WEC ENERGY GROUP, INC. (Form: 10-K, Received: 02/26/2016 15:21:25)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K

(Mark One)



[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015



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

For the transition period from ________________ to ___________________



Commission File Number	Registrant; State of Incorporation; Address; and Telephone Number	IRS Employer Identification No.

001-09057	WEC ENERGY GROUP, INC.	39-1391525
	(A Wisconsin Corporation) 231 West Michigan Street P. O. Box 1331 Milwaukee, WI 53201 414-221-2345

Securities registered pursuant to Section 12(b) of the Act :



Title of Each Class		Name of Each Exchange on Which Registered
Common Stock, $.01 Par Value		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act :

None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [X] No [ ]

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes [ ] No [X]

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 the 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 has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.



	Large accelerated filer [X]	Accelerated filer [ ]
	Non-accelerated filer [ ]	Smaller reporting company [ ]

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

The aggregate market value of the common stock of WEC Energy Group, Inc. held by non-affiliates was $14.2 billion based upon the reported closing price of such securities as of June 30, 2015 .

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date ( January 31, 2016 ):

Common Stock, $.01 par value, 315,652,119 shares outstanding

Documents incorporated by reference :

Portions of WEC Energy Group, Inc.'s Definitive Proxy Statement on Schedule 14A for its Annual Meeting of Stockholders, to be held on May 5, 2016, are incorporated by reference into Part III hereof.

Table of Contents

WEC ENERGY GROUP, INC.

ANNUAL REPORT ON FORM 10-K

For the Year Ended December 31, 2015

TABLE OF CONTENTS



					Page
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION					1
PART I					3
ITEM 1.	BUSINESS				3
	A.	INTRODUCTION			3
	B.	UTILITY ENERGY OPERATIONS			3
	C.	NON-UTILITY OPERATIONS			16
	D.	REGULATION			17
	E.	ENVIRONMENTAL COMPLIANCE			20
	F.	EMPLOYEES			21
ITEM 1A.	RISK FACTORS				23
ITEM 1B.	UNRESOLVED STAFF COMMENTS				32
ITEM 2.	PROPERTIES				33
ITEM 3.	LEGAL PROCEEDINGS				35
ITEM 4.	MINE SAFETY DISCLOSURES				36
	EXECUTIVE OFFICERS OF THE REGISTRANT				37
PART II					39
ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES				39
ITEM 6.	SELECTED FINANCIAL DATA				40
ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS				41
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK				64
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA				65
	A.	Reports of Independent Registered Public Accounting Firm			65
	B.	Consolidated Income Statements			67
	C.	Consolidated Statements of Comprehensive Income			68
	D.	Consolidated Balance Sheets			69
	E.	Consolidated Statements of Cash Flows			70
	F.	Consolidated Statements of Equity			71
	G.	Consolidated Statements of Capitalization			72
	H.	Notes to Consolidated Financial Statements			74
		Note 1	Summary of Significant Accounting Policies	74
		Note 2	Acquisition	81
		Note 3	Dispositions	84
		Note 4	Investment in American Transmission Company	85
		Note 5	Supplemental Cash Flow Information	86
		Note 6	Regulatory Assets and Liabilities	86
		Note 7	Property, Plant, and Equipment	87
		Note 8	Jointly Owned Facilities	88
		Note 9	Asset Retirement Obligations	88
		Note 10	Goodwill and Other Intangible Assets	89
		Note 11	Common Equity	89
		Note 12	Preferred Stock	93
		Note 13	Short-Term Debt and Lines of Credit	93



2015 Form 10-K	i	WEC Energy Group, Inc.

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		Note 14	Long-Term Debt and Capital Lease Obligations	94
		Note 15	Income Taxes	97
		Note 16	Guarantees	100
		Note 17	Employee Benefits	100
		Note 18	Commitments and Contingencies	105
		Note 19	Fair Value Measurements	113
		Note 20	Derivative Instruments	115
		Note 21	Variable Interest Entities	116
		Note 22	Regulatory Environment	116
		Note 23	Michigan Settlement	120
		Note 24	Segment Information	121
		Note 25	Quarterly Financial Information (Unaudited)	122
		Note 26	New Accounting Pronouncements	123
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE				124
ITEM 9A.	CONTROLS AND PROCEDURES				124
ITEM 9B.	OTHER INFORMATION				124
PART III					125
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE OF THE REGISTRANT				125
ITEM 11.	EXECUTIVE COMPENSATION				125
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS				125
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE				126
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES				126
PART IV					127
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES				127
SCHEDULE I — CONDENSED PARENT COMPANY FINANCIAL STATEMENTS					128
	A.	Income Statements			128
	B.	Statements of Comprehensive Income			129
	C.	Balance Sheets			130
	D.	Statements of Cash Flows			131
	E.	Notes to Parent Company Financial Statements			132
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS					134
SIGNATURES					135
EXHIBIT INDEX					137



2015 Form 10-K	ii	WEC Energy Group, Inc.

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GLOSSARY OF TERMS AND ABBREVIATIONS

The abbreviations and terms set forth below are used throughout this report and have the meanings assigned to them below:



Subsidiaries and Affiliates
ATC		American Transmission Company LLC
Bostco		Bostco LLC
DATC		Duke-American Transmission Company
ERGSS		Elm Road Generating Station Supercritical, LLC
Integrys		Integrys Holding, Inc. (previously known as Integrys Energy Group, Inc.)
ITF		Integrys Transportation Fuels, LLC
MERC		Minnesota Energy Resources Corporation
MGU		Michigan Gas Utilities Corporation
NSG		North Shore Gas Company
PDL		WPS Power Development LLC
PELLC		Peoples Energy, LLC
PGL		The Peoples Gas Light and Coke Company
WBS		WEC Business Services, LLC
We Power		W.E. Power, LLC
WECC		Wisconsin Energy Capital Corporation
Wisconsin Electric		Wisconsin Electric Power Company
Wisconsin Gas		Wisconsin Gas LLC
Wispark		Wispark LLC
Wisvest		Wisvest LLC
WPS		Wisconsin Public Service Corporation

Certain Assets
MCPP		Milwaukee County Power Plant
OC 1		Oak Creek Expansion Unit 1
OC 2		Oak Creek Expansion Unit 2
PIPP		Presque Isle Power Plant
PSGS		Paris Generating Station
PWGS 1		Port Washington Generating Station Unit 1
PWGS 2		Port Washington Generating Station Unit 2
VAPP		Valley Power Plant

Federal and State Regulatory Agencies
EPA		United States Environmental Protection Agency
FERC		Federal Energy Regulatory Commission
ICC		Illinois Commerce Commission
MDEQ		Michigan Department of Environmental Quality
MPSC		Michigan Public Service Commission
MPUC		Minnesota Public Utilities Commission
PSCW		Public Service Commission of Wisconsin
SEC		Securities and Exchange Commission
WDNR		Wisconsin Department of Natural Resources



2015 Form 10-K	iii	WEC Energy Group, Inc.

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Accounting Terms
AFUDC		Allowance for Funds Used During Construction
ARO		Asset Retirement Obligation
ASC		Accounting Standards Codification
ASU		Accounting Standards Update
CWIP		Construction Work in Progress
FASB		Financial Accounting Standards Board
GAAP		Generally Accepted Accounting Principles
OPEB		Other Postretirement Employee Benefits

Environmental Terms
Act 141		2005 Wisconsin Act 141
CAA		Clean Air Act
CO ₂		Carbon Dioxide
CSAPR		Cross-State Air Pollution Rule
GHG		Greenhouse Gas
MATS		Mercury and Air Toxics Standards
NAAQS		National Ambient Air Quality Standards
NOx		Nitrogen Oxide
SO ₂		Sulfur Dioxide
WPDES		Wisconsin Pollutant Discharge Elimination System

Measurements
Bcf		Billion Cubic Feet
Btu		British Thermal Unit(s)
Dth		Dekatherm(s) (One Dth equals one million Btu)
kW		Kilowatt(s) (One kW equals one thousand Watts)
kWh		Kilowatt-hour(s)
MDth		One thousand Dekatherms
MW		Megawatt(s) (One MW equals one million Watts)
MWh		Megawatt-hour(s)

Other Terms and Abbreviations
ALJ		Administrative Law Judge
AMRP		Accelerated Natural Gas Main Replacement Program
ARRs		Auction Revenue Rights
CNG		Compressed Natural Gas
Compensation Committee		Compensation Committee of the Board of Directors
CPCN		Certificate of Public Convenience and Necessity
Exchange Act		Securities Exchange Act of 1934, as amended
FTRs		Financial Transmission Rights
GCRM		Gas Cost Recovery Mechanism
LMP		Locational Marginal Price
Merger Agreement		Agreement and Plan of Merger, dated as of June 22, 2014, between Integrys Energy Group, Inc. and Wisconsin Energy Corporation
MISO		Midcontinent Independent System Operator, Inc.
MISO Energy Markets		MISO Energy and Operating Reserves Market
N/A		Not Applicable



2015 Form 10-K	iv	WEC Energy Group, Inc.

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NYMEX		New York Mercantile Exchange
Point Beach		Point Beach Nuclear Power Plant
PTF		Power the Future
ROE		Return on Equity
RTO		Regional Transmission Organization
SSR		System Support Resource
Treasury Grant		Section 1603 Renewable Energy Treasury Grant



2015 Form 10-K	v	WEC Energy Group, Inc.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

In this report, we make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. These statements are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements may be identified by reference to a future period or periods or by the use of terms such as "anticipates," "believes," "could," "estimates," "expects," "forecasts," "goals," "guidance," "intends," "may," "objectives," "plans," "possible," "potential," "projects," "seeks," "should," "targets," "will," or variations of these terms.

Forward-looking statements include, among other things, statements concerning management's expectations and projections regarding earnings, completion of capital projects, sales and customer growth, rate actions and related filings with regulatory authorities, environmental and other regulations and associated compliance costs, legal proceedings, dividend payout ratios, effective tax rate, pension and OPEB plans, fuel costs, sources of electric energy supply, coal and natural gas deliveries, remediation costs, liquidity and capital resources, and other matters.

Forward-looking statements are subject to a number of risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in the statements. These risks and uncertainties include those described in Item 1A. Risk Factors and those identified below:


•	Factors affecting utility operations such as catastrophic weather-related damage, environmental incidents, unplanned facility outages and repairs and maintenance, and electric transmission or natural gas pipeline system constraints;


•	Factors affecting the demand for electricity and natural gas, including political developments, unusual weather, changes in economic conditions, customer growth and declines, commodity prices, energy conservation efforts, and continued adoption of distributed generation by customers;


•	The timing, resolution, and impact of rate cases and negotiations, including recovery of deferred and current costs and the ability to earn a reasonable return on investment, and other regulatory decisions impacting our regulated businesses;


•	The ability to obtain and retain customers, including wholesale customers, due to increased competition in our electric and natural gas markets from retail choice and alternative electric suppliers, and continued industry consolidation;


•	The timely completion of capital projects within budgets, as well as the recovery of the related costs through rates;

•

The impact of federal, state, and local legislative and regulatory changes, including changes in rate-setting policies or procedures, tax law changes, including the extension of bonus depreciation, deregulation and restructuring of the electric and/or natural gas utility industries, transmission or distribution system operation, the approval process for new construction, reliability standards, pipeline integrity and safety standards, allocation of energy assistance, and energy efficiency mandates;


•	Federal and state legislative and regulatory changes relating to the environment, including climate change and other environmental regulations impacting generation facilities and renewable energy standards, the enforcement of these laws and regulations, changes in the interpretation of permit conditions by regulatory agencies, and the recovery of associated remediation and compliance costs;

•

The risks associated with changing commodity prices, particularly natural gas and electricity, and the availability of sources of fossil fuel, natural gas, purchased power, materials needed to operate environmental controls at our electric generating facilities, or water supply due to high demand, shortages, transportation problems, nonperformance by electric energy or natural gas suppliers under existing power purchase or natural gas supply contracts, or other developments;


•	Changes in credit ratings, interest rates, and our ability to access the capital markets, caused by volatility in the global credit markets, our capitalization structure, and market perceptions of the utility industry, us, or any of our subsidiaries;


•	Costs and effects of litigation, administrative proceedings, investigations, settlements, claims, and inquiries;


•	Restrictions imposed by various financing arrangements and regulatory requirements on the ability of our subsidiaries to transfer funds to us in the form of cash dividends, loans or advances;



2015 Form 10-K	1	WEC Energy Group, Inc.

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•	The risk of financial loss, including increases in bad debt expense, associated with the inability of our customers, counterparties, and affiliates to meet their obligations;


•	Changes in the creditworthiness of the counterparties with whom we have contractual arrangements, including participants in the energy trading markets and fuel suppliers and transporters;


•	The direct or indirect effect on our business resulting from terrorist incidents, the threat of terrorist incidents, and cyber intrusion, including the failure to maintain the security of personally identifiable information, the associated costs to protect our assets and personal information, and the costs to notify affected persons to mitigate their information security concerns;


•	The financial performance of ATC and its corresponding contribution to our earnings, as well as the ability of ATC and DATC to obtain the required approvals for their transmission projects;


•	The investment performance of our employee benefit plan assets, as well as unanticipated changes in related actuarial assumptions, which could impact future funding requirements;


•	Factors affecting the employee workforce, including loss of key personnel, internal restructuring, work stoppages, and collective bargaining agreements and negotiations with union employees;


•	Advances in technology that result in competitive disadvantages and create the potential for impairment of existing assets;


•	The terms and conditions of the governmental and regulatory approvals of the acquisition of Integrys that could reduce anticipated benefits and our ability to successfully integrate the operations of the combined company;


•	The risk associated with the values of goodwill and other intangible assets and their possible impairment;


•	Potential business strategies to acquire and dispose of assets or businesses, which cannot be assured to be completed timely or within budgets, and legislative or regulatory restrictions or caps on non-utility acquisitions, investments or projects, including the State of Wisconsin's public utility holding company law;


•	The timing and outcome of any audits, disputes, and other proceedings related to taxes;


•	The effect of accounting pronouncements issued periodically by standard-setting bodies; and


•	Other considerations disclosed elsewhere herein and in other reports we file with the SEC or in other publicly disseminated written documents.

We expressly disclaim any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.



2015 Form 10-K	2	WEC Energy Group, Inc.

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PART I

ITEM 1. BUSINESS

A. INTRODUCTION

In this report, when we refer to "us," "we," "our," or "ours," we are referring to WEC Energy Group, Inc. The term "utility" refers to the regulated activities of the electric and natural gas utility companies, while the term "non-utility" refers to the activities of the electric and natural gas utility companies that are not regulated, as well as We Power. The term "nonregulated" refers to activities at WEC Energy Group holding company, the Integrys holding company, the PELLC holding company, Wispark, Bostco, Wisvest, WECC, WBS, PDL, and ITF. References to "Notes" are to the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

For more information about our business operations, including financial and geographic information about each reportable business segment, see Note 24, Segment Information , and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations.

WEC Energy Group, Inc.

We were incorporated in the state of Wisconsin in 1981 and became a diversified holding company in 1986. We maintain our principal executive offices in Milwaukee, Wisconsin. Our wholly owned subsidiaries provide regulated natural gas and electricity, as well as nonregulated renewable energy. Another subsidiary, ITF, provides CNG products and services and was recorded as held for sale as of December 31, 2015. See Note 3, Dispositions, for more information . In addition, we have an approximately 60% equity interest in ATC (an electric transmission company operating in Illinois, Michigan, Minnesota, and Wisconsin). At December 31, 2015, we had six reportable segments which are discussed below. For additional information about our reportable segments, see Note 24, Segment Information .

Acquisition

On June 29, 2015, Wisconsin Energy Corporation acquired 100% of the outstanding common shares of Integrys and changed its name to WEC Energy Group, Inc. For additional information on this acquisition, see Note 2, Acquisition .

Available Information

Our annual and periodic filings with the SEC are available, free of charge, on our website, www.wecenergygroup.com, as soon as reasonably practicable after they are filed with or furnished to the SEC.

You may obtain materials we filed with or furnished to the SEC at the SEC Public Reference Room at 100 F Street, NE, Washington, DC 20549. To obtain information on the operation of the Public Reference Room, you may call the SEC at 1-800-SEC-0330. You may also view information filed or furnished electronically with the SEC at the SEC's website at www.sec.gov .

B. UTILITY ENERGY OPERATIONS

Wisconsin Segment

Electric Utility Operations

For the periods presented in this Annual Report on Form 10-K, our electric utility operations included operations of Wisconsin Electric for all periods and operations for WPS beginning July 1, 2015, due to the acquisition of Integrys and its subsidiaries. Wisconsin Electric, which is the largest electric utility in the state of Wisconsin, generates and distributes electric energy to approximately 1,140,100 customers located in southeastern Wisconsin (including the metropolitan Milwaukee area), east central Wisconsin, northern Wisconsin, and Michigan's Upper Peninsula. WPS generates and distributes electric energy to approximately 449,200 customers located in northeastern Wisconsin and Michigan's Upper Peninsula.



2015 Form 10-K	3	WEC Energy Group, Inc.

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Electric Utility Operating Statistics

The following table shows certain electric utility operating statistics for the past three years:



	Year Ended December 31
	2015 ⁽¹⁾		2014		2013
Operating revenues (in millions)
Residential	$	1,398.5	$	1,199.3	$	1,208.6
Small commercial and industrial	1,234.3		1,052.9		1,048.0
Large commercial and industrial	857.6		637.0		711.9
Other	26.9		23.0		23.4
Total retail revenues	3,517.3		2,912.2		2,991.9
Wholesale	181.4		131.9		143.7
Resale	248.7		264.1		143.2
Other operating revenues	77.5		87.8		28.4
Total	4,024.9		3,396.0		3,307.2
Electric customer choice ⁽²⁾	2.6		5.1		1.5
Total operating revenues	$	4,027.5	$	3,401.1	$	3,308.7

Customers – end of year (in thousands)
Residential	1,414.1		1,015.0		1,010.5
Small commercial and industrial	171.1		115.4		114.6
Large commercial and industrial	1.0		0.7		0.7
Other	3.1		2.5		2.6
Total customers	1,589.3		1,133.6		1,128.4

Customers – average (in thousands)	1,584.4		1,130.7		1,126.9


⁽¹⁾	Includes the operations of WPS beginning July 1, 2015, as a result of the acquisition of Integrys on June 29, 2015.


⁽²⁾	Represents distribution sales for customers who have purchased power from an alternative electric supplier in Michigan.

Electric Sales

Our electric energy deliveries included supply and distribution sales to retail and wholesale customers and distribution sales to those customers who switched to an alternative electric supplier. In 2015, retail electric revenues accounted for 87.3% of total electric operating revenues, while wholesale (including resale) electric revenues accounted for 10.7% of total electric operating revenues. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Wisconsin Segment Contribution to Operating Income for information on MWh sales by customer class.

Our electric utilities are authorized to provide retail electric service in designated territories in the state of Wisconsin, as established by indeterminate permits and boundary agreements with other utilities, and in certain territories in the state of Michigan pursuant to franchises granted by municipalities.

Our electric utilities buy and sell wholesale electric power by participating in the MISO Energy Markets. The cost of our generation offered into the MISO Energy Markets, compared to our competitors, affects how often our generating units are dispatched and how we buy and sell power. For more information, see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Factors Affecting Results, Liquidity, and Capital Resources – Industry Restructuring.

Large Electric Retail Customers

We provide electric utility service to a diversified base of customers in such industries as mining, paper, foundry, food products and machinery production, health services, governmental, and large retail chains. In February 2015, our largest retail electric customer, the owner of two iron ore mines located in Michigan's Upper Peninsula, returned as a customer after choosing an alternative electric supplier in September 2013. Wisconsin Electric entered into a special contract with each of the mines to provide full requirements electric service through December 31, 2019. In 2015, we deferred, and we expect to continue to defer, the margin from those sales and will apply these amounts for the benefit of Wisconsin retail electric customers in a future rate proceeding. For more information,



2015 Form 10-K	4	WEC Energy Group, Inc.

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see Note 23, Michigan Settlement , and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Factors Affecting Results, Liquidity, and Capital Resources – Industry Restructuring.

Wholesale Customers

We provide wholesale electric service to various customers, including electric cooperatives, municipal joint action agencies, other investor-owned utilities, municipal utilities, and energy marketers. Wholesale sales accounted for 6.0% , 5.3%, and 5.9% of total electric energy sales during 2015, 2014, and 2013, respectively. Wholesale revenues accounted for 4.5% , 3.9%, and 4.3% of total electric operating revenues during 2015, 2014, and 2013, respectively.

Resale

The majority of our sales for resale are sold to one RTO, MISO, at market rates based on availability of our generation and RTO demand. Resale sales accounted for 20.9% , 18.5%, and 13.3% of total electric energy sales during 2015, 2014, and 2013, respectively. Resale revenues accounted for 6.2% , 7.8%, and 4.3% of total electric operating revenues during 2015, 2014, and 2013, respectively.

Electric Sales Growth

Our service territory experienced slightly declining weather-normalized retail electric sales in 2015 as positive customer growth was more than offset by reduced volumes related to lower use per customer. We currently forecast retail electric sales volumes, excluding the two iron ore mines, to grow at a compound annual rate of between flat and 0.5% over the next five years, assuming normal weather. In addition, we forecast associated electric peak demand, excluding the two iron ore mines, to grow at a compound annual rate of between 0.5% to 1.0% over the next five years, also assuming normal weather. The owner of the two iron ore mines has announced its intention to shut down one of the mines in 2017. The potential loss of retail electric sales associated with this mine is estimated at approximately 2% of our annual total retail electric sales.

Electric Generation and Supply Mix

Our electric supply strategy is to provide our customers with energy from plants using a diverse fuel mix that is expected to maintain a stable, reliable, and affordable supply of electricity. We supply a significant amount of electricity to our customers from power plants that we own. We supplement our internally generated power supply with long-term power purchase agreements, including the Point Beach power purchase agreement discussed in Power Purchase Commitments below, and through spot purchases in the MISO Energy Markets.

Our rated capacity by fuel type as of December 31 is shown below. For more information on our electric generation facilities, see Item 2. Properties.



	Rated Capacity in MW ⁽¹⁾
	2015	2014	2013
Coal	4,955	3,707	3,822
Natural gas:
Combined cycle	1,636	1,082	1,082
Steam turbine ⁽²⁾	305	118	—
Natural gas/oil peaking units ⁽³⁾	1,412	962	962
Renewables ⁽⁴⁾	269	155	155
Total rated capacity by fuel type	8,577	6,024	6,021


⁽¹⁾	Rated capacity is the net power output under average operating conditions with equipment in an average state of repair as of a given month in a given year. We are a summer peaking electric utility, and amounts are based on expected capacity ratings for the following summer. The values were established by tests and may change slightly from year to year.


⁽²⁾	The natural gas steam turbine represents the rated capacity associated with the VAPP Units, which were converted from coal to natural gas in 2014 and 2015, as well as Weston Unit 2, which was converted from coal to natural gas in 2015.


⁽³⁾	The dual-fueled facilities generally burn oil only if natural gas is not available due to constraints on the natural gas pipeline and/or at the local natural gas distribution company that delivers natural gas to the plants.


⁽⁴⁾	Includes hydroelectric, biomass, and wind generation.



2015 Form 10-K	5	WEC Energy Group, Inc.

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The table below indicates our sources of electric energy supply as a percentage of sales for the three years ended December 31, as well as estimates for 2016 :



	Estimate		Actual
	2016		2015		2014		2013
Company-owned generation units:
Coal	49.6	%	51.5	%	55.2	%	53.6	%
Natural gas:
Combined cycle	18.7	%	14.6	%	8.7	%	10.1	%
Steam turbine	0.8	%	1.2	%	0.2	%	—	%
Natural gas/oil peaking units	0.1	%	0.6	%	0.2	%	0.2	%
Renewables	3.5	%	3.4	%	3.8	%	3.3	%
Total company-owned generation units	72.7	%	71.3	%	68.1	%	67.2	%
Power purchase contracts:
Nuclear	16.6	%	20.5	%	25.4	%	27.1	%
Natural gas	2.5	%	1.4	%	2.1	%	2.1	%
Renewables	2.1	%	1.5	%	2.7	%	3.1	%
Other	2.9	%	3.5	%	0.9	%	0.5	%
Total power purchase contracts	24.1	%	26.9	%	31.1	%	32.8	%
Purchased power from MISO	3.2	%	1.8	%	0.8	%	—	%
Total purchased power	27.3	%	28.7	%	31.9	%	32.8	%
Total electric utility supply	100.0	%	100.0	%	100.0	%	100.0	%

Coal-Fired Generation

Our coal-fired generation consists of nine operating plants with a rated capacity of 4,955 MW as of December 31, 2015 . For more information about our operating plants, see Item 2. Properties.

Natural Gas-Fired Generation

Our natural gas-fired generation consists of nine operating plants, including peaking units, with a rated capacity of 3,173 MW as of December 31, 2015 . For more information about our operating plants, see Item 2. Properties.

Oil-Fired Generation

Fuel oil is used for combustion turbines at certain of our natural gas-fired plants as well as for ignition and flame stabilization at one of our coal-fired plants. Our oil-fired generation had a rated capacity of 180 MW as of December 31, 2015 . We also have natural gas-fired peaking units with a rated capacity of 1,217 MW, which have the ability to burn oil if natural gas is not available due to delivery constraints. For more information about our operating plants, see Item 2. Properties.

Renewable Generation

Hydroelectric

Our hydroelectric generating system consists of 30 operating plants with a total installed capacity of 168 MW and a rated capacity of 146 MW as of December 31, 2015 . All of our hydroelectric facilities follow FERC guidelines and/or regulations.

Wind

We have six wind sites, consisting of 280 turbines, with an installed capacity of 447 MW and a rated capacity of 73 MW as of December 31, 2015.



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Biomass

We constructed a biomass-fueled power plant at a Rothschild, Wisconsin paper mill site that went into commercial operation in November 2013. Wood waste and wood shavings are used to produce a rated capacity of approximately 50 MW of electric power as well as steam to support the paper mill's operations. Fuel for the power plant is supplied by both the paper mill and through contracts with biomass suppliers.

Electric System Reliability

The PSCW requires us to maintain a planning reserve margin above our projected annual peak demand forecast to help ensure reliability of electric service to our customers. These planning reserve requirements are consistent with the MISO calculated planning reserve margin. The PSCW has a 14.5% reserve margin requirement for long-term planning (planning years two through ten). For short-term planning (planning year one), the PSCW requires Wisconsin utilities to follow the planning reserve margin established by MISO. MISO has a 14.3% reserve margin requirement from January 1, 2016, through May 31, 2016, and 15.2% for the remainder of 2016. The MPSC does not have minimum guidelines for future supply reserves.

We had adequate capacity through company-owned generation units and power purchase contracts to meet the MISO calculated planning reserve margin during 2015 and expect to have adequate capacity to meet the planning reserve margin requirements during 2016 . However, extremely hot weather, unexpected equipment failure or unavailability across the 15-state MISO market footprint could require us to call upon load management procedures. Load management procedures allow for the reduction of energy use through agreements with customers to directly shut off their equipment or through interruptible service, where customers agree to reduce their load in the case of an emergency interruption.

Fuel and Purchased Power Costs

Our retail electric rates in Wisconsin are established by the PSCW and include base amounts for fuel and purchased power costs. The electric fuel rules set by the PSCW allow us to defer, for subsequent rate recovery or refund, under or over-collections of actual fuel and purchased power costs that exceed a 2% price variance from the costs included in the rates charged to customers. For more information about the fuel rule, see Item 1. Business – D. Regulation.

Our average fuel and purchased power costs per MWh by fuel type were as follows for the years ended December 31:



	2015		2014		2013
Coal	$	25.57	$	27.68	$	27.97
Natural gas combined cycle	17.66		40.64		32.22
Natural gas/oil peaking units	56.99		129.83		83.95
Purchased power	43.50		47.47		43.74

We purchase coal under long-term contracts, which helps with price stability. Coal and associated transportation services have continued to see volatility in pricing due to changing domestic and world-wide demand for coal and the impacts of diesel costs, which are incorporated into fuel surcharges on rail transportation. Certain of our coal transportation contracts contain fuel cost adjustments that are tied to changes in diesel fuel and crude oil prices. Currently, diesel fuel contracts are not actively traded. Therefore, we use financial heating oil contracts to mitigate risk related to diesel fuel prices.

We purchase natural gas for our plants on the spot market from natural gas marketers, utilities, and producers, and we arrange for transportation of the natural gas to our plants. We have firm and interruptible transportation, as well as balancing and storage agreements, intended to support our plants' variable usage.

Wisconsin Electric and WPS both have a PSCW-approved hedging program that allows them to hedge up to 75% of their potential risks related to fuel surcharge exposure. Wisconsin Electric and WPS also have a program that allows them to hedge up to 65% and 75%, respectively, of their estimated natural gas use for electric generation in order to help manage their natural gas price risk. These hedging programs are generally implemented on a 36-month forward-looking basis. The results of all of these programs are reflected in the average costs of natural gas and purchased power.



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Coal Supply

We diversify the coal supply for our electric generating facilities and jointly-owned plants by purchasing coal from several mines in Wyoming, as well as from various other states. For 2016 , approximately 78% of our total projected coal requirements of approximately 16 million tons are contracted under fixed-price contracts. See Note 18, Commitments and Contingencies, for more information on amounts of coal purchases and coal deliveries under contract.

The annual tonnage amounts contracted for 2016 through 2018 are as follows:



(in thousands)		Annual Tonnage
2016		13,281
2017		9,303
2018		5,153

Coal Deliveries

All of our 2016 coal requirements are expected to be shipped by our owned or leased unit trains under existing transportation agreements. The unit trains transport the coal for electric generating facilities from mines in Wyoming, Pennsylvania, and Montana. The coal is transported by train to our rail-served electric-generating facilities and to dock storage in Superior, Wisconsin, until needed by our lake vessel-served facilities. Additional small volume agreements may also be used to supplement the normal coal supply for our facilities.

Midcontinent Independent System Operator Costs

In connection with its status as a FERC approved RTO, MISO developed and operates the MISO Energy Markets, which include its bid-based energy markets and ancillary services market. We are participants in the MISO Energy Markets. In 2013, MISO expanded its footprint to include entities in Mississippi, Arkansas, Texas, and Missouri, a region referred to as MISO South. These changes have not had a material impact on our allocation of transmission costs, and we do not expect them to have a material impact in the future. For more information on MISO, see Item 1. Business – D. Regulation.

Power Purchase Commitments

We enter into short and long-term power purchase commitments to meet a portion of our anticipated electric energy supply needs. As of December 31, 2015 , our power purchase commitments with unaffiliated parties for the next five years is 1,432 MW per year. This amount includes 1,033 MW per year related to a long-term power purchase agreement for electricity generated by Point Beach. In addition, 234 MW per year relates to a long-term power purchase agreement under which we purchase power at a price determined monthly based on a formula tied to a natural gas price index.

Other Matters

Seasonality

Our electric utility sales are impacted by seasonal factors and varying weather conditions. We sell more electricity during the summer months because of the residential cooling load. We continue to upgrade our electric distribution system, including substations, transformers, and lines, to meet the demand of our customers. Our generating plants performed as expected during the warmest periods of the summer, and all power purchase commitments under firm contract were received. During this period, Wisconsin Electric did not require public appeals for conservation, and it did not interrupt or curtail service to non-firm customers who participate in load management programs. In addition, WPS did not require any public appeals for conservation, and it did not interrupt or curtail service to non-firm customers who participate in load management programs for capacity reasons. However, WPS did have service curtailments for economic reasons.

Competition

Our electric utilities face competition from various entities and other forms of energy sources available to customers, including self-generation by large industrial customers and alternative energy sources. Our electric utilities compete with other utilities for sales to municipalities and cooperatives as well as with other utilities and marketers for wholesale electric business.



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The retail electric utility market in Wisconsin is regulated by the PSCW. Retail electric customers do not have the ability to choose their electric supplier, and it is uncertain when, if ever, retail electric choice might be implemented in Wisconsin. The regulated energy industry continues to experience significant structural changes, which could eventually lead to increased competition in Wisconsin.

The retail electric utility market in Michigan remains open to competition with its retail choice program, which allows customers to remain with their regulated utility at regulated rates or choose an alternative electric supplier to provide power supply service. We continue providing distribution and customer service functions regardless of the customer's power supplier.

Environmental Matters

For information regarding environmental matters, especially as they relate to coal-fired generating facilities, see Note 18, Commitments and Contingencies , and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Factors Affecting Results, Liquidity, and Capital Resources – Environmental Matters.

Natural Gas Utility Operations

For the periods presented in this Annual Report on Form 10-K, our Wisconsin natural gas utility operations include Wisconsin Gas's and Wisconsin Electric's natural gas operations for all periods and WPS's natural gas operations, including in the Upper Peninsula of Michigan, beginning July 1, 2015, due to the acquisition of Integrys and its subsidiaries.

We are authorized to provide retail natural gas distribution service in designated territories in the state of Wisconsin, as established by indeterminate permits and boundary agreements with other utilities. We also transport customer-owned natural gas. Together our natural gas distribution utilities are the largest in Wisconsin, and we operate throughout the state, including the City of Milwaukee and surrounding areas, northeastern Wisconsin, and large areas of both central and western Wisconsin.

Natural Gas Utility Operating Statistics

The following table shows certain natural gas utility operating statistics at our Wisconsin segment for the past three years:



	Year Ended December 31
	2015 ⁽¹⁾		2014		2013
Operating revenues (in millions)
Residential	$	696.2	$	925.3	$	712.6
Commercial and industrial	332.8		506.0		356.1
Total retail revenues	1,029.0		1,431.3		1,068.7
Transport	62.8		54.2		50.8
Other operating revenues	30.8		10.6		(5.8		)
Total	$	1,122.6	$	1,496.1	$	1,113.7

Customers – end of year (in thousands)
Residential	1,299.7		993.9		985.7
Commercial and industrial	123.4		93.3		92.4
Transport	2.6		1.8		1.7
Total customers	1,425.7		1,089.0		1,079.8

Customers – average (in thousands)	1,417.8		1,081.5		1,074.9


⁽¹⁾	Includes the operations of WPS beginning July 1, 2015, as a result of the acquisition of Integrys on June 29, 2015.

Natural Gas Deliveries

Our gas therm deliveries include customer-owned transported natural gas. Transported natural gas accounted for approximately 50.7% of the total volumes delivered during 2015 , 42.3% during 2014 , and 43.1% during 2013 . Our peak daily send-out during 2015 was 18.2 million therms on January 7, 2015 .



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Large Natural Gas Customers

We provide natural gas utility service to a diversified base of industrial customers who are largely within our electric service territory. Major industries served include governmental, educational, food products, paper, and metal. Fuel used for Wisconsin Electric's electric generation represents our largest transportation customer. Natural gas therms delivered to Wisconsin Electric for electric generation represented 15.3%, 9.3%, and 10.4% of the total volumes delivered during 2015, 2014, and 2013, respectively.

Natural Gas Supply, Pipeline Capacity and Storage

We have been able to meet our contractual obligations with both our suppliers and our customers. For more information on our natural gas utility supply and transportation contracts, see Note 18, Commitments and Contingencies.

Pipeline Capacity and Storage

The interstate pipelines serving Wisconsin originate in major natural gas producing areas of North America: the Oklahoma and Texas basins, western Canada, and the Rocky Mountains. We have contracted for long-term firm capacity from a number of these sources. This strategy reflects management's belief that overall supply security is enhanced by geographic diversification of the supply portfolio.

Due to the daily and seasonal variations in natural gas usage in Wisconsin, we have also contracted for substantial underground storage capacity, primarily in Michigan. We target storage inventory levels at approximately 35% of forecasted winter demand; November through March is considered the winter season. Storage capacity, along with our natural gas purchase contracts, enables us to manage significant changes in daily demand and to optimize our overall natural gas supply and capacity costs. We generally inject natural gas into storage during the spring and summer months when demand is lower and withdraw it in the winter months. As a result, we can contract for less long-line pipeline capacity during periods of peak usage than would otherwise be necessary and can purchase natural gas on a more uniform daily basis from suppliers year-round. Each of these capabilities enables us to reduce our overall costs.

We hold daily transportation and storage capacity entitlements with interstate pipeline companies as well as other service providers under varied-length long-term contracts.

Term Natural Gas Supply

We have contracts for firm supplies with terms of 3–7 months with suppliers for natural gas acquired in the Chicago, Illinois market hub and in the producing areas discussed above. The pricing of the term contracts is based upon first of the month indices.

Combined with our storage capability, management believes that the volume of natural gas under contract is sufficient to meet our forecasted firm peak-day and seasonal demand. Our Wisconsin natural gas utilities' forecasted design peak-day throughput is 30.8 million therms for the 2015 through 2016 heating season.

Secondary Market Transactions

Pipeline long-line and storage capacity and natural gas supplies under contract can be resold in secondary markets. As local distribution companies, our Wisconsin natural gas utilities must contract for capacity and supply sufficient to meet the firm peak-day demand of our customers. Peak or near peak demand days generally occur only a few times each year. The secondary markets facilitate higher utilization of contracted capacity and supply during those times when the full contracted capacity and supply are not needed by the utility, helping to mitigate the fixed costs associated with maintaining peak levels of capacity and natural gas supply. Through pre-arranged agreements and day-to-day electronic bulletin board postings, interested parties can purchase this excess capacity and supply. The proceeds from these transactions are passed through to rate payers, subject to our approved GCRMs. During 2015 , we continued to participate in the secondary markets. For information on the GCRMs, see Note 1(d), Revenues and Customer Receivables.

Spot Market Natural Gas Supply

We expect to continue to make natural gas purchases in the spot market as price and other circumstances dictate. We have supply relationships with a number of sellers from whom we purchase natural gas in the spot market.



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Hedging Natural Gas Supply Prices

Wisconsin Electric and Wisconsin Gas have PSCW approval to hedge up to 60% of planned winter demand and up to 15% of planned summer demand using a mix of NYMEX-based natural gas options and futures contracts. WPS has PSCW approval to hedge up to 67% of planned winter demand using a combination of planned withdrawals from storage and NYMEX financial instruments. These approvals allow these companies to pass 100% of the hedging costs (premiums and brokerage fees) and proceeds (gains and losses) to rate payers through their respective GCRMs. Hedge targets (volumes) are provided annually to the PSCW as part of each company's three-year natural gas supply plan and risk management filing.

To the extent that opportunities develop and physical supply operating plans are supportive, Wisconsin Electric, Wisconsin Gas, and WPS also have PSCW approval to utilize NYMEX-based natural gas derivatives to capture favorable forward-market price differentials. These approvals provide for 100% of the related proceeds to accrue to these companies' respective GCRMs.

Seasonality

Since the majority of our customers use natural gas for heating, customer use is sensitive to weather and is generally higher during the winter months. Accordingly, we are subject to variations in earnings and working capital throughout the year as a result of changes in weather.

Our working capital needs are met by cash generated from operations and debt (both long-term and short-term). The seasonality of natural gas revenues causes the timing of cash collections to be concentrated from January through June. A portion of the winter natural gas supply needs is typically purchased and stored from April through October. Also, planned capital spending on our natural gas distribution facilities is concentrated in April through October. Because of these timing differences, the cash flow from customers is typically supplemented with temporary increases in short-term borrowings (from external sources) during the late summer and fall. Short-term debt is typically reduced over the January through June period.

Competition

Competition in varying degrees exists between natural gas and other forms of energy available to consumers. A number of our large commercial and industrial customers are dual-fuel customers that are equipped to switch between natural gas and alternate fuels. We are allowed to offer lower-priced natural gas sales and transportation services to dual-fuel customers. Under natural gas transportation agreements, customers purchase natural gas directly from natural gas marketers and arrange with interstate pipelines and us to have the natural gas transported to their facilities. We earn substantially the same margin (difference between revenue and cost of natural gas) whether we sell and transport natural gas to customers or only transport their natural gas.

Our ability to maintain our share of the industrial dual-fuel market depends on our success and the success of third-party natural gas marketers in obtaining long-term and short-term supplies of natural gas at competitive prices compared to other sources and in arranging or facilitating competitively priced transportation service for those customers that desire to buy their own natural gas supplies.

Federal and state regulators continue to implement policies to bring more competition to the natural gas industry. While the natural gas utility distribution function is expected to remain a highly regulated, monopoly function, the sale of the natural gas commodity and related services are expected to remain subject to competition from third parties for large commercial and industrial customers. It remains uncertain if and when the current economic disincentives for small firm customers to choose an alternative natural gas commodity supplier may be removed such that we begin to face competition for the sale of natural gas to those customers.

Steam Utility Operations

Wisconsin Electric has a steam utility that generates, distributes, and sells steam supplied by VAPP and MCPP to customers in metropolitan Milwaukee, Wisconsin. Steam is used by customers for processing, space heating, domestic hot water, and humidification. Wisconsin Electric operates a district steam system in downtown Milwaukee and the near south side of Milwaukee, and steam is supplied to this system from VAPP. Wisconsin Electric also operates the steam production and distribution facilities of the MCPP located on the Milwaukee County Grounds in Wauwatosa, Wisconsin. In 2015, we entered into an agreement to sell the MCPP, which is expected to close during the first half of 2016.



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Steam Utility Operating Statistics

Annual sales of steam fluctuate from year to year based on system growth and variations in weather conditions. Certain sections of this Annual Report on Form 10-K combine steam operating revenues with electric operating revenues.

The following table shows certain steam utility operating statistics for the past three years:



	Year Ended December 31
	2015		2014		2013
Operating revenues (in millions)	$	41.0	$	44.1	$	39.6

Pounds of steam sales (in millions)	2,515		2,865		2,750

Customers – average	430		440		445

Illinois Segment

Our Illinois segment includes the natural gas utility operations of PGL and NSG. PGL and NSG, both Illinois corporations, began operations in 1855 and 1900, respectively. We acquired PGL and NSG as a result of the acquisition of Integrys on June 29, 2015. Our customers are located in Chicago and the northern suburbs of Chicago.

Illinois Utilities Operating Statistics

The following table shows certain Illinois utility operating statistics since the acquisition of Integrys.



	Six Months Ended
	December 31,
	2015
Operating revenues (in millions)
Residential	$	309.8
Commercial and industrial	50.4
Total retail revenues	360.2
Transport	97.1
Other operating revenues	46.1
Total	$	503.4

Customers – end of year (in thousands)
Residential	838.2
Commercial and industrial	46.2
Transport	107.8
Total customers	992.2

Customers – average (in thousands)	982.3

Natural Gas Supply, Pipeline Capacity and Storage

We manage portfolios of natural gas supply contracts, storage services, and pipeline transportation services designed to meet varying customer use patterns with safe, reliable natural gas supplies at the best value.

Our natural gas supply requirements are met through a combination of fixed-price purchases, index-priced purchases, contracted and owned storage, peak-shaving facilities, and natural gas supply call options. We contract for fixed-term firm natural gas supply each year to meet the demand of firm system sales customers. To supplement natural gas supply and manage risk, we purchase additional natural gas supply on the monthly and daily spot markets.

For more information on our natural gas utility supply and transportation contracts, see Note 18, Commitments and Contingencies .



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We contract with local distribution companies and interstate pipelines to purchase firm transportation services. We believe that having multiple pipelines that serve our natural gas service territory benefits our customers by improving reliability, providing access to a diverse supply of natural gas, and fostering competition among these service providers. These benefits can lead to favorable conditions for our Illinois utilities when negotiating new agreements for transportation and storage services. Our Illinois utilities further reduce their supply cost volatility through the use of financial instruments, such as commodity futures, swaps, and options as part of their hedging programs. They hedge between 25% and 50% of natural gas purchases, with a target of 37.5%.

We own a 38.3 Bcf storage field (Manlove Field in central Illinois) and contract with various other underground storage service providers for additional storage services. Storage allows us to manage significant changes in daily natural gas demand and to purchase steady levels of natural gas on a year-round basis, which provides a hedge against supply cost volatility. We also own a natural gas pipeline system that connects Manlove Field to Chicago and eight major interstate pipelines. These assets are directed primarily to serving rate-regulated retail customers and are included in our regulatory rate base. We also use a portion of these company-owned storage and pipeline assets as a natural gas hub, which consists of providing transportation and storage services in interstate commerce to our wholesale customers. Customers deliver natural gas to us for storage through an injection into the storage reservoir, and we return the natural gas to the customers under an agreed schedule through a withdrawal from the storage reservoir. Title to the natural gas does not transfer to us. We recognize service fees associated with the natural gas hub services provided to wholesale customers. These service fees reduce the cost of natural gas and services charged to retail customers in rates.

We had adequate capacity to meet all firm natural gas demand obligations during 2015 and expect to have adequate capacity to meet all firm demand obligations during 2016. Our Illinois utilities' forecasted design peak-day throughput is 25.4 million therms for the 2015 through 2016 heating season.

Accelerated Natural Gas Main Replacement Program

PGL is continuing work on the AMRP, a 20-year project that began in 2011 under which PGL is replacing approximately 2,000 miles of Chicago's aging natural gas pipeline infrastructure. PGL currently recovers these costs through a surcharge on customer bills pursuant to an ICC approved qualifying infrastructure plant rider, which is in effect through 2023. For information on investigations related to the AMRP, see Note 22, Regulatory Environment .

Seasonality

Our Illinois utilities' working capital needs are met by cash generated from operations and debt (both long-term and short-term). The seasonality of natural gas revenues causes the timing of cash collections to be concentrated from January through June. A portion of the winter natural gas supply needs is typically purchased and stored from April through November. Also, planned capital spending on our natural gas distribution facilities is concentrated in April through November. Because of these timing differences, the cash flow from customers is typically supplemented with temporary increases in short-term borrowings (from external sources) during the late summer and fall. Short-term debt is typically reduced over the January through June period.

Competition

Although our Illinois utilities' rates are regulated by the ICC, we still face varying degrees of competition from other entities and other forms of energy available to consumers. Absent extraordinary circumstances, potential competitors are not allowed to construct competing natural gas distribution systems in our service territory due to a judicial doctrine known as the "first in the field." In addition, we believe it would be impractical to construct competing duplicate distribution facilities due to the high cost of installation.

Since 2002, all our Illinois utilities' natural gas customers have had the opportunity to choose a natural gas supplier other than us. As a result, we offer natural gas transportation service to enable customers to directly manage their energy costs. Transportation customers purchase natural gas directly from third-party natural gas suppliers and use our distribution system to transport the natural gas to their facilities. We still earn a distribution charge for transporting the natural gas for these customers. As such, the loss of revenue associated with the cost of natural gas that our transportation customers purchase from third-party suppliers has little impact on our net income, as it is offset by an equal reduction to natural gas costs.



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An interstate pipeline may seek to provide transportation service directly to end users, which would bypass our natural gas transportation service. However, we have a bypass rate approved by the ICC, which allows us to negotiate rates with customers that are potential bypass candidates to help ensure that such customers use our transportation service.

Other States Segment

Our other states segment includes the natural gas utility operations of MERC and MGU. We acquired the natural gas distribution operations of MERC and MGU, located in Minnesota and Michigan, respectively, on June 29, 2015, with the acquisition of Integrys. MERC serves customers in various cities and communities throughout Minnesota, and MGU serves customers in the southern portion of lower Michigan.

Other States Utilities Operating Statistics

The following table shows certain other states utility operating statistics since the acquisition of Integrys.



	Six Months Ended
	December 31,
	2015
Operating revenues (in millions)
Residential	$	67.6
Commercial and industrial	38.8
Total retail revenues	106.4
Transport	11.5
Other operating revenues	31.4
Total	$	149.3

Customers – end of year (in thousands)
Residential	345.8
Commercial and industrial	33.8
Transport	23.0
Total customers	402.6

Customers – average (in thousands)	401.5

Natural Gas Supply, Pipeline Capacity and Storage

For more information on our natural gas utility supply and transportation contracts, see Note 18, Commitments and Contingencies.

We own a storage field (Partello in Michigan) and contract with various other underground storage service providers for additional storage services. Storage allows us to manage significant changes in daily natural gas demand and to purchase steady levels of natural gas on a year-round basis, which provides a hedge against supply cost volatility. We contract with local distribution companies and interstate pipelines to purchase firm transportation services. We believe that having multiple pipelines that serve our natural gas service territory benefits our customers by improving reliability, providing access to a diverse supply of natural gas, and fostering competition among these service providers. These benefits can lead to favorable conditions for our other states utilities when negotiating new agreements for transportation and storage services. Our other states utilities further reduce their supply cost volatility through the use of financial instruments, such as commodity futures, swaps, and options as part of their hedging programs.



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MERC hedges up to 70% of planned winter demand using a combination of planned withdrawals from storage and NYMEX financial instruments. MGU hedges up to 20% of its planned annual purchases using NYMEX financial instruments.

Combined with our storage capability, management believes that the volume of gas under contract is sufficient to meet our forecasted firm peak-day and seasonal demand. Forecasted design peak-day throughput for our other states utilities segment is 8.2 million therms for the 2015 through 2016 heating season.

Seasonality

Our other states utilities' working capital needs are met by cash generated from operations and debt (both long-term and short-term). The seasonality of natural gas revenues causes the timing of cash collections to be concentrated from January through June. A portion of the winter natural gas supply needs is typically purchased and stored from April through November. Also, planned capital spending on our natural gas distribution facilities is concentrated in April through November. Because of these timing differences, the cash flow from customers is typically supplemented with temporary increases in short-term borrowings (from external sources) during the late summer and fall. Short-term debt is typically reduced over the January through June period.

Competition

Although our other states utilities' rates are regulated by the MPUC and MSPC, we still face varying degrees of competition from other entities and other forms of energy available to consumers. Many large commercial and industrial customers have the ability to switch between natural gas and alternate fuels. Due to the volatility of energy commodity prices, we have seen customers with dual fuel capability switch to alternate fuels for short periods of time, then switch back to natural gas as market rates change.

MERC commercial and industrial customers have the opportunity to choose a natural gas supplier and all MGU customers have the opportunity to choose a natural gas supplier other than us. We offer natural gas transportation service and also offer interruptible natural gas sales to enable customers to better manage their energy costs. Transportation customers purchase natural gas directly from third-party natural gas suppliers and use our distribution systems to transport the natural gas to their facilities. We still earn a distribution charge for transporting the natural gas for these customers. As such, the loss of revenue associated with the cost of natural gas that our transportation customers purchase from third-party suppliers has little impact on our net income, as it is offset by an equal reduction to natural gas costs. Customers continue to switch between firm system supply, interruptible system supply, and transportation service each year as the economics and service options change.

Electric Transmission Segment

American Transmission Company

ATC is a regional transmission company that owns, maintains, monitors, and operates electric transmission systems in Wisconsin, Michigan, Illinois, and Minnesota. ATC is expected to provide comparable service to all customers, including Wisconsin Electric and WPS, and to support effective competition in energy markets without favoring any market participant. ATC is regulated by the FERC for all rate terms and conditions of service and is a transmission-owning member of MISO. MISO maintains operational control of ATC's transmission system, and Wisconsin Electric and WPS are non-transmission owning members and customers of MISO. As of December 31, 2015 , our ownership interest in ATC was approximately 60% . This increase over the December 31, 2014 , ownership interest of approximately 26% was due to the acquisition of Integrys on June 29, 2015. See Note 4, Investment in American Transmission Company, for more information .

In April 2011, ATC and Duke Energy announced the creation of a joint venture, DATC, that will seek opportunities to acquire, build, own, and operate new electric transmission infrastructure in North America to address increasing demand for affordable, reliable transmission capacity. In April 2013, DATC acquired a 72% interest in California's Path 15 transmission line. DATC continues to evaluate new projects and opportunities, along with participating in the competitive bidding process on projects it considers viable. These projects are located in the service territories of several different RTOs around the country. On January 20, 2016, the FERC issued an order authorizing ATC to enter into a proposed restructuring involving the creation of three new entities: ATC Holdco, ATC Development, and ATC Development Manager, Inc. ATC’s current member owners will have the option to retain their existing



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ownership interests limited to ATC in Wisconsin and adjacent states or to exchange their current ATC ownership interests for ownership interests in ATC Holdco, which would allow them to participate in ATC's transmission business in Wisconsin and adjacent states, as well as new transmission development projects throughout the U.S.

ATC is currently named in a complaint filed with the FERC requesting a reduction in the base ROE used by MISO transmission owners. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Factors Affecting Results, Liquidity, and Capital Resources – Other Matters, for more information.

C. NON-UTILITY OPERATIONS

We Power Segment

We Power, through wholly owned subsidiaries, has designed and built approximately 2,350 MW of generation in Wisconsin as part of our PTF strategy. This generation is made up of capacity from the Oak Creek Expansion units, OC 1 and OC 2, which were placed in service in February 2010 and January 2011, respectively, and the PWGS units, PWGS 1 and PWGS 2, which were placed in service in July 2005 and May 2008, respectively. Two unaffiliated entities collectively own approximately 17%, or approximately 211 MW, of OC 1 and OC 2. All four of the PTF units are being leased to Wisconsin Electric under long-term leases (the Oak Creek units have 30-year leases and the PWGS units have 25-year leases). The PTF units are positioned to provide a significant portion of our future generation needs.

Our PTF strategy was designed to address Wisconsin Electric's electric supply needs by increasing the electric generating capacity in Wisconsin while allowing us to maintain a diversified fuel mix by including both new coal-fired plants and natural gas-fired plants. Because of the significant investment necessary to construct these generating units, we constructed the plants under Wisconsin's Leased Generation Law, which allows a non-utility affiliate to construct an electric generating facility and lease it to the public utility. The law allows a public utility that has entered into a lease approved by the PSCW to recover fully in its retail electric rates that portion of any payments under the lease that the PSCW has allocated to the public utility's Wisconsin retail electric service, and all other costs that are prudently incurred in the public utility's operation and maintenance of the electric generating facility allocated to the utility's Wisconsin retail electric service. In addition, the PSCW may not modify or terminate a lease it has approved under the Leased Generation Law except as specifically provided in the lease or the PSCW's order approving the lease. This law effectively created regulatory certainty in light of the significant investment being made to construct the units. All four PTF units were constructed under leases approved by the PSCW.

We are recovering our costs of the PTF units, including subsequent capital additions, through lease payments that are billed from We Power to Wisconsin Electric and then recovered in Wisconsin Electric's rates as authorized by the PSCW, the MPSC, and the FERC. Under the lease terms, our return is calculated using a 12.7% ROE and the equity ratio is assumed to be 55% for the Oak Creek units and 53% for the PWGS units.

For additional background information on our PTF strategy, see Management's Discussion and Analysis of Financial Condition and Results of Operations – Factors Affecting Results, Liquidity and Capital Resources – Power the Future in Item 7. of our Annual Report on Form 10-K for the year ended December 31, 2007.

Corporate and Other Segment

The corporate and other segment includes the operations of the WEC Energy Group holding company, the Integrys holding company, and the PELLC holding company, as well as the operations of Wispark, Bostco, Wisvest, WECC, WBS, PDL, and ITF.

Bostco and Wispark develop and invest in real estate, and combined they had $72.7 million in real estate holdings at December 31, 2015 . Wispark has developed several business parks and other commercial real estate projects, primarily in southeastern Wisconsin.

Wisvest was originally formed to develop, own, and operate electric generating facilities and to invest in other energy-related entities. However, Wisvest discontinued its development activity several years ago. At December 31, 2015 , Wisvest's only operating asset and investment was Wisvest Thermal Energy Services, which provides chilled water services to the Milwaukee Regional Medical Center. During 2015, we entered into an agreement to sell the MCPP, including Wisvest Thermal Energy Services. This sale is expected to close during the first half of 2016.



