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 September 30, 2003

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 by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    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 (September 30, 2003):

Common Stock, $.01 Par Value, 117,664,930 shares outstanding.

		WISCONSIN ENERGY CORPORATION
		FORM 10-Q REPORT FOR THE QUARTER ENDED SEPTEMBER 30, 2003
		TABLE OF CONTENTS
Item			Page
	Introduction ............................................................................................................................		3
	Part I -- Financial Information
1.	Financial Statements
	Consolidated Condensed Income Statements ...................................................................		4
	Consolidated Condensed Balance Sheets ...........................................................................		5
	Consolidated Condensed Statements of Cash Flows ..........................................................		6
	Notes to Consolidated Condensed Financial Statements ....................................................		7
2.	Management's Discussion and Analysis of
	Financial Condition and Results of Operations ...................................................................		17
3.	Quantitative and Qualitative Disclosures About Market Risk ..................................................		42
4.	Controls and Procedures ...................................................................................................		42
	Part II -- Other Information
1.	Legal Proceedings ..................................................................................................................		43
6.	Exhibits and Reports on Form 8-K .........................................................................................		44
	Signatures ..............................................................................................................................		46

2

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 Wisconsin Energy Corporation 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, natural gas customers in Wisconsin and steam customers in metro Milwaukee, Wisconsin; Wisconsin Gas, which serves natural 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 operate under the trade name "We Energies".

Non-Utility Energy Segment:   The non-utility energy segment consists of: W.E. Power, LLC ("We Power"), which is designing, constructing and will own the new generating capacity included in the Company's Power the Future strategy; and Wisvest Corporation ("Wisvest"), which owns approximately $231 million of non-utility energy assets.

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 has approximately $62 million of assets and develops and markets renewable energy and recycling technologies, and Wispark LLC ("Wispark"), which has approximately $160 million of assets and develops and invests in real estate.

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 2002 Annual Report on Form 10-K.

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PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WISCONSIN ENERGY CORPORATION
CONSOLIDATED CONDENSED INCOME STATEMENTS
(Unaudited)
				Three Months Ended		Nine Months Ended
				September 30		September 30
				2003	2002	2003	2002
				(Millions of Dollars, Except Per Share Amounts)
	Operating Revenues			$878.5	$869.8	$3,022.0	$2,726.7
	Operating Expenses
		Fuel and purchased power		161.1	173.0	438.8	463.5
		Cost of gas sold		83.9	57.3	622.5	355.6
		Cost of goods sold		138.2	133.6	421.7	389.3
		Other operation and maintenance		257.2	265.4	790.5	787.6
		Depreciation, decommissioning
			and amortization	85.1	81.4	249.7	238.5
		Property and revenue taxes		20.6	22.1	62.0	67.1
		Asset valuation charges, net		37.4	-	37.4	141.5
	Total Operating Expenses			783.5	732.8	2,622.6	2,443.1
	Operating Income			95.0	137.0	399.4	283.6
	Other Income, Net			9.4	5.3	30.4	45.1
	Financing Costs			54.3	57.5	161.2	173.4
	Income Before Income Taxes			50.1	84.8	268.6	155.3
	Income Taxes			19.2	32.7	96.4	62.0
	Net Income			$30.9	$52.1	$172.2	$93.3
				=====	=====	======	======
	Earnings Per Share
			Basic	$0.26	$0.45	$1.47	$0.81
			Diluted	$0.26	$0.45	$1.46	$0.80
	Weighted Average Common
		Shares Outstanding (Millions)
			Basic	117.4	115.3	116.8	115.2
			Diluted	118.8	116.1	117.9	116.2
	Dividends Per Share of Common Stock			$0.20	$0.20	$0.60	$0.60
	The accompanying Notes to Consolidated Condensed Financial Statements are an integral part
		of these financial statements.

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WISCONSIN ENERGY CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
				(Unaudited)
				September 30, 2003	December 31, 2002
				(Millions of Dollars)
Assets
Property, Plant and Equipment
	In Service			$8,357.5		$7,958.7
	Accumulated depreciation			(3,636.1)		(4,007.4)
				4,721.4		3,951.3
	Construction work in progress			363.4		274.0
	Leased facilities, net			106.0		110.3
	Nuclear fuel, net			72.0		63.2
			Net Property, Plant and Equipment	5,262.8		4,398.8
Investments				922.6		856.6
Current Assets
	Cash and cash equivalents			31.3		43.6
	Accounts receivable			448.1		479.2
	Accrued revenues			104.4		209.1
	Materials, supplies and inventories			542.6		455.1
	Prepayments and other assets			169.1		152.7
			Total Current Assets	1,295.5		1,339.7
Deferred Charges and Other Assets
	Deferred regulatory assets			764.0		650.6
	Goodwill, net			835.2		833.1
	Other			246.1		286.1
			Total Deferred Charges and Other Assets	1,845.3		1,769.8
Total Assets				$9,326.2		$8,364.9
				======		======
Capitalization and Liabilities
Capitalization
	Common equity			$2,281.6		$2,139.4
	Preferred stock of subsidiary			30.4		30.4
	Company-obligated mandatorily redeemable
		preferred securities of subsidiary trust
		holding solely debentures of the Company (See Note 2)		-		200.0
	Long-term debt (See Note 2)			3,422.2		3,030.5
			Total Capitalization	5,734.2		5,400.3
Current Liabilities
	Long-term debt due currently			173.3		40.3
	Short-term debt			676.2		953.1
	Accounts payable			306.3		317.6
	Accrued liabilities			180.6		189.4
	Other			149.3		125.5
			Total Current Liabilities	1,485.7		1,625.9
Deferred Credits and Other Liabilities
	Asset retirement obligations			716.6		-
	Accumulated deferred income taxes			590.2		568.0
	Other			799.5		770.7
			Total Deferred Credits and Other Liabilities	2,106.3		1,338.7
Total Capitalization and Liabilities				$9,326.2		$8,364.9
				======		======
The accompanying Notes to Consolidated Condensed Financial Statements are an integral part
	of these financial statements.

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WISCONSIN ENERGY CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
				Nine Months Ended September 30
				2003	2002
				(Millions of Dollars)
Operating Activities
	Net income			$172.2	$93.3
	Reconciliation to cash
		Depreciation, decommissioning and amortization		287.4	270.5
		Nuclear fuel expense amortization		20.1	21.3
		Equity in earnings of unconsolidated affiliates		(17.2)	(20.1)
		Asset valuation charges, net		37.4	141.5
		Deferred income taxes and investment tax credits, net		19.9	(95.3)
		Change in -	Accounts receivable and accrued revenues	135.8	78.0
			Other accounts receivable	-	116.4
			Inventories	(87.5)	(2.4)
			Other current assets	16.9	18.5
			Accounts payable	(11.3)	(37.5)
			Accrued income taxes	(32.0)	70.0
			Other current liabilities	47.0	41.8
		Other		(41.4)	(54.3)
Cash Provided by Operating Activities				547.3	641.7
Investing Activities
	Capital expenditures			(502.1)	(393.5)
	Acquisitions and investments			(4.1)	(31.9)
	Proceeds from asset sales, net			14.3	63.2
	Nuclear fuel			(21.9)	(18.7)
	Nuclear decommissioning funding			(13.2)	(13.2)
	Other			(18.6)	(19.4)
Cash Used in Investing Activities				(545.6)	(413.5)
Financing Activities
	Issuance of common stock			42.8	42.3
	Repurchase of common stock			(6.8)	(52.3)
	Dividends paid on common stock			(70.0)	(69.2)
	Issuance of long-term debt			843.1	45.1
	Retirement of long-term debt			(523.8)	(138.0)
	Change in short-term debt			(276.9)	(66.6)
	Other			(22.4)	-
Cash Used in Financing Activities				(14.0)	(238.7)
Change in Cash and Cash Equivalents				(12.3)	(10.5)
Cash and Cash Equivalents at Beginning of Period				43.6	47.0
Cash and Cash Equivalents at End of Period				$31.3	$36.5
				====	====
Supplemental Information - Cash Paid For
	Interest (net of amount capitalized)			$124.3	$148.8
	Income taxes (net of refunds)			$109.2	$84.9
The accompanying Notes to Consolidated Condensed Financial Statements are an integral part
	of these financial statements.

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

1. General Information

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 2002 Annual Report on Form 10-K. In the opinion of management, all adjustments, normal and recurring in nature, 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 nine months ended September 30, 2003 are not necessarily indicative of the results which may be expected for the entire fiscal year 2003 because of seasonal and other factors.

2. ACCOUNTING POLICIES

Asset Retirement Obligations:   The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 143, Accounting for Asset Retirement Obligations, effective January 1, 2003. Under SFAS 143, entities are required to record the fair value of a legal liability for an asset retirement obligation in the period in which it is incurred. When a new liability is recorded, the entity capitalizes the costs of the liability by increasing the carrying amount of the related long-lived asset. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. At retirement, an entity settles the obligation for its recorded amount or incurs a gain or loss.

The following table presents pro forma information as if SFAS 143 had been adopted at the beginning of fiscal 2002.

	September 30, 2003	December 31, 2002
	(Millions of Dollars)
Asset Retirement Obligations
Reported	$716.6	$  -
Pro forma	$716.6	$675.4

The following table presents the details of the Company's asset retirement obligations which are included on the Consolidated Condensed Balance Sheets in "Deferred Credits and Other Liabilities".

	Balance at	Initial	Liabilities	Liabilities		Cash flow	Balance at
	12/31/02	Adoption	Incurred	Settled	Accretion	revisions	9/30/03
	(Millions of Dollars)
Wisconsin Energy	$  -	$675.4	$14.9	$  -	$26.3	$  -	$716.6

The regulated operations of the Company also collect removal costs in rates for certain assets that do not have associated legal asset retirement obligations. As of September 30, 2003, the Company estimates that it has approximately $573 million related to removal costs recorded in "Accumulated Depreciation".

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Debt Redemption Costs:   As permitted by regulatory authorities, the Company is accounting for certain debt redemption costs under the revenue neutral method of accounting. Under the revenue neutral method of accounting, the Company defers the costs associated with the redemption of utility debt, to the extent that the redeemed debt is refinanced with other utility debt. The redemption costs are amortized based upon the difference between the interest expense of the new and redeemed debt. Wisconsin Electric's $485 million of optional debt redemptions in June and August 2003 are being accounted for using the revenue neutral method of accounting. At September 30, 2003, the Company had deferred as regulatory assets approximately $21.3 million of net debt redemption costs and expects to fully amortize these costs through 2005.

Financial Instruments with Characteristics of both Liabilities and Equity:   The Company adopted SFAS 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity, on July 1, 2003. SFAS 150, which was issued by the Financial Accounting Standards Board ("FASB") in May 2003, requires an issuer to classify outstanding freestanding financial instruments within its scope as a liability on its balance sheets even though the instruments have characteristics of equity. The Company's Trust Preferred Securities, previously separately classified in the capitalization section of its balance sheets, fall within the scope of SFAS 150. Effective for the quarterly period ending September 30, 2003, the Company began classifying its $200 million of outstanding Trust Preferred Securities as long-term debt on its balance sheet. As required by SFAS 150, the Trust Preferred Securities were not restated as long-te rm debt on the December 31, 2002 balance sheet.

Variable Interest Entities:   In January 2003, FASB issued Interpretation 46, Consolidation of Variable Interest Entities ("FIN 46"). This standard requires an enterprise that is the primary beneficiary of a variable interest entity to consolidate that entity. The Interpretation was to be applied to any existing interests in variable interest entities beginning in the third quarter of 2003. On October 8, 2003, the FASB deferred the adoption of FIN 46 for all entities to the first reporting period ending after December 15, 2003. While the Company is continuing to evaluate the impact of the application of these new rules, the Company does not expect adoption of FIN 46 to have a significant impact on the Company's balance sheets or on its results of operations.

Derivative Instruments:   The Company adopted SFAS 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, effective July 1, 2003. SFAS 149, which was issued by FASB in April 2003, amends Statement 133 for certain decisions made by the FASB as part of the Derivatives Implementation Group process and other FASB projects dealing with financial instruments. SFAS 149 also amends Statement 133 to incorporate clarifications of and to expand the definition of a derivative. Upon adoption of SFAS 149, prospectively any forward energy contracts that are subject to unplanned netting, also referred to as bookouts, generally will qualify as derivatives and any changes in fair value of the derivative are to be recorded currently in earnings. However, the Public Service Commission of Wisconsin ("PSCW") allows the effects of the fair market value accounting to be offset to regulatory assets and liabilities for any energy-related contracts in the regulated electric operations that qualify as derivatives. During the third quarter of 2003, a decline in fair market value of approximately $1 million was recognized for energy contracts entered into during the quarter in the regulated electric operations that were subject to unplanned netting.

3. BUSINESS COMBINATIONS AND GOODWILL

The Company accounts for goodwill and other intangibles under SFAS No. 142, Goodwill and Other Intangible Assets. Under SFAS 142, goodwill and other intangibles with indefinite lives are not subject to amortization. However, goodwill and other intangibles are subject to fair value-based rules for measuring impairment, and resulting write-downs, if any, are to be reflected in operating expense.

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The following table presents the details of the Company's intangible assets that are included on the Consolidated Condensed Balance Sheets in "Deferred Charges and Other Assets".

		Accumulated
	Gross Value	Amortization	Net Book Value
	(Millions of Dollars)
September 30, 2003
Total amortizable intangible assets	$21.5	$7.4	$14.1
Total non-amortizable intangible assets	54.7	2.1	52.6
Total intangible assets	$76.2	$9.5	$66.7
	====	===	====
December 31, 2002
Total amortizable intangible assets	$21.3	$6.2	$15.1
Total non-amortizable intangible assets	54.7	2.1	52.6
Total intangible assets	$76.0	$8.3	$67.7
	====	===	====

The amount of intangible amortization expense included in operating income was $1.2 million and $1.1 million for the nine months ended September 30, 2003 and 2002, respectively. The estimated future annual intangible amortization expense for each of the five succeeding fiscal years and the remainder of fiscal 2003 is estimated to be $0.4 million for 2003, and $1.7 million in 2004 trending down to $1.3 million in 2008.

The following table presents the changes in goodwill during the first nine months of fiscal 2003:

	Balance at			Balance at
Reporting Unit	12/31/02	Acquired	Adjustments (a)	9/30/03
	(Millions of Dollars)
Utility Energy	$442.9	$  -	$ -	$442.9
Manufacturing	390.2	-	2.1	392.3
	$833.1	$ -	$2.1	$835.2
	====	====	====	====

(a) The adjustment to the manufacturing reporting unit includes $1.6 million of purchase accounting adjustments and $0.5 million of currency translation adjustments.

4. ASSET VALUATION CHARGES AND NON-UTILITY ENERGY ASSETS

In the third quarter of 2003, the Company recorded a non-cash asset valuation charge of $40.1 million ($26.0 million after tax or $0.22 per share). The asset valuation charge related to costs associated with a 500 megawatt power island consisting of gas turbine generators and related equipment. The Company determined in the third quarter of 2003 based on information obtained from the Company's efforts to market the power island, that the carrying value of these assets exceeded market values. The Company estimated the fair market value of its 500 megawatt power island based upon a definitive agreement the Company has entered into to sell the assets.

In the first quarter of 2002, the Company recorded a non-cash asset valuation charge of $141.5 million ($92.0 million after tax or $0.79 per share). The asset valuation charge primarily related to two non-

9
utility energy assets: the Company's Wisvest-Connecticut, LLC power plants and the aforementioned 500 megawatt power island. The Company sold the Wisvest-Connecticut plants in the fourth quarter of 2002 and completed the sale of the power island in October  2003.

Non-Utility Energy Assets:   During the third quarter of 2003, Wisconsin Energy recorded a gain of $2.7 million from the liquidation of an investment, which reduced the $40.1 million non-cash asset valuation charge in 2003 noted above to a net of $37.4 million reflected in "Asset valuation charges, net" on the Company's September 30, 2003 Consolidated Condensed Income Statement.

