any rating can be revised upward or downward or withdrawn at any time by a rating agency if it decides that the circumstances warrant the change. Each rating should be evaluated independently of any other rating.

Capital Requirements

Capital requirements during the remainder of 2002 are expected to be principally for capital expenditures, for long- and short-term debt retirements, for the purchase of nuclear fuel, and for continuing repurchases of outstanding shares of the Company's common stock. Wisconsin Energy's 2002 annual consolidated capital expenditure budget is approximately $660 million.

Wisconsin Energy is a party to various financial instruments with off-balance sheet risk as a part of its normal course of business, including financial guarantees and letters of credit which support construction projects, commodity contracts and other payment obligations. As of June 30, 2002, the Company's estimated maximum exposure under such agreements has not changed significantly compared to December 31, 2001. In addition, the Company believes the likelihood is remote that material payments will be required under these agreements.

As previously disclosed in Wisconsin Energy's 2001 Form 10-K, the Company's subsidiary WICOR, Inc. is an equal one third joint venture partner in the $238 million Guardian Pipeline project ("Guardian"). In November 2001, Guardian obtained $170 million of fixed rate financing for the project, secured by guarantees severally from the parent (in WICOR's case, the Company) or an affiliate of each of the partners for its one third share of the debt financing. The guarantees are effective during the construction of the project and approximately the first six months of commercial operation. As of June 30, 2002, approximately $120 million of the $170 million facility was borrowed for the project's construction. Guardian is expected to commence commercial operation during the fourth quarter of 2002.

On July 30, 2002, CMS Energy Corporation ("CMS") announced that its subsidiary, Panhandle Eastern Pipeline Company ("Panhandle"), one of the Guardian joint venture partners, had received a demand from the project lenders to post additional collateral to secure its one-third portion of the construction period guaranty obligation as a result of its debt being downgraded to below investment grade. CMS and Panhandle have disclosed they are working with the project lenders to reach a satisfactory arrangement but can give no assurance they will be successful. In the event a remedy cannot be reached, Wisconsin Energy and the other joint venture partner have several options including the option to increase the amount of their guarantees to cover Panhandle's pro rata guaranty obligation in order to preserve the project financing.

Total contractual obligations and other commercial commitments for Wisconsin Energy as of June 30, 2002 declined compared with December 31, 2001 due to normal periodic payments related to these types of obligations and the early repayment of $103.4 million of long-term debt. There were no significant new contracts entered into in the first six months of 2002. Obligations for utility operations by Wisconsin Energy have historically been included as part of the rate making process and were therefore generally recoverable from customers.

FACTORS AFFECTING RESULTS, LIQUDITY AND CAPITAL RESOURCES

CORPORATE STRATEGY

Power the Future Strategy:   Implementation of the Company's Power the Future strategy is subject to a number of regulatory approvals. On October 16, 2001, the PSCW issued a declaratory ruling finding, among other things, that it was prudent to proceed with Power the Future prior to receiving a Certificate of Public Convenience and Necessity ("CPCN") and for the Company to incur the associated pre-certification expenses, which are then subject to review by the PSCW prior to recovery. Midwest Independent Power Suppliers Coordination Group ("MWIPS"), an unincorporated association of independent power producers, has filed a Petition for Judicial Review with the Dane County Circuit Court. MWIPS has asked the Circuit Court to reverse and remand to the PSCW the declaratory ruling, alleging, among other things, that:

• the declaratory ruling constitutes, contrary to Wisconsin law, an increase in rates without following Wisconsin statutory procedures for rate increases;
• such "rate increase" is unreasonable and unjust;
• the declaratory ruling authorizes, contrary to Wisconsin law, a material subsidization by the consumers of a public utility of a non-utility affiliate if Power the Future does not go forward; and
• the declaratory ruling is arbitrary and capricious because it does not require bidding for the proposed facilities.

Wisconsin Electric has filed its Notice of Appearance and Statement of Position denying the allegations and asking that the declaratory ruling be upheld and the Petition for Judicial Review be dismissed. Wisconsin Electric and the PSCW both filed a Motion to Dismiss on the grounds that MWIPS did not have standing to bring the review proceeding. The Dane County Circuit Court concluded that MWIPS had standing to bring the review proceeding. The Dane County Circuit has not addressed the merits of the Petition nor established a briefing schedule. The Company believes these claims lack merit and does not believe that this proceeding will adversely affect implementation of Power the Future.

On February 1, 2002, Wisconsin Energy filed applications for a CPCN with the PSCW for a gas-based generating facility at the Port Washington Power Plant site and a coal-based generating facility at the Oak Creek Power Plant site, a certificate for a gas lateral to serve the Port Washington plant and related affiliated interest approvals. Supplemental information requested by the PSCW was filed in April 2002. On April 9, 2002, the PSCW authorized the bifurcation of its consideration of the Company's CPCN application along the lines of fuel source. On April 25, 2002, the PSCW determined that the Company's CPCN application with respect to the gas-based generation facilities to be constructed in the City of Port Washington was complete. The Company continues to file material related to the CPCN application for the coal-based Elm Road Generating Station at the Oak Creek Power Plant site. The Company expects that the PSCW will make a decision on the Port Washington Generating Station by the end o f 2002. The Company anticipates that the PSCW will complete its consideration of the proposal for the Elm Road Generating Station in 2003. Wisconsin Energy continues to work with the PSCW and the Wisconsin Department of Natural Resources to obtain all required permits and project approvals.

On July 8, 2002, Wisconsin Energy signed a Memorandum of Understanding ("MOU") with the Customers First! Coalition, The Wisconsin Industrial Energy Group, the Wisconsin Initiative Seeking Energy Reform and the Citizens' Utility Board amending key financial aspects of the Power the Future proposal. Changes to the proposal include the lengthening of the lease term between Wisconsin Electric and We Power from 20 to 25 years for both of the Port Washington Generating Station gas-based units, and an extension of the lease term from 25 to 30 years for two of the three Elm Road Generating Stationcoal-based units. The third coal-based unit is not covered under the agreement, but may be discussed at a later time. Environmental and local siting issues are not covered by the MOU.

The MOU also reaches an agreement on key cost issues included in the lease. Under the agreement, Wisconsin Energy would receive a 12.9% return on equity based on a capital structure of 55% equity for the two gas-fired units. Two of the three coal-fired units would also receive a 12.9% return on equity on a capital structure with 58% equity. The MOU solidifies support for the project among coalition members and may further facilitate PSCW approval of the Power the Future project.

UTILITY RATES AND REGULATORY MATTERS

Wisconsin Jurisdiction

Fuel Cost Adjustment Procedure:   As previously reported, Wisconsin Electric operates under a fuel cost adjustment clause for fuel and purchased power costs associated with the generation and delivery of electricity and with purchase power contracts. During the second quarter of 2002, the PSCW issued an order authorizing new fuel cost adjustment rules to be implemented in the Wisconsin retail jurisdiction. The new rules will not be effective for Wisconsin Electric until January 1, 2006, the end of a five year rate freeze associated with the WICOR Merger Order. Until such time, Wisconsin Electric will operate under an approved transaction mechanism similar to the old fuel cost adjustment procedure.

In addition, as previously reported, on June 4, 2001, two consumer advocacy groups had petitioned the Dane County Circuit Court for review of decisions related to authorization by the PSCW for Wisconsin Electric to add a surcharge to its electric rates to recover its expected 2001 power supply costs. The petitioners alleged that the PSCW made various material errors of law and procedure as a result of which the Court should set aside both interim and final orders and remand the case to the PSCW. The case was settled and, on May 30, 2002, the Dane County Circuit Court issued a final order dismissing the petition.

Michigan Jurisdiction

Wisconsin Electric Power Company:   In mid-November 2000, Wisconsin Electric submitted an application with the Michigan Public Service Commission ("MPSC") requesting an electric retail rate increase of $3.7 million or 9.4% on an annualized basis. Hearings on this rate relief request were completed in June of 2001. In December of 2001, the MPSC issued an order reopening the case on a limited basis to incorporate the rate effects of the transfer of Wisconsin Electric transmission assets to American Transmission Company. Hearings were completed on April 10, 2002. A Supplemental Proposal for Decision was issued on May 23, 2002. The Supplemental Proposal for Decision the MPSC recommended an increase of $3.2 million or 8%. A MPSC final order is anticipated in the fall of 2002.

Edison Sault Electric Company:   In September 1995, the MPSC approved Edison Sault's application to implement price cap regulation for its electric customers in the state of Michigan, capping base rates at existing levels, rolling its existing fuel cost adjustment procedure or Power Supply Cost Recovery ("PSCR") factor into base rates and suspending its existing PSCR clause. Edison Sault is required to give thirty days notice for rate decreases. The order authorizing Edison Sault's price cap represents a temporary experimental regulatory mechanism and allows Edison Sault to file an application seeking an increase in rates under extraordinary circumstances. On October 2, 2000, Edison Sault filed a report with the MPSC addressing its experience under the price-cap mechanism. In September of 2001, Edison Sault submitted an application to reinstate its PSCR clause in January 2002 and to incorporate therein 2002 incremental American Transmission Company charges and certain miscellaneous costs. On October 1, 2001, Edison Sault filed an application with the MPSC to establish its PSCR factor for the year 2002. On April 16, 2002, the MPSC issued orders authorizing Edison Sault to reimplement its PSCR clause, beginning May 1, 2002 which incorporates therein 2002 incremental American Transmission Company charges and certain miscellaneous costs. Any PSCR revenues collected during the remainder of 2002 would be subject to a true-up hearing.

NUCLEAR OPERATIONS

Point Beach Nuclear Plant:   On July 12, 2002, the United States Nuclear Regulatory Commission ("NRC") issued a Notice of Violation and provided its final significance determination upholding its April 8, 2002 preliminary red finding for Point Beach related to a potential failure of the plant's auxiliary feedwater system. In November 2001, as part of a comprehensive risk assessment, plant employees had discovered the potential for a common mode failure of the plant's auxiliary feedwater pumps. The matter was immediately reported to the NRC and prompt interim corrective actions were implemented. Point Beach has completed equipment modifications and updated its procedures to ensure operators have explicit guidance that matches training and to ensure plant personnel take appropriate actions when necessary. The NRC plans to conduct an additional inspection this fall to gather additional information needed to complete the NRC's evaluation of whether or not it is appropriate to tre at this issue as an old design issue. If the NRC agrees with the NMC and We Energies that treatment as an old design issue is appropriate, then the NRC will not use this finding in consideration of Point Beach's current overall performance. However, if treatment as an old design issue is not determined to be appropriate, this issue will be considered in Point Beach's overall NRC performance assessment for four calendar quarters, and would likely result in increased regulatory interaction and inspection during that period.

Used Fuel Storage & Disposal:   On May 8, 2002, the U.S. House of Representatives endorsed President Bush's recommendation to develop the Yucca Mountain site, as the nation's long-term geological repository for used nuclear fuel overriding the state of Nevada's objections. On July 9, 2002, the U.S. Senate approved Yucca Mountain as such a repository. President Bush signed the resolution on July 23, 2002 which now clears the way for the U.S. Department of Energy to begin preparation of the application to the NRC for a license to design and build the repository.

CAUTIONARY FACTORS

This report and other documents or oral presentations contain or may contain forward-looking statements made by or on behalf of Wisconsin Energy. Such statements are based upon management's current expectations and are subject to risks and uncertainties that could cause Wisconsin Energy's actual results to differ materially from those contemplated in the statements. Readers are cautioned not to place undue reliance on the forward-looking statements. When used in written documents or oral presentations, the terms "anticipate," "believe," "estimate," "expect," "forecast," "objective," "plan," "possible," "potential," "project" and similar expressions are intended to identify forward-looking statements. In addition to the assumptions and other factors referred to specifically in connection with such statements, factors that could cause Wisconsin Energy's actual results to differ materially from those contemplated in any forward-looking statements include, among others, the following:

• Factors affecting utility operations, such as unusual weather conditions; catastrophic weather-related or terrorism-related damage; availability of electric generating facilities; unscheduled generation outages, or unplanned maintenance or repairs; unanticipated changes in fossil fuel, nuclear fuel, purchased power, gas supply or water supply costs or availability due to higher demand, shortages, transportation problems or other developments; nonperformance by electric energy or natural gas suppliers under existing power purchase or gas supply contracts; nuclear or environmental incidents; resolution of used nuclear fuel storage and disposal issues; electric transmission or gas pipeline system constraints; unanticipated organizational structure or key personnel changes; collective bargaining agreements with union employees or work stoppages; inflation rates; or demographic and economic factors affecting utility service territories or operating environment.

• Regulatory factors, such as unanticipated changes in rate-setting policies or procedures; unanticipated changes in regulatory accounting policies and practices; industry restructuring initiatives; transmission system operation and/or administration initiatives; recovery of costs of previous investments made under traditional regulation; required changes in facilities or operations to reduce the risks or impacts of potential terrorist activities; required approvals for new construction; changes in the United States Nuclear Regulatory Commission's regulations related to Point Beach Nuclear Plant or a permanent repository for used nuclear fuel; changes in the United States Environmental Protection Agency's regulations as well as regulations from the Wisconsin or Michigan Departments of Natural Resources or the state of Connecticut related to emissions from fossil-fueled power plants such as carbon dioxide, sulfur dioxide, nitrogen oxide, small particulates or mercury; or the siting approval process for new generation and transmission facilities.

• Unexpected difficulties or unanticipated effects of the qualified five-year electric and gas rate freeze ordered by the Public Service Commission of Wisconsin as a condition of its approval in 2000 of the merger of Wisconsin Energy Corporation and WICOR, Inc.

• The rapidly changing and increasingly competitive electric and gas utility environment as market-based forces replace strict industry regulation and other competitors enter the electric and gas markets resulting in increased wholesale and retail competition.

• Consolidation of the industry as a result of the combination and acquisition of utilities in the Midwest, nationally and globally.

• Restrictions imposed by various financing arrangements and regulatory requirements on the ability of its subsidiaries to transfer funds to Wisconsin Energy in the form of cash dividends, loans or advances.

• Changes in social attitudes regarding the utility and power industries.

• Customer business conditions, including demand for their products or services and supply of labor and material used in creating their products and services.

• The cost and other effects of legal and administrative proceedings, settlements, investigations and claims, and changes in those matters, including the final outcome of the Giddings & Lewis, Inc. lawsuit against Wisconsin Electric.

• Factors affecting the availability or cost of capital, such as: changes in interest rates; the Company's capitalization structure; market perceptions of the utility industry, the Company or any of its subsidiaries; or security ratings.

• Federal, state or local legislative factors, such as changes in tax laws or rates; changes in trade, monetary and fiscal policies, laws and regulations; electric and gas industry restructuring initiatives; changes in the Price-Anderson Act; or changes in environmental laws and regulations.

• Authoritative generally accepted accounting principle or policy changes, such as adoption of SFAS 142, Goodwill and Other Intangible Assets; and SFAS 143, Accounting for Asset Retirement Obligations; from such standard setting bodies as the Financial Accounting Standards Board and the Securities and Exchange Commission.

• Unanticipated technological developments that result in competitive disadvantages and create the potential for impairment of existing assets.

• Possible risks associated with non-utility diversification, such as: general economic conditions; competition; operating risks; dependence upon certain suppliers and customers; the cyclical nature of property values that could affect real estate investments; unanticipated changes in environmental or energy regulations; fluctuations in the independent power producers market, timely regulatory approval without onerous conditions of potential acquisitions or divestitures, including the planned sale of Wisvest's two power plants in the state of Connecticut; risks associated with minority investments, where there is a limited ability to control the development, management or operation of the project; and the risk of higher interest costs associated with potentially reduced securities ratings by independent rating agencies as a result of these and other factors.

• Legislative or regulatory restrictions or caps on non-utility acquisitions, investments or projects, including the state of Wisconsin's amended public utility holding company law.