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WECC was originally formed to invest in non-utility projects, such as low income housing developments. However, due to a focus on our regulated utility business, WECC sold many of its non-utility investments and no longer has significant operations.

WBS is a wholly owned centralized service company that provides administrative and general support services to our regulated utilities. WBS also provides certain administrative and support services to our nonregulated entities.

PDL owns distributed renewable projects, primarily solar, and a natural gas-fired cogeneration facility in Wisconsin known as the Combined Locks Energy Center. PDL's natural gas-fired facility is subject to market price volatility and is dispatched to produce energy only when it is economical to do so. PDL's renewable energy facilities rely on renewable resources, such as solar irradiance or landfill gas. There is no market price risk associated with the fuel supply of these facilities. However, production at these facilities can be intermittent due to the availability of the renewable energy resource.

ITF designs, builds, maintains, owns, and operates CNG fueling stations in multiple states. In addition, ITF manufactures its own compressor package, which includes a proprietary method of compressing natural gas. Since ITF's operations are inconsistent with our risk profile, we entered into an agreement to sell ITF in February 2016. See Note 3, Dispositions, for more information .

D. REGULATION

We are a holding company and are subject to the requirements of the Public Utility Holding Company Act of 2005 (PUHCA 2005). We also have various subsidiaries that meet the definition of a holding company under PUHCA 2005 and are also subject to its requirements.

Pursuant to the non-utility asset cap provisions of Wisconsin's public utility holding company law, the sum of certain assets of all non-utility affiliates in a holding company system may not exceed 25% of the assets of all public utility affiliates. However, among other items, the law exempts energy-related assets, including the generating plants constructed by We Power as part of our PTF strategy, from being counted against the asset cap provided that they are employed in qualifying businesses. We report to the PSCW annually our compliance with this law and provide supporting documentation to show that our non-utility assets are below the non-utility asset cap.

Regulated Utility Operations

In addition to the specific regulations noted above and below, our utilities are also subject to regulations, where applicable, of the EPA, the WDNR, the MDEQ, the Michigan Department of Natural Resources, the Illinois Environmental Protection Agency, the U.S. Army Corps of Engineers, the Minnesota Department of Natural Resources, and the Minnesota Pollution Control Agency.



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Rates

Our utilities' rates are regulated by the various commissions shown in the table below. These commissions have general supervisory and regulatory powers over public utilities in their respective jurisdictions.



Regulated Rates		Regulatory Commission
Wisconsin Electric
Retail electric, natural gas, and steam		PSCW
Retail electric		MPSC
Wholesale power		FERC
WPS
Retail electric and natural gas		PSCW and MPSC
Wholesale power		FERC
Wisconsin Gas
Retail natural gas		PSCW
PGL
Retail natural gas		ICC
NSG
Retail natural gas		ICC
MERC
Retail natural gas		MPUC
MGU
Retail natural gas		MPSC

Embedded within Wisconsin Electric's and WPS’s electric rates is an amount to recover fuel and purchased power costs. The Wisconsin retail fuel rules require the utility to defer, for subsequent rate recovery or refund, any under-collection or over-collection of fuel and purchased power costs that are outside of the utility's symmetrical fuel cost tolerance, which the PSCW typically sets at plus or minus 2% of the utility's approved fuel and purchased power cost plan. The deferred fuel and purchased power costs are subject to an excess revenues test. If the utility's ROE in a given year exceeds the ROE authorized by the PSCW, the recovery of under-collected fuel and purchased power costs would be reduced by the amount by which the utility's return exceeds the authorized amount.

Prudently incurred fuel and purchased power costs are recovered dollar-for-dollar from our Michigan retail electric customers and our Wisconsin wholesale electric customers. Our natural gas operations operate under GCRMs as approved by their respective state regulator. Generally, the GCRMs allow for a dollar-for-dollar recovery of prudently incurred natural gas costs.

For a summary of the significant mechanisms our utility subsidiaries had in place in 2015 that allowed them to recover or refund changes in prudently incurred costs from rate case-approved amounts, see Note 1(d), Revenues and Customer Receivables .

In May 2015, the PSCW approved the acquisition of Integrys on the condition that Wisconsin Electric and Wisconsin Gas will be subject to an earnings sharing mechanism for three years beginning January 1, 2016 . See Note 2, Acquisition, for more information on this earnings sharing mechanism.

For information on how rates are set for our regulated entities, see Note 22, Regulatory Environment . Orders from our respective regulators can be viewed at the following websites:



Regulatory Commission		Website
PSCW		https://psc.wi.gov/
ICC		https://www.icc.illinois.gov/
MPSC		http://www.michigan.gov/mpsc/
MPUC		http://mn.gov/puc/
FERC		http://www.ferc.gov/



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The material and information contained on these websites are not intended to be a part of, nor are they incorporated by reference into, this Annual Report on Form 10-K.

The following table compares our utility operating revenues by regulatory jurisdiction for each of the three years ended December 31:



	2015				2014				2013
(in millions)	Amount		Percent		Amount		Percent		Amount		Percent
Electric ⁽¹⁾
Wisconsin	$	3,374.9	83.0	%	$	2,934.0	85.2	%	$	2,914.4	87.0	%
Michigan	173.1		4.3	%	58.8		1.7	%	147.0		4.4	%
FERC – Wholesale	429.1		10.5	%	396.0		11.5	%	286.9		8.6	%
FERC – SSR ⁽²⁾	91.4		2.2	%	56.4		1.6	%	—		—	%
Total	4,068.5		100.0	%	3,445.2		100.0	%	3,348.3		100.0	%

Natural Gas ⁽¹⁾
Wisconsin	1,121.3		63.2	%	1,496.1		100.0	%	1,113.7		100.0	%
Illinois	503.4		28.4	%	—		—	%	—		—	%
Minnesota	98.3		5.5	%	—		—	%	—		—	%
Michigan	52.3		2.9	%	—		—	%	—		—	%
Total	1,775.3		100.0	%	1,496.1		100.0	%	1,113.7		100.0	%

Total utility operating revenues	$	5,843.8			$	4,941.3			$	4,462.0


⁽¹⁾	Includes the operations of WPS, PGL, NSG, MERC, and MGU beginning July 1, 2015, as a result of the acquisition of Integrys on June 29, 2015.


⁽²⁾	See Note 22, Regulatory Environment, for more information regarding SSR revenues.

Electric Transmission, Capacity, and Energy Markets

In connection with its status as a FERC approved RTO, MISO developed bid-based energy markets, which were implemented on April 1, 2005. In January 2009, MISO commenced the MISO Energy Markets, which include the bid-based energy markets and an ancillary services market. We previously self-provided both regulation reserves and contingency reserves. In the MISO ancillary services market, we buy/sell regulation and contingency reserves from/to the market. The MISO ancillary services market has been able to reduce overall ancillary services costs in the MISO footprint. The MISO ancillary services market has enabled MISO to assume significant balancing area responsibilities such as frequency control and disturbance control.

In MISO, base transmission costs are currently being paid by load-serving entities located in the service territories of each MISO transmission owner. The FERC has previously confirmed the use of the current transmission cost allocation methodology. Certain additional costs for new transmission projects are allocated throughout the MISO footprint.

As part of MISO, a market-based platform was developed for valuing transmission congestion premised upon the LMP system that has been implemented in certain northeastern and mid-Atlantic states. The LMP system includes the ability to mitigate or eliminate congestion costs through ARRs and FTRs. ARRs are allocated to market participants by MISO, and FTRs are purchased through auctions. A new allocation and auction were completed for the period of June 1, 2015, through May 31, 2016. The resulting ARR valuation and the secured FTRs are expected to mitigate our transmission congestion risk for that period.

Beginning June 1, 2013, MISO instituted an annual zonal resource adequacy requirement to ensure there is sufficient generation capacity to serve the MISO market. To meet this requirement, capacity resources could be acquired through MISO's annual capacity auction, bilateral contracts for capacity, or provided from generating or demand response resources. Our capacity requirements during 2015 were primarily fulfilled using our own capacity resources.



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Other Electric Regulations

Wisconsin Electric and WPS are subject to the Federal Power Act and the corresponding regulations developed by certain federal agencies. The Energy Policy Act amended the Federal Power Act in 2005 to, among other things, make electric utility industry consolidation more feasible, authorize the FERC to review proposed mergers and the acquisition of generation facilities, change the FERC regulatory scheme applicable to qualifying cogeneration facilities, and modify certain other aspects of energy regulations and Federal tax policies applicable to us. Additionally, the Energy Policy Act created an Electric Reliability Organization to be overseen by the FERC, which established mandatory electric reliability standards and which has the authority to levy monetary sanctions for failure to comply with these standards.

Wisconsin Electric and WPS are subject to Act 141 in Wisconsin and Public Act 295 in Michigan, which contain certain minimum requirements for renewable energy generation. See Note 18, Commitments and Contingencies, for more information .

All of our hydroelectric facilities follow FERC guidelines and/or regulations.

Other Natural Gas Regulations

Almost all of the natural gas we distribute is transported to our distribution systems by interstate pipelines. The pipelines' transportation and storage services, including PGL's natural gas hub, are regulated by the FERC under the Natural Gas Act and the Natural Gas Policy Act of 1978. In addition, the Pipeline and Hazardous Materials Safety Administration and the state commissions are responsible for monitoring and enforcing requirements governing our natural gas utilities' safety compliance programs for our pipelines under United States Department of Transportation regulations. These regulations include 49 Code of Federal Regulations (CFR) Part 192 (Transportation of Natural and Other Gas by Pipeline: Minimum Federal Safety Standards) and 49 CFR Part 195 (Transportation of Hazardous Liquids by Pipeline).

We are required to provide natural gas service and grant credit (with applicable deposit requirements) to customers within our service territories. We are generally not allowed to discontinue natural gas service during winter moratorium months to residential heating customers who do not pay their bills. Federal and certain state governments have programs that provide for a limited amount of funding for assistance to low-income customers of the utilities.

Non-Utility Operations

We Power, through wholly owned subsidiaries, constructed the new generating capacity in our PTF strategy. These facilities are being leased on a long-term basis to Wisconsin Electric. Environmental permits necessary for operating the facilities are the responsibility of the operating entity, Wisconsin Electric. We Power received determinations from the FERC that upon the transfer of the facilities by lease to Wisconsin Electric, We Power's subsidiaries would not be deemed public utilities under the Federal Power Act and thus would not be subject to the FERC's jurisdiction.

E. ENVIRONMENTAL COMPLIANCE

Our operations are subject to extensive environmental regulation by state and federal environmental agencies governing air and water quality, hazardous and solid waste management, environmental remediation, and management of natural resources. Costs associated with complying with these requirements are significant. Additional future environmental regulations or revisions to existing laws, including for example, additional regulation of GHG emissions, coal combustion products, air emissions, or wastewater discharges, could significantly increase these environmental compliance costs.

Anticipated expenditures for environmental compliance and remediation issues for the next three years are included in the estimated capital expenditures described in Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Capital Requirements in Item 7. For a discussion of matters related to certain solid waste and coal combustion product landfills, manufactured gas plant sites, and air and water quality, see Note 18, Commitments and Contingencies , and Management's Discussion and Analysis of Financial Condition and Results of Operations – Factors Affecting Results, Liquidity, and Capital Resources – Environmental Matters in Item 7.



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F. EMPLOYEES

As of December 31, 2015 , we had the following number of employees:



	Total Employees		Number of Full-Time Employees
Wisconsin Electric	3,653		3,551
WPS	1,329		1,267
Wisconsin Gas	426		415
PGL	1,339		1,337
NSG	167		166
MERC	216		213
MGU	159		156
WBS	1,043	*	998
ITF	108		105
Other	3		3
Total employees	8,443		8,211


*	Effective January 1, 2016, approximately 500 employees were transferred from Wisconsin Electric and Wisconsin Gas into WBS.



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As of December 31, 2015 , we had employees represented under labor agreements with the following bargaining units:



	Number of Employees	Expiration Date of Current Labor Agreement
Wisconsin Electric
Local 2150 of International Brotherhood of Electrical Workers, AFL-CIO	1,679	August 15, 2017
Local 420 of International Union of Operating Engineers, AFL-CIO	489	September 30, 2017
Local 2006 Unit 1 of United Steel Workers of America, AFL-CIO	123	April 30, 2017
Local 510 of International Brotherhood of Electrical Workers, AFL-CIO	105	October 31, 2016
Total Wisconsin Electric	2,396

WPS
Local 420 of International Union of Operating Engineers, AFL-CIO	917	October 15, 2016

Wisconsin Gas
Local 2150 of International Brotherhood of Electrical Workers, AFL-CIO	91	August 15, 2017
Local 2006 Unit 1 of United Steel Workers of America, AFL-CIO	191	April 30, 2017
Local 2006 Unit 3 of United Steel Workers of America, AFL-CIO	3	February 29, 2016
Total Wisconsin Gas	285

PGL
Local 18007 of Utility Workers Union of America, AFL-CIO	955	April 30, 2018

NSG
Local 2285 of International Brotherhood of Electrical Workers, AFL CIO	121	June 30, 2019

MERC
Local 31 of International Brotherhood of Electrical Workers, AFL CIO	39	May 31, 2016

MGU
Local 12295 of United Steelworkers of America, AFL-CIO CLC	77	January 15, 2017
Local 417 of Utility Workers Union of America, AFL-CIO *	31	February 15, 2016
Total MGU	108

Total represented employees	4,821


*	MGU entered into a labor agreement with Local 417 of Utility Workers Union of America AFL-CIO, which became effective February 16, 2016. The agreement expires on February 15, 2019.



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ITEM 1A. RISK FACTORS

We are subject to a variety of risks, many of which are beyond our control, that may adversely affect our business, financial condition, and results of operations. You should carefully consider the following risk factors, as well as the other information included in this report and other documents filed by us with the SEC from time to time, when making an investment decision.

Risks Related to Legislation and Regulation

Our business is significantly impacted by governmental regulation.

We are subject to significant state, local, and federal governmental regulation, including regulation by the various utility commissions in the states where we serve customers. This regulation significantly influences our operating environment and may affect our ability to recover costs from utility customers. Many aspects of our operations are regulated, including, but not limited to: the rates we charge our retail electric, natural gas, and steam customers; wholesale power service practices; electric reliability requirements and accounting; participation in the interstate natural gas pipeline capacity market; standards of service; issuance of securities; short-term debt obligations; construction and operation of facilities; transactions with affiliates; and billing practices. Our significant level of regulation imposes restrictions on our operations and causes us to incur substantial compliance costs. Failure to comply with any applicable rules or regulations may lead to customer refunds, penalties, and other payments, which could materially and adversely affect our results of operations and financial condition.

The rates, including adjustments determined under riders, we are allowed to charge our customers for retail and wholesale services have the most significant impact on our financial condition, results of operations, and liquidity. Rate regulation is based on providing an opportunity to recover prudently incurred costs and earn a reasonable rate of return on invested capital. However, our ability to obtain rate adjustments in the future is dependent on regulatory action, and there is no assurance that our regulators will consider all of our costs to have been prudently incurred. In addition, our rate proceedings may not always result in rates that fully recover our costs or provide for a reasonable ROE. We defer certain costs and revenues as regulatory assets and liabilities for future recovery or refund to customers, as authorized by our regulators. Future recovery of regulatory assets is not assured, and is subject to review and approval by our regulators. If recovery of regulatory assets is not approved or is no longer deemed probable, these costs would be recognized in current period expense and could have a material adverse impact on our results of operations, cash flows, and financial condition.

We believe we have obtained the necessary permits, approvals, authorizations, certificates, and licenses for our existing operations, have complied with all of their associated terms, and that our businesses are conducted in accordance with applicable laws. These permits, approvals, authorizations, certificates, and licenses may be revoked or modified by the agencies that granted them if facts develop that differ significantly from the facts assumed when they were issued. In addition, discharge permits and other approvals and licenses are often granted for a term that is less than the expected life of the associated facility. Licenses and permits may require periodic renewal, which may result in additional requirements being imposed by the granting agency. In addition, existing regulations may be revised or reinterpreted by federal, state, and local agencies, or these agencies may adopt new laws and regulations that apply to us. We cannot predict the impact on our business and operating results of any such actions by these agencies. Changes in regulations, interpretations of regulations, or the imposition of new regulations could influence our operating environment, may result in substantial compliance costs, or may require us to change our business operations.

If we are unable to obtain, renew, or comply with these governmental permits, approvals, authorizations, certificates, or licenses, or if we are unable to recover any increased costs of complying with additional requirements or any other associated costs in customer rates in a timely manner, our results of operations and financial condition could be materially and adversely affected.

We may face significant costs to comply with existing and future environmental laws and regulations.

Our operations are subject to numerous federal and state environmental laws and regulations. These laws and regulations govern, among other things, air emissions (including CO _2, methane, mercury, SO ₂ , and NOx), water quality, wastewater discharges, and management of hazardous, toxic, and solid wastes and substances. We incur significant costs to comply with these environmental requirements, including costs associated with the installation of pollution control equipment, environmental monitoring, emissions fees, and permits at our facilities. In addition, if we fail to comply with environmental laws and regulations, even if caused by factors beyond our control, that failure may result in the assessment of civil or criminal penalties and fines.

The EPA has adopted and has implemented (or is in the process of implementing) regulations governing the emission of NOx, SO ₂ , fine particulate matter, mercury, and other air pollutants under the CAA through the NAAQS, the MATS rule, the Clean Power Plan,



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the CSAPR, and other air quality regulations. In addition, the EPA has finalized regulations under the Clean Water Act that govern cooling water intake structures at our power plants and revised the effluent guidelines for steam electric generating plants. The EPA has also adopted a final rule that would expand traditional federal jurisdiction over navigable waters and related wetlands for permitting and other regulatory matters; however, this rule has been stayed. We continue to assess the potential cost of complying, and to explore different alternatives in order to comply, with these and other environmental regulations. Several environmental regulations were either finalized or implemented during 2015, and there is still uncertainty as to what capital expenditures or additional costs may ultimately be required to comply with these regulations.

Existing environmental laws and regulations may be revised or new laws or regulations may be adopted at the federal or state level that could result in significant additional expenditures for our generation units or distribution systems, including, without limitation, costs to further limit GHG emissions from our operations through emission control technology; operating restrictions on our facilities; and increased compliance costs. In addition, the operation of emission control equipment and compliance with rules regulating our intake and discharge of water could increase our operating costs and reduce the generating capacity of our power plants. Any such regulation may also create substantial additional costs in the form of taxes or emission allowances and could affect the availability and/or cost of fossil fuels.

As a result, certain of our coal-fired electric generating facilities may become uneconomical to maintain and operate, which could result in some of these units being retired early or converted to an alternative type of fuel. If generation facility owners in the Midwest, including us, are forced to retire a significant number of older coal-fired generation facilities, a potential reduction in the region's capacity reserve margin below acceptable risk levels may result. This could impair the reliability of the grid in the Midwest, particularly during peak demand periods. A reduction in available future capacity could also adversely affect our ability to serve our customers' needs.

Our electric and natural gas utilities are also subject to significant liabilities related to the investigation and remediation of environmental impacts at certain of our current and former facilities, and at third-party owned sites. We accrue liabilities and defer costs (recorded as regulatory assets) incurred in connection with our former manufactured gas plant sites. These costs include all costs incurred to date that we expect to recover, management's best estimates of future costs for investigation and remediation, and related legal expenses, and are net of amounts recovered by or that may be recovered from insurance or other third parties. Due to the potential for imposition of stricter standards and greater regulation in the future, as well as the possibility that other potentially responsible parties may not be financially able to contribute to cleanup costs, conditions may change or additional contamination may be discovered, our remediation costs could increase, and the timing of our capital and/or operating expenditures in the future may accelerate or could vary from the amounts currently accrued.

In the event we are not able to recover all of our environmental expenditures and related costs from our customers in the future, our results of operations and financial condition could be adversely affected. Further, increased costs recovered through rates could contribute to reduced demand for electricity, which could adversely affect our results of operations, cash flows, and financial condition.

Litigation over environmental issues and claims of various types, including property damage, personal injury, common law nuisance, and citizen enforcement of environmental requirements, has increased generally throughout the U.S. In particular, personal injury, property damage, and other claims for damages alleged to have been caused by environmental impacts and alleged exposure to hazardous materials have become more frequent. In addition to claims relating to our current facilities, we may also be subject to potential liability in connection with the environmental condition of facilities that we previously owned and operated, regardless of whether the liabilities arose before, during, or after the time we owned or operated these facilities. If we fail to comply with environmental laws and regulations or cause (or caused) harm to the environment or persons, that failure or harm may result in the assessment of civil penalties and damages against us. The incurrence of a material environmental liability or a material judgment in any action for personal injury or property damage related to environmental matters could have a significant adverse effect on our results of operations and financial condition.

We may face significant costs to comply with the regulation of greenhouse gas emissions.

Federal, state, regional, and international authorities have undertaken efforts to limit GHG emissions. In 2015, the EPA issued the Clean Power Plan, which is a final rule that regulates GHG emissions from existing generating units, as well as a proposed federal plan as an alternative to state compliance plans. The EPA also issued final performance standards for modified and reconstructed generating units, as well as for new fossil-fueled power plants. Under the Clean Power Plan, states are required to submit compliance plans as early as September 2016 to achieve state-specific GHG emission reductions by 2030. If Wisconsin or Michigan determines not to file a state compliance plan, we may be required to comply with the federal plan, which could result in more significant



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compliance costs than a state compliance plan. We are continuing to analyze the final rule and to work with other stakeholders to determine how to implement the Clean Power Plan and the potential impacts to our operations. In October 2015, numerous states (including Wisconsin and Michigan), trade associations, and private parties filed lawsuits challenging the final rule, including a request to stay the implementation of the final rule pending the outcome of these legal challenges. The United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit Court of Appeals) denied the stay request, but on February 9, 2016, the United States Supreme Court (Supreme Court) stayed the effectiveness of the rule until disposition of the litigation in the D.C. Circuit Court of Appeals and to the extent that review is sought, at the Supreme Court. Therefore, it is unlikely that states will move forward on the development of the state plans until the litigation is complete. Any state or federal compliance plans that are developed could be subject to change based upon the outcome of this litigation. In addition, on February 15, 2016, the Governor of Wisconsin issued Executive Order 186, which prohibits state agencies, departments, boards, commissions, or other state entities from developing or promoting the development of a state plan. The rule could result in significant additional compliance costs, including capital expenditures, and impact how we operate our existing fossil-fueled power plants and biomass facility, all of which could have a material adverse impact on our operating costs.

There is no guarantee that we will be allowed to fully recover costs incurred to comply with the Clean Power Plan or that cost recovery will not be delayed or otherwise conditioned. The Clean Power Plan and any other related regulations that may be adopted in the future, either at the federal or state level, may cause our environmental compliance spending over the next several years to differ materially from the amounts currently estimated. These regulations could have a material adverse impact on our electric generation and natural gas distribution operations, could make some of our electric generating units uneconomic to maintain or operate, and could affect unit retirement and replacement decisions. These regulations could also adversely affect our future results of operations, cash flows, and financial condition.

In addition, our natural gas delivery systems may generate fugitive gas as a result of normal operations and as a result of excavation, construction, and repair of natural gas delivery systems. Fugitive gas typically vents to the atmosphere and consists primarily of methane. CO ₂ is also a byproduct of natural gas consumption. As a result, future legislation to regulate GHG emissions could increase the price of natural gas, restrict the use of natural gas, and adversely affect our ability to operate our natural gas facilities. A significant increase in the price of natural gas may increase rates for our natural gas customers, which could reduce natural gas demand.

Our electric utilities could be subject to higher costs and penalties as a result of mandatory reliability standards.

Our electric utilities are subject to mandatory reliability and critical infrastructure protection standards established by the North American Electric Reliability Corporation and enforced by the FERC. The critical infrastructure protection standards focus on controlling access to critical physical and cyber security assets. Compliance with the mandatory reliability standards could subject our electric utilities to higher operating costs. If our electric utilities were ever found to be in noncompliance with the mandatory reliability standards, they could be subject to sanctions, including substantial monetary penalties.

Provisions of the Wisconsin Utility Holding Company Act limit our ability to invest in non-utility businesses and could deter takeover attempts by a potential purchaser of our common stock that would be willing to pay a premium for our common stock.

Under the Wisconsin Utility Holding Company Act, we remain subject to certain restrictions that have the potential of limiting our diversification into non-utility businesses. Under the Act, the sum of certain assets of all non-utility affiliates in a holding company system generally may not exceed 25% of the assets of all public utility affiliates in the system, subject to certain exceptions.

In addition, the Act precludes the acquisition of 10% or more of the voting shares of a holding company of a Wisconsin public utility unless the PSCW has first determined that the acquisition is in the best interests of utility customers, investors, and the public. This provision and other requirements of the Act may delay or reduce the likelihood of a sale or change of control of WEC Energy Group. As a result, stockholders may be deprived of opportunities to sell some or all of their shares of our common stock at prices that represent a premium over market prices.

Risks Related to the Operation of Our Business

Our operations are subject to risks arising from the reliability of our electric generation, transmission, and distribution facilities, natural gas infrastructure facilities, and other facilities, as well as the reliability of third-party transmission providers.

Our financial performance depends on the successful operation of our electric generation and natural gas and electric distribution facilities. The operation of these facilities involves many risks, including operator error and the breakdown or failure of equipment or



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processes. Potential breakdown or failure may occur due to severe weather; catastrophic events (i.e., fires, earthquakes, explosions, tornadoes, floods, droughts, pandemic health events, etc.); significant changes in water levels in waterways; fuel supply or transportation disruptions; accidents; employee labor disputes; construction delays or cost overruns; shortages of or delays in obtaining equipment, material, and/or labor; performance below expected levels; operating limitations that may be imposed by environmental or other regulatory requirements; terrorist attacks; or cyber security threats. Any of these events could lead to substantial financial losses.

Because our electric generation facilities are interconnected with third-party transmission facilities, the operation of our facilities could also be adversely affected by events impacting their systems. Unplanned outages at our power plants may reduce our revenues or cause us to incur significant costs if we are required to operate our higher cost electric generators or purchase replacement power to satisfy our obligations, and could result in additional maintenance expenses.

Insurance, warranties, performance guarantees, or recovery through the regulatory process may not cover any or all of these lost revenues or increased expenses, which could adversely affect our results of operations and cash flows.

Our operations are subject to various conditions that can result in fluctuations in energy sales to customers, including customer growth and general economic conditions in our service areas, varying weather conditions, and energy conservation efforts.

Our results of operations and cash flows are affected by the demand for electricity and natural gas, which can vary greatly based upon:

•

Fluctuations in customer growth and general economic conditions in our service areas. Customer growth and energy use can be negatively impacted by population declines as well as economic factors in our service territories, including job losses, decreases in income, and business closings. Our electric and natural gas utilities are impacted by economic cycles and the competitiveness of the commercial and industrial customers we serve. Any economic downturn or disruption of financial markets could adversely affect the financial condition of our customers and demand for their products. These risks could directly influence the demand for electricity and natural gas as well as the need for additional power generation and generating facilities. We could also be exposed to greater risks of accounts receivable write-offs if customers are unable to pay their bills.

•

Weather conditions . Demand for electricity is greater in the summer and winter months associated with cooling and heating. In addition, demand for natural gas peaks in the winter heating season. As a result, our overall results may fluctuate substantially on a seasonal basis. In addition, milder temperatures during the summer cooling season and during the winter heating season may result in lower revenues and net income.

•

Our customers' continued focus on energy conservation and ability to meet their own energy needs . Customers could voluntarily reduce their consumption of energy in response to decreases in their disposable income, increases in energy prices, and individual conservation efforts through the use of more energy efficient technologies. Conservation of energy can be influenced by certain federal and state programs that are intended to influence how consumers use energy. In addition, several states, including Wisconsin and Michigan, have adopted energy efficiency targets to reduce energy consumption by certain dates.

As part of our planning process, we estimate the impacts of changes in customer growth and general economic conditions, weather, and customer energy conservation efforts, but risks still remain. Any of these matters, as well as any regulatory delay in adjusting rates as a result of reduced sales from effective conservation measures or the adoption of new technologies, could adversely impact our results of operations and financial condition.

We are actively involved with several significant capital projects, which are subject to a number of risks and uncertainties that could adversely affect project costs and completion of construction projects.

Our business requires substantial capital expenditures for investments in, among other things, capital improvements to our electric generating facilities, electric and natural gas distribution infrastructure, natural gas storage, and other projects, including projects for environmental compliance. In addition, WBS has various capital projects that are primarily related to the development of software applications used to support our utilities.

Achieving the intended benefits of any large construction project is subject to many uncertainties, some of which we will have limited or no control over, that could adversely affect project costs and completion time. These risks include, but are not limited to, the ability to adhere to established budgets and time frames; the availability of labor or materials at estimated costs; the ability of contractors to perform under their contracts; strikes; adverse weather conditions; potential legal challenges; changes in applicable laws or regulations; other governmental actions; continued public and policymaker support for such projects; and events in the global economy. In addition, certain of these projects require the approval of our regulators. If construction of commission-approved



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projects should materially and adversely deviate from the schedules, estimates, and projections on which the approval was based, the applicable commission may deem the additional capital costs as imprudent and disallow recovery of them through rates.

To the extent that delays occur, costs become unrecoverable, or we otherwise become unable to effectively manage and complete our capital projects, our results of operations, cash flows, and financial condition may be adversely affected.

In 2015, the ICC and the Attorney General of Illinois initiated investigations into our AMRP capital project. Since the investigations are ongoing, it is too early to determine, what effect, if any, the investigations will have on the AMRP.

Advances in technology could make our electric generating facilities less competitive.

Research and development activities are ongoing for new technologies that produce power or reduce power consumption. These technologies include renewable energy, customer-oriented generation, energy storage, and energy efficiency. We generate power at central station power plants to achieve economies of scale and produce power at a competitive cost. There are distributed generation technologies that produce power, including fuel cells, microturbines, wind turbines, and solar cells, which have become more cost competitive. It is possible that advances in technology will continue to reduce the costs of these alternative methods of producing power to a level that is competitive with that of central station power production. If these technologies become cost competitive and achieve economies of scale, our market share could be eroded, and the value of our generating facilities could be reduced. Advances in technology could also change the channels through which our electric customers purchase or use power, which could reduce our sales and revenues or increase our expenses.

Our operations are subject to risks beyond our control, including but not limited to, cyber security intrusions, terrorist attacks, acts of war, or unauthorized access to personally identifiable information.

We face the risk of terrorist and cyber intrusions, both threatened and actual, against our generation facilities, electric and natural gas distribution infrastructure, our information and technology systems, and network infrastructure, including that of third parties on which we rely, any of which could result in a full or partial disruption of our ability to generate, transmit, purchase, or distribute electricity or natural gas or cause environmental repercussions. Any operational disruption or environmental repercussions could result in a significant decrease in our revenues or significant reconstruction or remediation costs, which could materially and adversely affect our results of operations, financial condition, and cash flows.

We operate in an industry that requires the use of sophisticated information technology systems and network infrastructure, which control an interconnected system of generation, distribution, and transmission systems shared with third parties. A successful physical or cyber security intrusion may occur despite our security measures or those that we require our vendors to take, which include compliance with reliability standards and critical infrastructure protection standards. Successful cyber intrusions, including those targeting the electronic control systems used at our generating facilities and electric and natural gas transmission, distribution, and storage systems, could disrupt our operations and result in loss of service to customers. These intrusions may cause unplanned outages at our power plants, which may reduce our revenues or cause us to incur significant costs if we are required to operate our higher cost electric generators or purchase replacement power to satisfy our obligations, and could result in additional maintenance expenses. The risk of such intrusions may also increase our capital and operating costs as a result of having to implement increased security measures for protection of our information technology and infrastructure.

We face on-going threats to our assets and technology systems. Despite the implementation of strong security measures, all assets and systems are potentially vulnerable to disability, failures, or unauthorized access due to human error or physical or cyber intrusions. If our assets or systems were to fail, be physically damaged, or be breached and were not recovered in a timely manner, we may be unable to perform critical business functions, and sensitive and other data could be compromised.

Our business requires the collection and retention of personally identifiable information of our customers, stockholders, and employees, who expect that we will adequately protect such information. Security breaches may expose us to a risk of loss or misuse of confidential and proprietary information. A significant theft, loss, or fraudulent use of personally identifiable information may lead to potentially large costs to notify and protect the impacted persons, and/or could cause us to become subject to significant litigation, costs, liability, fines, or penalties, any of which could materially and adversely impact our results of operations as well as our reputation with customers, stockholders and regulators, among others. In addition, we may be required to incur significant costs associated with governmental actions in response to such intrusions or to strengthen our information and electronic control systems. We may also need to obtain additional insurance coverage related to the threat of such intrusions.



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The costs of repairing damage to our facilities, protecting personally identifiable information, and notifying impacted persons, as well as related legal claims, may not be recoverable in rates, may exceed the insurance limits on our insurance policies, or, in some cases, may not be covered by insurance.

Transporting, distributing, and storing natural gas involves numerous risks that may result in accidents and other operating risks and costs.

Inherent in natural gas distribution activities are a variety of hazards and operational risks, such as leaks, accidental explosions, including third party damages, and mechanical problems, which could materially and adversely affect our results of operations, financial condition, and cash flows. In addition, these risks could result in serious injury to employees and non-employees, loss of human life, significant damage to property, environmental pollution, impairment of operations, and substantial losses to us. The location of natural gas pipelines and storage facilities near populated areas, including residential areas, commercial business centers, and industrial sites, could increase the level of damages resulting from these risks. These activities may subject us to litigation or administrative proceedings from time to time, which could result in substantial monetary judgments, fines, or penalties against us, or be resolved on unfavorable terms.

We are a holding company and rely on the earnings of our subsidiaries to meet our financial obligations.

As a holding company with no operations of our own, our ability to meet our financial obligations and pay dividends on our common stock is dependent upon the ability of our subsidiaries to pay amounts to us, whether through dividends or other payments. Our subsidiaries are separate legal entities that have no obligation to pay any of our obligations or to make any funds available for that purpose or for the payment of dividends on our common stock. The ability of our subsidiaries to pay amounts to us depends on their earnings, cash flows, capital requirements, and general financial condition, as well as regulatory limitations. Prior to distributing cash to us, our subsidiaries have financial obligations that must be satisfied, including, among others, debt service and preferred stock dividends. In addition, each subsidiary's ability to pay amounts to us depends on any statutory, regulatory, and/or contractual restrictions and limitations applicable to such subsidiary, which may include requirements to maintain specified levels of debt or equity ratios, working capital, or other assets. Our utility subsidiaries are regulated by various state utility commissions, which generally possess broad powers to ensure that the needs of the utility customers are being met.

We may fail to attract and retain an appropriately qualified workforce.

We operate in an industry that requires many of our employees to possess unique technical skill sets. Events such as an aging workforce without appropriate replacements, the mismatch of skill sets to future needs, or the unavailability of contract resources may lead to operating challenges or increased costs. These operating challenges include lack of resources, loss of knowledge, and a lengthy time period associated with skill development. In addition, current and prospective employees may determine that they do not wish to work for us. Failure to hire and obtain replacement employees, including the ability to transfer significant internal historical knowledge and expertise to the new employees, may adversely affect our ability to manage and operate our business. If we are unable to successfully attract and retain an appropriately qualified workforce, our results of operations could be adversely affected.

Failure of our counterparties to meet their obligations, including obligations under power purchase agreements, could have an adverse impact on our results of operations.

We are exposed to the risk that counterparties to various arrangements who owe us money, electricity, natural gas, or other commodities or services will not be able to perform their obligations. Should the counterparties to these arrangements fail to perform, we may be required to replace the underlying commitment at current market prices or we may be unable to meet all of our customers' electric and natural gas requirements unless or until alternative supply arrangements are put in place. In such event, we may incur losses, and our results of operations, financial position, or liquidity could be adversely affected.

We have entered into several power purchase agreements with non-affiliated companies, and continue to look for additional opportunities to enter into these agreements. Revenues are dependent on the continued performance by the purchasers of their obligations under the power purchase agreements. Although we have a comprehensive credit evaluation process and contractual protections, it is possible that one or more purchasers could fail to perform their obligations under the power purchase agreements. If this were to occur, we would expect that any operating and other costs that were initially allocated to a defaulting customer's power purchase agreement would be reallocated among our retail customers. To the extent there is any regulatory delay in adjusting rates, a customer default under a power purchase agreement could have a negative impact on our results of operations and cash flows.



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Our revenues could be negatively impacted by competitive activity in the wholesale electricity markets.

The FERC rules related to transmission are designed to facilitate competition in the wholesale electricity markets among regulated utilities, non-utility generators, wholesale power marketers, and brokers by providing greater flexibility and more choices to wholesale customers, including initiatives designed to encourage the integration of renewable sources of supply. In addition, along with transactions contemplating physical delivery of energy, financial laws and regulations impact hedging and trading based on futures contracts and derivatives that are traded on various commodities exchanges, as well as over-the-counter. Technology changes in the power and fuel industries also have significant impacts on wholesale transactions and related costs. We currently cannot predict the impact of these and other developments or the effect of changes in levels of wholesale supply and demand, which are driven by factors beyond our control.

We may not be able to use tax credits, net operating losses, and/or charitable contribution carryforwards.

We have significantly reduced our consolidated federal and state income tax liability in the past through tax credits, net operating losses, and charitable contribution deductions available under the applicable tax codes. We have not fully used the allowed tax credits, net operating losses, and charitable contribution deductions in our previous tax filings. We may not be able to fully use the tax credits, net operating losses, and charitable contribution deductions available as carryforwards if our future federal and state taxable income and related income tax liability is insufficient to permit their use. In addition, any future disallowance of some or all of those tax credits, net operating losses, or charitable contribution carryforwards as a result of legislation or an adverse determination by one of the applicable taxing jurisdictions could materially affect our tax obligations and financial results.

Risks Related to Economic and Market Volatility

Our business is dependent on our ability to successfully access capital markets.

We rely on access to credit and capital markets to support our capital requirements, including expenditures for our utility infrastructure and to comply with future regulatory requirements, to the extent not satisfied by the cash flow generated by our operations. We have historically secured funds from a variety of sources, including the issuance of short-term and long-term debt securities. Successful implementation of our long-term business strategies, including capital investment, is dependent upon our ability to access the capital markets, including the banking and commercial paper markets, on competitive terms and rates. In addition, we rely on committed bank credit agreements as back-up liquidity, which allows us to access the low cost commercial paper markets.

Our or our subsidiaries' access to the credit and capital markets could be limited, or our or our subsidiaries' cost of capital significantly increased, due to any of the following risks and uncertainties:


•	A rating downgrade;


•	An economic downturn or uncertainty;


•	Prevailing market conditions;


•	Concerns over foreign economic conditions;


•	Changes in tax policy;


•	War or the threat of war; and


•	The overall health and view of the utility and financial institution industries.

If any of these risks or uncertainties limit our access to the credit and capital markets or significantly increase our cost of capital, it could limit our ability to implement, or increase the costs of implementing, our business plan, which, in turn, could materially and adversely affect our results of operations, cash flows, and financial condition, and could limit our ability to sustain our current common stock dividend level.



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A downgrade in our or any of our subsidiaries' credit ratings could negatively affect our or our subsidiaries' ability to access capital at reasonable costs and/or require the posting of collateral.

There are a number of factors that impact our and our subsidiaries' credit ratings, including, but not limited to, capital structure, regulatory environment, the ability to cover liquidity requirements, and other requirements for capital. We or any of our subsidiaries could experience a downgrade in ratings if the rating agencies determine that the level of business or financial risk of us, our utilities, or the utility industry has deteriorated. Changes in rating methodologies by the rating agencies could also have a negative impact on credit ratings.

Any downgrade by the rating agencies could:


•	Increase borrowing costs under certain existing credit facilities;


•	Require the payment of higher interest rates in future financings and possibly reduce the pool of creditors;


•	Decrease funding sources by limiting our or our subsidiaries' access to the commercial paper market;


•	Limit the availability of adequate credit support for our subsidiaries' operations; and


•	Trigger collateral requirements in various contracts.

Fluctuating commodity prices could negatively impact our electric and natural gas utility operations.

The margins and liquidity requirements of our businesses are impacted by changes in the forward and current market prices of natural gas, coal, electricity, renewable energy credits, and ancillary services.

Our electric utilities burn natural gas in several of their electric generation plants and as a supplemental fuel at several coal-fired plants. In many instances the cost of purchased power is tied to the cost of natural gas. The cost of natural gas may increase because of disruptions in the supply of natural gas due to a curtailment in production or distribution, international market conditions, the demand for natural gas, and the availability of shale gas and potential regulations affecting its accessibility.

Our Wisconsin electric utilities bear the risk for the recovery of fuel and purchased power costs within a symmetrical 2% fuel tolerance band compared to the forecast of fuel and purchased power costs established in their respective rate structures. Our natural gas utilities receive dollar-for-dollar recovery of prudently incurred natural gas costs.

Changes in commodity prices could result in:


•	Higher working capital requirements, particularly related to natural gas inventory, accounts receivable, and cash collateral postings;


•	Reduced profitability to the extent that reduced margins, increased bad debt, and interest expense are not recovered through rates;


•	Higher rates charged to our customers, which could impact our competitive position;


•	Reduced demand for energy, which could impact margins and operating expenses; and


•	Shutting down of generation facilities if the cost of generation exceeds the market price for electricity.

We may not be able to obtain an adequate supply of coal, which could limit our ability to operate our coal-fired facilities.

We are dependent on coal for much of our electric generating capacity. Although we generally carry sufficient coal inventory at our generating facilities to protect against an interruption or decline in supply, there can be no assurance that the inventory levels will be adequate. While we have coal supply and transportation contracts in place, we cannot assure that the counterparties to these agreements will be able to fulfill their obligations to supply coal to us or that we will be able to take delivery of all the coal volume contracted for. The suppliers under these agreements may experience financial or operational problems that inhibit their ability to fulfill their obligations to us, or we may experience operational problems or constraints that prevent us from taking delivery. In addition, suppliers under these agreements may not be required to supply coal to us under certain circumstances, such as in the event of a natural disaster. Furthermore, demand for coal can impact its availability and cost. If we are unable to obtain our coal requirements under our coal supply and transportation contracts, we may be required to purchase coal at higher prices or we may be forced to reduce generation at our coal-fired units and replace this lost generation through additional power purchases in the MISO Energy Markets. There is no guarantee that we would be able to fully recover any increased costs in rates or that recovery would not otherwise be delayed, either of which could adversely affect our cash flows.

Our electric generation frequently exceeds our customer load. When this occurs, we generally sell the excess generation into the



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MISO Energy Markets. If we are unable to run our lower cost units, we may lose the ability to engage in these opportunity sales, which may adversely affect our results of operations.

The use of derivative contracts could result in financial losses.

We use derivative instruments such as swaps, options, futures, and forwards to manage commodity price exposure. We could recognize financial losses as a result of volatility in the market value of these contracts or if a counterparty fails to perform. These risks are managed through risk management policies, which might not work as planned and cannot entirely eliminate the risks associated with these activities. In addition, although the hedging programs of our utilities must be approved by the various state commissions, derivative contracts entered into for hedging purposes might not offset the underlying exposure being hedged as expected, resulting in financial losses. In the absence of actively quoted market prices and pricing information from external sources, the value of these financial instruments can involve management's judgment or use of estimates. Changes in the underlying assumptions or use of alternative valuation methods could affect the value of the reported fair value of these contracts.

Restructuring in the regulated energy industry could have a negative impact on our business.

The regulated energy industry continues to experience significant structural changes. Increased competition in the retail and wholesale markets, which may result from restructuring efforts, could have a significant adverse financial impact on us.

Certain jurisdictions in which we operate, including Michigan and Illinois, have adopted retail choice. Under Michigan law, our retail customers may choose an alternative electric supplier to provide power supply service. The law limits customer choice to 10% of our Michigan retail load. The two iron ore mines located in the Upper Peninsula of Michigan are excluded from this cap. When a customer switches to an alternative electric supplier, we continue to provide distribution and customer service functions for the customer. It is uncertain whether retail choice might be implemented in Wisconsin or Minnesota.

Illinois utilities' retail customers may choose an alternative natural gas supplier. Transportation customers purchase natural gas directly from third-party natural gas suppliers and use our distribution system to transport the natural gas to their facilities. Because we earn a distribution charge for transporting the natural gas for these customers, these arrangements have little or no impact on our net income.

FERC continues to support the existing RTOs that affect the structure of the wholesale market within these RTOs. In connection with its status as a FERC approved RTO, MISO implemented bid-based energy markets that are part of the MISO Energy Markets. The MISO Energy Markets rules require that all market participants submit day-ahead and/or real-time bids and offers for energy at locations across the MISO region. MISO then calculates the most efficient solution for all of the bids and offers made into the market that day and establishes an LMP that reflects the market price for energy. As a participant in the MISO Energy Markets, we are required to follow MISO's instructions when dispatching generating units to support MISO's responsibility for maintaining stability of the transmission system. MISO also implemented an ancillary services market for operating reserves that was simultaneously co-optimized with its existing energy markets.

These market designs continue to have the potential to increase the costs of transmission, the costs associated with inefficient generation dispatching, the costs of participation in the MISO Energy Markets, and the costs associated with estimated payment settlements.

We may experience poor investment performance of benefit plan holdings due to changes in assumptions and market conditions.

We have significant obligations related to pension and OPEB plans. If we are unable to successfully manage our benefit plan assets and medical costs, our cash flows, financial condition, or results of operations could be adversely impacted.

Our cost of providing these plans is dependent upon a number of factors, including actual plan experience, changes made to the plans, and assumptions concerning the future. Types of assumptions include earnings on plan assets, discount rates, the level of interest rates used to measure the required minimum funding levels of the plans, future government regulation, estimated withdrawals by retirees, and our required or voluntary contributions to the plans. Plan assets are subject to market fluctuations and may yield returns that fall below projected return rates. In addition, medical costs for both active and retired employees may increase at a rate that is significantly higher than we currently anticipate. Our funding requirements could be impacted by a decline in the market value of plan assets, changes in interest rates, changes in demographics (including the number of retirements), or changes in life expectancy assumptions.



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We may be unable to obtain insurance on acceptable terms or at all, and the insurance coverage we do obtain may not provide protection against all significant losses.

Our ability to obtain insurance, as well as the cost and coverage of such insurance, could be affected by developments affecting our business; international, national, state, or local events; and the financial condition of insurers. Insurance coverage may not continue to be available at all or at rates or terms similar to those presently available to us. In addition, our insurance may not be sufficient or effective under all circumstances and against all hazards or liabilities to which we may be subject. Any losses for which we are not fully insured or that are not covered by insurance at all could materially adversely affect our results of operations, cash flows, and financial position.

Risks Related to the Integrys Acquisition

The acquisition of Integrys may not achieve its anticipated results, and we may be unable to integrate operations as expected.

The Merger Agreement was entered into with the expectation that the acquisition would result in various benefits, including, among other things, cost savings and operating efficiencies. Achieving the anticipated benefits of the acquisition is subject to a number of uncertainties, including whether the businesses of the two companies can be integrated in an efficient, effective, and timely manner.

It is possible that the integration process could take longer than anticipated and could result in the loss of valuable employees; the disruption of ongoing businesses, processes, and systems; or inconsistencies in standards, controls, procedures, practices, policies, and compensation arrangements, any of which could adversely affect our ability to achieve the anticipated benefits of the transaction as and when expected. We may have difficulty addressing possible differences in corporate cultures and management philosophies. Failure to achieve the anticipated benefits of the acquisition could result in increased costs or decreases in the amount of expected revenues and could adversely affect our future business, financial condition, operating results, and prospects.

The acquisition may not be accretive to earnings and may cause dilution to our earnings per share, which may negatively affect the market price of our common stock.

We anticipate that the acquisition will be accretive to earnings per share in 2016, which will be the first full year following completion of the transaction. This expectation is based on preliminary estimates that are subject to change. We also could encounter additional transaction and integration-related costs, may fail to realize all of the benefits anticipated in the acquisition, or may be subject to other factors that affect preliminary estimates. Any of these factors could cause a decrease in our earnings per share or decrease or delay the expected accretive effect of the transaction and contribute to a decrease in the price of our common stock.

We may incur unexpected transaction fees and transaction-related costs in connection with the acquisition.

We incurred a number of expenses associated with completing the acquisition, and expect to incur additional expenses related to combining the operations of the two companies. We may incur additional unanticipated costs in the integration of the businesses. Although we expect that the elimination of certain duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses of the two companies, will offset the incremental transaction-related costs over time, we may not achieve this net benefit in the near term, or at all.

We recorded goodwill that could become impaired and adversely affect financial results.

The acquisition of Integrys was accounted for as a purchase in accordance with GAAP. Under the purchase method of accounting, the assets and liabilities acquired and assumed were recorded at their estimated fair values at the date of acquisition and added to those of legacy Wisconsin Energy Corporation. The excess of the purchase price over the estimated fair values was recorded as goodwill. As of December 31, 2015 , goodwill totaled $3,023.5 million , of which $2,581.6 million is attributable to the acquisition of Integrys. We perform an analysis of our goodwill balances to test for impairment on an annual basis or whenever events occur or circumstances change that would indicate a potential for impairment. If goodwill is deemed to be impaired, we may be required to incur material non-cash charges that could materially adversely affect our results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.



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ITEM 2. PROPERTIES

We own our principal properties outright, except the major portion of our electric utility distribution lines, steam utility distribution mains, and natural gas utility distribution mains and services are located, for the most part, on or under streets and highways, and on land owned by others and are generally subject to granted easements, consents, or permits.

A. REGULATED

Electric Facilities

The following table summarizes information on our electric generation facilities, including owned and jointly owned facilities, as of December 31, 2015:



Name	Location	Fuel	Number of Generating Units	Rated Capacity In MW ⁽¹⁾
Coal-fired plants
Columbia	Portage, WI	Coal	2	353	⁽²⁾
Edgewater	Sheboygan, WI	Coal	1	96	⁽²⁾
Milwaukee County	Wauwatosa, WI	Coal	3	7	⁽³⁾
Oak Creek Expansion	Oak Creek, WI	Coal	2	1,057	⁽⁴⁾
Pleasant Prairie	Pleasant Prairie, WI	Coal	2	1,188
Presque Isle	Marquette, MI	Coal	5	344
Pulliam	Green Bay, WI	Coal	2	212
South Oak Creek	Oak Creek, WI	Coal	4	993
Weston Units 3 and 4	Rothschild, WI	Coal	2	705	⁽²⁾
Total coal-fired plants			23	4,955
Natural gas-fired plants
Concord Combustion Turbines	Watertown, WI	Natural Gas/Oil	4	352
De Pere Energy Center	De Pere, WI	Natural Gas/Oil	1	158
Fox Energy Center	Wrightstown, WI	Natural Gas	3	554
Germantown Combustion Turbines	Germantown, WI	Natural Gas/Oil	5	258
Juneau	Adams, WI	Distillate Fuel Oil	1	—	⁽⁵⁾
Paris Combustion Turbines	Union Grove, WI	Natural Gas/Oil	4	352
Port Washington Generating Station	Port Washington, WI	Natural Gas	2	1,082	⁽⁶⁾
Pulliam	Green Bay, WI	Natural Gas/Oil	1	78
Valley Power Plant	Milwaukee, WI	Natural Gas	2	240
West Marinette	Marinette, WI	Natural Gas/Oil	3	153
Weston	Rothschild, WI	Natural Gas/Oil	3	126
Total natural gas-fired plants			29	3,353
Renewables
Hydro Plants (30 in number)	WI and MI	Hydro	84	146	⁽⁷⁾
Rothschild Biomass Plant	Rothschild, WI	Biomass	1	50
Blue Sky Green Field	Fond du Lac, WI	Wind	88	21
Byron Wind Turbines	Fond du Lac, WI	Wind	2	—
Crane Creek	Howard County, IA	Wind	66	21
Glacier Hills	Cambria, WI	Wind	90	28
Lincoln	Kewaunee County, WI	Wind	14	1
Montfort Wind Energy Center	Montfort, WI	Wind	20	2
Total renewables			365	269
Total system			417	8,577


⁽¹⁾	Based on expected capacity ratings for summer 2016, which can differ from nameplate capacity, especially on wind projects. The summer period is the most relevant for capacity planning purposes. This is a result of continually reaching demand peaks in the summer months, primarily due to air conditioning demand.



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⁽²⁾	These facilities are jointly owned by WPS and various other utilities. The capacity indicated for each of these units is equal to WPS's portion of total plant capacity based on its percent of ownership.


•	Wisconsin Power and Light Company, an unaffiliated utility, operates the Columbia and Edgewater units. WPS holds a 31.8% ownership interest in these facilities.


•	WPS operates the Weston 4 facility and holds a 70% ownership interest in this facility. Dairyland Power Cooperative holds the remaining 30% interest.


⁽³⁾	Wisconsin Electric expects to complete the sale of MCPP during the first half of 2016.


⁽⁴⁾	This facility is jointly owned by We Power and various other utilities. The capacity indicated for the facility is equal to We Power's portion of total plant capacity based on its 83.34% ownership.


⁽⁵⁾	Wisconsin River Power Company (WRPC) owns and operates the Juneau unit. WPS holds a 50% ownership interest in WRPC and is entitled to 50% of the total capacity from the Juneau unit.


⁽⁶⁾	We Power owns 100% of Port Washington Generating Stations 1 and 2.


⁽⁷⁾	WRPC owns and operates the Castle Rock and Petenwell units. WPS holds a 50% ownership interest in WRPC and is entitled to 50% of the total capacity at Castle Rock and Petenwell. WPS's share of capacity for Castle Rock is 8.1 MWs, and WPS's share of capacity for Petenwell is 10.2 MWs.

As of December 31, 2015 , we operated approximately 40,200 pole-miles of overhead distribution lines and 31,100 miles of underground distribution cable, as well as approximately 500 distribution substations and 489,400 line transformers.

Natural Gas Facilities

At December 31, 2015, our natural gas properties were located in Illinois, Wisconsin, Minnesota, and Michigan, and consisted of the following:


•	Approximately 44,200 miles of natural gas distribution mains,


•	Approximately 1,100 miles of natural gas transmission mains,


•	Approximately 2.3 million natural gas lateral services,


•	Approximately 500 natural gas distribution and transmission gate stations,


•	A 3.9 billion-cubic-foot underground natural gas storage field located in Michigan,


•	A 38.3 billion-cubic-foot underground natural gas storage field located in central Illinois,


•	A 2.0 billion-cubic-foot liquefied natural gas plant located in central Illinois,


•	A peak-shaving facility that can store the equivalent of approximately 80 MDth in liquefied petroleum gas located in Wisconsin,


•	Peak propane air systems providing approximately 2,960 Dth per day, and


•	Liquefied natural gas storage plants with a total send-out capability of 73,600 Dth per day.

Our natural gas distribution system included distribution mains and transmission mains connected to the pipeline transmission systems of ANR Pipeline Company, Guardian Pipeline L.L.C., Natural Gas Pipeline Company of America, Northern Natural Pipeline Company, Great Lakes Transmission Company, Viking Gas Transmission, and Michigan Consolidated Gas Company. Our liquefied natural gas storage plants convert and store, in liquefied form, natural gas received during periods of low consumption.

PGL owns and operates a reservoir in central Illinois (Manlove Field), and a natural gas pipeline system that connects

Manlove Field to Chicago with eight major interstate pipelines. The underground storage reservoir also serves NSG under a

contractual arrangement. PGL uses its natural gas storage and pipeline assets as a natural gas hub in the Chicago area.

We also own office buildings, natural gas regulating and metering stations, and major service centers, including garage and warehouse facilities, in certain communities we serve. Where distribution lines and services, and natural gas distribution mains and services occupy private property, we have in some, but not all instances, obtained consents, permits, or easements for these installations from the apparent owners or those in possession of those properties, generally without an examination of ownership records or title.