In October 2003, the Company announced the sale of its interest in Kaztex Energy Management, Inc and Blackhawk Energy Services, LLC and received approximately $20 million in sales proceeds and dividends. This sale resulted in a gain of approximately $10.4 million or $0.05 per share which will be recorded in the fourth quarter. In connection with the October 2003 sale of these affiliates, the acquiring company is backstopping the Wisconsin Energy guarantees until they can be replaced or expire (See Note 7 for more information on the guarantees).

The carrying value of these and certain other non-utility energy assets held for sale of $34.7 million is reflected as current assets under "Prepayments and other assets" on the Company's September 30, 2003 Condensed Consolidated Balance Sheet.

The Company has a 49.5% ownership interest in Androscoggin LLC ("Androscoggin"), which owns a co-generation power plant in Maine. This investment is accounted for under the equity method of accounting and had a book value of approximately $23 million at September 30, 2003.

Androscoggin has an energy services agreement with a company that receives steam from the co-generation plant. In October 2000, the steam customer filed a lawsuit against Androscoggin alleging breach of contract under the energy services agreement. In November 2002, a federal judge awarded partial summary judgment to the steam customer. Androscoggin and the steam customer have completed expert witness reports and depositions relative to the determination of damages, if any, regarding the judgment. The lawsuit is tentatively scheduled to go to a jury trial in 2004. In addition, the steam customer has filed, and Androscoggin anticipates filing, in the fourth quarter of 2003 separate motions for summary judgment relative to damages.

Androscoggin has non-recourse credit financing from a bank lending group. In August 2003, Androscoggin received a letter from the bank lending group claiming that certain events of default have occurred under the bank financing. No formal action has been taken by the bank lending group to date and certain letter of credit facilities have been extended into 2004. Androscoggin's cash flow forecast continues to indicate the need for additional outside capital to meet its operating cash requirements through 2004. During 2003, another investor in Androscoggin has continued to fund cash shortfalls with subordinated debt. The ultimate value of the Company's investment is dependent upon a satisfactory resolution of the litigation, the ability of Androscoggin to obtain long-term financing and the infusion of additional capital.

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5. COMMON EQUITY

Comprehensive Income:   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 nine months ended September 30, 2003 and 2002:

	Nine Months Ended September 30
Comprehensive Income	2003	2002
	(Millions of Dollars)
Net Income	$172.2	$93.3
Other Comprehensive Income (Loss)
Currency Translation Adjustments	4.2	1.4
Hedging Gains (Losses)	1.4	(3.0)
Other	0.4	-
Total Other Comprehensive Income (Loss)	6.0	(1.6)
Total Comprehensive Income	$178.2	$91.7
	====	====

Common Stock Repurchase Plan:   The Board of Directors approved a common stock repurchase plan, which, as extended, authorized the Company to purchase up to $400 million of its shares of common stock through December 31, 2004. During the first nine months of 2003, Wisconsin Energy purchased 0.3 million shares of common stock for $6.8 million, all of which were purchased in the first quarter. From the date of inception of the plan, the Company has purchased approximately 13.4 million shares of common stock for $293.6 million. The Company has retired the stock that was purchased. In light of significant capital expenditures for its Power the Future program, Wisconsin Energy does not expect to continue repurchasing shares.

During the first nine months of 2003, Wisconsin Energy issued approximately 1.9 million new shares of common stock totaling $42.8 million related to the Company's dividend reinvestment plan, other benefit plans and the exercise of stock options.

Stock-Based Compensation:   The Company applies Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its stock option plans and has adopted the disclosure-only provisions of SFAS 123, Accounting for Stock-Based Compensation, as amended by SFAS 148, Accounting for Stock-Based Compensation - Transition and Disclosure, an amendment of SFAS 123. The following table illustrates the effect on net income and earnings per share as if the Company had accounted for stock options under the fair value method of SFAS 123 in each period. The fair value of options at date of grant was estimated using the Black-Scholes option-pricing model. Had the Company expensed stock-based compensation under SFAS 123, the Company's diluted earnings would have been reduced by $0.02 per share and $0.05 per share for the three and nine months ended September 30, 2003, respectively.

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	Three Months Ended		Nine Months Ended
	September 30		September 30
	2003	2002	2003	2002
	(Millions of Dollars, Except Per Share Amounts)
Net Income
As reported	$30.9	$52.1	$172.2	$93.3
Add: Stock-based employee compensation       expense included in reported net income,       net of related tax effects	-	-	-	-
Deduct: Total stock-based employee       compensation expense determined under fair       value based method for all awards, net of       related tax effects	2.0	1.2	5.6	3.7
Pro forma Net Income	$28.9	$50.9	$166.6	$89.6
	====	====	====	====
Basic Earnings Per Common Share
As reported	$0.26	$0.45	$1.47	$0.81
Pro forma	$0.25	$0.44	$1.43	$0.77
Diluted Earnings Per Common Share
As reported	$0.26	$0.45	$1.46	$0.80
Pro forma	$0.24	$0.44	$1.41	$0.77

6. DERIVATIVE INSTRUMENTS

The Company follows SFAS 133, Accounting for Derivative Instruments and Hedging Activities as amended by SFAS 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, effective July 1, 2003, 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. For any electric-related contracts in Wisconsin Energy's regulated electric operations that qualify as derivatives under SFAS 133, the PSCW allows the effects of the fair market value accounting to be offset to regulatory assets and liabilities.

Wisvest-Connecticut, LLC, formerly a wholly-owned subsidiary of Wisvest, which was sold in December 2002, had fuel oil contracts utilized to mitigate the commodity risk associated with generation costs. These contracts were defined as derivatives under SFAS 133 and did not qualify or were not designated for hedge accounting treatment. During the three and nine months ended September 30, 2002, the Company had non-cash, after tax losses of $0.7 million or $ 0.01 per share and income of $13.5 million or $0.12 per share, respectively, to reflect the increase in fuel oil prices and the settlement of transactions.

7. GUARANTEES

Wisconsin Energy and certain subsidiaries enter into various guarantees to provide financial and performance assurance to third parties on behalf of affiliates. As of September 30, 2003, Wisconsin Energy and subsidiaries had the following guarantees:

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	Maximum Potential Future Payments	Outstanding at September 30, 2003	Liability Recorded at September 30, 2003
	(Millions of Dollars)
Wisconsin Energy Guarantees
Joint venture (Energy Affiliates)	$58.9	$21.3	$  -
Other	2.0	2.0	-
Wisconsin Electric Guarantees	274.9	-	-
Other Subsidiary Guarantees	14.0	13.0	-
Total	$349.8	$36.2	$  -
	====	====	====

The Wisconsin Energy guarantees issued in support of energy related affiliates are for obligations under commodity contracts and credit agreements between the affiliates and third parties. In connection with the October 2003 sale of these affiliates disclosed in Note 4, the acquiring company has provided a guarantee as a backstop to these guarantees until they can be replaced or expire.

Other Wisconsin Energy guarantees support obligations of affiliates to third parties under loan agreements. In the event the affiliates fail to perform under the loan agreements, Wisconsin Energy would be responsible for the obligations.

Wisconsin Electric guarantees support the commercial paper and line of credit borrowings for the Wisconsin Electric Fuel Trust. Wisconsin Electric also guarantees the potential retrospective premiums that could be assessed under Wisconsin Electric's nuclear insurance program.

Other subsidiary guarantees support loan obligations between affiliates and third parties. In the event the loan obligations are not performed, the subsidiary would be responsible for the obligations.

Postemployment benefits:   Postemployment benefits provided to former or inactive employees are recognized when an event occurs. The estimated liability for such benefits was $12 million as of September 30, 2003.

8. SEGMENT INFORMATION

Summarized financial information concerning Wisconsin Energy's reportable operating segments for the three and nine month periods ended September 30, 2003 and 2002 is shown in the following table. This information includes non-cash asset valuation charges in the third quarter of 2003 and the first quarter of 2002, primarily related to the Non-Utility Energy Segment and the operations of Wisvest-Connecticut in 2002, which affect the comparability of the reported periods (See Note 4 above).

13

				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
September 30, 2003
Operating Revenues (b)	$683.8	$6.0	$182.7	$6.0	$878.5
Operating Income (Loss)	$118.3	($40.5)	$15.6	$1.6	$95.0
Net Income (Loss)	$61.9	($31.1)	$6.7	($6.6)	$30.9
Capital Expenditures	$127.8	$38.7	$2.2	$6.5	$175.2
September 30, 2002
Operating Revenues (b)	$630.1	$55.6	$179.1	$5.0	$869.8
Operating Income (Loss)	$120.7	$5.1	$15.5	($4.3)	$137.0
Net Income (Loss)	$62.7	($3.3)	$6.5	($13.8)	$52.1
Capital Expenditures	$103.4	$8.0	$2.7	$23.4	$137.5
Nine Months Ended
September 30, 2003
Operating Revenues (b)	$2,419.4	$12.8	$566.6	$23.2	$3,022.0
Operating Income (Loss)	$389.4	($49.0)	$54.5	$4.5	$399.4
Net Income (Loss)	$209.7	($43.3)	$24.2	($18.4)	$172.2
Capital Expenditures	$342.6	$129.8	$7.4	$22.3	$502.1
Total Assets	$7,607.8	$421.3	$918.1	$379.0	$9,326.2
September 30, 2002
Operating Revenues (b)	$2,046.4	$137.7	$522.6	$20.0	$2,726.7
Operating Income (Loss)	$390.9	($125.1)	$43.9	($26.1)	$283.6
Net Income (Loss)	$201.7	($82.7)	$17.7	($43.4)	$93.3
Capital Expenditures	$274.0	$50.3	$11.3	$57.9	$393.5
Total Assets	$6,329.4	$647.0	$923.3	$362.8	$8,262.5

(a)	Other includes all other non-utility activities, primarily non-utility real estate investment and development by Wispark and non-utility investment in renewable energy and recycling technologies by Minergy as well as interest on corporate debt.
(b)	Intersegment revenues are not material. Eliminations for intersegment revenues in the amount of $1.8 million are included in Operating Revenues for the three months ended September 2003 and 2002, and in the amounts of $2.7 million and $2.8 million for nine months ended September 2003 and 2002, respectively.

9. COMMITMENTS AND CONTINGENCIES

Environmental Matters:   The Company periodically reviews its exposure for remediation costs as evidence becomes available indicating that its remediation liability has changed. Given current information, management believes that future costs in excess of the amounts accrued and/or disclosed on all presently known and quantifiable environmental contingencies will not be material to the Company's financial position or results of operations.

EPA Information Requests:   Wisconsin Electric received a request for information in December 2000 from the United States Environmental Protection Agency ("EPA") regional offices pursuant to

14
Section 114(a) of the Clean Air Act and a supplemental request in December 2002. In April 2003, Wisconsin Electric and EPA announced that a consent decree had been reached which resolved all issues related to this matter. Under the consent decree, Wisconsin Electric will significantly reduce its air emissions from its coal-fired generating facilities. The reductions will be achieved between now and 2013 through a combination of installing new pollution control equipment, upgrading existing equipment, and retiring certain older units. The capital cost of implementing this agreement is estimated to be approximately $600 million over 10 years. Under the agreement with EPA, Wisconsin Electric will spend between $20 million and $25 million to conduct a research project at its Presque Isle facility, in cooperation with U.S. Department of Energy, to test new mercury reduction technologies. These steps and the associated costs are consistent with the Company's cost projections for implementing its Wisconsin Multi-Emission Cooperative Agreement and Power the Future plan. Wisconsin Electric also agreed to pay a civil penalty of $3.2 million which was charged to earnings in the second quarter of 2003. The public comment period on the consent decree closed September 2, 2003, but the agreement remains subject to federal court approval. On July 21, 2003, the court granted the state of Michigan's and the EPA's joint motion to allow Michigan to become a party to the agreement. On October 3, 2003, three citizen groups filed a motion with the court to intervene in the proceeding to contest the consent decree. In October 2003, both the government and the Company filed responses to this request to intervene. Also, in October 2003, the government filed its response to public comments and a motion asking the court to approve the amended Consent Decree.

Giddings & Lewis, Inc./City of West Allis Lawsuit:   As previously reported, Wisconsin Electric entered into Settlement Agreements and Releases during 2002 with Giddings & Lewis, Inc. and the City of West Allis in a lawsuit alleging that Wisconsin Electric had deposited contaminated wastes at two sites owned by the plaintiffs in West Allis, Wisconsin. In September 2002, Wisconsin Electric filed a lawsuit against its insurance carriers to recover those costs and expenses associated with this matter. As of September 30, 2003, Wisconsin Electric recovered amounts totaling approximately $9.4 million from several insurance carriers, which has been recorded as a reduction of other operation and maintenance expenses. The Company is continuing to pursue litigation against the remaining insurance carriers.

Nuclear Insurance:   Effective August 20, 2003, the Price-Anderson Act limits the total public liability for damages arising from a nuclear incident at a nuclear power plant to approximately $10.7 billion, of which $300 million is covered by liability insurance purchased from private sources. The remaining $10.4 billion is covered by an industry retrospective loss sharing plan whereby, in the event of a nuclear incident resulting in damages exceeding the private insurance coverage, each owner of a nuclear plant would be assessed a deferred premium of up to $99.2 million per reactor with a limit of $10 million per reactor within one calendar year. As the owner of Point Beach, which has two nuclear reactors, Wisconsin Electric would be obligated to pay its proportionate share of any such assessment.

Wisconsin Electric, through its membership in Nuclear Electric Insurance Limited ("NEIL"), carries decontamination, property damage and decommissioning shortfall insurance covering losses of up to $2.0 billion at Point Beach. Under policies issued by NEIL, an insured member is liable for a retrospective premium adjustment in the event of catastrophic losses exceeding the full financial resources of NEIL. Wisconsin Electric's maximum retrospective liability under its policies is $14.9 million.

15

Wisconsin Electric also maintains insurance with NEIL covering business interruption and extra expenses during any prolonged accidental outage at Point Beach, where such outage is caused by accidental property damage from radioactive contamination or other risks of direct physical loss. Wisconsin Electric's maximum retrospective liability under this policy is $10.0 million.

It should not be assumed that, in the event of a major nuclear incident, any insurance or statutory limitation of liability would protect Wisconsin Electric from material adverse impact.

16

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

Cautionary Factors:   Certain statements contained herein are "Forward Looking Statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward Looking Statements may be identified by reference to a future period or periods or by the use of forward looking terminology such as "may," "intends," "anticipates," "believes," "estimates," "expects," "forecasts," "objectives," "plans," "possible," "potential," "project" or similar terms or variations of these terms. Actual results may differ materially from those set forth in Forward Looking Statements as a result of certain risks and uncertainties, including but not limited to, changes in political and economic conditions, equity and bond market fluctuations, varying weather conditions, governmental regulation and supervision, as well as other risks and uncertainties detailed from time to time in filings with the Securities and Exchange Commission ("SEC") including factors described throughout this document and below in "Factors Affecting Results, Liquidity and Capital Resources".

RESULTS OF OPERATIONS -- THREE MONTHS ENDED SEPTEMBER 30, 2003

CONSOLIDATED EARNINGS

The following table compares Wisconsin Energy's operating income by business segment during the third quarter of 2003 with similar information during the third quarter of 2002 including favorable (better ("B")) or unfavorable (worse ("W")) variances.

		Three Months Ended September 30
		2003	B (W)	2002
	(Millions of Dollars, Except per Share Amounts)
Contribution to Operating Income
Utility Energy Segment	$118.3		($2.4)	$120.7
Manufacturing Segment	15.6		0.1	15.5
Non-Utility Energy Segment (a)	(40.5)		(45.6)	5.1
Corporate and Other	1.6		5.9	(4.3)
Total Operating Income	95.0		(42.0)	137.0
Other Income, net	9.4		4.1	5.3
Financing Costs	54.3		3.2	57.5
Income Before Income Taxes	50.1		(34.7)	84.8
Income Taxes	19.2		13.5	32.7
Net Income	$30.9		($21.2)	$52.1
	====		====	====
Diluted Earnings Per Share	$0.26		($0.19)	$0.45
	====		====	====

(a) During 2003, non-utility energy segment operating income includes a non-cash asset valuation charge of $40.1 million.

A more detailed analysis of financial results by segment follows.