• Factors affecting foreign non-utility operations and investments, including: foreign governmental actions; foreign economic and currency risks; political instability; and unanticipated changes in foreign environmental or energy regulations.

• Factors which impede execution of Wisconsin Energy's Power the Future strategy announced in September 2000 and revised in February 2001, including receipt of necessary state and federal regulatory approvals, local opposition to siting of new generating facilities and obtaining the investment capital from outside sources necessary to implement the strategy.

• Other business or investment considerations that may be disclosed from time to time in Wisconsin Energy's Securities and Exchange Commission filings or in other publicly disseminated written documents.

Wisconsin Energy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

*****

For certain other information which may impact Wisconsin Energy's future financial condition or results of operations, see Item 1, Financial Statements -- "Notes to Consolidated Condensed Financial Statements," in Part 1 of this report as well as Item 1, Legal Proceedings, in Part II of this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For information concerning commodity price risk at Wisconsin Energy Corporation, see Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations -- "Non-Utility Energy Segment Contribution to Net Income," in Part I of this report and Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations -- "Non-Utility Energy Segment Contribution to Net Income," in Part I of Wisconsin Energy's Quarterly Report on Form 10-Q for the period ended March 31, 2002. For information concerning other market risk exposures, see Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations -- "Factors Affecting Results, Liquidity and Capital Resources - Market Risks and Other Significant Risks," in Part II of Wisconsin Energy's 2001 Annual Report on Form 10-K.

PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The following should be read in conjunction with Item 3, Legal Proceedings, in Part I of Wisconsin Energy's 2001 Annual Report on Form 10-K and Item I, Legal Proceedings, in Part II of Wisconsin Energy's Quarterly Report on Form 10-Q for the period ended March 31, 2002.

ENVIRONMENTAL MATTERS

Giddings & Lewis, Inc./City of West Allis Lawsuit:   See Note 11 in Item 1, Financial Statements -- "Notes to Consolidated Condensed Financial Statements" in Part I of this report for information concerning recent developments related to the Giddings & Lewis, Inc./City of West Allis lawsuit, which information is incorporated herein by reference.

California PRP Notification:   With respect to the matter referenced in Item 3, Legal Proceedings in Part I of Wisconsin Energy's 2001 Annual Report on Form 10-K, the sellers of the Park facility in Long Beach, California to Sta-Rite, have indemnified Sta-Rite with respect to any liability arising from the release of hazardous substances at the Davis Chemical Company in Los Angeles, California prior to August 10, 2000. The indemnity is contained in the Asset Purchase Agreement dated August 10, 2000 which governed the purchase by Sta-Rite of the Park facility.

UTILITY RATES AND REGULATORY MATTERS

Power the Future:   See Item 2, Management's Discussion & Analysis of Financial Condition and Results of Operations -" Factors Affecting Results, Liquidity and Capital Resources" in Part I of this report for information concerning recent PSCW actions related to the Company's Power the Future strategy.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Information on the items shareholders voted on and the voting results from Wisconsin Energy's 2002 Annual Meeting of Stockholders held on May 2, 2002 was previously reported in Item 4 in Part II of Wisconsin Energy's Quarterly Report on Form 10-Q for the period ended March 31, 2002.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a. EXHIBITS

The following Exhibits are filed with or incorporated by reference in this Form 10-Q report:

Exhibit No.

10	Material Contracts
10.1	Amended and Restated Senior Officer Change in Control, Severance and Non-Compete Agreement between Wisconsin Energy Corporation and Richard A. Abdoo, effective May 1, 2002.
10.2	Amended and Restated Senior Officer Employment, Change in Control, Severance, Special Pension and Non-Compete Agreement between Wisconsin Energy Corporation and Paul Donovan, effective May 1, 2002.
10.3	Amended and Restated Senior Officer Employment, Change in Control, Severance and Non-Compete Agreement between Wisconsin Energy Corporation and Richard R. Grigg, effective April 29, 2002.
99	Additional Exhibits
99.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

b. REPORTS ON FORM 8-K

A Current Report on Form 8-K, dated as of May 29, 2002, was filed by Wisconsin Energy on June 5, 2002 to report that Wisconsin Electric Power Company and the City of West Allis had settled an action alleging that Wisconsin Electric had deposited contaminated wastes at two sites in the City.

A Current Report on Form 8-K, dated as of June 10, 2002, was filed by Wisconsin Energy on June 14, 2002 to report that its subsidiary, Wisvest Corporation, had signed a definitive agreement with PSEG Fossil, LLC of New Jersey, a wholly owned subsidiary of Public Service Enterprise Group Incorporated, for the sale of two fossil-fueled power plants in Connecticut owned and operated through Wisvest-Connecticut, LLC, a subsidiary of Wisvest Corporation.

No other reports on Form 8-K were filed by Wisconsin Energy during the quarter ended June 30, 2002.

A Current Report on Form 8-K, dated as of July 3, 2002, was filed by Wisconsin Energy on July 8, 2002 to report that Wisconsin Energy Corporation had dismissed Arthur Andersen LLP as its independent accountants and engaged the firm of Deloitte & Touche LLP to audit the books and records of Wisconsin Energy and its subsidiaries, including Wisconsin Electric Power Company and Wisconsin Gas Company, for 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	WISCONSIN ENERGY CORPORATION
	(Registrant)
	/s/STEPHEN P. DICKSON
Date: August 6, 2002	Stephen P. Dickson, Controller, Chief Accounting Officer and duly authorized officer

EX-10

AMENDED AND RESTATED
SENIOR OFFICER CHANGE IN CONTROL, SEVERANCE
AND NON-COMPETE AGREEMENT

WHEREAS, WISCONSIN ENERGY CORPORATION (the "Company") and RICHARD A. ABDOO (the "Executive") entered into a Senior Officer Change in Control, Severance and Non-Compete Agreement as of July 18, 2000 (the "Agreement"); and

WHEREAS, the Executive is currently the Chief Executive Officer, President and Chairman of the Board of Directors of the Company (the "Board") and the Board wishes to encourage the Executive to continue to devote his time and attention to pursuit of Company matters without distractions relating to his employment security; and

WHEREAS, the parties wish to amend and restate the Agreement as of May1, 2002 in consideration of their mutual promises and the terms and conditions set forth below;

NOW, THEREFORE, the parties agree as follows:

1. Defined Terms. All of the capitalized terms used in this Agreement are defined in the attached Appendix.
2. Purpose of Agreement. This Agreement is intended to provide the Executive with certain minimum compensation rights in the event of his termination of employment under certain circumstances as set forth herein and to provide for a non-compete agreement from the Executive.
3. Obligation of the Company on a Covered Termination of Employment Associated with a Change in Control. In the event of a Covered Termination of Employment Associated with a Change in Control, then the Company shall provide the Executive with the following compensation and benefits:
1. General Compensation and Benefits. The Company shall pay the Executive's full salary to the Executive from the time notice of termination is given through the date of termination of employment at the rate in effect at the time such notice is given or, if higher, at an annual rate not less than twelve times the Executive's highest monthly base salary for the twelve-month period immediately preceding the month in which the Effective Date occurs, together with all compensation and benefits payable to the Executive through the date of termination of employment under the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period. Such payments shall be made in a lump sum not later than ten business days after such termination. The Company shall also pay the Executive's normal post-termination compensation and benefits to the Executive as such payments become due, except that any normal cash severance benefits shall be superseded and replaced entirely by the benefits provided under this Agreement. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company's retirement, insurance and other compensation or benefit plans, programs and arrangements most favorable to the Executive in effect at any time during the 180-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to executives of the Company of comparable status and position to the Executive.
2. Incentive Compensation. Notwithstanding any provision of any cash bonus or incentive compensation plan of the Company, the Company shall pay to the Executive, within ten business days after the Executive's termination of employment, a lump sum amount, in cash, equal to the sum of (i) any bonus or incentive compensation which has been allocated or awarded to the Executive for a fiscal year or other measuring period under the plan that ends prior to the date of termination of employment, but which has not yet been paid, and (ii) a pro rata portion of the Highest Bonus Amount for all uncompleted periods under any bonus or incentive compensation plan.
3. Special Compensation. The Company shall pay to the Executive a lump sum equal to three times the sum of (a) the highest per annum base rate of salary in effect with respect to the Executive during the three-year period immediately prior to the termination of employment plus (b) the Highest Bonus Amount. Such lump sum shall be paid by the Company to the Executive within ten business days after the Executive's termination of employment, unless the provisions of Section 3(e) below apply. The amount of the aggregate lump sum provided by this Section 3(c), whether paid immediately or deferred, shall not be counted as compensation for purposes of any other benefit plan or program applicable to the Executive.
4. Special Retirement Plans Lump Sum. The Company shall pay to the Executive an aggregate lump sum equal to the total of the amounts described in (a) and (b) herein. Amount (a) is a lump sum equal to the difference between (i) the actuarial equivalent of the benefit under the Company's tax-qualified pension plan, the Retirement Account Plan (the "Retirement Plan"), the Supplemental Executive Retirement Plan (the "SERP") and any applicable non-qualified pension plan letter agreement (the "Letter Agreement") between the Executive and the Company, which the Executive would receive if his employment continued for a three-year period following termination of employment, assuming that the Executive's compensation during such three-year period would have been equal to the Executive's salary as in effect immediately before the termination or, if higher, as in effect at any time during the 180-day period immediately preceding the termination date, and the Highest Bonus Amount, and (ii) th e actuarial equivalent of the Executive's actual benefit (paid or payable) under the Retirement Plan, the SERP, and any Letter Agreement as of the termination date. Actuarial equivalency for this purpose shall be determined using an interest rate equal to the five-year United States Treasury note yield in effect on the last business day of the month prior to the date of termination of employment as such yield is reported in the Wall Street Journal or comparable publication, and the mortality table used for purposes of determining lump sum amounts then in use under the Retirement Plan. Amount (b) is a lump sum equal to the total of (i) the additional contributions which would have been made to the Executive's account under the Company's tax-qualified 401(k) plan, plus (ii) the additional contributions which would have been credited to the bookkeeping account balance of the Executive attributable to the 401(k) match feature of the EDCP, had the Executive continued in employment for a three-year period following termination of employment and assuming that the Executive's compensation would have been the same as set forth above and that the Executive had made maximum utilization of the pre-tax and after-tax opportunity in the qualified 401(k) plan and obtained the maximum matching contributions in such plan. The amount of the aggregate lump sum under this Section 3(d) shall be paid by the Company to the Executive within ten business days after the Executive's termination of employment, unless the provisions of Section 3(e) below apply. The amount of the lump sum provided by this Section 3(d) shall not be treated as compensation for purposes of any other benefit plan or program applicable to the Executive. An example of the calculation of the aggregate lump sum amount provided by this Section 3(d) is attached following the Appendix and is made a part of this Agreement.
5. Deferral Option. Notwithstanding any other provision of this Agreement, the Executive may file a written irrevocable deferral election form with the Company prior to the first date on which a Change in Control of the Company occurs electing to defer all or part of the special compensation provided by Section 3(c) and the special retirement plans lump sum otherwise provided for in Section 3(d). Such form shall irrevocably specify a method of payment for such compensation from among the methods allowable under the Company's Executive Deferred Compensation Plan (the "EDCP"). Any deferred amounts shall be credited with earnings in the same manner as the Interest Rate Fund provided for in the EDCP or any other investment alternative that may later become allowable under the EDCP and the EDCP provisions shall apply to deferrals made hereunder except that (i) any provisions for a mandatory lump sum payment upon a "Change in Control" as defined in the EDCP shall not apply to deferral s made hereunder, (ii) any amounts which become payable under this Section 3(e) shall be deemed for purposes of the EDCP to have become payable on account of the Executive's "retirement," and (iii) the entire amount deferred under this Section 3(e) shall be paid in a lump sum by the Company immediately prior to the occurrence of a Change in Control to such grantor or "rabbi" trust as the Company shall have established as a vehicle to hold such amount pending payment, but with such trust designed so that the Executive's rights to payment of such benefits are no greater than those of an unsecured creditor.
6. Welfare Benefits. Subject to Section 3(g) below, for a three-year period following termination of employment, the Company shall provide the Executive (and his family) with health, life and other welfare benefits (but excluding disability benefits) substantially similar to the benefits received by the Executive (and his family) pursuant to welfare benefit programs of the Company or its affiliates as in effect immediately during the 180 days preceding the Effective Date (or, if more favorable to the Executive, as in effect at any time thereafter until the termination of employment); provided, however, that no compensation or benefits provided hereunder shall be treated as compensation for purposes of any of the programs or shall result in the crediting of additional service thereunder. For purposes of determining the amount of such welfare benefits, any part of which shall be based on compensation, the Executive's compensation during the relevant three-year period shall be deeme d to be equal to the Executive's salary as in effect immediately before the termination of employment or, if higher, as in effect at any time during the 180-day period immediately preceding the termination date, and the Highest Bonus Amount. To the extent that any of the welfare benefits covered by this Section 3(f) cannot be provided pursuant to the plan or program maintained by the Company or its affiliates, the Company shall provide such benefits outside the plan or program at no additional cost (including, without limitation, tax cost) to the Executive and his family. The Executive shall be entitled to be covered by a retiree medical and dental program at the end of the relevant three-year period, at a cost to the Executive not to exceed the lesser of the cost, if any, charged to other retirees or the COBRA continuation premium charged to terminees who elect to continue in the Company's health plan at their expense under applicable law. The Company shall become obligated to continue such benefits for the remainder of the Executive's life and that of his surviving spouse, notwithstanding any contrary provision or power of amendment or termination reserved to the Company in any otherwise applicable document.
7. New Employment. If the Executive secures new employment during the three-year period following termination of employment, the level of any benefit being provided pursuant to Section 3(f) hereof shall be reduced to the extent that any such benefit is being provided by the Executive's new employer. The Executive, however, shall be under no obligation to seek new employment and, in any event, no other amounts payable pursuant to this Agreement shall be reduced or offset by any compensation received from new employment or by any amounts claimed to be owed by the Executive to the Company or its affiliates.
8. Split-Dollar Life Insurance. Notwithstanding the provisions of Section 3(f) above, the Company shall continue to make premium payments on any split-dollar type life insurance program in effect on the life of the Executive during the 180 days preceding the Effective Date (or, if more favorable to the Executive, as in effect at any time thereafter until the termination of employment), in a manner consistent with the past practices of the Company as to timing and amount, until each policy has achieved paid-up status.
9. Equity Incentive Awards. Notwithstanding the provisions in any stock option award, restricted stock award or other equity incentive compensation award (the "Awards"), the Executive shall become fully vested in all outstanding Awards and all otherwise applicable restrictions shall lapse and for purposes of determining the length of time the Executive has to exercise rights, if applicable under any such Award, the Executive shall be treated as if he had retired from the service of the Company at or after age 55 and completion of ten years of service.
10. Outplacement and Financial Planning. The Company shall, at its sole expense as incurred, provide the Executive with outplacement services, the scope and provider of which shall be selected by the Executive in his sole discretion (but at a cost to the Company of not more than $30,000) or, at the Executive's option, the use of office space, office supplies and equipment and secretarial services for a period not to exceed one year. The Company shall also continue to provide the Executive with financial planning counseling benefits through the third anniversary of the date of the Executive's termination of employment, on the same terms and conditions as were in effect immediately before the termination or, if more favorable, on the Effective Date.
4. Obligation of the Company on a Covered Termination of Employment Not Associated with a Change in Control of the Company. In the event of a Covered Termination of Employment Not Associated with a Change in Control of the Company, then the Company shall provide the Executive with the same compensation and benefits and subject to the same terms and conditions as are specified in Section 3 above, but the tax gross-up provisions of Section 5 hereof shall not apply. Further, the deferral election for the Executive described in Section 3(e) above shall apply, but only if the written irrevocable deferral form is filed with the Company both prior to the expiration of thirty days from the date this Agreement is signed by the Executive and prior to the Executive's termination of employment.
5. Certain Additional Payments by the Company.
1. Anything in this Agreement to the contrary notwithstanding, and whether or not a Covered Termination of Employment occurs, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 5) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties impo sed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
2. Subject to the provisions of paragraph (c) of this Section 5, all determinations required to be made under this Section 5, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by a certified public accounting firm designated by the Executive (the "Accounting Firm"), which shall provide detailed supporting calculations both to the Company and the Executive within fifteen business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fee s and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 5, shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to paragraph (c) of this Section 5 and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to o r for the benefit of Executive.
3. The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the thirty-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:
1. give the Company any information reasonably requested by the Company relating to such claim,
2. take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company.
3. cooperate with the Company in good faith in order effectively to contest such claim, and
4. permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this paragraph (c) of Section 5, the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and provided, further, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