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Steam Facilities

As of December 31, 2015 , the combined steam systems supplied by the VAPP and MCPP consisted of approximately 42 miles of both high pressure and low pressure steam piping, nine miles of walkable tunnels, and other pressure regulating equipment.

General

Substantially all of PGL's and NSG's properties are subject to the lien of the respective company's mortgage indenture for the benefit of bondholders.

B. CORPORATE AND OTHER

As of December 31, 2015, the corporate and other segment facilities consisted of energy asset facilities owned by PDL and CNG fueling stations owned by ITF.

The energy asset facilities owned by PDL include a portfolio of residential solar facilities, a portfolio of commercial and industrial solar facilities, a landfill gas transportation facility, and a natural gas co-generation facility. The solar facilities consist of distributed solar projects ranging from small residential roof top systems up to commercial and industrial solar systems of 4.5 MWs in size. The total capacity of these solar projects is 27.6 MWs. The majority of the solar facilities are wholly owned by subsidiaries of PDL while one is jointly owned by PDL and Duke Energy Generation Services. PDL's portion of the jointly owned solar capacity is 0.4 MWs. The landfill gas transportation facility in Brazoria County, Texas, has 33 miles of natural gas pipeline connecting a landfill and chemical plant. The natural gas co-generation station in Combined Locks, Wisconsin, has a summer design capacity of 45.5 MWs.

The CNG fueling stations consist of 32 stations that are wholly owned and operated by ITF. Additionally, ITF operates five stations that are owned by EVO Trillium LLC, which is jointly owned by ITF and Environmental Alternative Fuels, LLC. ITF holds a 15% ownership interest in EVO Trillium LLC. The sale of these facilities is currently pending. See Note 3, Dispositions, for more information .

ITEM 3. LEGAL PROCEEDINGS

In addition to those legal proceedings discussed below, we are currently, and from time to time, subject to claims and suits arising in the ordinary course of business. Although the results of these legal proceedings cannot be predicted with certainty, management believes, after consultation with legal counsel, that the ultimate resolution of these proceedings will not have a material effect on our financial statements.

OTHER MATTERS

Litigation Relating to the Acquisition of Integrys

After the announcement of the acquisition, Integrys and its board of directors, along with WEC Energy Group, were named as defendants in ten separate purported class action lawsuits filed in Brown County, Wisconsin (three of the cases – Rubin v. Integrys, et al. , Blachor v. Integrys, et al., and Albera v. Integrys, et al. ), Milwaukee County, Wisconsin (two of the cases – Amo v. Integrys, et al. and Inman v. Integrys, et al. ), Cook County, Illinois (two of the cases – Taxman v. Integrys, et al. and Curley v. Integrys, et al. ), and the federal court for the Northern District of Illinois (three of the cases – Steiner v. Integrys, et al., Tri-State Joint Fund v. Integrys, et al., and Collison v. Integrys, et al. ). In the Tri-State Joint Fund case, WEC Energy Group’s CEO was also named as a defendant. The cases were brought on behalf of proposed classes consisting of former shareholders of Integrys. The complaints alleged, among other things, that the Integrys board members breached their fiduciary duties by failing to maximize the value to be received by Integrys’s shareholders, that WEC Energy Group aided and abetted the breaches of fiduciary duty, and that the joint proxy statement/prospectus contained material misstatements and omissions. The Brown County and Cook County cases were dismissed in favor of the Milwaukee County actions. On November 12, 2014, the parties entered into a Memorandum of Understanding which provided the basis for a complete settlement of these actions. A Stipulation of Settlement was presented to the Court in late July 2015. On December 17, 2015, the Court approved the settlement and entered a final judgment in this matter, which resulted in the complete dismissal of all remaining actions. The period to appeal the Court's order terminates on March 16, 2016.

See Note 18, Commitments and Contingencies , and Note 22, Regulatory Environment , for more information on material legal proceedings and matters related to us and our subsidiaries.



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ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.



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EXECUTIVE OFFICERS OF THE REGISTRANT

The names, ages, and positions of our executive officers at December 31, 2015 are listed below along with their business experience during the past five years. All officers are appointed until they resign, die, or are removed pursuant to our Bylaws. There are no family relationships among these officers, nor is there any agreement or understanding between any officer and any other person pursuant to which the officer was selected.

Gale E. Klappa. Age 65.


•	WEC Energy Group — Director since 2003. Chairman and Chief Executive Officer since May 2004. President from April 2003 to July 2013.


•	Wisconsin Electric — Director since 2003. Chairman of the Board since May 2004. Chief Executive Officer since August 2003. President from August 2003 to June 2015.


•	Director of Joy Global, Inc. since 2006 and Badger Meter, Inc. since 2010.

J. Kevin Fletcher. Age 57.


•	Wisconsin Electric — Director and Executive Vice President - Customer Service and Operations since June 2015. Senior Vice President - Customer Operations from October 2011 to June 2015.


•	Georgia Power — Vice President - Community and Economic Development from 2007 to October 2011. Georgia Power is an affiliate of The Southern Company, a public utility holding company serving the southeastern United States.

Robert M. Garvin. Age 49.


•	WEC Energy Group — Executive Vice President - External Affairs since June 2015. Senior Vice President - External Affairs from April 2011 to June 2015.


•	Wisconsin Electric — Executive Vice President - External Affairs since June 2015. Senior Vice President - External Affairs from April 2011 to June 2015.


•	ATC — Vice President and General Counsel from 2009 to April 2011.

William J. Guc. Age 46.


•	WEC Energy Group — Controller since October 2015. Vice President since June 2015.


•	Wisconsin Electric — Vice President and Controller since October 2015.


•	Integrys Energy Group — Vice President and Treasurer from December 2010 to June 2015.

J. Patrick Keyes. Age 50.


•	WEC Energy Group — Executive Vice President and Chief Financial Officer since September 2012. Treasurer from April 2011 to January 2013. Vice President from April 2011 to August 2012.


•	Wisconsin Electric — Director since June 2015. Executive Vice President and Chief Financial Officer since September 2012. Treasurer from April 2011 to January 2013. Vice President from April 2011 to August 2012.


•	Accenture — Senior Executive from September 2001 to March 2011.

Scott J. Lauber. Age 50.


•	WEC Energy Group — Vice President and Treasurer since February 2013. Assistant Treasurer from March 2011 to January 2013.


•	Wisconsin Electric — Vice President and Treasurer since February 2013. Assistant Treasurer from March 2011 to January 2013.

Allen L. Leverett. Age 49.


•	WEC Energy Group — President since August 2013. Executive Vice President from May 2004 to July 2013. Chief Financial Officer from July 2003 to February 2011.


•	Wisconsin Electric — Director and President since June 2015. Executive Vice President from May 2004 to June 2015. Chief Financial Officer from July 2003 to February 2011.

Susan H. Martin. Age 63.


•	WEC Energy Group — Executive Vice President and General Counsel since March 2012. Corporate Secretary since December 2007. Vice President and Associate General Counsel from December 2007 to February 2012.


•	Wisconsin Electric — Director since June 2015. Executive Vice President and General Counsel since March 2012. Corporate Secretary since December 2007. Vice President and Associate General Counsel from December 2007 to February 2012.



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Charles R. Matthews. Age 59.


•	PELLC — President since June 2015.


•	PGL — Director, President, and Chief Executive Officer since June 2015.


•	NSG — Director, President, and Chief Executive Officer since June 2015.


•	Wisconsin Electric — Senior Vice President - Wholesale Energy and Fuels from January 2012 to June 2015. Vice President - Wholesale Energy and Fuels from August 2006 to January 2012.

Joan M. Shafer. Age 62.


•	Wisconsin Electric — Executive Vice President - Human Resources and Organizational Effectiveness since June 2015. Senior Vice President - Customer Services from January 2012 to June 2015. Vice President - Customer Services from January 2004 to January 2012.

Mary Beth Straka. Age 51.


•	WEC Energy Group — Senior Vice President - Corporate Communications and Investor Relations since June 29, 2015.


•	Wisconsin Electric — Senior Vice President - Corporate Communications and Investor Relations from June 1 to June 28, 2015.


•	Barclays — Vice President of Equity Research Power and Utilities Group from September 2008 to May 2015.

On January 27, 2016, Mr. Klappa notified WEC Energy Group's Board of Directors (Board) of his decision to retire as Chief Executive Officer (CEO) effective May 1, 2016, after which time he will serve as Non-Executive Chairman of the Board. On the same day, the Board elected Mr. Leverett to the Board and appointed him as CEO effective upon Mr. Klappa's retirement.

Certain executive officers also hold officer and/or director positions at our other significant subsidiaries.



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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Number of Common Stockholders

As of January 31, 2016, based upon the number of WEC Energy Group stockholder accounts (including accounts in our dividend reinvestment and stock purchase plan), we had approximately 55,000 registered stockholders.

Common Stock Listing and Trading

Our common stock is listed on the New York Stock Exchange under the ticker symbol "WEC."

Dividends and Common Stock Prices

Common Stock Dividends of WEC Energy Group

Cash dividends on our common stock, as declared by our Board of Directors, are normally paid on or about the first day of March, June, September, and December of each year. We review our dividend policy on a regular basis. Subject to any regulatory restrictions or other limitations on the payment of dividends, future dividends will be at the discretion of the Board of Directors and will depend upon, among other factors, earnings, financial condition, and other requirements. For information regarding restrictions on the ability of our subsidiaries to pay us dividends, see Note 11, Common Equity .

On January 21, 2016, the Board of Directors increased the quarterly dividend to $0.4950 per share effective with the first quarter of 2016 dividend payment, which equates to an annual dividend of $1.98 per share. In addition, the Board of Directors affirmed our dividend policy that continues to target a dividend payout ratio of 65–70% of earnings.

Range of WEC Energy Group Common Stock Prices and Dividends



	2015						2014
Quarter	High		Low		Dividend		High		Low		Dividend
First	$	58.01	$	47.51	$	0.4225	$	46.76	$	40.17	$	0.39
Second	$	51.54	$	44.93	0.4225		$	49.21	$	44.03	0.39
Third	$	52.29	$	44.97	0.4404		$	47.02	$	41.90	0.39
Fourth	$	53.88	$	47.98	0.4575		$	55.39	$	43.01	0.39
Annual	$	58.01	$	44.93	$	1.7429	$	55.39	$	40.17	$	1.56



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ITEM 6. SELECTED FINANCIAL DATA

WEC ENERGY GROUP, INC.

COMPARATIVE FINANCIAL DATA AND OTHER STATISTICS



As of or for Year Ended December 31
(in millions, except per share information)	2015 ⁽¹⁾		2014		2013		2012		2011
Operating revenues	$	5,926.1	$	4,997.1	$	4,519.0	$	4,246.4	$	4,486.4
Net income attributed to common shareholders	638.5		588.3		577.4		546.3		526.2
Total assets ^{(2) (3)}	29,355.2		14,905.0		14,443.2		14,163.0		13,823.3
Preferred stock of subsidiary	30.4		30.4		30.4		30.4		30.4
Long-term debt (excluding current portion) ⁽²⁾	9,124.1		4,170.7		4,347.0		4,437.1		4,597.1

Weighted average common shares outstanding
Basic	271.1		225.6		227.6		230.2		232.6
Diluted	272.7		227.5		229.7		232.8		235.4

Earnings per share
Basic	$	2.36	$	2.61	$	2.54	$	2.37	$	2.26
Diluted	$	2.34	$	2.59	$	2.51	$	2.35	$	2.24
Dividends per share of common stock	$	1.74	$	1.56	$	1.45	$	1.20	$	1.04


⁽¹⁾	Includes the impact of the Integrys acquisition for the last two quarters of 2015. See Note 2, Acquisition, for more information .


⁽²⁾	In the fourth quarter of 2015, we early implemented ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. As a result, debt issuance costs previously reported as other long-term assets were reclassified to offset long-term debt for all periods presented. Amounts reclassified were $15.7 million in 2014, $16.2 million in 2013, $16.7 million in 2012, and $17.2 million in 2011.

⁽³⁾

In the fourth quarter of 2015, we early implemented ASU 2015-17, Balance Sheet Classification of Deferred Taxes. As a result, current deferred income taxes previously reported as a separate component of current assets were reclassified to offset long-term deferred income tax liabilities for all periods presented. Amounts reclassified were $242.7 million in 2014, $310.0 million in 2013, $105.3 million in 2012, and $21.6 million in 2011.



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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CORPORATE DEVELOPMENTS

Introduction

We are a diversified holding company with natural gas and electric utility operations (serving customers in Wisconsin, Illinois, Michigan, and Minnesota), an approximately 60% equity ownership interest in ATC (a federally regulated electric transmission company), and non-utility electric operations through our We Power business. See Note 24, Segment Information , for more information on our reportable business segments.

Corporate Strategy

Our goal is to create long-term value for our stockholders and our customers by focusing on the following:

Reliability

We have made significant reliability related investments in recent years, and plan to continue making significant capital investments to strengthen and modernize the reliability of our generation and distribution network.


•	The West Central Gas Expansion project went into service in early November 2015. This natural gas lateral will allow Wisconsin Gas to improve the reliability of its natural gas distribution network in the western part of Wisconsin and better meet customer demand.


•	PGL is continuing to work on its gas system modernization program (AMRP), which primarily involves replacing old cast and ductile iron gas pipes and facilities in the city of Chicago’s natural gas delivery system with modern polyethylene pipes to reinforce the long-term safety and reliability of the system.


•	WPS continues work on its System Modernization Reliability Project, which involves modernizing parts of its electric distribution system by burying or upgrading lines. The project focuses on electric lines that currently have the lowest reliability in its system, primarily in rural areas that are heavily forested.

Our investment in reliability related projects has been very successful. In October 2015, We Energies, the trade name of Wisconsin Electric and Wisconsin Gas, was named the most reliable utility in the Midwest by PA Consulting Group for the fifth year in a row. We Energies received the ReliabilityOne ^TM Award, an annual award that recognizes utilities that excel in delivering reliable electric service.

Operating Efficiency

We continually look for ways to optimize the operating efficiency of our company. We have provided some examples from our generating fleet.


•	VAPP is a co-generation plant in Milwaukee that was constructed in 1968. The plant originally utilized coal to produce electricity and steam; however, the plant's fuel source was converted to natural gas with construction completed in November 2015. Changing the fuel source is expected to reduce operating costs and enhance environmental performance without decreasing the plant’s capacity.

•

Wisconsin Electric received approval from the PSCW to make changes at the Oak Creek Expansion units to enable them to burn coal from the Powder River Basin (PRB) in the Western United States. The coal plant was originally designed to burn coal mined from the Eastern United States, but the price of that coal increased relative to the PRB coal in recent years. This project is expected to create flexibility and enable the plant to operate at lower costs, placing it in a better position to be called upon in the MISO Energy Markets, resulting in lower fuel costs for our customers.



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Financial Discipline

A strong adherence to financial discipline is essential to meeting our earnings projections and maintaining a strong balance sheet, stable cash flows, attractive dividends, and quality credit ratings.

We follow an asset management strategy that focuses on investing in and acquiring assets consistent with our strategic plans, as well as disposing of assets, including property, plant, and equipment and entire business units that are no longer strategic to operations, are not performing as intended, or have an unacceptable risk profile.


•	See Note 2, Acquisition , for information about the recent acquisition of Integrys.

•

Our primary investment opportunities are in three areas: our regulated utility business; our investment in ATC; and our generation plants within our We Power segment. In addition to the projects discussed above, other on-going projects are discussed in more detail within Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.


•	See Note 3, Dispositions , for more information on the pending sale of ITF.

Exceptional Customer Care

Our approach is driven by an intense focus on delivering exceptional customer care every day. We strive to provide the best value for our customers by embracing constructive change, leveraging our capabilities and expertise, and using creative solutions to meet or exceed our customers’ expectations.

RESULTS OF OPERATIONS

Consolidated Earnings

The following table compares our consolidated results:



	Year Ended December 31
(in millions, except per share data)	2015			2014			2013
Wisconsin	$	884.2		$	770.2		$	719.4
Illinois	78.1			—			—
Other states	6.0			—			—
We Power	373.4			368.0			366.6
Corporate and other	(91.2		)	(26.1		)	(5.9		)
Total operating income	1,250.5			1,112.1			1,080.1
Electric transmission	96.1			66.0			68.5
Other income, net	58.9			13.4			18.8
Interest expense	331.4			240.3			250.9
Income before income taxes	1,074.1			951.2			916.5
Income tax expense	433.8			361.7			337.9
Preferred stock dividends of subsidiaries	1.8			1.2			1.2
Net income attributed to common shareholders	$	638.5		$	588.3		$	577.4

Diluted earnings per share	$	2.34		$	2.59		$	2.51

2015 Compared with 2014

Earnings increased $50.2 million in 2015, driven by a $30.1 million net increase in earnings due to the inclusion of Integrys's results, partially offset by acquisition costs recorded by us and our subsidiaries. Integrys was acquired on June 29, 2015. See Note 2, Acquisition , for more information. Also contributing to the increase was a $20.8 million pre-tax gain ($12.5 million after tax) from the sale of Minergy LLC and its remaining financial assets in June 2015.



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2014 Compared with 2013

Earnings increased $10.9 million in 2014, driven by:


•	A $50.8 million pre-tax ($30.5 million after tax) increase in operating income at Wisconsin Electric and Wisconsin Gas driven by lower operation and maintenance expense.


•	A $10.6 million pre-tax ($6.4 million after tax) decrease in interest expense driven by lower debt levels and lower average interest rates on long-term debt.

These increases in our earnings were partially offset by:


•	A $12.5 million decrease in earnings from acquisition costs that were recorded during 2014. See Note 2, Acquisition , for more information on the acquisition.


•	An $8.1 million increase in income tax expense due to reduced tax benefits associated with lower Treasury Grant income and decreased AFUDC – Equity.

Wisconsin Segment Contribution to Operating Income

For the periods presented in this Annual Report on Form 10-K, our Wisconsin operations included operations for both Wisconsin Electric and Wisconsin Gas for all periods, and operations for WPS beginning July 1, 2015, due to the acquisition of Integrys and its subsidiaries.

Electric utility margins are defined as electric revenues less fuel and purchased power costs. We believe that electric utility margins provide a more meaningful basis for evaluating electric utility operations than electric revenues since the majority of prudently incurred fuel and purchased power costs are passed through to customers in current rates under enacted fuel rules.

Natural gas utility margins are defined as natural gas revenues less the cost of natural gas sold. Management believes that natural gas utility margins provide a more meaningful basis for evaluating natural gas utility operations than natural gas utility revenues, since prudently incurred natural gas commodity costs are passed through to our customers in current rates. The average per-unit cost of natural gas sold decreased 34.3% in 2015 and increased 45.8% in 2014, neither of which had an impact on margins.



	Year Ended December 31
(in millions)	2015		2014		2013
Electric revenues	$	4,068.5	$	3,445.2	$	3,348.3
Fuel and purchased power	1,369.3		1,228.1		1,158.1
Total electric margins	2,699.2		2,217.1		2,190.2

Natural gas revenues	1,122.6		1,496.1		1,113.7
Cost of natural gas sold	640.5		1,036.1		674.1
Total natural gas margins	482.1		460.0		439.6

Other operation and maintenance	1,741.0		1,462.7		1,522.0
Depreciation and amortization	408.6		323.2		272.2
Property and revenue taxes	147.5		121.0		116.2
Operating income	$	884.2	$	770.2	$	719.4



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The following tables provide information on delivered volumes by customer class and weather statistics:



	Year Ended December 31
	MWh (in thousands)
Electric Sales Volumes	2015	2014	2013
Customer class
Residential	9,218.9	7,946.3	8,141.9
Small commercial and industrial	10,850.3	8,805.1	8,860.4
Large commercial and industrial	11,126.8	7,393.3	8,673.4
Other	162.6	148.7	152.3
Total retail	31,358.6	24,293.4	25,828.0
Wholesale	2,588.1	1,852.8	1,953.5
Resale	9,077.1	6,497.9	4,382.7
Total sales in MWh	43,023.8	32,644.1	32,164.2
Electric customer choice*	457.9	2,440.0	813.0


*	Represents distribution sales for customers who have purchased power from an alternative electric supplier in Michigan.



	Year Ended December 31
	Therms (in millions)
Natural Gas Sales Volumes	2015	2014	2013
Customer class
Residential	859.4	911.5	872.0
Commercial and industrial	527.4	571.7	518.0
Total retail	1,386.8	1,483.2	1,390.0
Transport	1,428.5	1,087.5	1,052.8
Total sales in therms	2,815.3	2,570.7	2,442.8



	Year Ended December 31
	Degree Days
Weather	2015	2014	2013
Wisconsin Electric and Wisconsin Gas ⁽¹⁾
Heating (6,659 normal)	6,468	7,616	7,233
Cooling (712 normal)	622	464	688

WPS ⁽²⁾
Heating (2,863 normal)	2,215
Cooling (364 normal)	396


⁽¹⁾	Normal heating and cooling degree days are based on a 20-year moving average of monthly temperatures from Mitchell International Airport in Milwaukee, Wisconsin.


⁽²⁾	Normal heating and cooling degree days are based on a 20-year moving average of monthly temperatures from the Green Bay, Wisconsin Weather Station. Degree days have been included beginning July 1, 2015.

2015 Compared with 2014

Operating Income

Operating income at the Wisconsin segment increased $114.0 million, driven by a $122.8 million increase due to the inclusion of WPS operating income beginning July 1, 2015, as a result of the acquisition of Integrys on June 29, 2015. Without the inclusion of WPS operating income, operating income at the Wisconsin segment decreased $8.8 million in 2015.

Significant factors impacting the $8.8 million decrease in operating income were:


•	An aggregate $35.8 million decrease in natural gas margins at Wisconsin Electric and Wisconsin Gas in 2015. This decrease was primarily driven by a $42.7 million decrease from sales volume variances largely related to warmer weather during the heating



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season as well as lower weather-normalized use per customer. As measured by heating degree days, 2015 was 15.1% warmer than 2014. This decrease in margins was partially offset by a $6.4 million net increase in margins as a result of the impact of the Wisconsin Electric and Wisconsin Gas PSCW rate orders, effective January 1, 2015. See Note 22, Regulatory Environment, for more information .


•	An aggregate $25.5 million increase in other operation and maintenance expense at Wisconsin Electric and Wisconsin Gas in 2015. This increase was driven by:


◦	A $48.6 million increase from higher PTF lease expense and associated operating and maintenance expenses as approved in Wisconsin Electric's PSCW rate order, effective January 1, 2015.


◦	A $16.0 million increase in transmission expense from MISO and ATC related to the iron ore mines returning as customers in February 2015.


◦	These increases in other operation and maintenance expenses were partially offset by:


▪	A $16.1 million decrease in employee benefits in 2015 driven by lower performance units share-based compensation, deferred compensation, and medical costs.


▪	A $9.3 million decrease in electric and natural gas distribution costs in 2015, related to amortization of design software, and maintenance costs.


▪	Other decreases in other operation and maintenance expenses that were not individually significant.


•	A $24.5 million increase in other depreciation and amortization expense at Wisconsin Electric and Wisconsin Gas, driven by:


◦	An overall increase in utility plant in service in 2015. During 2015, Wisconsin Gas completed the Western Gas lateral project, and Wisconsin Electric completed the conversion of the fuel source for VAPP from coal to natural gas.


◦	New depreciation studies approved by the PSCW for both the utilities, effective January 1, 2015.


◦	A $7.7 million reduction in income received in 2015 from a Treasury Grant associated with the completion of our biomass plant in 2013. The lower grant income corresponds to lower bill credits provided to our retail electric customers in Wisconsin.


•	A combined $6.0 million increase in property and revenue taxes at Wisconsin Electric and Wisconsin Gas in 2015.

These decreases in operating income were significantly offset by an $83.0 million increase in electric margins at Wisconsin Electric driven by:


•	A $38.4 million increase as a result of the PSCW rate order, effective January 1, 2015. See Note 22, Regulatory Environment, for more information .


•	A $35.0 million increase driven by the escrow accounting treatment of the SSR revenues in the PSCW rate order, effective January 1, 2015. See Note 22, Regulatory Environment, for more information .

•

A $24.2 million increase due to the return of the iron ore mines as customers in February 2015. The two iron ore mines, which we served on an interruptible tariff rate, switched to an alternative electric supplier effective September 1, 2013. Effective February 1, 2015, the owner of the two mines returned them as retail customers. In 2015, we deferred, and expect to continue to defer, the margin from those sales and apply these amounts for the benefit of Wisconsin retail electric customers in a future rate proceeding. Michigan state law allows the mines to switch to an alternative electric supplier after sufficient notice. See Note 23, Michigan Settlement, for more information . A large portion of this increase in margins was offset by higher transmission expense included in other operation and maintenance expense at Wisconsin Electric.


•	A $10.4 million increase in positive collections of fuel and purchased power costs compared with costs approved in rates in 2015, as compared with 2014. Under the fuel rule, Wisconsin Electric defers under or over-collections of certain fuel and purchased power costs that exceed a 2% price variance from the costs included in rates, and the remaining variance impacts margins.



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•	A $6.2 million increase primarily due to lower fly ash removal costs in 2015. These costs are not included in the fuel rule recovery mechanism.


•	A partially offsetting $22.3 million decrease in electric margins related to sales volume variances in 2015. This decrease was driven by lower margins from residential customers in 2015, primarily due to lower weather-normalized use per customer and warmer weather during the heating season.


•	A partially offsetting $10.8 million decrease in wholesale margins driven by a reduction in sales volumes in 2015. Certain wholesale customers have provisions in their contracts which allow them to reduce the amount of energy we provide to them.

2014 Compared with 2013

Operating Income

Operating income at the Wisconsin segment increased $50.8 million in 2014, driven by:


•	A $120.9 million increase in sales for resale in 2014 due to higher sales into the MISO Energy Markets as a result of Michigan's alternative electric supplier program and increased availability of our generating units. The margins on these sales are used to reduce fuel costs for our retail customers.


•	A $59.4 million increase in other operating revenues in 2014, primarily driven by the recognition of $56.4 million related to revenues under the SSR agreement with MISO. See Note 23, Michigan Settlement, for more information .


•	A $59.3 million decrease in other operation and maintenance expense in 2014. This decrease was primarily driven by lower benefit costs related to pensions, postretirement, and medical costs. Our operation and maintenance expenses are influenced by, among other things, labor costs, employee benefit costs, plant outages, and amortization of regulatory assets.


•	A $38.3 million increase in Wisconsin net retail pricing in 2014, primarily related to Wisconsin Electric's PSCW rate order, effective January 1, 2013.


•	A $15.8 million increase in natural gas margins, primarily due to colder winter weather in 2014. We estimate that colder winter weather increased natural gas margins by approximately $11.2 million. As measured by heating degree days, 2014 was 5.3% colder than 2013 and 15.4% colder than normal.

These increases in operating income were partially offset by:


•	A $78.4 million decrease in large commercial and industrial sales in 2014 due to the two iron ore mines switching to an alternative electric supplier in September 2013.


•	A $69.5 million increase in electric fuel and purchased power costs in 2014. This increase was primarily driven by a 1.5% increase in total MWh sales and higher generating costs due to an increase in natural gas prices.

•

A $51.0 million increase in depreciation and amortization expense in 2014. The increase was partially driven by lower income received from a Treasury Grant in 2014. During 2014, we recognized $17.4 million of income related to a Treasury Grant associated with the completion of the biomass plant, compared to $48.0 million in 2013. The lower grant income corresponds to the lower bill credits provided to Wisconsin Electric's retail electric customers in Wisconsin in 2014. In addition, an overall increase in utility plant in service as a result of the biomass plant that went into service in November 2013 contributed to the increase in depreciation and amortization expense.


•	A $45.8 million decrease in electric revenues related to unseasonably cool summer weather in 2014. As measured by cooling degree days, 2014 was 36.6% cooler than normal and 32.6% cooler than 2013 due to mild second and third quarters. The unfavorable impact of the cool summer weather was partially offset by the cold winter weather.


◦	Residential sales decreased 2.4%, primarily due to the weather.



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◦	Sales to our large commercial and industrial customers decreased 14.8% primarily due to the loss of the two iron ore mines in Michigan. If the mines were excluded, sales to our large commercial and industrial customers would have decreased 1.1%.

Illinois Segment Contribution to Operating Income



(in millions)	2015
Natural gas revenues	$	503.4
Cost of natural gas sold	133.2
Total natural gas margins	370.2

Other operation and maintenance	219.6
Depreciation and amortization	63.3
Property and revenue taxes	9.2
Operating income	$	78.1

The following tables provide information on delivered volumes by customer class and weather statistics:



		Therms (in millions)
Natural Gas Sales Volumes		2015
Customer Class
Residential		300.7
Commercial and industrial		63.2
Total retail		363.9
Transport		328.4
Total sales in therms		692.3



		Degree Days
Weather *		2015
Heating (2,282 normal)		1,813


*	Normal heating degree days are based on a 12-year moving average of monthly total heating degree days at Chicago's O'Hare Airport.

We did not have any operations in Illinois until our acquisition of Integrys on June 29, 2015. Since the majority of PGL and NSG customers use natural gas for heating, operating income is sensitive to weather and is generally higher during the winter months.

PGL and NSG recover certain operating expenses directly through separate riders, resulting in no impact on operating income as increases in operating expenses are offset by equal increases in margins. The following table shows the impact of these riders on margins and operating expenses.



(in millions)	2015
Environmental cleanup costs	$	9.2
Energy efficiency program	7.4
Bad debt rider	3.6
Total increase in margins and operating expenses	$	20.2



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Other States Segment Contribution to Operating Income



(in millions)	2015
Natural gas revenues	$	149.3
Cost of natural gas sold	76.9
Total natural gas margins	72.4

Other operation and maintenance	50.0
Depreciation and amortization	10.0
Property and revenue taxes	6.4
Operating income	$	6.0

The following tables provide information on delivered volumes by customer class and weather statistics:



		Therms (in millions)
Natural Gas Sales Volumes		2015
Customer Class
Residential		84.7
Commercial and industrial		60.9
Total retail		145.6
Transport		279.6
Total sales in therms		425.2



		Degree Days
Weather *		2015
Heating (2,744 normal)		2,193


*	Normal heating degree days for MERC and MGU are based on a 20-year moving average and 15-year moving average, respectively, of monthly temperatures from various weather stations throughout their respective territories.

We did not have any operations in this segment until our acquisition of Integrys on June 29, 2015. Since the majority of MERC and MGU customers use natural gas for heating, gross margin is sensitive to weather and is generally higher during the winter months.

We Power Segment Contribution to Operating Income



	Year Ended December 31
(in millions)	2015		2014		2013
Operating income	$	373.4	$	368.0	$	366.6

2015 Compared with 2014

Operating income at the We Power segment increased $5.4 million , or 1.5% , when compared to 2014. This increase was primarily related to higher revenues in connection with capital additions to the plants it owns and leases to Wisconsin Electric.

2014 Compared with 2013

Operating income at the We Power segment increased $1.4 million , or 0.4% , when compared to 2013 .

Corporate and Other Segment Contribution to Operating Income



	Year Ended December 31
(in millions)	2015			2014			2013
Operating loss	$	(91.2	)	$	(26.1	)	$	(5.9	)



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2015 Compared with 2014

Operating loss at the corporate and other segment increased $65.1 million when compared to 2014 , driven by costs associated with the acquisition of Integrys on June 29, 2015. See Note 2, Acquisition, for more information regarding costs associated with the acquisition.

2014 Compared with 2013

Operating loss at the corporate and other segment increased $20.2 million when compared to 2013. This was primarily attributable to external costs incurred in 2014 related to the acquisition of Integrys.

Electric Transmission Segment Operations



	Year Ended December 31
(in millions)	2015		2014		2013
Earnings from ATC	$	96.1	$	66.0	$	68.5

2015 Compared with 2014

Earnings from our ownership interest in ATC increased $30.1 million when compared to 2014, driven by the increase in our ownership interest from 26.2% to approximately 60% as a result of the acquisition of Integrys on June 29, 2015. This increase was partially offset by lower earnings recognized by ATC, as ATC further reduced earnings in 2015 related to an anticipated refund to customers resulting from a complaint filed with the FERC requesting a lower ROE for certain transmission owners. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Factors Affecting Results, Liquidity, and Capital Resources – Other Matters – ATC Allowed ROE Complaint, for more information.

2014 Compared with 2013

Earnings from our ownership interest in ATC decreased $2.5 million when compared to 2013. ATC reduced its earnings in 2014, driven by a potential refund to customers related to a complaint filed with the FERC requesting lower ROE for certain transmission owners.

Consolidated Other Income, Net



	Year Ended December 31
(in millions)	2015		2014		2013
AFUDC – Equity	$	20.1	$	5.6	$	18.3
Gain on asset sales	22.9		7.5		0.8
Other, net	15.9		0.3		(0.3		)
Other income, net	$	58.9	$	13.4	$	18.8

2015 Compared with 2014

Other income, net increased by $45.5 million when compared to 2014. This increase was primarily due to the $20.8 million gain from the sale of Minergy LLC and its remaining financial assets in June 2015, as well as higher AFUDC – Equity due to the inclusion of AFUDC from the Integrys companies after the acquisition on June 29, 2015.

2014 Compared with 2013

Other income, net decreased by $5.4 million, when compared to 2013. This decrease primarily relates to lower AFUDC – Equity related to the biomass plant going into service in November 2013, which was partially offset by an increased gain on asset sales.



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Consolidated Interest Expense



	Year Ended December 31
(in millions)	2015		2014		2013
Interest expense	$	331.4	$	240.3	$	250.9

2015 Compared with 2014

Interest expense increased by $91.1 million , or 37.9% , when compared to 2014, primarily due to higher debt levels. We assumed approximately $3.0 billion of debt from Integrys and its subsidiaries upon the closing of the acquisition on June 29, 2015. Additionally, we issued $1.2 billion of long-term debt in June 2015 to finance a portion of the cash consideration for the acquisition of Integrys.

2014 Compared with 2013

Interest expense decreased by $10.6 million , or 4.2% , when compared to 2013, primarily because of lower debt levels and lower average interest rates on long-term debt.

Consolidated Income Tax Expense



	Year Ended December 31
	2015		2014		2013
Effective tax rate	40.4	%	38.0	%	36.9	%

2015 Compared with 2014

Our effective tax rate was 40.4% in 2015 compared to 38.0% in 2014 . This increase was primarily due to an increase in non-deductible acquisition related expenses. See Note 15, Income Taxes, for more information . We expect our 2016 annual effective tax rate to be between 37.5% and 38.5%.

2014 Compared with 2013

Our effective tax rate applicable to continuing operations was 38.0% in 2014 compared to 36.9% in 2013. This increase in our effective tax rate was due to reduced tax benefits associated with Treasury Grant income, decreased AFUDC – Equity, and non-deductible acquisition related expenses.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

The following summarizes our cash flows during 2015, 2014, and 2013:



(in millions)	2015			2014			2013			Change in 2015 Over 2014			Change in 2014 Over 2013
Cash provided by (used in):
Operating activities	$	1,293.6		$	1,198.9		$	1,232.2		$	94.7		$	(33.3	)
Investing activities	(2,517.5		)	(756.8		)	(745.8		)	(1,760.7		)	(11.0		)
Financing activities	1,211.8			(406.2		)	(496.0		)	1,618.0			89.8



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Operating Activities

2015 Compared with 2014

Net cash provided by operating activities increased $94.7 million in 2015, driven by a $141.6 million increase related to net cash flows from the operating activities of Integrys in the last six months of 2015 as a result of the acquisition on June 29, 2015. See Note 2, Acquisition, for more information .

The remaining $46.9 million decrease in net cash provided by operating activities from legacy Wisconsin Energy Corporation companies was driven by:


•	A $141.4 million decrease in cash related to higher payments for operating and maintenance costs in 2015.


•	A $96.8 million increase in contributions to pension and OPEB plans in 2015.

These decreases in cash provided by operating activities from legacy Wisconsin Energy Corporation companies were partially offset by a $174.4 million net increase in cash related to lower payments for natural gas, fuel, and purchased power, partially offset by a decrease in cash driven by lower overall collections from customers in 2015. This net increase was primarily due to the impact of lower commodity prices in 2015.

2014 Compared with 2013

Net cash provided by operating activities decreased $33.3 million in 2014. During 2014, we experienced higher net income, higher depreciation expense and favorable cash flows from accounts receivable, primarily because of the timing of the Treasury Grant. More than offsetting these favorable items were increases in working capital related to natural gas in storage and increases in regulatory assets.

Investing Activities

2015 Compared with 2014

Net cash used in investing activities increased $1,760.7 million in 2015, driven by:


•	An investment of $1,329.9 million related to the June 29, 2015, acquisition of Integrys, which is net of cash acquired of $156.3 million. See Note 2, Acquisition, for more information .


•	A $505.0 million increase in cash used for capital expenditures in 2015, which is discussed in more detail below.

These increases in cash used for investing activities were partially offset by:


•	A $17.3 million increase in cash related to the receipt of the cash surrender value of Integrys corporate-owned life insurance policies in 2015.


•	A $15.0 million increase in proceeds from asset sales, driven by the sale of Minergy LLC and its remaining financial assets in 2015.

2014 Compared with 2013

Net cash used in investing activities increased $11.0 million in 2014, driven by higher capital expenditures of $36.0 million , which is discussed in more detail below. This increase in cash used in investing activities was partially offset by an increase in proceeds received from asset sales.



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Capital Expenditures

The following table summarizes our capital expenditures by business segment by year:



Reportable Segment (in millions)	2015		2014		2013		Change in 2015 over 2014		Change in 2014 over 2013
Wisconsin	$	950.3	$	715.0	$	695.7	$	235.3	$	19.3
Illinois	194.4		—		—		194.4		—
Other states	34.7		—		—		34.7		—
We Power	53.4		41.0		25.8		12.4		15.2
Corporate and other	33.4		5.2		3.7		28.2		1.5
Total	$	1,266.2	$	761.2	$	725.2	$	505.0	$	36.0

2015 Compared with 2014

The increase in capital expenditures in the Wisconsin segment in 2015 was primarily due to the inclusion of WPS as a result of the acquisition of Integrys on June 29, 2015. Significant projects included in 2015 capital expenditures for WPS include the ReACT ^TM emission control technology project at Weston Unit 3 and the System Modernization and Reliability Project, which is a project to underground and upgrade certain electric distribution facilities in northern Wisconsin. The Wisconsin segment also included increased expenditures in 2015 related to Wisconsin Gas's Western Gas Lateral project, which was a project to improve the reliability of Wisconsin Gas's natural gas distribution network in the western part of Wisconsin and to better meet customer demand. These increases were partially offset by lower capital expenditures in 2015 for Wisconsin Electric's conversion of the fuel source for VAPP from coal to natural gas, as most of the capital expenditures related to this project were incurred in 2014. For additional discussion regarding ReACT ^TM , see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Capital Requirements – Capital Expenditures and Significant Capital Projects.

The Illinois segment includes capital expenditures from PGL and NSG as a result of the acquisition of Integrys on June 29, 2015. In 2015, PGL incurred significant capital expenditures related to the AMRP.

The other states segment includes capital expenditures from MERC and MGU as a result of the acquisition of Integrys on June 29, 2015.

2014 Compared with 2013

The increase in capital expenditures in the Wisconsin segment in 2014 was primarily driven by the starting of the conversion of the fuel source for VAPP from coal to natural gas.

See Capital Expenditures and Significant Capital Projects below for more information.

Financing Activities

2015 Compared with 2014

Net cash from financing activities increased $1,618.0 million in 2015, driven by:


•	A $1,900.0 million increase in the issuance of long-term debt in 2015, of which $1,200.0 million related to the acquisition of Integrys.


•	An $82.8 million increase in net borrowings of commercial paper in 2015.

These increases in net cash from financing activities were partially offset by:


•	A $205.3 million increase in retirements of long-term debt in 2015, of which $130.1 million was attributable to legacy Integrys and its subsidiaries.



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•	A $103.4 million increase in dividends paid on common stock due to the issuance of 90.2 million shares associated with the Integrys acquisition and an increase in our quarterly dividend rate effective with the closing of the acquisition on June 29, 2015. See Note 2, Acquisition and Note 11, Common Equity , for more information.


•	A $52.7 million decrease in cash due to the redemption of all of WPS's preferred stock in 2015. See Note 12, Preferred Stock, for more information .

2014 Compared with 2013

Net cash used in financing activities decreased $89.8 million in 2014, primarily driven by a decrease in common stock repurchased as a result of our Board of Directors terminating our share repurchase program in connection with the acquisition of Integrys. During 2014, we repurchased $18.6 million of common stock as compared to $126.0 million in 2013 as part of the share repurchase program. See Note 11, Common Equity, for more information on share repurchases. Our dividends paid on common stock increased $23.1 million in 2014 as a result of increases in the quarterly common stock dividend of 12.5% and 2.0% in the third quarter of 2013 and first quarter of 2014, respectively.

Significant Financing Activities

For information on our short-term debt, see Note 13, Short-Term Debt and Lines of Credit .

For information on our long-term debt, see Note 14, Long-Term Debt and Capital Lease Obligations .

Capital Resources and Requirements

Capital Resources

Liquidity

We anticipate meeting our capital requirements for our existing operations through internally generated funds and short-term borrowings, supplemented by the issuance of intermediate or long-term debt securities, depending on market conditions and other factors.

We currently have access to the capital markets and have been able to generate funds internally and externally to meet our capital requirements. Our ability to attract the necessary financial capital at reasonable terms is critical to our overall strategic plan. We currently believe that we have adequate capacity to fund our operations for the foreseeable future through our existing borrowing arrangements, access to capital markets, and internally generated cash.

WEC Energy Group, Wisconsin Electric, Wisconsin Gas, WPS, and PGL maintain bank back-up credit facilities, which provide liquidity support for each company's obligations with respect to commercial paper and for general corporate purposes. We review our bank back-up credit facility needs on an ongoing basis and expect to be able to maintain adequate credit facilities to support our operations. See Note 13, Short-Term Debt and Lines of Credit , for more information about these credit facilities and other short-term credit agreements.



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The following table shows our capitalization structure as of December 31, 2015 and 2014 , as well as an adjusted capitalization structure that we believe is consistent with the manner in which the rating agencies currently view our 2007 6.25% Series A Junior Subordinated Notes due 2067 (6.25% Junior Notes), Integrys's 2006 6.11% Junior Subordinated Notes due 2066 (6.11% Junior Notes), and Integrys's 2013 6.00% Junior Subordinated Notes due 2073 (6.00% Junior Notes) (collectively, Junior Notes):



	2015						2014
(in millions)	Actual			Adjusted			Actual			Adjusted
Common equity	$	8,654.8		$	9,239.7		$	4,419.7		$	4,669.7
Preferred stock of subsidiary	30.4			30.4			30.4			30.4
Long-term debt (including current maturities)	9,281.8			8,696.9			4,594.8			4,344.8
Short-term debt	1,095.0			1,095.0			617.6			617.6
Total capitalization	$	19,062.0		$	19,062.0		$	9,662.5		$	9,662.5

Total debt	$	10,376.8		$	9,791.9		$	5,212.4		$	4,962.4

Ratio of debt to total capitalization	54.4		%	51.4		%	53.9		%	51.4		%

Included in long-term debt on our balance sheets as of December 31, 2015 and 2014 , is $1,169.8 million and $500.0 million aggregate principal amount of Junior Notes and 6.25% Junior Notes, respectively. The adjusted presentation attributes $584.9 million of the Junior Notes to common equity and $584.9 million to long-term debt in 2015 and $250.0 million of the 6.25% Junior Notes to common equity and $250.0 million to long-term debt in 2014. We believe this presentation is consistent with the 50% equity credit the majority of rating agencies currently attribute to the Junior Notes.

The adjusted presentation of our consolidated capitalization structure is presented as a complement to our capitalization structure presented in accordance with GAAP. Management evaluates and manages our capitalization structure, including our total debt to total capitalization ratio, using the GAAP calculation as adjusted by the rating agency treatment of the Junior Notes. Therefore, we believe the non-GAAP adjusted presentation reflecting this treatment is useful and relevant to investors in understanding how management and the rating agencies evaluate our capitalization structure.

In February 2016, Integrys repurchased and retired approximately $154.9 million aggregate principal amount of its 6.11% Junior Notes for a purchase price of $128.6 million, plus accrued and unpaid interest, through a modified “dutch auction” tender offer.

For a summary of the interest rate, maturity, and amount outstanding of each series of our long-term debt on a consolidated basis, see our capitalization statements.

As described in Note 11, Common Equity , certain restrictions exist on the ability of our subsidiaries to transfer funds to us. We do not expect these restrictions to have any material effect on our operations or ability to meet our cash obligations.

At December 31, 2015, we were in compliance with all covenants related to outstanding short-term and long-term debt. We expect to be in compliance with all such debt covenants for the foreseeable future. See Note 13, Short-Term Debt and Lines of Credit , for more information about our credit facilities and other short-term credit agreements. See Note 14, Long-Term Debt and Capital Lease Obligations , for more information about our long-term debt.

Working Capital

As of December 31, 2015 , our current liabilities exceeded our current assets by $502.2 million. We do not expect this to have any impact on our liquidity because we believe we have adequate back-up lines of credit in place for ongoing operations. We also have access to the capital markets to finance our construction programs and to refinance current maturities of long-term debt if necessary.

Capital Requirements

Acquisition of Integrys

The acquisition of Integrys on June 29, 2015, was financed through the issuance of approximately 90.2 million shares of Wisconsin Energy Corporation common stock, $1.2 billion of long-term debt, and $300.0 million of commercial paper. See Note 2, Acquisition, for more information on the acquisition.



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Contractual Obligations

We have the following contractual obligations and other commercial commitments as of December 31, 2015 :



	Payments Due by Period ⁽¹⁾
(in millions)	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
Long-term debt obligations ⁽²⁾	$	18,155.9	$	539.3	$	1,763.0	$	1,748.9	$	14,104.7
Capital lease obligations ⁽³⁾	130.5		45.1		28.6		31.9		24.9
Operating lease obligations ⁽⁴⁾	107.1		9.8		18.8		11.9		66.6
Energy and transportation purchase obligations ⁽⁵⁾	12,677.7		1,164.7		1,739.7		1,330.6		8,442.7
Purchase orders ⁽⁶⁾	824.8		629.1		138.5		41.3		15.9
Pension and OPEB funding obligations ⁽⁷⁾	68.6		30.4		38.2		—		—
Capital contributions to equity method investments	9.0		9.0		—		—		—
Total contractual obligations	$	31,973.6	$	2,427.4	$	3,726.8	$	3,164.6	$	22,654.8


⁽¹⁾	The amounts included in the table are calculated using current market prices, forward curves, and other estimates.


⁽²⁾	Principal and interest payments on long-term debt (excluding capital lease obligations).


⁽³⁾	Capital lease obligations for power purchase commitments. This amount does not include We Power leases to Wisconsin Electric which are eliminated upon consolidation.


⁽⁴⁾	Operating lease obligations for power purchase commitments and rail car leases.


⁽⁵⁾	Energy and transportation purchase obligations under various contracts for the procurement of fuel, power, gas supply, and associated transportation related to utility operations.


⁽⁶⁾	Purchase obligations related to normal business operations, information technology, and other services.


⁽⁷⁾	Obligations for pension and OPEB plans cannot reasonably be estimated beyond 2018.

The table above does not include liabilities related to the accounting treatment for uncertainty in income taxes because we are not able to make a reasonably reliable estimate as to the amount and period of related future payments at this time. For additional information regarding these liabilities, refer to Note 15, Income Taxes .

AROs in the amount of $571.2 million are not included in the above table. Settlement of these liabilities cannot be determined with certainty, but we believe the majority of these liabilities will be settled in more than five years.

Obligations for utility operations have historically been included as part of the rate-making process and therefore are generally recoverable from customers.

Capital Expenditures and Significant Capital Projects

We have several capital projects that will require significant capital expenditures over the next three years and beyond. All projected capital requirements are subject to periodic review and may vary significantly from estimates, depending on a number of factors. These factors include environmental requirements, regulatory restraints and requirements, changes in tax laws and regulations, acquisition and development opportunities, market volatility, and economic trends. Our estimated capital expenditures for the next three years are as follows:



(in millions)	2016		2017		2018
Wisconsin ⁽¹⁾	$	934.6	$	998.0	$	1,055.2
Illinois ⁽²⁾	375.5		390.9		387.0
Other states	60.1		64.6		64.0
We Power	49.3		60.5		38.5
Corporate and other	90.9		48.5		5.3
Total	$	1,510.4	$	1,562.5	$	1,550.0



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⁽¹⁾

WPS is in the process of constructing a multi-pollutant control technology known as ReACT ^TM as part of Weston Unit 3. The control technology will help meet the requirements of a Consent Decree agreed to between WPS and the EPA. The technology will also assist with WPS's compliance with future air pollution regulations, as well as help maintain a balanced generation portfolio. The cost of the project is estimated at approximately $342.0 million, excluding AFUDC, with a targeted completion date of April 2016.

⁽²⁾

PGL is continuing work on the AMRP, a 20-year project that began in 2011 under which PGL is replacing approximately 2,000 miles of Chicago's aging natural gas pipeline infrastructure. PGL currently recovers these costs through a surcharge on customer bills pursuant to an ICC approved qualifying infrastructure plant rider, which is in effect through 2023. PGL expects to invest between $250 million and $280 million annually over the next three years.

We expect to provide capital contributions to ATC (not included in the above table) of approximately $317 million from 2016 through 2018.

Common Stock Matters

For information related to our common stock matters, see Note 11, Common Equity .

Investments in Outside Trusts

We use outside trusts to fund our pension and certain OPEB obligations. These trusts had investments of approximately $3.5 billion as of December 31, 2015 . These trusts hold investments that are subject to the volatility of the stock market and interest rates. We contributed $121 million, $13.9 million, and $22.8 million to our pension and OPEB plans in 2015, 2014, and 2013, respectively. Future contributions to the plans will be dependent upon many factors, including the performance of existing plan assets and long-term discount rates. For additional information, see Note 17, Employee Benefits .

Off-Balance Sheet Arrangements

We are a party to various financial instruments with off-balance sheet risk as a part of our normal course of business, including financial guarantees and letters of credit which support construction projects, commodity contracts, and other payment obligations. We believe that these agreements do not have, and are not reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to our investors. For additional information regarding guarantees and other off-balance sheet arrangements, see Note 16, Guarantees , and Note 21, Variable Interest Entities .

FACTORS AFFECTING RESULTS, LIQUIDITY, AND CAPITAL RESOURCES

Market Risks and Other Significant Risks

We are exposed to market and other significant risks as a result of the nature of our businesses and the environment in which those businesses operate. These risks, described in further detail below, include but are not limited to:

Regulatory Recovery

Our utilities account for their regulated operations in accordance with accounting guidance under the Regulated Operations Topic of the FASB ASC. Our rates are determined by various regulatory commissions. See Item 1. Business – D. Regulation, for more information on these commissions.

Regulated entities are allowed to defer certain costs that would otherwise be charged to expense, if the regulated entity believes the recovery of these costs is probable. We record regulatory assets pursuant to specific orders or by a generic order issued by our regulators. Recovery of these deferred costs in future rates is subject to the review and approval by those regulators. We assume the risks and benefits of ultimate recovery of these items in future rates. If the recovery of these costs is not approved by our regulators, the costs are charged to income in the current period. In general, our regulatory assets are recovered over a period of between one to six years. Regulators can impose liabilities on a prospective basis for amounts previously collected from customers and for



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amounts that are expected to be refunded to customers. We record these items as regulatory liabilities. As of December 31, 2015 , our regulatory assets totaled $3,101.7 million and our regulatory liabilities totaled $1,426.0 million .

Regarding our ReACT™ project, the PSCW approved deferral of costs above the originally authorized $275.0 million level through 2016. We will be required to obtain a separate approval for collection of these deferred costs. Also, prior to the acquisition, Integrys initiated an IT project with the goal of improving the customer experience. Specifically, the project is expected to provide functional and technological benefits to the billing, call center, and credit collection functions. As of December 31, 2015, none of the costs have been disallowed in rate proceedings. We will be required to obtain approval for the recovery of additional costs incurred through the completion of this long-term project See Note 22, Regulatory Environment , for additional information regarding recent and pending rate proceedings, orders, and investigations involving our utilities.

Commodity Costs

In the normal course of providing energy, we are subject to market fluctuations in the costs of coal, natural gas, purchased power, and fuel oil used in the delivery of coal. We manage our fuel and natural gas supply costs through a portfolio of short and long-term procurement contracts with various suppliers for the purchase of coal, natural gas, and fuel oil. In addition, we manage the risk of price volatility through natural gas and electric hedging programs.

Embedded within our utilities' rates are amounts to recover fuel, natural gas, and purchased power costs. Our utilities have recovery mechanisms in place that allow them to recover or refund all or a portion of the changes in prudently incurred fuel, natural gas, and purchased power costs from rate case-approved amounts. See Item 1. Business – D. Regulation, for more information on these mechanisms.

Higher commodity costs can increase our working capital requirements, result in higher gross receipts taxes, and lead to increased energy efficiency investments by our customers to reduce utility usage and/or fuel substitution. Higher commodity costs combined with slower economic conditions also expose us to greater risks of accounts receivable write-offs as more customers are unable to pay their bills. See Note 1(d), Revenues and Customer Receivables, for more information on riders and other mechanisms that allow for cost recovery or refund of uncollectible expense.

Weather

Our utilities' rates are based upon estimated normal temperatures. Our electric revenues are unfavorably sensitive to below normal temperatures during the summer cooling season, and to some extent, to above normal temperatures during the winter heating season. Our natural gas revenues are unfavorably sensitive to above normal temperatures during the winter heating season. Certain of our natural gas utilities have decoupling mechanisms in place that help reduce the impacts of weather. Decoupling mechanisms differ by state and allow utilities to recover or refund certain differences between actual and authorized margins. A summary of actual weather information in our utilities' service territories during 2015 , 2014 , and 2013 , as measured by degree days, may be found in Management's Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations.

Interest Rates

We are exposed to interest rate risk resulting from our short-term borrowings and projected near-term debt financing needs. We manage exposure to interest rate risk by limiting the amount of our variable rate obligations and continually monitoring the effects of market changes on interest rates. When it is advantageous to do so, we enter into long-term fixed rate debt. We may also enter into derivative financial instruments, such as swaps, to mitigate interest rate exposure.

Based on the variable rate debt outstanding at December 31, 2015 , and December 31, 2014 , a hypothetical increase in market interest rates of one-percentage point would have increased annual interest expense by $11.0 million and $6.2 million, respectively. This sensitivity analysis was performed assuming a constant level of variable rate debt during the period and an immediate increase in interest rates, with no other changes for the remainder of the period.



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Marketable Securities Return

We use various trusts to fund our pension and OPEB obligations. These trusts invest in debt and equity securities. Changes in the market prices of these assets can affect future pension and OPEB expenses. Additionally, future contributions can also be affected by the investment returns on trust fund assets. We believe that the financial risks associated with investment returns would be partially mitigated through future rate actions by our various utility regulators.

The fair value of our trust fund assets and expected long-term returns were approximately:



(in millions)	As of December 31, 2015		Expected Return on Assets in 2016
Pension trust funds	$	2,755.1	7.13	%
OPEB trust funds	$	749.8	7.25	%

Fiduciary oversight of the pension and OPEB trust fund investments is the responsibility of an Investment Trust Policy Committee. The Committee works with external actuaries and investment consultants on an ongoing basis to establish and monitor investment strategies and target asset allocations. Forecasted cash flows for plan liabilities are regularly updated based on annual valuation results. Target asset allocations are determined utilizing projected benefit payment cash flows and risk analyses of appropriate investments. The targeted asset allocations are intended to reduce risk, provide long-term financial stability for the plans, and maintain funded levels which meet long-term plan obligations while preserving sufficient liquidity for near-term benefit payments. Investment strategies utilize a wide diversification of asset types and qualified external investment managers.