UTILITY ENERGY SEGMENT CONTRIBUTION TO OPERATING INCOME

The utility energy segment contributed $118.3 million to operating income during the third quarter of 2003, a decrease of $2.4 million or 2.0% over the prior year third quarter. The decrease in operating

17
income is largely due to cooler summer weather and higher fuel and purchased power costs, both of which reduced electric margins between the comparative periods. Increases in benefit and bad debt expenses also contributed to the decline in operating income. A March 2003 rate increase associated with fuel and purchased power expenses, slightly higher gas margins and the timing of scheduled nuclear plant outages and litigation settlements between the comparative periods partially mitigated the decline in utility operating income. The following table summarizes the operating income of this segment between the comparative quarters.

	Three Months Ended September 30
Utility Energy Segment	2003	B (W)	2002
	(Millions of Dollars)
Operating Revenues
Electric	$551.5	$22.1	$529.4
Gas	128.4	31.4	97.0
Other	3.9	0.2	3.7
Total Operating Revenues	683.8	53.7	630.1
Fuel and Purchased Power	160.4	(15.8)	144.6
Cost of Gas Sold	83.9	(26.7)	57.2
Gross Margin	439.5	11.2	428.3
Other Operating Expenses
Other Operation and Maintenance	220.3	(10.0)	210.3
Depreciation, Decommissioning
and Amortization	81.1	(3.2)	77.9
Property and Revenue Taxes	19.8	(0.4)	19.4
Operating Income	$118.3	($2.4)	$120.7
	====	====	====

A more detailed analysis of financial results for the utility energy segment follows.

Electric Utility Revenues, Gross Margin and Sales

The following table compares Wisconsin Energy's total electric utility operating revenues and gross margin during the third quarter of 2003 with similar information for the third quarter of 2002.

	Three Months Ended September 30
Electric Utility Operations	2003	B (W)	2002
	(Millions of Dollars)
Electric Operating Revenues	$551.5	$22.1	$529.4
Fuel and Purchased Power
Fuel	85.8	(4.3)	81.5
Purchased Power	73.4	(11.2)	62.2
Total Fuel and Purchased Power	159.2	(15.5)	143.7
Gross Margin	$392.3	$6.6	$385.7
	====	====	====

Electric gross margin increased to $392.3 million or by 1.7% between the comparative periods. The increase is primarily related to implementing a PSCW approved surcharge in October 2002 for recovery of increased annual transmission costs associated with American Transmission Company LLC ("ATC"), which increased third quarter 2003 gross margin by approximately $13.2 million. A corresponding increase in expense is recorded in other operating and maintenance expenses. Excluding the surcharge, electric gross margin fell by $6.6 million primarily due to the impact of cooler summer weather and higher fuel and purchased power costs compared to the prior year. As measured by cooling degree days, the third quarter of 2003 was 18.9% cooler than the third quarter of 2002 and 2.2% cooler than normal.

18

Total operating revenues increased $22.1 million primarily due to the surcharge for transmission costs as well as to a surcharge for higher fuel costs. In March 2003, Wisconsin Electric received an interim increase in rates to recover increases in fuel and purchased power costs. On a quarter to quarter basis, the fuel surcharge resulted in $14.0 million of additional revenue. In October 2003, the Company received a final rate order (see "Factors Affecting Results, Liquidity and Capital Resources -- Market Risks and Other Significant Risks" below). The Company under recovered fuel cost by $3.9 million in the third quarter of 2003 which is approximately $3.1 million worse than the same period in 2002. The cooler weather partially offset the increase in revenues due to the surcharges.

Total fuel and purchased power expenses rose mostly due to an increase in natural gas prices, the primary fuel source for Wisconsin Energy's purchased power, resulting in a 21.6% increase in the cost per megawatt hour of purchased power. Average commodity gas prices were $5.01 for the third quarter of 2003, compared to $2.99 for the third quarter of 2002 on a per dekatherm basis.

The following table compares Wisconsin Energy's electric utility operating revenues and electric utility megawatt-hour sales by customer class during the third quarter of 2003 with similar information for the third quarter of 2002.

		Operating Revenues			Megawatt-Hour Sales
		Three Months Ended September 30			Three Months Ended September 30
Electric Utility Operations		2003	B (W)	2002	2003	B (W)	2002
		(Millions of Dollars)			(Thousands)
Customer Class
Residential		$193.7	($4.0)	$197.7	2,196.5	(169.2)	2,365.7
Small Commercial/Industrial		174.9	7.7	167.2	2,379.2	(58.9)	2,438.1
Large Commercial/Industrial		142.5	13.2	129.3	3,124.0	86.0	3,038.0
Other-Retail/Municipal		22.6	0.6	22.0	551.5	(8.0)	559.5
Resale-Utilities		7.6	(2.0)	9.6	209.7	(105.2)	314.9
Other-Operating Revenues		10.2	6.6	3.6	-	-	-
Total		$551.5	$22.1	$529.4	8,460.9	(255.3)	8,716.2
		====	====	====	====	====	====
Weather -- Degree Days (a)
Cooling (537 Normal)					525	(122)	647
(a)	As measured at Mitchell International Airport in Milwaukee, Wisconsin. Normal degree days are based upon a twenty-year moving average.

Total electric megawatt-hour sales decreased by 2.9% during the third quarter of 2003 compared to the same period in 2002. Residential sales were down 7.1% reflecting cooler summer weather as compared to 2002. Residential customers contribute higher margins than other customer classes and are particularly sensitive to fluctuations in weather. Sales to Wisconsin Electric's largest customers, two iron ore mines, increased by 97.8 thousand megawatt-hours or 19.1% between the comparative periods due primarily to an outage at one of the mines in July 2002. Excluding these two mines, Wisconsin Energy's total electric energy sales fell 4.3% and sales volumes to the remaining large commercial/industrial customers were down 0.5% between the comparative periods. Sales volumes for resale to other utilities, the Resale-Utilities customer class, decreased 33.4% 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 for the third quarter of 2003 and the third quarter of 2002. Gross margin is a better performance indicator than revenues because changes in the cost of gas sold flow through to revenue

19
under gas cost recovery mechanisms. Due primarily to a significant increase in the delivered cost of natural gas between the comparative periods, gas operating revenues increased by $31.4 million or 32.4% offset by a $26.7 million or 46.6% increase in purchased gas costs.

	Three Months Ended September 30
Gas Utility Operations	2003	B (W)	2002
	(Millions of Dollars)
Gas Operating Revenues	$128.4	$31.4	$97.0
Cost of Gas Sold	83.9	(26.7)	57.2
Gross Margin	$44.5	$4.7	$39.8
	====	====	====

Gas margins increased by $4.7 million or 11.8% between the comparative periods due primarily to recognition of $3.2 million of increased gas cost incentive revenues during the third quarter of 2003 compared with the third quarter of 2002 under the Company's gas cost recovery mechanisms.

The following table compares Wisconsin Energy's gas utility gross margins and natural gas therm deliveries by customer class during the third quarter of 2003 with similar information for the third quarter of 2002.

		Gross Margin				Therm Deliveries
			Three Months Ended September 30			Three Months Ended September 30
Gas Utility Operations		2003		B (W)	2002	2003	B (W)	2002
		(Millions of Dollars)				(Millions)
Customer Class
Residential		$24.6		$1.0	$23.6	51.8	3.8	48.0
Commercial/Industrial		6.8		0.3	6.5	34.3	3.2	31.1
Interruptible		0.3		(0.1)	0.4	4.2	(1.1)	5.3
Total Gas Sold		31.7		1.2	30.5	90.3	5.9	84.4
Transported Gas		7.9		0.1	7.8	161.3	(7.3)	168.6
Other-Operating		4.9		3.4	1.5	-	-	-
Total		$44.5		$4.7	$39.8	251.6	(1.4)	253.0
		====		====	====	====	====	====
Weather -- Degree Days (a)
Heating (142 Normal)						134	67	67
(a)	As measured at Mitchell International Airport in Milwaukee, Wisconsin. Normal degree days are based upon a twenty-year moving average.

Other Operation and Maintenance Expenses

Other operation and maintenance expenses increased by $10.0 million or 4.8% during the third quarter of 2003 when compared with the third quarter of 2002. The increase was primarily attributable to approximately $13.2 million of higher electric transmission expenses, which were offset by increased revenues resulting from a surcharge that became effective in October of 2002. Pension and other benefit costs increased by $12.5 million and bad debt expenses increased by $1.7 million during 2003. During the third quarter of 2002, other operation and maintenance expenses included $10.6 million of costs associated with the scheduled Unit 1 outage at Point Beach Nuclear Plant. The only 2003 scheduled outage at Point Beach occurs during the fourth quarter. Overall, nuclear costs are $5.3 million less during 2003 compared with the same period in 2002. In addition, the Company recorded $8.7 million of settlement costs in the third quarter of 2002, related to the Giddings  & Lewis/City of West Allis litigation; no similar expenses occurred in 2003.

20

Depreciation, Decommissioning and Amortization

Depreciation, Decommissioning and Amortization expenses increased by $3.2 million or 4.1% during the third quarter of 2003 primarily due to a higher base of depreciable assets between the comparative periods.

MANUFACTURING SEGMENT CONTRIBUTION TO OPERATING INCOME

The manufacturing segment contributed operating income of $15.6 million during the third quarter of 2003 compared with $15.5 million during the third quarter of 2002. The following table identifies the key components of operating income for Wisconsin Energy's manufacturing segment between the comparative periods.

	Three Months Ended September 30
Manufacturing Segment	2003	B (W)	2002
	(Millions of Dollars)
Operating Revenues
Domestic	$130.8	($2.3)	$133.1
International	51.9	5.9	46.0
Total Operating Revenues	182.7	3.6	179.1
Cost of Goods Sold	138.2	(4.6)	133.6
Gross Margin	44.5	(1.0)	45.5
Operating Expenses	28.9	1.1	30.0
Operating Income	$15.6	$0.1	$15.5
	====	====	====

Manufacturing operating revenues for the third quarter of 2003 were $182.7 million, an increase of $3.6 million or 2.0% compared to the same period in 2002. Approximately $3 million of the increase was due to the translation of foreign subsidiaries' financial statements into U.S. dollars due to the weaker U.S. dollar. The largest base business growth was seen in the Water Systems market, which increased 7.6%, due mainly to conditions caused by Hurricane Isabel on the East Coast of the U.S., as well as increased export and international sales. The increased Water Systems sales were offset by softer Water Treatment and Beverage markets.

During the third quarter of 2003, international sales were 13% ahead of the same period in 2002. Half of the growth was due to continued international growth and half was related to translation of foreign subsidiaries' financial statements from their respective local currencies into U.S. dollars due to the weaker U.S. dollar.

Gross margins decreased to $44.5 million for the third quarter in 2003 in comparison to the same period in 2002. The incremental sales benefit was more than offset by lower margins in the Spa markets of the business in 2003. For the third quarter of 2003, operating expenses as a percentage of sales decreased to 15.8% from 16.8% in the third quarter of 2002 due to a combination of lower bad debt expense and a favorable insurance recovery during 2003 and higher 2002 provisions for product liability expenses.

NON-UTILITY ENERGY SEGMENT CONTRIBUTION TO OPERATING INCOME

The operations of the non-utility energy segment have been significantly reduced from the prior year due to the sale of Wisvest-Connecticut in December 2002. The following table compares an operating loss by Wisconsin Energy's non-utility energy segment during the third quarter of 2003 with operating income during the third quarter of 2002.

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	Three Months Ended September 30
Non-Utility Energy Segment	2003	B (W)	2002
	(Millions of Dollars)
Operating Revenues	$6.0	($49.6)	$55.6
Fuel and Purchased Power	0.7	27.7	28.4
Gross Margin	5.3	(21.9)	27.2
Other Operating Expenses
Other Operation and Maintenance	3.3	14.5	17.8
Depreciation, Decommissioning
and Amortization	1.9	(0.1)	1.8
Property and Revenue Taxes	0.5	2.0	2.5
Asset Valuation Charges	40.1	(40.1)	-
Operating Income (Loss)	($40.5)	($45.6)	$ 5.1
	=====	=====	===

The operating loss incurred in 2003 primarily relates to a non-cash asset valuation charge recorded in the third quarter (see Note 4 in the Notes to Consolidated Condensed Financial Statements in Item 1 of Part I of this report) and the timing of the sale of Wisvest-Connecticut in December 2002, which had positive operating income during the third quarter of 2002.

CORPORATE AND OTHER CONTRIBUTION TO OPERATING INCOME

Corporate and other affiliates had operating income of $1.6 million in the third quarter of 2003 compared to an operating loss during the same period in 2002, primarily due to improved affiliate operating results and a gain from the liquidation of an investment. The following table identifies the components of operating income (loss) of Wisconsin Energy's corporate and other affiliates between the third quarter of 2003 and the third quarter of 2002.

	Three Months Ended September 30
Corporate and Other Affiliates	2003	B (W)	2002
	(Millions of Dollars)
Operating Revenues	$6.0	$1.0	$5.0
Operating Expenses
Other Operation and Maintenance	5.3	2.4	7.7
Depreciation, Decommissioning
and Amortization	1.5	(0.2)	1.3
Property and Revenue Taxes	0.3	-	0.3
Gain from Asset Sale	(2.7)	2.7	-
Operating Income (Loss)	$1.6	$5.9	($4.3)
	====	====	====

CONSOLIDATED OTHER INCOME AND DEDUCTIONS

Net consolidated other income and deductions increased by $4.1 million in the third quarter of 2003 compared to the third quarter of 2002. This increase is primarily due to the Company's interest in improved earnings of ATC and lower net deferred benefit costs.

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CONSOLIDATED FINANCING COSTS

Total financing costs decreased by $3.2 million in the three months ended September 30, 2003 compared to the same period in 2002. This decline was primarily due to a combination of reduced debt levels, increased Allowance For Funds Used During Construction, and lower interest rates.

CONSOLIDATED INCOME TAXES

For the third quarter of 2003, the Company's effective tax rate was 38.3%, which was less than the annual rate of 38.8% for 2002. This reduction in the effective income tax rate was primarily due to tax credits associated with rehabilitation projects and a lower effective rate for state income taxes.

RESULTS OF OPERATIONS -- NINE MONTHS ENDED SEPTEMBER 30, 2003

CONSOLIDATED EARNINGS

The following table compares Wisconsin Energy's operating income by business segment during the first nine months of 2003 with similar information during the first nine months of 2002 including favorable (better ("B")) or unfavorable (worse ("W")) variances.

		Nine Months Ended September 30
		2003		B (W)	2002
		(Millions of Dollars, Except per Share Amounts)
Contribution to Operating Income
Utility Energy Segment		$389.4	($1.5)		$390.9
Manufacturing Segment		54.5	10.6		43.9
Non-Utility Energy Segment (a)		(49.0)	76.1		(125.1)
Corporate and Other (b)		4.5	30.6		(26.1)
Total Operating Income		399.4	115.8		283.6
Other Income, net		30.4	(14.7)		45.1
Financing Costs		161.2	12.2		173.4
Income Before Income Taxes		268.6	113.3		155.3
Income Taxes		96.4	(34.4)		62.0
Net Income		$172.2	$78.9		$ 93.3
		====	====		====
Diluted Earnings Per Share		$1.46	$0.66		$ 0.80
		====	====		====
(a)	Non-utility energy segment operating income includes a non-cash asset valuation charge of $40.1 million in 2003 and $125.1 million in 2002.
(b)	During 2002, corporate and other operating income includes a non-cash asset valuation charge of $16.4 million.

A more detailed analysis of financial results by segment follows.

UTILITY ENERGY SEGMENT CONTRIBUTION TO OPERATING INCOME

The utility energy segment contributed $389.4 million to operating income during the first nine months of 2003, a decrease of $1.5 million when compared with the same period in the prior year primarily due

23
to unseasonably cool weather during the summer of 2003, higher fuel and purchased power costs and increases in benefit and bad debt expenses. A March 2003 rate increase associated with fuel and purchased power expenses, slightly higher gas margins and the timing of scheduled nuclear plant outages and litigation settlements between the comparative periods partially mitigated the decline in utility operating income. The following table summarizes the comparative operating income of this segment.