4. If, after the receipt by the Executive of an amount advanced by the Company pursuant to paragraph (c) of this Section 5, the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company's complying with the requirements of paragraph (c) of this Section 5) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If after the receipt by the Executive of an amount advanced by the Company pursuant to paragraph (c) of this Section 5, a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the a mount of Gross-Up Payment required to be paid.
6. Termination of Employment. The Company shall be entitled to terminate the Executive's employment on account of Disability pursuant to the procedures set forth in Section (e) of the Appendix, for Cause pursuant to the procedures set forth in Section (a) of the Appendix, or without Cause by giving written notice to the Executive of such termination. The Executive may terminate his employment for Good Reason by giving the Company written notice of the termination, setting forth in reasonable detail the specific conduct of the Company that constitutes Good Reason. A termination of employment by the Executive for Good Reason shall be effective on the fifth business day following the date such notice is given, unless the notice sets forth a later date (which date shall in no event be later than thirty days after the notice is given). In the event of a dispute regarding whether the Executive's voluntary termination qualifies as a termination for Good Reason, no claim by the Co mpany that the same does not constitute a termination for Good Reason shall be given effect unless the Company establishes by clear and convincing evidence that such termination does not constitute a termination for Good Reason. The Executive may also terminate his employment without Good Reason by giving the Company written notice of such termination.
7. Obligations of the Company on Termination of Employment for Death, Disability, for Cause or by the Executive Other than for Good Reason. If the Executive's employment is terminated by reason of his death or Disability (but not under the circumstances covered by paragraph (c)(iv) of the Appendix), or if such employment is terminated by the Company for Cause or by the Executive other than for Good Reason, the Company will pay to the Executive's estate or legal representative or to the Executive, as the case may be, all accrued but unpaid base salary and all other benefits and amounts which may become due in accordance with the terms of any applicable benefit plan, contract, agreement or practice, but no other compensation or benefits will be paid under this Agreement.
8. Non-Compete Agreement. In consideration of this Agreement, the Executive agrees that he will not, for a period of one year from the date of his or her termination of employment with the Company, directly or indirectly own, manage, operate, join, control, be employed by, or participate in the ownership, management, operation or control of, or be connected in any manner, including but not limited to, holding the position of shareholder, director, officer, consultant, independent contractor, executive partner, or investor with any "Competing Enterprise." For purposes of this paragraph, a "Competing Enterprise" means any entity, firm or person engaged in a business within the State of Wisconsin or the upper peninsula area of the State of Michigan (the "Territory") which is in competition with any of the businesses of the Company or any of its subsidiaries within the Territory as of the date the Executive's termination of employment, and whose aggregate gross revenues, calculated f or the most recently completed fiscal year of the Competing Enterprise, derived from all such competing activities within the Territory during such fiscal year, equal at least 10% or more of such Enterprise's consolidated net revenues for such fiscal year. If the Executive notifies the Company in writing of any employment or opportunity which the Executive proposes to undertake during the one year non-compete period, and supplies the Company with any additional information which the Company may reasonably request, the Company agrees to promptly notify the Executive within thirty days after all information reasonably requested by it has been provided, whether the Company considers the proposed employment or opportunity to be prohibited by these provisions and, if so, whether the Company is willing to waive the same. Notwithstanding anything in this Section 8, the Executive shall not be prohibited from acquiring or holding up to 2% of the common stock of an entity that is traded on a national securities exch ange or a nationally recognized over-the-counter market.
9. Successors and Binding Agreements.
1. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) and the direct and indirect parent of any such successor, to all or substantially all of the business and/or assets of the Company expressly to assume and to agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no succession had taken place. This Agreement shall be binding upon and inure to the benefit of the Company and any such successor, and such successor shall thereafter be deemed the "Company" for the purposes of this Agreement.
2. This Agreement shall inure to the benefit of and be enforceable by the Executive's respective personal or legal representative, executor, administrator, successor, heirs, distributees and/or legatees.
3. Neither the Company nor the Executive may assign, transfer or delegate this Agreement or any rights or obligations hereunder except as expressly provided in this Section. Without limiting the generality of the foregoing, the Executive's right to receive payments hereunder shall not be assignable or transferable, whether by pledge, creation of a security interest or otherwise, other than by a transfer by will or the laws of descent and distribution. In the event the Executive attempts any assignment or transfer contrary to this Section, the Company shall have no liability to pay any amount so attempted to be assigned or transferred.
10. Notices. All communications provided for herein shall be in writing and shall be deemed to have been duly given when delivered or five business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the Company (to the attention of the Secretary of the Company) at its principal executive office and to the Executive at his/her principal residence, or to such other address as any party may have furnished to the other in writing in accordance herewith, except that notices of a change of address shall be effective only upon receipt.
11. Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Wisconsin without giving effect to the principles of conflict of laws of such state, except that Section 12 shall be construed in accordance with the Federal Arbitration Act if arbitration is chosen by the Executive as the method of dispute resolution.
12. Settlement of Disputes; Arbitration; Attorneys' Fees. Any dispute or controversy arising under or in connection with this Agreement shall be settled, at the Executive's election, either by arbitration in Milwaukee, Wisconsin in accordance with the rules of the American Arbitration Association then in effect or by litigation; provided, however, that in the event of a dispute regarding whether the Executive's employment has been terminated for Cause or whether the Executive's voluntary termination qualifies as a termination for Good Reason, the evidentiary standards set forth in this Agreement shall apply. Judgment may be entered on the arbitrator's award in any court having jurisdiction. The Company agrees to pay, as incurred, to the fullest extent permitted by law, all legal fees and expenses that the Executive may reasonably incur as a result of any contest (regardless of outcome) by the Company, the Executive or others of the validity or enforceability of or liability under , or otherwise involving any provision of this Agreement.
13. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement which shall remain in full force and effect. If any provision of this Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision, together with all other provisions of this Agreement, shall remain valid and enforceable and continue in full force and effect to the fullest extent consistent with law.
14. Entire Agreement; Amendments. This Agreement constitutes the entire understanding and agreement of the parties with respect to the matters discussed herein and supersedes all other prior agreements and understandings, written or oral, between the parties with respect thereto including, without limitation, the Senior Officer Change in Control Agreement dated July 29, 1999 between the parties. There are no representations, warranties or agreements of any kind relating thereto that are not set forth in this Agreement. This Agreement may not be amended or modified except by a written instrument signed by the parties hereto or their respective successors and legal representatives.
15. Withholding. The Company may withhold from any amounts payable under this Agreement all federal, state and other taxes as shall be legally required.
16. Certain Limitations. Nothing in this Agreement shall grant the Executive any right to remain an executive, director or employee of the Company or of any of its subsidiaries for any period of time.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and date first written above.

                                                           
RICHARD A. ABDOO WISCONSIN ENERGY CORPORATION


By:                                                               

APPENDIX

This is an appendix to the Amended and Restated Senior Officer Change in Control, Severance and Non-Compete Agreement between WISCONSIN ENERGY CORPORATION and RICHARD A. ABDOO dated July 18, 2000 (the "Agreement").

As used in the Agreement, the terms set forth below shall have the following meanings:

1. "Cause" means:
1. the willful and continued failure of the Executive to substantially perform the Executive's duties (other than failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board of Directors of the Company (the "Board"), or the Compensation Committee of the Board (the "Committee") which specifically identifies the manner in which the Board or the Committee or the elected officer believes that the Executive has not substantially performed the Executive's duties, or
2. the willful engaging by the Executive in illegal conduct or gross misconduct which is determined by the Board to have been materially and demonstrably injurious to the Company. However, no act, or failure to act, on the Executive's part shall be considered "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.

The Executive may only be terminated for Cause if the Company gives written notice to the Executive of its intention to terminate the Executive's employment for Cause, setting forth in reasonable detail the specific conduct of the Executive that it considers to constitute Cause and the specific provision(s) of this Agreement on which it relies, and stating the date, time and place of the Special Meeting for Cause. The "Special Meeting for Cause" means a meeting of the Board called and held specifically for the purpose of considering the Executive's termination for Cause, that takes place not less than ten and not more than twenty business days after the Executive receives the notice of termination for Cause. The Executive shall be given an opportunity, together with counsel, to be heard at the Special Meeting for Cause. The Executive's termination for Cause shall be effective when and if a resolution is duly adopted by the affirmative vote of at least two-thirds (⅔) of the entire membership of the Board, excluding employee directors, at the Special Meeting for Cause, stating that in the good faith opinion of the Board, the Executive is guilty of the conduct described in the notice of termination for Cause and that conduct constitutes Cause under this Agreement. In the event of a dispute regarding whether the Executive's employment has been terminated for Cause, no claim by the Company that Cause exists shall be given effect unless the Company establishes by clear and convincing evidence that Cause exists.

2. A "Change in Control" with respect to the Company shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:
1. any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates) representing 20% or more of the combined voting power of the Company's then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (a) of paragraph (iii) below; or
2. the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's shareholders was approved or recommended by a vote of at least two-thirds (⅔) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or
3. there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (a) a merger or consolidation immediately following which the directors of the Company immediately prior to such merger or consolidation continue to constitute at least a majority of the board of directors of the Company, the surviving entity or any parent thereof or (b) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its affiliates) representing 20% or more of the combined voting power of the Company's then outstanding securities; or
4. the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement (or series of related agreements) for the sale or disposition by the Company of all or substantially all of the Company's assets, disregarding any sale or disposition to a company, at least a majority of the directors of which were directors of the Company immediately prior to such sale or disposition; or
5. the Board determines in its sole and absolute discretion that there has been a Change in Control of the Company.

For purposes of this Change in Control definition, the terms set forth below shall have the following meanings:

"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time.

"Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the company.

3. "Covered Termination of Employment Associated with a Change in Control" means:
1. a termination of employment by the Company other than because of death or Disability and without Cause, which occurs within a period of eighteen months following the Effective Date or,
2. a termination of employment by the Company other than because of death or Disability and without Cause within a period of six months prior to the Effective Date, and it is reasonably demonstrated by the Executive that such termination of employment was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or otherwise arose in connection with or in anticipation of a Change in Control, or
3. a termination of employment by the Executive for Good Reason within a period of eighteen months following the Effective Date and also subsequent to the occurrence, without the Executive's written consent, of any event described in Section (g) after the Effective Date, or a termination of employment by the Executive within a period of six months prior to the Effective Date and following the occurrence without the Executive's consent of any event described in Section (g)(i), (ii), (iii) or (iv) and it is reasonably demonstrated by the Executive that such event occurred at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or otherwise arose in connection or in anticipation of a Change in Control, or
4. a voluntary termination of employment by the Executive without Good Reason following completion of one year of service after a Change in Control of the Company, provided that the voluntary termination must be effected by the Executive within six months after the completion of that one-year of service. Further, if the Executive gives written notice to the Company any time after a Change in Control of the Company but before completion of one year of service thereafter that the Executive intends to so voluntarily terminate and if the Executive should thereafter die while in the employ of the Company or incur a termination of employment because of Disability, in either case before completion of such one year of service, such death or termination of employment shall be treated as a Covered Termination Associated with a Change in Control.

If within fifteen days after the Company notifies the Executive that it is terminating his employment for Cause or the Executive notifies the Company that he is terminating his employment for Good Reason, the party receiving such notice notifies the other party that a dispute exists concerning the termination, then for purposes of this Section (c) the date of the Executive's termination of employment shall not be deemed to have occurred until the earlier of (i) the date that is 18 months following the Effective Date or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); provided, however, that the date of termination shall be extended by a notice of dispute given by the Executive only if such notice is giv en in good faith and the Executive pursues the resolution of such dispute with reasonable diligence.

If a purported termination occurs prior to or following a Change in Control and the date of termination is extended in accordance with the preceding paragraph, the Company shall continue to pay the Executive the full compensation and benefits as are provided in the first sentence of Section 3(a) of the Agreement until the date of termination, as determined in accordance with the preceding paragraph. Amounts paid under this Section (c) are in addition to all other amounts due under the Agreement and shall not be offset against or reduce any other amounts due under the Agreement, other than amounts due under the first sentence of Section 3(a) of the Agreement.

4. "Covered Termination of Employment Not Associated with a Change in Control of the Company" means:
1. a termination of employment by the Company other than because of death or Disability and without Cause, or
2. a termination of employment by the Executive for Good Reason subsequent to the occurrence, without the Executive's written consent, of any event described in Section (g).
5. "Disability" means that the Executive has been unable, for a period of 180 consecutive business days, to perform the material duties of his job, as a result of physical or mental illness or injury and that a physician selected by the Company or its insurers and acceptable to the Executive or his legal representative, has determined that the Executive's incapacity is total and permanent. A termination of the Executive's employment by the Company for Disability shall be communicated to the Executive by written notice and shall be effective on the thirtieth day after receipt of such notice by the Executive, unless the Executive returns to full-time performance of his duties before the expiration of such thirty-day period.
6. "Effective Date" means the first date on which a Change in Control of the Company occurs, except that if Section 4 of the Agreement applies, the term shall mean the date immediately prior to the Executive's termination of employment.
7. "Good Reason" means:
1. the assignment to the Executive of any duties inconsistent, in the reasonable judgment of the Executive, with the customary duties of a Chief Executive Officer of a comparably sized company or any other action by the Company that results in material reduction of the Executive's duties and responsibilities, or
2. any failure by the Company to provide for the continuation of the Executive's compensation (base salary and incentive compensation or bonus opportunity) and benefits and his participation in the Company's long-term incentive plans and programs on a basis commensurate with other senior executives of the Company, or any reduction in the Executive's base salary or percentage of base salary available as an incentive compensation or bonus opportunity relative to those most favorable to the Executive in effect at any time during the 180-day period prior to the first date on which a Change in Control of the Company occurs or to the extent more favorable to the Executive, those in effect after such date, or from and after the first date on which a Change in Control of the Company occurs, a reduction in any material element of the Executive's compensation or benefits, or
3. the relocation of the Executive's principal place of employment to a location more than 35 miles from the Executive's principal place of employment immediately prior to the Effective Date, or
4. the Company's requiring the Executive to travel on Company business to a materially greater extent than was required immediately prior to the Effective Date, or
5. the failure by the Company to comply with Section 9(a) of this Agreement.
8. "Highest Bonus Amount" means the highest dollar bonus which would result from three calculations, as follows: (i) the highest percentage of base salary ever used with respect to the calculation of the Executive's bonus during the three complete fiscal years of the Company immediately preceding the termination of employment or, if more favorable to the Executive, during the three complete fiscal years of the Company immediately preceding the Change in Control of the Company, multiplied times the highest per annum base rate of salary in effect with respect to the Executive during the three-year period immediately prior to the termination of employment; (ii) the highest dollar bonus earned by the Executive under any cash bonus or incentive compensation plan of the Company during either of the three complete fiscal year periods of the Company listed in (i) above, whichever is more favorable to the Executive; or (iii) the Executive's bonus or incentive compensation "target" for the fiscal year in which the termination of employment occurs.