We consult with our investment advisors on an annual basis to help us forecast expected long-term returns on plan assets by reviewing actual historical returns and calculating expected total trust returns using the weighted-average of long-term market returns for each of the major target asset categories utilized in the fund.

Economic Conditions

We have electric and natural gas utility operations that serve customers in Wisconsin, Illinois, Michigan, and Minnesota. As such, we are exposed to market risks in the regional midwest economy. In addition, any economic downturn or disruption of national or international markets could adversely affect the financial condition of our customers and demand for their products, which could affect their demand for our products.

Inflation

We continue to monitor the impact of inflation, especially with respect to the costs of medical plans, fuel, transmission access, construction costs, and regulatory and environmental compliance in order to minimize its effects in future years through pricing strategies, productivity improvements, and cost reductions. We do not believe the impact of general inflation will have a material impact on our future results of operations.

For additional information concerning risk factors, including market risks, see the Cautionary Statement Regarding Forward-Looking Information at the beginning of this report and Risk Factors in Item 1A.

Industry Restructuring

Electric Utility Industry

The regulated energy industry continues to experience significant changes. FERC continues to support large RTOs, which affects the structure of the wholesale market. To this end, MISO implemented the MISO Energy Markets, including the use of LMP to value electric transmission congestion and losses. Increased competition in the retail and wholesale markets, which may result from restructuring efforts, could have a significant and adverse financial impact on us. It is uncertain when retail choice might be implemented, if at all, in Wisconsin. However, Michigan has adopted retail choice.



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Restructuring in Wisconsin

Electric utility revenues in Wisconsin are regulated by the PSCW. The PSCW has been focused on electric reliability infrastructure issues for the state of Wisconsin in recent years. The PSCW continues to maintain the position that the question of whether to implement electric retail competition in Wisconsin should ultimately be decided by the Wisconsin legislature. No such legislation has been introduced in Wisconsin to date.

Restructuring in Michigan

Under Michigan law, our retail customers may choose an alternative electric supplier to provide power supply service. Some of our small retail customers have switched to an alternative electric supplier. The law limits customer choice to 10% of our Michigan retail load, but the two iron ore mines in our service territory are excluded from this cap. See Note 23, Michigan Settlement , for information on the mines' ability to switch to an alternative electric supplier. When a customer switches to an alternative electric supplier, we continue to provide distribution and customer service functions for the customer.

Natural Gas Utility Industry

Restructuring in Wisconsin

The PSCW previously instituted generic proceedings to consider how its regulation of natural gas distribution utilities should change to reflect a competitive environment in the natural gas industry. To date, the PSCW has made a policy decision to deregulate the sale of natural gas in customer classes with workably competitive market choices and has adopted standards for transactions between a utility and its natural gas marketing affiliates. All of our Wisconsin customer classes have workably competitive market choices and, therefore, can purchase natural gas directly from a third party supplier. However, work on deregulation of the natural gas distribution industry by the PSCW continues to be on hold. Currently, we are unable to predict the impact of potential future deregulation on our results of operations or financial position.

Restructuring in Illinois

Since 2002, PGL and NSG have provided all of their customers with the option to choose an alternative retail natural gas supplier. PGL and NSG are not required by the ICC or state law to make this option available to customers, but since this option is currently provided to customers, PGL and NSG would need ICC approval to eliminate it.

PGL and NSG offer natural gas transportation service to customers that select an alternative retail natural gas supplier. Transportation customers purchase natural gas directly from an alternative retail natural gas supplier and use PGL's and NSG's distribution systems to transport the natural gas to their facilities. PGL and NSG still earn a distribution charge when they transport natural gas for these customers. As such, the loss of revenue associated with the natural gas that transportation customers purchase from an alternative retail natural gas supplier has little impact on our net income, since it is offset by an equal reduction to natural gas costs.

Restructuring in Minnesota

We are unaware of any current efforts to deregulate the sale of natural gas in Minnesota. While potential future efforts to deregulate the sale of natural gas could occur, we are unable to predict the impact of any potential future deregulation on our results of operations or financial position.

Restructuring in Michigan

The option to choose an alternative retail natural gas supplier has been provided to WPS's and MGU's customers since the late 1990s and 2005, respectively. WPS and MGU are not required by the MPSC or state law to make this option available to customers, but since this option is currently provided to customers, WPS and MGU would need MPSC approval to eliminate it.

WPS and MGU offer natural gas transportation service to customers that select an alternative retail natural gas supplier. Transportation customers purchase natural gas directly from an alternative retail natural gas supplier and use WPS's and MGU's distribution systems to transport the natural gas to their facilities. WPS and MGU still earn a distribution charge when they transport natural gas for these customers. As such, the loss of revenue associated with the natural gas that transportation customers purchase from an alternative retail natural gas supplier has little impact on our net income, since it is offset by an equal reduction to natural gas costs.



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Environmental Matters

Cross-State Air Pollution Rule

In July 2011, the EPA issued the CSAPR, which replaced a previous rule, the Clean Air Interstate Rule (CAIR). The purpose of the CSAPR was to limit the interstate transport of emissions of NOx and SO ₂ that contribute to fine particulate matter and ozone nonattainment in downwind states through a proposed allocation plan and allowance trading scheme. The rule was to become effective in January 2012. However, in December 2011, the CSAPR requirements were stayed by the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit Court of Appeals) and CAIR was implemented during the stay period. In August 2012, the D.C. Circuit Court of Appeals issued a ruling vacating and remanding CSAPR and simultaneously reinstating CAIR pending the issuance of a replacement rule by the EPA. The case was appealed to the United States Supreme Court (Supreme Court). In April 2014, the Supreme Court issued a decision largely upholding CSAPR and remanded it to the D.C. Circuit Court of Appeals for further proceedings. In October 2014, the D.C. Circuit Court of Appeals issued a decision that allowed the EPA to begin implementing CSAPR on January 1, 2015. The compliance deadlines were also changed by three years, so that Phase I emissions budgets apply in 2015 and 2016, and Phase 2 emissions budgets will apply to 2017 and beyond.

In December 2015, the EPA published its proposed update to the CSAPR for the 2008 ozone NAAQS and plans to issue a final rule by August 2016. Starting in 2017, this proposed rule would reduce ozone season (May 1 through September 30) NOx emissions from power plants in 23 states in the eastern United States. In this rule, the EPA is proposing to update Phase II CSAPR NOx ozone season budgets for electric generating units in the 23 states. An approximate 60% reduction in NOx emissions is proposed for Wisconsin and an approximate 29% reduction is proposed for Michigan, beginning in May 2017. Additional investments in controls and/or shifts in generation may be required depending upon the final outcome of the rule. We submitted comments to the EPA on the potential impacts of the rule.

See Note 18, Commitments and Contingencies , for a discussion of additional environmental matters affecting us, including rules and regulations relating to air quality, water quality, land quality, renewable energy requirements, and climate change.

Other Matters

American Transmission Company Allowed Return On Equity Complaint

In November 2013, a group of MISO industrial customer organizations filed a complaint with the FERC requesting to reduce the base ROE used by MISO transmission owners, including ATC, to 9.15%. ATC's current authorized ROE is 12.2%. In October 2014, the FERC issued an order to hear the complaint on ROE and set a refund effective date retroactive to November 12, 2013. The FERC conducted hearings in August 2015, and the ALJ issued an initial decision in December 2015. The ALJ's initial decision recommended that ATC and all other MISO transmission owners be authorized to collect a base ROE of 10.32%, as well as the 0.5% incentive adder approved by the FERC in January 2015 for MISO transmission owners. The ALJ's recommendation is not binding to the FERC. A FERC order related to this complaint is expected during the fourth quarter of 2016.

In February 2015, a second complaint was filed with the FERC requesting a reduction in the base ROE used by MISO transmission owners, including ATC, to 8.67%, with a refund effective date retroactive to the filing date of the complaint. The FERC conducted hearings in February 2016 with respect to this second complaint, and an initial decision is expected by June 30, 2016.

In October 2014, the FERC issued an order, in regard to a similar complaint, reducing the base ROE for New England transmission owners from their existing rate of 11.14% to 10.57%. In this order, the FERC used a revised method for determining the appropriate ROE for FERC-jurisdictional electric utilities. The FERC expects its new methodology will narrow the "zone" of reasonable returns on equity. The FERC has stated that it expects future decisions on pending complaints related to similar ROE issues to be guided by the New England transmission decision.

Any change to ATC's ROE could result in lower equity earnings and distributions from ATC in the future. We are currently unable to determine how the FERC may rule in these complaints. However, we believe it is probable that refunds will be required upon resolution of these issues. Based on the ALJ's initial decision in December 2015, ATC reduced its earnings, which resulted in us recognizing lower earnings from our investment in ATC.



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Wisconsin Power and Light's (WP&L) Riverside Energy Center Facility

In April 2015, WP&L filed a CPCN application with the PSCW for approval to construct an approximate 650 MW natural gas-fired combined-cycle generating unit in Beloit, Wisconsin. Recent construction proposals received by WP&L indicate that the unit could generate up to 700 MWs. In the third quarter of 2015, Wisconsin Electric and WPS requested and received intervention in this proceeding. As intervenors, Wisconsin Electric and WPS proposed purchased power agreement alternatives to the new generating unit. In December 2015, Wisconsin Electric, WPS, and WP&L entered into a settlement agreement that was approved by the PSCW. Based on the settlement agreement, the generating unit cannot become commercially operational before June 1, 2020. In addition, WP&L must enter into a purchased power agreement with Wisconsin Electric for MISO planning years 2017, 2018, and 2019, whereby Wisconsin Electric will sell and WP&L will purchase capacity and energy at certain agreed upon prices. WPS also will have the option to purchase an undivided ownership interest of up to 100 MWs of generating capacity from the unit during the first two years of operation and up to an aggregate 200 MWs of generating capacity during the third and fourth years of operation. Other major terms of the settlement included agreement on ownership of future Wisconsin Electric and WPS natural gas units, negotiation of a renewable generation joint development plan, and ownership terms of the jointly-owned Columbia plant.

Bonus Depreciation Provisions

The Protecting Americans from Tax Hikes Act of 2015 was signed into law on December 18, 2015. This act extended 50% bonus depreciation to assets placed in service during 2015 through 2017, 40% bonus depreciation to assets placed in service during 2018, and 30% bonus depreciation to assets placed in service during 2019. Bonus depreciation is an additional amount of deductible depreciation that is awarded above and beyond what would normally be available. Due to the resulting increase in federal tax depreciation, we did not make federal income tax payments for 2015, 2014, or 2013.

Critical Accounting Policies and Estimates

Preparation of financial statements and related disclosures in compliance with GAAP requires the application of appropriate technical accounting rules and guidance, as well as the use of estimates. The application of these policies necessarily involves judgments regarding future events, including the likelihood of success of particular projects, legal and regulatory challenges, and anticipated recovery of costs. These judgments, in and of themselves, could materially impact the financial statements and disclosures based on varying assumptions. In addition, the financial and operating environment may also have a significant effect, not only on the operation of our business, but on our results reported through the application of accounting measures used in preparing the financial statements and related disclosures, even if the nature of the accounting policies applied have not changed.

The following is a list of accounting policies that are most significant to the portrayal of our financial condition and results of operations and that require management's most difficult, subjective, or complex judgments.

Goodwill Impairment

Goodwill represents the excess of the cost of an acquisition over the fair value of the identifiable net assets acquired. Goodwill is assessed for impairment at least annually or more frequently if a triggering event occurs. If the carrying amount of a reporting unit is greater than its fair value, impairment may be present. When evaluating goodwill for impairment, a qualitative assessment, referred to as the step zero approach, may first be performed to determine whe ther further quantitative analysis is necessary. If the qualitative assessment indicates that a reporting unit's fair value more likely than not exceeds its carrying value, the two-step quantitative analysis is unnecessary. However, the quantitative analysis needs to be performed if the qualitative assessment indicates that a reporting unit's carrying value more likely than not exceeds its fair value. The quantitative analysis involves calculating the estimated fair value of the reporting unit. Since the qualitative assessment is optional, companies are allowed to proceed directly to the quantitative analysis.

We completed our annual goodwill impairment test for all of our reporting units that carried a goodwill balance effective August 31, 2015. Our reporting units are the same as our reportable segments. We performed the step zero qualitative analysis since all of our reporting units were either valued recently in connection with the acquisition of Integrys or passed their most recent goodwill impairment test by a significant amount. In addition, no events occurred that would have more likely than not caused a significant decrease in the fair values of our reporting units. Events and circumstances we considered when performing the step zero analysis included, but were not limited to, macro-economic conditions, market and industry conditions, internal cost factors, share price fluctuations, competitive environment, and the operational stability and overall financial performance of the reporting units. After evaluating and weighing all relevant events and circumstances, we concluded that the carrying amounts of our reporting units were



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significantly exceeded by their respective fair values. Consequently, no reporting units were at risk of impairment. No impairment charges were recorded in 2015 as a result of our qualitative annual impairment assessment.

Our reporting units had the following goodwill balances at December 31, 2015:



(in millions, except percentages)	Goodwill		Percentage of Total Goodwill
Wisconsin	$	2,109.5	69.8	%
Illinois	731.2		24.2	%
Other states	182.8		6.0	%
Total goodwill	$	3,023.5	100.0	%

See Note 10, Goodwill and Other Intangible Assets, for more information .

Pension and Other Postretirement Employee Benefits

The costs of providing non-contributory defined pension benefits and OPEB, described in Note 17, Employee Benefits , are dependent upon numerous factors resulting from actual plan experience and assumptions of future experience.

Pension and OPEB costs are impacted by actual employee demographics (including age, compensation levels, and employment periods), the level of contributions made to the plans, and earnings on plan assets. Pension and OPEB costs may also be significantly affected by changes in key actuarial assumptions, including anticipated rates of return on plan assets, mortality and discount rates, and expected health care cost trends. Changes made to the plan provisions may also impact current and future pension and OPEB costs.

Pension and OPEB plan assets are primarily made up of equity and fixed income investments. Fluctuations in actual equity and fixed income market returns, as well as changes in general interest rates, may result in increased or decreased benefit costs in future periods. We believe that such changes in costs would be recovered or refunded at our utilities through the ratemaking process.

The following table shows how a given change in certain actuarial assumptions would impact the projected benefit obligation and the reported net periodic pension cost. Each factor below reflects an evaluation of the change based on a change in that assumption only.



Actuarial Assumption (in millions, except percentages)	Percentage-Point Change in Assumption	Impact on Projected Benefit Obligation			Impact on 2015 Pension Cost
Discount rate	(0.5)	$	198.0		$	10.6
Discount rate	0.5	(172.1		)	(9.9		)
Rate of return on plan assets	(0.5)	N/A			10.8
Rate of return on plan assets	0.5	N/A			(10.8		)

The following table shows how a given change in certain actuarial assumptions would impact the accumulated OPEB obligation and the reported net periodic OPEB cost. Each factor below reflects an evaluation of the change based on a change in that assumption only.



Actuarial Assumption (in millions, except percentages)	Percentage-Point Change in Assumption	Impact on Postretirement Benefit Obligation			Impact on 2015 Postretirement Benefit Cost
Discount rate	(0.5)	$	53.5		$	2.1
Discount rate	0.5	(47.3		)	(1.7		)
Health care cost trend rate	(0.5)	(33.9		)	(3.5		)
Health care cost trend rate	0.5	38.5			4.0
Rate of return on plan assets	(0.5)	N/A			2.7
Rate of return on plan assets	0.5	N/A			(2.7		)

In the fourth quarter of 2014, the Society of Actuaries published a new set of mortality tables, which updated life expectancy assumptions. We have adjusted the tables to better reflect our plan-specific mortality experience and other general assumptions. We have incorporated the revised mortality tables into the projected pension and OPEB obligations at December 31, 2015.



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The discount rates are selected based on hypothetical bond portfolios consisting of noncallable (or callable with make-whole provisions), noncollateralized, high-quality corporate bonds with maturities between 0 and 30 years. The bonds are generally rated "Aa" with a minimum amount outstanding of $50.0 million. From the hypothetical bond portfolios, a single rate is determined that equates the market value of the bonds purchased to the discounted value of the plans' expected future benefit payments.

We establish our expected return on assets based on consideration of historical and projected asset class returns, as well as the target allocations of the benefit trust portfolios. The assumed long-term rate of return on pension plan assets was 7.37% in 2015, and 7.25% in both 2014 and 2013, respectively. The actual rate of return on pension plan assets, net of fees, was (3.85)%, 6.17%, and 10.92%, in 2015, 2014, and 2013, respectively.

In selecting assumed health care cost trend rates, past performance and forecasts of health care costs are considered. For more information on health care cost trend rates and a table showing future payments that we expect to make for our pension and OPEB, see Note 17, Employee Benefits .

Regulatory Accounting

Our utility operations follow the guidance under the Regulated Operations Topic of the FASB ASC. Our financial statements reflect the effects of the ratemaking principles followed by the various jurisdictions regulating us. Certain items that would otherwise be immediately recognized as revenues and expenses are deferred as regulatory assets and regulatory liabilities for future recovery or refund to customers, as authorized by our regulators. Future recovery of regulatory assets is not assured and is generally subject to review by regulators in rate proceedings for matters such as prudence and reasonableness. Once approved, the regulatory assets and liabilities are amortized into earnings over the rate recovery period. If recovery or refund of costs is not approved or is no longer considered probable, these regulatory assets or liabilities are recognized in current period earnings. Management regularly assesses whether these regulatory assets and liabilities are probable of future recovery or refund by considering factors such as changes in the regulatory environment, earnings at the electric and natural gas utilities, and the status of any pending or potential deregulation legislation.

The application of the Regulated Operations Topic of the FASB ASC would be discontinued if all or a separable portion of our utility operations no longer meet the criteria for application. Our regulatory assets and liabilities would be written off as a charge to income as an unusual or infrequently occurring item in the period in which discontinuation occurred. As of December 31, 2015 , we had $3,101.7 million in regulatory assets and $1,426.0 million in regulatory liabilities. See Note 6, Regulatory Assets and Liabilities, for more information .

Unbilled Revenues

We record utility operating revenues when energy is delivered to our customers. However, the determination of energy sales to individual customers is based upon the reading of their meters, which occurs on a systematic basis throughout the month. At the end of each month, amounts of energy delivered to customers since the date of their last meter reading are estimated and corresponding unbilled revenues are calculated. This unbilled revenue is estimated each month based upon actual generation and throughput volumes, recorded sales, estimated customer usage by class, weather factors, estimated line losses, and applicable customer rates. Significant fluctuations in energy demand for the unbilled period or changes in the composition of customer classes could impact the accuracy of the unbilled revenue estimate. Total utility operating revenues during 2015 of approximately $5.8 billion included accrued utility revenues of $418.3 million as of December 31, 2015 .

Income Tax Expense

We are required to estimate income taxes for each of the jurisdictions in which we operate as part of the process of preparing financial statements. This process involves estimating current income tax liabilities together with assessing temporary differences resulting from differing treatment of items, such as depreciation, for income tax and accounting purposes. These differences result in deferred income tax assets and liabilities, which are included within our balance sheets. We also assess the likelihood that our deferred income tax assets will be recovered through future taxable income. To the extent we believe that realization is not likely, we establish a valuation allowance, which is offset by an adjustment to the provision for income taxes in the income statements.

Uncertainty associated with the application of tax statutes and regulations and the outcomes of tax audits and appeals requires that judgments and estimates be made in the accrual process and in the calculation of effective tax rates. Only income tax benefits that meet the "more likely than not" recognition threshold may be recognized or continue to be recognized. Unrecognized tax benefits



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are re-evaluated quarterly and changes are recorded based on new information, including the issuance of relevant guidance by the courts or tax authorities and developments occurring in the examinations of our tax returns.

Significant management judgment is required in determining our provision for income taxes, deferred income tax assets and liabilities, the liability for unrecognized tax benefits, and any valuation allowance recorded against deferred income tax assets. The assumptions involved are supported by historical data, reasonable projections, and interpretations of applicable tax laws and regulations across multiple taxing jurisdictions. Significant changes in these assumptions could have a material impact on our financial condition and results of operations. See Note 1(n), Income Taxes , and Note 15, Income Taxes , for a discussion of accounting for income taxes.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See 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 Item 7. of this report, as well as Note 1(t), Derivative Instruments , Note 1(s), Fair Value Measurements , and Note 16, Guarantees , for information concerning potential market risks to which we are exposed.



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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

A. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of WEC Energy Group, Inc.:

We have audited the accompanying consolidated balance sheets and consolidated statements of capitalization of WEC Energy Group Inc. and subsidiaries (the "Company") as of December 31, 2015 and 2014 , and the related consolidated income statements, statements of comprehensive income, statements of equity, and statements of cash flows for each of the three years in the period ended December 31, 2015 . Our audits also included the financial statement schedules listed in the Index at Item 15. These consolidated financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of WEC Energy Group, Inc. and subsidiaries as of December 31, 2015 and 2014 , and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 , in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2015 , based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2016 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin

February 26, 2016



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A. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of WEC Energy Group, Inc.:

We have audited the internal control over financial reporting of WEC Energy Group, Inc. and subsidiaries (the "Company") as of December 31, 2015 , based on the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015 , based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedules as of and for the year ended December 31, 2015 of the Company and our report dated February 26, 2016 expressed an unqualified opinion on those consolidated financial statements and financial statement schedules.

/s/DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin

February 26, 2016



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B. CONSOLIDATED INCOME STATEMENTS



Year Ended December 31
(in millions, except per share amounts)	2015			2014			2013
Operating revenues	$	5,926.1		$	4,997.1		$	4,519.0

Operating expenses
Cost of sales	2,240.1			2,259.4			1,827.1
Other operation and maintenance	1,709.3			1,112.4			1,155.0
Depreciation and amortization	561.8			391.4			340.1
Property and revenue taxes	164.4			121.8			116.7
Total operating expenses	4,675.6			3,885.0			3,438.9

Operating income	1,250.5			1,112.1			1,080.1

Equity in earnings of transmission affiliate	96.1			66.0			68.5
Other income, net	58.9			13.4			18.8
Interest expense	331.4			240.3			250.9
Other expense	(176.4		)	(160.9		)	(163.6		)

Income before income taxes	1,074.1			951.2			916.5
Income tax expense	433.8			361.7			337.9
Net income	640.3			589.5			578.6

Preferred stock dividends of subsidiaries	1.8			1.2			1.2
Net income attributed to common shareholders	$	638.5		$	588.3		$	577.4

Earnings per share
Basic	$	2.36		$	2.61		$	2.54
Diluted	$	2.34		$	2.59		$	2.51

Weighted average common shares outstanding
Basic	271.1			225.6			227.6
Diluted	272.7			227.5			229.7

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.



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C. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



Year Ended December 31
(in millions)	2015			2014		2013
Net income	$	640.3		$	589.5	$	578.6

Other comprehensive income, net of tax
Derivatives accounted for as cash flow hedges
Gains on settlement, net of tax of $7.6	11.4			—		—
Reclassification of gains to net income, net of tax	(0.8		)	—		—
Cash flow hedges, net	10.6			—		—

Defined benefit plans
Pension and OPEB costs arising during period, net of tax of $4.2	(6.3		)	—		—

Other comprehensive income, net of tax	4.3			—		—

Comprehensive income	644.6			589.5		578.6

Preferred stock dividends of subsidiaries	1.8			1.2		1.2
Comprehensive income attributed to common shareholders	$	642.8		$	588.3	$	577.4

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.



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D. CONSOLIDATED BALANCE SHEETS



At December 31
(in millions, except share and per share amounts)	2015			2014
Assets
Property, plant, and equipment
In service	$	26,249.5		$	15,509.0
Accumulated depreciation	(7,919.1		)	(4,485.1		)
	18,330.4			11,023.9
Construction work in progress	822.9			191.8
Leased facilities, net	36.4			42.0
Net property, plant, and equipment	19,189.7			11,257.7
Investments
Equity investment in transmission affiliate	1,380.9			424.1
Other	85.8			32.8
Total investments	1,466.7			456.9
Current assets
Cash and cash equivalents	49.8			61.9
Accounts receivable and unbilled revenues, net of reserves of $113.3 and $74.5, respectively	1,028.6			643.4
Materials, supplies, and inventories	687.0			400.6
Assets held for sale	96.8			—
Prepayments	285.8			148.2
Other	58.8			38.6
Total current assets	2,206.8			1,292.7
Deferred charges and other assets
Regulatory assets	3,064.6			1,271.2
Goodwill	3,023.5			441.9
Other	403.9			184.6
Total deferred charges and other assets	6,492.0			1,897.7
Total assets	$	29,355.2		$	14,905.0

Capitalization and liabilities
Capitalization
Common stock – $0.01 par value; 325,000,000 shares authorized; 315,683,496 and 225,517,339 shares outstanding, respectively	$	3.2		$	2.3
Additional paid in capital	4,347.2			300.1
Retained earnings	4,299.8			4,117.0
Accumulated other comprehensive income	4.6			0.3
Preferred stock of subsidiary	30.4			30.4
Long-term debt	9,124.1			4,170.7
Total capitalization	17,809.3			8,620.8
Current liabilities
Current portion of long-term debt	157.7			424.1
Short-term debt	1,095.0			617.6
Accounts payable	815.4			363.3
Accrued payroll and benefits	169.7			95.1
Other	471.2			168.6
Total current liabilities	2,709.0			1,668.7
Deferred credits and other liabilities
Regulatory liabilities	1,392.2			830.6
Deferred income taxes	4,622.3			2,664.0
Deferred revenue, net	579.4			614.1
Pension and other postretirement benefit obligations	543.1			203.8
Environmental remediation	628.2			32.6
Other	1,071.7			270.4
Total deferred credits and other liabilities	8,836.9			4,615.5

Commitments and contingencies (Note 18)

Total capitalization and liabilities	$	29,355.2		$	14,905.0

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.



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E. CONSOLIDATED STATEMENTS OF CASH FLOWS



Year Ended December 31
(in millions)	2015			2014			2013
Operating activities
Net income	$	640.3		$	589.5		$	578.6
Reconciliation to cash provided by operating activities
Depreciation and amortization	583.5			417.0			396.0
Deferred income taxes and investment tax credits, net	418.7			328.1			312.7
Contributions to pension and OPEB plans	(121.0		)	(13.9		)	(22.8		)
Change in –
Accounts receivable and unbilled revenues	84.0			80.7			(162.9		)
Materials, supplies, and inventories	(69.4		)	(71.2		)	31.3
Other current assets	(27.2		)	(13.9		)	2.8
Accounts payable	(9.3		)	23.7			(14.8		)
Accrued taxes, net	35.7			(11.4		)	36.6
Other current liabilities	(21.6		)	(33.9		)	(1.5		)
Other, net	(220.1		)	(95.8		)	76.2
Net cash provided by operating activities	1,293.6			1,198.9			1,232.2

Investing activities
Capital expenditures	(1,266.2		)	(761.2		)	(725.2		)
Business acquisition, net of cash acquired of $156.3	(1,329.9		)	—			—
Investment in transmission affiliate	(8.7		)	(13.1		)	(10.5		)
Proceeds from asset sales	28.9			13.9			2.5
Proceeds from cashout of corporate owned life insurance policies	17.3			—			—
Other, net	41.1			3.6			(12.6		)
Net cash used in investing activities	(2,517.5		)	(756.8		)	(745.8		)

Financing activities
Exercise of stock options	30.1			50.3			48.5
Purchase of common stock	(74.7		)	(123.2		)	(223.4		)
Dividends paid on common stock	(455.4		)	(352.0		)	(328.9		)
Redemption of WPS preferred stock	(52.7		)	—			—
Issuance of long-term debt	2,150.0			250.0			251.0
Retirement of long-term debt	(529.6		)	(324.3		)	(397.2		)
Change in short-term debt	163.0			80.2			142.8
Other, net	(18.9		)	12.8			11.2
Net cash provided by (used in) financing activities	1,211.8			(406.2		)	(496.0		)

Net change in cash and cash equivalents	(12.1		)	35.9			(9.6		)
Cash and cash equivalents at beginning of year	61.9			26.0			35.6
Cash and cash equivalents at end of year	$	49.8		$	61.9		$	26.0

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.



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F. CONSOLIDATED STATEMENTS OF EQUITY



	WEC Energy Group Common Shareholders' Equity
	Common Stock		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income		Total Common Shareholders' Equity			Preferred Stock of Subsidiaries			Total Equity
(in millions, expect per share amounts)	Common Stock		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income		Total Common Shareholders' Equity			Preferred Stock of Subsidiaries			Total Equity
Balance at December 31, 2012	$	2.3	$	500.3		$	3,632.2		$	0.3	$	4,135.1		$	30.4		$	4,165.5
Net income attributed to common shareholders	—		—			577.4			—		577.4			—			577.4
Common stock dividends of $1.45 per share	—		—			(328.9		)	—		(328.9		)	—			(328.9		)
Exercise of stock options	—		48.5			—			—		48.5			—			48.5
Purchase of common stock	—		(223.4		)	—			—		(223.4		)	—			(223.4		)
Stock-based compensation and other	—		24.3			—			—		24.3			—			24.3
Balance at December 31, 2013	2.3		349.7			3,880.7			0.3		4,233.0			30.4			4,263.4
Net income attributed to common shareholders	—		—			588.3			—		588.3			—			588.3
Common stock dividends of $1.56 per share	—		—			(352.0		)	—		(352.0		)	—			(352.0		)
Exercise of stock options	—		50.3			—			—		50.3			—			50.3
Purchase of common stock	—		(123.2		)	—			—		(123.2		)	—			(123.2		)
Stock-based compensation and other	—		23.3			—			—		23.3			—			23.3
Balance at December 31, 2014	2.3		300.1			4,117.0			0.3		4,419.7			30.4			4,450.1
Net income attributed to common shareholders	—		—			638.5			—		638.5			—			638.5
Other comprehensive income	—		—			—			4.3		4.3			—			4.3
Common stock dividends of $1.74 per share	—		—			(455.4		)	—		(455.4		)	—			(455.4		)
Exercise of stock options	—		30.1			—			—		30.1			—			30.1
Issuance of common stock for the acquisition of Integrys	0.9		4,072.0			—			—		4,072.9			—			4,072.9
Purchase of common stock	—		(74.7		)	—			—		(74.7		)	—			(74.7		)
Addition of WPS preferred stock	—		—			—			—		—			51.1			51.1
Redemption of WPS preferred stock	—		(1.6		)	—			—		(1.6		)	(51.1		)	(52.7		)
Stock-based compensation and other	—		21.3			(0.3		)	—		21.0			—			21.0
Balance at December 31, 2015	$	3.2	$	4,347.2		$	4,299.8		$	4.6	$	8,654.8		$	30.4		$	8,685.2

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.



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G. CONSOLIDATED STATEMENTS OF CAPITALIZATION



At December 31
(in millions)				2015		2014
Common equity (see accompanying statement)				$	8,654.8	$	4,419.7
Preferred stock of subsidiary (Note 12)				30.4		30.4
Long-term debt	Interest Rate		Year Due
WEC Energy Group Senior Notes (unsecured)	1.65%		2018	300.0		—
	2.45%		2020	400.0		—
	3.55%		2025	500.0		—
	6.20%		2033	200.0		200.0
WEC Energy Group Junior Notes (unsecured)	6.25%		2067	500.0		500.0
Wisconsin Electric Debentures (unsecured)	6.25%		2015	—		250.0
	1.70%		2018	250.0		250.0
	4.25%		2019	250.0		250.0
	2.95%		2021	300.0		300.0
	3.10%		2025	250.0		—
	6.50%		2028	150.0		150.0
	5.625%		2033	335.0		335.0
	5.70%		2036	300.0		300.0
	3.65%		2042	250.0		250.0
	4.25%		2044	250.0		250.0
	4.30%		2045	250.0		—
	6.875%		2095	100.0		100.0
WPS Notes (unsecured)	5.65%		2017	125.0		—
	1.65%		2018	250.0		—
	6.08%		2028	50.0		—
	5.55%		2036	125.0		—
	3.671%		2042	300.0		—
	4.752%		2044	450.0		—
Wisconsin Gas Debentures (unsecured)	5.20%		2015	—		125.0
	3.53%		2025	200.0		—
	5.90%		2035	90.0		90.0
PGL First and Refunding Mortgage Bonds (secured) ⁽¹⁾	2.21%		2016	50.0		—
	8.00%		2018	5.0		—
	4.63%		2019	75.0		—
	3.90%		2030	50.0		—
	1.875%		2033	50.0		—
	4.00%		2033	50.0		—
	4.30%		2035	50.0		—
	3.98%		2042	100.0		—
	3.96%		2043	220.0		—
	4.21%		2044	200.0		—
NSG First Mortgage Bonds (secured) ⁽²⁾	3.43%		2027	28.0		—
	3.96%		2043	54.0		—
We Power Subsidiary Notes (secured, nonrecourse)	4.91%	⁽³⁾	2015-2030	112.1		117.2
	5.209%	⁽⁴⁾	2015-2030	215.0		223.9
	4.673%	⁽⁴⁾	2015-2031	178.3		184.7
	6.00%	⁽³⁾	2015-2033	130.5		134.6
	6.09%	⁽⁴⁾	2030-2040	275.0		275.0
	5.848%	⁽⁴⁾	2031-2041	215.0		215.0
WECC Notes (unsecured)	6.94%		2028	50.0		50.0
Integrys Senior Notes (unsecured)	8.00%		2016	50.0		—
	4.17%		2020	250.0		—
Integrys Junior Notes (unsecured)	6.11%		2066	269.8		—
	6.00%		2073	400.0		—



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Other Notes (secured, nonrecourse)	4.81%	2030	2.0			2.0

Obligations under capital leases			59.9			84.5
Total long-term debt and capital lease obligations			9,314.6			4,636.9
Integrys acquisition fair value adjustment			41.1			—
Unamortized debt issuance costs			(37.8		)	(15.7		)
Unamortized discount, net and other			(36.1		)	(26.4		)
Total			9,281.8			4,594.8
Current portion of long-term debt and capital lease obligations			(157.7		)	(424.1		)
Total long-term debt and capital lease obligations			9,124.1			4,170.7
Total long-term capitalization			$	17,809.3		$	8,620.8


⁽¹⁾	PGL's First Mortgage Bonds are subject to the terms and conditions of PGL's First Mortgage Indenture dated January 2, 1926, as supplemented. Under the terms of the Indenture, substantially all property owned by PGL is pledged as collateral for these outstanding debt securities.

PGL has used certain First Mortgage Bonds to secure tax exempt interest rates. The Illinois Finance Authority has issued Tax Exempt Bonds, and the proceeds from the sale of these bonds were loaned to PGL. In return, PGL issued equal principal amounts of certain collateralized First Mortgage Bonds.


⁽²⁾	NSG's First Mortgage Bonds are subject to the terms and conditions of NSG's First Mortgage Indenture dated April 1, 1955, as supplemented. Under the terms of the Indenture, substantially all property owned by NSG is pledged as collateral for these outstanding debt securities.


⁽³⁾	We Power senior notes, secured by a collateral assignment of the leases between PWGS and Wisconsin Electric related to PWGS 1 and 2.


⁽⁴⁾	We Power senior notes, secured by a collateral assignment of the leases between ERGSS and Wisconsin Electric related to OC 1 and 2.

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.



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H. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) General Information —On June 29, 2015, Wisconsin Energy Corporation acquired Integrys and changed its name to WEC Energy Group, Inc. WEC Energy Group serves approximately 1.6 million electric customers and 2.8 million natural gas customers, and it owns approximately 60% of ATC. See Note 2, Acquisition, for more information on this acquisition.

As used in these notes, the term "financial statements" refers to the consolidated financial statements. This includes the income statements, statements of comprehensive income, balance sheets, statements of cash flows, statements of equity, and statements of capitalization, unless otherwise noted.

Our financial statements include the accounts of WEC Energy Group, a diversified energy holding company, and the accounts of our subsidiaries in the following reportable segments:


•	Wisconsin segment – Consists of Wisconsin Electric, Wisconsin Gas, and WPS, which are engaged primarily in the generation of electricity and the distribution of electricity and natural gas in Wisconsin. Wisconsin Electric's electric and WPS's electric and natural gas operations in the state of Michigan are also included in this segment.


•	Illinois segment – Consists of PGL and NSG, which are engaged primarily in the distribution of natural gas in Illinois.


•	Other states segment – Consists of MERC and MGU, which are engaged primarily in the distribution of natural gas in Minnesota and Michigan, respectively.


•	Electric transmission segment – Consists of our approximate 60% ownership interest in ATC, a federally regulated electric transmission company.


•	We Power segment – Consists of We Power, which is principally engaged in the ownership of electric power generating facilities for long-term lease to Wisconsin Electric.


•	Corporate and other segment – Consists of the WEC Energy Group holding company, the Integrys holding company, the PELLC holding company, Wispark, Bostco, Wisvest, WECC, WBS, PDL, and ITF.

Our financial statements also reflect our proportionate interests in certain jointly owned utility facilities. See Note 8, Jointly Owned Facilities, for more information . The cost method of accounting is used for investments when we do not have significant influence over the operating and financial policies of the investee. Investments in companies not controlled by us, but over which we have significant influence regarding the operating and financial policies of the investee, are accounted for using the equity method.

We prepare our financial statements in conformity with GAAP. We make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.

(b) Reclassifications —On the income statements for the years ended December 31, 2014 and 2013, we reclassified $17.4 million and $48.0 million , respectively, from treasury grant to depreciation and amortization. We also reclassified $1.2 million from interest expense to preferred stock dividends of subsidiaries on the income statements for the years ended December 31, 2014 and 2013. These reclassifications were made to be consistent with the current year presentation on the income statements.

During the fourth quarter of 2015, we early implemented ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. As a result, debt issuance costs of $15.7 million , previously reported as other long-term assets, were reclassified to offset long-term debt on the December 31, 2014 balance sheet. We also early implemented ASU 2015-17, Balance Sheet Classification of Deferred Taxes, during the fourth quarter of 2015. Since we adopted this ASU on a retrospective basis, we reclassified current deferred income taxes of $242.7 million , previously reported as a separate component of current assets, to offset long-term deferred income tax liabilities on the December 31, 2014 balance sheet.

On the statements of cash flows for the years ended December 31, 2014 and 2013, we reclassified $2.4 million and $4.2 million , respectively, from depreciation and amortization to other operating activities. In addition, we reclassified $13.9 million and



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$22.8 million of nonqualified pension and OPEB contributions from other operating activities to contributions to pension and OPEB plans on the statements of cash flows for the years ended December 31, 2014 and 2013, respectively. Preferred stock dividends of subsidiaries of $1.2 million were also reclassified from other financing activities to net income on the statements of cash flows for the years ended December 31, 2014 and 2013. These reclassifications were made to be consistent with the current year presentation on the statements of cash flows.

During the third quarter of 2015, following the acquisition of Integrys, we reorganized our business segments. All prior period amounts impacted by this change were reclassified to conform to the new presentation. See Note 24, Segment Information, for more information on our business segments.

(c) Cash and Cash Equivalents —Cash and cash equivalents include marketable debt securities acquired three months or less from maturity.

(d) Revenues and Customer Receivables —We recognize revenues related to the sale of energy on the accrual basis and include estimated amounts for services provided but not yet billed to customers.

We present revenues net of pass-through taxes on the income statements.

Below is a summary of the significant mechanisms our utility subsidiaries had in place that allowed them to recover or refund changes in prudently incurred costs from rate case-approved amounts:


•	Fuel and purchased power costs were recovered from customers on a one-for-one basis by our Wisconsin wholesale electric operations and our Michigan retail electric operations.

•

Our retail electric rates in Wisconsin are established by the PSCW and include base amounts for fuel and purchased power costs. The electric fuel rules set by the PSCW allow us to defer, for subsequent rate recovery or refund, under or over-collections of actual fuel and purchased power costs that exceed a 2% price variance from the costs included in the rates charged to customers. Our electric utilities monitor the deferral of under-collected costs to ensure that it does not cause them to earn a greater return on common equity than authorized by the PSCW.


•	Wisconsin Electric received payments from MISO under an SSR agreement for its PIPP units through February 1, 2015. We recorded revenue for these payments to recover costs for operating and maintaining these units. See Note 22, Regulatory Environment , and Note 23, Michigan Settlement , for more information.


•	The rates for all of our natural gas utilities included one-for-one recovery mechanisms for natural gas commodity costs. We defer any difference between actual natural gas costs incurred and costs recovered through rates as a current asset or liability. The deferred balance is returned to or recovered from customers at intervals throughout the year.


•	The rates of PGL and NSG included riders for cost recovery of both environmental cleanup costs and energy conservation and management program costs.


•	MERC's rates included a conservation improvement program rider for cost recovery of energy conservation and management program costs as well as a financial incentive for meeting energy savings goals.


•	The rates of PGL and NSG, and the residential rates of Wisconsin Electric and Wisconsin Gas, included riders or other mechanisms for cost recovery or refund of uncollectible expense based on the difference between actual uncollectible write-offs and the amounts recovered in rates.


•	The rates of PGL, NSG, MERC, and MGU included decoupling mechanisms. These mechanisms differ by state and allow utilities to recover or refund differences between actual and authorized margins. MGU's decoupling mechanism was discontinued after December 31, 2015. See Note 22, Regulatory Environment, for more information .


•	PGL's rates included a cost recovery mechanism for AMRP costs.

Revenues are also impacted by other accounting policies related to PGL's natural gas hub and our electric utilities' participation in the MISO Energy Markets. Amounts collected from PGL's wholesale customers that use the natural gas hub are credited to natural gas costs, resulting in a reduction to retail customers' charges for natural gas and services. Our electric utilities sell and purchase power



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in the MISO Energy Markets, which operate under both day-ahead and real-time markets. We record energy transactions in the MISO Energy Markets on a net basis for each hour. If our electric utilities were a net seller in a particular hour, the net amount was reported as operating revenue. If our electric utilities were a net purchaser in a particular hour, the net amount was recorded as cost of sales on our income statements.

ITF accounts for revenues from construction management projects using the percentage of completion method. Revenues are recognized based on the percentage of costs incurred to date compared to the total estimated costs of each contract. This method is used because management considers total costs to be the best available measure of progress on these contracts. See Note 3, Dispositions, for more information .

We provide regulated electric service to customers in Wisconsin and Michigan and regulated natural gas service to customers in Wisconsin, Illinois, Minnesota, and Michigan. The geographic concentration of our customers did not contribute significantly to our overall exposure to credit risk. We periodically review customers' credit ratings, financial statements, and historical payment performance and require them to provide collateral or other security as needed. Credit risk exposure at Wisconsin Electric, Wisconsin Gas, PGL, and NSG is mitigated by their recovery mechanisms for uncollectible expense discussed above. As a result, we did not have any significant concentrations of credit risk at December 31, 2015 . In addition, there were no customers that accounted for more than 10% of our revenues for the year ended December 31, 2015 .

(e) Materials, Supplies, and Inventories — Our inventory as of December 31 consisted of:



(in millions)	2015		2014
Natural gas in storage	$	284.1	$	124.8
Materials and supplies	219.2		150.2
Fossil fuel	183.7		125.6
Total	$	687.0	$	400.6

PGL and NSG price natural gas storage injections at the calendar year average of the costs of natural gas supply purchased. Withdrawals from storage are priced on the Last-in, First-out (LIFO) cost method. Inventories stated on a LIFO basis represented approximately 18.0% of total inventories at December 31, 2015 . The estimated replacement cost of natural gas in inventory at December 31, 2015 , exceeded the LIFO cost by $15.2 million . In calculating these replacement amounts, PGL and NSG used a Chicago city-gate natural gas price per Dth of $2.48 at December 31, 2015 .

Substantially all other natural gas in storage, materials and supplies, and fossil fuel inventories are recorded using the weighted-average cost method of accounting.

(f) Investments Held in Rabbi Trust — Integrys has a rabbi trust that is used to fund participants' benefits under the Integrys deferred compensation plan and certain Integrys non-qualified pension plans. It holds investments that are classified as trading securities for accounting purposes. We do not intend to sell these investments in the near term. They are included in other investments on our balance sheet at December 31, 2015. The net unrealized loss included in earnings related to the investments held at the end of the period was not significant for the year ended December 31, 2015.

(g) Regulatory Assets and Liabilities —The economic effects of regulation can result in regulated companies recording costs and revenues that have been or are expected to be allowed in the rate-making process in a period different from the period in which the costs or revenues would be recognized by a nonregulated company. When this occurs, regulatory assets and regulatory liabilities are recorded on the balance sheet. Regulatory assets represent probable future revenue associated with certain costs or liabilities that have been deferred and are expected to be recovered through rates charged to customers. Regulatory liabilities represent amounts that are expected to be refunded to customers in future rates or amounts that are collected in rates for future costs. Recovery or refund of regulatory assets and liabilities is based on specific periods determined by the regulators or occurs over the normal operating period of the assets and liabilities to which they relate. If at any reporting date a previously recorded regulatory asset is no longer probable of recovery, the regulatory asset is reduced to the amount considered probable of recovery with the reduction charged to expense in the reporting period the determination is made. See Note 6, Regulatory Assets and Liabilities, for more information .

(h) Property, Plant, and Equipment — We record property, plant, and equipment at cost. Cost includes material, labor, overhead, and capitalized interest. Utility property also includes AFUDC – Equity. Additions to and significant replacements of property are charged to property, plant, and equipment at cost; minor items are charged to maintenance expense. The cost of depreciable utility property less salvage value is charged to accumulated depreciation when property is retired.



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We record straight-line depreciation expense over the estimated useful life of utility property using depreciation rates approved by the applicable regulators. Annual utility composite depreciation rates are shown below:



Annual Utility Composite Depreciation Rates	2015	2014	2013
Wisconsin Electric	3.01%	2.93%	2.90%
WPS ⁽¹⁾	1.30%	N/A	N/A
Wisconsin Gas	2.36%	2.69%	2.68%
PGL ⁽¹⁾	1.67%	N/A	N/A
NSG ⁽¹⁾	1.22%	N/A	N/A
MERC ⁽¹⁾	1.26%	N/A	N/A
MGU ⁽¹⁾	1.32%	N/A	N/A


⁽¹⁾	The rates shown for 2015 are for a partial year as a result of the acquisition of Integrys on June 29, 2015. The full year rate would be approximately double the rate shown.

We depreciate our We Power assets over the estimated useful life of the various property components. The components have useful lives of between 10 to 45 years for PWGS 1 and PWGS 2 and 10 to 55 years for OC 1 and OC 2.

We capitalize certain costs related to software developed or obtained for internal use and record these costs to amortization expense over the estimated useful life of the related software, which ranges from 3 to 15 years . If software is retired prior to being fully amortized, the difference is recorded as a loss on the income statement.

(i) Allowance for Funds Used During Construction — AFUDC is included in utility plant accounts and represents the cost of borrowed funds (AFUDC - Debt) used during plant construction, and a return on stockholders' capital (AFUDC - Equity) used for construction purposes. AFUDC - Debt is recorded as a reduction of interest expense, and AFUDC - Equity is recorded in other income, net.

The majority of AFUDC is recorded at Wisconsin Electric, WPS, and Wisconsin Gas. Approximately 50% of Wisconsin Electric's, WPS's, and Wisconsin Gas's retail jurisdictional CWIP expenditures are subject to the AFUDC calculation. For 2015, Wisconsin Electric's average AFUDC retail rate was 8.45% , and its average AFUDC wholesale rate was 1.72% . For the six months ended December 31, 2015, WPS's average AFUDC retail rate was 7.92% and its average AFUDC wholesale rate was 5.04% . For 2015, Wisconsin Gas's average AFUDC retail rate was 8.33% . The AFUDC calculation for WBS uses the WPS AFUDC retail rate, while the other utilities AFUDC rates are determined by their respective state commissions, each with specific requirements. Based on these requirements, the other utilities and WBS did not record significant AFUDC for 2015, 2014, or 2013.

Our regulated utilities recorded the following AFUDC for the years ended December 31:



(in millions)	2015		2014		2013
AFUDC – Debt	$	8.6	$	2.3	$	7.7
AFUDC – Equity	$	20.1	$	5.6	$	18.3

(j) Asset Impairment —Goodwill and other intangible assets with indefinite lives are subject to an annual impairment test. Interim impairment tests are performed when impairment indicators are present. Intangible assets with definite lives are reviewed for impairment on a quarterly basis. Other long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying value may not be recoverable.

An impairment loss is recognized when the carrying amount of an asset is not recoverable and exceeds the fair value of the asset. The carrying amount of an asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. An impairment loss is measured as the excess of the carrying amount of the asset in comparison to the fair value of the asset.

Our reporting units containing goodwill perform annual goodwill impairment tests during the third quarter of each year. The carrying amount of the reporting unit's goodwill is considered not recoverable if the carrying amount of the reporting unit exceeds the reporting unit's fair value. An impairment loss is recorded for the excess of the carrying amount of the goodwill over its implied fair value. See Note 10, Goodwill and Other Intangible Assets, for more information .



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The carrying amounts of cost and equity method investments are assessed for impairment by comparing the fair values of these investments to their carrying amounts, if a fair value assessment was completed, or by reviewing for the presence of impairment indicators. If an impairment exists and it is determined to be other-than-temporary, a loss is recognized equal to the amount by which the carrying amount exceeds the investment's fair value.

(k) Deferred Revenue — As part of the construction of the PTF electric generating units, we capitalized interest during construction. As allowed under the lease agreements, we were able to collect the carrying costs during the construction of the PTF generating units from our utility customers. The carrying costs that we collected during construction have been recorded as deferred revenue on our balance sheets and we are amortizing the deferred carrying costs to revenue over the individual lease terms.

(l) Asset Retirement Obligations —We recognize, at fair value, legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development, and normal operation of the assets. A liability is recorded, when incurred, for these obligations as long as the fair value can be reasonably estimated, even if the timing or method of settling the obligation is unknown. The associated retirement costs are capitalized as part of the related long-lived asset and are depreciated over the useful life of the asset. The AROs are accreted to their present value each period using the credit-adjusted risk-free interest rate associated with the expected settlement dates of the AROs. This rate is determined when the obligation is incurred. Subsequent changes resulting from revisions to the timing or the amount of the original estimate of undiscounted cash flows are recognized as an increase or a decrease to the carrying amount of the liability and the associated retirement costs. For our regulated entities, we recognize regulatory assets or liabilities for the timing differences between when we recover an ARO in rates and when we recognize the associated retirement costs. See Note 9, Asset Retirement Obligations, for more information .

(m) Environmental Remediation Costs —We are subject to federal and state environmental laws and regulations that in the future may require us to pay for environmental remediation at sites where we have been, or may be, identified as a potentially responsible party. Loss contingencies may exist for the remediation of hazardous substances at various potential sites, including coal combustion product landfill sites and manufactured gas plant sites. See Note 18, Commitments and Contingencies, for more information .

We record environmental remediation liabilities when site assessments indicate remediation is probable and we can reasonably estimate the loss or a range of losses. The estimate includes both our share of the liability and any additional amounts that will not be paid by other potentially responsible parties or the government. When possible, we estimate costs using site-specific information but also consider historical experience for costs incurred at similar sites. Remediation efforts for a particular site generally extend over a period of several years. During this period, the laws governing the remediation process may change, as well as site conditions, potentially affecting the cost of remediation.

Our utilities have received approval to defer certain environmental remediation costs, as well as estimated future costs, through a regulatory asset. The recovery of deferred costs is subject to the applicable state Commission's approval.

We review our estimated costs of remediation annually for our manufactured gas plant sites and coal combustion product landfill sites. We adjust the liabilities and related regulatory assets, as appropriate, to reflect the new cost estimates. Any material changes in cost estimates are adjusted throughout the year.

(n) Income Taxes —We follow the liability method in accounting for income taxes. Accounting guidance for income taxes requires the recording of deferred assets and liabilities to recognize the expected future tax consequences of events that have been reflected in our financial statements or tax returns and the adjustment of deferred tax balances to reflect tax rate changes. We are required to assess the likelihood that our deferred tax assets would expire before being realized. If we conclude that certain deferred tax assets are likely to expire before being realized, a valuation allowance would be established against those assets. GAAP requires that, if we conclude in a future period that it is more likely than not that some or all of the deferred tax assets would be realized before expiration, we reverse the related valuation allowance in that period. Any change to the allowance, as a result of a change in judgment about the realization of deferred tax assets, is reported in income tax expense.

Investment tax credits associated with regulated operations are deferred and amortized over the life of the assets. We file a consolidated Federal income tax return. Accordingly, we allocate Federal current tax expense benefits and credits to our subsidiaries based on their separate tax computations. See Note 15, Income Taxes, for more information .

We recognize interest and penalties accrued, related to unrecognized tax benefits, in income tax expense in our income statements.



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(o) Guarantees — We follow the guidance of the Guarantees Topic of the FASB ASC, which requires that the guarantor recognize, at the inception of the guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. See Note 16, Guarantees, for more information .

(p) Employee Benefits —The costs of pension and OPEB are expensed over the periods during which employees render service. These costs are allocated among our subsidiaries based on current employment status and actuarial calculations, as applicable. Our regulators allow recovery in rates for the utilities' net periodic benefit cost calculated under GAAP. See Note 17, Employee Benefits, for more information .

(q) Stock-Based Compensation — In accordance with stockholder approved plans, we provide long-term incentives through our equity interests to our outside directors, officers, and other key employees. The plans provide for the granting of stock options, restricted stock awards, performance shares, and other share-based awards. Awards may be paid in common stock, cash, or a combination thereof. We recognize share-based compensation expense on a straight-line basis. Accordingly, for employee awards classified as equity awards, share-based compensation expense is measured based on the grant-date fair value of the award and is recognized as expense ratably over the requisite service period.

Stock Options

We grant non-qualified stock options that vest on a cliff-basis after a three-year period. The exercise price of a stock option under the plan cannot be less than 100% of our common stock's fair market value on the grant date. Historically, all stock options have been granted with an exercise price equal to the fair market value of our common stock on the date of the grant. Options may not be exercised within six months of the grant date except in the event of a change in control. Options expire no later than 10 years from the date of grant. There were no modifications to the terms of outstanding stock options during the year.

The fair value of our stock options was calculated using a binomial option-pricing model. The following table shows the estimated fair value per stock option granted along with the weighted-average assumptions used in the valuation models:



	2015			2014			2013
Non-qualified stock options granted	516,475			899,500			1,418,560

Estimated fair value per non-qualified stock option	$	5.29		$	4.18		$	3.45

Assumptions used to value the options:
Risk-free interest rate	0.1% – 2.1%			0.1% – 3.0%			0.1% – 1.9%
Dividend yield	3.7		%	3.8		%	3.7		%
Expected volatility	18.0		%	18.0		%	18.0		%
Expected forfeiture rate	2.0		%	2.0		%	2.0		%
Expected life (years)	5.8			5.8			5.9

The risk-free interest rate is based on the U.S. Treasury interest rate with a term consistent with the expected life of the stock options. Dividend yield, expected volatility, expected forfeiture rate, and expected life assumptions are based on our historical experience.

Restricted Shares

Restricted shares have a three -year vesting period, and generally, one-third of the award vests on each anniversary of the grant date. During the vesting period, restricted share recipients also have voting rights and are entitled to dividends in the same manner as other shareholders.