	Nine Months Ended September 30
Utility Energy Segment	2003	B (W)	2002
	(Millions of Dollars)
Operating Revenues
Electric	$1,517.4	$78.3	$1,439.1
Gas	884.1	293.7	590.4
Other	17.9	1.0	16.9
Total Operating Revenues	2,419.4	373.0	2,046.4
Fuel and Purchased Power	437.7	(53.9)	383.8
Cost of Gas Sold	622.5	(266.9)	355.6
Gross Margin	1,359.2	52.2	1,307.0
Other Operating Expenses
Other Operation and Maintenance	672.7	(46.5)	626.2
Depreciation, Decommissioning
and Amortization	237.6	(7.6)	230.0
Property and Revenue Taxes	59.5	0.4	59.9
Operating Income	$389.4	($1.5)	$390.9
	====	====	====

A more detailed analysis of financial results for the utility energy segment follows.

Electric Utility Revenues, Gross Margin and Sales

The following table compares Wisconsin Energy's total electric utility operating revenues and gross margin during the first nine months of 2003 with similar information for the first nine months of 2002.

	Nine Months Ended September 30
Electric Utility Operations	2003	B (W)	2002
	(Millions of Dollars)
Electric Operating Revenues	$1,517.4	$78.3	$1,439.1
Fuel and Purchased Power
Fuel	221.0	8.4	212.6
Purchased Power	211.9	45.6	166.3
Total Fuel and Purchased Power	432.9	(54.0)	378.9
Gross Margin	$1,084.5	$24.3	$1,060.2
	=====	====	=====

Electric gross margin increased 2.3% to $1,084.5 million between the comparative periods. The increase is primarily related to implementing a PSCW approved surcharge in October 2002 for recovery of increased annual transmission costs associated with ATC, which increased year-to-date 2003 gross margin by approximately $36.2 million. Non-fuel Operation and Maintenance costs increased by a similar amount, so there was little impact to Operating Income as a result of the transmission surcharge. Excluding the surcharge, electric gross margin fell by $11.9 million primarily due to the impact of cooler summer weather and higher fuel and purchased power costs compared to the prior year.

During the first nine months of 2003, total electric utility operating revenues increased by $78.3 million or 5.4% when compared with the first nine months of 2002 primarily due to the impact of rate increases

24
related to fuel and purchased power costs and to a surcharge related to transmission costs noted above. In March 2003, Wisconsin Electric received an interim increase in rates to recover increases in fuel and purchased power costs. On an annual basis, the increase was $55.0 million. In October 2003 the Company received the final rate order (see "Factors Affecting Results, Liquidity and Capital Resources -- Market Risks and Other Significant Risks" below). In spite of the interim fuel order, the Company under recovered fuel costs by approximately $17.0 million on a year to date basis, which is approximately $10.8 million worse than the Company's under recovery during the first nine months of 2002. This increase can be attributed primarily to the need to purchase replacement power due to a flood at Presque Isle Power Plant in May and June of 2003. In addition, the impact of favorable weather on heating load during the first quarter of 2003 was more than offset by the impact of un favorable weather on cooling load during the second and third quarters of 2003, thereby reducing electric operating revenues by approximately $23.4 million between the comparative nine month periods.

Total fuel and purchased power expenses grew mostly due to a significant increase in natural gas prices, the primary fuel source for Wisconsin Energy's purchased power, resulting in a 26.6% increase in the cost per megawatt hour of purchased power. Average commodity gas prices were $5.21 for the first nine months of 2003 compared to $2.91 for the first nine months of 2002 on a per dekatherm basis. Fuel and purchased power costs also increased due to a higher need for replacement power resulting from lower generation availability in 2003 compared with the same period in 2002. Approximately $8 million of this increase was caused by a flood that temporarily shut down the Company's Presque Isle Power Plant during the second quarter of 2003.

The following table compares Wisconsin Energy's electric utility operating revenues and electric utility megawatt-hour sales by customer class during the first nine months of 2003 with similar information for the first nine months of 2002.

		Operating Revenues			Megawatt-Hour Sales
		Nine Months Ended September 30			Nine Months Ended September 30
Electric Utility Operations		2003	B (W)	2002	2003	B (W)	2002
		(Millions of Dollars)			(Thousands)
Customer Class
Residential		$533.3	$3.4	$529.9	6,048.4	(245.1)	6,293.5
Small Commercial/Industrial		485.0	26.1	458.9	6,626.2	(5.6)	6,631.8
Large Commercial/Industrial		394.4	35.1	359.3	8,583.6	300.8	8,282.8
Other-Retail/Municipal		65.4	7.0	58.4	1,698.0	183.5	1,514.5
Resale-Utilities		16.9	1.0	15.9	466.6	(88.2)	554.8
Other-Operating Revenues		22.4	5.7	16.7	-	-	-
Total		$1,517.4	$78.3	$1,439.1	23,422.8	145.4	23,277.4
		=====	===	=====	=====	====	=====
Weather -- Degree Days (a)
Heating (4,344 Normal)					4,839	690	4,149
Cooling (722 Normal)					600	(288)	888
(a)	As measured at Mitchell International Airport in Milwaukee, Wisconsin. Normal degree days are based upon a twenty-year moving average.

Total electric megawatt-hour sales increased by 0.6% during the first nine months of 2003. Residential sales fell 3.9% because the impact of unfavorable weather conditions on cooling load during the second and third quarters of 2003 more than offset the impact of favorable weather conditions on heating load during the first quarter of 2003. Residential customers contribute higher margins than other customer classes and are particularly sensitive to fluctuations in weather. Despite a temporary curtailment of electric sales in the second quarter of 2003 as a result of a flood-related outage at the Company's Presque

25
Isle Power Plant, sales to Wisconsin Electric's largest customers, two iron ore mines, increased by 252.1 thousand megawatt-hours or 18.6% between the comparative periods because of outages at the mines in the first and third quarters of 2002. Excluding these two mines, Wisconsin Energy's total electric energy sales decreased by 0.5% and sales volumes to the remaining large commercial/industrial customers improved by 0.7% between the comparative periods. Sales to municipal utilities, the Other Retail/Municipal customer class, increased 12.1% between the periods due to a higher off-peak demand from municipal wholesale power customers.

Gas Utility Revenues, Gross Margin and Therm Deliveries

A comparison follows of Wisconsin Energy's gas utility operating revenues, gross margin and gas deliveries for the first nine months of 2003 and the first nine months of 2002. 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. Due primarily to a significant increase in the delivered cost of natural gas between the comparative periods, gas operating revenues increased by $293.4 million or 49.7% offset by a $266.9 million or 75.1% increase in purchased gas costs.

	Nine Months Ended September 30
Gas Utility Operations	2003	B (W)	2002
	(Millions of Dollars)
Gas Operating Revenues	$884.1	$293.4	$590.4
Cost of Gas Sold	622.5	(266.9)	355.6
Gross Margin	$261.6	$26.8	$234.8
	=====	=====	=====

Gas margins increased by $26.8 million or 11.4% between the comparative periods primarily due to a favorable 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. As measured by heating degree days, the first nine months of 2003 was 16.6% colder than the first nine months of 2002 and 11.4% colder than normal. A $7.0 million increase in gas cost incentive revenues during the first nine months of 2003 under the Company's gas cost recovery mechanism also contributed to the increased gross margin between the comparative periods.

The following table compares Wisconsin Energy's gas utility gross margins and natural gas therm deliveries by customer class during the first nine months of 2003 with similar information for the first nine months of 2002.

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		Gross Margin				Therm Deliveries
			Nine Months Ended September 30			Nine Months Ended September 30
Gas Utility Operations		2003		B (W)	2002	2003	B (W)	2002
		(Millions of Dollars)				(Millions)
Customer Class
Residential		$165.7		$13.5	$152.2	597.9	62.1	535.8
Commercial/Industrial		50.3		5.4	44.9	344.4	43.2	301.2
Interruptible		1.5		-	1.5	19.8	(0.4)	20.2
Total Gas Sold		217.5		18.9	198.6	962.1	104.9	857.2
Transported Gas		30.5		0.3	30.2	589.3	(7.3)	596.6
Other-Operating		13.6		7.6	6.0	-	-	-
Total		$261.6		$26.8	$234.8	1,551.4	97.6	1,453.8
		====		====	====	=====	=====	=====
Weather -- Degree Days (a)
Heating (4,344 Normal)						4,839	690	4,149
(a)	As measured at Mitchell International Airport in Milwaukee, Wisconsin. Normal degree days are based upon a twenty-year moving average.

Other Operation and Maintenance Expenses

Other operation and maintenance expenses increased by $46.5 million or 7.4% during the first nine months of 2003 when compared with the first nine months of 2002. The increase was primarily attributable to approximately $36.2 million of higher electric transmission expenses which were offset by increased revenues resulting from a surcharge that became effective in October of 2002. Pension and other benefit costs increased by $21.5 million during 2003 and bad debt expenses increased by $8.7 million in large part due to higher gas bills. Overall, nuclear costs were $10.3 million less during the first nine months of 2003 compared with the same period in 2002 including $20.0 million related to the timing of scheduled outages. In 2002, the Company incurred costs for scheduled outages of both generating units at Point Beach Nuclear Plant. The only 2003 scheduled outage at Point Beach occurs during the fourth quarter. In 2003, the reduction in nuclear costs as a result of outa ge schedules was partially offset by the impact of more forced outages at Point Beach. Insurance recoveries of approximately $9.4 million in the first nine months of 2003 compared to associated settlement costs of $17.3 million in the same period in 2002, both related to the Giddings & Lewis/City of West Allis litigation, also offset some of the increase in other operation and maintenance expenses.

Depreciation, Decommissioning and Amortization

Depreciation, Decommissioning and Amortization expenses increased by $7.6 million or 3.3% during the first nine months of 2003 primarily due to a higher base of depreciable assets between the comparative periods.

MANUFACTURING SEGMENT CONTRIBUTION TO OPERATING INCOME

The manufacturing segment contributed operating income of $54.5 million during the first nine months of 2003 compared with $43.9 million during the first nine months of 2002. The following table identifies the key components of operating income for Wisconsin Energy's manufacturing segment between the comparative periods.

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	Nine Months Ended September 30
Manufacturing Segment	2003	B (W)	2002
	(Millions of Dollars)
Operating Revenues
Domestic	$406.7	$17.8	$388.9
International	159.9	26.2	133.7
Total Operating Revenues	566.6	44.0	522.6
Cost of Goods Sold	421.7	(32.4)	389.3
Gross Margin	144.9	11.6	133.3
Operating Expenses	90.4	(1.0)	89.4
Operating Income	$54.5	$10.6	$43.9
	====	====	====

Manufacturing operating revenues for the nine months ended September 30, 2003 were $566.6 million, an increase of $44.0 million or 8.4% compared to the same period in 2002. Acquisitions completed in 2002 contributed $10.4 million of sales during the first nine months of 2003. The Company experienced a 6% growth in its base manufacturing business between the comparative periods. Overall for the first nine months of 2003, sales in all markets of the manufacturing business were at or above prior levels with the exception of the Beverage and Water Treatment markets. The largest growth was seen in the Water Systems market, which increased 19% due to wet conditions in the Northeastern and Midwest sections of the United States coupled with the impact of a 2002 second quarter acquisition. The RV, Agriculture and Industrial markets also saw significant growth over the prior year sales levels. During the first nine months of 2003, international sales were 20% ahead of the same period in 20 02, with half due to continued international growth and about half relating to currency translation effects.

Gross margin increased to $144.9 million for the first nine months of 2003 from $133.3 million for the same period in 2002, which is flat year over year as a percentage of sales. For the first nine months of 2003, operating expenses as a percentage of sales decreased to 15.9% from 17.1% for the first nine months of 2002. During 2002, the manufacturing segment recorded $4.5 million of operating expenses related to facility relocations, plant closing and severance payments which did not recur in 2003. Excluding these charges, operating expenses as a percentage of sales were 0.4% lower than the prior year.

NON-UTILITY ENERGY SEGMENT CONTRIBUTION TO OPERATING INCOME

The operations of the non-utility energy segment have been significantly reduced from the prior year due to the sale of Wisvest-Connecticut in December 2002. The following table compares the operating loss of Wisconsin Energy's non-utility energy segment between the first nine months of 2003 and the first nine months of 2002.

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	Nine Months Ended September 30
Non-Utility Energy Segment	2003	B (W)	2002
	(Millions of Dollars)
Operating Revenues	$12.8	($124.9)	$137.7
Fuel and Purchased Power	1.1	78.6	79.7
Gross Margin	11.7	(46.3)	58.0
Other Operating Expenses
Other Operation and Maintenance	13.4	35.3	48.7
Depreciation, Decommissioning
and Amortization	5.6	(2.6)	3.0
Property and Revenue Taxes	1.6	4.6	6.3
Asset Valuation Charges	40.1	85.1	125.1
Operating Income (Loss)	($49.0)	$76.1	($125.1)
	=====	====	=====

The decrease in the operating loss primarily relates to the $40.1 million asset valuation charge recorded in the third quarter of 2003 as compared to the $125.1 million of the asset valuation charge recorded in 2002 that related to the non-utility energy segment (see Note 4 in the Notes to Consolidated Condensed Financial Statements in Item 1 of Part I of this report) and to the sale of Wisvest-Connecticut in December 2002.

CORPORATE AND OTHER CONTRIBUTION TO OPERATING INCOME

Corporate and other affiliates operating income increased $30.6 million in the first nine months of 2003 compared to the same period in 2002 primarily due to a $16.4 million non-cash asset valuation charge recorded in the first quarter of 2002 related to the decline in value of a venture capital investment (the other component of the $141.5 million first quarter 2002 asset valuation charge discussed in Note 4 in the Notes to Consolidated Condensed Financial Statements in Item 1 of Part I of this report), a $2.7 million gain from the liquidation of an investment in the third quarter of 2003, and improved operating results. The following table identifies the components of operating income (loss) of Wisconsin Energy's corporate and other affiliates between the nine months ended September 30, 2003 and the nine months ended September 30, 2002.

	Nine Months Ended September 30
Corporate and Other Affiliates	2003	B (W)	2002
	(Millions of Dollars)
Operating Revenues	$23.2	$3.2	$20.0
Operating Expenses
Other Operation and Maintenance	15.9	8.9	24.8
Depreciation, Decommissioning
and Amortization	4.7	(0.8)	3.9
Property and Revenue Taxes	0.8	0.2	1.0
Asset (Gain) Charge (a)	(2.7)	19.1	16.4
Operating Income (Loss)	$4.5	$30.6	($26.1)
	====	=====	=====
(a) Asset (gain) charges during 2003 include a gain of $2.7 million from the liquidation of an investment. During 2002, asset (gain) charges include $16.4 million related to the decline in value of a venture capital investment.

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CONSOLIDATED OTHER INCOME AND DEDUCTIONS

Net consolidated other income and deductions decreased by $14.7 million in the first nine months of 2003 compared to the first nine months of 2002. This decrease is primarily due to $22.4 million ($13.5 million after tax) in SFAS 133 gains recognized in 2002 on fuel oil contracts at Wisvest-Connecticut's two power plants, which were sold in December 2002, a $3.2 million civil penalty the Company agreed to pay pursuant to the terms of an EPA consent decree, and lower net deferred benefit costs of $2.9million. Also in 2002, the Company recorded $5.3 million of costs associated with bond redemptions.

CONSOLIDATED FINANCING COSTS

Total financing costs decreased by $12.2 million in the nine months ended September 30, 2003 compared to the same period in 2002. This decline was primarily due to a combination of reduced debt levels, increased Allowance For Funds Used During Construction, and lower interest rates.