EX-10

Exhibit 10.1

AMENDED AND RESTATED SENIOR OFFICER
EMPLOYMENT, CHANGE IN CONTROL, SEVERANCE,
SPECIAL PENSION AND NON-COMPETE AGREEMENT

THIS AMENDED AND RESTATED SENIOR OFFICER EMPLOYMENT, CHANGE IN CONTROL, SEVERANCE AND NON-COMPETE AGREEMENT (the "Agreement") is made as of this 1^st day of May, 2002 between WISCONSIN ENERGY CORPORATION (the "Company") and PAUL DONOVAN (the "Executive").

The Executive is currently a Senior Vice President and Chief Financial Officer of the Company, and the Executive and the Company are each party to that certain Senior Officer Change In Control, Severance, Special Pension and Non-Compete Agreement, dated as of November 8, 2000 (the "Original Agreement") and desire to amend and restate the Original Agreement as set forth herein.

In consideration of the terms and conditions set forth below, the parties agree as follows:

1. General.
1. Defined Terms. All of the capitalized terms used in this Agreement are defined in the attached Appendix.
2. Purpose of this Agreement. This Agreement is intended to set forth certain terms and conditions of Executive's employment with the Company, to provide the Executive with certain minimum compensation rights in the event of his termination of employment under certain circumstances as set forth herein, to provide for certain pension rights and to provide the Company with a non-compete agreement from the Executive.
2. Employment.
1. Effective as of May 1, 2002, Executive will (i) be named Executive Vice President, in addition to his current office as Chief Financial Officer, of the Company, (ii) have his annual base salary increased to an annual rate of $552,000 and (iii) receive an option grant for 68,465 shares of common stock of the Company, the principal terms and conditions of which are set forth on Exhibit A hereto. Executive's target bonus opportunity for 2002 will be increased to $414,993.
2. Effective as of January 1, 2003, Executive's annual base salary will be further increased to the annual rate of $579,600. On January 2, 2003, Executive will receive an option grant for 200,000 shares of common stock of the Company (adjusted prior to the date of the grant, as may be necessary to avoid dilution for any stock split or other equity restructuring), the principal terms and conditions of which are set forth on Exhibit A hereto. Executive's target bonus opportunity for 2003 will equal $463,680.
3. Obligation of the Company on a Covered Termination of Employment Associated with a Change in Control. In the event of a Covered Termination of Employment Associated with a Change in Control, then the Company shall provide the Executive with the following compensation and benefits:
1. General Compensation and Benefits. The Company shall pay the Executive's full salary to the Executive from the time notice of termination is given through the date of termination of employment at the rate in effect at the time such notice is given or, if higher, at an annual rate not less than twelve times the Executive's highest monthly base salary for the twelve-month period immediately preceding the month in which the Effective Date occurs, together with all compensation and benefits payable to the Executive through the date of termination of employment under the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period. Such payments shall be made in a lump sum not later than ten business days after such termination. The Company shall also pay the Executive's normal post-termination compensation and benefits to the Executive as such payments become due, except that any normal cash severance benefits shall be superseded and replaced entirely by the benefits provided under this Agreement. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company's retirement, insurance and other compensation or benefit plans, programs and arrangements most favorable to the Executive in effect at any time during the 180-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date (but prior to any termination of employment) to executives of the Company of comparable status and position to the Executive.
2. Incentive Compensation. Notwithstanding any provision of any cash bonus or incentive compensation plan of the Company, the Company shall pay to the Executive, within ten business days after the Executive's termination of employment, a lump sum amount, in cash, equal to the sum of (i) any bonus or incentive compensation which has been allocated or awarded to the Executive for a fiscal year or other measuring period under the plan that ends prior to the date of termination of employment, but which has not yet been paid, and (ii) a pro rata portion of the Highest Bonus Amount for all uncompleted periods under any bonus or incentive compensation plan.
3. Special Compensation. The Company shall pay to the Executive a lump sum equal to three times the sum of (a) the highest per annum base rate of salary in effect with respect to the Executive during the three-year period immediately prior to the termination of employment plus (b) the Highest Bonus Amount. Such lump sum shall be paid by the Company to the Executive within ten business days after the Executive's termination of employment, unless the provisions of Section 3(e) below apply. The amount of the aggregate lump sum provided by this Section 3(c), whether paid immediately or deferred, shall not be counted as compensation for purposes of any other benefit plan or program applicable to the Executive.
4. Special Retirement Plans Lump Sum. The Company shall pay to the Executive an aggregate lump sum equal to the total of the amounts described in (a) and (b) herein. Amount (a) is a lump sum equal to the difference between (i) the actuarial equivalent of the benefit under the Company's tax-qualified pension plan, the Retirement Account Plan (the "Retirement Plan"), the Supplemental Executive Retirement Plan (the "SERP") discussed in Section 7 below which the Executive would receive if his employment continued for a three-year period following termination of employment, assuming that the Executive's compensation during such three-year period would have been equal to the Executive's salary as in effect immediately before the termination or, if higher, as in effect at any time during the 180-day period immediately preceding the termination date, and the Highest Bonus Amount, and (ii) the actuarial equivalent of the Executive's actual benefit (paid or payable) under the Retirement Plan and the SERP as of the termination date. Actuarial equivalency for this purpose shall be determined using an interest rate equal to the five-year United States Treasury note yield in effect on the last business day of the month prior to the date of termination of employment as such yield is reported in the Wall Street Journal or comparable publication, and the mortality table used for purposes of determining lump sum amounts then in use under the Retirement Plan. Amount (b) is a lump sum equal to the total of (i) the additional contributions which would have been made to the Executive's account under the Company's tax-qualified 401(k) plan, plus (ii) the additional contributions which would have been credited to the bookkeeping account balance of the Executive attributable to the 401(k) match feature of the EDCP, had the Executive continued in employment for a three-year period following termination of employment and assuming that the Executive's compensation would have been the same as set forth above and that the Executive had made maximum utilization of the pre-tax and after-tax opportunity in the qualified 401(k) plan and obtained the maximum matching contributions in such plan. The amount of the aggregate lump sum under this Section 3(d) shall be paid by the Company to the Executive within ten business days after the Executive's termination of employment, unless the provisions of Section 3(e) below apply. The amount of the lump sum provided by this Section 3(d) shall not be treated as compensation for purposes of any other benefit plan or program applicable to the Executive.
5. Deferral Option. Notwithstanding any other provision of this Agreement, the Executive may file a written irrevocable deferral election form with the Company prior to the first date on which a Change in Control of the Company occurs electing to defer all or part of the salary and other cash compensation provided by the first sentence of Section 3(a), the special compensation provided by Section 3(c) and the special retirement plans lump sum otherwise provided for in Section 3(d). Such form shall irrevocably specify a method of payment for such compensation from among the methods allowable under the Company's Executive Deferred Compensation Plan (the "EDCP"). Any deferred amounts shall be credited with earnings in the same manner as the Interest Rate Fund provided for in the EDCP or any other investment alternative that may later become allowable under the EDCP and the EDCP provisions shall apply to deferrals made hereunder except that (i) any provisions for a mandatory lump sum payment upon a "Chan ge in Control" as defined in the EDCP shall not apply to deferrals made hereunder, (ii) any amounts which become payable under this Section 3(e) shall be deemed for purposes of the EDCP to have become payable on account of the Executive's "retirement," and (iii) the entire amount deferred under this Section 3(e) shall be paid in a lump sum by the Company immediately prior to the occurrence of a Change in Control to such grantor or "rabbi" trust as the Company shall have established as a vehicle to hold such amount pending payment, but with such trust designed so that the Executive's rights to payment of such benefits are no greater than those of an unsecured creditor.
6. Welfare Benefits. Subject to Section 3(g) below, for the "relevant three-year period" as defined below, the Company shall provide the Executive (and his family) with health, disability, life and other welfare benefits substantially similar to the benefits received by the Executive (and his family) pursuant to welfare benefit programs of the Company or its affiliates as in effect immediately during the 180 days preceding the Effective Date (or, if more favorable to the Executive, as in effect at any time thereafter until the termination of employment); provided, however, that no compensation or benefits provided hereunder shall be treated as compensation for purposes of any of the programs or shall result in the crediting of additional service thereunder. For purposes of determining the amount of such welfare benefits, any part of which shall be based on compensation, the Executive's compensation during the relevant three-year period shall be deemed to be equal to the Executive's salary as in effec t immediately before the termination of employment or, if higher, as in effect at any time during the 180-day period immediately preceding the termination date, and the Highest Bonus Amount. To the extent that any of the welfare benefits covered by this Section 3(f) cannot be provided pursuant to the plan or program maintained by the Company or its affiliates, the Company shall provide such benefits outside the plan or program at no additional cost (including, without limitation, tax cost) to the Executive and his family. The Executive shall be entitled to be covered by a retiree medical and dental program at the end of the relevant three-year period, at a cost to the Executive not to exceed the lesser of the cost, if any, charged to other retirees or the COBRA continuation premium charged to terminees who elect to continue in the Company's health plan at their expense under applicable law. The Company shall become obligated to continue such benefits for the remainder of the Executive's life and that of his surviving spouse, notwithstanding any contrary provision or power of amendment or termination reserved to the Company in any otherwise applicable document. The "relevant three-year period" shall mean a three-year period beginning on the later of the Executive's termination of employment or the expiration of the welfare benefits coverage provided to the Executive under an agreement dated June 1, 1998 between the Executive and Sundstrand Corporation. In addition, the "relevant three-year period" shall be extended for a period of time equal to the "Excluded Period" under paragraph 5(c) of the letter agreement dated August 20, 1999 from the Company to the Executive extending an offer of employment to him, which is incorporated by reference into this Agreement.
7. New Employment. If the Executive secures new employment during the three-year period following termination of employment, the level of any benefit being provided pursuant to Section 3(f) hereof shall be reduced to the extent that any such benefit is being provided by the Executive's new employer. The Executive, however, shall be under no obligation to seek new employment and, in any event, no other amounts payable pursuant to this Agreement shall be reduced or offset by any compensation received from new employment or by any amounts claimed to be owed by the Executive to the Company or its affiliates.
8. Split-Dollar Life Insurance. Notwithstanding any limitation on the payment of welfare benefits to Executive under the provisions of Section 3(f) above, the Company shall continue to make premium payments on any split-dollar type life insurance program in effect on the life of the Executive during the 180 days preceding the Effective Date (or, if more favorable to the Executive, as in effect at any time thereafter until the termination of employment), in a manner consistent with the past practices of the Company as to timing and amount, until each policy has achieved paid-up status. The Company further agrees that the Exchange Agreement, Collateral Assignment and the Split Dollar Agreement (and letter agreement referenced in the Split Dollar Agreement), between Executive and the Company, each dated as of April 23, 2001, shall continue pursuant to their terms.
9. Equity Incentive Awards. Notwithstanding the provisions in any stock option award, restricted stock award or other equity incentive compensation award (the "Awards"), the Executive shall become fully vested in all outstanding Awards and all otherwise applicable restrictions shall lapse and for purposes of determining the length of time the Executive has to exercise rights, if applicable under any such Award, the Executive shall be treated as if he had retired from the service of the Company at or after age 55 and completion of ten years of service.
10. Outplacement and Financial Planning. The Company shall, at its sole expense as incurred, provide the Executive with outplacement services, the scope and provider of which shall be selected by the Executive in his sole discretion (but at a cost to the Company of not more than $30,000) or, at the Executive's option, the use of office space, office supplies and equipment and secretarial services for a period not to exceed one year. The Company shall also continue to provide the Executive with financial planning counseling benefits through the third anniversary of the date of the Executive's termination of employment, on the same terms and conditions as were in effect immediately before the termination or, if more favorable, on the Effective Date.
4. Obligation of the Company on a Covered Termination of Employment Not Associated with a Change in Control of the Company.
1. In the event of a Covered Termination of Employment Not Associated with a Change in Control of the Company occurring as a result of a notice of termination delivered by the Company or Executive to the other party during the 60 day period beginning on May 1, 2003 and ending on June 29, 2003, then Executive shall continue to work for the Company through August 30, 2003, on which date his employment with the Company shall terminate, and the Company shall provide the Executive with the compensation and benefits specified in this Section 4(a):
1. In the event of a termination of employment under paragraph (i) of Section (d) of the Appendix, the Company shall provide the Executive with the following:
1. Termination Compensation and Benefits (as defined below); and
2. a lump sum payment on February 25, 2004 equal to:
1. the Executive's target bonus opportunity for 2003 of 80% of 2003 annual base salary; plus
2. an amount equal to the excess, if any, of the Executive's target bonus opportunity for 2002 of 80% of 2002 annual base salary over the amount of such bonus the Executive received for 2002, if any.
2. In the event of a termination of employment under paragraph (iii) of Section (d) of the Appendix, the Company shall provide the Executive with the following:
1. Termination Compensation and Benefits; and
2. a lump sum payment on February 25, 2004 equal to
1. the Executive's target bonus opportunity for 2003 of 80% of 2003 annual base salary; plus
2. an amount equal to the excess, if any, of the Executive's minimum bonus opportunity for 2002 of 40% of 2002 annual base salary over the amount of such bonus Executive received for 2002, if any.
2. In the event of a Covered Termination of Employment Not Associated with a Change in Control of the Company, other than pursuant to Section 4(a), occurring (x) prior to May 1, 2003 or (y) after June 29, 2003 but prior to February 29, 2004, or (z) on the later of February 29, 2004 or the date on which Executive is paid his bonus, if any, for the fiscal year ending immediately prior to February 29, 2004 pursuant to Section 11, then the Company shall provide the Executive with the following:
1. Termination Compensation and Benefits; and
2. a lump sum payment payable within ten days of such termination equal to:
1. an amount equal to the excess, if any, of the Executive's target bonus opportunity for 2002 of 80% of 2002 annual base salary over the amount of such bonus the Executive received for 2002, if any; plus
2. an amount equal to the excess, if any, of the Executive's target bonus opportunity for 2003 of 80% of 2003 annual base salary over the amount of such bonus the Executive received for 2003, if any.
3. In the event of a Covered Termination of Employment Not Associated with a Change in Control of the Company, other than pursuant to Section 4(b), occurring after February 29, 2004, then the Company shall provide the Executive with the following:
1. Termination Compensation and Benefits; and
2. a lump sum payment payable within ten days of such termination equal to:
1. an amount equal to the excess, if any, of the Executive's target bonus opportunity for 2002 of 80% of 2002 annual base salary over the amount of such bonus the Executive received for 2002, if any; plus
2. an amount equal to the excess, if any, of the Executive's target bonus opportunity for 2003 of 80% of 2003 annual base salary over the amount of such bonus the Executive received for 2003, if any.
4. All amounts payable under Sections 4(a)(i)(2), 4(a)(ii)(2), 4(b)(ii), 4(c)(ii), 4(e)(i)(1), 4(e)(ii), 4(e)(iii)(1) and 4(e)(iii)(2)(A), whether paid immediately or deferred, shall be counted as compensation for purposes of calculating Executive's supplemental pension subject to the provisions of this Section 4(d). For purposes of calculating Executive's supplemental pension, (i) all amounts payable under Section 4(e)(i)(1), (4)(e)(iii)(1) or 4(e)(iii)(2)(A) shall be credited towards Executive's age and service for the periods for which they are paid, and such amounts shall be deemed paid ratably over such period, (ii) amounts payable under 4(a)(i)(2), 4(a)(ii)(2), 4(b)(ii), 4(c)(ii) and 4(e)(ii) shall be deemed paid on the date on which the bonus for the fiscal year or other measuring period to which such payment (or portion thereof) relates has been or will be paid and (iii) the calculation of Executive's thirty-six (36) month high average compensation under the supplemental pension shall reflect payme nt of bonuses for three complete incentive compensation fiscal years or other such measuring periods; provided, however, that, notwithstanding anything to the contrary contained herein, in no event will such calculation include payments of bonuses for more than three complete incentive compensation fiscal years or other such measuring periods.
5. The term "Termination Compensation and Benefits" shall mean:
1. General Compensation and Benefits. The Company shall pay (1) the Executive's full salary (plus accrued vacation) to the Executive from the time notice of termination is given through the date of termination of employment at the highest monthly base rate in effect during the twelve-month period immediately preceding the date notice of termination of employment is given, together with (2) all compensation and benefits payable to the Executive through the date of termination of employment under the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period. Such payments shall be made in a lump sum not later than ten business days after such termination. (3) The Company shall also pay the Executive's normal post-termination compensation and benefits to the Executive as such payments become due, except that any normal cash severance benefits shall be superseded and replaced entirely by the benefits provided under this Agreement. Such post-terminatio n compensation and benefits shall be determined under, and paid in accordance with, the Company's retirement, insurance and other compensation or benefit plans, programs and arrangements at the time of termination of employment.
2. Incentive Compensation. Notwithstanding any provision of any cash bonus or incentive compensation plan of the Company, the Company shall pay to the Executive in cash within 10 days of termination a payment in an amount equal to any bonus or incentive compensation which has been allocated or awarded to the Executive for a fiscal year or other measuring period under the plan that ends prior to the date of termination of employment, but which has not yet been paid.
3. Special Compensation. The Company shall pay to the Executive a lump sum equal to:
1. In the case of a termination pursuant to Section 4(a) or Section 4(b), Executive's highest monthly base rate of salary then in effect during the twelve-month period immediately preceding the date notice of termination of employment is delivered for the greater of six (6) months or the period from the date of termination to February 29, 2004; or
2. In the case of a termination pursuant to Section 4(c), (A) Executive's highest monthly base rate of salary then in effect during the twelve-month period immediately preceding the date notice of termination of employment is delivered, for the greater of (I) six (6) months or (II) the period from the date of termination to the next succeeding February 28 following such termination (provided, such amount shall be for six (6) months in the event of any such termination, pursuant to a notice by the Company to Executive under Section 11, occurring on the later of the February 28 after such notice or the date on which Executive is paid his bonus, if any, for the fiscal year ending immediately prior to such February 28), plus (B) a pro rata portion of Executive's bonus for the fiscal year in which such termination occurs, based on the fractional part of any bonus or incentive period for which the Executive had been employed by the Company and Executive's target bonus for such period, under any bonus or incentive compensation plan.