Performance Units

Officers and other key employees are granted performance units under the WEC Energy Group Performance Unit Plan. Under the plan, the ultimate number of units that will be awarded is dependent on our total stockholder return (stock price appreciation plus dividends) as compared to the total stockholder return of a peer group of companies over a three-year period. Under the terms of the award, participants may earn between 0% and 175% of the base performance unit award. All grants are settled in cash and are accounted for as liability awards accordingly. We accrue compensation costs over the three-year performance period based on our estimate of the final expected value of the awards.



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See Note 11, Common Equity, for more information on our share-based compensation plans.

(r) Earnings Per Share — We compute basic earnings per share by dividing our net income attributed to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributed to common shareholders by the weighted average number of common shares outstanding during the period, adjusted for the exercise and/or conversion of all potentially dilutive securities. Such dilutive securities include in-the-money stock options. Options to purchase 516,475 shares of common stock with an exercise price of $52.90 were outstanding at December 31, 2015 , but were not included in the computation of diluted earnings per share because they were anti-dilutive. All stock options outstanding during 2014 and 2013 were included in the computation of diluted earnings per share.

(s) Fair Value Measurements —Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).

Fair value accounting rules provide a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are defined as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Pricing inputs are observable, either directly or indirectly, but are not quoted prices included within Level 1. Level 2 includes those financial instruments that are valued using external inputs within models or other valuation methods.

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methods that result in management's best estimate of fair value. Level 3 instruments include those that may be more structured or otherwise tailored to customers' needs.

Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. We use a mid-market pricing convention (the mid-point price between bid and ask prices) as a practical measure for valuing certain derivative assets and liabilities. We primarily use a market approach for recurring fair value measurements and attempt to use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

When possible, we base the valuations of our derivative assets and liabilities on quoted prices for identical assets and liabilities in active markets. These valuations are classified in Level 1. The valuations of certain contracts not classified as Level 1 may be based on quoted market prices received from counterparties and/or observable inputs for similar instruments. Transactions valued using these inputs are classified in Level 2. Certain derivatives are categorized in Level 3 due to the significance of unobservable or internally-developed inputs.

Derivatives were transferred between levels of the fair value hierarchy primarily due to observable pricing becoming available. We recognize transfers at their value as of the end of the reporting period.

Due to the short-term nature of cash and cash equivalents, net accounts receivable, accounts payable, and short-term borrowings, the carrying amount of each such item approximates fair value. The fair value of our preferred stock is estimated based on the quoted market value for the same issue, or by using a perpetual dividend discount model. The fair value of our long-term debt, including the current portion of long-term debt, but excluding capitalized leases, is estimated based upon the quoted market value for the same issue, similar issues, or upon the quoted market prices of U.S. Treasury issues having a similar term to maturity, adjusted for the issuing company's bond rating and the present value of future cash flows.

We conduct a thorough review of fair value hierarchy classifications on a quarterly basis.

See Note 19, Fair Value Measurements, for more information .

(t) Derivative Instruments —We use derivatives as part of our risk management program to manage the risks associated with the price volatility of purchased power, generation, and natural gas costs for the benefit of our customers and shareholders. Our approach is non-speculative and designed to mitigate risk. Regulated hedging programs are approved by our state regulators.



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We record derivative instruments on our balance sheets as an asset or liability measured at fair value unless they qualify for the normal purchases and sales exception, and are so designated. We continually assess our contracts designated as normal and will discontinue the treatment of these contracts as normal if the required criteria are no longer met. Changes in the derivative's fair value are recognized currently in earnings unless specific hedge accounting criteria are met or we receive regulatory treatment for the derivative. For most energy-related physical and financial contracts in our regulated operations that qualify as derivatives, our regulators allow the effects of fair value accounting to be offset to regulatory assets and liabilities.

We classify derivative assets and liabilities as current or long-term on our balance sheets based on the maturities of the underlying contracts. Gains and losses on derivative instruments are primarily recorded in cost of sales on the income statements. Cash flows from derivative activities are presented in the same category as the item being hedged within operating activities on our statements of cash flows.

Derivative accounting rules provide the option to present certain asset and liability derivative positions net on the balance sheets and to net the related cash collateral against these net derivative positions. We elected not to net these items. On our balance sheets, cash collateral provided to others is reflected in other current assets. See Note 20, Derivative Instruments, for more information .

(u) Customer Deposits and Credit Balances —When utility customers apply for new service, they may be required to provide a deposit for the service.

Utility customers can elect to be on a budget plan. Under this type of plan, a monthly installment amount is calculated based on estimated annual usage. During the year, the monthly installment amount is reviewed by comparing it to actual usage. If necessary, an adjustment is made to the monthly amount. Annually, the budget plan is reconciled to actual annual usage. Payments in excess of actual customer usage are recorded within current liabilities on our balance sheets.

NOTE 2— ACQUISITION

On June 29, 2015, Wisconsin Energy Corporation acquired 100% of the outstanding common shares of Integrys and changed its name to WEC Energy Group, Inc. Integrys is a provider of regulated natural gas and electricity, as well as nonregulated renewable energy and CNG products and services. Integrys also held a 34% interest in ATC, a for-profit transmission company regulated by the FERC. The acquisition of Integrys provides increased scale, the potential for long-term cost savings through a combination of lower capital and operating costs, and the potential for operating efficiencies.

Purchase Price

Pursuant to the Merger Agreement, Integrys’s shareholders received 1.128 shares of Wisconsin Energy Corporation common stock and $18.58 in cash per share of Integrys common stock. The total consideration transferred was based on the closing price of Wisconsin Energy Corporation common stock on June 29, 2015, and was calculated as follows:



	Consideration Paid
(in millions, except per share amounts)	Stock		Cash		Total
Integrys common shares outstanding at June 29, 2015	79,963,091		79,963,091
Exchange ratio	1.128
Wisconsin Energy Corporation shares issued for Integrys shares *	90,187,884
Closing price of Wisconsin Energy Corporation common shares on June 29, 2015	$45.16
Fair value of common stock issued	$	4,072.9			$	4,072.9
Cash paid per share of Integrys shares outstanding			$18.58
Fair value of cash paid for Integrys shares *			$	1,486.2	$	1,486.2
Consideration attributable to settlement of equity awards, net of tax			$	24.0	$	24.0
Total purchase price	$	4,072.9	$	1,510.2	$	5,583.1


*	Fractional shares of 10,483 totaling $0.5 million were paid in cash.

All Integrys unvested stock-based compensation awards became fully vested upon the close of the acquisition and were either paid to award recipients in cash, or the value of the awards was deferred into a deferred compensation plan. In addition, all vested but



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unexercised Integrys stock options were paid in cash. In accordance with accounting guidance for business combinations, the acceleration of the vesting was recorded as an acquisition-related expense.

Allocation of Purchase Price

The Integrys assets acquired and liabilities assumed were measured at estimated fair value in accordance with the accounting guidance under the Business Combinations Topic in the FASB ASC. Substantially all of Integrys's operations are subject to the rate-setting authority of federal and state regulatory commissions. These operations are accounted for following the accounting guidance under the Regulated Operations Topic of the FASB ASC. The underlying assets and liabilities of ATC are also regulated by the FERC. The fair values of Integrys's assets and liabilities subject to rate-setting provisions provide revenues derived from costs, including a return on investment of assets and liabilities included in rate base. As such, the fair values of these assets and liabilities

equal their carrying values. Accordingly, neither the assets and liabilities acquired, nor the pro forma financial information, reflect any adjustments related to these amounts.

The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was recognized as goodwill. The goodwill reflects the value paid for the increased scale and efficiencies as a result of the combination. The goodwill recognized is not deductible for income tax purposes, and as such, no deferred taxes have been recorded related to goodwill. See Note 10, Goodwill and Other Intangible Assets , for the allocation of goodwill to our reportable segments.

The table below shows the preliminary allocation of the purchase price to the assets acquired and liabilities assumed at the date of the acquisition. The allocation is subject to change during the remainder of the measurement period, which ends one year from the acquisition date, as we obtain additional information, including with respect to certain regulatory and legal matters and the expected sale of ITF.



(in millions)
Current assets	$	1,069.9
Net property, plant, and equipment	7,091.8
Investments *	1,062.5
Goodwill	2,581.6
Deferred charges and other assets, excluding goodwill	1,737.9
Current liabilities, including current maturities of long-term debt	(1,293.5		)
Deferred credits and other liabilities	(3,668.5		)
Long-term debt	(2,947.5		)
Preferred stock of subsidiary	(51.1		)
Total purchase price	$	5,583.1


*	Includes equity method goodwill related to Integrys's investment in ATC. See Note 4, Investment in American Transmission Company, for more information .

In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, which requires that an acquirer recognize and disclose adjustments to provisional amounts that are identified during an acquisition measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Early adoption is permitted for any interim and annual financial statements that have not yet been issued. We early adopted ASU 2015-16 in the fourth quarter of 2015. Adoption had no impact on our financial statements.

Conditions of Approval

The acquisition was subject to the approvals of various government agencies, including the FERC, Federal Communications Commission, PSCW, ICC, MPSC, and MPUC. Approvals were obtained from all agencies subject to several conditions.



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The PSCW order includes the following conditions:

•

Wisconsin Electric and Wisconsin Gas will be subject to an earnings sharing mechanism for three years beginning January 1, 2016. Under the earnings sharing mechanism, if either company earns above its authorized return, 50% of the first 50 basis points of additional utility earnings will be shared with customers. For Wisconsin Electric, the additional utility earnings will be used to reduce the company’s transmission escrow. For Wisconsin Gas, additional utility earnings will be used to reduce the costs of the Western Gas Lateral. All utility earnings above the first 50 basis points will be used to reduce the transmission escrow for Wisconsin Electric and reduce the costs of the Western Gas Lateral for Wisconsin Gas.


•	Any future electric generation projects affecting Wisconsin ratepayers submitted by us or our subsidiaries will first consider the extent to which existing intercompany resources can meet energy and capacity needs. In September 2015, WPS and Wisconsin Electric filed a joint integrated resource plan with the PSCW for their combined loads, which indicated that no new generation is currently needed.

The ICC order includes a base rate freeze for PGL and NSG effective for two years after the close of the acquisition. This base rate freeze does not impact PGL's or NSG's ability to adjust rates through various riders or GCRMs.

We do not believe that the conditions set forth in the various regulatory orders approving the acquisition will have a material impact on our operations or financial results.

Pro Forma Information

The following unaudited pro forma financial information reflects the consolidated results and amortization of purchase price adjustments as if the acquisition had taken place on January 1, 2014. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or our future consolidated results.

The pro forma financial information does not reflect any potential cost savings from operating efficiencies resulting from the acquisition and does not include certain acquisition-related costs.



	Year Ended December 31
(in millions, except per share amounts)	2015		2014
Unaudited pro forma financial information
Operating revenues	$	7,727.1	$	9,135.4
Net income attributed to common shareholders	$	873.5	$	869.9
Earnings per share (Basic)	$	2.77	$	2.76
Earnings per share (Diluted)	$	2.75	$	2.74

Impact of Acquisition

As a result of the acquisition, our ownership of ATC increased to approximately 60% . We have made commitments with respect to our voting rights of the combined ownership of ATC, which are included as enforceable conditions in the FERC and PSCW orders approving the acquisition. Under GAAP, these commitments do not allow for the consolidation of ATC in our financial statements and the 60% ownership is accounted for as an equity method investment subsequent to the close of the acquisition. See Note 4, Investment in American Transmission Company, for more information .

In connection with the acquisition, WEC Energy Group and its subsidiaries recorded pre-tax acquisition costs of $107.6 million and $12.5 million during 2015 and 2014, respectively. These costs consisted of employee-related expenses, professional fees, and other miscellaneous costs. They are primarily recorded in the other operation and maintenance line item on the income statements. No acquisition costs were recorded in 2013.



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Included in the 2015 acquisition costs was $24.9 million of severance expense that resulted from employee reductions related to the post-acquisition integration. Severance payments of $16.9 million were made during 2015, leaving a severance accrual of $8.0 million on our balance sheet at December 31, 2015 . Severance costs to be incurred after December 31, 2015 are not expected to be material. The severance expense was recorded in the following segments:



(in millions)	2015
Wisconsin	$	11.1
Illinois	0.9
Other states	0.1
Corporate and other	12.8
Total severance expense	$	24.9

Our revenues for the year ended December 31, 2015 include revenues attributable to Integrys of $1,416.8 million . Included in our net income for the year ended December 31, 2015 , is net income attributable to Integrys of $65.9 million .

NOTE 3— DISPOSITIONS

Corporate and Other Segment – Pending Sale of Integrys Transportation Fuels

In February 2016, we reached an agreement to sell ITF. The sale is scheduled to close in the first quarter of 2016. ITF is a provider of CNG fueling services and a single-source provider of CNG fueling facility design, construction, operation and maintenance. The pending sale of ITF met the criteria to qualify as held for sale at December 31, 2015, but did not meet the requirements to qualify as a discontinued operation. The pending sale of ITF does not represent a shift in our corporate strategy and will not have a major effect on our operations and financial results. Therefore, ITF's results of operations remain in continuing operations. The pre-tax profit or loss of this individually significant component was not material for the year ended December 31, 2015.

In November 2015, we sold our 30% joint interest in AMP Trillium LLC. This transaction was not significant, and there was no gain recorded on the sale. In addition, in the fourth quarter of 2015, we lowered the fair value of the remaining ITF assets to fair market value, less costs to sell. This fair value adjustment was reflected in the allocation of the purchase price for the acquisition. See Note 2, Acquisition, for more information .

The following table shows the carrying values of the major classes of assets and liabilities included as held for sale on our balance sheet at December 31:



(in millions)	2015
Accounts receivable and unbilled revenues	$	34.9
Materials, supplies, and inventories	18.4
Other current assets	2.6
Property, plant, and equipment	37.2
Other long-term assets	3.7
Total assets	$	96.8

Accounts payable	$	12.9
Accrued payroll and benefits	2.4
Other current liabilities	4.5
Pension and OPEB obligations	1.2
Other long-term liabilities	0.6
Total liabilities *	$	21.6


*	Included in other current liabilities on our balance sheet.



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NOTE 4— INVESTMENT IN AMERICAN TRANSMISSION COMPANY

Due to the acquisition of Integrys on June 29, 2015, our ownership of ATC increased from 26.2% to approximately 60% . ATC is a for-profit, transmission-only company regulated by the FERC. We have one representative on ATC's ten -member board of directors. Each member of the board has only one vote. Due to voting requirements, no individual board member has more than 10% of the voting control. The following table shows changes to our investment in ATC during the years ended December 31:



(in millions)	2015		2014		2013
Balance at beginning of period	$	424.1	$	402.7	$	378.3
Add: Earnings from equity method investment	96.1		66.0		68.5
Add: Capital contributions	8.7		13.1		10.5
Add: Acquisition of Integrys's investment in ATC	541.5		—		—
Add: Equity method goodwill from the acquisition of Integrys *	395.8		—		—
Less: Distributions received	85.1		57.5		54.5
Less: Other	0.2		0.2		0.1
Balance at end of period	$	1,380.9	$	424.1	$	402.7


*	Represents the purchase price allocated to Integrys's investment in ATC in excess of the recorded value.

We pay ATC for transmission and other related services it provides. In addition, we provide a variety of operational, maintenance, and project management work for ATC, which is reimbursed to us by ATC. We are required to pay the cost of needed transmission infrastructure upgrades for new generation projects while the projects are under construction. ATC reimburses us for these costs when the new generation is placed in service. The following table summarizes our significant related party transactions with ATC during the years ended December 31:



(in millions)	2015		2014		2013
Charges to ATC for services and construction	$	15.4	$	8.1	$	9.0
Charges from ATC for network transmission services	289.2		231.4		234.2

As of December 31, 2015 and 2014 , our balance sheets included the following receivables and payables related to ATC:



(in millions)	2015		2014
Accounts receivable
Services provided to ATC	$	1.0	$	0.6
Accounts payable
Services received from ATC	28.3		19.3

Summarized financial data for ATC is included in the tables below:



(in millions)	2015		2014		2013
Income statement data
Revenues	$	615.8	$	635.0	$	626.3
Operating expenses	319.3		307.4		295.0
Other expense	96.1		88.9		83.7
Net income	$	200.4	$	238.7	$	247.6



(in millions)	December 31, 2015		December 31, 2014
Balance sheet data
Current assets	$	80.5	$	66.4
Noncurrent assets	3,957.6		3,728.7
Total assets	$	4,038.1	$	3,795.1

Current liabilities	$	330.3	$	313.1
Long-term debt	1,800.0		1,701.0
Other noncurrent liabilities	245.0		163.8
Shareholders' equity	1,662.8		1,617.2
Total liabilities and shareholders' equity	$	4,038.1	$	3,795.1



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NOTE 5— SUPPLEMENTAL CASH FLOW INFORMATION



(in millions)	2015		2014		2013
Cash paid for interest, net of amount capitalized	$	329.6	$	241.1	$	250.4
Cash paid (received) for income taxes, net of refunds	9.3		22.0		(39.6		)

Significant non-cash transactions:
Construction costs funded through accounts payable	177.1		1.8		4.7
Amortization of deferred revenue	39.9		55.7		56.5
Note receivable received related to the sale of AMP Trillium*	12.0		—		—
Capital assets received related to the sale of AMP Trillium *	6.3		—		—


*	See Note 3, Dispositions, for more information .

At December 31, 2015 , restricted cash of $118.4 million was recorded within other long-term assets on our balance sheet. This amount was held in the Integrys rabbi trust and represents a portion of the required funding that was triggered by the announcement of the Integrys acquisition.

NOTE 6— REGULATORY ASSETS AND LIABILITIES

The following regulatory assets were reflected on our balance sheets as of December 31:



(in millions)	2015		2014		See Note
Regulatory assets ^{(1) (2)}
Unrecognized pension and OPEB costs ⁽³⁾	$	1,306.4	$	669.1	17
Environmental remediation costs ⁽⁴⁾	697.0		45.9		18
Income tax related items ⁽⁵⁾	248.3		176.0
Electric transmission costs ⁽⁶⁾	191.5		146.0
AROs	173.0		17.6		9
SSR	86.1		—		22
Derivatives	70.4		14.7		1(t)
Energy efficiency programs ⁽⁷⁾	48.7		58.0
PTF ⁽⁸⁾	45.4		66.6
Other, net	234.9		77.3
Total regulatory assets	$	3,101.7	$	1,271.2

Balance Sheet Presentation
Current assets ⁽⁹⁾	$	37.1	$	—
Regulatory assets	3,064.6		1,271.2
Total regulatory assets	$	3,101.7	$	1,271.2


⁽¹⁾	Based on prior and current rate treatment, we believe it is probable that our utility subsidiaries will continue to recover from customers the regulatory assets in the table above.


⁽²⁾	As of December 31, 2015 , we had $33.8 million of regulatory assets not earning a return and $136.6 million of regulatory assets earning a return based on short-term interest rates.


⁽³⁾	Represents the unrecognized future pension and OPEB costs resulting from actuarial gains and losses on defined benefit and OPEB plans.


⁽⁴⁾	As of December 31, 2015 , we had not yet made cash expenditures for $628.2 million of these environmental remediation costs. The recovery of these costs depends on the timing of the actual expenditures.


⁽⁵⁾	Adjustments related to deferred income taxes. As the related temporary differences reverse, we prospectively collect taxes from customers for which deferred taxes were recorded in prior years.


⁽⁶⁾	Represents amounts recoverable from customers related to transmission costs incurred that exceed amounts authorized for recovery in our current rates.



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⁽⁷⁾	Represents amounts recoverable from customers related to programs at the utility subsidiaries designed to meet energy efficiency standards.


⁽⁸⁾	Represents amounts recoverable from customers related to Wisconsin Electric's costs of the PTF units, including subsequent capital additions.


⁽⁹⁾	Short-term regulatory assets are recorded in accounts receivable and accrued unbilled revenues on our balance sheets.

The following regulatory liabilities were reflected on our balance sheets as of December 31:



(in millions)	2015		2014		See Note
Regulatory liabilities
Removal costs ⁽¹⁾	$	1,209.6	$	741.1
Energy costs refundable through rate adjustments ⁽²⁾	76.9		18.9
Uncollectible expense ⁽³⁾	31.8		30.1
Mines deferral ⁽⁴⁾	31.6		—
Unrecognized pension and OPEB costs ⁽⁵⁾	26.3		3.8		17
Other, net	49.8		36.7
Total regulatory liabilities	$	1,426.0	$	830.6

Balance Sheet Presentation
Other current liabilities	$	33.8	$	—
Regulatory liabilities	1,392.2		830.6
Total regulatory liabilities	$	1,426.0	$	830.6


⁽¹⁾	Represents amounts collected from customers to cover the cost of future removal of property, plant, and equipment.


⁽²⁾	Represents energy costs that will be refunded to customers in the future.


⁽³⁾	Represents amounts refundable to customers related to our uncollectible expense tracking mechanisms. These mechanisms allow us to recover or refund the difference between actual uncollectible write-offs and the amounts recovered in rates.


⁽⁴⁾	Represents the deferral of margins from the sales to the mines, which were not included in the 2015 rate order. We intend to request that this deferral be applied for the benefit of Wisconsin retail electric customers in a future rate proceeding.


⁽⁵⁾	Represents the unrecognized future OPEB costs resulting from actuarial gains on OPEB plans. We will amortize this regulatory liability into net periodic benefit cost over the average remaining service life of each plan.

NOTE 7— PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment consisted of the following utility and non-utility and other assets at December 31:



(in millions)	2015		2014
Utility property, plant, and equipment	$	22,803.7	$	12,290.7
Less: Accumulated depreciation	7,358.2		4,044.6
Net	15,445.5		8,246.1
CWIP	672.7		170.1
Net utility property, plant, and equipment	16,118.2		8,416.2

Non-utility and other property, plant, and equipment	3,482.2		3,260.3
Less: Accumulated depreciation	560.9		440.5
Net	2,921.3		2,819.8
CWIP	150.2		21.7
Net non-utility and other property, plant, and equipment	3,071.5		2,841.5

Total property, plant, and equipment	$	19,189.7	$	11,257.7



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NOTE 8— JOINTLY OWNED FACILITIES

We Power and WPS hold joint ownership interests in certain electric generating facilities. They are entitled to their share of generating capability and output of each facility equal to their respective ownership interest. They pay their ownership share of additional construction costs and have supplied their own financing for all jointly owned projects. We Power and WPS record their proportionate share of significant jointly owned electric generating facilities as property, plant, and equipment on the balance sheets.

We Power leases its ownership interest in the Oak Creek Expansion units to Wisconsin Electric, and Wisconsin Electric operates these units. Wisconsin Electric and WPS record their respective share of fuel inventory purchases and operating expenses, unless specific agreements have been executed to limit their maximum exposure to additional costs. Wisconsin Electric's and WPS's proportionate share of direct expenses for the joint operation of these plants is recorded in operating expenses in the income statements.

Information related to jointly owned facilities at December 31, 2015 was as follows:



	We Power			WPS
(in millions, except for percentages and MWs)	Oak Creek Expansion Units 1 and 2			Weston 4			Columbia Energy Center Units 1 and 2			Edgewater Unit 4
Ownership	83.34		%	70.0		%	31.8		%	31.8		%
Share of rated capacity (MWs) *	1,056.8			374.5			352.9			96.3
In-service date	2010 and 2011			2008			1975 and 1978			1969
Property, plant, and equipment	$	2,359.6		$	591.5		$	404.6		$	47.6
Accumulated depreciation	$	(283.4	)	$	(150.5	)	$	(122.6	)	$	(30.6	)
CWIP	$	35.5		$	5.9		$	23.4		$	0.4


*	Based on expected capacity ratings for summer 2016. The summer period is the most relevant for capacity planning purposes. This is a result of continually reaching demand peaks in the summer months, primarily due to air conditioning demand.

NOTE 9— ASSET RETIREMENT OBLIGATIONS

Our utilities have recorded AROs primarily for the removal of natural gas distribution mains and service pipes (including asbestos and polychlorinated biphenyls [PCBs]); asbestos abatement at certain generation and substation facilities, office buildings, and service centers; the removal and dismantlement of generation facilities; the dismantling of wind generation projects; the disposal of PCB-contaminated transformers; the closure of fly-ash landfills at certain generation facilities; and the removal of above ground storage tanks. The utilities establish regulatory assets and liabilities to record the differences between ongoing expense recognition under the ARO accounting rules and the ratemaking practices for retirement costs authorized by the applicable regulators. PDL has AROs recorded for the removal of solar equipment components. On our balance sheets, AROs are recorded within other long-term liabilities.

The following table shows changes to our AROs:



(in millions)	2015				2014			2013
Balance as of January 1	$	43.6			$	42.3		$	44.3
Integrys subsidiaries	491.0				—			—
Accretion	14.5				2.4			2.4
Additions and revisions to estimated cash flows	35.5			*	—			—
Liabilities settled	(13.4		)		(1.1		)	(4.4		)
Balance as of December 31	$	571.2			$	43.6		$	42.3

An ARO of $16.1 million was recorded during 2015 for fly-ash landfills located at generation facilities owned by Wisconsin Electric and WPS. An ARO of $9.0 million was also recorded for the Hazardous and Solid Waste Management System; Disposal of Coal Combustion Residuals from Electric Utilities rule passed by the EPA in April 2015. See Note 18, Commitments and Contingencies, for more information on this rule. In addition, AROs increased $10.4 million in 2015 due to revisions made to estimated cash flows primarily for changes in the weighted average cost to retire natural gas distribution pipe at PGL and NSG.



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NOTE 10— GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill represents the excess of the cost of an acquisition over the fair value of the identifiable net assets acquired. The following table shows changes to our goodwill balances by segment during the years ended December 31, 2015 and 2014 :



	Wisconsin				Illinois				Other States				Total
(in millions)	2015		2014		2015		2014		2015		2014		2015		2014
Balance as of January 1
Gross goodwill	$	441.9	$	441.9	$	—	$	—	$	—	$	—	$	441.9	$	441.9
Accumulated impairment losses	—		—		—		—		—		—		—		—
Net goodwill as of January 1	441.9		441.9		—		—		—		—		441.9		441.9
Acquisition of Integrys	1,667.6		—		731.2		—		182.8		—		2,581.6		—

Balance as of December 31
Gross goodwill	2,109.5		441.9		731.2		—		182.8		—		3,023.5		441.9
Accumulated impairment losses	—		—		—		—		—		—		—		—
Net goodwill as of December 31	$	2,109.5	$	441.9	$	731.2	$	—	$	182.8	$	—	$	3,023.5	$	441.9

In the third quarter of 2015, annual impairment tests were completed at all of our reporting units that carried a goodwill balance as of August 31, 2015. No impairments resulted from these tests.

The identifiable intangible assets other than goodwill listed below are part of other long-term assets on our balance sheets. We had no material intangible assets other than goodwill at December 31, 2014.



	December 31, 2015
(in millions)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Amortized intangible assets ⁽¹⁾	$	16.0	$	(7.8	)	$	8.2
Unamortized intangible assets ⁽²⁾	5.7		—			5.7
Total intangible assets	$	21.7	$	(7.8	)	$	13.9


⁽¹⁾	Primarily relates to contractual service agreements that provide for major maintenance and protection against unforeseen maintenance costs related to the combustion turbine generators at WPS's Fox Energy Center. The remaining weighted-average amortization period for our amortized intangible assets at December 31, 2015 , was approximately three years .


⁽²⁾	Consists primarily of a trade name.

NOTE 11— COMMON EQUITY

Share-Based Compensation Plans

The following table summarizes our pre-tax share-based compensation expense and the related tax benefit for the year ended December 31:



(in millions)	2015		2014		2013
Stock options	$	3.3	$	3.7	$	3.9
Restricted stock	7.0		2.8		2.4
Performance units	13.0		15.4		12.7
Share-based compensation expense	$	23.3	$	21.9	$	19.0
Related tax benefit	$	9.3	$	8.8	$	7.6

Stock-based compensation capitalized was not significant during 2015 , 2014 , and 2013 .



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Stock Options

The following is a summary of our stock option activity during 2015 :



Stock Options	Number of Options		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in millions)
Outstanding as of January 1, 2015	6,770,194		$	29.99
Granted	516,475		$	52.90
Exercised	(1,302,005	)	$	23.09
Outstanding as of December 31, 2015	5,984,664		$	33.47	5.6	$	107.6
Exercisable as of December 31, 2015	3,280,334		$	26.84	3.9	$	80.3

The aggregate intrinsic value of outstanding and exercisable options in the above table represents the total pre-tax intrinsic value that would have been received by the option holders had they exercised all of their options on December 31, 2015 . This is calculated as the difference between our closing stock price on December 31, 2015 , and the option exercise price, multiplied by the number of in-the-money stock options. The intrinsic value of options exercised during the years ended December 31, 2015 , 2014 , and 2013 was $36.1 million , $50.5 million , and $44.5 million , respectively. Cash received from options exercised during the years ended December 31, 2015 , 2014 , and 2013 , was $30.1 million , $50.3 million , and $48.5 million , respectively. The actual tax benefit realized for the tax deductions from option exercises for the same periods was approximately $14.5 million , $19.9 million , and $17.8 million , respectively.

At December 31, 2015 , total compensation cost related to non-vested stock options not yet recognized was approximately $1.5 million , which is expected to be recognized over the next 19 months on a weighted-average basis.

During the first quarter of 2016 , the Compensation Committee awarded 752,085 non-qualified stock options with a weighted-average exercise price of $51.80 to certain of our officers and other key employees under its normal schedule of awarding long-term incentive compensation.

Restricted Shares

The following restricted stock activity occurred during 2015 :



Restricted Shares	Number of Shares		Weighted-Average Grant Date Fair Value
Outstanding as of January 1, 2015	155,479		$	38.45
Granted	143,107		$	51.13
Released	(68,429	)	$	36.95
Forfeited	(1,139	)	$	46.26
Outstanding as of December 31, 2015	229,018		$	46.78

On July 31, 2015, the Compensation Committee awarded certain of our officers and other employees an aggregate of 82,943 shares of restricted stock for the key role each played in our acquisition of Integrys. The restricted stock vests in three equal installments on January 29, 2016, January 31, 2017, and July 31, 2018.

The intrinsic value of restricted stock released was $3.7 million , $2.7 million , and $4.0 million for the years ended December 31, 2015 , 2014 , and 2013 , respectively. The actual tax benefit realized for the tax deductions from released restricted shares for the same years was $1.3 million , $1.0 million , and $1.3 million , respectively.

As of December 31, 2015 , total compensation cost related to restricted stock not yet recognized was approximately $3.1 million , which is expected to be recognized over the next 20 months on a weighted-average basis.

During the first quarter of 2016 , the Compensation Committee awarded 113,892 restricted shares to certain of our directors, officers, and other key employees under its normal schedule of awarding long-term incentive compensation.



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Performance Units

In January 2015 , 2014 , and 2013 , the Compensation Committee awarded 195,365 ; 233,735 ; and 239,120 performance units, respectively, to officers and other key employees under the WEC Energy Group Performance Unit Plan.

Performance units earned as of December 31, 2015 , 2014 , and 2013 vested and were settled during the first quarter of 2016 , 2015 , and 2014 , and had a total intrinsic value of $13.2 million , $13.2 million , and $14.8 million , respectively. The actual tax benefit realized for the tax deductions from the distribution of performance units for the same years was approximately $4.5 million , $4.8 million , and $5.3 million , respectively.

As of December 31, 2015 , total compensation cost related to performance units not yet recognized was approximately $11.8 million , which is expected to be recognized over the next 20 months on a weighted-average basis.

During the first quarter of 2016 , the Compensation Committee awarded 283,505 performance units to certain of our officers and other key employees under its normal schedule of awarding long-term incentive compensation.

Restrictions

Our ability as a holding company to pay common stock dividends primarily depends on the availability of funds received from our utility subsidiaries and our non-utility subsidiary, We Power. Various financing arrangements and regulatory requirements impose certain restrictions on the ability of our subsidiaries to transfer funds to us in the form of cash dividends, loans, or advances. All of our utility subsidiaries, with the exception of MGU, are prohibited from loaning funds to us, either directly or indirectly.

In accordance with their most recent rate orders, Wisconsin Electric, Wisconsin Gas, and WPS may not pay common dividends above the test year forecasted amounts reflected in their respective rate cases, if it would cause their average common equity ratio, on a financial basis, to fall below their authorized levels of 51% , 49.5% , and 51% , respectively. A return of capital in excess of the test year amount can be paid by each company at the end of the year provided that their respective average common equity ratios do not fall below the authorized levels.

Wisconsin Electric may not pay common dividends to us under Wisconsin Electric's Restated Articles of Incorporation if any dividends on its outstanding preferred stock have not been paid. In addition, pursuant to the terms of Wisconsin Electric's 3.60% Serial Preferred Stock, Wisconsin Electric's ability to declare common dividends would be limited to 75% or 50% of net income during a twelve month period if its common stock equity to total capitalization, as defined in the preferred stock designation, is less than 25% and 20% , respectively.

Integrys has long-term debt obligations that contain financial and other covenants, including, but not limited to, a requirement to maintain a debt to total capitalization ratio not to exceed 65% .

NSG's long-term debt obligations contain provisions and covenants restricting the payment of cash dividends and the purchase or redemption of its capital stock.

We and Integrys have the option to defer interest payments on our Junior Notes, from time to time, for one or more periods of up to 10 consecutive years per period. During any period in which we defer interest payments, we may not declare or pay any dividends or distributions on, or redeem, repurchase or acquire, our common stock.

See Note 13, Short-Term Debt and Lines of Credit , for discussion of certain financial covenants related to short-term debt obligations.

As of December 31, 2015 , the restricted net assets of consolidated and unconsolidated subsidiaries and our equity in undistributed earnings of investees accounted for by the equity method totaled approximately $6.2 billion . This amount exceeds 25% of our consolidated net assets as of December 31, 2015 .

We do not believe that these restrictions will materially affect our operations or limit any dividend payments in the foreseeable future.



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Share Repurchase Program

We have instructed our independent agents to purchase shares on the open market to fulfill obligations under various stock-based employee benefit and compensations plans and to provide shares to participants in our dividend reinvestment and stock purchase plan. As a result, no new shares of common stock were issued in 2015, 2014, or 2013, other than for the Integrys acquisition discussed below.

In December 2013, our Board of Directors authorized a share repurchase program for the purchase of up to $300.0 million of our common stock through open market purchases or privately negotiated transactions from January 1, 2014, through the end of 2017. On June 22, 2014, in connection with entering into the Merger Agreement, the Board of Directors terminated this share repurchase program. The following table identifies shares purchased during the year ended December 31 :



	2015			2014			2013
(in millions)	Shares	Cost		Shares	Cost		Shares		Cost
Under share repurchase programs	—	$	—	0.4	$	18.6	3.0		$	126.0
To fulfill exercised stock options and restricted stock awards	1.5	74.7		2.3	104.6		2.4		97.4
Total	1.5	$	74.7	2.7	$	123.2	$	5.4	$	223.4

Integrys Acquisition

On June 29, 2015, we issued approximately 90.2 million common shares to acquire Integrys. All Integrys unvested stock-based compensation awards became fully vested upon the close of the transaction and were paid to award recipients in cash or deferred into a deferred compensation plan. In addition, all vested but unexercised Integrys stock options were paid in cash. See Note 2, Acquisition, for more information on this acquisition.

Common Stock Dividends

During the year ended December 31, 2015 , our Board of Directors declared common stock dividends which are summarized below:



Date Declared	Date Payable	Per Share	Period
January 15, 2015	March 1, 2015	$0.4225	First quarter
April 16, 2015	June 1, 2015	$0.4225	Second quarter
June 12, 2015 ⁽¹⁾	July 6, 2015 ⁽²⁾	$0.2067	45 days through June 28, 2015
June 12, 2015 ⁽¹⁾	September 1, 2015 ⁽³⁾	$0.2337	47 days through Aug. 14, 2015
October 15, 2015	December 1, 2015	$0.4575	Fourth quarter


⁽¹⁾	Pro rata dividends were declared on June 12, 2015, in anticipation of closing the acquisition of Integrys.


⁽²⁾	The dividend payable on July 6, 2015, was based on a quarterly rate of $0.4225 per share.


⁽³⁾	The dividend payable on September 1, 2015, was based on our new quarterly rate of $0.4575 per share, which represents an 8.3% increase over the prior quarterly rate. Pursuant to the terms of the Merger Agreement, our Board of Directors adopted a new dividend policy.



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NOTE 12— PREFERRED STOCK

The following table shows preferred stock authorized and outstanding at December 31, 2015 and 2014 :



2015 (in millions, except share and per share amounts)	Shares Authorized	Shares Outstanding	Redemption Price Per Share		Total
WEC Energy Group
$.01 par value Preferred Stock	15,000,000	—	—		$	—

Wisconsin Electric
$100 par value, Six Per Cent. Preferred Stock	45,000	44,498	—		4.4
$100 par value, Serial Preferred Stock	2,286,500
3.60% Series		260,000	$	101	26.0
$25 par value, Serial Preferred Stock	5,000,000	—	—		—

WPS
$100 par value, Preferred Stock	1,000,000	—	—		—

PGL
$100 par value, Cumulative Preferred Stock	430,000	—	—		—

NSG
$100 par value, Cumulative Preferred Stock	160,000	—	—		—
Total					$	30.4



2014 (in millions, except share and per share amounts)	Shares Authorized	Shares Outstanding	Redemption Price Per Share		Total
WEC Energy Group
$.01 par value Preferred Stock	15,000,000	—	—		$	—

Wisconsin Electric
$100 par value, Six Per Cent. Preferred Stock	45,000	44,498	—		4.4
$100 par value, Serial Preferred Stock	2,286,500
3.60% Series		260,000	$	101	26.0
$25 par value, Serial Preferred Stock	5,000,000	—	—		—
Total					$	30.4

On November 13, 2015, WPS redeemed all 511,882 outstanding shares of its five series of preferred stock: (i) 131,916 shares of 5.00% Series; (ii) 29,983 shares of 5.04% Series; (iii) 49,983 shares of 5.08% Series; (iv) 150,000 shares of 6.76% Series; and (v) 150,000 shares of 6.88% Series. The aggregate redemption price was $52.7 million , plus accumulated and unpaid dividends.

NOTE 13— SHORT-TERM DEBT AND LINES OF CREDIT

Short-term notes payable balances and their corresponding weighted-average interest rates as of December 31 consist of:



	2015			2014
(in millions, except percentages)	Balance			Balance
Commercial paper
Amount outstanding at December 31	$	1,095.0		$	617.6
Average interest rate on amounts outstanding at December 31	0.68		%	0.22		%
Average amounts outstanding during the year *	817.8			468.1


*	Based on daily outstanding balances during the year.

WEC Energy Group, Wisconsin Electric, WPS, Wisconsin Gas, and PGL have entered into bank back-up credit facilities to maintain short-term credit liquidity which, among other terms, require us to maintain, subject to certain exclusions, a minimum total funded



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debt to capitalization ratio of less than 70.0% , 65.0% , 65.0% , 65.0% , and 65.0% respectively. All companies are in compliance with their respective ratio.

As of December 31, 2015 , we had $1,387.0 million of available capacity under our bank back-up credit facilities and $1,095.0 million of commercial paper outstanding that was supported by the credit facilities.

The information in the table below relates to our revolving credit facilities used to support our commercial paper borrowing program, including remaining available capacity under these facilities as of December 31 :



(in millions)	Maturity	2015
WEC Energy Group	December 2020	$	1,050.0
Wisconsin Electric	December 2020	500.0
WPS *	December 2016	250.0
Wisconsin Gas	December 2020	350.0
PGL	December 2020	350.0
Total short-term credit capacity		$	2,500.0

Less:
Letters of credit issued inside credit facilities		$	18.0
Commercial paper outstanding		1,095.0

Available capacity under existing agreements		$	1,387.0


*	WPS plans to request approval from the PSCW to extend the maturity through December 2020.

In December 2015, WEC Energy Group, Wisconsin Electric, and Wisconsin Gas amended their credit facilities to extend their expirations to December 2020. At the same time, WPS and PGL terminated their prior credit facilities and entered into new credit facilities. The lenders under the WPS facility have agreed that its maturity can be extended to December 2020, subject to the receipt of PSCW approval. Each of these facilities has a renewal provision for two one-year extensions, subject to lender approval.

The bank back-up credit facilities contain customary covenants, including certain limitations on the respective companies' ability to sell assets. The credit facilities also contain customary events of default, including payment defaults, material inaccuracy of representations and warranties, covenant defaults, bankruptcy proceedings, certain judgments, Employee Retirement Income Security Act of 1974 defaults, and change of control. In addition, pursuant to the terms of our credit agreement, we must ensure that certain of our subsidiaries comply with several of the covenants contained therein.

NOTE 14— LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

See our statements of capitalization for details on our long-term debt.

Our outstanding long-term debt, including current maturities as of December 31, 2015 , included approximately $3.0 billion of Integrys debt assumed on June 29, 2015. The amount assumed included $46.2 million of fair value adjustments recorded in connection with purchase accounting, which will be amortized over the estimated remaining life of the debt and will not be a part of future principal payments. See Note 2, Acquisition, for more information regarding the acquisition.

WEC Energy Group

In June 2015, we issued $300.0 million of 1.65% Senior Notes due June 15, 2018, $400.0 million of 2.45% Senior Notes due June 15, 2020, and $500.0 million of 3.55% Senior Notes due June 15, 2025. The net proceeds were used to pay a portion of the cash consideration for the acquisition of Integrys and related transaction costs, and for general corporate purposes.

Wisconsin Electric Power Company

In May 2015, Wisconsin Electric issued $250.0 million of 3.10% Debentures due June 1, 2025. The net proceeds were used to repay short-term debt and for general corporate purposes.



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In November 2015, Wisconsin Electric issued $250.0 million of 4.30% Debentures due December 15, 2045. The proceeds were used to repay short-term debt, to repay a portion of Wisconsin Electric’s $250.0 million of 6.25% Debentures that matured on December 1, 2015, and for working capital and general corporate purposes.

Wisconsin Public Service Corporation

In November 2015, WPS redeemed all of the remaining $0.1 million aggregate principal amount of First Mortgage Bonds, 7.125% Series due July 1, 2023 at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest to the date of redemption. Following the redemption, WPS discharged its mortgage indenture and does not intend to issue additional first mortgage bonds. All of WPS's senior notes outstanding are now senior unsecured obligations and rank equally with all of its other unsecured obligations.

In December 2015, WPS's $125.0 million of 6.375% Senior Notes matured, and the outstanding principal balance was repaid.

In December 2015, WPS issued $250.0 million of 1.65% Senior Notes due December 4, 2018. The proceeds were used to repay short-term debt incurred to repay all of WPS's $125.0 million of 6.375% Senior Notes at maturity, and for working capital and general corporate purposes.

Wisconsin Gas

In September 2015, Wisconsin Gas issued $200.0 million of 3.53% Debentures due September 30, 2025. The net proceeds were used to repay short-term debt and for general corporate purposes.

In December 2015, Wisconsin Gas's $125.0 million of 5.20% Debentures matured, and the outstanding principal balance was repaid.

The Peoples Gas Light and Coke Company

In August 2015, the interest rate on PGL's $50.0 million of 2.625% Series WW Bonds was reset. The new interest rate is 1.875% . The new mandatory interest reset date is August 1, 2020. The final maturity of these bonds is February 1, 2033.

In November 2016, PGL's 2.21% First and Refunding Mortgage Bonds will mature. As a result, the $50.0 million balance of these bonds was included in the current portion of long-term debt on our balance sheet at December 31, 2015.

W.E. Power

During 2016, $5.4 million of We Power's outstanding $112.1 million of 4.91% secured notes will mature. As a result, this balance was included in the current portion of long-term debt on our balance sheet at December 31, 2015.

During 2016, $4.4 million of We Power's outstanding $130.5 million of 6.00% secured notes will mature. As a result, this balance was included in the current portion of long-term debt on our balance sheet at December 31, 2015.

During 2016, $10.2 million of We Power's outstanding $215.0 million of 5.209% secured notes will mature. As a result, this balance was included in the current portion of long-term debt on our balance sheet at December 31, 2015.

During 2016, $7.4 million of We Power's outstanding $178.3 million of 4.673% secured notes will mature. As a result, this balance was included in the current portion of long-term debt on our balance sheet at December 31, 2015.

Integrys Holding

In July 2015, Integrys tendered an offer to repurchase all $55.0 million outstanding of its 8.00% Senior Notes due June 1, 2016, and $5.0 million of this amount was tendered and purchased. The $50.0 million balance of these notes was included in the current portion of long-term debt on our balance sheet at December 31, 2015 .



2015 Form 10-K	95	WEC Energy Group, Inc.

Table of Contents

Bonds and Notes

The following table shows the future maturities and sinking fund requirements of our long-term debt outstanding (excluding obligations under capital leases) as of December 31, 2015 :



(in millions)	Payments
2016	$	127.4
2017	154.5
2018	836.1
2019	357.7
2020	684.4
Thereafter	7,094.6
Total	$	9,254.7

We amortize debt premiums, discounts, and debt issuance costs over the life of the debt and we include the costs in interest expense.

Wisconsin Electric is the obligor under two series of tax-exempt pollution control refunding bonds in an outstanding principal amount of $147.0 million . In August 2009, Wisconsin Electric terminated letters of credit that provided credit and liquidity support for the bonds, which resulted in a mandatory tender of the bonds. Wisconsin Electric purchased the bonds at par plus accrued interest to the date of purchase. As of December 31, 2015 and 2014 , the repurchased bonds were still outstanding, but were not reported in our consolidated long-term debt or included on our capitalization statements because they are held by Wisconsin Electric. Depending on market conditions and other factors, Wisconsin Electric may change the method used to determine the interest rate on the bonds and have them remarketed to third parties.

In connection with our outstanding 2007 6.25% Series A Junior Subordinated Notes ( 6.25% Junior Notes), we executed a Replacement Capital Covenant dated May 11, 2007 (RCC), which we amended on June 29, 2015, for the benefit of persons that buy, hold, or sell a specified series of our long-term indebtedness (covered debt). Our 6.20% Senior Notes due April 1, 2033 have been designated as the covered debt under the RCC. The RCC provides that we may not redeem, defease, or purchase, and that our subsidiaries may not purchase, any 6.25% Junior Notes on or before May 15, 2037, unless, subject to certain limitations described in the RCC, we have received a specified amount of proceeds from the sale of qualifying securities.

Effective May 2017, the $500.0 million of 6.25% Junior Notes will bear interest at the three-month London Interbank Offered Rate (LIBOR) plus 211.25 basis points and will reset quarterly.

In connection with Integrys’s outstanding 2006 6.11% Junior Subordinated Notes ( 6.11% Junior Notes), Integrys executed a Replacement Capital Covenant dated December 1, 2006, as replaced by a new Replacement Capital Covenant on December 1, 2010 (Integrys RCC) for the benefit of persons that buy, hold, or sell a specified series of its long-term indebtedness (covered debt). Integrys’s 4.17% Senior Notes due November 1, 2020, have been designated as the covered debt under the Integrys RCC. The Integrys RCC provides that Integrys may not redeem, defease, or purchase, and that its subsidiaries may not purchase, any 6.11% Junior Notes on or before December 1, 2036, unless, subject to certain limitations described in the Integrys RCC. Integrys has received a specified amount of proceeds from the sale of qualifying securities.

In February 2016, Integrys repurchased and retired $154.9 million aggregate principal amount of its 6.11% Junior Notes for a purchase price of $128.6 million , plus accrued and unpaid interest, through a modified “dutch auction” tender offer. Effective December 1, 2016, the remaining $114.9 million aggregate principal amount of the 6.11% Junior Notes will bear interest at the three-month LIBOR rate plus 212 basis points and will reset quarterly.

In connection with the transaction, Integrys issued approximately $66.4 million of additional common stock to WEC Energy Group in satisfaction of its obligations under the Integrys RCC.

Effective August 2023, Integrys's $400.0 million of 2013 6.00% Junior Subordinated Notes due 2073 will bear interest at the three-month LIBOR Rate plus 322 basis points and will reset quarterly.

Certain long-term debt obligations contain financial and other covenants, including but not limited to, a requirement to maintain a debt to total capitalization ratio not to exceed 65% . Failure to comply with these covenants could result in an event of default, which could result in the acceleration of outstanding debt obligations.



2015 Form 10-K	96	WEC Energy Group, Inc.

Table of Contents

Obligations Under Capital Leases

In 1997, Wisconsin Electric entered into a 25 -year power purchase contract with an unaffiliated independent power producer. The contract, for 236 MW of firm capacity from a natural gas-fired cogeneration facility, includes no minimum energy requirements. When the contract expires in 2022 , Wisconsin Electric may, at its option and with proper notice, renew for another ten years or purchase the generating facility at fair value or allow the contract to expire. We account for this contract as a capital lease and recorded the leased facility and corresponding obligation under the capital lease at the estimated fair value of the plant's electric generating facilities. We are amortizing the leased facility on a straight-line basis over the original 25 -year term of the contract.

We treat the long-term power purchase contract as an operating lease for rate-making purposes and we record our minimum lease payments as cost of sales on our income statements. We paid a total of $36.2 million and $34.9 million in lease payments during 2015 and 2014 , respectively. We record the difference between the minimum lease payments and the sum of imputed interest and amortization costs calculated under capital lease accounting as a deferred regulatory asset on our balance sheets. Due to the timing and the amounts of the minimum lease payments, the regulatory asset increased to approximately $78.5 million during 2009, at which time the regulatory asset began to be reduced to zero over the remaining life of the contract. The total obligation under the capital lease was $59.9 million as of December 31, 2015 , and will decrease to zero over the remaining life of the contract.

The following is a summary of our capitalized leased facilities as of December 31:



(in millions)	2015			2014
Long-term power purchase commitment	$	140.3		$	140.3
Accumulated amortization	(103.9		)	(98.3		)
Total leased facilities	$	36.4		$	42.0

Future minimum lease payments under our capital lease and the present value of our net minimum lease payments as of December 31, 2015 are as follows:



(in millions)	Payments
2016	$	45.1
2017	13.9
2018	14.7
2019	15.5
2020	16.4
Thereafter	24.9
Total minimum lease payments	130.5
Less: Estimated executory costs	(47.4		)
Net minimum lease payments	83.1
Less: Interest	(23.2		)
Present value of net minimum lease payments	59.9
Less: Due currently	(30.3		)
Long-term obligations under capital lease	$	29.6

NOTE 15— INCOME TAXES

Income Tax Expense

The following table is a summary of income tax expense for each of the years ended December 31:



(in millions)	2015			2014			2013
Current tax expense	$	15.1		$	33.6		$	25.2
Deferred income taxes, net	420.4			329.2			313.8
Investment tax credit, net	(1.7		)	(1.1		)	(1.1		)
Total income tax expense	$	433.8		$	361.7		$	337.9



2015 Form 10-K	97	WEC Energy Group, Inc.

Table of Contents

Statutory Rate Reconciliation

The provision for income taxes for each of the years ended December 31 differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to income before income taxes as a result of the following:



	2015					2014					2013
				Effective					Effective					Effective
(in millions)	Amount			Tax Rate		Amount			Tax Rate		Amount			Tax Rate
Expected tax at statutory federal tax rates	$	375.5		35.0	%	$	332.5		35.0	%	$	320.3		35.0	%
State income taxes net of federal tax benefit	73.1			6.8	%	50.5			5.3	%	49.0			5.3	%
Production tax credits	(17.4		)	(1.6	)%	(17.4		)	(1.8	)%	(16.7		)	(1.8	)%
AFUDC – Equity	(7.1		)	(0.7	)%	(1.9		)	(0.2	)%	(6.4		)	(0.7	)%
Investment tax credit restored	(1.7		)	(0.2	)%	(1.1		)	(0.1	)%	(1.1		)	(0.1	)%
Treasury grant	(1.7		)	(0.2	)%	(3.8		)	(0.4	)%	(7.4		)	(0.8	)%
Other, net	13.1			1.3	%	2.9			0.2	%	0.2			—	%
Total income tax expense	$	433.8		40.4	%	$	361.7		38.0	%	$	337.9		36.9	%

Deferred Income Tax Assets and Liabilities

The components of deferred income taxes as of December 31 are as follows:



(in millions)	2015			2014
Deferred tax assets
Future tax benefits	$	382.8		$	221.7
Employee benefits and compensation	229.9			111.9
Deferred revenues	219.9			221.3
Property-related	59.5			28.8
Other	177.1			118.4
Total deferred tax assets	1,069.2			702.1
Valuation allowance	(17.1		)	—
Net deferred tax assets	$	1,052.1		$	702.1

Deferred tax liabilities
Property-related	4,451.5			2,750.4
Employee benefits and compensation	428.9			242.5
Investment in transmission affiliate	420.4			188.6
Deferred transmission costs	76.7			58.5
Other	296.9			126.1
Total deferred tax liabilities	5,674.4			3,366.1
Deferred tax liability, net	$	4,622.3		$	2,664.0

Consistent with rate-making treatment, deferred taxes in the table above are offset for temporary differences that have related regulatory assets and liabilities.



2015 Form 10-K	98	WEC Energy Group, Inc.

Table of Contents

The components of net deferred tax assets associated with federal and state tax benefit carryforwards as of December 31, 2015 and 2014 are summarized in the table below:



2015 (in millions)	Gross Value		Deferred Tax Effect		Valuation Allowance			Earliest Year of Expiration
Future tax benefits as of December 31, 2015
Federal net operating loss	$	412.3	$	144.3	$	—		2031
Federal foreign tax credit	—		15.2		(15.2		)	2017
Other federal tax credit	—		207.8		—			2025
Charitable contribution	4.7		1.9		(1.9		)	2016
State net operating loss	185.9		9.3		—			2024
State tax credit	—		4.3		—			2016
Balance as of December 31, 2015	$	602.9	$	382.8	$	(17.1	)



2014 (in millions)	Gross Value		Deferred Tax Effect		Valuation Allowance		Earliest Year of Expiration
Future tax benefits as of December 31, 2014
Federal net operating loss	$	416.2	$	145.7	$	—	2029
Federal tax credit	—		76.0		—		2029
Balance as of December 31, 2014	$	416.2	$	221.7	$	—

Valuation allowances of approximately $17.1 million have been established for certain tax benefit carryforwards obtained in the Integrys acquisition based on our projected ability to realize such benefits by offsetting future tax liabilities. This is primarily the result of the extension of bonus depreciation. Realization is dependent on generating sufficient tax liabilities prior to expiration of the tax benefit carryforwards.

Unrecognized Tax Benefits

We previously adopted accounting guidance related to uncertainty in income taxes. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



(in millions)	2015			2014
Balance as of January 1	$	7.2		$	8.4
Acquired legacy Integrys unrecognized tax benefits	3.6			—
Additions for tax positions of prior years	0.3			—
Additions based on tax positions related to the current year	0.2			—
Reductions for tax positions of prior years	(1.1		)	(1.2		)
Settlements during the period	(0.7		)	—
Balance as of December 31	$	9.5		$	7.2

The amount of unrecognized tax benefits as of December 31, 2015 and 2014, excludes deferred tax assets related to uncertainty in income taxes of $6.2 million and $7.2 million , respectively. As of December 31, 2015 , our effective tax rate could be affected by recognition of approximately $2.2 million of unrecognized tax benefits. As of December 31, 2014 , there were no unrecognized tax benefits that, if recognized, would impact the effective tax rate.

We recognize interest and penalties accrued related to unrecognized tax benefits as a component of income tax expense. For the year ended December 31, 2015 , we recognized no accrued interest in our income statements. For the years ended December 31, 2014 and 2013 , we recognized approximately $0.3 million and $0.2 million , respectively, of accrued interest in our income statements. For the years ended December 31, 2015 , 2014 , and 2013 , we recognized no penalties in our income statements. For the year ended December 31, 2015, we had $0.7 million of interest accrued and $0.1 million of penalties accrued on our balance sheets. For the year ended December 31, 2014 , we had approximately $0.7 million of interest accrued and no penalties accrued on our balance sheets.