CONSOLIDATED INCOME TAXES

For the first nine months of 2003, the Company's effective tax rate was 35.9%, which was less than the annual rate of 38.8% for 2002. This reduction in the effective income tax rate was primarily due to tax credits associated with rehabilitation projects, a lower effective rate for state income taxes, the favorable settlement of tax contingencies, and the Company's ability to recognize almost $3 million of state tax benefits associated with net operating loss carryforwards. The Company expects the annual effective income tax rate for 2003 to be between 36% and 37%.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS

The following summarizes Wisconsin Energy's cash flows during the first nine months of 2003 and 2002:

	Nine Months Ended September 30
Wisconsin Energy Corporation	2003	2002
	(Millions of Dollars)
Cash Provided by (Used in)
Operating Activities	$547.3	$641.7
Investing Activities	($545.6)	($413.5)
Financing Activities	($14.0)	($238.7)

Operating Activities

Cash provided by operating activities decreased to $547.3 million during the first nine months of 2003 compared with $641.7 million during the same period in 2002. This decrease was primarily due to a $116 million refund in the first quarter of 2002 from a favorable court ruling in the Giddings & Lewis/City of West Allis litigation and an increase in taxes paid for the first nine months of 2003 compared to the same period in 2002.

30

Investing Activities

During the first nine months of 2003, Wisconsin Energy invested a total of $545.6 million, an increase of $132.1 million over the prior year, primarily due to the Power the Future initiative, to costs for construction of the Ixonia natural gas lateral, and to reduced asset sales. In the first nine months of 2003, the Company had capital expenditures of $342.6 million for utility plant, $129.8 million for non-utility energy projects ($129.0 million of which is attributable to Power the Future new generation projects), $7.4 million for manufacturing and $22.3 million for other non-utility activities. Between the comparative periods, Wisconsin Energy invested $27.8 million less in various acquisitions and investments and received $48.9 million less from asset sales.

The Company anticipates it will receive a total of approximately $100 million in cash benefits including tax benefits from 2003 asset sales, primarily from the Company's continued program to divest non-core businesses and assets. Since inception of the plan in 2000, the Company has received proceeds from asset divestitures of approximately $1 billion.

Financing Activities

During the nine months ended September 30, 2003, the Company used $14 million for financing activities compared with using $238.7 million for financing activities during the first nine months of 2002. During 2003, the Company reduced short-term debt by $276.9 million and retired $523.8 million of long-term debt while issuing $843.1 million of long-term debt during this period.

In March 2003, Wisconsin Energy sold $200 million of unsecured 6.20% Senior Notes due April 1, 2033. These securities were issued under a shelf registration statement filed with the SEC. The proceeds of the offering were used to repay a portion of the Company's outstanding commercial paper as it matured.

In May 2003, Wisconsin Electric sold $635 million of unsecured Debentures ($300 million of ten-year 4.50% Debentures due 2013 and $335 million of thirty-year 5.625% Debentures due 2033) under an $800 million shelf registration statement filed with the SEC. Wisconsin Electric used a portion of the proceeds from the Debentures to repay short-term debt, which was originally incurred to retire debt that matured in December 2002. The balance of the proceeds were used to redeem $425 million of Wisconsin Electric's debt securities in June 2003, and to fund the optional redemption in August 2003 of another $60 million debt issue.

In October 2003, Wisconsin Electric funded the optional redemption of $9 million of 6.85% bonds due October 1, 2021 with short-term borrowings and working capital.

The debt refinancings in June and August 2003 are being accounted for using the revenue neutral method of accounting pursuant to PSCW authorization, whereby gross debt extinguishment costs in the amount of approximately $24.9 million were deferred and are being amortized over an approximately two year period based upon the level of interest savings achieved (See Note 2 in the Notes to Condensed Consolidated Financial Statements in Item 1 of Part I of this report).

During the first nine months of 2003, Wisconsin Energy purchased approximately 0.3 million shares of common stock for $6.8 million, all of which were purchased in the first quarter, under a $400 million board-approved repurchase program that was initiated in 2000. Also during the first nine months of 2003, Wisconsin Energy issued approximately 1.9 million new shares of common stock aggregating $42.8 million related to the Company's dividend reinvestment plan, other benefit plans and the exercise

31
of stock options. Wisconsin Energy does not expect to continue repurchasing shares now that the Company is spending significant dollars on its Power the Future program.

CAPITAL RESOURCES AND REQUIREMENTS

Capital Resources

Cash requirements during the remaining three months of 2003 are expected to be met through a combination of internal sources of funds from operations, asset sales, short-term borrowings, existing lines of credit and the issuance of common stock under the Company's stock plans supplemented, if necessary, through the sale of debt securities.

Depending on market conditions and other factors, including receipt of required regulatory approvals, Wisconsin Gas anticipates issuing between $100 and $200 million of unsecured long-term debt during the fourth quarter of 2003 under an existing $200 million shelf registration statement filed with the SEC.

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.

Wisconsin Electric has $165 million of unsecured notes outstanding at September 30, 2003 that were issued as support for a similar amount of variable rate tax-exempt bonds issued on its behalf. The terms of the variable rate tax-exempt bonds require resetting of the interest rate on a weekly basis and allow holders to put the bonds at par value to the issuer with seven days notice. Wisconsin Energy and Wisconsin Electric credit agreements provide liquidity support of Wisconsin Electric's obligations with respect to variable rate tax-exempt bonds and commercial paper.

Wisconsin Energy had approximately $1.1 billion of available unused lines of bank back-up credit facilities on a consolidated basis as of September 30, 2003. The Company had approximately $676 million 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. The following table summarizes such facilities at September 30, 2003:

Company	Total Facility	Drawn	Credit Available	Facility Maturity	Facility Term
	(Millions of Dollars)
Wisconsin Energy	$300.0	$  -	$300.0	Apr-2004	364 day
Wisconsin Energy	$300.0	$  -	$300.0	Apr-2006	3 year
Wisconsin Electric	$250.0	$  -	$250.0	Jun-2004	364 day
Wisconsin Gas	$200.0	$  -	$200.0	Jun-2004	364 day

32

The following table shows Wisconsin Energy's consolidated capitalization structure at September 30, 2003 and at December 31, 2002:

Capitalization Structure	September 30, 2003		December 31, 2002
	(Millions of Dollars)
Common Equity	$2,281.6	34.6%	$2,139.4	33.5%
Preferred Stock of Subsidiaries	30.4	0.5%	30.4	0.5%
Trust Preferred Securities	-	- %	200.0	3.1%
Long-Term Debt (including
current maturities)	3,595.5	54.6%	3,070.8	48.0%
Short-Term Debt	676.2	10.3%	953.1	14.9%
Total	$6,583.7	100.0%	$6,393.7	100.0%
	======	=====	======	=====

Effective with the adoption of SFAS 150 on July 1, 2003, the Company began reclassifying its Trust Preferred Securities as long-term debt. The debt, including Trust Preferred Securities, to total capital for the Company as of September 30, 2003 is 64.9%. The equivalent, debt plus Trust Preferred Securities to total capital at year end of 2002 was 66.0%. For further information, see Note 2 in the Notes to Consolidated Condensed Financial Statements in Item 1 of Part I of this report. The Company's debt to total capital at year end of 2002 was 62.9%. This calculation was done prior to adoption of SFAS 150 when the Trust Preferred Securities were excluded from long-term debt.

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 & Poor's Ratings Services ("S&P"), Moody's Investors Service ("Moody's") and Fitch Ratings ("Fitch").

	S&P	Moody's	Fitch
Wisconsin Energy Corporation
Commercial Paper	A-2	P-2	F2
Unsecured Senior Debt	BBB+	A3	A-
Wisconsin Electric Power Company
Commercial Paper	A-2	P-1	F1
Secured Senior Debt	A-	Aa3	AA-
Unsecured Debt	A-	A1	A+
Preferred Stock	BBB	A3	A
Wisconsin Gas Company
Commercial Paper	A-2	P-1	F1
Unsecured Senior Debt	A-	A1	A+
Wisconsin Energy Capital Corporation
Unsecured Debt	BBB+	A3	A-
WEC Capital Trust I
Trust Preferred Securities	BBB-	Baa1	BBB+

In October 2003, Moody's downgraded certain security ratings of Wisconsin Energy and its subsidiaries. Moody's lowered the senior unsecured debt ratings of Wisconsin Energy and Wisconsin Energy Capital Corporation from A2 to A3 and the commercial paper rating of Wisconsin Energy from P-1 to P-2. Moody's lowered the WEC Capital Trust I Trust Preferred Securities rating from A3 to Baa1. The rating

33
outlook for Wisconsin Energy and Wisconsin Energy Capital Corporation is negative. Moody's lowered Wisconsin Electric's senior secured rating from Aa2 to Aa3, senior unsecured rating from Aa3 to A1, and preferred stock rating from A2 to A3. Moody's lowered Wisconsin Gas' senior unsecured rating from Aa2 to A1. Moody's confirmed the P-1 commercial paper ratings of Wisconsin Electric and Wisconsin Gas. The rating outlook for Wisconsin Electric and Wisconsin Gas is stable.

In October 2003, Fitch downgraded certain security ratings of Wisconsin Energy and its subsidiaries. Fitch lowered the senior unsecured debt ratings of Wisconsin Energy and Wisconsin Energy Capital Corporation from A to A- and the commercial paper rating of Wisconsin Energy from F1 to F2. Fitch lowered the WEC Capital Trust I Trust Preferred Securities rating from A- to BBB+. Fitch lowered Wisconsin Electric's senior secured rating from AA to AA-, senior unsecured rating from AA- to A+, and preferred stock rating from AA- to A. Fitch lowered Wisconsin Gas' senior unsecured rating from AA- to A+. Fitch lowered the commercial paper ratings of Wisconsin Electric and Wisconsin Gas from F1+ to F1. The rating outlook for Wisconsin Energy, Wisconsin Electric, Wisconsin Gas and Wisconsin Energy Capital Corporation is stable.

S&P's current outlook for Wisconsin Energy and its subsidiaries is stable.

Wisconsin Energy believes these security 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 only. 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 2003 are expected to be principally for capital expenditures. Wisconsin Energy's 2003 annual consolidated capital expenditure budget is approximately $693 million.

Financial Instruments:   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 September 30, 2003, the Company's estimated maximum exposure under such agreements has not changed significantly compared to December 31, 2002. The Company continues to believe that the likelihood is remote that material payments will be required under these agreements. For information regarding guarantees the Company has entered into, see Note 7 in the Notes to Consolidated Condensed Financial Statements in Item 1 of Part I of this report.

Contractual Obligations/Commercial Commitments:   The Company's total contractual obligations and other commercial commitments as of September 30, 2003 increased compared with December 31, 2002 due to Wisconsin Energy's sale of $200 million of unsecured Senior Notes and Wisconsin Electric's sale of $635 million of unsecured debentures. These obligations were offset by the optional redemptions of $425 million and $60 million of Wisconsin Electric's debt securities in June and August 2003, respectively, and customary periodic payments, along with reductions during the first nine months of 2003 in obligations and commitments made in the ordinary course of business.

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FACTORS AFFECTING RESULTS, LIQUDITY AND CAPITAL RESOURCES

MARKET RISKS AND OTHER SIGNIFICANT RISKS

Commodity Price Risk:   Wisconsin's retail electric fuel cost adjustment procedure mitigates some of Wisconsin Electric's risk of electric fuel cost fluctuation. On a prospective basis, if cumulative fuel and purchased power costs for electric utility operations deviate from a prescribed range when compared to the costs projected in the most recent retail rate proceeding, retail electric rates may be adjusted, subject to risks associated with the regulatory approval process. The PSCW has authorized the inclusion of price risk management financial instruments for the management of the Company's electric fuel-related costs. For the nine months ended September 30, 2003, the Company's fuel cost has exceeded fuel recovery by approximately $17.0 million. The Company anticipates this number to be less by year end 2003. The PSCW has authorized dollar for dollar recovery for the majority of natural gas costs for the gas utility operations of Wisconsin Electric and W isconsin Gas through gas cost recovery mechanisms, which mitigate most of the risk of gas cost variations.

Independent Power Project Market Risk:As of September 30, 2003, the Company had approximately $231 million of non-utility energy assets, excluding those held by We Power. Based upon projections of the expected undiscounted cash flows over the useful life of these assets, the Company has concluded that it will recover its costs. However, the values that could be realized if the Company immediately disposed of certain assets are believed to be less than their carrying amounts. As of September 30, 2003, the Company has sale agreements that are expected to close in the fourth quarter of 2003 for approximately $32 million of these non-utility energy assets.

Calumet Energy Team, LLC ("Calumet"), a wholly-owned subsidiary of Wisvest, in responding to a Request for Proposal from Exelon Generation Company, LLC, was informed that PJM Interconnection, L.L.C. ("PJM"), in evaluating generation deliverability on the transmission system located in Northern Illinois owned by Commonwealth Edison Company ("ComEd"), had determined that Calumet's generation peaking facility was not considered deliverable during certain peak periods. While not necessarily affecting Calumet's ability to sell energy, the determination negatively impacts Calumet's ability to sell capacity from its plant that is interconnected to the ComEd transmission system. Calumet disagrees with PJM's determination and has invoked dispute resolution under its Interconnection Agreement with ComEd. The ultimate impact that this matter may have on the value of the asset cannot be determined at this time.

Construction Risk:   In December 2002, the PSCW issued a written order granting We Power, Wisconsin Electric, and Wisconsin Energy a Certificate of Public Convenience and Necessity ("CPCN") to commence construction of two 545 megawatt natural gas-based combined cycle generating units on the site of Wisconsin Electric's existing Port Washington Power Plant. The order approves key financial terms of leased generation contracts between We Power and Wisconsin Electric including fixed construction costs of the two Port Washington units at $309.6 million and $280.3 million (2001 dollars) subject to escalation at the GDP inflation rate and force majeure and excused events provisions. Project management is subject to a number of risks over which the Company will have limited or no control and which might adversely affect project costs and completion time. These risks include but are not limited to shortages of, or the inability to obtain, labor or materials, t he inability of the general contractor or subcontractors to perform under their contracts, strikes, adverse weather conditions and changes in applicable laws or regulations. If final costs for the construction of the Port Washington units exceed the fixed costs allowed in the PSCW order it is unlikely that such excess could be recovered from Wisconsin Electric or its customers.

Credit Rating Risk:   Wisconsin Energy and its subsidiaries do not have any credit agreements that would require material changes in payment schedules or terminations as a result of a credit rating

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downgrade. Wisconsin Energy and its subsidiaries do have certain agreements in the form of commodity and energy services contracts and employee benefit plans that could require collateral or termination payments in the event of a credit ratings change to below investment grade. At September 30, 2003, the Company estimates that the potential payments under such agreements that could result from credit rating downgrades totaled approximately $97 million.

UTILITY RATES AND REGULATORY MATTERS

Fuel Cost Adjustment Procedure:   In February 2003, Wisconsin Electric completed a power supply cost analysis which included updated natural gas cost projections for 2003. Based upon this analysis, the Company determined that projected costs had deviated outside of a range prescribed by the PSCW when compared to fuel and purchased power costs authorized in current rates. As a result, the Company filed a request with the PSCW in February 2003 to increase Wisconsin retail electric rates by $55.0 million annually to recover the forecasted increases in fuel and purchased power costs. Wisconsin Electric received an interim order from the PSCW authorizing an increase of $55.0 million in electric rates in March 2003, subject to refund to the extent the final order authorizes recovery of a lesser amount. The interim order was subject to PSCW audit and final order.

In October 2003, the PSCW approved the fuel surcharge adjustment request authorizing an increase of $61.2 million for 2003, $6.2 million more than the interim order on an annualized basis. The final order reflects actual costs incurred plus changes in natural gas prices. The final order imposes an obligation on Wisconsin Electric to refund any fuel surcharge amounts that result in excess revenues as defined. The Company does not anticipate a refund to occur.

Limited Rate Adjustment Request:   Under the conditions of the PSCW Order authorizing Wisconsin Energy's acquisition of WICOR, Inc., the Company is authorized to seek rate reviews with the PSCW during a five-year rate restriction period that began January 1, 2001 limited to changes in revenue requirements as a result of:

• Governmental mandates;
• Abnormal levels of capital additions required to maintain or improve reliable electric service; and
• Major gas lateral projects associated with approved natural gas pipeline construction projects.