Such lump sum shall be paid by the Company to the Executive within ten business days after the Executive's termination of employment, unless the provisions of Section 4(e)(v) below apply.

4. Special Retirement Plans Lump Sum. The Company shall pay to the Executive an aggregate lump sum equal to the total of the amounts described in (a) and (b) herein. Amount (a) is a lump sum equal to the difference between (1) the actuarial equivalent of the benefit under the Company's tax-qualified pension plan, the Retirement Plan, the SERP provided in Section 7 below which the Executive would have received if his employment continued for the Relevant Benefits Period (as defined below) following termination of employment, assuming that the Executive's compensation during the Relevant Benefits Period would have been equal to the Executive's highest monthly base salary in effect during the twelve month period immediately preceding the date notice of termination of employment is given and (2) the actuarial equivalent of the Executive's actual benefit (paid or payable) under the Retirement Plan and the SERP as of the termination date. Actuarial equivalency for this purpose shall be determined using an interest rate equal to the five-year United States Treasury note yield in effect on the last business day of the month prior to the date of termination of employment as such yield is reported in the Wall Street Journal or comparable publication, and the mortality table used for purposes of determining lump sum amounts then in use under the Retirement Plan. Amount (b) is a lump sum equal to the total of (i) the additional contributions which would have been made to the Executive's account under the Company's tax-qualified 401(k) plan, plus (ii) the additional contributions which would have been credited to the bookkeeping account balance of the Executive attributable to the 401(k) match feature of the EDCP, had the Executive continued in employment for the Relevant Benefits Period and assuming that the Executive's compensation would have been the same as set forth above and that the Executive had made maximum utilization of the pre-tax and after-tax opportunity in the qualified 401(k) plan and obtained the ma ximum matching contributions in such plan. The amount of the aggregate lump sum under this Section 4(e)(iv) shall be paid by the Company to the Executive within ten business days after the Executive's termination of employment, unless the provisions of Section 4(e)(v) below apply. The amount of the lump sum provided by this Section 4(e)(iv) shall not be treated as compensation for purposes of any other benefit plan or program applicable to the Executive.
5. Deferral Option. Notwithstanding any other provision of this Agreement, the Executive may file a written irrevocable deferral election form with the Company prior to the expiration of thirty days from the date this Agreement electing to defer all or part of the salary and other cash compensation provided by Section 4(a)(i)(2), Section 4(a)(ii)(2), Section 4(b)(ii), Section 4(c)(ii), Section 4(e)(i)(1), Section 4(e)(ii), the special compensation provided by Section 4(e)(iii) and the special retirement plans lump sum otherwise provided for in Section 4(e)(iv). Such form shall irrevocably specify a method of payment for such compensation from among the methods allowable under the EDCP. Any deferred amounts shall be credited with earnings in the same manner as the Interest Rate Fund provided for in the EDCP or any other investment alternative that is currently available or allowable or may later become allowable under the EDCP and the EDCP provisions shall apply to deferrals made hereunder except tha t (i) any provisions for a mandatory lump sum payment upon termination or retirement shall not apply to deferrals made hereunder, (ii) any amounts which become payable under this Section 4(e)(v) shall be deemed for purposes of the EDCP to have become payable on account of the Executive's "retirement," and (iii) the entire amount deferred under this Section 4(e)(v) shall be paid in a lump sum by the Company immediately prior to the occurrence of a Change in Control to such grantor or "rabbi" trust as the Company shall have established as a vehicle to hold such amount pending payment, but with such trust designed so that the Executive's rights to payment of such benefits are no greater than those of an unsecured creditor.
6. Welfare Benefits. Subject to Section 4(e)(vii) below, for the Relevant Benefits Period, the Company shall provide the Executive (and his family) with health, disability, life and other welfare benefits substantially similar to the benefits received by the Executive (and his family) pursuant to welfare benefit programs of the Company or its affiliates as in effect on the date of termination of employment; provided, however, that no compensation or benefits provided hereunder shall be treated as compensation for purposes of any of the programs or shall result in the crediting of additional service thereunder. To the extent that any of the welfare benefits covered by this Section 4(e)(vi) cannot be provided pursuant to the plan or program maintained by the Company or its affiliates, the Company shall provide such benefits outside the plan or program at no additional cost (including, without limitation, tax cost) to the Executive and his family. The Executive shall be entitled to be covered by a reti ree medical and dental program at the end of the Relevant Benefit Period, at a cost to the Executive not to exceed the lesser of the cost, if any, charged to other retirees or the COBRA continuation premium charged to terminees who elect to continue in the Company's health plan at their expense under applicable law. The Company shall become obligated to continue such benefits for the remainder of the Executive's life and that of his surviving spouse, notwithstanding any contrary provision or power of amendment or termination reserved to the Company in any otherwise applicable document. The "Relevant Benefits Period" shall mean: (1) in the case of a termination pursuant to Section 4(a) or Section 4(b), the period commencing on the date of termination and ending on the later of six (6) months after such termination or February 29, 2004; and (2) in the case of a termination pursuant to Section 4(c), the period commencing on the date of termination and ending on the next succeeding February 28 following such ter mination (provided, such period shall be for six (6) months in the event of any such termination, pursuant to a notice by the Company to Executive under Section 11, occurring on the later of the February 28 after such notice or the date on which Executive is paid his bonus, if any, for the fiscal year ending immediately prior to such February 28).
7. New Employment. If the Executive secures new employment during the Relevant Benefits Period, the level of any benefit being provided pursuant to Section 4(d)(vi) hereof shall be reduced to the extent that any such benefit is being provided by the Executive's new employer. The Executive, however, shall be under no obligation to seek new employment and, in any event, no other amounts payable pursuant to this Agreement shall be reduced or offset by any compensation received from new employment or by any amounts claimed to be owed by the Executive to the Company or its affiliates.
8. Split-Dollar Life Insurance. Notwithstanding any limitation on the payment of welfare benefits to Executive under the provisions of Section 4(e)(vi) above, the Company shall continue to make premium payments on any split-dollar type life insurance program in effect on the life of the Executive at the time of termination of employment, in a manner consistent with the past practices of the Company as to timing and amount, until each policy has achieved paid-up status. The Company further agrees that the Exchange Agreement, Collateral Assignment and the Split Dollar Agreement (and letter agreement referenced in the Split Dollar Agreement), between Executive and the Company, each dated as of April 23, 2001, shall continue pursuant to their terms.
9. Equity Incentive Awards. Notwithstanding the provisions in any Awards, the Executive shall become fully vested in all outstanding Awards and all otherwise applicable restrictions shall lapse and for purposes of determining the length of time the Executive has to exercise rights, if applicable under any such Award, the Executive shall be treated as if he had retired from the service of the Company at or after age 55 and as if he completed ten years of service.
6. In the event of a termination described in this Section 4, no other compensation or benefits (including, without limitation, any payments contemplated by Section 5) will be paid except as provided in this Section 4; provided, in the event of a Covered Termination Associated with a Change of Control pursuant to paragraph (v) of Section (c) of the Appendix, Executive shall receive the more favorable of the compensation and benefits provided under Section 3 (including, without limitation, such amounts payable pursuant to Section 5) and the compensation and benefits provided under this Section 4 as he shall determine in his reasonable discretion (and if a determination of a whether a termination is a Covered Termination Associated with a Change of Control cannot be made until after payment of benefits under this Section 4, then after such determination is made, Executive shall receive such additional payment and other benefits as may be required to satisfy his right compensation and benefits under Sec tion 3 as he so elects under this Section 4(f)).
5. Certain Additional Payments by the Company.
1. Anything in this Agreement to the contrary notwithstanding, and whether or not a Covered Termination of Employment occurs, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 5) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
2. Subject to the provisions of paragraph (c) of this Section 5, all determinations required to be made under this Section 5, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by a certified public accounting firm designated by the Executive (the "Accounting Firm"), which shall provide detailed supporting calculations both to the Company and the Executive within fifteen business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 5, shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to paragraph (c) of this Section 5 and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Exec utive.
3. The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the thirty-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:
1. give the Company any information reasonably requested by the Company relating to such claim,
2. take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company.
3. cooperate with the Company in good faith in order effectively to contest such claim, and
4. permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this paragraph (c) of Section 5, the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and provided, further, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case ma y be, any other issue raised by the Internal Revenue Service or any other taxing authority.

4. If, after the receipt by the Executive of an amount advanced by the Company pursuant to paragraph (c) of this Section 5, the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company's complying with the requirements of paragraph (c) of this Section 5) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If after the receipt by the Executive of an amount advanced by the Company pursuant to paragraph (c) of this Section 5, a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Pa yment required to be paid.
6. Termination of Employment.
1. The Company shall be entitled to terminate the Executive's employment on account of Disability pursuant to the procedures set forth in Section (e) of the Appendix, for Cause pursuant to the procedures set forth in Section (a) of the Appendix, pursuant to Section 11 or without Cause by giving written notice to the Executive of such termination.
2. The Executive may terminate his employment for Good Reason as follows:
1. Prior to a Change of Control the Executive may only terminate his employment with the Company for Good Reason if the Executive gives the Company 30 days' prior written notice of his intention to terminate his employment for Good Reason, setting forth in reasonable detail the specific conduct of the Company that the Executive considers to constitute Good Reason and the specific provision(s) of this Agreement on which he relies. The Executive's termination for Good Reason shall be effective only if the Company does not cure or otherwise remedy the alleged conduct specified in the notice within 30 days after the date such notice is duly given.
2. After a Change of Control by giving the Company written notice of the termination, setting forth in reasonable detail the specific conduct of the Company that constitutes Good Reason. Termination of employment by the Executive for Good Reason shall be effective on the fifth business day following the date such notice is given, unless the notice sets forth a later date (which date shall in no event be later than thirty days after the notice is given). After a Change of Control, except as otherwise provided in this Agreement, in the event of a dispute regarding whether the Executive's voluntary termination qualifies as a termination for Good Reason, no claim by the Company that the same does not constitute a termination for Good Reason shall be given effect unless the Company establishes by clear and convincing evidence that such termination does not constitute a termination for Good Reason. The Executive may also terminate his employment without Good Reason by giving the Company written notice of such termination.
3. Either the Executive or the Company may terminate the Executive's employment for any reason by delivering written notice to the other party during the 60 day period beginning on May 1, 2003 and ending on June 29, 2003.
7. Special Pension Provisions. The Executive shall be eligible to participate in the Company's Supplemental Executive Retirement Plan (the "SERP") with respect to monthly benefits "A" and "B," but on the following modified terms which shall override any contrary provisions in the SERP:
1. The Executive or his beneficiary will become entitled to monthly benefit "A" on his retirement at or after age 55, or in the event of his termination of service because of death or Disability while in the service of the Company prior to age 55.
2. Further, the Executive will be entitled to past service credit under monthly benefit "A," calculated as if his participation in the Company's tax-qualified pension plan, the Retirement Account Plan, had commenced at age 25 and as if the benefit formula under such pension plan for all periods before December 31, 1995 was the same as in effect on December 31, 1995, and for all periods after December 31, 1995, pursuant to the actual benefit formula used in such pension plan (including the grandfathered minimum benefit provisions thereof), offset by the value of any benefits payable to the Executive from Social Security which is the actuarial equivalent of a single life annuity benefit payable to the Executive at the later of age 65 or the date when benefits commence under monthly benefit "A." Actuarial equivalency for this purpose shall be determined using an interest rate equal to the five-year United States Treasury Note yield in effect on the last business day of the month prior to the month in which ben efits commence under monthly benefit "A," as such yield is reported in the Wall Street Journal or comparable publication, and the mortality table used for purposes of determining lump sum amounts then in use under the qualified defined benefit plan of the Company or its subsidiaries applicable to the Executive.
3. Any early retirement reduction factor that would otherwise apply to the Executive at any time between ages 55 and 62 will be disregarded and in lieu thereof, the Executive will be deemed entitled for purposes of monthly benefit "A" to the following percentages of the calculated benefit:

	% of Benefit "A"
Age	Becoming Payable
55	75%
56	81%
57	86%
58 or later	100%

For ages in between those above stated, the percentage of benefit "A" payable shall be increased. The amount of the increase shall be determined by multiplying 1/12th of the increase in the percentage which would have become payable on the Executive's next birthday by the number of months (with each 30-day period to be counted as one month) completed since the Executive's last birthday and before the start of payments of benefit "A."