We do not anticipate any significant increases or decreases in the total amounts of unrecognized tax benefits within the next 12 months.



2015 Form 10-K	99	WEC Energy Group, Inc.

Table of Contents

We file income tax returns in the United States federal jurisdiction and state tax returns based on income in our major state operating jurisdictions of Wisconsin, Illinois, Michigan, and Minnesota. We also file tax returns in other state and local jurisdictions with varying statutes of limitations. As of December 31, 2015, we were subject to examination by state or local tax authorities for the 2008 through 2015 tax years in our major state operating jurisdictions as follows:



Jurisdiction		Years
Federal		2012–2015
Illinois		2008–2015
Michigan		2008–2015
Minnesota		2011–2015
Wisconsin		2011–2015

NOTE 16— GUARANTEES

The following table shows our outstanding guarantees:



	Total Amounts Committed		Expiration
(in millions)	at December 31, 2015		Less Than 1 Year		1 to 3 Years		Over 3 Years
Guarantees
Guarantees supporting commodity transactions of subsidiaries ⁽¹⁾	$	174.5	$	95.0	$	—	$	79.5
Standby letters of credit ⁽²⁾	28.4		18.5		9.7		0.2
Surety bonds ⁽³⁾	38.6		38.6		—		—
Other guarantees ⁽⁴⁾	70.5		20.6		0.1		49.8
Total guarantees	$	312.0	$	172.7	$	9.8	$	129.5


⁽¹⁾	Consists of (a) $5.0 million and $11.0 million to support the business operations of WBS and PDL, respectively; and (b) $117.6 million , $40.3 million , and $0.6 million related to natural gas supply at MERC, MGU, and ITF, respectively. These amounts are not reflected on our balance sheets.


⁽²⁾	At our request or the request of our subsidiaries, financial institutions have issued standby letters of credit for the benefit of third parties that have extended credit to our subsidiaries. These amounts are not reflected on our balance sheets.


⁽³⁾	Primarily for the construction and operation of CNG fueling stations by ITF, workers compensation self-insurance programs, and obtaining various licenses, permits, and rights-of-way. These amounts are not reflected on our balance sheets.

⁽⁴⁾

Consists of (a) $19.1 million to support PDL's future payment obligations related to its distributed solar generation projects, of which $6.6 million is covered by a reciprocal guarantee from a third party; (b) $20.0 million for an interconnection agreement between WPS and ATC; (c) $10.0 million related to the sale of a nonregulated retail marketing business previously owned by Integrys; (d) $11.2 million related to the performance of an operating and maintenance agreement by ITF; and (e) $10.2 million related to other indemnifications. The amounts discussed in items (a), (b) and (d) are not reflected on our balance sheets. An insignificant liability was recorded for item (c) related to the possible imposition of additional miscellaneous gross receipts tax in the event of a change in law or interpretation of the law. In addition, a liability of $9.6 million related to workers compensation coverage was recorded for item (e).

NOTE 17— EMPLOYEE BENEFITS

Pension and Other Postretirement Employee Benefits

We and our subsidiaries have defined benefit pension plans that cover substantially all of our employees, as well as several unfunded nonqualified retirement plans. In addition, we and our subsidiaries offer multiple OPEB plans to employees. The benefits for a portion of these plans are funded through irrevocable trusts, as allowed for income tax purposes. We also offer medical, dental, and life insurance benefits to active employees and their dependents. We expense the costs of these benefits as incurred.

Generally, former Wisconsin Energy Corporation employees who started with the company after 1995 receive a benefit based on a percentage of their annual salary plus an interest credit, while employees who started before 1996 receive a benefit based upon years of service and final average salary. Approximately half of the projected benefit obligation for legacy Wisconsin Energy Corporation employees relates to benefits based upon years of service and final average salary. New Wisconsin Energy Corporation management employees hired after December 31, 2014 receive a 6% annual company contribution to their 401(k) plan instead of being enrolled in the defined benefit plans.



2015 Form 10-K	100	WEC Energy Group, Inc.

Table of Contents

For former Integrys employees, the defined benefit pension plans are closed to all new hires. In addition, the service accruals for the defined benefit pension plans were frozen for non-union employees as of January 1, 2013. These employees receive an annual company contribution to their 401(k) plan, which is calculated based on age, wages, and full years of vesting service as of December 31 each year.

We use a year-end measurement date to measure the funded status of all of our pension and OPEB plans. Due to the regulated nature of our business, we have concluded that substantially all of the unrecognized costs resulting from the recognition of the funded status of our pension and OPEB plans qualify as a regulatory asset.

The following tables provide a reconciliation of the changes in our plans' benefit obligations and fair value of assets:



	Pension Costs						OPEB Costs
(in millions)	2015			2014			2015			2014
Change in benefit obligation
Obligation at January 1	$	1,505.5		$	1,410.2		$	397.7		$	362.7
Obligation assumed from acquisition	1,594.0			—			493.0			—
Service cost	30.4			10.1			20.7			8.5
Interest cost	94.3			68.1			26.7			17.8
Participant contributions	—			—			12.7			9.1
Plan amendments	—			—			—			(4.6		)
Actuarial loss (gain)	14.6			120.4			(74.0		)	29.4
Benefit payments	(156.0		)	(103.3		)	(36.2		)	(26.4		)
Federal subsidy on benefits paid	N/A			N/A			1.6			1.2
Plan curtailment	0.2			—			(0.2		)	—
Obligation at December 31	$	3,083.0		$	1,505.5		$	842.0		$	397.7

Change in fair value of plan assets
Fair Value at January 1	$	1,444.6		$	1,451.0		$	333.5		$	327.6
Assets received from acquisition	1,420.9			—			442.1			—
Actual return on plan assets	(62.1		)	88.5			(15.6		)	17.7
Employer contributions	107.7			8.4			13.3			5.5
Participant contributions	—			—			12.7			9.1
Benefit payments	(156.0		)	(103.3		)	(36.2		)	(26.4		)
Fair value at December 31	$	2,755.1		$	1,444.6		$	749.8		$	333.5

The amounts recognized on our balance sheets at December 31 related to the funded status of the benefit plans were as follows:



	Pension Costs				OPEB Costs
(in millions)	2015		2014		2015		2014
Other long-term assets	$	74.1	$	39.2	$	50.1	$	39.5
Pension and other postretirement benefit obligations *	402.0		100.1		142.3		103.7
Total net liabilities	$	327.9	$	60.9	$	92.2	$	64.2


*	Includes $0.8 million of pension and $0.4 million of OPEB obligations classified as liabilities held for sale as of December 31, 2015. These amounts are included in other current liabilities on our balance sheets.

The accumulated benefit obligation for all defined pension plans was $2,936.4 million and $1,504.6 million as of December 31, 2015 , and 2014 , respectively.

The following table shows information for the pension plans for which we have an accumulated benefit obligation in excess of plan assets. Amounts presented are as of December 31:



(in millions)	2015		2014
Projected benefit obligation	$	1,706.6	$	100.1
Accumulated benefit obligation	1,560.5		99.8



2015 Form 10-K	101	WEC Energy Group, Inc.

Table of Contents

The following table shows the amounts that have not yet been recognized in our net periodic benefit cost as of December 31:



	Pension Costs				OPEB Costs
(in millions)	2015		2014		2015			2014
Accumulated other comprehensive loss (pre-tax) ⁽¹⁾
Net actuarial loss (gain)	$	11.4	$	—	$	(0.6	)	$	—
Total	$	11.4	$	—	$	(0.6	)	$	—

Net regulatory assets ⁽²⁾
Net actuarial loss	$	798.1	$	622.7	$	23.7		$	44.1
Prior service costs (credits)	4.7		6.8		(3.3		)	(4.6		)
Total	$	802.8	$	629.5	$	20.4		$	39.5


⁽¹⁾	Amounts related to the nonregulated entities are included in accumulated other comprehensive loss.


⁽²⁾	Amounts related to the utilities and WBS are recorded as net regulatory assets or liabilities.

The following table shows the estimated amounts that will be amortized into net periodic benefit cost during 2016:



(in millions)	Pension Costs		OPEB Costs
Net actuarial loss	$	41.6	$	1.9
Prior service costs	1.7		(1.2		)
Total 2016 – estimated amortization	$	43.3	$	0.7

The components of net periodic benefit cost for the years ended December 31 are as follows:



	Pension Costs									OPEB Costs
(in millions)	2015			2014			2013			2015			2014			2013
Service cost	$	30.4		$	10.1		$	14.6		$	20.7		$	8.5		$	10.0
Interest cost	94.3			68.1			60.4			26.7			17.8			15.6
Expected return on plan assets	(155.6		)	(98.6		)	(95.8		)	(39.6		)	(23.7		)	(21.3		)
Plan curtailment	(0.3		)	—			—			—			—			—
Amortization of prior service cost (credit)	2.2			2.1			2.3			(6.4		)	(1.8		)	(2.0		)
Amortization of net actuarial loss	68.5			36.7			54.5			3.9			1.2			3.7
Settlement charge	—			—			2.5			—			—			—
Net periodic benefit cost	$	39.5		$	18.4		$	38.5		$	5.3		$	2.0		$	6.0

The weighted-average assumptions used to determine the benefit obligations for the plans were as follows for the years ended December 31:



	Pension		OPEB
	2015	2014	2015	2014
Discount rate	4.46%	4.15%	4.38%	4.20%
Rate of compensation increase	4.00%	4.00%	N/A	N/A
Assumed medical cost trend rate	N/A	N/A	7.50%	7.50%
Ultimate trend rate	N/A	N/A	5.00%	5.00%
Year ultimate trend rate is reached	N/A	N/A	2021	2021

The weighted-average assumptions used to determine the net periodic benefit cost for the plans were as follows for the years ended December 31:



	Pension Costs
	2015	2014	2013
Discount rate	4.11%	5.00%	4.10%
Expected return on plan assets	7.37%	7.25%	7.25%
Rate of compensation increase	4.0%	4.0%	4.0%



2015 Form 10-K	102	WEC Energy Group, Inc.

Table of Contents



	OPEB Costs
	2015	2014	2013
Discount rate	4.09%	4.95%	4.15%
Expected return on plan assets	7.54%	7.50%	7.50%
Assumed medical cost trend rate (Pre 65/Post 65)	7.50%	7.50%	7.50%
Ultimate trend rate	5.00%	5.00%	5.00%
Year ultimate trend rate is reached	2021	2021	2021

We consult with our investment advisors on an annual basis to help us forecast expected long-term returns on plan assets by reviewing historical returns as well as calculating expected total trust returns using the weighted-average of long-term market returns for each of the major target asset categories utilized in the fund. For 2016, the expected return on assets assumption is 7.13% for the pension plans and 7.25% for the OPEB plans.

Assumed health care cost trend rates have a significant effect on the amounts reported by us for health care plans. For the year ended December 31, 2015, a one-percentage-point change in assumed health care cost trend rates would have had the following effects:



(in millions)	1% Increase		1% Decrease
Effect on total of service and interest cost components of net periodic postretirement health care benefit cost	$	6.5	$	(5.3	)
Effect on health care component of the accumulated postretirement benefit obligations	79.4		(65.9		)

Plan Assets

Current pension trust assets and amounts which are expected to be contributed to the trusts in the future are expected to be adequate to meet pension payment obligations to current and future retirees.

The Investment Trust Policy Committee oversees investment matters related to all of our funded benefit plans. The Committee works with external actuaries and investment consultants on an on-going basis to establish and monitor investment strategies and target asset allocations. Forecasted cash flows for plan liabilities are regularly updated based on annual valuation results. Target allocations are determined utilizing projected benefit payment cash flows and risk analyses of appropriate investments. They are intended to reduce risk, provide long-term financial stability for the plans and maintain funded levels which meet long-term plan obligations while preserving sufficient liquidity for near-term benefit payments.

Previously, the Wisconsin Energy Corporation pension trust target allocation was 45% equity investments and 55% fixed income investments. A transition to a target asset allocation of 35% equity investments, 55% fixed income investments, and 10% private equity and real estate investments began in late 2014. The Integrys pension trust target allocation moved from 70% equity investments and 30% fixed income investments in 2014 to 60% equity investments and 40% fixed income investments for 2015. The current OPEB trusts' target asset allocations are 60% equity investments and 40% fixed income investments for Wisconsin Energy Corporation, and 70% equity investments and 30% fixed income investments for Integrys. Equity securities include investments in large-cap, mid-cap, and small-cap companies primarily located in the United States. Fixed income securities include corporate bonds of companies from diversified industries, mortgage and other asset backed securities, commercial paper, and U.S. Treasuries.

Pension and OPEB plan investments are recorded at fair value. See Note 1(s), Fair Value Measurements, for more information regarding the fair value hierarchy and the classification of fair value measurements based on the types of inputs used.



2015 Form 10-K	103	WEC Energy Group, Inc.

Table of Contents

The following tables provide the fair values of our investments by asset class:



	December 31, 2015
	Pension Plan Assets								OPEB Assets
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Asset Class
Cash and cash equivalents	$	17.0	$	45.8	$	—	$	62.8	$	9.8	$	1.3	$	—	$	11.1
Equity securities:
U.S. Equity	524.1		291.0		—		815.1		146.4		136.3		—		282.7
International Equity	192.2		351.2		—		543.4		57.2		133.3		—		190.5
Fixed income securities: *
U.S. Bonds	53.2		1,019.2		—		1,072.4		122.3		116.1		—		238.4
International Bonds	67.4		140.3		—		207.7		16.0		6.7		—		22.7
Private Equity and Real Estate	—		—		53.7		53.7		—		—		4.4		4.4
Total	$	853.9	$	1,847.5	$	53.7	$	2,755.1	$	351.7	$	393.7	$	4.4	$	749.8


*	This category represents investment grade bonds of U.S. and foreign issuers denominated in U.S. dollars from diverse industries.



	December 31, 2014
	Pension Plan Assets								OPEB Assets
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Asset Class
Cash and cash equivalents	$	6.4	$	—	$	—	$	6.4	$	1.4	$	—	$	—	$	1.4
Equity securities:
U.S. Equity	503.8		—		—		503.8		146.0		—		—		146.0
International Equity	128.6		29.8		—		158.4		42.2		2.5		—		44.7
Fixed income securities: *
U.S. Bonds	42.5		599.3		—		641.8		3.5		112.4		—		115.9
International Bonds	79.3		43.3		—		122.6		17.5		7.0		—		24.5
Private Equity and Real Estate	—		—		11.6		11.6		—		—		1.0		1.0
Total	$	760.6	$	672.4	$	11.6	$	1,444.6	$	210.6	$	121.9	$	1.0	$	333.5


*	This category represents investment grade bonds of U.S. and foreign issuers denominated in U.S. dollars from diverse industries.

The following tables set forth a reconciliation of changes in the fair value of pension and OPEB plan assets categorized as Level 3 in the fair value hierarchy:



	Private Equity and Real Estate
(in millions)	Pension			OPEB
Beginning balance at January 1, 2015	$	11.6		$	1.0
Realized and unrealized gains (losses)	1.8			0.1
Purchases	51.1			4.2
Liquidations	(10.8		)	(0.9		)
Ending balance at December 31, 2015	$	53.7		$	4.4



	Private Equity and Real Estate
(in millions)	Pension		OPEB
Beginning balance at January 1, 2014	$	—	$	—
Purchases	11.6		1.0
Ending balance at December 31, 2014	$	11.6	$	1.0

Cash Flows

We expect to contribute $23.8 million to the pension plans and $6.9 million to OPEB plans in 2016, dependent upon various factors affecting us, including our liquidity position and possible tax law changes.



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The following table shows the payments, reflecting expected future service, that we expect to make for pension and OPEB:



(in millions)	Pension Costs		OPEB Costs
2016	$	305.7	$	48.4
2017	215.4		53.4
2018	211.9		52.2
2019	223.2		54.7
2020	224.9		57.1
2021-2025	1,105.2		307.0

Savings Plans

We sponsor savings plans which allow employees to contribute a portion of their pre-tax and/or after-tax income in accordance with plan-specified guidelines. A percentage of employee contributions are matched through an employee stock ownership plan (ESOP) contribution or cash contribution up to certain limits. The ESOPs held 5.5 million shares of our common stock (market value of $280.6 million ) at December 31, 2015. Certain employees participate in a defined contribution pension plan, in which amounts are contributed to an employee's account based on the employee's wages, age, and years of service. Total costs incurred under all of these plans were $48.0 million in 2015 and $14.2 million in both 2014 and 2013.

NOTE 18— COMMITMENTS AND CONTINGENCIES

We and our subsidiaries have significant commitments and contingencies arising from our operations, including those related to unconditional purchase obligations, environmental remediation, and enforcement and litigation matters.

Unconditional Purchase Obligations

Energy Related Purchased Power Agreements

We routinely enter into long-term purchase and sale commitments for various quantities and lengths of time. Our natural gas utilities have obligations to distribute and sell natural gas to their customers, and our electric utilities have obligations to distribute and sell electricity to their customers. The utilities expect to recover costs related to these obligations in future customer rates.

The following table shows our minimum future commitments related to these purchase obligations as of December 31, 2015 , including those of our subsidiaries.



				Payments Due By Period
(in millions)	Date Contracts Extend Through	Total Amounts Committed		2016		2017		2018		2019		2020		Later Years
Electric utility:
Purchased power	2027	$	811.9	$	110.1	$	78.4	$	74.9	$	62.1	$	62.4	$	424.0
Coal supply and transportation	2019	608.7		310.2		177.4		110.0		11.1		—		—
Nuclear	2033	10,012.5		412.8		415.3		420.0		445.4		475.1		7,843.9
Natural gas utility supply and transportation	2028	1,244.6		331.6		263.6		200.1		159.3		115.2		174.8
Total		$	12,677.7	$	1,164.7	$	934.7	$	805.0	$	677.9	$	652.7	$	8,442.7

Operating Leases

We lease various property, plant, and equipment with various terms in the operating leases. The operating leases generally require us to pay property taxes, insurance premiums, and maintenance costs associated with the leased property. Many of our leases contain one of the following options upon the end of the lease term: (a) purchase the property at the current fair market value, or (b) exercise a renewal option, as set forth in the lease agreement.

Rental expense attributable to operating leases was $12.7 million , $4.8 million , and $4.0 million in 2015 , 2014 , and 2013 , respectively.



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Future minimum payments under noncancelable operating leases are payable as follows:



Year Ending December 31	Payments (in millions)
2016	$	9.8
2017	9.8
2018	9.0
2019	6.2
2020	5.7
Later years	66.6
Total	$	107.1

Environmental Matters

Consistent with other companies in the energy industry, we face significant ongoing environmental compliance and remediation obligations related to current and past operations. Specific environmental issues affecting us include, but are not limited to, current and future regulation of air emissions such as SO ₂ , NOx, fine particulates, mercury, and GHGs; water discharges; disposal of coal combustion products such as fly ash; and remediation of impacted properties, including former manufactured gas plant sites.

We have continued to pursue a proactive strategy to manage our environmental compliance obligations, including:


•	the development of additional sources of renewable electric energy supply;


•	the addition of improvements for water quality matters such as treatment technologies to meet regulatory discharge limits and improvements to our cooling water intake systems;


•	the addition of emission control equipment to existing facilities to comply with new ambient air quality standards and federal clean air rules;


•	the protection of wetlands and waterways, threatened and endangered species, and cultural resources associated with utility construction projects;


•	the retirement of old coal plants and conversion to modern, efficient, natural gas generation and super-critical pulverized coal generation;


•	the beneficial use of ash and other products from coal-fired and biomass generating units; and


•	the remediation of former manufactured gas plant sites.

Air Quality

Sulfur Dioxide National Air Ambient Quality Standards

The EPA issued a revised 1-Hour SO ₂ NAAQS that became effective in August 2010. The EPA issued a final rule in August 2015 describing the implementation requirements and established a compliance timeline for the revised standard.

The final rule affords state agencies latitude in rule implementation. States have the option of modeling or monitoring to show attainment (subject to EPA approval for this selection) and make attainment designation recommendations. If a state chooses modeling and an area does not show attainment, and sources do not agree to reductions by 2017 to allow attainment, the area would be classified as nonattainment. A plan would need to be developed requiring emission reductions to bring the area back into attainment by 2023. Alternatively, if a state opted out of modeling and instead chose to install air quality monitors, and subsequently monitored nonattainment, then it would face a 2026 compliance date. A nonattainment designation could have negative impacts for a localized geographic area, including additional permitting requirements for new or existing sources in the area.

In March 2015, a federal court entered a consent decree between the EPA and the Sierra Club and others agreeing to specific actions related to implementing the revised standard for areas containing large sources emitting above a certain threshold level of SO ₂ . The consent decree requires the EPA to complete attainment designations for certain areas with large sources by no later than July 2, 2016. SO ₂ emissions from PIPP are above the emission threshold, which means that the Marquette area requires action earlier than would otherwise be required under the revised NAAQS. However, we were able to show through modeling that the area should be designated as attainment. Based upon this modeling, the state of Michigan recommended to the EPA that the Marquette area be designated as attainment. We expect that the EPA will act on this recommendation in 2016.

We believe our fleet overall is well positioned to meet the new regulation.



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8-Hour Ozone National Air Ambient Quality Standards

The EPA completed its review of the 2008 8-hour ozone standard in November 2014, and announced a proposal to tighten (lower) the NAAQS. In October 2015, the EPA released the final rule, which lowered the limit for ground-level ozone. This is expected to cause nonattainment designations for some counties in Wisconsin with potential future impacts for our fossil-fueled power plant fleet. For nonattainment areas, the state will have to develop a state implementation plan to bring the areas back into attainment. We will be required to comply with this state implementation plan no earlier than 2020 and are in the process of reviewing and determining potential impacts resulting from this rule.

Mercury and Other Hazardous Air Pollutants

In December 2011, the EPA issued the final MATS rule, which imposes stringent limitations on emissions of mercury and other hazardous air pollutants from coal and oil-fired electric generating units beginning in April 2015. In addition, both Wisconsin and Michigan have state mercury rules that require a 90% reduction of mercury; however, these rules are not in effect as long as MATS is in place. In June 2015, the United States Supreme Court (Supreme Court) ruled on a challenge to the MATS rule and remanded the case back to the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit Court of Appeals), ruling that the EPA failed to appropriately consider the cost of the regulation. The MATS rule has been remanded to the EPA to address the Supreme Court decision, but remains in effect while the EPA completes its cost evaluation.

Our compliance plans currently include capital projects for PIPP and for WPS's jointly owned plants to achieve the required reductions for MATS. Construction on the addition of a dry sorbent injection system for further control of mercury and acid gases at PIPP is essentially complete and going through final startup and tuning. In addition, construction of the ReACT ^TM multi-pollutant control system at Weston Unit 3 is complete and startup/commissioning work is underway with an expected in-service date of July 2016. Controls for acid gases and mercury are already in operation at the Pulliam units.

In April 2013, Wisconsin Electric received a one year MATS compliance extension from the MDEQ for PIPP through April 2016. Although WPS also received a one year MATS compliance extension from the WDNR for Weston Unit 3 through April 2016, this unit is shut down to complete the construction of the ReACT ^TM system.

Climate Change

In 2015, the EPA issued the Clean Power Plan, a final rule regulating GHG emissions from existing generating units, a proposed federal plan as an alternative to state compliance plans, and final performance standards for modified and reconstructed generating units and new fossil-fueled power plants. The final rule for existing fossil generating units seeks to achieve state-specific GHG emission reduction goals by 2030, and requires states to submit plans by September 6, 2016. States submitting initial plans and requesting an extension would be required to submit final plans by September 2018, either alone or in conjunction with other states. States will be required to meet interim goals over the period from 2022 through 2029, and a final goal in 2030, with the goal of reducing nationwide GHG emissions by 32% from 2005 levels. The rule is seeking GHG emission reductions in Wisconsin and Michigan of 41% and 39% , respectively, below 2012 levels by 2030. The building blocks used by the EPA to determine each state's emission reduction requirements include a combination of improving power plant efficiency, increasing reliance on combined cycle natural gas units, and adding new renewable energy resources.

Rules for existing, as well as new, modified, and reconstructed generating units became effective in October 2015. A draft Federal Plan and Model Trading Rule were also published in October 2015 for use in developing state plans or for use in states where a plan is not submitted or approved. In December 2015, the state of Wisconsin submitted petitions for review to the EPA of the final standards for existing as well as new, modified, and reconstructed generating units. A petition for review was also submitted jointly by the Wisconsin utilities. The utilities' petition narrowly asks the EPA to consider revising the state goal for existing units to reflect the 2013 retirement of the Kewaunee Power Station, which could lower the state's CO ₂ equivalent reduction goal by about 10% . The state's petition asks for review of a number of aspects of the final rules, including an adjustment to reflect the Kewaunee Power Station retirement. In January 2016, we submitted comments on the draft Federal Plan and Model Trading Rule. Michigan state agencies announced modeling results that suggest that the state will be able to meet existing source requirements until 2025, based on planned coal plant retirements, along with a continuation of state renewable standards and current levels of energy efficiency. A stakeholder process began in the middle of January 2016. Michigan plans to submit an interim plan by September 6, 2016, with a request for a two year extension for submittal of a final plan.



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We are in the process of reviewing the final rule for existing generating units to determine the potential impacts to our operations. The rule could result in significant additional compliance costs, including capital expenditures, could impact how we operate our existing fossil-fueled power plants and biomass facility, and could have a material adverse impact on our operating costs. In October 2015, following publication of the final rule, numerous states (including Wisconsin and Michigan), trade associations, and private parties filed lawsuits challenging the final rule, including a request to stay the implementation of the final rule pending the outcome of these legal challenges. The D.C. Circuit Court of Appeals denied the stay request, but on February 9, 2016, the Supreme Court stayed the effectiveness of the rule until disposition of the litigation in the D.C. Circuit Court of Appeals and to the extent that review is sought, at the Supreme Court. Therefore, it is unlikely that states will move forward on the development of state plans until the litigation is complete. In addition, on February 15, 2016, the Governor of Wisconsin issued Executive Order 186, which prohibits state agencies, departments, boards, commissions, or other state entities from developing or promoting the development of a state plan.

We are required to report our CO ₂ equivalent emissions from our electric generating facilities under the EPA Greenhouse Gases Reporting Program. For 2014, Wisconsin Energy Corporation reported aggregated CO ₂ equivalent emissions of approximately 23.3 million metric tonnes to the EPA. Based upon our preliminary analysis of the data, we estimate that WEC Energy Group will report CO ₂ equivalent emissions of approximately 31.0 million metric tonnes to the EPA for 2015. The level of CO ₂ and other GHG emissions vary from year to year and are dependent on the level of electric generation and mix of fuel sources, which is determined primarily by demand, the availability of the generating units, the unit cost of fuel consumed, and how our units are dispatched by MISO.

We are also required to report CO ₂ equivalent amounts related to the natural gas that our natural gas utilities distribute and sell. For 2014, Wisconsin Energy Corporation reported aggregated CO ₂ equivalent emissions of approximately 10.8 million metric tonnes to the EPA related to our distribution and sale of natural gas. Based upon our preliminary analysis of the data, we estimate that WEC Energy Group will report CO ₂ equivalent emissions of approximately 27.1 million metric tonnes to the EPA for 2015.

The increase in CO ₂ equivalent amounts reported between 2014 and 2015 for the electric generating facilities, as well as the amounts related to the distribution and sale of natural gas, are primarily related to the addition of the Integrys regulated companies, which were acquired on June 29, 2015.

Water Quality

Clean Water Act Cooling Water Intake Structure Rule

In August 2014, the EPA issued a final regulation under Section 316(b) of the Clean Water Act, which requires that the location, design, construction, and capacity of cooling water intake structures at existing power plants reflect the Best Technology Available (BTA) for minimizing adverse environmental impacts from both impingement and entrainment. The rule became effective in October 2014, and applies to all of our existing generating facilities with cooling water intake structures, except for the Oak Creek expansion units, which were permitted under the rules governing new facilities.

Facility owners must select from seven compliance options available to meet the impingement mortality (IM) reduction standard. The rule requires state permitting agencies to make BTA determinations, subject to EPA oversight, for IM reduction over the next several years as facility permits are reissued. Based on our assessment, we believe that existing technologies at our generating facilities, except for VAPP Units 1 and 2, Pulliam Units 7 and 8, and Weston Unit 2, satisfy the IM BTA requirements. For VAPP Unit 2, a project to install fish protection screens to meet the IM BTA standard was completed in October 2015. The same types of screens are scheduled to be installed on VAPP Unit 1 starting in September 2016. We plan to evaluate the available IM options for Pulliam Units 7 and 8. We also expect that limited studies will be required to support the future WDNR BTA determinations for Weston Unit 2. Based on preliminary discussions with the WDNR, we anticipate that the WDNR will not require physical modifications to the Weston Unit 2 intake structure to meet the IM BTA requirements based on low capacity use of the unit.

BTA determinations must also be made by the WDNR and MDEQ to address entrainment mortality (EM) reduction on a site-specific basis taking into consideration several factors. We have received an EM BTA determination by the WDNR, with EPA concurrence, for our proposed intake modification at VAPP. BTA determinations for EM will be made in future permit reissuances for Pulliam Units 7 and 8, Weston Units 2 through 4, Port Washington Generating Station, Pleasant Prairie Power Plant, PIPP, and Oak Creek Power Plant Units 5 through 8.

During 2016 – 2018, we plan to complete studies and evaluate options to address the EM BTA requirements at our plants. With the exception of Pleasant Prairie Power Plant and Weston Units 3 and 4 (which all have existing cooling towers that meet EM BTA requirements), and VAPP, we cannot yet determine what, if any, intake structure or operational modifications will be required to



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meet the new EM BTA requirements at our facilities. We also expect that limited studies to support WDNR BTA determinations will be conducted at the Weston facility. Based on preliminary discussions with the WDNR, we anticipate that the WDNR will not require physical modifications to the Weston Unit 2 intake structure to meet the EM BTA requirements based on low capacity use of the unit. In addition, the rule allows the EM BTA requirements to be waived in cases of pending facility retirements, which we are currently considering for PIPP. Based on discussions with the MDEQ, if we submit a signed certification with our next National Pollutant Discharge Elimination System permit application stating that PIPP will be retired no later than the end of the next permit cycle (assumed to be October 1, 2022), then the EM BTA requirements will be waived. Entrainment studies are currently being conducted at Pulliam Units 7 and 8 and will commence in January 2016 at PIPP.

Steam Electric Effluent Guidelines

The EPA's final steam electric effluent guidelines rule took effect in January 2016 and applies to discharges of wastewater from our power plant processes in Wisconsin and Michigan. Unless pending challenges to the final guidelines are successful, the WDNR and MDEQ will modify the state rules and incorporate the new requirements into our facility permits, which are renewed every five years . We expect the new requirements to be phased in between 2018 and 2023 as our permits are renewed. Our power plant facilities already have advanced wastewater treatment technologies installed that meet many of the discharge limits established by this rule. However, these standards will require additional wastewater treatment retrofits as well as installation of other equipment to minimize process water use. The final rule phases in new or more stringent requirements related to limits of arsenic, mercury, selenium, and nitrogen in wastewater discharged from wet scrubber systems. New requirements for wet scrubber wastewater treatment will likely require additional biological treatment capital improvements for the Oak Creek and Pleasant Prairie facilities. The rule also requires dry fly ash handling, which is already in place at all of our power plants. Dry bottom ash transport systems are also required by the new rule, and modifications will be required at Oak Creek Units 5 and 6, the Pleasant Prairie units, PIPP Units 5 through 9, Pulliam Units 7 and 8, and Weston Unit 3. We are beginning preliminary engineering for compliance with the rule and estimate a total cost range of $70 million to $100 million for these biological treatment and bottom ash transport systems.

Valley Power Plant Wisconsin Pollution Discharge Elimination System Permit

The WDNR issued a WPDES permit for VAPP that became effective in January 2013. The permit contains several additional requirements including effluent toxicity testing and monitoring for additional parameters (phosphorous, mercury, and ammonia-nitrogen), and a new heat addition limit from the cooling water discharges that all took effect immediately. Other long-term compliance requirements include thermal discharge studies, phosphorous evaluation and feasibility for reduction, mercury minimization planning, and the installation of new cooling water intake fish protection screens. Installation of wedge wire screens for fish protection on the VAPP Unit 2 cooling water intake structure is complete. An identical modification is planned for VAPP Unit 1 in 2016. We are also currently involved in planning to meet the remaining long-term requirements.

Land Quality

Coal Combustion Residuals Rule

In April 2015, the Hazardous and Solid Waste Management System; Disposal of Coal Combustion Residuals from Electric Utilities final rule was entered into the Federal Register. The final rule regulates the disposal of coal combustion residuals as a non-hazardous waste. We do not expect the compliance costs will be significant because we currently have a program of beneficial utilization for most of our coal combustion products. If needed, we have landfill capacity that meets the rule requirements for our remaining coal combustion product sources.

Coal Combustion Product Landfill Sites

We aggressively seek environmentally acceptable, beneficial uses for our coal combustion products. However, some coal combustion products have been, and to a small degree continue to be, managed in company-owned, licensed landfills. Some early designed and constructed landfills have at times required some level of monitoring or remediation. Where we have become aware of these conditions, and where necessary, we have worked to define the nature and extent of the impact, if any, and work has been performed to address these conditions. During 2015 , 2014 , and 2013 , landfill remediation expenses were not material. See Note 9, Asset Retirement Obligations, for more information about obligations related to these sites.



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Renewables, Efficiency, and Conservation

Wisconsin Act 141

In 2006, Wisconsin revised the requirements for renewable energy generation by enacting Act 141. Act 141 established a goal that 10% of all electricity consumed in Wisconsin be generated by renewable resources by December 31, 2015. Under Act 141, Wisconsin Electric and WPS are required to increase their renewable energy percentage to 8.27% and 9.74% , respectively. To comply with these requirements, Wisconsin Electric constructed the Blue Sky Green Field wind park, the Glacier Hills wind park, and the Rothschild biomass facility. WPS constructed the Crane Creek wind park. Wisconsin Electric and WPS also rely on renewable energy purchases to meet their respective renewable portfolio standard commitments.

Wisconsin Electric and WPS are in compliance with Act 141's 2015 standard and have entered into agreements for renewable energy credits, that should allow Wisconsin Electric and WPS to remain in compliance through 2022 and 2023, respectively. If market conditions are favorable, Wisconsin Electric and WPS may purchase more renewable energy credits. Act 141 assigned responsibility for the administration of energy efficiency, conservation, and renewable programs to the PSCW and/or contracted third parties. The funding required by Act 141 for 2015 was 1.2% of annual operating revenues of each utility.

Michigan Act 295

In 2008, Michigan revised the requirements for renewable energy generation by enacting Act 295. Act 295 requires 10% of the state's energy to come from renewables by 2015 and energy optimization (efficiency) targets up to 1% annually by 2015. Wisconsin Electric and WPS are currently in compliance with this requirement. Act 295 specifically calls for current recovery of costs incurred to meet the standards and provides for ongoing review and revision to assure the measures taken are cost-effective.

Manufactured Gas Plant Remediation

We have identified sites at which our utilities or a predecessor company owned or operated a manufactured gas plant or stored manufactured gas. We have also identified other sites that may have been impacted by historical manufactured gas plant activities. Our natural gas utilities are responsible for the environmental remediation of these sites, some of which are in the EPA Superfund Program. We are also working with various state jurisdictions in our investigation and remediation planning. These sites are at various stages of investigation, monitoring, remediation, and closure.

In addition, some of these sites are coordinating the investigation and cleanup subject to the jurisdiction of the EPA under what is called a "multisite" program. This program involves prioritizing the work to be done at the sites, preparation and approval of documents common to all of the sites, and use of a consistent approach in selecting remedies. At this time, we cannot estimate future remediation costs associated with these sites beyond those described below.

The future costs for detailed site investigation, future remediation, and monitoring are dependent upon several variables including, among other things, the extent of remediation, changes in technology, and changes in regulation. Historically, our regulators have allowed us to recover incurred costs, net of insurance recoveries and recoveries from potentially responsible parties, associated with the remediation of manufactured gas plant sites. Accordingly, we have established regulatory assets for costs associated with these sites.

We have established the following regulatory assets and reserves related to manufactured gas plant sites as of December 31:



(in millions)	2015		2014
Regulatory assets	$	697.0	$	45.9
Reserves for future remediation	628.0		32.6

The increases in the regulatory assets and reserves are primarily related to balances associated with the Integrys regulated companies, which were acquired on June 29, 2015. See Note 2, Acquisition, for more information .



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Enforcement and Litigation Matters

We and our subsidiaries are involved in legal and administrative proceedings before various courts and agencies with respect to matters arising in the ordinary course of business. Although we are unable to predict the outcome of these matters, management believes that appropriate reserves have been established and that final settlement of these actions will not have a material effect on our financial condition or results of operations.

Paris Generating Station Wisconsin Pollution Discharge Elimination System Permit

In November 2014, the WDNR reissued the WPDES permit for the PSGS. We believed that the WDNR imposed unreasonable permit conditions with respect to temperature monitoring, the control of water treatment additive, and phosphorus discharges. To address these permit conditions, Wisconsin Electric filed a petition for a contested case hearing with the WDNR in January 2015. On the same day, Wisconsin Electric also filed a request to be covered by the statewide phosphorus variance to address one of its concerns with the permit. Wisconsin Electric reached an agreement with the WDNR with respect to the permit conditions for temperature monitoring and for restrictions related to the use of a water treatment additive. In March 2015, the WDNR issued a final WPDES permit with agreed upon modifications, and Wisconsin Electric withdrew its petition for a contested case hearing. In July 2015, the Milwaukee County Circuit Court entered a stipulation and Order for Judgment between the WDNR and Wisconsin Department of Justice. This order resolves the litigation by allowing Wisconsin Electric to maintain the ability to apply for and be covered by the statewide phosphorus variance.

Paris Generating Station Units 1 and 4 Construction Permit

In December 2013, Act 91 was signed into law in Wisconsin, creating a process by which the EPA and WDNR were able to revise the regulations and emissions rates applicable to PSGS Units 1 and 4, allowing those units to restart after a temporary outage related to a construction permit matter with the WDNR. We received an “after the fact” permit from the WDNR, and the units are now available for service. In October, 2014, the Sierra Club filed for a contested case hearing with the WDNR challenging this permit.

In February 2013, the Sierra Club also filed for a contested case hearing with the WDNR in connection with the administration order issued in this matter, which was granted. However, a hearing has not yet been scheduled.

Valley Power Plant Title V Air Permit

In February 2011, the WDNR renewed VAPP's Title V operating permit for five years . In March 2011, the Sierra Club petitioned the EPA for additional reductions and monitoring for particulate matter and revisions to certain applicable requirements. No timeline has been set by the EPA to respond to that petition. In May 2012, the Sierra Club filed a notice of intent to bring suit to force the EPA to issue a response to that petition. We believe that the permit was properly issued and that the plant is in compliance with all applicable regulations and standards. However, if as a result of this proceeding the permit is remanded to the WDNR, the plant will continue to operate under the previous operating permit.

Weston Title V Air Permit

In August 2013, the WDNR issued the Weston Title V air permit. In September 2013, WPS challenged various requirements in the permit by filing a contested case proceeding with the WDNR and also filed a Petition for Judicial Review in the Brown County Circuit Court. The Sierra Club and Clean Wisconsin also challenged various aspects of the permit. The WDNR granted all parties' requests for contested case proceedings. The Petitions for Judicial Review, by all parties, have been stayed pending the resolution of the contested cases. In February 2014, a new permit change was challenged and added to the case. The ALJ dismissed some of the petition issues relating to the averaging period and monitoring issues.

In May 2014, the WDNR issued a Notice of Violation (NOV) alleging that WPS failed to maintain a minimum sorbent feed rate prior to the Continuous Emissions Monitoring System certification and included an issue related to reporting NOx emissions from the Weston Unit 4 auxiliary boiler.

In June 2015, the WDNR issued a NOV alleging that WPS failed to comply with mercury reporting requirements related to challenged matters in the 2013 Weston Title V permit. The ALJ denied its request to issue a stay or confirm that a statutory stay applies to the requirements identified in the NOV.



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The contested case has been stayed for a period of months, and no hearing date has been set. We do not expect these matters to have a material impact on our financial statements.

Solvay Coke and Gas Site

In August 2004, Wisconsin Electric and Wisconsin Gas were identified as potentially responsible parties at the Solvay Coke and Gas Site located in Milwaukee, Wisconsin. A predecessor company of Wisconsin Electric owned a parcel of property that is within the property boundaries of the site. A predecessor company of Wisconsin Gas had a customer and corporate relationship with the entity that owned and operated the site. In 2007, Wisconsin Electric, Wisconsin Gas, and several other parties entered into an Administrative Settlement Agreement and Order with the EPA to perform additional investigation and assessment and reimburse the EPA's oversight costs. The final remedial investigation report was submitted to the EPA in December 2015, and work will now begin on the feasibility study. Under the Administrative Settlement Agreement, neither Wisconsin Electric nor Wisconsin Gas admits to any liability for the site, waives any liability defenses, or commits to perform future site remedial activities. The companies' share of the costs to perform the required work and reimburse the EPA's oversight costs, as well as potential future remediation cost estimates and reserves, are included in the estimated manufactured gas plant values reported above .

Consent Decrees

Wisconsin Public Service Corporation Consent Decree – Weston and Pulliam

In November 2009, the EPA issued a NOV to WPS, which alleged violations of the CAA's New Source Review requirements relating to certain projects completed at the Weston and Pulliam plants from 1994 to 2009. WPS entered into a Consent Decree with the EPA resolving this NOV. This Consent Decree was entered by the U.S. District Court for the Eastern District of Wisconsin in March 2013. The final Consent Decree includes:


•	the installation of emission control technology, including ReACT™ on Weston 3,


•	changed operating conditions (including refueling, repowering, and/or retirement of units),


•	limitations on plant emissions,


•	beneficial environmental projects totaling $6.0 million , and


•	a civil penalty of $1.2 million .

As mentioned above, the Consent Decree contains a requirement to refuel, repower, and/or retire certain Weston and Pulliam units. Effective June 1, 2015, WPS retired Weston Unit 1 and Pulliam Units 5 and 6 and recorded a regulatory asset of $11.5 million for the undepreciated book value. WPS received approval from the PSCW in its 2015 rate order to defer and amortize the undepreciated book value of the retired plant associated with these units starting June 1, 2015, and concluding by 2023.

WPS received approval from the PSCW in its rate orders to recover prudently incurred costs as a result of complying with the terms of the Consent Decree, with the exception of the civil penalty. The majority of the beneficial environmental projects proposed by WPS have been approved by the EPA. WPS is currently working with the EPA on certain changes to the environmental projects, but these changes are not expected to materially impact the overall cost.

Also, in May 2010, WPS received from the Sierra Club a Notice of Intent to file a civil lawsuit based on allegations that WPS violated the CAA at the Weston and Pulliam plants. WPS entered into a Standstill Agreement with the Sierra Club by which the parties agreed to negotiate as part of the EPA NOV process, rather than litigate. The Standstill Agreement ended in October 2012, but no further action has been taken by the Sierra Club as of December 31, 2015 . It is unknown whether the Sierra Club will take further action in the future.



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Joint Ownership Power Plants Consent Decree – Columbia and Edgewater

In December 2009, the EPA issued a NOV to Wisconsin Power and Light, the operator of the Columbia and Edgewater plants, and the other joint owners of these plants, including Madison Gas and Electric, Wisconsin Electric (former co-owner of an Edgewater unit), and WPS. The NOV alleged violations of the CAA's New Source Review requirements related to certain projects completed at those plants. WPS, Wisconsin Power and Light, Madison Gas and Electric, and Wisconsin Electric entered into a Consent Decree with the EPA resolving this NOV. This Consent Decree was entered by the United States District Court for the Western District of Wisconsin in June 2013. Wisconsin Electric paid an immaterial portion of the assessed penalty but has no further obligations under the Consent Decree. The final Consent Decree includes:


•	the installation of emission control technology, including scrubbers at the Columbia plant,


•	changed operating conditions (including refueling, repowering, and/or retirement of units),


•	limitations on plant emissions,


•	beneficial environmental projects, with WPS's portion totaling $1.3 million , and


•	WPS's portion of a civil penalty and legal fees totaling $0.4 million .

As mentioned above, the Consent Decree contains a requirement to refuel, repower, or retire Edgewater Unit 4, of which WPS is a joint owner, by no later than December 31, 2018. In the first quarter of 2015, management of the joint owners recommended that Edgewater Unit 4 be retired in December 2018. However, a final decision on how to address the requirement for this unit has not yet been made by the joint owners, as early retirement is contingent on various operational and market factors, and other alternatives to retirement are still available. All of the beneficial environmental projects that WPS proposed have been approved by the EPA.

NOTE 19— FAIR VALUE MEASUREMENTS

The following tables summarize our financial assets and liabilities that were accounted for at fair value on a recurring basis, categorized by level within the fair value hierarchy:



	December 31, 2015
(in millions)	Level 1		Level 2		Level 3		Total
Assets
Derivative assets
Natural gas contracts	$	1.6	$	1.5	$	—	$	3.1
FTRs	—		—		3.6		3.6
Petroleum products contracts	1.2		—		—		1.2
Coal contracts	—		2.0		—		2.0
Total derivative assets	$	2.8	$	3.5	$	3.6	$	9.9

Investments held in rabbi trust	$	39.8	$	—	$	—	$	39.8

Liabilities
Derivative liabilities
Natural gas contracts	$	16.5	$	25.3	$	—	$	41.8
Petroleum products contracts	4.9		—		—		4.9
Coal contracts	—		12.3		—		12.3
Total derivative liabilities	$	21.4	$	37.6	$	—	$	59.0



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	December 31, 2014
(in millions)	Level 1		Level 2		Level 3		Total
Assets
Derivative assets
Natural gas contracts	$	1.1	$	3.9	$	—	$	5.0
FTRs	—		—		7.0		7.0
Coal contracts	—		3.3		—		3.3
Total derivative assets	$	1.1	$	7.2	$	7.0	$	15.3

Liabilities
Derivative liabilities
Natural gas contracts	$	11.5	$	0.8	$	—	$	12.3
Coal contracts	—		0.2		—		0.2
Total derivative liabilities	$	11.5	$	1.0	$	—	$	12.5

The derivative assets and liabilities listed in the tables above include options, swaps, futures, physical commodity contracts, and other instruments used to manage market risks related to changes in commodity prices. They also include FTRs, which are used to manage electric transmission congestion costs in the MISO Energy Markets. See Note 20, Derivative Instruments, for more information .

The following table summarizes the changes to derivatives classified as Level 3 in the fair value hierarchy at December 31 :



(in millions)	2015			2014			2013
Balance at the beginning of the period	$	7.0		$	3.5		$	4.7
Realized and unrealized gains	1.3			—			—
Purchases	3.9			15.6			10.6
Sales	(0.1		)	—			—
Settlements	(11.9		)	(12.1		)	(11.8		)
Acquisition of Integrys	(1.3		)	—			—
Net transfers out of level 3	4.7			—			—
Balance at the end of the period	$	3.6		$	7.0		$	3.5

Unrealized gains and losses on Level 3 derivatives are deferred as regulatory assets or liabilities. Therefore, these fair value measurements have no impact on earnings. Realized gains and losses on these instruments flow through cost of sales on the income statements.

Fair Value of Financial Instruments

The following table shows the financial instruments included on our balance sheets that are not recorded at fair value at December 31 :



	2015				2014
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Preferred stock	$	30.4	$	27.3	$	30.4	$	27.1
Long-term debt, including current portion *	$	9,221.9	$	9,681.0	$	4,510.3	$	5,126.0


*	Long-term debt excludes capital lease obligations.



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NOTE 20— DERIVATIVE INSTRUMENTS

The following table shows our derivative assets and derivative liabilities:



		December 31, 2015				December 31, 2014
(in millions)	Balance Sheet Presentation	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
Natural gas	Other current	$	2.6	$	38.5	$	5.0	$	11.5
Natural gas	Other long-term	0.5		3.3		—		0.8
Petroleum products	Other current	0.9		3.8		—		—
Petroleum products	Other long-term	0.3		1.1		—		—
FTRs	Other current	3.6		—		7.0		—
Coal	Other current	1.7		6.7		2.7		0.2
Coal	Other long-term	0.3		5.6		0.6		—
	Other current	8.8		49.0		14.7		11.7
	Other long-term	1.1		10.0		0.6		0.8
Total		$	9.9	$	59.0	$	15.3	$	12.5

Our estimated notional sales volumes and gains (losses) were as follows:



	December 31, 2015				December 31, 2014			December 31, 2013
(in millions)	Volume	Gains (Losses)			Volume	Gains		Volume	Gains (Losses)
Natural gas	86.2 Dth	$	(50.5	)	40.5 Dth	$	7.3	48.6 Dth	$	(8.5	)
Petroleum products	7.8 gallons	(1.9		)	9.2 gallons	0.5		8.6 gallons	0.5
FTRs	27.3 MWh	6.7			26.1 MWh	12.7		25.3 MWh	14.9
Total		$	(45.7	)		$	20.5		$	6.9

The following table shows derivative assets and derivative liabilities if derivative instruments by counterparty were presented net on our balance sheets:



	December 31, 2015						December 31, 2014
	Derivative			Derivative			Derivative			Derivative
(in millions)	Assets			Liabilities			Assets			Liabilities
Gross amount recognized on the balance sheet	$	9.9		$	59.0		$	15.3		$	12.5
Gross amount not offset on the balance sheet *	(3.0		)	(22.5		)	(0.4		)	(11.5		)
Net amount	$	6.9		$	36.5		$	14.9		$	1.0


*	Includes cash collateral posted of $19.5 million and $10.3 million as of December 31, 2015 and 2014 , respectively.

As of December 31, 2015 and 2014 , we posted collateral of $42.3 million and $11.2 million , respectively, in our margin accounts. Certain of our derivative and non-derivative commodity instruments contain provisions that could require "adequate assurance" in the event of a material change in our creditworthiness, or the posting of additional collateral for instruments in net liability positions, if triggered by a decrease in credit ratings. The aggregate fair value of all derivative instruments with specific credit risk-related contingent features that were in a net liability position at December 31, 2015 was $23.8 million , and zero at December 31, 2014 . At December 31, 2015 , we had not posted any cash collateral related to the credit risk-related contingent features of these commodity instruments. If all of the credit risk-related contingent features contained in derivative instruments in a net liability position had been triggered at December 31, 2015 , we would have been required to post collateral of $18.0 million .

During 2015 , we settled several forward interest rate swap agreements entered into to mitigate interest risk associated with the issuance of $1.2 billion of long-term debt related to the acquisition of Integrys. As these agreements qualified for cash flow hedging accounting treatment, the payments of $19.0 million received upon settlement of these agreements were deferred in accumulated other comprehensive income and are being amortized as a decrease to interest expense over the periods in which the interest costs are recognized in earnings.

During 2015 , we reclassified $1.2 million of forward interest rate swap agreement settlements deferred in accumulated other comprehensive income as a reduction to interest expense. We estimate that during the next twelve months, $2.2 million will be reclassified from accumulated other comprehensive income as a reduction to interest expense.



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NOTE 21— VARIABLE INTEREST ENTITIES

The primary beneficiary of a variable interest entity must consolidate the entity's assets and liabilities. In addition, certain disclosures are required for significant interest holders in variable interest entities.

We assess our relationships with potential variable interest entities, such as our coal suppliers, natural gas suppliers, coal and natural gas transporters, and other counterparties related to power purchase agreements, investments, and joint ventures. In making this assessment, we consider, along with other factors, the potential that our contracts or other arrangements provide subordinated financial support, the obligation to absorb the entity's losses, the right to receive residual returns of the entity, and the power to direct the activities that most significantly impact the entity's economic performance.

American Transmission Company

We own approximately 60% of ATC, a for-profit, transmission-only company regulated by the FERC. We have determined that ATC is a variable interest entity but that consolidation is not required since we are not ATC's primary beneficiary. As a result of our limited voting rights, we do not have the power to direct the activities that most significantly impact ATC's economic performance. We instead account for ATC as an equity method investment. See Note 4, Investment in American Transmission Company, for more information .

The significant assets and liabilities related to ATC recorded on our balance sheet at December 31, 2015 included our equity investment and accounts payable. At December 31, 2015, our equity investment was $1,380.9 million , which approximates our maximum exposure to loss as a result of our involvement with ATC. In addition, we had $28.3 million of accounts payable due to ATC at December 31, 2015 for network transmission services.

Purchased Power Agreement

We have identified a purchased power agreement that represents a variable interest. This agreement is for 236 MW of firm capacity from a natural gas-fired cogeneration facility, and we account for it as a capital lease. The agreement includes no minimum energy requirements over the remaining term of approximately six years . We have examined the risks of the entity, including operations and maintenance, dispatch, financing, fuel costs, and other factors, and have determined that we are not the primary beneficiary of the entity. We do not hold an equity or debt interest in the entity, and there is no residual guarantee associated with the purchased power agreement.

We have approximately $130.5 million of required payments over the remaining term of this agreement. We believe that the required lease payments under this contract will continue to be recoverable in rates. Total capacity and lease payments under this contract for the years ended December 31, 2015, 2014, and 2013 were $53.6 million , $53.0 million , and $50.3 million , respectively. Our maximum exposure to loss is limited to the capacity payments under the contract.

NOTE 22— REGULATORY ENVIRONMENT

Wisconsin Electric Power Company

2015 Wisconsin Rate Order

In May 2014, Wisconsin Electric applied to the PSCW for a biennial review of costs and rates. In December 2014, the PSCW approved the following rate adjustments, effective January 1, 2015:

•

A net bill increase related to non-fuel costs for Wisconsin Electric's retail electric customers of approximately $2.7 million ( 0.1% ) in 2015. This amount reflects Wisconsin Electric's receipt of SSR payments from MISO that were higher than Wisconsin Electric anticipated when it filed its rate request in May 2014, as well as an offset of $26.6 million related to a refund of prior fuel costs and the remainder of the proceeds from a Treasury Grant that Wisconsin Electric received in connection with its biomass facility. The majority of this $26.6 million was returned to customers in the form of bill credits in 2015.


•	A rate increase for Wisconsin Electric's retail electric customers of $26.6 million ( 0.9% ) in 2016 related to the expiration of the bill credits provided to customers in 2015.


•	A rate decrease of $13.9 million ( -0.5% ) in 2015 related to a forecasted decrease in fuel costs.


•	A rate decrease of $10.7 million ( -2.4% ) for Wisconsin Electric's natural gas customers in 2015, with no rate adjustment in 2016.



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•	A rate increase of approximately $0.5 million ( 2.0% ) for Wisconsin Electric's Downtown Milwaukee (Valley) steam utility customers in 2015, with no rate adjustment in 2016.


•	A rate increase of approximately $1.2 million ( 7.3% ) for Wisconsin Electric's Milwaukee County steam utility customers in 2015, with no rate adjustment in 2016.

The authorized ROE for Wisconsin Electric was set at 10.2% , and its common equity component remained at an average of 51% . The PSCW order reaffirmed the deferral of Wisconsin Electric's transmission costs, and it verified that 2015 and 2016 fuel costs should continue to be monitored using a 2% tolerance window. The PSCW approved a change in rate design for Wisconsin Electric, which includes higher fixed charges to better match the related fixed costs of providing service. The PSCW order also authorized escrow accounting for SSR revenues because of the uncertainty of the actual revenues Wisconsin Electric will receive under the PIPP SSR agreements. Under escrow accounting, Wisconsin Electric will record SSR revenues from MISO of $90.7 million a year. If actual SSR payments from MISO exceed $90.7 million a year, the difference will be deferred and returned to customers, with interest, in a future rate case. If actual SSR payments from MISO are less than $90.7 million a year, the difference will be deferred and recovered from customers with interest, in a future rate case.