On July 2, 2003, the Company filed an application with the PSCW for $90.3 million of total rate adjustments for anticipated 2004 revenue deficiencies associated with (1) costs for the new Port Washington Generating Station being constructed as part of the Power the Future strategy, (2) increased costs linked to changes in Wisconsin's public benefits legislation, (3) costs for construction of the Ixonia Lateral further described below, and (4) costs related to steam utility operations. The filing identifies anticipated revenue deficiencies in 2004 attributable to Wisconsin in the amount of $63.5 million (3.5%) for the electric operations of Wisconsin Electric, $26.2 million (3.9%) for the gas operations of Wisconsin Gas, and $0.6 million (3.9%) for Wisconsin Electric's steam operations. The filing also includes an additional anticipated 2005 Wisconsin revenue deficiency in the amount of $0.4 million (2.6%) for Wisconsin Electric's steam operations. The Company continues to respond to PSCW information requests and expects to update its filing with the PSCW at the end of 2003 to reflect additional anticipated 2005 revenue deficiencies associated with the Oak Creek Generating Units that are contemplated as part of the Power the Future strategy. The Company anticipates an order from the PSCW on the 2004 revenue deficiencies in early 2004.

Request for Deferral of Uncollectible Accounts Receivable:   Due to a combination of unusually high natural gas prices, the soft economy within its utility service territories, and limited governmental

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assistance available to low-income customers, the Company has seen a significant increase in residential uncollectible accounts receivable. Because of this, the Company sent a letter to the PSCW on July 23, 2003 requesting authority to defer for future rate recovery all bad debt expenses incurred during 2003 in excess of amounts included in current utility rates. The PSCW approved the Company's request in October 2003; however the Company has not received a final order. As such, the Company has not yet determined the financial impact of the PSCW's decision.

Ixonia Lateral:   In April 2003, Wisconsin Gas started construction on the 35-mile Ixonia Lateral, which will connect the Wisconsin Gas distribution system to the Guardian Pipeline. The Ixonia Lateral is expected to provide substantial gas cost savings as well as critical additional pipeline capacity. Wisconsin Gas expects to complete and place the Ixonia Lateral in service in time to allow Wisconsin Gas to access its full contract capacity from Guardian Pipeline in the fourth quarter of 2003.

Power the Future - Port Washington:   After receiving approval from the PSCW for the Port Washington project, We Power entered into binding contracts with third parties to secure necessary engineering, design and construction services and major equipment components for the Port Washington Generating Station Unit 1. We Power began construction of the new facility in July 2003 and expects to complete construction of Unit 1 by the end of the second quarter of 2005. We Power began collecting certain costs from Wisconsin Electric in the third quarter of 2003 as provided for in leased generation contracts that were signed in May 2003. In January 2003, Wisconsin Electric filed a request with the PSCW to defer costs for recovery in future rates. The PSCW approved the request at an open meeting in April 2003. (See "Limited Rate Adjustment Request" above for further information.) Before beginning construction of Port Washington Generating Station Un it 2, the order from the PSCW authorizing the Port Washington project requires that an updated demand and energy forecast be filed with the PSCW to document market demand for additional generating capacity. In October 2003, the Company received approval from the Federal Energy Regulatory Commission ("FERC") to transfer by long-term lease certain FERC jurisdictional assets from We Power to Wisconsin Electric.

Associated with construction of the Port Washington Generating Station under the Company's Power the Future strategy, Wisconsin Gas received a Certificate of Authority from the PSCW in December 2002 authorizing construction of a 16.8 mile natural gas lateral that will connect the plant to the ANR Pipeline. It will also improve reliability for the natural gas distribution system in the area. The Company received a Chapter 30 wetland permit from the Wisconsin Department of Natural Resources ("WDNR") on July 3, 2003 approving construction of this lateral. The WDNR permitted construction of substantially the entire lateral consistent with the planned route previously approved by the PSCW, with certain exceptions. The Company has modified the planned route pursuant to the WDNR's request and the PSCW is scheduled to meet in November 2003 for re-approval of the modified route. Including the requested changes, the Company estimates the total cost of the project to be approximately $40 million, subject to PSCW approval. Construction of the lateral is scheduled to begin in spring 2004 and to be completed by late 2004.

In March 2003, an individual who participated in the Port Washington CPCN proceedings before the PSCW filed a petition for review with the Dane County Circuit Court requesting the Court to reverse and remand in its entirety the PSCW's December 2002 order granting the CPCN to commence construction at the Port Washington Generating Station (the "Order"). Wisconsin Energy believes the petition has no merit and in March 2003 filed a notice of appearance and statement of position asking that the Order be upheld and the petition dismissed. In October 2003, the petitioner filed a reply brief, but the Court has allowed the petitioner to supplement such brief. This supplement is due in November 2003.

In July and August 2003, two landowners filed separate Petitions for Review in Ozaukee County Circuit Court challenging the Chapter 30 permit issued in July 2003 by the WDNR to Wisconsin Gas for the Port Washington Lateral. Further, in September 2003, one of the same landowners filed an additional Petition

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for Review in Ozaukee County Circuit Court challenging WDNR's denial of a request for a contested case hearing on the issuance of the Chapter 30 permit. The Company has intervened as a full party in these proceedings and will actively support the validity of the permit.

Power the Future - Oak Creek:   Implementation of phase two of the Company's Power the Future strategy is subject to a number of regulatory approvals. The Company's application seeking the issuance of a CPCN for the construction of additional generating units at the Company's existing Oak Creek Power Plant site was deemed complete by the PSCW on November 15, 2002. In January 2003, certain intervenors filed with the PSCW a petition for review of the completeness determination seeking its reversal. The PSCW denied the intervenors' petition in April 2003 and established a time schedule for the Oak Creek CPCN hearings. Such intervenors subsequently filed a petition for judicial review of the PSCW's denial on May 16, 2003 in Dane County Circuit Court. On June 25, 2003, the Circuit Court dismissed the intervenors' petition.

The Oak Creek CPCN hearings were completed in September 2003 pursuant to a schedule set by the Administrative Law Judge. Wisconsin Energy anticipates receiving a decision from the PSCW on the Oak Creek CPCN no later than November 2003.

In March 2003, the City of Oak Creek announced that it had entered into an environmental and economic agreement with Wisconsin Energy covering the Company's expansion plans for the Oak Creek Power Plant site. Under such agreement, the City will receive annual community-impact mitigation payments for each additional generating unit constructed on the Oak Creek site. Such payments are subject to prior approval by the PSCW. Wisconsin Energy's direct obligations under such agreement are not expected to have a material impact on its financial condition or results of operations. In June 2003, the City issued a conditional use permit allowing new generating station construction activities on the existing Oak Creek site. Wisconsin Energy continues to work with the PSCW and the WDNR to obtain all required permits and project approvals.

In September 2003, several parties submitted to the WDNR a joint Request for Hearing on Wisconsin Electric's application for state water regulatory permits and approvals for its proposed new generating units at the existing Oak Creek Power Plant. The parties requesting the hearing are S.C. Johnson & Son, Inc., Sierra Club, Citizens for Responsible Power, Clean Wisconsin, and Clean Air Task Force. In October 2003, the WDNR notified the Company that it will grant the hearing request. The matter will be referred to an Administrative Law Judge, who will schedule and conduct the hearing.

On October 29, 2003, the PSCW discussed the major issues regarding the proposed Oak Creek Power Plants. In a release by the PSCW dated October 29, 2003, the PSCW reported that it had reached the following preliminary decisions:

• Additional electric generation was required for Southeast Wisconsin;
• A diversity of fuel sources best serves the state;
• Two coal-fired Super-Critical Pulverized Coal units should be constructed with the first plant going on line in 2009 and the second plant going on line in 2010;
• The cost to construct the two coal units will be $2.15 billion, overall;
• The Return on Equity on the lease agreement with Wisconsin Electric will be set at 12.7% with a capital structure that includes 55% equity;
• The CPCN will be granted contingent upon the Company obtaining the necessary air quality and water permits, and a prudence requirement on any costs above the $2.15 billion; and
• The third proposed Gasification Combined Cycle unit was not approved at this time as the technology is not currently considered cost-effective.

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The PSCW announced that the above decisions will be finalized in a Commission Order that will be released before November 10, 2003.

ENVIRONMENTAL MATTERS

Mercury Emission Control Rulemaking:   As required by the 1990 amendments to the Federal Clean Air Act, the EPA issued a regulatory determination in December 2000 that utility mercury emissions should be regulated. The EPA is expected to develop draft rules by December 2003 and issue final rules by December 2004. In June 2001, the WDNR independently developed draft mercury emission control rules that would affect electric utilities in Wisconsin. On May 23, 2003, the WDNR released a final draft of the proposed rules, which include mercury emission reductions of 40% by 2010 and 80% by 2015. The rules provide for a multi-emission alternative approach for compliance, but it is not clear if this would apply to the second phase of reductions. On June 25, 2003, the Natural Resources Board approved the rules and sent them to the Wisconsin Legislature. The Wisconsin Legislature rejected the rules during the third quarter of 2003. The Company is currently unable to predict the ultimate rules that will be developed and adopted by the EPA and/or the WDNR, nor is it able to predict the impacts, if any, that the EPA's and/or WDNR's mercury emission control rulemakings might have on the operations of its existing coal-based generating facilities.

NUCLEAR OPERATIONS

Point Beach Nuclear Plant:   Wisconsin Electric owns two 517-megawatt electric generating units at Point Beach Nuclear Plant in Two Rivers, Wisconsin which are operated by Nuclear Management Company, LLC ("NMC").

On February 11, 2003, the United States Nuclear Regulatory Commission ("NRC") issued an order establishing interim inspection requirements for reactor vessel heads at pressurized water reactors such as Point Beach. The order formally establishes requirements for licensees to implement the provisions of NRC Bulletin 2002-02, Reactor Pressure Vessel Head Penetration Nozzle Inspection Programs, issued on August 9, 2002. The Company plans to replace both reactor vessel heads during the 2005 refueling outages as an alternative to incurring the additional time and costs of these examinations and filed the required application with the PSCW on June 6, 2003. In October 2003, the PSCW approved reactor vessel head replacement for Units 1 & 2 at Point Beach. Total capital expenditures to replace the two reactor vessel heads are estimated at approximately $54 million.

On April 2, 2003, the NRC issued the results of two special inspections conducted in late 2002 in response to problems identified by Point Beach with the performance of the auxiliary feedwater ("AFW") system recirculation lines. The NRC determined that a potential common mode failure of the AFW pumps due to a loss of instrument air is a "red" finding that will not be treated as an old design issue. The NRC inspections identified that corrective actions did not prevent subsequently identified problems related to AFW design, including the potential for plugging of recirculation orifices. The NRC has also preliminarily determined that this issue is a "red" finding.

NMC attended a regulatory conference with the NRC in June 2003 to provide additional information and discuss the significance of the findings. The NRC conducted a supplemental inspection at Point Beach in three phases during the third quarter of 2003 to determine further follow-up actions, if any. NRC identified a number of potential violations and areas for improvement but concluded that Point Beach continues to operate safely. NRC expects to discuss the results of this inspection in a public meeting in mid-November 2003. The Company is currently unable to estimate the additional impact that may result.

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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 the 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, distribution system and/or administration initiatives; recovery of costs of previous investments made under traditional regulation; recovery of costs associated with adoption of changed accounting standards; 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, including but not limited to, regulations relating to the release of emissions from fossil-fueled power plants such as carbon dioxide, sulfur dioxide, nitrogen oxide, small particulates or mercury; the siting approval process for new generation and transmission facilities; or changes in the regulations from the Wisconsin Department of Natural Resources related to the siting approval process for new pipeline construction.

• 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 changing 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.

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• 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.

• Factors which impede execution of Wisconsin Energy's Power the Future strategy, including receipt of necessary state and federal regulatory approvals; local opposition to siting of new generating facilities; obtaining the investment capital from outside sources necessary to implement the strategy; and risk associated with construction of the Power the Future facilities on time and within budget.

• 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 litigation with insurance carriers to recover costs and expenses associated with the Giddings & Lewis Inc. / City of West Allis 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 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; timely regulatory approval without onerous conditions of potential acquisitions or divestitures; 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 otherfactors.

• 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 operations, including foreign governmental actions; foreign economic and currency risks; political instability; and unanticipated changes in foreign environmental regulations.

• 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.

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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 I 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, independent power project market risk, credit rating risk and construction risk at Wisconsin Energy Corporation, see Item 2, 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 I of this report and Item 2, 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 I of Wisconsin Energy's Quarterly Reports on Form 10-Q for the periods ended March 31 and June 30, 2003. 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 Ris ks," in Part II of Wisconsin Energy's 2002 Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures:   The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.

Internal Control Over Financial Reporting:   There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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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 2002 Annual Report on Form 10-K and Item 1, Legal Proceedings, in Part II of Wisconsin Energy's Quarterly Reports on Form 10-Q for the periods ended March 31 and June 30, 2003.

In addition to those legal proceedings discussed in its reports to the SEC, the Company is currently, and from time to time, subject to claims and suits arising in the ordinary course of business. Although the results of such legal proceedings cannot be predicted with certainty, the Company's management, after consultation with legal counsel, believes that the ultimate resolution of these proceedings will not have a material adverse effect on the financial statements of the Company and its subsidiaries.

ENVIRONMENTAL MATTERS

EPA Information Requests:   Wisconsin Electric received requests between 2000 and 2002 for information from the EPA regional offices pursuant to Section 114(a) of the Clean Air Act. For further information, see "Note 9 -- Commitments and Contingencies" in the Notes to Consolidated Condensed Financial Statements in Item 1 of Part I of this report.

UTILITY RATES AND REGULATORY MATTERS

Power the Future:   See Item 2, Management's Discussion and 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.

See Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations - "Factors Affecting Results, Liquidity and Capital Resources" in Part I of this report for information concerning rate matters in the jurisdictions where Wisconsin Electric, Wisconsin Gas and Edison Sault do business and for information concerning nuclear operations at Wisconsin Electric's Point Beach Nuclear Plant.

OTHER MATTERS

Lorenzo Peterson vs. Sta-Rite:   As previously reported, on September 4, 2001, a lawsuit was commenced against Sta-Rite Industries, Inc., an indirect wholly owned subsidiary of Wisconsin Energy, in the Circuit Court of the Eleventh Judicial Circuit in Miami-Dade County, Florida. Lorenzo Peterson, a minor, was seeking damages for the personal injuries he sustained when he was trapped under water after placing his hand in the main drain on the bottom of a pool. Trial commenced on July 21, 2003, and on August 1, 2003 the jury returned a verdict against Sta-Rite in the amount of $104.4 million in compensatory damages. Counsel for the plaintiff filed a motion requesting further proceedings before the Court to determine whether punitive damages should also be assessed against Sta-Rite. The Court denied this motion on September 23, 2003 finding that the case on its merits did not warrant punitive damages. On October 14, 2003, the Co urt denied Sta-Rite's post-verdict motions challenging the jury's

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verdict. Sta-Rite intends to appeal the jury verdict. In any event, Wisconsin Energy believes it has adequate insurance to cover the compensatory damages.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a. EXHIBITS

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

Exhibit No.

10	Material Contracts
10.1	Senior Officer Employment and Non-Compete Agreement between Wisconsin Energy Corporation and Allen L. Leverett, effective July 1, 2003. (Incorporated herein by reference to Exhibit 10.3 to Wisconsin Energy Corporation's 6/30/03 Form 10-Q.)
10.2	Letter Agreement by and between Richard R. Grigg and Wisconsin Energy Corporation dated July 23, 2003. (Incorporated herein by reference to Exhibit 10.4 to Wisconsin Energy Corporation's 6/30/03 Form 10-Q.)
10.3	Senior Officer Employment and Non-Compete Agreement between Wisconsin Energy Corporation and Rick Kuester, effective October 13, 2003.

10.4	Amended and Restated Senior Officer Employment and Non-Compete Agreement between Wisconsin Energy Corporation and Gale E. Klappa, effective October 22, 2003.
31	Rule 13a-14(a) / 15d-14(a) Certifications
31.1	Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Section 1350 Certifications
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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b. REPORTS ON FORM 8-K

A Current Report on Form 8-K dated as of July 25, 2003 was filed by Wisconsin Energy on July 25, 2003 to report that Richard R. Grigg had decided to retire effective March 1, 2004, and relinquished as of July 31, 2003 the titles of President of Wisconsin Electric Power Company and President and Chief Operating Officer of Wisconsin Gas Company and all directorships with Wisconsin Energy Corporation and its subsidiaries.