4. The Executive will become entitled to monthly benefit "B" on his retirement at or after 55.
8. Wisconsin Housing Assistance. The parties acknowledge that the Executive is in the process of acquiring a home in Wisconsin and agree to the following provisions in connection therewith:
1. Upon the Executive's termination of employment with the Company, the Executive (or his estate as the case may be) shall have the right by written notice to the Company at any time within seven (7) years of such termination (the "7-Year Period") to require the Company to buy the Executive's Wisconsin house and lot (the "House") for a cash price equal to the greater of the Cost Price or Fair Market Value. For this purpose the Cost Price shall mean the price paid by the Executive for the House together with improvements thereon, or, should the Executive build the House, the Executive's total costs of obtaining the lot and constructing the House. The Executive will provide the Company with his Cost Price within 30 days of his purchase of the House and the completion of the improvements thereon, or, should the Executive build the House, the Executive will provide the Company with a detailed listing of his costs within 6 months of the completion of the House . Such detailed listing, if applicable, shall be the final determination of the Cost Price. The Cost Price may be amended by the Executive from time to time if part of the lot is sold or if additional improvements are made to the House or lot. The Executive has timely delivered to the Company by letter dated as of the date hereof, the Cost Price as April 30, 2002, together with supporting documentation. The Company acknowledges receipt of such letter and supporting documentation and agrees with the calculation of the Cost Price based on such supporting documentation. For this purpose, "Fair Market Value" shall mean the average of the highest two of three appraisals obtained from qualified residential appraisers, one to be selected by the Executive, one by the Company and the third by the other two, with the Company to bear the appraisal costs. The Company shall also make a gross-up payment to the Executive to the extent that the Cost Price is higher than Fair Market Value, so that after the Executive's payment of any income taxes which may be due on such excess and the gross-up payment, the Executive will be left with an amount equal to the Cost Price.
2. The terms of this Section 8 shall apply upon the Executive's termination of employment with the Company at any time after the Executive's purchase of the House, or should the Executive intend to build the House, at any time after the Executive's purchase of the lot, even if prior to the start of construction of the House.
3. The closing of any purchase and sale contemplated by this Section 8 will be on the terms herein set forth and otherwise on standard terms and conditions as are customary for residential real estate transactions in Wisconsin. The parties acknowledge that the Executive did not take title to the House in his own name, and agree that hereafter title may be transferred into Executive's own name or such other legal title holder as he or the current (or successor) title holder may designate from time to time (other than due to a bona fide sale), and that the Company will continue to be obligated to honor its purchase obligations under Section 8(a) upon timely written notice to it, so long as the Executive or his estate causes the legal title holder to convey, or the legal title holder otherwise conveys, the property to the Company upon closing of such purchase and sale.
4. The Company shall reimburse the Executive his out of pocket living expenses associated with maintaining an apartment in Wisconsin pending acquisition of the House, or should the Executive intend to build the House, while the House is being constructed. Such amounts will be "grossed-up" for any taxes the Executive may be required to pay.
9. Obligations of the Company on Termination of Employment for Death, Disability, for Cause or by the Executive Other than for Good Reason. If the Executive's employment is terminated by reason of his death or Disability (but not under the circumstances covered by paragraph (c)(iv) of the Appendix), or if such employment is terminated by the Company for Cause or by the Executive other than for Good Reason (other than pursuant to delivery of a notice of termination pursuant to paragraph (iii) of Section (d) of the Appendix), the Company will pay to the Executive's estate or legal representative or to the Executive, as the case may be, all accrued but unpaid base salary and all other benefits and amounts which may become due in accordance with the terms of any applicable benefit plan, contract, agreement or practice (including pursuant to the SERP as modified pursuant to Section 7 above), but no other compensation or benefits will be paid under this Agreement. However, under such circumstances, the fol lowing provisions shall apply.
1. Section 8 of this Agreement shall remain in full force and effect in accordance with its terms.
2. If the Executive's separation from the service of the Company occurs at or after his attainment of age 55, then notwithstanding any contrary provisions in any restricted stock award, he shall become fully vested in any such outstanding award and all otherwise applicable restrictions shall lapse.
3. For purposes of all applicable stock option awards, other equity incentive compensation awards, retiree health care plans, and any other employee welfare benefit plan, program or fringe benefit (but specifically excluding any tax-qualified retirement plan), the Executive shall be treated as if his service with the Company had commenced at age 25.
4. The foregoing provisions of this Section 9 to the contrary notwithstanding, the provisions of Section 4 shall apply to any termination of Executive's employment by reason of his death or Disability following delivery of a notice of termination pursuant to paragraph (i) or (iii) of Section (d) of the Appendix.
10. Non-Compete Agreement. In consideration of this Agreement, the Executive agrees that he will not, for a period of one year from the date of his or her termination of employment with the Company, directly or indirectly own, manage, operate, join, control, be employed by, or participate in the ownership, management, operation or control of, or be connected in any manner, including but not limited to, holding the position of shareholder, director, officer, consultant, independent contractor, executive partner, or investor with any "Competing Enterprise." For purposes of this paragraph, a "Competing Enterprise" means any entity, firm or person engaged in a business within the State of Wisconsin or the upper peninsula area of the State of Michigan (the "Territory") which is in competition with any of the businesses of the Company or any of its subsidiaries within the Territory as of the date the Executive's termination of employment, and whose aggregate gross revenues, calculated for the most recently completed fiscal year of the Competing Enterprise, derived from all such competing activities within the Territory during such fiscal year, equal at least 10% or more of such Enterprise's consolidated net revenues for such fiscal year. If the Executive notifies the Company in writing of any employment or opportunity which the Executive proposes to undertake during the one year non-compete period, and supplies the Company with any additional information which the Company may reasonably request, the Company agrees to promptly notify the Executive within thirty days after all information reasonably requested by it has been provided, whether the Company considers the proposed employment or opportunity to be prohibited by these provisions and, if so, whether the Company is willing to waive the same. Notwithstanding anything in this Section 10, the Executive shall not be prohibited from acquiring or holding up to 2% of the common stock of an entity that is traded on a national securities exchange or a nationally r ecognized over-the-counter market.
11. Termination. Unless sooner terminated pursuant to the terms of this Agreement, Executive's employment shall terminate on the later of February 29, 2004 or the date on which Executive is paid his bonus, if any, for the immediately preceding fiscal year; provided that this Agreement shall automatically be extended commencing on February 29, 2004 and on each subsequent anniversary (February 28 or 29, as the case may be) of such date for additional one year periods until March 1, 2008 (whereupon Executive's employment shall automatically terminate) unless the Company, by written notice given to Executive at least 90 days prior to the scheduled date of termination, elects not to extend Executive's employment. Any such termination of Executive's employment with the Company shall be effective as of the later of (i) the last day of February immediately following such notice by the Company to Executive or (ii) the date on which Executive is paid his bonus, if any, for the immediately preceding fis cal year; provided, if such notice is given more than 120 days prior to the scheduled date of termination, Executive may terminate his employment effective the ninetieth (90th) day after such notice. During the term of his employment, Executive shall cooperate fully with the Company in recruiting, hiring and training a successor Chief Financial Officer. Notwithstanding the foregoing, after a Change of Control, Executive's employment shall automatically terminate on the date which is eighteen months after the Effective Date, and prior to such date, the Company may not terminate Executive's employment pursuant to this Section 11.
12. Successors and Binding Agreements.
1. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) and the direct and indirect parent of any such successor, to all or substantially all of the business and/or assets of the Company expressly to assume and to agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no succession had taken place. This Agreement shall be binding upon and inure to the benefit of the Company and any such successor, and such successor shall thereafter be deemed the "Company" for the purposes of this Agreement.
2. This Agreement shall inure to the benefit of and be enforceable by the Executive's respective personal or legal representative, executor, administrator, successor, heirs, distributees and/or legatees.
3. Neither the Company nor the Executive may assign, transfer or delegate this Agreement or any rights or obligations hereunder except as expressly provided in this Section. Without limiting the generality of the foregoing, the Executive's right to receive payments hereunder shall not be assignable or transferable, whether by pledge, creation of a security interest or otherwise, other than by a transfer by will or the laws of descent and distribution. In the event the Executive attempts any assignment or transfer contrary to this Section, the Company shall have no liability to pay any amount so attempted to be assigned or transferred.
13. Notices. All communications provided for herein shall be in writing and shall be deemed to have been duly given when delivered or five business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the Company (to the attention of the Secretary of the Company) at its principal executive office and to the Executive at his/her principal residence, or to such other address as any party may have furnished to the other in writing in accordance herewith, except that notices of a change of address shall be effective only upon receipt.
14. Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Wisconsin without giving effect to the principles of conflict of laws of such state, except that Section 15 shall be construed in accordance with the Federal Arbitration Act if arbitration is chosen by the Executive as the method of dispute resolution.
15. Settlement of Disputes; Arbitration; Attorneys' Fees. Any dispute or controversy arising under or in connection with this Agreement shall be settled, at the Executive's election, either by arbitration in Milwaukee, Wisconsin in accordance with the rules of the American Arbitration Association then in effect or by litigation; provided, however, that in the event of a dispute regarding whether the Executive's employment has been terminated for Cause or whether the Executive's voluntary termination qualifies as a termination for Good Reason, the evidentiary standards set forth in this Agreement shall apply; provided further that notwithstanding anything to the contrary contained herein, in the absence of a Change of Control, the normal, civil burden of proof by a preponderance of the evidence shall be applicable to any dispute regarding whether the Executive's voluntary termination qualifies as a termination for Good Reason and such burden of proof shall be upon the Executive. Judgment may be entere d on the arbitrator's award in any court having jurisdiction. The Company agrees to pay, as incurred, to the fullest extent permitted by law, all legal fees and expenses that the Executive may reasonably incur as a result of any contest (regardless of outcome) by the Company, the Executive or others of the validity or enforceability of or liability under, or otherwise involving any provision of this Agreement. Executive agrees and acknowledges that as of the date of this Agreement there does not exist "Good Reason" to terminate his employment with the Company.
16. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement which shall remain in full force and effect. If any provision of this Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision, together with all other provisions of this Agreement, shall remain valid and enforceable and continue in full force and effect to the fullest extent consistent with law.
17. Entire Agreement; Amendments. This Agreement constitutes the entire understanding and agreement of the parties with respect to the matters discussed herein and supersedes all other prior agreements and understandings, written or oral, between the parties with respect thereto including, without limitation, the Senior Officer Change in Control, Severance and Special Pension Agreement dated March 8, 2000 between the parties and the Original Agreement. There are no representations, warranties or agreements of any kind relating thereto that are not set forth in this Agreement. This Agreement may not be amended or modified except by a written instrument signed by the parties hereto or their respective successors and legal representatives.
18. Withholding. The Company may withhold from any amounts payable under this Agreement all federal, state and other taxes as shall be legally required.
19. Certain Limitations. Nothing in this Agreement shall grant the Executive any right to remain an executive, director or employee of the Company or of any of its subsidiaries for any period of time.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and date first written above.

WISCONSIN ENERGY CORPORATION

By:_____________________________

Name:

Title:

_________________________________

Paul Donovan

APPENDIX

This is an appendix to the Amended and Restated Senior Officer Employment, Change in Control, Severance and Non-Compete Agreement between WISCONSIN ENERGY CORPORATION and PAUL DONOVAN dated as of May 1, 2002 (the "Agreement").

As used in the Agreement, the terms set forth below shall have the following meanings:

1. "Cause" means:
1. the willful and continued failure of the Executive to substantially perform the Executive's duties (other than failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board of Directors of the Company (the "Board"), or the Compensation Committee of the Board (the "Committee") which specifically identifies the manner in which the Board or the Committee or the elected officer believes that the Executive has not substantially performed the Executive's duties, or
2. the willful engaging by the Executive in illegal conduct or gross misconduct which is determined by the Board to have been materially and demonstrably injurious to the Company. However, no act, or failure to act, on the Executive's part shall be considered "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.

The Executive may only be terminated for Cause if the Company gives written notice to the Executive of its intention to terminate the Executive's employment for Cause, setting forth in reasonable detail the specific conduct of the Executive that it considers to constitute Cause and the specific provision(s) of this Agreement on which it relies, and stating the date, time and place of the Special Meeting for Cause. The "Special Meeting for Cause" means a meeting of the Board called and held specifically for the purpose of considering the Executive's termination for Cause, that takes place not less than ten and not more than twenty business days after the Executive receives the notice of termination for Cause. The Executive shall be given an opportunity, together with counsel, to be heard at the Special Meeting for Cause. The Executive's termination for Cause shall be effective when and if a resolution is duly adopted by the affirmative vote of at least two-thirds (2/3) of the entire membership of the Board , excluding employee directors, at the Special Meeting for Cause, stating that in the good faith opinion of the Board, the Executive is guilty of the conduct described in the notice of termination for Cause and that conduct constitutes Cause under this Agreement. In the event of a dispute regarding whether the Executive's employment has been terminated for Cause, no claim by the Company that Cause exists shall be given effect unless the Company establishes by clear and convincing evidence that Cause exists.

2. A "Change in Control" with respect to the Company shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:
1. any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates) representing 20% or more of the combined voting power of the Company's then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (a) of paragraph (iii) below; or
2. the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or
3. there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (a) a merger or consolidation immediately following which the directors of the Company immediately prior to such merger or consolidation continue to constitute at least a majority of the board of directors of the Company, the surviving entity or any parent thereof or (b) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its affiliates) representing 20% or more of the combined voting power of the Company's then outstanding securities; or
4. the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement (or series of related agreements) for the sale or disposition by the Company of all or substantially all of the Company's assets, disregarding any sale or disposition to a company, at least a majority of the directors of which were directors of the Company immediately prior to such sale or disposition; or
5. the Board determines in its sole and absolute discretion that there has been a Change in Control of the Company.

For purposes of this Change in Control definition, the terms set forth below shall have the following meanings:

"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time.

"Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the company.

3. "Covered Termination of Employment Associated with a Change in Control" means:
1. a termination of employment by the Company other than because of death or Disability and without Cause, which occurs within a period of eighteen months following the Effective Date or,
2. a termination of employment by the Company other than because of death or Disability and without Cause within a period of six months prior to the Effective Date, and it is reasonably demonstrated by the Executive that such termination of employment was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or otherwise arose in connection with or in anticipation of a Change in Control, or
3. a termination of employment by the Executive for Good Reason within a period of eighteen months following the Effective Date and also subsequent to the occurrence, without the Executive's written consent, of any event described in Section (g) after the Effective Date, or a termination of employment by the Executive within a period of six months prior to the Effective Date and following the occurrence without the Executive's consent of any event described in Section (g)(i), (ii), (iii) or (iv) and it is reasonably demonstrated by the Executive that such event occurred at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or otherwise arose in connection or in anticipation of a Change in Control,
4. a voluntary termination of employment by the Executive without Good Reason following completion of one year of service after a Change in Control of the Company, provided that the voluntary termination must be effected by the Executive within six months after the completion of that one-year of service. Further, if the Executive gives written notice to the Company any time after a Change in Control of the Company but before completion of one year of service thereafter that the Executive intends to so voluntarily terminate and if the Executive should thereafter die while in the employ of the Company or incur a termination of employment because of Disability, in either case before completion of such one year of service, such death or termination of employment shall be treated as a Covered Termination Associated with a Change in Control, or
5. (1) a termination of employment occurring after delivery of a notice of termination pursuant to Section 4(a)(i) of the Agreement provided that a Change of Control occurs on or prior to February 29, 2004, or (2) in the event of a Change of Control after February 29, 2004, a termination of employment pursuant to Section 4(c) of the Agreement occurring on or after the 120th day prior to a public announcement of the transaction that constitutes such Change of Control and prior to the date of such Change of Control.

If within fifteen days after the Company notifies the Executive that it is terminating his employment for Cause or the Executive notifies the Company that he is terminating his employment for Good Reason, the party receiving such notice notifies the other party that a dispute exists concerning the termination, then for purposes of this Section (c) the date of the Executive's termination of employment shall not be deemed to have occurred until the earlier of (i) the date that is 18 months following the Effective Date or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); provided, however, that the date of termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Execu tive pursues the resolution of such dispute with reasonable diligence.

If a purported termination occurs prior to or following a Change in Control and the date of termination is extended in accordance with the preceding paragraph, the Company shall continue to pay the Executive the full compensation and benefits as are provided in the first sentence of Section 3(a) of the Agreement until the date of termination, as determined in accordance with the preceding paragraph. Amounts paid under this Section (c) are in addition to all other amounts due under the Agreement and shall not be offset against or reduce any other amounts due under the Agreement, other than amounts due under the first sentence of Section 3(a) of the Agreement.