In January 2015, certain parties appealed a portion of the PSCW's final decision adopting Wisconsin Electric's specific rate design changes, including new charges for customer-owned generation within its service territory. The Dane County Circuit Court, in its November 2015 order, ruled that there was not enough evidence provided in Wisconsin Electric's rate case to support a demand charge for customer-owned generation. As a result, this demand charge did not take effect on January 1, 2016. No other rates approved by the PSCW in the rate case were impacted by the Dane County Circuit Court order.

Earnings Sharing Agreement

In May 2015, the PSCW approved the acquisition of Integrys subject to the condition of an earnings sharing mechanism for Wisconsin Electric. See Note 2, Acquisition, for more information on this earnings sharing mechanism.

2013 Wisconsin Rate Order

In March 2012, Wisconsin Electric initiated a rate proceeding with the PSCW. In December 2012, the PSCW approved the following rate adjustments, effective January 1, 2013:

•

A net bill increase related to non-fuel costs for Wisconsin Electric's retail electric customers of approximately $70.0 million ( 2.6% ) in 2013. This amount reflected an offset of approximately $63.0 million ( 2.3% ) for bill credits related to the proceeds of the Treasury Grant, including associated tax benefits. Absent this offset, the retail electric rate increase for non-fuel costs was approximately $133.0 million ( 4.8% ) in 2013.


•	An electric rate increase for Wisconsin Electric's electric customers of approximately $28.0 million ( 1.0% ) in 2014, and a $45.0 million ( -1.6% ) reduction in bill credits.


•	Recovery of a forecasted increase in fuel costs of approximately $44.0 million ( 1.6% ) in 2013.


•	A rate decrease of approximately $8.0 million ( -1.9% ) for Wisconsin Electric's natural gas customers in 2013, with no rate adjustment in 2014. The Wisconsin Electric rates reflect a $6.4 million reduction in bad debt expense.


•	An increase of approximately $1.3 million ( 6.0% ) for Wisconsin Electric's Downtown Milwaukee (Valley) steam utility customers in 2013 and another $1.3 million ( 6.0% ) in 2014.


•	An increase of approximately $1.0 million ( 7.0% ) in 2013 and $1.0 million ( 6.0% ) in 2014 for Wisconsin Electric's Milwaukee County steam utility customers.

Based on the PSCW order, the authorized ROE for Wisconsin Electric remained at 10.4% . In addition, the PSCW approved escrow accounting treatment for the Treasury Grant. The PSCW also determined the construction costs for the Oak Creek expansion units were prudently incurred, and it approved the recovery of the majority of these costs in rates.

Wisconsin Gas LLC

2015 Wisconsin Rate Order

In May 2014, Wisconsin Gas applied to the PSCW for a biennial review of costs and rates. In December 2014, the PSCW approved rate increases of $17.1 million ( 2.6% ) in 2015 and $21.4 million ( 3.2% ) in 2016 for Wisconsin Gas's natural gas customers. These rate



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adjustments were effective January 1, 2015. The authorized ROE for Wisconsin Gas was set at 10.3% . The PSCW also authorized an increase in Wisconsin Gas's common equity component to an average of 49.5% .

Earnings Sharing Agreement

In May 2015, the PSCW approved the acquisition of Integrys subject to the condition of an earnings sharing mechanism for Wisconsin Gas . See Note 2, Acquisition, for more information on this earnings sharing mechanism.

2013 Wisconsin Rate Order

In March 2012, Wisconsin Gas initiated a rate proceeding with the PSCW. In December 2012, the PSCW approved a rate decrease of approximately $34.0 million ( -5.5% ) for Wisconsin Gas’s natural gas customers in 2013, with no rate adjustment in 2014. The Wisconsin Gas rates reflect a $43.8 million reduction in bad debt expense. The rate adjustments were effective January 1, 2013, and the authorized ROE for Wisconsin Gas remained at 10.5% .

Wisconsin Public Service Corporation

2016 Wisconsin Rate Order

In April 2015, WPS initiated a rate proceeding with the PSCW. In December 2015, the PSCW issued a final written order for WPS, effective January 1, 2016. The order, which reflects a 10.0% ROE and a common equity component average of 51.0% , authorized a net retail electric rate decrease of $7.9 million ( -0.8% ) and a net retail natural gas rate decrease of $6.2 million ( -2.1% ). Based on the order, the PSCW will continue to allow escrow treatment for ATC and MISO network transmission expenses, including any future SSR payments. This allows WPS to defer as a regulatory asset or liability the differences between actual transmission expenses and those included in rates until a future rate proceeding. In addition, the PSCW approved a deferral for ReACT™, which requires WPS to defer the revenue requirement of ReACT™ costs above the authorized $275.0 million level through 2016. Fuel costs will continue to be monitored using a 2% tolerance window.

2015 Wisconsin Rate Order

In April 2014, WPS initiated a rate proceeding with the PSCW. In December 2014, the PSCW issued a final written order for WPS, effective January 1, 2015. It authorized a net retail electric rate increase of $24.6 million and a net retail natural gas rate decrease of $15.4 million , reflecting a 10.20% ROE. The order authorized a common equity component average of 50.28% . The PSCW approved a change in rate design for WPS, which includes higher fixed charges to better match the related fixed costs of providing service. In addition, the order continued to exclude a decoupling mechanism that was terminated beginning January 1, 2014.

The primary driver of the increase in retail electric rates was higher costs of fuel for electric generation of approximately $42.0 million . In addition, 2015 rates included approximately $9.0 million of lower refunds to customers related to decoupling over-collections. In 2015 rates, WPS refunded approximately $4.0 million to customers related to 2013 decoupling over-collections compared with refunding approximately $13.0 million to customers in 2014 rates related to 2012 decoupling over-collections. Absent these adjustments for electric fuel costs and decoupling refunds, WPS would have realized an electric rate decrease. In addition, WPS received approval from the PSCW to defer and amortize the undepreciated book value associated with Pulliam Units 5 and 6 and Weston Unit 1 starting with the actual retirement date, June 1, 2015, and concluding by 2023. See Note 18, Commitments and Contingencies, for more information . The PSCW is allowing WPS to escrow ATC and MISO network transmission expenses for 2015 and 2016. As a result, WPS defers as a regulatory asset or liability the differences between actual transmission expenses and those included in rates until a future rate proceeding. Finally, the PSCW ordered that 2015 fuel costs should continue to be monitored using a 2% tolerance window.

The retail natural gas rate decrease was driven by the approximate $16.0 million year-over-year negative impact of decoupling refunds to and collections from customers. In 2015 rates, WPS refunded approximately $8.0 million to customers related to 2013 decoupling over-collections compared with recovering approximately $8.0 million from customers in 2014 rates related to 2012 decoupling under-collections. Absent the adjustment for decoupling refunds to and collections from customers, WPS would have realized a retail natural gas rate increase.



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2015 Michigan Rate Order

In October 2014, WPS initiated a rate proceeding with the MPSC. In April 2015, the MPSC issued a final written order for WPS, effective April 24, 2015, approving a settlement agreement. The order authorized a retail electric rate increase of $4.0 million to be implemented over three years to recover costs for the 2013 acquisition of the Fox Energy Center as well as other capital investments associated with the Crane Creek wind farm and environmental upgrades at generation plants. The rates reflect a 10.2% ROE and a common equity component average of 50.48% . The increase reflects the continued deferral of costs associated with the Fox Energy Center until the second anniversary of the order. The increase also reflects the deferral of Weston Unit 3 ReACT™ environmental project costs. On the second anniversary of the order, WPS will discontinue the deferral of Fox Energy Center costs and will begin amortizing this deferral along with the deferral associated with the termination of a tolling agreement related to the Fox Energy Center. WPS also received approval from the MPSC to defer and amortize the undepreciated book value of the retired plant associated with Pulliam Units 5 and 6 and Weston Unit 1 starting with the actual retirement date, June 1, 2015, and concluding by 2023. Lastly, WPS will not seek an increase to retail electric base rates that would become effective prior to January 1, 2018.

The Peoples Gas Light and Coke Company and North Shore Gas Company

Base Rate Freeze

In June 2015, the ICC approved the acquisition of Integrys subject to the condition that PGL and NSG will not seek increases of their base rates that would become effective earlier than two years after the close of the acquisition.

Illinois Investigations

In March 2015, the ICC opened a docket, naming PGL as respondent, to investigate the veracity of certain allegations included in anonymous letters that the ICC staff received regarding the AMRP. The Illinois Attorney General’s office is also conducting an inquiry into the same allegations. Since the investigations are ongoing, it is too early to determine what effect, if any, the investigations will have on the AMRP. In July 2015, we engaged a nationally recognized engineering and construction firm to conduct an independent, bottom up review of the AMRP's long-term cost, scope, and schedule. We filed the results of that review with the ICC on November 30, 2015.

In November 2015, the ICC initiated an investigation into whether we, PGL, or Integrys knowingly misled or withheld material information from the ICC at its open meeting on May 20, 2015. The investigation relates to the ICC Staff's presentation of the independent audit findings reached for the AMRP. The Illinois Attorney General’s office is conducting an inquiry into this matter as well. It is too early to estimate the outcome of these inquiries since they are still ongoing.

In December 2015, the ICC ordered a series of stakeholder workshops to evaluate the AMRP. This ICC action does not impact PGL's ongoing work to modernize and maintain the safety of its natural gas distribution system, but it instead provides the ICC with an opportunity to analyze long-term elements of the program through the stakeholder workshops. The workshops are expected to result in an ICC order with final and binding recommendations for the AMRP. Since the workshops only commenced in January 2016, we are currently unable to determine what, if any, long-term impact there will be on the AMRP.

2015 Illinois Rate Order

In February 2014, PGL and NSG initiated a rate proceeding with the ICC. In January 2015, the ICC issued a final written order for PGL and NSG, effective January 28, 2015. The order authorized a retail natural gas rate increase of $74.8 million for PGL and $3.7 million for NSG. In February 2015, the ICC issued an amendatory order that revised the increases to $71.1 million for PGL and $3.5 million for NSG, effective February 26, 2015, to reflect the extension of bonus depreciation in 2014. The rates for PGL reflect a 9.05% ROE and a common equity component average of 50.33% . The rates for NSG reflect a 9.05% ROE and a common equity component average of 50.48% . The rate order allowed PGL and NSG to continue the use of their decoupling mechanisms and uncollectible expense true-up mechanisms. In addition, PGL recovers a return on certain investments and depreciation expense through the qualifying infrastructure plant rider, and accordingly, such costs are not subject to PGL's rate order. In February 2015, the Attorney General and certain intervenors filed requests for rehearing on certain issues, which the ICC denied in March 2015. No appeals were filed related to the rehearing requests.



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Minnesota Energy Resources Corporation

2016 Minnesota Rate Case

In September 2015, MERC initiated a rate proceeding with the MPUC to increase retail natural gas rates $14.8 million ( 5.5% ). MERC's request reflects a 10.3% ROE and a common equity component average of 50.32% . The proposed retail natural gas rate increase is primarily driven by higher construction and capital expenditures, general inflation, and improvements to customer service programs. The request also includes increases in costs related to the acquisition of Alliant Energy Corporation's Minnesota natural gas operations in April 2015. MERC is requesting authority from the MPUC to continue the use of its currently authorized decoupling mechanism.

In November 2015, the MPUC approved an interim rate order, effective January 1, 2016, authorizing a retail natural gas rate increase for MERC of $9.7 million ( 3.7% ). The interim rates reflect a 9.35% ROE and a common equity component average of 50.32% . The interim rate increase is subject to refund pending the final rate order.

2015 Minnesota Rate Case

In September 2013, MERC initiated a rate proceeding with the MPUC. In October 2014, the MPUC issued a final written order for MERC, effective April 1, 2015. The order authorized a retail natural gas rate increase of $7.6 million . The rates reflect a 9.35% ROE and a common equity component average of 50.31% . The order approved a deferral of customer billing system costs, for which recovery will be requested in a future rate case. A decoupling mechanism with a 10% cap remains in effect for MERC's residential and small commercial and industrial customers. The final approved rate increase was lower than the interim rates collected from customers during 2014. Therefore, MERC refunded $4.7 million to customers in 2015.

Michigan Gas Utilities Corporation

2016 Michigan Rate Order

In June 2015, MGU initiated a rate proceeding with the MPSC. In December 2015, the MPSC issued a final written order, approving a settlement agreement for MGU. The order, which reflects a 9.9% ROE and a common equity component average of 52.0% , authorized a retail natural gas rate increase of $3.4 million ( 2.4% ), effective January 1, 2016. Based on the settlement agreement, MGU discontinued the use of its decoupling mechanism after December 31, 2015. In addition, since bonus depreciation is in effect in 2016, MGU is required to establish a regulatory liability for the resulting cost savings and must refund the liability in its next general rate case.

NOTE 23— MICHIGAN SETTLEMENT

In March 2015, we entered into an Amended and Restated Settlement Agreement with the Attorney General of the State of Michigan, the Staff of the MPSC, Tilden Mining Company, and Empire Iron Mining Partnership (Amended Agreement) to resolve all objections these parties raised with the MPSC related to our acquisition of Integrys. The agreement includes the following provisions:


•	The parties to the Amended Agreement agree that the acquisition satisfies the applicable requirements under Michigan law and should be approved by the MPSC.

•

Wisconsin Electric will not enter into an SSR agreement for the operation of PIPP so long as both mines, if operational, remain full requirements customers of Wisconsin Electric until the earlier of: (a) the date a new, clean generation plant located in the Upper Peninsula of Michigan commences commercial operation; or (b) December 31, 2019. The prior SSR agreement was terminated effective February 1, 2015, with the return of the mines as full requirements customers.


•	We commit to invest, either through an ownership interest or a purchased power agreement, or to have, if formed, our future Michigan jurisdictional utility invest, in a plant subject to the issuance of a Certificate of Necessity from the MPSC. The costs of this plant would be recovered from Michigan customers.

In addition, in March 2015, Wisconsin Electric entered into a special contract with each of the mines to provide full requirements electric service through December 31, 2019.



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In April 2015, the MPSC approved our acquisition of Integrys, the Amended Agreement, and the special contracts with the two mines.

NOTE 24— SEGMENT INFORMATION

During the third quarter of 2015, following the acquisition of Integrys, we reorganized our business segments to reflect our new internal organization and management structure. All prior period amounts impacted by this change were reclassified to conform to the new presentation. We use operating income to measure segment profitability and to allocate resources to our businesses. At December 31, 2015 , we reported six segments, which are described below.


•	The Wisconsin segment includes the electric and natural gas utility and non-utility operations of Wisconsin Electric, Wisconsin Gas, and WPS, including Wisconsin Electric's electric and WPS's electric and natural gas operations in the state of Michigan.


•	The Illinois segment includes the natural gas utility and non-utility operations of NSG and PGL.


•	The other states segment includes the natural gas utility and non-utility operations of MERC and MGU.


•	The electric transmission segment includes our approximate 60% ownership interest in ATC, a federally regulated electric transmission company.


•	The We Power segment includes our nonregulated entity that owns and leases generating facilities to Wisconsin Electric.


•	The corporate and other segment includes the operations of the WEC Energy Group holding company, the Integrys holding company, the PELLC holding company, Wispark, Bostco, Wisvest, WECC, WBS, PDL, and ITF.

All of our operations and assets are located within the United States. The following tables show summarized financial information concerning our reportable segments for the years ended December 31, 2015 , 2014 , and 2013 .



	Regulated Operations
2015 (in millions)	Wisconsin		Illinois		Other States		Electric Transmission		Total Regulated Operations		We Power		Corporate and Other			Reconciling Eliminations			WEC Energy Group Consolidated
External revenues	$	5,186.1	$	503.4	$	149.3	$	—	$	5,838.8	$	40.0	$	47.3		$	—		$	5,926.1
Intersegment revenues	5.0		—		—		—		5.0		405.2		—			(410.2		)	—
Other operation and maintenance	1,741.0		219.6		50.0		—		2,010.6		4.3		103.7			(409.3		)	1,709.3
Depreciation and amortization	408.6		63.3		10.0		—		481.9		67.5		12.4			—			561.8
Operating income (loss)	884.2		78.1		6.0		—		968.3		373.4		(91.2		)	—			1,250.5
Equity in earnings of transmission affiliate	—		—		—		96.1		96.1		—		—			—			96.1
Interest expense	157.1		19.9		5.1		—		182.1		63.4		91.0			(5.1		)	331.4
Capital expenditures	950.3		194.4		34.7		—		1,179.4		53.4		33.4			—			1,266.2
Total assets *	21,113.5		5,462.9		918.0		1,381.0		28,875.4		2,779.0		1,132.5			(3,431.7		)	29,355.2


*	Total assets at December 31, 2015 reflect an elimination of $2,105.3 million for all PTF activity between We Power and Wisconsin Electric.



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	Regulated Operations
2014 (in millions)	Wisconsin		Illinois		Other States		Electric Transmission		Total Regulated Operations		We Power		Corporate and Other			Reconciling Eliminations			WEC Energy Group Consolidated
External revenues	$	4,932.1	$	—	$	—	$	—	$	4,932.1	$	55.7	$	9.3		$	—		$	4,997.1
Intersegment revenues	9.2		—		—		—		9.2		383.4		—			(392.6		)	—
Other operation and maintenance	1,462.7		—		—		—		1,462.7		4.4		33.0			(387.7		)	1,112.4
Depreciation and amortization	323.2		—		—		—		323.2		66.7		1.5			—			391.4
Operating income (loss)	770.2		—		—		—		770.2		368.0		(26.1		)	—			1,112.1
Equity in earnings of transmission affiliate	—		—		—		66.0		66.0		—		—			—			66.0
Interest expense	127.6		—		—		—		127.6		64.6		48.8			(0.7		)	240.3
Capital expenditures	715.0		—		—		—		715.0		41.0		5.2			—			761.2
Total assets *	14,403.8		—		—		424.1		14,827.9		2,789.9		253.3			(2,966.1		)	14,905.0


*	Total assets at December 31, 2014 reflect an elimination of $2,172.9 million for all PTF activity between We Power and Wisconsin Electric.



	Regulated Operations
2013 (in millions)	Wisconsin		Illinois		Other States		Electric Transmission		Total Regulated Operations		We Power		Corporate and Other			Reconciling Eliminations			WEC Energy Group Consolidated
External revenues	$	4,451.9	$	—	$	—	$	—	$	4,451.9	$	56.6	$	10.5		$	—		$	4,519.0
Intersegment revenues	10.1		—		—		—		10.1		380.9		—			(391.0		)	—
Other operation and maintenance	1,522.0		—		—		—		1,522.0		4.6		14.2			(385.8		)	1,155.0
Depreciation and amortization	272.2		—		—		—		272.2		66.3		1.6			—			340.1
Operating income	719.4		—		—		—		719.4		366.6		(5.9		)	—			1,080.1
Equity in earnings of transmission affiliate	—		—		—		68.5		68.5		—		—			—			68.5
Interest expense	135.0		—		—		—		135.0		65.7		50.8			(0.6		)	250.9
Capital expenditures	695.7		—		—		—		695.7		25.8		3.7			—			725.2
Total assets *	13,934.6		—		—		402.7		14,337.3		2,814.6		213.6			(2,922.3		)	14,443.2


*	Total assets at December 31, 2013 reflect an elimination of $2,231.2 million for all PTF activity between We Power and Wisconsin Electric.

NOTE 25— QUARTERLY FINANCIAL INFORMATION (Unaudited)



(in millions, except per share amounts)	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2015
Operating revenues	$	1,387.9	$	991.2	$	1,698.7	$	1,848.3	$	5,926.1
Operating income	358.8		165.8		345.7		380.2		1,250.5
Net income attributed to common shareholders	195.8		80.9		182.5		179.3		638.5
Earnings per share *
Basic	$	0.87	$	0.36	$	0.58	$	0.57	$	2.36
Diluted	0.86		0.35		0.58		0.57		2.34

2014
Operating revenues	$	1,695.0	$	1,043.7	$	1,033.3	$	1,225.1	$	4,997.1
Operating income	381.8		240.7		246.1		243.5		1,112.1
Net income attributed to common shareholders	207.6		133.0		126.3		121.4		588.3
Earnings per share *
Basic	$	0.92	$	0.59	$	0.56	$	0.54	$	2.61
Diluted	0.91		0.58		0.56		0.53		2.59


*	Earnings per share for the individual quarters do not total the year ended earnings per share amount because of changes to the average number of shares outstanding and changes in incremental issuable shares throughout the year.



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Due to various factors, including the acquisition of Integrys on June 29, 2015, the quarterly results of operations are not necessarily comparable.

NOTE 26— NEW ACCOUNTING PRONOUNCEMENTS

Revenue Recognition

In May 2014, the FASB and the International Accounting Standards Board issued their joint revenue recognition standard, ASU 2014-09, Revenue from Contracts with Customers. This guidance is effective for fiscal years and interim periods beginning after December 15, 2017, and can either be applied retrospectively or as a cumulative-effect adjustment as of the date of adoption. We are currently assessing the effects this guidance may have on our financial statements.

Classification and Measurement of Financial Instruments

In January 2016, the FASB issued ASU 2016-01, Classification and Measurement of Financial Assets and Liabilities. This guidance is effective for fiscal years and interim periods beginning after December 15, 2017, and will be recorded with a cumulative-effect adjustment to beginning retained earnings as of the beginning of the fiscal year in which the guidance is effective. We are currently assessing the effects this guidance may have on our financial statements.

Leases

In February 2016, the FASB issued ASU 2016-02, Leases. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We are currently assessing the effects this guidance may have on our financial statements.



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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon such evaluation, our principal executive officer and principal financial officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective (i) in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and (ii) to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our and our subsidiaries' internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its evaluation, our management concluded that our and our subsidiaries' internal control over financial reporting was effective as of December 31, 2015 .

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the fourth quarter of 2015 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On June 29, 2015, our acquisition of Integrys closed. We are currently in the process of integrating and aligning the operations, processes, and internal controls of the combined company. See Note 2, Acquisition, for more information regarding the acquisition.

Report of Independent Registered Public Accounting Firm

For Deloitte & Touche LLP's Report of Independent Registered Public Accounting Firm, attesting to the effectiveness of our internal controls over financial reporting, see Section A of Item 8.

ITEM 9B. OTHER INFORMATION

None.



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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE OF THE REGISTRANT

The information under "Proposal 1: Election of Directors – Terms Expiring in 2017", "Section 16(a) Beneficial Ownership Reporting Compliance", "Corporate Governance – Stockholder Nominees and Proposals – What is the process used to identify director nominees and how do I recommend a nominee to the Corporate Governance Committee?", "Corporate Governance – Board Committees – Are the Audit and Oversight, Corporate Governance and Compensation Committees comprised solely of independent directors?", "Corporate Governance – Board Committees – Are all the members of the Audit Committee financially literate and does the committee have an 'audit committee financial expert'?" and "Committees of the Board of Directors – Audit and Oversight" in our Definitive Proxy Statement on Schedule 14A to be filed with the SEC for our Annual Meeting of Stockholders to be held May 5, 2016 (the " 2016 Annual Meeting Proxy Statement") is incorporated herein by reference. Also see "Executive Officers of the Registrant" in Part I of this report.

We have adopted a written code of ethics, referred to as our Code of Business Conduct, that all of our directors, executive officers and employees, including the principal executive officer, principal financial officer, and principal accounting officer, must comply with. We have posted our Code of Business Conduct on our website, www.wecenergygroup.com. We have not provided any waiver to the Code for any director, executive officer, or other employee. Any amendments to, or waivers for directors and executive officers from, the Code of Business Conduct will be disclosed on our website or in a current report on Form 8-K.

Our website, www.wecenergygroup.com, also contains our Corporate Governance Guidelines and the charters of our Audit and Oversight, Corporate Governance and Compensation Committees.

Our Code of Business Conduct, Corporate Governance Guidelines and committee charters are also available without charge to any stockholder of record or beneficial owner of our common stock by writing to the corporate secretary, Susan H. Martin, at our principal business office, 231 West Michigan Street, P.O. Box 1331, Milwaukee, Wisconsin 53201.

ITEM 11. EXECUTIVE COMPENSATION

The information under "Compensation Discussion and Analysis", "Executive Compensation Tables", "Director Compensation", "Committees of the Board of Directors – Compensation", "Compensation Committee Report", "Risk Analysis of Compensation Policies and Practices" and "Certain Relationships and Related Transactions – Compensation Committee Interlocks and Insider Participation" in the 2016 Annual Meeting Proxy Statement is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The security ownership information called for by Item 12 of Form 10-K is incorporated herein by reference to this information included under "WEC Energy Group Common Stock Ownership" in the 2016 Annual Meeting Proxy Statement.



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Equity Compensation Plan Information

The following table sets forth information about our equity compensation plans as of December 31, 2015 :



Plan Type	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights (a)	Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights (b)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Shares Reflected in Column (a)) (c)
Equity Compensation Plans Approved by Security Holders	5,984,664	$	33.47	29,592,644	*
Equity Compensation Plans Not Approved by Security Holders	N/A	N/A		N/A
Total	5,984,664	$	33.47	29,592,644


*	Includes shares available for future issuance under our 1993 Omnibus Stock Incentive Plan, amended and restated effective May 5, 2011, all of which could be granted as awards of stock options, stock appreciation rights, performance units, restricted stock, or other stock based awards.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information under "Corporate Governance – Board Independence – Who are the independent directors?", "Corporate Governance – Board Independence – What are the Board's standards of independence?", "Corporate Governance – Board Committees – Are the Audit and Oversight, Corporate Governance and Compensation Committees comprised solely of independent directors?", "Corporate Governance: Does the Company have policies and procedures in place to review and approve related party transactions?" and "Certain Relationships and Related Transactions" in the 2016 Annual Meeting Proxy Statement is incorporated herein by reference. A full description of the guidelines our Board uses to determine director independence is located in Appendix A of our Corporate Governance Guidelines, which can be found on our website, www.wecenergygroup.com.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information regarding the fees paid to, and services performed by, our independent auditors and the pre-approval policy of our audit and oversight committee under "Independent Auditors' Fees and Services" in the 2016 Annual Meeting Proxy Statement is incorporated herein by reference.



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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES



1.	Financial Statements and Reports of Independent Registered Public Accounting Firm Included in Part II of This Report

	Description	Page in 10-K

	Reports of Independent Registered Public Accounting Firm.	65

	Consolidated Income Statements for the three years ended December 31, 2015, 2014, and 2013.	67

	Consolidated Statements of Comprehensive Income for the three years ended December 31, 2015, 2014, and 2013.	68

	Consolidated Balance Sheets at December 31, 2015 and 2014.	69

	Consolidated Statements of Cash Flows for the three years ended December 31, 2015, 2014, and 2013.	70

	Consolidated Statements of Equity for the three years ended December 31, 2015, 2014, and 2013.	71

	Consolidated Statements of Capitalization at December 31, 2015 and 2014.	72

	Notes to Consolidated Financial Statements.	74

2.	Financial Statement Schedules Included in Part IV of This Report

	Schedule I, Condensed Parent Company Financial Statements, including Income Statements, Statements of Comprehensive Income, and Statements of Cash Flows for the three years ended December 31, 2015, 2014, and 2013 and Balance Sheets as of December 31, 2015 and 2014.	128

	Schedule II, Valuation and Qualifying Accounts, for the three years ended December 31, 2015, 2014, and 2013.	134

	Other schedules are omitted because of the absence of conditions under which they are required or because the required information is given in the financial statements or notes thereto.

3.	Exhibits and Exhibit Index

	See the Exhibit Index included as the last part of this report, which is incorporated herein by reference. Each management contract and compensatory plan or arrangement required to be filed as an exhibit to this report is identified in the Exhibit Index by two asterisks (**) following the description of the exhibit.	137



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SCHEDULE I – CONDENSED

PARENT COMPANY FINANCIAL STATEMENTS

WEC ENERGY GROUP, INC. (PARENT COMPANY ONLY)

A. INCOME STATEMENTS



Year Ended December 31
(in millions)	2015		2014		2013
Operating expenses	$	42.2	$	26.8	$	5.5
Equity earnings from subsidiaries	695.7		635.0		607.8
Other income, net	23.2		2.8		3.1
Interest expense	71.2		53.1		54.4
Income before income taxes	605.5		557.9		551.0
Income tax benefit	33.0		30.4		26.4
Net income attributed to common shareholders	$	638.5	$	588.3	$	577.4

The accompanying Notes to Condensed Parent Company Financial Statements are an integral part of these financial statements.



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B. STATEMENTS OF COMPREHENSIVE INCOME



Year Ended December 31
(in millions)	2015			2014		2013
Net income attributed to common shareholders	$	638.5		$	588.3	$	577.4

Other comprehensive income, net of tax
Derivatives accounted for as cash flow hedges
Gains on settlement, net of tax of $7.6	11.4			—		—
Reclassification of gains to net income, net of tax	(0.8		)	—		—
Cash flow hedges, net	10.6			—		—

Defined benefit plans
Pension and OPEB costs arising during period, net of tax of $1.0	(1.5		)	—		—

Other comprehensive loss from subsidiaries, net of tax	(4.8		)	—		—

Other comprehensive income, net of tax	4.3			—		—

Comprehensive income attributed to common shareholders	$	642.8		$	588.3	$	577.4

The accompanying Notes to Condensed Parent Company Financial Statements are an integral part of these financial statements.



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C. BALANCE SHEETS



At December 31
(in millions)	2015		2014
Assets
Current assets
Cash and cash equivalents	$	1.3	$	37.3
Accounts receivable from related parties	13.2		5.6
Notes receivable from related parties	123.2		32.2
Prepaid taxes and other	2.2		103.4
Total current assets	139.9		178.5

Investments in subsidiaries	10,792.6		4,917.8
Other long-term assets	254.0		280.7
Total long-term assets	11,046.6		5,198.5
Total assets	$	11,186.5	$	5,377.0

Liabilities and equity
Current liabilities
Short-term debt	$	307.9	$	—
Accounts payable to related parties	1.7		2.6
Notes payable to related parties	119.0		117.2
Accrued taxes	75.6		—
Other	17.5		19.8
Total current liabilities	521.7		139.6

Long-term debt	1,887.2		695.5
Other long-term liabilities	122.8		122.2
Total long-term liabilities	2,010.0		817.7
Shareholders' equity	8,654.8		4,419.7
Total liabilities and shareholders' equity	$	11,186.5	$	5,377.0

The accompanying notes to Condensed Parent Company Financial Statements are an integral part of these financial statements.



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D. STATEMENTS OF CASH FLOWS



Year Ended December 31
(in millions)	2015			2014			2013
Operating activities
Net income attributed to common shareholders	$	638.5		$	588.3		$	577.4
Reconciliation to net cash provided by operating activities
Equity earnings from subsidiaries	(695.7		)	(635.0		)	(607.8		)
Dividends from subsidiaries	538.8			720.0			720.4
Deferred income taxes	30.9			60.1			(7.8		)
Accrued income taxes, net	175.7			4.1			66.8
Change in – other current assets	(9.3		)	(0.3		)	(2.8		)
Change in – other current liabilities	(3.2		)	5.1			(22.9		)
Other, net	(18.4		)	(8.1		)	(21.6		)
Net cash provided by operating activities	657.3			734.2			701.7

Investing activities
Business acquisition	(1,486.2		)	—			—
Proceeds from asset sales	20.8			—			—
Capital contributions to subsidiaries	(135.3		)	(225.5		)	(195.3		)
Change in short-term notes receivable from related parties	(91.0		)	—			—
Other, net	(0.1		)	5.0			4.0
Net cash used for investing activities	(1,691.8		)	(220.5		)	(191.3		)

Financing activities
Exercise of stock options	30.1			50.3			48.5
Purchase of common stock	(74.7		)	(123.2		)	(223.4		)
Dividends paid on common stock	(455.4		)	(352.0		)	(328.9		)
Issuance of long-term debt	1,200.0			—			—
Change in short-term debt	307.9			(72.0		)	5.0
Change in short-term notes payable to related parties	1.8			3.5			(26.8		)
Other, net	(11.2		)	16.7			14.6
Net cash provided by (used for) financing activities	998.5			(476.7		)	(511.0		)

Net change in cash and cash equivalents	(36.0		)	37.0			(0.6		)
Cash and cash equivalents at beginning of year	37.3			0.3			0.9
Cash and cash equivalents at end of year	$	1.3		$	37.3		$	0.3

The accompanying Notes to Condensed Parent Company Financial Statements are an integral part of these financial statements.



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SCHEDULE I –CONDENSED

PARENT COMPANY FINANCIAL STATEMENTS

WEC ENERGY GROUP, INC. (PARENT COMPANY ONLY)

E. NOTES TO PARENT COMPANY FINANCIAL STATEMENTS

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

For Parent Company only presentation, investments in subsidiaries are accounted for using the equity method. The condensed Parent Company financial statements and notes should be read in conjunction with the consolidated financial statements and notes of WEC Energy Group, Inc. appearing in this Annual Report on Form 10-K.

NOTE 2—CASH DIVIDENDS RECEIVED FROM SUBSIDIARIES

Dividends received from our subsidiaries during the years ended December 31, were as follows:



(in millions)	2015		2014		2013
Wisconsin Electric	$	240.0	$	390.0	$	340.0
Wisconsin Gas	30.0		33.0		33.0
We Power	262.8		297.0		347.4
ATC Holding LLC	6.0		—		—
Total	$	538.8	$	720.0	$	720.4

NOTE 3—LONG-TERM DEBT

The following table shows the future maturities of our long-term debt outstanding as of December 31, 2015 :



(in millions)
2018	$	300.0
2020	400.0
Thereafter	1,200.0
Total	$	1,900.0

WECC is our subsidiary and has $50.0 million of long-term notes outstanding. In a Support Agreement between us and WECC, we agreed to make sufficient liquid asset contributions to WECC to permit WECC to service its debt obligations as they become due.

The following table shows the financial instruments included on our balance sheets that are not recorded at fair value at December 31 :



	2015				2014
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt	$	1,887.2	$	1,900.7	$	695.5	$	770.0

The carrying value of cash and cash equivalents, net accounts receivable, accounts payable, and short-term borrowings approximates fair value due to the short-term nature of these instruments. The fair value of our long-term debt is estimated based upon the quoted market value for the same or similar issues or upon the quoted market prices of U.S. Treasury issues having a similar term to maturity, adjusted for our bond rating and the present value of future cash flows.

NOTE 4—SUPPLEMENTAL CASH FLOW INFORMATION



(in millions)	2015		2014		2013
Cash paid for interest	$	68.8	$	44.4	$	44.4
Cash received from income tax refunds	242.9		95.1		86.1



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NOTE 5—SHORT-TERM NOTES RECEIVABLE – RELATED PARTIES

The following table shows our outstanding short-term notes receivable from related parties as of December 31:



(in millions)	2015		2014
Integrys	$	95.1	$	—
Bostco	19.6		22.4
Wispark	8.5		9.8
Total	$	123.2	$	32.2

NOTE 6—SHORT-TERM NOTES PAYABLE – RELATED PARTIES

The following table shows our outstanding short-term notes payable to related parties as of December 31:



(in millions)	2015		2014
WECC	$	108.4	$	106.6
Wisvest	10.6		10.6
Total	$	119.0	$	117.2



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SCHEDULE II

WEC ENERGY GROUP, INC.

VALUATION AND QUALIFYING ACCOUNTS



Allowance for Doubtful Accounts (in millions)	Balance at Beginning of the Period		Acquisitions of Businesses	Expense ⁽¹⁾	Deferral	Net Write-offs ⁽²⁾		Balance at End of the Period
December 31, 2015	$	74.5	54.3	56.7	8.2	(80.4	)	$	113.3
December 31, 2014	$	61.0	—	49.8	18.4	(54.7	)	$	74.5
December 31, 2013	$	58.0	—	49.4	0.4	(46.8	)	$	61.0


⁽¹⁾	Net of recoveries


⁽²⁾	Represents amounts written off to the reserve, net of adjustments to regulatory assets.



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.



		WEC ENERGY GROUP, INC.

	By	/s/GALE E. KLAPPA
Date:	February 26, 2016	Gale E. Klappa, Chairman of the Board and
		Chief Executive Officer



2015 Form 10-K	135	WEC Energy Group, Inc.

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



/s/GALE E. KLAPPA		February 26, 2016
Gale E. Klappa, Chairman of the Board, Chief Executive
Officer and Director -- Principal Executive Officer

/s/J. PATRICK KEYES		February 26, 2016
J. Patrick Keyes, Executive Vice President and Chief
Financial Officer -- Principal Financial Officer

/s/WILLIAM J. GUC		February 26, 2016
William J. Guc, Vice President and
Controller -- Principal Accounting Officer

/s/JOHN F. BERGSTROM		February 26, 2016
John F. Bergstrom, Director

/s/BARBARA L. BOWLES		February 26, 2016
Barbara L. Bowles, Director

/s/WILLIAM J. BRODSKY		February 26, 2016
William J. Brodsky, Director

/s/ALBERT J. BUDNEY, JR.		February 26, 2016
Albert J. Budney, Jr., Director

/s/PATRICIA W. CHADWICK		February 26, 2016
Patricia W. Chadwick, Director

/s/CURT S. CULVER		February 26, 2016
Curt S. Culver, Director

/s/THOMAS J. FISCHER		February 26, 2016
Thomas J. Fischer, Director

/s/PAUL W. JONES		February 26, 2016
Paul W. Jones, Director

/s/HENRY W. KNUEPPEL		February 26, 2016
Henry W. Knueppel, Director

/s/ALLEN L. LEVERETT		February 26, 2016
Allen L. Leverett, Director

/s/ULICE PAYNE, JR.		February 26, 2016
Ulice Payne, Jr., Director

/s/MARY ELLEN STANEK		February 26, 2016
Mary Ellen Stanek, Director



2015 Form 10-K	136	WEC Energy Group, Inc.

Table of Contents

WEC ENERGY GROUP, INC.

(Commission File No. 001-09057)

EXHIBIT INDEX

Annual Report on Form 10-K

For the year ended December 31, 2015

The following exhibits are filed or furnished with or incorporated by reference in the report with respect to WEC Energy Group. (An asterisk (*) indicates incorporation by reference pursuant to Exchange Act Rule 12b-32.)



Number	Exhibit
2	Plan of Acquisition, Reorganization, Arrangement, Liquidation, or Succession

	2.1*	Agreement and Plan of Merger, dated as of June 22, 2014, by and between Wisconsin Energy Corporation (n/k/a WEC Energy Group, Inc.) and Integrys Energy Group, Inc. (Exhibit 2.1 to Wisconsin Energy Corporation's 06/22/14 Form 8-K.)

	2.2*	Stock Purchase Agreement, dated as of July 29, 2014, between Integrys Energy Group, Inc. and Exelon Generation Company, LLC., as amended on October 31, 2014. (Exhibit 2 under File No. 1-11337, Integrys Energy Group's 09/30/2014 Form 10-Q.)

3	Articles of Incorporation and By-laws

	3.1*	Articles of Amendment to the Restated Articles of Incorporation of WEC Energy Group, Inc., as amended. (Exhibit 3.1 to WEC Energy Group's 06/29/2015 Form 8-K.)

	3.2*	Bylaws of WEC Energy Group, Inc., as amended to June 29, 2015. (Exhibit 3.2 to WEC Energy Group's 06/29/2015 Form 8-K.)

	3.3*	Amendment to the Bylaws of WEC Energy Group (Exhibit 3.1 to WEC Energy Group's 1/27/16 Form 8-K.)

4	Instruments defining the rights of security holders, including indentures

	4.1*	Reference is made to Article III of the Restated Articles of Incorporation and the Bylaws of WEC Energy Group, Inc. (Exhibits 3.1 and 3.2 herein.)

	4.2*	Replacement Capital Covenant, dated May 11, 2007, by Wisconsin Energy Corporation for the benefit of certain debtholders named therein. (Exhibit 4.2 to Wisconsin Energy Corporation's 05/08/07 Form 8-K.)

	4.3*	Amendment to Replacement Capital Covenant, dated as of June 29, 2015. (Exhibit 4.1 to Wisconsin Energy Corporation's 06/29/2015 Form 8-K.)

	Indentures and Securities Resolutions:

	4.4*	Indenture for Debt Securities of Wisconsin Electric Power Company (the "Wisconsin Electric Indenture"), dated December 1, 1995. (Exhibit (4)-1 under File No. 1-1245, Wisconsin Electric's 12/31/95 Form 10-K.)

	4.5*	Securities Resolution No. 1 of Wisconsin Electric under the Wisconsin Electric Indenture, dated December 5, 1995. (Exhibit (4)-2 under File No. 1-1245, Wisconsin Electric's 12/31/95 Form 10-K.)

	4.6*	Securities Resolution No. 3 of Wisconsin Electric under the Wisconsin Electric Indenture, dated May 27, 1998. (Exhibit (4)-1 under File No. 1-1245, Wisconsin Electric’s 06/30/98 Form 10-Q.)

	4.7*	Securities Resolution No. 5 of Wisconsin Electric under the Wisconsin Electric Indenture, dated as of May 1, 2003. (Exhibit 4.47 filed with Post-Effective Amendment No. 1 to Wisconsin Electric's Registration Statement on Form S-3 (File No. 333-101054), filed May 6, 2003.)

	4.8*	Securities Resolution No. 7 of Wisconsin Electric under the Wisconsin Electric Indenture, dated as of November 2, 2006. (Exhibit 4.1 under File No. 1-1245, Wisconsin Electric's 11/02/06 Form 8-K.)



2015 Form 10-K	137	WEC Energy Group, Inc.

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Number	Exhibit

	4.9*	Securities Resolution No. 10 of Wisconsin Electric under the Wisconsin Electric Indenture, dated as of December 8, 2009. (Exhibit 4.1 under File No. 1-1245, Wisconsin Electric's 12/08/09 Form 8-K.)

	4.10*	Securities Resolution No. 11 of Wisconsin Electric under the Wisconsin Electric Indenture, dated as of September 7, 2011. (Exhibit 4.1 under File No. 1-1245, Wisconsin Electric's 09/07/11 Form 8-K.)

	4.11*	Securities Resolution No. 12 of Wisconsin Electric under the Wisconsin Electric Indenture, dated as of December 5, 2012. (Exhibit 4.1 under File No. 1-1245, Wisconsin Electric's 12/05/12 Form 8-K.)

	4.12*	Securities Resolution No. 13 of Wisconsin Electric under the Wisconsin Electric Indenture, dated as of June 10, 2013. (Exhibit 4.1 under File No. 1-1245, Wisconsin Electric's 06/10/13 Form 8-K.)

	4.13*	Securities Resolution No. 14 of Wisconsin Electric under the Wisconsin Electric Indenture, dated as of May 12, 2014. (Exhibit 4.1 under File No. 1-1245, Wisconsin Electric's 05/12/14 Form 8-K.)

	4.14*	Securities Resolution No. 15 of Wisconsin Electric under the Wisconsin Electric Indenture, dated as of May 14, 2015. (Exhibit 4.1 to Wisconsin Electric's 05/14/2015 Form 8-K.)

	4.15*	Securities Resolution No. 16 of Wisconsin Electric under the Wisconsin Electric Indenture, dated as of November 13, 2015. (Exhibit 4.1 under File No. 1-1245, Wisconsin Electric's 11/13/2015 Form 8-K.)

	4.16*	Indenture for Debt Securities of Wisconsin Energy Corporation (the "Wisconsin Energy Indenture"), dated as of March 15, 1999, between WEC Energy Group and The Bank of New York Mellon Trust Company, N.A. (as successor to First National Bank of Chicago), as Trustee. (Exhibit 4.46 to Wisconsin Energy Corporation's 03/25/99 Form 8-K.)

	4.17*	Securities Resolution No. 4 of Wisconsin Energy Corporation under the Wisconsin Energy Indenture, dated as of March 17, 2003. (Exhibit 4.12 filed with Post-Effective Amendment No. 1 to Wisconsin Energy Corporation's Registration Statement on Form S-3 (File No. 333-69592), filed March 20, 2003.)

	4.18*	Securities Resolution No. 5 of Wisconsin Energy Corporation under the Wisconsin Energy Indenture, dated as of May 8, 2007. (Exhibit 4.1 to Wisconsin Energy Corporation's 05/08/07 Form 8-K.)

	4.19*	Securities Resolution No. 6 of WEC Energy Group under the Wisconsin Energy Indenture, dated as of June 4, 2015. (Exhibit 4.1 to Wisconsin Energy Corporation's 06/04/2015 Form 8-K.)

	4.20*	Indenture, dated as of December 1, 1998, between Wisconsin Public Service Corporation ("WPS") and U.S. Bank National Association (successor to Firstar Bank Milwaukee, N.A., National Association) (Exhibit 4A to Form 8-K filed December 18, 1998); First Supplemental Indenture, dated as of December 1, 1998, between WPS and Firstar Bank Milwaukee, N.A., National Association (Exhibit 4C to Form 8-K filed December 18, 1998); Fifth Supplemental Indenture, dated as of December 1, 2006, by and between WPS and U.S. Bank National Association (Exhibit 4.1 to Form 8-K filed November 30, 2006); Seventh Supplemental Indenture, dated as of November 1, 2007, by and between WPS and U.S. Bank National Association (Exhibit 4.1 to Form 8-K filed November 16, 2007); Ninth Supplemental Indenture, dated as of December 1, 2012, by and between WPS and U.S. Bank National Association (Exhibit 4.1 to Form 8-K filed November 29, 2012); Tenth Supplemental Indenture, dated as of November 1, 2013, by and between WPS and U.S. Bank Nation Association (Exhibit 4.1 to Form 8-K filed November 18, 2013); Eleventh Supplemental Indenture, dated as of December 4, 2015, by and between WPS and U.S. Bank National Association (Exhibit 4.1 to Form 8-K filed December 4, 2015) All references to periodic reports are to those of WPS (File No. 1-3016).

		Certain agreements and instruments with respect to unregistered long-term debt not exceeding 10 percent of the total assets of the Registrant and its subsidiaries on a consolidated basis have been omitted as permitted by related instructions. The Registrant agrees pursuant to Item 601(b)(4) of Regulation S-K to furnish to the Securities and Exchange Commission, upon request, a copy of all such agreements and instruments.


10	Material Contracts

	10.1	WEC Energy Group Supplemental Pension Plan, Amended and Restated Effective as of January 1, 2016.** See Note.

	10.2	Legacy Wisconsin Energy Corporation Executive Deferred Compensation Plan, Amended and Restated as of January 1, 2016.** See Note.



2015 Form 10-K	138	WEC Energy Group, Inc.

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Number	Exhibit

	10.3	WEC Energy Group Executive Deferred Compensation Plan, Amended and Restated Effective as of January 1, 2016.** See Note.

	10.4*	Directors' Deferred Compensation Plan of Wisconsin Energy Corporation, as amended and restated as of May 1, 2004 (the "Legacy DDCP"). (Exhibit 10.3 to Wisconsin Energy Corporation's 06/30/04 Form 10-Q.)** See Note.

	10.5*	First Amendment to the Legacy DDCP, effective as of January 1, 2005. (Exhibit 10.15 to Wisconsin Energy Corporation's 12/31/08 Form 10-K.)** See Note.

	10.6	WEC Energy Group Directors' Deferred Compensation Plan, Amended and Restated Effective as of January 1, 2016. ** See Note.

	10.7	WEC Energy Group Non-Qualified Retirement Savings Plan, Amended and Restated Effective as of January 1, 2016.** See Note.

	10.8*	Wisconsin Energy Corporation Death Benefit Only Plan, as amended and restated as of July 22, 2010. (Exhibit 10.1 to Wisconsin Energy Corporation's 09/30/10 Form 10-Q.) ** See Note.

	10.9*	WEC Energy Group Short-Term Performance Plan, as amended and restated effective as of January 1, 2016. (Exhibit 10.2 to WEC Energy Group's 12/3/15 Form 8-K.)** See Note.

	10.10*	Wisconsin Energy Corporation Amended and Restated Executive Severance Policy, effective as of January 1, 2008. (Exhibit 10.18 to Wisconsin Energy Corporation's 12/31/08 Form 10-K.)** See Note.

	10.11*	Wisconsin Energy Corporation 2014 Rabbi Trust by and between Wisconsin Energy Corporation and The Northern Trust Company dated February 23, 2015, regarding the trust established to provide a source of funds to assist in meeting the liabilities under various nonqualified deferred compensation plans made between Wisconsin Energy Corporation or its subsidiaries and various plan participants. (Exhibit 10.13 to Wisconsin Energy Corporation's 12/31/14 Form 10K.)** See Note.

	10.12*	Amended and Restated Senior Officer Employment and Non-Compete Agreement between Wisconsin Energy Corporation and Gale E. Klappa, dated as of December 29, 2008. (Exhibit 10.25 to Wisconsin Energy Corporation's 12/31/08 Form 10-K.)** See Note.

	10.13*	Amended and Restated Senior Officer Employment and Non-Compete Agreement between Wisconsin Energy Corporation and Allen L. Leverett, dated as of December 30, 2008. (Exhibit 10.26 to Wisconsin Energy Corporation's 12/31/08 Form 10-K.)** See Note.

	10.14*	Terms of Employment for J. Patrick Keyes. (Exhibit 10.1 to Wisconsin Energy Corporation's 09/30/12 Form 10-Q.)** See Note.

	10.15*	Letter Agreement by and between Wisconsin Energy Corporation and J. Patrick Keyes, dated as of December 20, 2010. (Exhibit 10.20 to Wisconsin Energy Corporation's 12/31/12 Form 10-K.)** See Note.

	10.16*	Amendment to the Letter Agreement by and between Wisconsin Energy Corporation and J. Patrick Keyes, dated as of August 15, 2011. (Exhibit 10.21 to Wisconsin Energy Corporation's 12/31/12 Form 10-K.)** See Note.

	10.17*	Terms of Employment for Susan H. Martin. (Exhibit 10.1 to Wisconsin Energy Corporation's 03/31/12 Form 10-Q.)** See Note.

	10.18*	Letter Agreement by and between Wisconsin Energy Corporation and Robert Garvin, dated January 31, 2011. (Exhibit 10.1 to Wisconsin Energy Corporation's 03/31/11 Form 10-Q.)** See Note.

	10.19	WEC Energy Group 1993 Omnibus Stock Incentive Plan, Amended and Restated effective as of January 1, 2016** See Note.

	10.20*	2005 Terms and Conditions Governing Non-Qualified Stock Option Award under 1993 Omnibus Stock Incentive Plan. (Exhibit 10.1 to Wisconsin Energy Corporation's 12/28/04 Form 8-K.)** See Note.



2015 Form 10-K	139	WEC Energy Group, Inc.

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Number	Exhibit
	10.21*	Terms and Conditions Governing Non-Qualified Stock Option Award under the 1993 Omnibus Stock Incentive Plan. (Exhibit 10.1 to Wisconsin Energy Corporation's 09/30/07 Form 10-Q.)** See Note.

	10.22*	Terms and Conditions Governing Restricted Stock Awards under the 1993 Omnibus Stock Incentive Plan, approved December 1, 2010. (Exhibit 10.1 to Wisconsin Energy Corporation's 12/01/10 Form 8-K.)** See Note.

	10.23*	Wisconsin Energy Corporation Terms and Conditions Governing Director Restricted Stock Award under the 1993 Omnibus Stock Incentive Plan. (Exhibit 10.1 to Wisconsin Energy Corporation's 01/19/12 Form 8-K.)** See Note.

	10.24	2016 WEC Energy Group Terms and Conditions Governing Director Restricted Stock Awards under the 1993 Omnibus Stock Incentive Plan.** See Note.

	10.25*	WEC Energy Group Performance Unit Plan, amended and restated effective as of January 1, 2016. (Exhibit 10.1 to WEC Energy Group's 12/3/15 Form 8-K.)** See Note.

	10.26*	Wisconsin Energy Corporation Restricted Stock Award Terms and Conditions governing awards under the 1993 Omnibus Stock Incentive Plan, approved December 4, 2014. (Exhibit 10.2 to Wisconsin Energy Corporation's 12/04/14 Form 8-K.)** See Note.

	10.27	2016 WEC Energy Group Restricted Stock Award Terms and Conditions governing awards under the 1993 Omnibus Stock Incentive Plan.** See Note.

	10.28*	Wisconsin Energy Corporation Terms and Conditions Governing Non-Qualified Stock Option Award for option awards under the 1993 Omnibus Stock Incentive Plan, approved December 4, 2014. (Exhibit 10.3 to Wisconsin Energy Corporation's 12/04/14 Form 8-K.)** See Note.

	10.29	2016 WEC Energy Group Terms and Conditions Governing Non-Qualified Stock Option Award for option awards under the 1993 Omnibus Stock Incentive Plan.** See Note.

	10.30*	Port Washington I Facility Lease Agreement between Port Washington Generating Station, LLC, as Lessor, and Wisconsin Electric Power Company, as Lessee, dated as of May 28, 2003. (Exhibit 10.7 to Wisconsin Electric's 06/30/03 Form 10-Q (File No. 001-01245).)

	10.31*	Port Washington II Facility Lease Agreement between Port Washington Generating Station, LLC, as Lessor, and Wisconsin Electric Power Company, as Lessee, dated as of May 28, 2003. (Exhibit 10.8 to Wisconsin Electric's 06/30/03 Form 10-Q (File No. 001-01245).)

	10.32*	Elm Road I Facility Lease Agreement between Elm Road Generating Station Supercritical, LLC, as Lessor, and Wisconsin Electric Power Company, as Lessee, dated as of November 9, 2004. (Exhibit 10.56 to Wisconsin Energy Corporation's 12/31/04 Form 10-K.)

	10.33*	Elm Road II Facility Lease Agreement between Elm Road Generating Station Supercritical, LLC, as Lessor, and Wisconsin Electric Power Company, as Lessee, dated as of November 9, 2004. (Exhibit 10.57 to Wisconsin Energy Corporation's 12/31/04 Form 10-K.)

	10.34*	Point Beach Nuclear Plant Power Purchase Agreement between FPL Energy Point Beach, LLC and Wisconsin Electric Power Company, dated as of December 19, 2006 (the "PPA"). (Exhibit 10.1 to Wisconsin Energy Corporation's 03/31/08 Form 10-Q.)

	10.35*	Letter Agreement between Wisconsin Electric Power Company and FPL Energy Point Beach, LLC dated October 31, 2007, which amends the PPA. (Exhibit 10.45 to Wisconsin Energy Corporation's 12/31/07 Form 10-K.)

	10.36*	Terms and Conditions for July 31, 2015 Special Restricted Stock Award. (Exhibit 10.1 to WEC Energy Group's 6/30/15 Form 10-Q.)** See Note.

	10.37*	Integrys Energy Group, Inc. Deferred Compensation Plan, as Amended and Restated Effective January 1, 2014. (Exhibit 10.15 under File No. 1-11337, Integrys Energy Group's 12/31/13 Form 10-K.)** See Note.

	10.38*	Integrys Energy Group, Inc. Pension Restoration and Supplemental Retirement Plan, as Amended and Restated Effective January 1, 2014. (Exhibit 10.16 under File No. 1-11337, Integrys Energy Group's 12/31/13 Form 10-K.)** See Note.



2015 Form 10-K	140	WEC Energy Group, Inc.

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Number	Exhibit
	10.39*	PELLC Directors Deferred Compensation Plan as amended and restated April 7, 2004. (Exhibit 10(c) under File No. 1-5540, PELLC's 06/30/05 Form 10-Q.)** See Note.