A Current Report on Form 8-K dated as of August 1, 2003 was filed by Wisconsin Energy on August 7, 2003 to report an update on the Lorenzo Peterson vs. Sta-Rite case.

A Current Report on Form 8-K dated as of September 15, 2003 was filed by Wisconsin Energy on September 15, 2003 to report that Rick Kuester was named President and Chief Executive officer of We Generation, Wisconsin Energy's electric generation group, effective October 13, 2003.

No other reports on Form 8-K were filed by Wisconsin Energy during the quarter ended September 30, 2003.

A Current Report on Form 8-K dated as of October 3, 2003 was filed by Wisconsin Energy on October 6, 2003 to report that Wisvest Corporation, a wholly-owned subsidiary of Wisconsin Energy Corporation, had entered into an agreement to sell its 500 megawatt Siemens Westinghouse advanced technology natural gas power island back to Siemens Westinghouse.

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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: October 31, 2003	Stephen P. Dickson Controller, Chief Accounting Officer and duly authorized officer

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EX-10.3

Exhibit 10.3

SENIOR OFFICER EMPLOYMENT AND NON-COMPETE AGREEMENT

THIS AGREEMENT is made as of September 12, 2003 between WISCONSIN ENERGY CORPORATION (the "Company") and Frederick D. Kuester (the "Executive").

WHEREAS, the Company wishes to employ the Executive as President and Chief Executive Officer of its We Generation operations and as Chief Operating Officer of its subsidiary Wisconsin Electric Power Company and the Executive wishes to accept such employment on the terms and conditions provided in this Agreement;

NOW, THEREFORE, in consideration of their mutual promises, the parties agree as follows:

1.      Defined Terms. All of the capitalized terms not otherwise defined in this Agreement are defined in the attached Appendix.

2.      Employment. Effective as of October 13, 2003 (the "Employment Starting Date"), the Company employs the Executive as President and Chief Executive Officer of its We Generation operations and as Chief Operating Officer of its subsidiary Wisconsin Electric Power Company and the Executive hereby accepts such employment and agrees to serve in such positions and to perform such other executive duties and serve in such other executive capacities not inconsistent with such positions as the Board of Directors of the Company or its Chief Executive Officer may request. The Executive's employment is not for any fixed term and the Executive acknowledges that he is an employee at-will. Further:

a.  Base Salary, Signing Bonus and Bonus Opportunity. Effective as of the Employment Starting Date, the Executive's base salary is hereby established at an annual rate of $500,000. Unless base salaries are reduced by the Board of Directors of the Company for all senior executives, the Executive's base salary for 2004 and subsequent years will not be less than $500,000, and the Executive's base salary will be subject to annual review on a basis commensurate with other senior officers of the Company. The Executive will receive a signing bonus of $100,000 payable promptly after the Employment Starting Date. An additional signing bonus of $100,000 shall be payable on the Company's last regular payroll disbursement date in January of 2004 provided that the Executive remains in the Company's employ on that date. The Executive's target bonus opportunity for 2003 under the Company's Short-Term Performance Plan (the "STPP") is fixed at $150,000. Unless target bonus levels are reduced by the Board of Directors of the Company for all senior executives, the Executive's target bonus opportunity under the STPP for 2004 and subsequent years will not be less than 80% of base salary and the maximum bonus opportunity shall be two times the target bonus.

b.  Stock Based Incentives. Effective as of the Employment Starting Date, the Executive will receive a grant of non-qualified options for 200,000 shares of the Company's common stock (the "Stock") at an exercise price per share equal to the average of the lowest and highest reported sale prices for the Stock on the Employment Starting Date. Such options shall vest at the rate of 25% per year of service with the Company by the Executive and shall be on such other terms and conditions as specified for other senior officers of the Company in the grants made to such officers in January of 2003. Additionally, effective as of the Employment Starting Date, the Executive will be granted an award of restricted Stock, with the number of shares awarded to be determined by dividing $750,000 by the average of the lowest and highest reported sale prices for the Stock on such date and then rounding the number of shares to the nearest 10. The restricted Stock will vest at the rate of 10% per year of service with the Company by the Executive, and with 100% vesting to occur upon the Executive's death or disability while in the Company's employ. For 2004 and subsequent years, the Executive will be eligible for equity and equity-linked awards on a basis commensurate with other senior officers of the Company.

3.      Other Benefits and Special Additional Pension Benefit. The Executive will be entitled to six weeks of vacation per year, to participate in all retirement and welfare benefit plans and programs generally available to employees in accordance with the terms of such plans and programs and to participate on a basis commensurate with other senior officers of the Company in any benefit plans and programs available to such officers, including club memberships and the opportunity to participate in the Company's Executive Deferred Compensation Plan (the "EDCP"). Additionally, and provided the Executive's retirement occurs at or after age 60, the Executive shall be entitled to (i) participate in the Company's Supplemental Executive Retirement Plan (the "SERP") with respect to monthly benefit "A," which is designed to make up for any limitations imposed on the amount of Executive's accrued benefit under the Company's tax-qualified defined benefit plan (th e "Retirement Account Plan") because of statutory or regulatory limits relating to the Internal Revenue Code, and (ii) receive a special additional pension benefit. Such special additional pension benefit will be equal to the difference between (a) and (b) below, less the monthly lifetime retirement benefits payable to the Executive from all qualified and non-qualified defined benefit pension plans of previous employers of the Executive, calculated as if starting on the same date as the special additional pension benefit, where (a) and (b) are as follows:

a.  equals the monthly lifetime retirement benefit payable from the Company's Retirement Account Plan, plus any amount payable under the SERP monthly benefit "A", and

b.  equals the monthly lifetime retirement benefit that would have been payable from the Management Employees' Retirement Plan of the Company as in effect on December 31, 1995 (the "1995 Management Plan") had the defined benefit formula then in effect continued until the Executive's retirement, calculated without regard to Internal Revenue Code limits, and as if the Executive had started participation in the 1995 Management Plan at age 22 and as if any deferrals elected by the Executive under the EDCP and any bonuses were all included in the Executive's compensation base for calculating benefits under the 1995 Management Plan.

4.      Additional Preretirement Spouse's Benefit. In the event of the Executive's death while in the Company's employ, the Company will pay to the Executive's surviving spouse, if any, a monthly benefit equal to the difference between (a) and (b) below, but reduced as provided below to reflect the vested value of all qualified and nonqualified defined benefit pension plans of previous employers of the Executive, where (a) and (b) are as follows:

a.  equals the monthly spouse's benefit that is payable from the Retirement Account Plan of the Company, plus any amount payable under monthly benefit "A" of the SERP, and

b.  equals the monthly spouse's benefit that would have been payable from the 1995 Management Plan had the defined benefit formula in effect on December 31, 1995 continued until the Executive's death, calculated on all the same assumptions as set forth in Section 3(b)above.

The reduction attributable to plans of previous employers as referenced above in the event the additional preretirement spouse's benefit becomes payable is to be applied by reducing the monthly surviving spouse benefit calculation as above set forth by one-half of the dollar amount of offset attributable to the plans of previous employers that would have resulted under the third sentence of Section 3 above if Section 3 were applicable. Throughout the period the Executive's surviving spouse receives the monthly payments described above in this Section 4 the spouse shall be entitled to coverage under the Company's retiree medical and dental program upon the same terms as generally available to surviving spouses of retirees of the Company. To the extent that the medical and dental benefits for the spouse described in the preceding sentence cannot be provided pursuant to the retiree medical and dental program maintained by the Company or its affiliates, the Company shall provide such benefit s outside the program at no cost (including, without limitation, tax cost) to the spouse.

5.      Covered Termination Not Associated with a Change in Control. In the event of a Covered Termination Not Associated with a Change in Control, then the Company shall provide the Executive with the following compensation and benefits:

a.  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 s uperseded 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.

b.  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.

c.  Special Compensation. The Company shall pay to the Executive a lump sum equal to two 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 5 (f) below apply. The amount of the aggregate lump sum provided by this Section 5 (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.

d.  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 Retirement Account Plan, the SERP monthly benefit "A" and the special additional pension benefit provided under Section 3 above, which the Executive would receive if his employment continued for a two-year period following termination of employment, assuming that the Executive's compensation during such two-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 with all non-qualified pension benefits determined on a fully vested basis and waiving the requirement that Executive have attained age 60, and (ii) th e actuarial equivalent of the Executive's actual benefit (paid or payable) under the Retirement Account Plan, the SERP monthly benefit "A" and the special additional pension benefit under Section 3 above. Actuarial equivalency for this purpose shall be determined using an interest rate equal to a 36 consecutive month (or shorter period, as explained in the next sentence) average, using the rates as of the last business day of each month starting with January 31, 2002 (the "Month End Rate") of the five year United States Treasury Note yields (the "36 Month Average Rate") in effect ending with the Month End Rate immediately prior to the Effective Date, 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 Account Plan. Prior to January 31, 2005, the 36 Month Average Rate shall mean only the average of the Month End Rates which have occurred since January 31, 2002, even t hough less than 36. 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 two-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 5(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 5(f) below apply. The amount of the lump sum provided by this Section 5(d) shall not be treated as compensation for purposes of any other benefit plan or program applicable to the Executive.

e.  Special Additional Monthly Pension Benefit. The Company shall pay to the Executive an additional monthly pension benefit equal to the difference between (i) the pension benefits the Executive would have received under all qualified and non-qualified defined benefit pension plans of his former employer immediately prior to his employment with the Company had he remained with such former employer until age 60, calculated as if his pay with such employer had continued at its 2003 level, increased by 3% annually thereafter, and (ii) the sum of the pension benefits actually payable to the Executive under the Retirement Account Plan and under Section 3 above, which will become vested upon the Executive's termination under this Section 5 without regard to the Executive's age, plus the actuarial equivalent (calculated as provided in subsection (d) above) of the special retirement plans lump sum benefit provided in subsection (d) above, provided that the benefit calculated und er (i) above is greater than the benefit calculated under (ii) above.

f.   Deferral Option. Notwithstanding any other provision of this Agreement, the Executive may file a written irrevocable deferral election form 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 electing to defer all or part of the special compensation provided by Section 5(c) and the special retirement plans lump sum otherwise provided for in Section 5(d). 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 manner as elected by the Executive under the terms of 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 deferrals made hereunder, (ii) any amounts which become payable under this Section 5(f) 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 5(f) 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.

g.  Welfare Benefits. Subject to Section 5(h) below, for a two-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 two-year period shall be deemed 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 5(g) 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 two-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.

h.  New Employment. If the Executive secures new employment during the two-year period following termination of employment, the level of any benefit being provided pursuant to Section 5(g) 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.

i.   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.

j.   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 second 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.

6.      Obligation of the Company on a Covered Termination of Employment Associated with a Change in Control of the Company. In the event of a Covered Termination of Employment 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 5 above; provided, however that (i) the special compensation provided for in Section 5(c) shall be three times (rather than two times) the sum of the amounts specified in subsection (a) and (b) of Section 5(c), (ii) the special retirement plans lump sum provided for in Section 5(d) shall be calculated as if the Executive's employment has continued for a three-year period (rather than a two-year period) following his termination of employment, (iii) the welfare benefits described in Section 5(g) shall be provided for a three-year period (rather than a two-year period), (iv) the reference to a two-year period in Section 5(h) shall instead be a reference to a three-year period and (v) the reference to the second anniversary in Section 5(j) shall instead be a reference to the third anniversary. In addition, the tax gross-up provisions of Section 7 hereof shall apply. Further, the deferral election for the Executive described in Section 5(f) above shall apply, but only if the written irrevocable deferral form is filed with the Company prior to the first date on which a change in Control of the Company occurs.

7.      Certain Additional Payments by the Company.

a.  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 7) (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 pena lties 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

b.  Subject to the provisions of paragraph (c) of this Section 7, all determinations required to be made under this Section 7, 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 7, 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 7 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 Co mpany to or for the benefit of Executive.

c.  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:

i.   give the Company any information reasonably requested by the Company relating to such claim,

ii.   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.

iii.  cooperate with the Company in good faith in order effectively to contest such claim, and

iv.  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 7, 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.

d.  If, after the receipt by the Executive of an amount advanced by the Company pursuant to paragraph (c) of this Section 7, 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 7) 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 7, 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 ther eof, the amount of Gross-Up Payment required to be paid.

8.      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 f or 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.

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 amounts which may have become due under the terms of Sections 3 and 4, plus in the event of Disability the benefit that would be payable under Section 5(e) if that Section had been applicable and all equity incentive awards shall be fully veste d and payable on the same basis as provided under Section 5(i) of this Agreement if that Section had been applicable, 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 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 recognized over-the-counter market.

11.     Relocation Benefit. The Company will provide the Executive with the same relocation benefits for his move from his current residence to a residence near the Company's principal office in Milwaukee, Wisconsin as are provided on the date of this Agreement to the President of the Company and which relocation benefits include a guarantee of the Company that the amount realized by Executive on the sale of his current residence shall be the greater of the purchase price paid by the Executive for such residence or the current appraised value of such residence.

12.    Successors and Binding Agreements.

a.  The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) 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.

b.  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.

c.  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 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.     Indemnification. The Company will indemnify the Executive in accordance with the Company's by-laws and the Executive shall be entitled to the protection of any insurance policies the Company may elect to maintain generally for the benefit of its directors and officers.

15.     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 16 shall be construed in accordance with the Federal Arbitration Act.

16.     Resolution of Disputes. The parties shall endeavor to resolve any dispute arising out of or relating to this Agreement by mediation in Milwaukee, Wisconsin, under the Mediation Procedure of the Center for Public Resources ("CPR"). Unless the parties agree otherwise, the mediator will be selected from the CPR Panels of Distinguished Neutrals. Any such dispute which remains unresolved 45 days after appointment of a mediator, shall be finally resolved by arbitration in Milwaukee, Wisconsin, by a sole arbitrator in accordance with the CPR Rules for Non-Administered Arbitration, and judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction thereof. The Company will pay any fees and costs of the mediator in connection with the mediation, but the parties agree to each pay one-half of the fees and costs of the arbitrator in connection with the arbitration. Notwithstanding the foregoing, if the Executive is t he prevailing party in the arbitration, the Executive will be entitled to recover, in addition to any other relief, all reasonable costs and expenses, including fees and expenses of Executive's attorneys, incurred in connection therewith. If the Executive prevails on specific issues, the arbitrator may allocate the costs and expenses incurred by the Executive on a basis the arbitrator deems appropriate.

17.     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.

18.     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.

19.     Withholding. The Company may withhold from any amounts payable under this Agreement all federal, state and other taxes as shall be legally required.

20.     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.

/s/ Frederick D. Kuester                     WISCONSIN ENERGY CORPORATION
By: /s/ Richard A. Abdoo                   

APPENDIX

This is an appendix to the Senior Officer Employment Agreement between WISCONSIN ENERGY CORPORATION and Frederick D. Kuester dated September 12, 2003 (the "Agreement").

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

a.  "Cause" means:

i.   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 believes that the Executive has not substantially performed the Executive's duties, or

ii.  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.

b.  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:

i.   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

ii.  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

iii.  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

iv.  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

v.  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.

c.  "Covered Termination of Employment Associated with a Change in Control" means:

i.   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,

ii.  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

iii.  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), (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

iv.  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.

v.  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 one provided in the first sentence of Section 5(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 5(a) of the Agreement.

d.  "Covered Termination of Employment Not Associated with a Change in Control of the Company" means:

i.   a termination of employment by the Company other than because of death or Disability and without Cause, or

ii.  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)(i), (ii), (iii) or (iv).

e.  "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.

f.  "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.

g.  "Good Reason" means:

i.   any failure by the Company from and after the date of the Agreement 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

ii.  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

iii.  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

iv.  a material breach of the Company's obligations under the Agreement; provided that any change in Executive's title, position or reporting responsibilities shall not be deemed a material breach of this Agreement so long as Executive continues to serve in a senior executive capacity.

An isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive shall not constitute Good Reason.

h.  "Highest Bonus Amount" means the higher of (i) the highest dollar bonus earned by the Executive under any cash bonus or incentive compensation plan of the Company during either the three complete fiscal years of the Company immediately prior to the Executive's termination of employment or the three complete fiscal years of the Company immediately preceding the Change in Control of the Company, whichever is more favorable to the Executive, or (ii) the Executive's bonus or incentive compensation "target" for the fiscal year in which the termination of employment occurs.

EX-10.4

Exhibit 10.4

AMENDED SENIOR OFFICER EMPLOYMENT AND NON-COMPETE AGREEMENT

THIS AMENDED AGREEMENT is made as of October 22, 2003 between WISCONSIN ENERGY CORPORATION (the "Company") and GALE KLAPPA (the "Executive").

WHEREAS, the Executive is currently employed by the Company as its President;

WHEREAS, the Executive and the Company have previously entered into a Senior Officer Employment and Non-compete Agreement dated as of March 20, 2003 and the parties desire to replace that prior agreement with this Agreement;

NOW, THEREFORE, in consideration of their mutual promises, the parties agree as follows:

1.      Defined Terms. All of the capitalized terms not otherwise defined in this Agreement are defined in the attached Appendix.

2.      Employment. Effective as April 14, 2003 (the "Employment Starting Date"), the Company employed the Executive as the President and the Executive accepted and hereby again accepts such employment with the Company and agrees to serve in such position and to perform such other executive duties and serve in such other executive capacities not inconsistent with the position of President as the Board of Directors of the Company may request. The Executive's employment is not for any fixed term and the Executive acknowledges that he is an employee at-will. Further:

a.  Base Salary, Signing Bonus and Bonus Opportunity. Effective as of the Employment Starting Date, the Executive's annual base salary was established and hereby continues to be established at an annual rate of $640,000. The Executive received a special lump sum signing bonus of $350,000, with $250,000 of this amount paid promptly after the Employment Starting Date and the balance of $100,000 payable six months later. The Executive's target bonus opportunity for 2003 under the Company's Short-Term Performance Plan (the "STPP") was fixed at 90% of base salary, with a minimum guaranteed bonus of $576,000 for 2003 and a maximum bonus opportunity of two times the target bonus. The Executive's target bonus opportunity under the STPP for 2004 will not be less than 90% of base salary, unless there has been an adjustment in the maximum bonus opportunity for 2004 for all other senior officers which, on a comparable basis, would reduce Executive's target bonus opportunity for 20 04 to less than 90% of base salary, except under circumstances described in the next sentence. Circumstances under which an adjustment below the 90% target could take place would be limited to a general "Board Action" resulting in the lowering of targets for the entire senior executive group.

b.  Stock Based Incentives. Effective as of the Employment Starting Date, the Executive received a grant of non-qualified options for 250,000 shares of the Company's common stock (the "Stock") at an exercise price per share equal to the average of the lowest and highest reported sale prices for the Stock on the Employment Starting Date, and on other terms and conditions as specified for other senior officers in the grants made to such officers in January of 2003. Additionally, effective as of the Employment Starting Date, the Executive was granted an award of restricted stock, with the number of shares awarded determined by dividing $1,000,000 by the average of the lowest and highest reported sale prices for the Stock on such date and then rounding the number of shares to the nearest 10. The restricted Stock will vest at the rate of 10% per year of service with the Company by the Executive, and with 100% vesting to occur upon the Executive's death or disability while in the Company's employ.

3.      Other Benefits and Special Additional Pension Benefit. The Executive will be entitled to six weeks of vacation per year, to participate in all retirement and welfare benefit plans and programs generally available to employees in accordance with the terms of such plans and programs and to participate on a basis commensurate with other senior officers of the Company in any benefit plans and programs available to such officers, including the opportunity to participate in the Company's Executive Deferred Compensation Plan (the "EDCP"). Additionally, and provided the Executive's retirement occurs at or after age 60, the Executive shall be entitled to (i) participate in the Company's Supplemental Executive Retirement Plan (the "SERP") with respect to monthly benefit "A," which is designed to make up for any limitations imposed on the amount of Executive's accrued benefit under the Company's tax-qualified defined benefit plan (the "Retirement Account Plan") because of statutory or regulatory limits relating to the Internal Revenue Code, and (ii) receive a special additional pension benefit. Such special additional pension benefit will be equal to the difference between (a) and (b) below, less the monthly lifetime retirement benefits payable to the Executive from all qualified and non-qualified defined benefit pension plans of previous employers of the Executive, calculated as if starting on the same date as the special additional pension benefit, where (a) and (b) are as follows:

a.  equals the monthly lifetime retirement benefit payable from the Company's Retirement Account Plan, plus any amount payable under the SERP monthly benefit "A", and

b.  equals the monthly lifetime retirement benefit that would have been payable from the Management Employees' Retirement Plan of the Company as in effect on December 31, 1995 (the "1995 Management Plan") had the defined benefit formula then in effect continued until the Executive's retirement, calculated without regard to Internal Revenue Code limits, and as if the Executive had started participation in the 1995 Management Plan at age 27 and as if any deferrals elected by the Executive under the EDCP and any bonuses were all included in the Executive's compensation base for calculating benefits under the 1995 Management Plan.

4.      Additional Preretirement Spouse's Benefit. In the event of the Executive's death while in the Company's employ, the Company will pay to the Executive's surviving spouse, if any, a monthly benefit equal to the difference between (a) and (b) below, but reduced as provided below to reflect the vested value of all qualified and nonqualified defined benefit pension plans of previous employers of the Executive, where (a) and (b) are as follows:

a.  equals the monthly spouse's benefit that is payable from the Retirement Account Plan of the Company, plus any amount payable under monthly benefit "A" of the SERP, and

b.  equals the monthly spouse's benefit that would have been payable from the 1995 Management Plan had the defined benefit formula in effect on December 31, 1995 continued until the Executive's death, calculated on all the same assumptions as set forth in Section 3(b)above.

The reduction attributable to plans of previous employers as referenced above in the event the additional preretirement spouse's benefit becomes payable is to be applied by reducing the monthly surviving spouse benefit calculation as above set forth by one-half of the dollar amount of offset attributable to the plans of previous employers that would have resulted under the third sentence of Section 3 above if Section 3 were applicable. Throughout the period the Executive's surviving spouse receives the monthly payments described above in this Section 4 the spouse shall be entitled to coverage under the Company's retiree medical and dental program upon the same terms as generally available to surviving spouses of retirees of the Company. To the extent that the medical and dental benefits for the spouse described in the preceding sentence cannot be provided pursuant to the retiree medical and dental program maintained by the Company or its affiliates, the Company shall provide such benefit s outside the program at no cost (including, without limitation, tax cost) to the spouse.

5.      Covered Termination Not Associated with a Change in Control. In the event of a Covered Termination Not Associated with a Change in Control, then the Company shall provide the Executive with the following compensation and benefits:

a.  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 s uperseded 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.

b.  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.

c.  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 5 (f) below apply. The amount of the aggregate lump sum provided by this Section 5 (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.

d.  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 Retirement Account Plan, the SERP monthly benefit "A" and the special additional pension benefit provided under Section 3 above, 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 with all non-qualified pension benefits determined on a fully vested basis and waiving the requirement that Executive have attained age 60, and (ii ) the actuarial equivalent of the Executive's actual benefit (paid or payable) under the Retirement Account Plan, the SERP monthly benefit "A" and the special additional pension benefit under Section 3 above. Actuarial equivalency for this purpose shall be determined using an interest rate equal to a 36 consecutive month (or shorter period, as explained in the next sentence) average, using the rates as of the last business day of each month starting with January 31, 2002 (the "Month End Rate") of the five year United States Treasury Note yields (the "36 Month Average Rate") in effect ending with the Month End Rate immediately prior to the Effective Date, 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 Account Plan. Prior to January 31, 2005, the 36 Month Average Rate shall mean only the average of the Month End Rates which have occurred since January 31, 2002, ev en though less than 36. 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 5(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 5(f) below apply. The amount of the lump sum pro vided by this Section 5(d) shall not be treated as compensation for purposes of any other benefit plan or program applicable to the Executive.

e.  Special Additional Monthly Pension Benefit. The Company shall pay to the Executive an additional monthly pension benefit equal to the difference between (i) the pension benefits the Executive would have received under all qualified and non-qualified defined benefit pension plans of his former employer immediately prior to his employment with the Company had he remained with such former employer until age 60, calculated as if his pay with such employer had continued at its 2003 level, increased by 3% annually thereafter, and (ii) the sum of the pension benefits actually payable to the Executive under the Retirement Account Plan and under Section 3 above, which will become vested upon the Executive's termination under this Section 5 without regard to the Executive's age, plus the actuarial equivalent (calculated as provided in subsection (d) above) of the special retirement plans lump sum benefit provided in subsection (d) above, provided that the benefit calculated und er (i) above is greater than the benefit calculated under (ii) above.

f.  Deferral Option. Notwithstanding any other provision of this Agreement, the Executive may file a written irrevocable deferral election form with the Company both prior to the expiration of thirty days from the date the predecessor to this amended Agreement was signed by the Executive and prior to the Executive's termination of employment (i) electing to defer all or part of the special compensation provided by Section 5(c) and the special retirement plans lump sum otherwise provided for in Section 5(d) and (ii) irrevocably electing 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 manner as elected by the Executive under the terms of 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 deferrals made hereunder, (ii) any amounts which become payable under this Section 5(f) 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 5(f) 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.

g.  Welfare Benefits. Subject to Section 5(h) 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 shal l be deemed 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 5(g) 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 ben efits 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.

h.  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 5(g) 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.

i.   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.

j.  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.

6.      Obligation of the Company on a Covered Termination of Employment Associated with a Change in Control of the Company. In the event of a Covered Termination of Employment 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 5 above, but the tax gross-up provisions of Section 7 hereof shall apply. Further, the deferral election for the Executive described in Section 5(f) above shall apply, but only if the written irrevocable deferral form is filed with the Company prior to the first date on which a change in Control of the Company occurs.

7.      Certain Additional Payments by the Company.

a.  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 7) (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 pena lties 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.

b.  Subject to the provisions of paragraph (c) of this Section 7, all determinations required to be made under this Section 7, 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 7, 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 7 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 Co mpany to or for the benefit of Executive.

c.  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:

i.   give the Company any information reasonably requested by the Company relating to such claim,

ii.   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.

iii.  cooperate with the Company in good faith in order effectively to contest such claim, and

iv.  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 7, 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.

d.  If, after the receipt by the Executive of an amount advanced by the Company pursuant to paragraph (c) of this Section 7, 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 7) 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 7, 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 ther eof, the amount of Gross-Up Payment required to be paid.

8.      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 f or 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.

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 amounts which may have become due under the terms of Sections 3 and 4 plus in the event of Disability the benefit that would be payable under Section 5(e) if that Section had been applicable and all equity incentive awards shall be fully vested and payable on the same basis as provided under Section 5(i) of this Agreement if that Section had been applicable, 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 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 recognized over-the-counter market.

11.      Relocation Benefit. The Company will provide the Executive with the same relocation benefits for his move from his current residence to a residence near the Company's principal office in Milwaukee, Wisconsin as are provided on the date of this Agreement by his current employer.

12.     Successors and Binding Agreements.

a.  The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) 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.

b.  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.

c.  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 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.     Indemnification. The Company will indemnify the Executive in accordance with the Company's by-laws and the Executive shall be entitled to the protection of any insurance policies the Company may elect to maintain generally for the benefit of its directors and officers.

15.     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.

16.     Resolution of Disputes. The parties shall endeavor to resolve any dispute arising out of or relating to this Agreement by mediation in Milwaukee, Wisconsin, under the Mediation Procedure of the Center for Public Resources ("CPR"). Unless the parties agree otherwise, the mediator will be selected from the CPR Panels of Distinguished Neutrals. Any such dispute which remains unresolved 45 days after appointment of a mediator, shall be finally resolved by arbitration in Milwaukee, Wisconsin, by a sole arbitrator in accordance with the CPR Rules for Non-Administered Arbitration, and judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction thereof. The Company will pay any fees and costs of the mediator in connection with the mediation, but the parties agree to each pay one-half of the fees and costs of the arbitrator in connection with the arbitration.

17.     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.

18.     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.

19.     Withholding. The Company may withhold from any amounts payable under this Agreement all federal, state and other taxes as shall be legally required.

20.     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.

/s/ Gale E. Klappa                     WISCONSIN ENERGY CORPORATION
By: /s/ Richard A. Abdoo                   

APPENDIX

This is an appendix to the Senior Officer Employment Agreement between WISCONSIN ENERGY CORPORATION and GALE KLAPPA dated October 22, 2003 (the "Agreement").

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

a.  "Cause" means:

i.   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 believes that the Executive has not substantially performed the Executive's duties, or

ii.   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.

b.  "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:

i.   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

ii.  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

iii.  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

iv.  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

v.  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.

c.  "Covered Termination of Employment Associated with a Change in Control" means:

i.   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,

ii.  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

iii.  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), (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

iv.  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.

v.  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 one provided in the first sentence of Section 5(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 5(a) of the Agreement.

d.  "Covered Termination of Employment Not Associated with a Change in Control of the Company" means:

i.   a termination of employment by the Company other than because of death or Disability and without Cause, or

ii.  in the event the Executive is not appointed as the Chief Executive Officer of the Company or any successor company or companies on or before December 31, 2005 and the Executive terminates employment after December 31, 2005 but before March 31, 2006, or

iii.  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)(ii), (iii), (iv) or (v).

e.  "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.

f.  "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.

g.  "Good Reason" means:

i.   solely in the context of a Covered Termination Associated with a Change in Control, the assignment to the Executive of any duties inconsistent, in the reasonable judgment of the Executive, with the customary duties of a President 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

ii.   any failure by the Company from and after the date of the Agreement 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

iii.  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

iv.  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

v.  a material breach of the Company's obligations under the Agreement; provided that any change in Executive's title, position or reporting responsibilities shall not be deemed a material breach of this Agreement so long as Executive continues to serve in a senior executive capacity.

An isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive shall not constitute Good Reason.

h.  "Highest Bonus Amount" means the higher of (i) the highest dollar bonus earned by the Executive under any cash bonus or incentive compensation plan of the Company during either the three complete fiscal years of the Company immediately prior to the Executive's termination of employment or the three complete fiscal years of the Company immediately preceding the Change in Control of the Company, whichever is more favorable to the Executive, or (ii) the Executive's bonus or incentive compensation "target" for the fiscal year in which the termination of employment occurs.

EX-31.1

Exhibit 31.1

Certification Pursuant to
Rule 13a-14(a) or 15d-14(a),
as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, Richard A. Abdoo, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Wisconsin Energy Corporation;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)      Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)      Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)      All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)      Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:         October 31, 2003

                  /s/ Richard A. Abdoo           
                  Richard A. Abdoo
                  Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to
Rule 13a-14(a) or 15d-14(a),
as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, Allen L. Leverett, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Wisconsin Energy Corporation;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)      Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)      Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)      All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)      Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:          October 31, 2003

                  /s/ Allen L. Leverett      
                  Allen L. Leverett
                  Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification 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 ended September 30, 2003 as filed with the Securities and Exchange Commission on October 31, 2003 (the "Report"), I, Richard A. Abdoo, as Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my 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 results of operations of the Company.

/s/ Richard A. Abdoo      
Richard A. Abdoo
Chief Executive Officer
October 31, 2003

This certification accompanies this Report pursuant to Section 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. A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Wisconsin Energy Corporation and will be retained by Wisconsin Energy Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification 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 ended September 30, 2003 as filed with the Securities and Exchange Commission on October 31, 2003 (the "Report"), I, Allen L. Leverett, as Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my 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 results of operations of the Company.

/s/  Allen L. LeverettAllen L. Leverett
Chief Financial Officer
October 31, 2003

This certification accompanies this Report pursuant to Section 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. A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Wisconsin Energy Corporation and will be retained by Wisconsin Energy Corporation and furnished to the Securities and Exchange Commission or its staff upon request.