4. "Covered Termination of Employment Not Associated with a Change in Control of the Company" means:
1. a termination of employment by the Company (other than because of (A)death, (B) Disability, in each case subject to Section 9(d), or (C) a termination by the Company for Cause) pursuant to a notice of termination delivered during the 60 day period beginning on May 1, 2003 and ending on June 29, 2003;
2. a termination of employment by the Executive for Good Reason subsequent to the occurrence, without the Executive's written consent, of any event described in Section (g);
3. a termination of employment by the Executive for any reason including without limitation for Good Reason (other than because of death or Disability or by the Company for Cause) pursuant to a notice of termination delivered during the 60 day period beginning on May 1, 2003 and ending on June 29, 2003;
4. the termination of the employment pursuant to Section 11 of the Agreement; or
5. a termination of employment by the Company without Cause (other than because of death or Disability).
5. "Disability" means that the Executive has been unable, for a period of 180 consecutive business days, to perform the material duties of his job, as a result of physical or mental illness or injury and that a physician selected by the Company or its insurers and acceptable to the Executive or his legal representative, has determined that the Executive's incapacity is total and permanent. A termination of the Executive's employment by the Company for Disability shall be communicated to the Executive by written notice and shall be effective on the thirtieth day after receipt of such notice by the Executive, unless the Executive returns to full-time performance of his duties before the expiration of such thirty-day period.
6. "Effective Date" means the first date on which a Change in Control of the Company occurs, except that if Section 4 of the Agreement applies(subject to the proviso under Section 4(f) of the Agreement), the term shall mean the date immediately prior to the Executive's termination of employment.
7. "Good Reason" means:
1. the assignment to the Executive of any duties inconsistent with the duties performed by the Executive as Chief Financial Officer the Company prior on the date of the Agreement or any other action by the Company that results in material reduction of the Executive's duties and responsibilities as of the date of the Agreement, or
2. any reduction in the Executive's base salary or percentage of base salary available as an incentive compensation or target bonus opportunity relative to those most favorable to the Executive in effect at any time during the 180-day period prior to the Effective Date or to the extent more favorable to the Executive, those in effect after the Effective Date, or any failure by the Company to continue to provide for the Executive's participation in the Company's long-term incentive plans and programs on a basis commensurate with other senior executives of the Company, or reduction in any material element of the Executive's compensation or benefits, or
3. the relocation of the Executive's principal place of employment to a location more than 35 miles from the Executive's principal place of employment immediately prior to the Effective Date, or
4. the Company's requiring the Executive to travel on Company business to a materially greater extent than was required immediately prior to the Effective Date, or
5. the failure by the Company to comply with Section 12(a) of this Agreement.
8. "Highest Bonus Amount" means the highest dollar bonus which would result from three calculations, as follows: (i) the highest percentage of base salary ever used with respect to the calculation of the Executive's bonus during the three complete fiscal years of the Company immediately preceding the termination of employment or, if more favorable to the Executive, during the three complete fiscal years of the Company immediately preceding the Change in Control of the Company, multiplied times the highest per annum base rate of salary in effect with respect to the Executive during the three-year period immediately prior to the termination of employment; (ii) the highest dollar bonus earned by the Executive under any cash bonus or incentive compensation plan of the Company during either of the three complete fiscal year periods of the Company listed in (i) above, whichever is more favorable to the Executive; or (iii) the Executive's bonus or incentive compensation "target" for the fiscal year in which the te rmination of employment occurs.

EX-10

Exhibit 10.2

AMENDED AND RESTATED (4/29/02)
SENIOR OFFICER EMPLOYMENT, CHANGE IN CONTROL,
SEVERANCE AND NON-COMPETE AGREEMENT

WHEREAS, WISCONSIN ENERGY CORPORATION (the "Company") and RICHARD R. GRIGG (the "Executive") entered into a Senior Officer Change in Control, Severance and Non-Compete Agreement as of _______________, 2001 (the "Agreement"); and

WHEREAS, the Executive is currently a Vice President of the Company and President and Chief Operating Officer of Wisconsin Electric Power Company and Wisconsin Gas Company (Wisconsin Electric/Wisconsin Gas) and the Board of Directors of the Company (the "Board") wishes to encourage the Executive to continue to devote his time and attention to pursuit of Company matters without distractions relating to his employment security; and

WHEREAS, the parties wish to amend and restate the Agreement as of _______________, 2002 in consideration of their mutual promises and the terms and conditions set forth below;

NOW, THEREFORE, the parties agree as follows:

In consideration of the terms and conditions set forth below, the parties agree as follows:

1. Defined Terms. All of the capitalized terms used in this Agreement are defined in the attached Appendix.
2. Purpose of Agreement. This Agreement is intended to set forth certain terms and conditions of the Executive's employment with the Company, to provide the Executive with certain minimum compensation rights in the event of his termination of employment under certain circumstances as set forth herein and to provide for a non-compete agreement from the Executive.
3. Employment. Effective as of the date hereof, the Executive will be named an Executive Vice President of the Company, in addition to his officer positions as President and Chief Operating Officer of Wisconsin Electric/Wisconsin Gas. The Executive's employment is not for any fixed term and the Executive remains an employee at-will. Further:
1. Base Salary and Bonus Opportunity. Effective as of May 1, 2002, the Executive's annual base salary will be increased to an annual rate of $552,000 and the Executive's target bonus opportunity for 2002 under the Company's Short-Term Performance Plan will be fixed at 80% of such increased annual base salary. Effective as of January 1, 2003, the Executive's base salary shall be increased to an annual rate of $579,600 and the Executive's target bonus compensation for 2003 under the Company's Short-Term Performance Plan will be fixed at 80% of such increased base salary.
2. Options. Effective as of May 1, 2002, the Executive will receive an option grant for 68,465 shares of the Company's common stock and on January 2, 2003, the Executive will receive another option grant for 200,000 shares of the Company's common stock, with the principal terms of both such options to be as set forth on Exhibit A attached hereto.
4. Obligation of the Company on a Covered Termination of Employment Associated with a Change in Control. In the event of a Covered Termination of Employment Associated with a Change in Control, then the Company shall provide the Executive with the following compensation and benefits:
1. General Compensation and Benefits. The Company shall pay the Executive's full salary to the Executive from the time notice of termination is given through the date of termination of employment at the rate in effect at the time such notice is given or, if higher, at an annual rate not less than twelve times the Executive's highest monthly base salary for the twelve-month period immediately preceding the month in which the Effective Date occurs, together with all compensation and benefits payable to the Executive through the date of termination of employment under the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period. Such payments shall be made in a lump sum not later than ten business days after such termination. The Company shall also pay the Executive's normal post-termination compensation and benefits to the Executive as such payments become due, except that any normal cash severance benefits shall be superseded and replaced entirely by the benefits provided under this Agreement. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company's retirement, insurance and other compensation or benefit plans, programs and arrangements most favorable to the Executive in effect at any time during the 180-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to executives of the Company of comparable status and position to the Executive.
2. Incentive Compensation. Notwithstanding any provision of any cash bonus or incentive compensation plan of the Company, the Company shall pay to the Executive, within ten business days after the Executive's termination of employment, a lump sum amount, in cash, equal to the sum of (i) any bonus or incentive compensation which has been allocated or awarded to the Executive for a fiscal year or other measuring period under the plan that ends prior to the date of termination of employment, but which has not yet been paid, and (ii) a pro rata portion of the Highest Bonus Amount for all uncompleted periods under any bonus or incentive compensation plan.
3. Special Compensation. The Company shall pay to the Executive a lump sum equal to three times the sum of (a) the highest per annum base rate of salary in effect with respect to the Executive during the three-year period immediately prior to the termination of employment plus (b) the Highest Bonus Amount. Such lump sum shall be paid by the Company to the Executive within ten business days after the Executive's termination of employment, unless the provisions of Section 4(e) below apply. The amount of the aggregate lump sum provided by this Section 4(c), whether paid immediately or deferred, shall not be counted as compensation for purposes of any other benefit plan or program applicable to the Executive.
4. Special Retirement Plans Lump Sum. The Company shall pay to the Executive an aggregate lump sum equal to the total of the amounts described in (a) and (b) herein. Amount (a) is a lump sum equal to the difference between (i) the actuarial equivalent of the benefit under the Company's tax-qualified pension plan, the Retirement Account Plan (the "Retirement Plan"), the Supplemental Executive Retirement Plan (the "SERP") and any applicable non-qualified pension plan letter agreement (the "Letter Agreement") between the Executive and the Company, which the Executive would receive if his employment continued for a three-year period following termination of employment, assuming that the Executive's compensation during such three-year period would have been equal to the Executive's salary as in effect immediately before the termination or, if higher, as in effect at any time during the 180-day period immediately preceding the termination date, and the Highest Bonus Amount, and (ii) th e actuarial equivalent of the Executive's actual benefit (paid or payable) under the Retirement Plan, the SERP, and any Letter Agreement as of the termination date. Actuarial equivalency for this purpose shall be determined using an interest rate equal to the five-year United States Treasury note yield in effect on the last business day of the month prior to the date of termination of employment as such yield is reported in the Wall Street Journal or comparable publication, and the mortality table used for purposes of determining lump sum amounts then in use under the Retirement Plan. Amount (b) is a lump sum equal to the total of (i) the additional contributions which would have been made to the Executive's account under the Company's tax-qualified 401(k) plan, plus (ii) the additional contributions which would have been credited to the bookkeeping account balance of the Executive attributable to the 401(k) match feature of the EDCP, had the Executive continued in employment for a three-year period following termination of employment and assuming that the Executive's compensation would have been the same as set forth above and that the Executive had made maximum utilization of the pre-tax and after-tax opportunity in the qualified 401(k) plan and obtained the maximum matching contributions in such plan. The amount of the aggregate lump sum under this Section 4(d) shall be paid by the Company to the Executive within ten business days after the Executive's termination of employment, unless the provisions of Section 4(e) below apply. The amount of the lump sum provided by this Section 4(d) shall not be treated as compensation for purposes of any other benefit plan or program applicable to the Executive.
5. Deferral Option. Notwithstanding any other provision of this Agreement, the Executive may file a written irrevocable deferral election form with the Company prior to the first date on which a Change in Control of the Company occurs electing to defer all or part of the special compensation provided by Section 4(c) and the special retirement plans lump sum otherwise provided for in Section 4(d). Such form shall irrevocably specify a method of payment for such compensation from among the methods allowable under the Company's Executive Deferred Compensation Plan (the "EDCP"). Any deferred amounts shall be credited with earnings in the same manner as the Interest Rate Fund provided for in the EDCP or any other investment alternative that may later become allowable under the EDCP and the EDCP provisions shall apply to deferrals made hereunder except that (i) any provisions for a mandatory lump sum payment upon a "Change in Control" as defined in the EDCP shall not apply to deferral s made hereunder, (ii) any amounts which become payable under this Section 4(e) shall be deemed for purposes of the EDCP to have become payable on account of the Executive's "retirement," and (iii) the entire amount deferred under this Section 4(e) shall be paid in a lump sum by the Company immediately prior to the occurrence of a Change in Control to such grantor or "rabbi" trust as the Company shall have established as a vehicle to hold such amount pending payment, but with such trust designed so that the Executive's rights to payment of such benefits are no greater than those of an unsecured creditor.
6. Welfare Benefits. Subject to Section 4(g) below, for a three-year period following termination of employment, the Company shall provide the Executive (and his family) with health, life, disability and other welfare benefits substantially similar to the benefits received by the Executive (and his family) pursuant to welfare benefit programs of the Company or its affiliates as in effect immediately during the 180 days preceding the Effective Date (or, if more favorable to the Executive, as in effect at any time thereafter until the termination of employment); provided, however, that no compensation or benefits provided hereunder shall be treated as compensation for purposes of any of the programs or shall result in the crediting of additional service thereunder. For purposes of determining the amount of such welfare benefits, any part of which shall be based on compensation, the Executive's compensation during the relevant three-year period shall be deemed to be equal to the Exe cutive's salary as in effect immediately before the termination of employment or, if higher, as in effect at any time during the 180-day period immediately preceding the termination date, and the Highest Bonus Amount. To the extent that any of the welfare benefits covered by this Section 4(f) cannot be provided pursuant to the plan or program maintained by the Company or its affiliates, the Company shall provide such benefits outside the plan or program at no additional cost (including, without limitation, tax cost) to the Executive and his family. The Executive shall be entitled to be covered by a retiree medical and dental program at the end of the relevant three-year period, at a cost to the Executive not to exceed the lesser of the cost, if any, charged to other retirees or the COBRA continuation premium charged to terminees who elect to continue in the Company's health plan at their expense under applicable law. The Company shall become obligated to continue such benefits for the remainder of the Exe cutive's life and that of his surviving spouse, notwithstanding any contrary provision or power of amendment or termination reserved to the Company in any otherwise applicable document.
7. New Employment. If the Executive secures new employment during the three-year period following termination of employment, the level of any benefit being provided pursuant to Section 4(f) hereof shall be reduced to the extent that any such benefit is being provided by the Executive's new employer. The Executive, however, shall be under no obligation to seek new employment and, in any event, no other amounts payable pursuant to this Agreement shall be reduced or offset by any compensation received from new employment or by any amounts claimed to be owed by the Executive to the Company or its affiliates.
8. Split-Dollar Life Insurance. Notwithstanding the provisions of Section 4(f) above, the Company shall continue to make premium payments on any split-dollar type life insurance program in effect on the life of the Executive during the 180 days preceding the Effective Date (or, if more favorable to the Executive, as in effect at any time thereafter until the termination of employment), in a manner consistent with the past practices of the Company as to timing and amount, until each policy has achieved paid-up status.
9. Equity Incentive Awards. Notwithstanding the provisions in any stock option award, restricted stock award or other equity incentive compensation award (the "Awards"), the Executive shall become fully vested in all outstanding Awards and all otherwise applicable restrictions shall lapse and for purposes of determining the length of time the Executive has to exercise rights, if applicable under any such Award, the Executive shall be treated as if he had retired from the service of the Company at or after age 55 and completion of ten years of service.
10. Outplacement and Financial Planning. The Company shall, at its sole expense as incurred, provide the Executive with outplacement services, the scope and provider of which shall be selected by the Executive in his sole discretion (but at a cost to the Company of not more than $30,000) or, at the Executive's option, the use of office space, office supplies and equipment and secretarial services for a period not to exceed one year. The Company shall also continue to provide the Executive with financial planning counseling benefits through the third anniversary of the date of the Executive's termination of employment, on the same terms and conditions as were in effect immediately before the termination or, if more favorable, on the Effective Date.
5. Obligation of the Company on a Covered Termination of Employment Not Associated with a Change in Control of the Company. In the event of a Covered Termination of Employment Not Associated with a Change in Control of the Company, then the Company shall provide the Executive with the same compensation and benefits and subject to the same terms and conditions as are specified in Section 4 above, but the tax gross-up provisions of Section 6 hereof shall not apply. Further, the deferral election for the Executive described in Section 4(e) above shall apply, but only if the written irrevocable deferral form is filed with the Company both prior to the expiration of thirty days from the date this Agreement is signed by the Executive and prior to the Executive's termination of employment.
6. Certain Additional Payments by the Company.
1. Anything in this Agreement to the contrary notwithstanding, and whether or not a Covered Termination of Employment occurs, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 6) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties impo sed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
2. Subject to the provisions of paragraph (c) of this Section 6, all determinations required to be made under this Section 6, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by a certified public accounting firm designated by the Executive (the "Accounting Firm"), which shall provide detailed supporting calculations both to the Company and the Executive within fifteen business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fee s and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 6, shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to paragraph (c) of this Section 6 and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to o r for the benefit of Executive.
3. The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the thirty-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:
1. give the Company any information reasonably requested by the Company relating to such claim,
2. take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company.
3. cooperate with the Company in good faith in order effectively to contest such claim, and
4. permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this paragraph (c) of Section 6, the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribuna l, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and provided, further, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or conte st, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

4. If, after the receipt by the Executive of an amount advanced by the Company pursuant to paragraph (c) of this Section 6, the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company's complying with the requirements of paragraph (c) of this Section 6) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If after the receipt by the Executive of an amount advanced by the Company pursuant to paragraph (c) of this Section 6, a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the a mount of Gross-Up Payment required to be paid.
7. Termination of Employment. The Company shall be entitled to terminate the Executive's employment on account of Disability pursuant to the procedures set forth in Section (e) of the Appendix, for Cause pursuant to the procedures set forth in Section (a) of the Appendix, or without Cause by giving written notice to the Executive of such termination. The Executive may terminate his employment for Good Reason by giving the Company written notice of the termination, setting forth in reasonable detail the specific conduct of the Company that constitutes Good Reason. A termination of employment by the Executive for Good Reason shall be effective on the fifth business day following the date such notice is given, unless the notice sets forth a later date (which date shall in no event be later than thirty days after the notice is given). In the event of a dispute regarding whether the Executive's voluntary termination qualifies as a termination for Good Reason, no claim by the Co mpany that the same does not constitute a termination for Good Reason shall be given effect unless the Company establishes by clear and convincing evidence that such termination does not constitute a termination for Good Reason. The Executive may also terminate his employment without Good Reason by giving the Company written notice of such termination.
8. Special Pension Provisions. The Executive shall be eligible to participate in the Company's Supplemental Executive Retirement Plan (the "SERP") with respect to monthly benefits "A" and "B" and, notwithstanding any contrary provisions in the SERP, the Executive or his beneficiary will become entitled to monthly benefit "A" and "B" on his retirement at or after age 55, or in the event of his termination of service because of death or Disability while in the service of the Company prior to age 55.
9. Obligations of the Company on Termination of Employment for Death, Disability, for Cause or by the Executive Other than for Good Reason. If the Executive's employment is terminated by reason of his death or Disability (but not under the circumstances covered by paragraph (c)(iv) of the Appendix), or if such employment is terminated by the Company for Cause or by the Executive other than for Good Reason, the Company will pay to the Executive's estate or legal representative or to the Executive, as the case may be, all accrued but unpaid base salary and all other benefits and amounts which may become due in accordance with the terms of any applicable benefit plan, contract, agreement or practice (including pursuant to the SERP as modified pursuant to Section 8 above), but no other compensation or benefits will be paid under this Agreement.
10. Non-Compete Agreement. In consideration of this Agreement, the Executive agrees that he will not, for a period of one year from the date of his or her termination of employment with the Company, directly or indirectly own, manage, operate, join, control, be employed by, or participate in the ownership, management, operation or control of, or be connected in any manner, including but not limited to, holding the position of shareholder, director, officer, consultant, independent contractor, executive partner, or investor with any "Competing Enterprise." For purposes of this paragraph, a "Competing Enterprise" means any entity, firm or person engaged in a business within the State of Wisconsin or the upper peninsula area of the State of Michigan (the "Territory") which is in competition with any of the businesses of the Company or any of its subsidiaries within the Territory as of the date the Executive's termination of employment, and whose aggregate gross revenues, calculated f or the most recently completed fiscal year of the Competing Enterprise, derived from all such competing activities within the Territory during such fiscal year, equal at least 10% or more of such Enterprise's consolidated net revenues for such fiscal year. If the Executive notifies the Company in writing of any employment or opportunity which the Executive proposes to undertake during the one year non-compete period, and supplies the Company with any additional information which the Company may reasonably request, the Company agrees to promptly notify the Executive within thirty days after all information reasonably requested by it has been provided, whether the Company considers the proposed employment or opportunity to be prohibited by these provisions and, if so, whether the Company is willing to waive the same. Notwithstanding anything in this Section 10, the Executive shall not be prohibited from acquiring or holding up to 2% of the common stock of an entity that is traded on a national securities exc hange or a nationally recognized over-the-counter market.
11. Successors and Binding Agreements.
1. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) and the direct and indirect parent of any such successor, to all or substantially all of the business and/or assets of the Company expressly to assume and to agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no succession had taken place. This Agreement shall be binding upon and inure to the benefit of the Company and any such successor, and such successor shall thereafter be deemed the "Company" for the purposes of this Agreement.
2. This Agreement shall inure to the benefit of and be enforceable by the Executive's respective personal or legal representative, executor, administrator, successor, heirs, distributees and/or legatees.
3. Neither the Company nor the Executive may assign, transfer or delegate this Agreement or any rights or obligations hereunder except as expressly provided in this Section. Without limiting the generality of the foregoing, the Executive's right to receive payments hereunder shall not be assignable or transferable, whether by pledge, creation of a security interest or otherwise, other than by a transfer by will or the laws of descent and distribution. In the event the Executive attempts any assignment or transfer contrary to this Section, the Company shall have no liability to pay any amount so attempted to be assigned or transferred.
12. Notices. All communications provided for herein shall be in writing and shall be deemed to have been duly given when delivered or five business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the Company (to the attention of the Secretary of the Company) at its principal executive office and to the Executive at his/her principal residence, or to such other address as any party may have furnished to the other in writing in accordance herewith, except that notices of a change of address shall be effective only upon receipt.
13. Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Wisconsin without giving effect to the principles of conflict of laws of such state, except that Section 14 shall be construed in accordance with the Federal Arbitration Act if arbitration is chosen by the Executive as the method of dispute resolution.
14. Settlement of Disputes; Arbitration; Attorneys' Fees. Any dispute or controversy arising under or in connection with this Agreement shall be settled, at the Executive's election, either by arbitration in Milwaukee, Wisconsin in accordance with the rules of the American Arbitration Association then in effect or by litigation; provided, however, that in the event of a dispute regarding whether the Executive's employment has been terminated for Cause or whether the Executive's voluntary termination qualifies as a termination for Good Reason, the evidentiary standards set forth in this Agreement shall apply. Judgment may be entered on the arbitrator's award in any court having jurisdiction. The Company agrees to pay, as incurred, to the fullest extent permitted by law, all legal fees and expenses that the Executive may reasonably incur as a result of any contest (regardless of outcome) by the Company, the Executive or others of the validity or enforceability of or liability under , or otherwise involving any provision of this Agreement.
15. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement which shall remain in full force and effect. If any provision of this Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision, together with all other provisions of this Agreement, shall remain valid and enforceable and continue in full force and effect to the fullest extent consistent with law.
16. Entire Agreement; Amendments. This Agreement constitutes the entire understanding and agreement of the parties with respect to the matters discussed herein and supersedes all other prior agreements and understandings, written or oral, between the parties with respect thereto. There are no representations, warranties or agreements of any kind relating thereto that are not set forth in this Agreement. This Agreement may not be amended or modified except by a written instrument signed by the parties hereto or their respective successors and legal representatives.
17. Withholding. The Company may withhold from any amounts payable under this Agreement all federal, state and other taxes as shall be legally required.
18. Certain Limitations. Nothing in this Agreement shall grant the Executive any right to remain an executive, director or employee of the Company or of any of its subsidiaries for any period of time.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and date first written above.

                                                
Richard R. Grigg WISCONSIN ENERGY CORPORATION


By:                                            
Richard A. Abdoo

APPENDIX

This is an appendix to the Amended and Restated Senior Officer Change in Control, Severance and Non-Compete Agreement between WISCONSIN ENERGY CORPORATION and RICHARD R. GRIGG dated _______________, 2002 (the "Agreement").

As used in the Agreement, the terms set forth below shall have the following meanings:

1. "Cause" means:
1. the willful and continued failure of the Executive to substantially perform the Executive's duties (other than failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board of Directors of the Company (the "Board"), or the Compensation Committee of the Board (the "Committee") which specifically identifies the manner in which the Board or the Committee or the elected officer believes that the Executive has not substantially performed the Executive's duties, or
2. the willful engaging by the Executive in illegal conduct or gross misconduct which is determined by the Board to have been materially and demonstrably injurious to the Company. However, no act, or failure to act, on the Executive's part shall be considered "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.

The Executive may only be terminated for Cause if the Company gives written notice to the Executive of its intention to terminate the Executive's employment for Cause, setting forth in reasonable detail the specific conduct of the Executive that it considers to constitute Cause and the specific provision(s) of this Agreement on which it relies, and stating the date, time and place of the Special Meeting for Cause. The "Special Meeting for Cause" means a meeting of the Board called and held specifically for the purpose of considering the Executive's termination for Cause, that takes place not less than ten and not more than twenty business days after the Executive receives the notice of termination for Cause. The Executive shall be given an opportunity, together with counsel, to be heard at the Special Meeting for Cause. The Executive's termination for Cause shall be effective when and if a resolution is duly adopted by the affirmative vote of at least two-thirds (⅔) of the entire membership of the Board, excluding employee directors, at the Special Meeting for Cause, stating that in the good faith opinion of the Board, the Executive is guilty of the conduct described in the notice of termination for Cause and that conduct constitutes Cause under this Agreement. In the event of a dispute regarding whether the Executive's employment has been terminated for Cause, no claim by the Company that Cause exists shall be given effect unless the Company establishes by clear and convincing evidence that Cause exists.

2. A "Change in Control" with respect to the Company shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:
1. any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates) representing 20% or more of the combined voting power of the Company's then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (a) of paragraph (iii) below; or
2. the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's shareholders was approved or recommended by a vote of at least two-thirds (⅔) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or
3. there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (a) a merger or consolidation immediately following which the directors of the Company immediately prior to such merger or consolidation continue to constitute at least a majority of the board of directors of the Company, the surviving entity or any parent thereof or (b) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its affiliates) representing 20% or more of the combined voting power of the Company's then outstanding securities; or
4. the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement (or series of related agreements) for the sale or disposition by the Company of all or substantially all of the Company's assets, disregarding any sale or disposition to a company, at least a majority of the directors of which were directors of the Company immediately prior to such sale or disposition; or
5. the Board determines in its sole and absolute discretion that there has been a Change in Control of the Company.

For purposes of this Change in Control definition, the terms set forth below shall have the following meanings:

"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time.

"Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the company.

3. "Covered Termination of Employment Associated with a Change in Control" means:
1. a termination of employment by the Company other than because of death or Disability and without Cause, which occurs within a period of eighteen months following the Effective Date or,
2. a termination of employment by the Company other than because of death or Disability and without Cause within a period of six months prior to the Effective Date, and it is reasonably demonstrated by the Executive that such termination of employment was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or otherwise arose in connection with or in anticipation of a Change in Control, or
3. a termination of employment by the Executive for Good Reason within a period of eighteen months following the Effective Date and also within a period of twelve months subsequent to the occurrence, without the Executive's written consent, of any event described in Section (g) after the Effective Date, or a termination of employment by the Executive within a period of six months prior to the Effective Date and following the occurrence without the Executive's consent of any event described in Section (g)(i), (iii), (v) or (vi) and it is reasonably demonstrated by the Executive that such event occurred at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or otherwise arose in connection or in anticipation of a Change in Control, or
4. a voluntary termination of employment by the Executive without Good Reason following completion of one year of service after a Change in Control of the Company, provided that the voluntary termination must be effected by the Executive within six months after the completion of that one-year of service. Further, if the Executive gives written notice to the Company any time after a Change in Control of the Company but before completion of one year of service thereafter that the Executive intends to so voluntarily terminate and if the Executive should thereafter die while in the employ of the Company or incur a termination of employment because of Disability, in either case before completion of such one year of service, such death or termination of employment shall be treated as a Covered Termination Associated with a Change in Control.

If within fifteen days after the Company notifies the Executive that it is terminating his employment for Cause or the Executive notifies the Company that he is terminating his employment for Good Reason, the party receiving such notice notifies the other party that a dispute exists concerning the termination, then for purposes of this Section (c) the date of the Executive's termination of employment shall not be deemed to have occurred until the earlier of (i) the date that is 18 months following the Effective Date or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); provided, however, that the date of termination shall be extended by a notice of dispute given by the Executive only if such notice is giv en in good faith and the Executive pursues the resolution of such dispute with reasonable diligence.

If a purported termination occurs prior to or following a Change in Control and the date of termination is extended in accordance with the preceding paragraph, the Company shall continue to pay the Executive the full compensation and benefits as are provided in the first sentence of Section 4(a) of the Agreement until the date of termination, as determined in accordance with the preceding paragraph. Amounts paid under this Section (c) are in addition to all other amounts due under the Agreement and shall not be offset against or reduce any other amounts due under the Agreement, other than amounts due under the first sentence of Section 4(a) of the Agreement.

4. "Covered Termination of Employment Not Associated with a Change in Control of the Company" means:
1. a termination of employment by the Company other than because of death or Disability and without Cause, or
2. a termination of employment by the Executive for Good Reason within a period of twelve months subsequent to the occurrence, without the Executive's written consent, of any event described in Section (g).
5. "Disability" means that the Executive has been unable, for a period of 180 consecutive business days, to perform the material duties of his job, as a result of physical or mental illness or injury and that a physician selected by the Company or its insurers and acceptable to the Executive or his legal representative, has determined that the Executive's incapacity is total and permanent. A termination of the Executive's employment by the Company for Disability shall be communicated to the Executive by written notice and shall be effective on the thirtieth day after receipt of such notice by the Executive, unless the Executive returns to full-time performance of his duties before the expiration of such thirty-day period.
6. "Effective Date" means the first date on which a Change in Control of the Company occurs, except that if Section 5 of the Agreement applies, the term shall mean the date immediately prior to the Executive's termination of employment.
7. "Good Reason" means:
1. the assignment to the Executive of any duties inconsistent, in the reasonable judgment of the Executive, with the customary duties of a President and Chief Operating Officer of Wisconsin Electric/Wisconsin Gas and an Executive Vice President of the Company or any other action by the Company that results in material reduction of the Executive's duties and responsibilities, or
2. any failure by the Company to provide for the continuation of the Executive's compensation (base salary and incentive compensation or bonus opportunity) and benefits and his participation in the Company's long-term incentive plans and programs on a basis commensurate with other senior executives of the Company, or any reduction in the Executive's base salary or percentage of base salary available as an incentive compensation or bonus opportunity relative to those most favorable to the Executive in effect at any time during the 180-day period prior to the first date on which a Change in Control of the Company occurs or to the extent more favorable to the Executive, those in effect after such date, or from and after the first date on which a Change in Control of the Company occurs, a reduction in any material element of the Executive's compensation or benefits, or
3. the appointment of an individual or individuals other than the Executive to succeed Mr. Richard A. Abdoo as Chief Executive Officer of the Company.
4. the relocation of the Executive's principal place of employment to a location more than 35 miles from the Executive's principal place of employment immediately prior to the Effective Date, or
5. the Company's requiring the Executive to travel on Company business to a materially greater extent than was required immediately prior to the Effective Date, or
6. the failure by the Company to comply with Section 11(a) of this Agreement.
8. "Highest Bonus Amount" means the highest dollar bonus which would result from three calculations, as follows: (i) the highest percentage of base salary ever used with respect to the calculation of the Executive's bonus during the three complete fiscal years of the Company immediately preceding the termination of employment or, if more favorable to the Executive, during the three complete fiscal years of the Company immediately preceding the Change in Control of the Company, multiplied times the highest per annum base rate of salary in effect with respect to the Executive during the three-year period immediately prior to the termination of employment; (ii) the highest dollar bonus earned by the Executive under any cash bonus or incentive compensation plan of the Company during either of the three complete fiscal year periods of the Company listed in (i) above, whichever is more favorable to the Executive; or (iii) the Executive's bonus or incentive compensation "target" for the fiscal year in which the termination of employment occurs.

EX-99

Exhibit 99.1

Certification of CEO and CFO Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Wisconsin Energy Corporation (the "Company") on Form 10-Q for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on August 7, 2002 (the "Report"), Richard A. Abdoo, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Richard A. Abdoo      
Richard A. Abdoo
Chief Executive Officer
August 6, 2002

This certification accompanies this Report pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

EX-99

Exhibit 99.2

Certification of CEO and CFO Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Wisconsin Energy Corporation (the "Company") on Form 10-Q for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on August 7, 2002 (the "Report"), Paul Donovan, as Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Paul Donovan            
Paul Donovan
Chief Financial Officer
August 6, 2002

This certification accompanies this Report pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.