	10.40*	Amended and Restated Trust under PELLC Directors Deferred Compensation Plan, Directors Stock and Option Plan, Executive Deferred Compensation Plan and Supplemental Retirement Benefit Plan, dated as of August 13, 2003. (Exhibit 10(a) under File No. 1-5540, PELLC's 09/30/03 Form 10-Q.)** See Note.

	10.41*	Amendment Number One to the Amended and Restated Trust under PELLC Directors Deferred Compensation Plan, Directors Stock and Option Plan, Executive Deferred Compensation Plan and Supplemental Retirement Benefit Plan, dated as of July 24, 2006. (Exhibit 10(e) under File No. 1-5540, PELLC's 09/30/06 Form 10-Q.)** See Note.

	Note: Two asterisks (**) identify management contracts and executive compensation plans or arrangements required to be filed as exhibits pursuant to Item 15(b) of Form 10-K.

21	Subsidiaries of the registrant

	21.1	Subsidiaries of WEC Energy Group.

23	Consents of experts and counsel

	23.1	Deloitte & Touche LLP – Milwaukee, WI, Consent of Independent Registered Public Accounting Firm for WEC Energy Group.

	23.2	Deloitte & Touche LLP – Milwaukee, WI, Consent of Independent Registered Public Accounting Firm for American Transmission Company.

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.

99	Additional Exhibits
	99.1	Financial Statements of American Transmission Company.

101	Interactive Data File



2015 Form 10-K	141	WEC Energy Group, Inc.

Exhibit 10.1

WEC ENERGY GROUP
SUPPLEMENTAL PENSION PLAN

Amended and Restated Effective as of January 1, 2016

Exhibit 10.1

TABLE OF CONTENTS



			Page
INTRODUCTION			1

ARTICLE 1		DEFINITIONS	2

ARTICLE 2		SERP BENEFITS	7
	2.1	Eligibility and Participation	7
	2.2	Vesting	7
	2.3	SERP Benefit A	7
	2.4	SERP Benefit B	8

ARTICLE 3		PENSION MAKE-WHOLE BENEFIT	9
	3.1	Eligibility and Participation	9
	3.2	Vesting	9
	3.3	Pension Make-Whole Benefit	9

ARTICLE 4		TIME AND FORM OF PAYMENT	10
	4.1	Application of Time and Form of Payment Provisions	10
	4.2	Time for Distribution	10
	4.3	Payment Form	11
	4.4	Election Form Requirements	12
	4.5	Discretion to Accelerate Distribution	13

ARTICLE 5		DEATH BENEFITS	14
	5.1	Death While In Pay Status or After a Separation from Service	14
	5.2	Death Prior to a Separation from Service	15

ARTICLE 6		BENEFICIARY DESIGNATION	15
	6.1	Beneficiary	15
	6.2	Beneficiary Designation; Change	15
	6.3	Acknowledgment	15
	6.4	No Beneficiary Designation	15
	6.5	Doubt as to Beneficiary	15
	6.6	Discharge of Obligations	16

ARTICLE 7		TERMINATION, AMENDMENT OR MODIFICATION	16
	7.1	Termination	16
	7.2	Amendment	16
	7.3	Effect of Payment	17

ARTICLE 8		ADMINISTRATION	17
	8.1	Plan Administration	17
	8.2	Powers, Duties and Procedures	17
	8.3	Administration Upon Change In Control	18
	8.4	Agents	18
	8.5	Binding Effect of Decisions	18

Exhibit 10.1

TABLE OF CONTENTS

(cont)



			Page
	8.6	Indemnity of Committee	18
	8.7	Employer Information	18
	8.8	Coordination with Other Benefits	19

ARTICLE 9		CLAIMS PROCEDURES	19
	9.1	Presentation of Claims	19
	9.2	Decision on Initial Claim	19
	9.3	Right to Review	20
	9.4	Decision on Review	20
	9.5	Form of Notice and Decision	21
	9.6	Legal Action	21

ARTICLE 10		TRUST	21
	10.1	Establishment of the Trust	21
	10.2	Interrelationship of the Plan and the Trust	21
	10.3	Distribution From the Trust	21

ARTICLE 11		MISCELLANEOUS	21
	11.1	Status of Plan	21
	11.2	Unsecured General Creditor	21
	11.3	Employer's Liability	22
	11.4	Nonassignability	22
	11.5	Not a Contract of Employment	22
	11.6	Furnishing Information	22
	11.7	Receipt and Release	22
	11.8	Incompetent	22
	11.9	Governing Law and Severability	23
	11.10	Notices and Communications	23
	11.11	Successors	23
	11.12	Insurance	23
	11.13	Legal Fees To Enforce Rights After Change in Control	23
	11.14	Terms	24
	11.15	Headings	24

APPENDIX A			A-1

Exhibit 10.1

WEC ENERGY GROUP
SUPPLEMENTAL PENSION PLAN

INTRODUCTION

The Plan was established effective January 1, 2005 and is known as the "WEC Energy Group Supplemental Pension Plan." Prior to January 1, 2016, the Plan was known as the Wisconsin Energy Corporation Supplemental Pension Plan.

The Plan is maintained by WEC Energy Group, Inc. (the “Company”) to attract and retain key employees by providing such employees with supplemental pension benefits. The Plan consolidates provisions applicable to supplemental pension benefits under the Legacy Plan and pension make-whole benefits under the Legacy EDCP, STPP and MEZ Plan. As such, beginning January 1, 2005, all supplemental pension benefits accrued pursuant to the Legacy Plan formula and all pension make-whole benefits accrued pursuant to the Legacy EDCP, STPP and MEZ Plan formulas are provided under this Plan. Pension make-whole benefits earned under the Legacy EDCP, STPP and MEZ Plans as of December 31, 2004 were immediately vested and are considered "grandfathered" within the meaning of Code Section 409A.

The Plan is intended to comply with the provisions of Code Section 409A, and any guidance and regulations issued thereunder. The Plan shall be interpreted and administered consistent with this intent and shall apply to all amounts credited under the Plan on or after January 1, 2005. Such amounts include any amounts previously earned but not vested as of December 31, 2004 under the Legacy Plan, which the Company froze effective December 31, 2004. The terms and conditions of the Legacy Plan govern any Legacy Plan benefits derived from compensation paid and credited to the Legacy Plan before January 1, 2005, provided the benefits were otherwise vested as of December 31, 2004. Except as otherwise provided in the Plan, payment elections made at the end of the Code Section 409A transition period apply to benefits derived from compensation paid in 2005 and later and supersede any payment election or election to defer made during such period, in accordance with Code Section 409A relief provided in Notice 2006‑79, Notice 2007‑86 and proposed regulations promulgated under Code Section 409A .

The Plan was amended and restated on January 1, 2015 to exclude from participation any nonrepresented (management) employee hired, rehired, or transferred from a union position on or after January 1, 2015 since these employees are not eligible to participate in the RAP. Instead, these employee are allocated a qualified employer pension contribution under the WEC Energy Group Employee Retirement Savings Plan (previously, the Wisconsin Energy Corporation Employee Retirement Savings Plan) and eligible employees receive supplemental benefits under the WEC Energy Group Non-Qualified Retirement Savings Plan (previously, the Wisconsin Energy Corporation Non‑qualified Retirement Savings Plan). Effective as of January 1, 2016, the Plan was again restated to reflect the change in the name of the Company and Plan and to clarify certain administrative provisions.

Exhibit 10.1

ARTICLE 1

DEFINITIONS

Whenever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:

1.1

"Annual Installment Method" shall mean equal annual installment payments over a specified number of years that is actuarially equivalent to the immediate life annuity that would have normally been payable to the Participant upon the Participant's benefit commencement date. To determine the annual installment payments, the Plan will utilize the actuarial assumptions set forth under the RAP for determining lump sum distributions from the RAP.

1.2

“Base Annual Salary” shall mean the annual cash compensation relating to services performed during a Plan Year, whether or not paid in, or included on the Form W-2 for, such Plan Year, excluding severance payments, non-qualified supplemental pension payments, performance awards, bonuses, commissions, overtime, fringe benefits, relocation expenses, incentive payments, non-monetary awards, directors’ fees and other fees, automobile and other allowances paid to a Participant for employment services rendered (whether or not such allowances are included in the Participant’s gross income), stock options, restricted stock, performance shares or units, dividends, dividend equivalents and any other equity-based award provided under a plan or arrangement of an Employer. Base Annual Salary shall be calculated before it is deferred or contributed by the Participant under a qualified or non-qualified plan of an Employer and shall include amounts not otherwise included in the Participant’s gross income under Code Sections 125, 132(f)(4), 402(e)(3), 402(h) or 403(b) pursuant to plans established by an Employer; provided, however, that all such amounts shall be included in Base Annual Salary only to the extent that, had there been no such plan, the amount would have been payable in cash to the Participant.


1.3	“Beneficiary” shall mean one or more persons, trusts, estates or other entities designated by the Participant in accordance with Article 6 that are entitled to receive benefits under this Plan upon the death of a Participant.


1.4	“Board” shall mean the board of directors of the Company.


1.5	“Change in Control” shall mean, with respect to the Company, the occurrence of any one of the following dates, interpreted consistent with Treasury Regulation Section 1.409A-3(i)(5).

(a)

Change in Ownership . The date any one Person, or more than one Person Acting as a Group, acquires ownership of stock of the Company that, together with stock held by such Person or Group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company. Notwithstanding the foregoing, for purposes of this paragraph, if any one Person, or more than one Person Acting as a Group, is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of

Exhibit 10.1

additional stock by the same Person or Persons is not considered to cause a Change in Control.


(b)	Change in Effective Control .

(i)

The date any one Person, or more than one Person Acting as a Group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company. Notwithstanding the foregoing, for purposes of this subparagraph, if any one Person, or more than one Person Acting as a Group, is considered to effectively control the Company, the acquisition of additional control of the Company by the same Person or Persons is not considered to cause a Change in Control; or


(ii)	The date a majority of the members of the Company’s Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board before the date of the appointment or election.

(c)

Change in Ownership of a Substantial Portion of the Company’s Assets . The date any one Person, or more than one Person Acting as a Group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions. For purposes of this paragraph (c), “gross fair market value” means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. Notwithstanding the foregoing, a transfer of assets is not treated as a Change in Control if the assets are transferred to:


(i)	An entity that is controlled by the shareholders of the transferring corporation;


(ii)	A shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock;


(iii)	An entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company;


(iv)	A Person, or more than one Person Acting as a Group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company; or


(v)	An entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a Person described in clause (iv).

Exhibit 10.1


(d)	“ Person” and “Acting as a Group. ”


(i)	For purposes of this Section, “Person” shall have the meaning set forth in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended.

(ii)

For purposes of this Section, Persons shall be considered to be “Acting as a Group” if they are owners of a corporation that enter into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. If a Person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be Acting as a Group with the other shareholders only with respect to the ownership in that corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation. Notwithstanding the foregoing, Persons shall not be considered to be Acting as a Group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering.


1.6	“Chief Executive Officer” shall mean the Chief Executive Officer of the Company.


1.7	“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.


1.8	“Committee” shall mean an internal administrative committee appointed by the Chief Executive Officer to administer the Plan in accordance with Article 8.


1.9	“Company” shall mean WEC Energy Group, Inc., a Wisconsin corporation, and any successor to all or substantially all of the Company’s assets or business. Prior to June 29, 2015, the Company was known as Wisconsin Energy Corporation.


1.10	“Compensation Committee” shall mean the Compensation Committee of the Board.


1.11	“EDCP” shall mean the WEC Energy Group Executive Deferred Compensation Plan, as amended from time to time, or any successor to such plan. Prior to January 1, 2016, the EDCP was known as the Wisconsin Energy Corporation Executive Deferred Compensation Plan.


1.12	“Election Form” shall mean the form or forms established from time to time by the Committee that a Participant completes and submits in accordance with Committee rules to designate a form of payment pursuant to Article 4. To the extent authorized by the Committee, such form may be electronic or set forth in some other media.


1.13	“Employer” shall mean the Company and/or any of its subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Board to participate in the Plan and have adopted the Plan as a sponsor.

Exhibit 10.1


1.14	“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.


1.15	“IRS Limitations” shall mean the limitation on tax-qualified benefits imposed by Code Section 415, Code Section 401(a)(17), or any other limitation on tax-qualified benefits to which a participant may be entitled under a plan sponsored by the Company.


1.16	“Legacy EDCP” shall mean the Legacy Wisconsin Energy Corporation Executive Deferred Compensation Plan. Prior to January 1, 2005, the Legacy EDCP was known as the Wisconsin Energy Corporation Executive Deferred Compensation Plan.


1.17	“Legacy Plan” shall mean the Legacy Wisconsin Energy Corporation Supplemental Executive Retirement Plan. Prior to January 1, 2005, the Legacy Plan was known as the Wisconsin Energy Corporation Supplemental Executive Retirement Plan.


1.18	“MEZ Plan” shall mean the 2003 Mezzanine Incentive Plan For We Power, LLC, as amended and restated effective as of January 1, 2005, and as may be amended from time to time thereafter, or any successor to such plan.

1.19

“Participant” shall mean an individual selected to participate in the Plan and earn a benefit under either Article 2 or Article 3. A spouse or former spouse of a Participant shall not be treated as a Participant in the Plan, even if the spouse or former spouse has an interest in the Participant’s benefit as a result of applicable law or property settlements resulting from legal separation or divorce.

1.20

“Pension Eligible Earnings” shall mean a Participant’s established base salary for assigned responsibilities including payments for absences, without regard for any limitations imposed by the Code on benefits or compensation and including any amounts of base salary that would have been paid to the Participant, but were not paid because of deferral elections made by the Participant under a savings or other deferred compensation plan, and including the total of any incentive performance award determined under the STPP or other bonus plan of the Company which has been approved by the Board, Committee or Chief Executive Officer for inclusion into Pension Eligible Earnings for this Plan. Amounts of base salary and annual incentive shall be calculated without regard to any amounts deferred from such base salary or annual incentive compensation. For purposes of this definition, base salary shall be defined with reference to the RAP, as modified above, as in effect from time to time for a Plan Year.


1.21	“Pension Make-Whole Benefit” shall mean the benefit provided pursuant to Article 3.


1.22	“Plan” shall mean the WEC Energy Group Supplemental Pension Plan, including any amendments adopted hereto. Prior to January 1, 2016, the Plan was known as the Wisconsin Energy Corporation Supplemental Pension Plan.


1.23	“Plan Year” shall mean the calendar year.

Exhibit 10.1


1.24	“RAP” shall mean the WEC Energy Group Retirement Account Plan, as amended from time to time, or any successor to such plan. Prior to January 1, 2016, the RAP was known as the Wisconsin Energy Corporation Retirement Account Plan.


1.25	“SERP Benefit” shall mean SERP Benefit A and/or SERP Benefit B provided pursuant to Article 2.


1.26	“SERP Benefit A” means the benefit provided pursuant to Section 2.3.


1.27	“SERP Benefit B” means the benefit provided pursuant to Section 2.4.

1.28

“Separation from Service” shall mean the Participant’s termination of employment with all Employers and other entities affiliated with the Company, voluntarily or involuntarily, for any reason other than on account of death, or as otherwise provided by the Department of Treasury in regulations promulgated under Code Section 409A. For purposes of the foregoing, whether an entity is affiliated with the Company shall be determined pursuant to the controlled group rules of Code Section 414, as modified by Code Section 409A. Unless the employment relationship is terminated earlier by the Employer or Participant, the following shall apply for determining a Separation from Service under the Plan:

(a)

Except as provided in paragraph (b), the Participant’s employment relationship with the Employer shall be treated as continuing intact while the individual is on a military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed six months (or longer, if required by statute or contract). If the period of the leave exceeds six months and the Participant’s right to reemployment is not provided either by statute or contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period.

(b)

Where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Participant to be unable to perform the duties of the Participant's position of employment or any substantially similar position of employment, the Participant's relationship with the Employer shall be treated as continuing intact for a period of 29 months and will be deemed to terminate on the first date immediately following such 29‑month period.


1.29	“STPP” shall mean the WEC Energy Group Short-Term Performance Plan, as amended from time to time, or any successor to such plan. Prior to January 1, 2016, the STPP was known as the Wisconsin Energy Corporation Short-Term Performance Plan.


1.30	“Trust” shall mean any fund created by a rabbi trust agreement established by the Company referencing the Plan and as amended from time to time.

Exhibit 10.1


1.31	“Vest” or “Vested” shall mean the Participant has a nonforfeitable right to the SERP Benefit and/or Pension Make-Whole Benefit, as the case may be, as determined under Section 2.2 or Section 3.2.

ARTICLE 2
SERP BENEFIT

2.1

Eligibility and Participation . The Chief Executive Officer, the Board or the Compensation Committee of the Board may designate those key employees of the Employer as a Participant for a SERP Benefit, provided that participation in the Plan shall be limited to a select group of management and highly compensated employees of the Employer (as defined in ERISA Sections 201(2), 301(a)(3) and 401(a)(1)) whose most recent date of hire, rehire, or transfer from a union position is prior to January 1, 2015. An employee may be designated as a Participant for purposes of SERP Benefit A and/or SERP Benefit B.

The Chief Executive Officer, the Board or the Compensation Committee of the Board shall have the discretion to exclude a Participant from continued participation in the SERP Benefit with such exclusion becoming effective as of the first day of the immediately following Plan Year. In such event, the Participant shall be eligible to receive a Pension Make-Whole Benefit in lieu of any SERP Benefit that accrued before such exclusion to avoid any duplication of benefits under the Plan.

2.2

Vesting . A Participant shall become Vested in the Participant's SERP Benefit upon the earlier of (i) attaining age 60 while employed with an Employer, (ii) death or (iii) a Change in Control. The Chief Executive Officer, the Board or the Compensation Committee of the Board has the authority to Vest a Participant who experiences a Separation from Service before age 60 or incurs a disability. “Disability” shall mean the Participant is eligible for a benefit under the Company’s long-term disability program, as may be in effect from time to time. In the event a Participant forfeits the SERP benefit due to a Separation from Service before becoming Vested, the Participant shall be entitled to a Pension Make-Whole Benefit, if any, pursuant to Article 3.


2.3	SERP Benefit A . SERP Benefit A provides a supplemental pension benefit, the amount of which shall be equal to the greater of (a) or (b), if applicable, subject to (c) below.


(a)	The benefit formula described in this paragraph (a) is intended to calculate a supplemental cash balance benefit that will be calculated as if it were held in an account (the “Account Balance”) for the Participant’s credit under the RAP. This Account Balance is a lump sum amount that increases each year as additional amounts are credited in two ways: a benefit credit and an interest credit.


(i)	Benefit Credit . Beginning as early as 1995, for each Plan Year in which a Participant is eligible to accrue a SERP Benefit A, the Participant’s Account Balance will be credited with a benefit credit equal to (i) the “relevant percentage” of the Participant's Pension Eligible Earnings for the Plan Year less (ii) the amount credited to the Participant’s RAP cash

Exhibit 10.1

balance account for such year. Notwithstanding the foregoing, if a Participant experiences a Separation from Service during the Plan Year, the Participant’s benefit credit will equal the relevant percentage of the Participant’s Pension Eligible Earnings through the Participant’s Separation from Service less the amount credited to the Participant's RAP cash balance account for the same time period.

For purposes of the above, the relevant percentage will be the same percentage as is determined under the RAP for the Plan Year of determination except that to be eligible for a relevant percentage of more than the minimum guaranteed benefit credit as determined under the RAP, the Participant must be actively employed on December 31 of that year.

(ii)

Interest Credit . For each Plan Year, the Participant’s Account Balance will receive an interest credit on the Account Balance at the beginning of the year. This interest credit will be the same percentage that has been applied to the RAP for that year. If the Participant did not have an Account Balance at the beginning of the year, the Account Balance will not receive an interest credit at the end of the year. If the Participant has a distribution from the Account Balance, either in whole or in part (under an installment payment or annuity) before December 31, a prorata Interest Credit will be credited for the Plan Year that includes the distribution, determined in the same manner as under the RAP. Interest credits cease with the commencement of payment.

(b)

The benefit formula described in this paragraph (b) will be calculated for Participants who were actively employed by an Employer on December 31, 1995 and who were covered under the RAP as of such date, thereby entitling them to a grandfathered pension benefit. Such Participants will be eligible to have their SERP Benefit A determined under the grandfathered minimum benefit, as described in Appendix A.

(c)

The SERP Benefit A provides a benefit for Participants who otherwise would lose benefits under the RAP due to certain limitations for included compensation under the RAP. Effective January 1, 2008, eligible compensation for determining benefits under the RAP for both the cash balance and grandfathered minimum benefit formulas was expanded to include STPP awards. As a result of this change, for certain participants, the total benefit payable as a final retirement benefit from both the RAP and this Plan may be fully payable from the RAP under the formula for the grandfathered minimum benefit. In this case, no further benefit would be payable from this Plan.


2.4	SERP Benefit B . SERP Benefit B provides Participants with a life annuity of 10% of the monthly average of the Participant’s Pension Eligible Earnings received from the Employer during whichever period of 36 consecutive months produces the highest monthly average. The monthly average of Pension Eligible Earnings during such 36 month period includes the monthly average of:

Exhibit 10.1


(a)	any performance award determined under the STPP or any other plan as designated by the Board, calculated as of the date of determination as if then paid in full as base salary, and


(b)	any amounts of base salary that would have been paid to the Participant during such 36-month period but are not paid due to deferral elections made by the Participant under a savings or other deferred compensation plan.

Effective as of January 1, 2005, no new individuals are eligible to earn a SERP B Benefit. The provisions relating to SERP Benefit B shall only apply to those Participants who were designated as eligible to earn a SERP Benefit B before January 1, 2005.

ARTICLE 3
PENSION MAKE-WHOLE BENEFIT

3.1

Eligibility and Participation . Participation in the Pension Make-Whole Benefit shall be limited to a select group of management and highly-compensated employees of the Employers whose most recent date of hire, rehire, or transfer from a union position is prior to January 1, 2015, as determined by the Chief Executive Officer, the Board or the Compensation Committee. From that group, the Chief Executive Officer, the Board or the Compensation Committee shall select employees to participate in the Pension Make-Whole Benefit and shall have the discretionary authority to exclude a Participant from continued participation in the Pension Make-Whole Benefit. Any such exclusion shall become effective as of the first day of the immediately following Plan Year. Such Participant shall remain a Participant until the accrued Pension Make-Whole Benefit is paid in full, unless such Participant becomes designated as eligible to earn a SERP Benefit.

3.2

Vesting . Pension Make-Whole Benefits are immediately vested, unless a Participant becomes designated as eligible for a SERP Benefit and Vested in the SERP Benefit. If a Participant becomes eligible to earn a SERP Benefit and becomes Vested in such benefit, no Pension Make-Whole Benefit shall be paid to such Participant in order to avoid any duplication of supplemental pension benefits provided under the Plan.


3.3	Pension Make-Whole Benefit . The Pension Make-Whole Benefit provided pursuant to this Article shall equal (a) less (b), subject to (c) below:


(a)	The pension benefit which would have accrued to the Participant’s credit under the RAP, calculated without regard to IRS Limitations and taking into account:


(i)	all Base Annual Salary, whether paid and/or deferred to the EDCP,


(ii)	STPP awards, whether paid and/or deferred to the EDCP;


(iii)	any other bonus award which has been approved by the Board, Committee or Chief Executive Officer; and

Exhibit 10.1


(iv)	any MEZ Plan award with respect to reaching the 2005 and/or 2008 MEZ Plan milestone, whether paid and/or deferred to the EDCP.


(b)	The pension benefit which has actually accrued to the credit of the Participant under the RAP.

(c)

The Pension Make-Whole Benefit provides a benefit for Participants who otherwise would lose benefits under the RAP due to certain limitations for included compensation under the RAP. Effective January 1, 2008, eligible compensation for determining benefits under the RAP for both the cash balance and grandfathered minimum benefit formulas was expanded to include STPP awards. As a result of this change, for certain participants, the total benefit payable as a final retirement benefit from both the RAP and this Plan may be fully payable from the RAP under the formula for the grandfathered minimum benefit. In this case, no further Pension Make-Whole Benefit would be payable from this Plan.

ARTICLE 4
TIME AND FORM OF PAYMENT


4.1	Application of Time and Form of Payment Provisions . The provisions of this Article apply to all supplemental pension benefits provided pursuant to Article 2 and Article 3, unless otherwise specified pursuant to a separate written agreement.


4.2	Time for Distribution . Distribution of a Participant’s SERP Benefit or Pension Make-Whole Benefit shall be made following the earliest to occur of:


(a)	The Participant’s Separation from Service; or


(b)	The Participant’s death.

Payment shall be paid or begin to be paid by the end of the Plan Year in which the distribution event occurs or, if later, by the 15 ^th day of the third month following the event. If an Annual Installment Method is in effect, the second installment payment shall be made within the first 90 days of the Plan Year following the Plan Year in which the first installment payment was made and subsequent installment payments shall be made thereafter during the first 90 days of the Plan Year in which the installment is due.

Notwithstanding anything in the Plan to the contrary, distributions made to “specified employees” (determined pursuant to Treasury Regulation Section 1.409A‑(a)) upon a Separation from Service for any reason other than death shall be paid or begin to be paid as of the first day of the seventh month following the Participant’s Separation from Service. If a monthly annuity is payable, the monthly payments otherwise scheduled to be made pending such six-month delay will be aggregated and paid in a lump sum payment as of the first day of the seventh month following the Participant’s Separation from Service. No interest shall be payable on any amounts delayed due to the Participant’s status as a specified employee.

Exhibit 10.1


4.3	Payment Form . The form in which a Participant’s benefit shall be paid is dependent upon the Participant’s accrued benefit value determined as of the first day of the month following the distribution event (the “determination date”), even if such payment is delayed for a specified employee pursuant to Section 4.2.


(a)	Separation from Service or Death .


(i)	A Participant whose accrued benefit is $75,000 or less as of the determination date, payment shall be made in a lump sum.


(ii)	A Participant whose accrued benefit is greater than $75,000 may elect, pursuant to Section 4.4, to receive payment:


(A)	in any number of installments between five and ten, using the Annual Installment Method to determine the amount of each installment, or


(B)	in the form of a life annuity.

A Participant electing to receive payment in the form of a life annuity may select among actuarially equivalent life annuities, the forms of which shall be determined by the Committee in its sole discretion. Actuarial equivalence shall be determined using the factors then in effect under the RAP. Such annuity selection may be made at the time distribution of the Participant's benefit is to begin without such selection being treated as a subsequent change in election pursuant to Treasury Regulation Section 1.409A-2(b)(2). In the event a Participant elected a life annuity but does not make a selection as to the specific annuity form, payment shall be made in the form of a single life annuity for unmarried Participants or a joint and 50% survivor annuity for married Participants.

Notwithstanding the foregoing, if no valid Election Form is in effect upon the distribution event, then payment shall be made in (1) a lump sum if the value of a Participant’s accrued benefit falls within the payment tier described in clause (i) and (2) five installments using the Annual Installment Method to determine the amount of each installment if the value of a Participant’s accrued benefit falls within the payment tier described in clause (ii).

(b)

Separation from Service After Change in Control . A lump sum payment shall be made upon a Separation from Service that occurs within 18 months following a Change in Control. Such lump sum payment shall be in an amount equal to the then present value of all benefits then accrued under this Plan, calculated using (i) an interest rate equal to a 36 consecutive month average, using the rates as of the last business day of each month (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 month in which the Separation from Service occurred as such yield is reported in the Wall Street

Exhibit 10.1

Journal or comparable publication, and (ii) the mortality table used for purposes of determining lump sum amounts then in use under the RAP.


4.4	Election Form Requirements .


(a)	Election Timing Generally . At the times indicated below, a Participant may file with the Committee an Election Form indicating the desired form of payment in the event the Participant’s benefit has a value greater than $75,000.


(i)	Participants eligible for a SERP Benefit A or Pension Make-Whole Benefit may file an Election Form with the Committee no later than January 30 ^th of the Plan Year immediately following the first Plan Year in which the Participant began to accrue either benefit. An Election Form is irrevocable as of January 30 of such Plan Year.


(ii)	SERP Benefit B Participants must file an Election Form with the Committee before the beginning of the first Plan Year in which a benefit is accrued. An Election Form is irrevocable as of the first day of the Plan Year in which the benefit first accrues.


(b)	Changes to Elected Form of Payment . A Participant may elect to change the form of payment for amounts that are subject to an election that is irrevocable.


(i)	A Participant who has an installment form of payment in effect may change such election to an annuity payment, provided the annuity commencement date shall be deferred to a date that is at least five years after the date the initial installment payment would otherwise have commenced.


(ii)	A Participant who has an annuity payment election in effect may change such election to an installment form of payment, provided that the first installment payment shall be deferred to a date that is at least five years after the date the annuity payments would otherwise have commenced.


(iii)	A Participant who has an installment election in effect may change the number of installments, provided that the first installment payment shall be deferred to a date that is at least five years after the date the initial installment payment would otherwise have commenced.


(c)	Elections Pursuant to §409A Transition Relief . Notwithstanding the foregoing provisions of this Section, on or before December 31, 2008, Participants may make or change payment form elections consistent with transition relief provided

Exhibit 10.1

by the Department of the Treasury in Notice 2006-79, Notice 2007-86 and proposed regulations promulgated under Code Section 409A. If a Participant makes such an election or change, then the last election validly in effect as of December 31, 2008 shall be treated as the “initial” election. Participants whose SERP Benefit A vested and began to be paid on and after January 1, 2005 and before January 1, 2009, received either the default payment form of a joint and survivor annuity payment or an actuarial equivalent form of annuity payment, as provided under the Legacy Plan’s form of payment provisions. In addition, a Participant who began to be paid any portion of the Participant's Pension Make-Whole Benefit that is subject to Code Section 409A on and after January 1, 2005 and before January 1, 2009, received payment of such benefit in the form selected pursuant to the Participant's timely filed election(s), or if none, in a lump sum, as provided under the Legacy Plan.


4.5	Discretion to Accelerate Distribution .


(a)	The Committee shall have the discretion to make a distribution, or accelerate the time or schedule of payment of a Participant’s vested accrued benefit if payment is required for:


(i)	FICA, FUTA and/or the corresponding withholding provisions of applicable state and local taxes with respect to compensation accrued under the Plan. Any such distribution shall not exceed the aggregate of such tax withholding and shall reduce the Participant’s accrued vested benefit to the extent of such distributions; or


(ii)	payment of state, local or foreign tax obligations arising from participation in the Plan that apply to an amount accrued under the Plan and FUTA resulting from such payment. Any such payment shall not exceed the amount of such taxes due as a result of Plan participation.

(b)

The Committee or a Plan representative is authorized to accelerate the time or schedule of a payment under the Plan to an individual other than the Participant, or to make a payment under the Plan to an individual other than the Participant, to the extent necessary to fulfill a domestic relations order (as defined in Code Section 414(p)(1)(B)). Payment to an alternate payee under a domestic relations order shall be made in a lump sum within 90 days after the Committee or Plan representative approves such order.


(c)	The Committee shall have the discretion to accelerate the time or schedule of a payment under the Plan if the Plan fails to meet the requirements of Code Section 409A and regulations promulgated thereunder, provided that any such payment does not exceed the amount required to be included in income as a result of such failure.

Exhibit 10.1

ARTICLE 5
DEATH BENEFITS


5.1	Death While In Pay Status or After a Separation from Service .


(a)	Death After Payment Commencement.


(i)	Lump Sum. If the Participant dies after the lump sum payment is made by the Plan, no further payments shall be made from the Plan.


(ii)	Installment Payments . If the Participant dies after installment payments begin, but before the entire benefit is paid in full, the Participant’s unpaid benefit payments shall continue to be paid to the Participant’s Beneficiary over the remaining number of years as that benefit would have been paid to the Participant had the Participant survived.


(iii)	Joint and Survivor Annuity . If payments to the Participant have begun under a joint and survivor annuity and the Participant then dies, the Participant’s spouse shall begin receiving the survivor annuity payments for the spouse's life.


(iv)	Single Annuity . If payments to the Participant have begun under a single life annuity and the Participant then dies, all payments shall cease upon the Participant’s death.


(b)	Death After Separation from Service but Before Payment Commencement.

In the event a Participant dies after a Separation from Service and before payment of the Participant's benefit is scheduled to be made, whether a benefit is paid to a Beneficiary will depend on the form of payment the Participant was scheduled to receive, determined as follows:


(i)	Lump Sum or Installment Payments . If payment to the Participant was scheduled to be made in a lump sum or installments, payment to the Participant’s Beneficiary shall be made or begin to be made pursuant to the Participant’s election during the first 90 days of the Plan Year following the Plan Year of the Participant’s Separation from Service.


(ii)	Joint and Survivor Annuity . If payment to the Participant was scheduled to be made in a joint and 50% survivor annuity, the Participant’s spouse shall begin receiving the survivor annuity payments at the time the Participant would have begun receiving payments had the Participant survived.


(iii)	Single Annuity . If payment to the Participant was scheduled to be made in a single life annuity, no further payment shall be made following the Participant’s death.

Exhibit 10.1

5.2

Death Prior to a Separation from Service . If a Participant dies prior to a Separation from Service, the Participant’s benefit shall be paid to the Participant’s Beneficiary in a lump sum by the end of the Plan Year in which the Participant dies or, if later, by the 15 ^th day of the third month following the Participant’s death, regardless of whether the Participant is a specified employee.

ARTICLE 6
BENEFICIARY DESIGNATION


6.1	Beneficiary . Each Participant may, at any time, designate one or more Beneficiaries (both primary as well as contingent) to receive any benefits payable under the Plan upon the Participant's death. The Beneficiary designated under this Plan may be the same as or different from the Beneficiary designation under any other plan of an Employer in which the Participant participates.

6.2

Beneficiary Designation; Change . A Participant shall designate a Beneficiary by completing a beneficiary designation form established by the Committee or its delegate, and returning it to the Committee or its designated agent. To the extent authorized by the Committee, such form may be electronic or set forth in some other media or format. A Participant may change a Beneficiary designation by completing and otherwise complying with the terms of the beneficiary designation form and the Committee’s rules and procedures, as in effect from time to time. Upon the acceptance by the Committee of a new beneficiary designation form, all Beneficiary designations previously submitted shall be canceled. The Committee shall rely on the last completed beneficiary designation form submitted by the Participant before the Participant's death. In the event of a Participant's divorce, any designation of the Participant's former spouse as a Beneficiary shall be deemed void unless after the divorce the Participant completes a new designation naming such former spouse as a Beneficiary.


6.3	Acknowledgment . No Beneficiary designation or change in Beneficiary designation shall be effective until accepted by the Committee or a Plan representative.

6.4

No Beneficiary Designation . If a Participant fails to designate a Beneficiary as provided in this Article 6 or, if all designated Beneficiaries predecease the Participant or die before complete distribution of the Participant’s benefit (applicable only if an installment payment is in effect), then the Participant's remaining benefits shall be paid to the Participant’s surviving spouse, if none, to the Participant's descendants by right of representation or, if none, to the Participant's next of kin determined pursuant to the laws of the state in which the Company's principal place of business is located as if the Participant had died unmarried and intestate.


6.5	Doubt as to Beneficiary . If the Committee has any doubt as to the proper Beneficiary to receive payments under this Plan, the Committee may, in its sole discretion, require the Participant’s Employer to withhold such payments until the matter is resolved to the Committee’s satisfaction.

Exhibit 10.1


6.6	Discharge of Obligations . The complete payment of benefits under the Plan to a Beneficiary shall fully and completely discharge all Employers and the Committee from all further obligations under this Plan with respect to the Participant, and the Participant’s Election Form shall terminate upon such full payment of benefits.

ARTICLE 7
TERMINATION, AMENDMENT OR MODIFICATION


7.1	Termination .

(a)

Although each Employer anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee that an Employer will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, each Employer reserves the right to discontinue its participation in the Plan and/or to terminate the Plan at any time with respect to all of its Participants, by action of its board of directors or compensation committee. The termination of the Plan shall not reduce the amount of any benefit to which the Participant or Beneficiary is entitled to receive under the Plan as of the termination date. Except as provided in paragraph (b) below, benefits shall be maintained under the Plan until such amounts would otherwise have been distributed in accordance with the terms of the Plan and Participants’ validly filed payment elections.


(b)	Notwithstanding any provision in the Plan to the contrary, upon termination of the Plan, the Board of Directors or Compensation Committee reserves the discretion to accelerate distribution of Participants’ benefits (including those Participants in pay status) in accordance with regulations promulgated by the Department of the Treasury under Code Section 409A.

7.2

Amendment . The Company may, in its sole discretion, amend or modify the Plan at any time, in whole or in part, by action of its Board, Compensation Committee or the Committee; provided, however, that (i) no amendment shall decrease the amount of a Participant’s accrued benefit in existence at the time the amendment or modification is made, and (ii) no amendment shall adversely affect any benefit to which a Participant or Beneficiary has become entitled as of the date of the amendment, in either case, without the Participant's consent. Further, during the pendency of a Potential Change in Control (as defined below) and at all times following a Change in Control, no amendment or modification may be made which in any way adversely affects the interests of any Participant with respect to benefits accrued as of the date of the amendment. A “Potential Change in Control” shall be deemed to have occurred if one of the following events occurs:


(a)	The Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;


(b)	The Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

Exhibit 10.1

(c)

Any Person becomes the Beneficial Owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of Stock representing 15% or more of either the then outstanding shares of stock of the Company or the combined voting power of the Company’s then outstanding Stock (not including the Stock beneficially owned by such Person or any Stock acquired directly from the Company or its affiliates); or


(d)	The Board adopts a resolution to the effect that, for purposes of this Plan, a Potential Change in Control has occurred.

Except as otherwise noted, the capitalized terms in the above definition have the same meaning as set forth in Section 1.5. The Company’s power to amend or modify the Plan includes the power to suspend or freeze participation in the Plan, provided such suspension or freeze does not cause a prohibited acceleration of compensation under Code Section 409A. In such circumstance, the Company may, in its sole discretion, rescind such modification at any time, provided such action is taken consistent with Code Section 409A. Such action may be taken by the Company’s Board of Directors, the Compensation Committee or the Committee.


7.3	Effect of Payment . The full payment of the Participant’s benefit under any provision of the Plan shall completely discharge the Plan’s and Employer’s obligations to the Participant and the Participant's Beneficiaries under this Plan.

ARTICLE 8
ADMINISTRATION

8.1

Plan Administration . Except as otherwise provided in this Article 8 and as specifically referenced in the Plan, the Compensation Committee has delegated administration of the Plan to the Committee. Members of the Committee may be Participants under this Plan. Any individual serving on the Committee who is a Participant shall not vote or act on any matter relating solely to such individual. The Chief Executive Officer may not act on any matter involving such officer’s own participation in the Plan. All references to the Committee shall be deemed to include reference to the Chief Executive Officer.

8.2

Powers, Duties and Procedures . The Committee (or the Chief Executive Officer if such individual chooses to so act) shall have full and complete discretionary authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration of the Plan, and (ii) decide or resolve any and all questions including interpretations of the Plan, as may arise in connection with the claims procedures set forth in Article 9 or otherwise with regard to the Plan. The Committee shall have complete control and authority to determine the rights and benefits of all claims, demands and actions arising out of the provisions of the Plan of any Participant or Beneficiary or other person having or claiming to have any interest under the Plan. When making a determination or calculation, the Committee may rely on information furnished by a Participant or the Employer. Benefits under the Plan shall be paid only if the Committee decides in its sole discretion that the Participant or Beneficiary is entitled to them. The

Exhibit 10.1

Committee or the Chief Executive Officer may delegate such powers and duties as it determines for the efficient administration of the Plan.

8.3

Administration Upon Change In Control . For purposes of this Plan, the Company shall be the “Administrator” at all times before a Change in Control. Upon and after a Change in Control, the Administrator shall be an independent third party selected by the individual who, at any time before such event, was the Company’s Chief Executive Officer or, if there is no such officer or such officer does not act, by the Company’s then highest ranking officer (the “Appointing Officer”). Upon a Change in Control, the Administrator shall have full and complete discretionary power to determine all questions arising in connection with the administration of the Plan and the interpretation of the Plan and Trust including, but not limited to, benefit entitlement determinations. Upon and after a Change in Control, the Company shall (i) pay all reasonable administrative expenses and fees of the Administrator, (ii) indemnify the Administrator against any costs, expenses and liabilities (including, without limitation, attorney’s fees) of whatever kind and nature which may be imposed on, asserted against or incurred by the Administrator in connection with the performance of the duties hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of the Administrator or its employees or agents, and (iii) supply full and timely information to the Administrator on all matters relating to the Plan, the Trust, the Participants and their Beneficiaries, the benefits of the Participants, including the dates of disability, death or Separation from Service and such other pertinent information as the Administrator may reasonably require. Upon and after a Change in Control, the Administrator may be terminated (and a replacement appointed) only by an Appointing Officer. Upon and after a Change in Control, the Administrator may not be terminated by the Company.


8.4	Agents . In the administration of this Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel who may be counsel to an Employer.

8.5

Binding Effect of Decisions . Notwithstanding any other provision of the Plan to the contrary, the Committee or its delegate shall have complete discretion to interpret the Plan and to decide all matters under the Plan. Any such interpretation shall be final, conclusive and binding on all Participants, Beneficiaries and any person claiming under or through any Participant, in the absence of clear and convincing evidence that the Committee acted arbitrarily and capriciously.

8.6

Indemnity of Committee . All Employers shall indemnify and hold harmless the members of the Committee, and any other employee to whom the duties of the Committee may be delegated, and the Administrator, as defined in Section 8.3, against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful misconduct by the Committee, any of its members or any such employee or the Administrator.


8.7	Employer Information . To enable the Committee and/or Administrator to perform its functions, each Employer shall supply full and timely information to the Committee on

Exhibit 10.1

all matters relating to the compensation of its Participants, the dates of the disability, death or Separation from Service and such other pertinent information as the Committee may reasonably require.


8.8	Coordination with Other Benefits . The benefits provided to a Participant and the Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of an Employer. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.

ARTICLE 9
CLAIMS PROCEDURES

9.1

Presentation of Claim . Any Participant or Beneficiary (such Participant or Beneficiary being referred to below as a “Claimant”) may deliver to the Committee a written claim for benefits. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within 90 days after such notice was received by the Claimant. All other claims shall be made within 180 days of the date on which the event that caused the claim to arise occurred. The claim shall state with particularity the determination desired by the Claimant. A claim shall be considered to have been made when a written communication made by the Claimant or the Claimant’s representative is received by the Committee.

9.2

Decision on Initial Claim . The Committee shall consider a Claimant’s claim and provide written notice to the Claimant of any denial within a reasonable time, but no later than 90 days after receipt of the claim. If an extension of time beyond the initial 90-day period for processing is required, written notice of the extension shall be provided to the Claimant before the initial 90-day period expires indicating the special circumstances requiring an extension of time and the date by which the Committee expects to render a final decision. In no event shall the period, as extended, exceed 180 days. If the Committee denies, in whole or in part, the claim, the notice shall set forth in a manner calculated to be understood by the Claimant:


(i)	The specific reasons for the denial of the claim, or any part thereof;


(ii)	Specific references to pertinent Plan provisions upon which such denial was based;


(iii)	A description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and


(iv)	An explanation of the claim review procedure set forth in Section 9.3 below, which explanation shall also include a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following a denial of the claim upon review.

Exhibit 10.1

9.3

Right to Review . A Claimant is entitled to appeal any claim that has been denied in whole or in part. To do so, the Claimant must submit a written request for review with the Committee within 60 days after receiving a notice from the Committee that a claim has been denied, in whole or in part. Absent receipt by the Committee of a written request for review within such 60-day period, the claim shall be deemed to be conclusively denied. The Claimant (or the Claimant’s duly authorized representative) may:


(a)	Review and/or receive copies of, upon request and free of charge, all documents, records and other information relevant to the Claimant’s claim;


(b)	Submit written comments, documents, records or other information relating to the Claimant's claim, which the Committee shall take into account in considering the claim on review, without regard to whether such information was submitted or considered in the initial review of the claim; and/or


(c)	Request a hearing, which the Committee, in its sole discretion, may grant.

If a Claimant requests to review and/or receive copies of relevant information pursuant to paragraph (a) above before filing a written request for review, the 60-day period for submitting the written request for review will be tolled during the period beginning on the date the Claimant makes such request and ending on the date the Claimant reviews or receives such relevant information.

9.4

Decision on Review . The Committee shall render its decision on review promptly, and not later than 60 days after it receives a written request for review of the denial, unless a hearing is held or other special circumstances require additional time. In such case, the Committee will notify the Claimant, before the expiration of the initial 60-day period and in writing, of the need for additional time, the reason the additional time is necessary, and the date (no later than 60 days after expiration of the initial 60-day period) by which the Committee expects to render its decision on review. Notwithstanding the foregoing, if the Committee determines that an extension of the initial 60-day period is required due to the Claimant's failure to submit information necessary for the Committee to decide the claim, the time period by which the Committee must make its determination on review shall be tolled from the date on which the notification of the extension is sent to the Claimant until the date on which the Claimant responds to the request for additional information. The decision on review shall be written in a manner calculated to be understood by the Claimant, and shall contain:


(a)	Specific reasons for the decision;


(b)	Specific references to the pertinent Plan provisions upon which the decision was based;


(c)	A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records or other information relevant (within the meaning of Department of Labor Regulation Section 2560.503-1(m)(8)) to the Claimant’s claim;

Exhibit 10.1


(d)	A statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following a wholly or partially denied claim for benefits; and


(e)	Such other matters as the Committee deems relevant.


9.5	Form of Notice and Decision . Any notice or decision by the Committee under this Article 9 may be furnished electronically in accordance with Department of Labor Regulation Section 2520.104b-(1)(c)(i), (iii) and (iv).

9.6

Legal Action . Any final decision by the Committee shall be binding on all parties. A Claimant’s compliance with the foregoing provisions of this Article 9 is a mandatory prerequisite to a Claimant’s right to commence any legal action with respect to any claim for benefits under this Plan. Any such legal action must be initiated no later than 180 days after the Committee renders its final decision. If a final determination of the Committee is challenged in court, such determination shall not be subject to de novo review and shall not be overturned unless proven to be arbitrary and capricious based on the evidence considered by the Committee at the time of such determination.

ARTICLE 10
TRUST


10.1	Establishment of the Trust . The Company may establish a Trust and, if established, each Employer shall contribute such amounts to the Trust from time to time as it deems desirable.

10.2

Interrelationship of the Plan and the Trust . The provisions of the Plan shall govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions of the Trust shall govern the rights of the Employers, Participants and the creditors of the Employers to the assets transferred to the Trust. Each Employer shall at all times remain liable to carry out its obligations under the Plan.


10.3	Distributions From the Trust . Each Employer’s obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution shall reduce the Employer’s obligations under this Plan.

ARTICLE 11
MISCELLANEOUS

11.1

Status of Plan . The Plan is intended to be a plan that is not qualified within the meaning of Code Section 401(a) and that is unfunded for tax purposes and “is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” (within the meaning of ERISA). The Plan shall be administered and interpreted in a manner consistent with that intent.


11.2	Unsecured General Creditor . Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of an Employer, Company or of any other person and nothing in the Plan shall be construed to give any employee or any other person such rights. The Plan constitutes a

Exhibit 10.1

mere promise by the Company or Employer to make payments in accordance with the terms of the Plan and Participants and Beneficiaries shall have the status of general unsecured creditors solely of the Employer employing the Participant.


11.3	Employer’s Liability . The amount of an Employer’s liability for the payment of benefits shall be defined only by the Plan and any Election Forms, as entered into between the Employer and a Participant. An Employer shall have no obligation to a Participant under the Plan except as expressly provided in the Plan.

11.4

Nonassignability . Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable to the maximum extent allowed by law. No part of the amounts payable shall, before actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor shall any part of the same, to the maximum extent allowed by law, be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency or, except as provided in Section 4.5(b), be transferable to a spouse as a result of a property settlement or otherwise.

11.5

Not a Contract of Employment . The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between any Employer and the Participant. Such employment is hereby acknowledged to be an “at will” employment relationship that can be terminated at any time for any reason, or no reason, with or without cause, and with or without notice, unless expressly provided in a written employment agreement between an Employer and a Participant. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of any Employer as an employee, or to interfere with the right of any Employer to discipline or discharge the Participant at any time, with or without cause, or to modify the Base Annual Salary or annual or long-term performance award at any time.


11.6	Furnishing Information . A Participant or Beneficiary shall cooperate with the Committee by furnishing any and all information requested by the Committee and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of benefits hereunder.

11.7

Receipt and Release . Any payment to any Participant or Beneficiary in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims against the Employer, the Committee and a trustee (if any) under the Plan, and the Committee may require such Participant or Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect.


11.8	Incompetent . If the Committee determines in its discretion that a benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling disposition of that person's property, the Committee may direct payment of such

Exhibit 10.1

benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person. The Committee may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the Account of the Participant and the Participant's Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such payment amount.

11.9

Governing Law and Severability . To the extent not preempted by ERISA, the provisions of this Plan shall be construed, administered and interpreted according to the internal laws of the State of Wisconsin without regard to its conflicts of laws principles. If any provision is held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective.

11.10

Notices and Communications . All notices, statements, reports and other communications from the Committee to any employee, Participant, Beneficiary or other person required or permitted under the Plan shall be deemed to have been duly given when personally delivered to, when transmitted via facsimile or other electronic media or when mailed overnight or by first-class mail, postage prepaid and addressed to, such employee, Participant, Beneficiary or other person at last known address on the Employer’s or Company’s records. All elections, designations, requests, notices, instructions and other communications from a Participant, Beneficiary or other person to the Committee required or permitted under the Plan shall be in such form as is prescribed from time to time by the Committee, and shall be mailed by first-class mail, transmitted via facsimile or other electronic media or delivered to such location as shall be specified by the Committee. Such communication shall be deemed to have been given and delivered only upon actual receipt by the Committee at such location.


11.11	Successors . The provisions of this Plan shall bind and inure to the benefit of the Participant’s Employer and its successors and assigns and the Participant and the Participant’s designated Beneficiaries.

11.12

Insurance . An Employer, on its own behalf or on behalf of the trustee of the Trust, and, in its sole discretion, may apply for and procure insurance on the life of the Participant, in such amounts and in such forms as the Employer may choose. The Employer or the trustee of the Trust, as the case may be, shall be the sole owner and beneficiary of any such insurance. The Participant shall have no interest whatsoever in any such policy or policies, and at the request of the Employer shall submit to medical examinations and supply such information and execute such documents as may be required by the insurance company or companies to whom the Employer has applied for insurance. The Participant may elect not to be insured.

11.13

Exhibit 10.1

under the Plan. In these circumstances, the purpose of the Plan could be frustrated. Accordingly, if, following a Change in Control, it should appear to any Participant that the Employer or any successor corporation has failed to comply with any of its obligations under the Plan or any agreement thereunder or, if the Employer or any other person takes any action to declare the Plan void or unenforceable or institutes any litigation or other legal action designed to deny, diminish or to recover from any Participant the benefits intended to be provided, then the Employer irrevocably authorizes such Participant to retain counsel of the Participant's choice at the expense of the Employer (who shall be jointly and severally liable for all reasonable fees of such counsel) to represent such Participant in connection with the initiation or defense of any litigation or other legal action, whether by or against the Employer or any director, officer, shareholder or other person affiliated with the Employer or any successor thereto in any jurisdiction. If paid by the Participant, the Employer shall reimburse such legal fees no later than December 31 ^st of the year following the year in which the expense was incurred.


11.14	Terms . Whenever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.


11.15	Headings . Headings and subheadings in the Plan are inserted for convenience only and shall not control or affect the meaning or construction of any of its provisions.

33020304v4

Exhibit 10.1

APPENDIX A

GRANDFATHERED MINIMUM BENEFITS FOR PARTICIPANTS WHO ON DECEMBER 31, 1995 WERE BOTH ACTIVELY EMPLOYED BY THE COMPANY AND COVERED UNDER THE WE RETIREMENT ACCOUNT PLAN

A Participant who was actively employed by the Company on December 31, 1995 and who was then covered by the WE Retirement Account Plan and who continued as an active employee of the Company until commencement of benefits under the WE Retirement Account Plan, shall be eligible for the Benefit A Grandfather Alternative. The Benefit A Grandfather Alternative will be equal to the greater of (x) or (y), where:

(x)

is the benefit that would have accrued for such Participant under the provisions of the special formula minimum retirement income grandfather sections (the “Grandfathered Benefit Provisions”) of the WE Retirement Account Plan, if the WE Retirement Account Plan were administered using all Pension Eligible Earnings as defined in this Plan, less the amount of the qualified pension benefit that such Participant would be actually entitled to receive were the Grandfathered Benefit Provisions of the WE Retirement Account Plan applied, and

(y)

is the benefit that would have accrued for such Participant under the provisions of the cash balance formula of the WE Retirement Account Plan, if the WE Retirement Account Plan was administered using all Pension Eligible Earnings as defined in this Plan, less the amount of the qualified benefit that such Participant would be actually entitled to receive under the cash balance formula of the WE Retirement Account Plan were such formula applied.

Credited service and Pension Eligible Earnings after December 31, 2010, will not be used to calculate this Benefit A Grandfather Alternative, but existing early retirement reductions based upon the Participant’s age and service applicable to the Grandfathered Benefit Provisions will continue in accordance with the terms of the WE Retirement Account Plan.

An example of the Benefit A Grandfather Alternative is as follows:

Assume the Participant actually receives a cash payment at retirement from the WE Retirement Account Plan of $380,000. At the time the Participant receives that benefit, calculations are made to convert the formula (x) benefit above into a lump sum amount that is the actuarial equivalent of a life annuity for the life of the Participant commencing at the later of age 60 or the Participant’s age at benefit commencement. This is accomplished in three steps. First, the portion of the formula (x) benefit calculated using all Pension Eligible Earnings is multiplied by the early retirement reduction factor as determined under the WE Retirement Account Plan. Secondly, the resulting benefit is converted into a lump sum actuarial equivalent ($1,450,000 in the illustration below) of the life annuity form described above, with actuarial equivalency determined for this purpose by using the interest rate and mortality table referenced in Article VII (with such interest rate to be that in effect on the last business day on the month prior to payment). Thirdly, the value of the lump sum to which the Participant would actually be entitled

A-1

Exhibit 10.1

under the WE Retirement Account were the Grandfathered Benefit Provisions applied is subtracted ($350,000 in the illustration below) to obtain the formula (x) net lump sum amount ($1,100,000 in the illustration below). Calculations are also made under formula (y) which compare the lump sum account balance that would have been generated for the Participant using all Pension Eligible Earnings under the regular cash balance formula of the WE Retirement Account Plan ($520,000 in the illustration below) with the actual lump sum account balance that would be payable to the Participant were the regular cash balance formula applied ($380,000 in the illustration below). The following comparisons result:

WE Retirement Account Plan:

Cash Balance Formula $380,000

Grandfather Formula 350,000

SERP Benefit A Grandfather Alternative, calculated under:

Cash Balance Formula $ 520,000

Grandfather Formula 1,450,000

Actual SERP Benefit A Grandfather is $1,100,000, which is the greater of

2(a) - 1(a) [$140,000] or 2(b) - 1(b) [$1,100,000].

33020304v4

A-2

Exhibit 10.2

LEGACY WISCONSIN ENERGY CORPORATION

EXECUTIVE DEFERRED COMPENSATION PLAN

Amended and Restated Effective as of January 1, 2016

Exhibit 10.2

TABLE OF CONTENTS



			Page
PURPOSE			1

ARTICLE 1		DEFINITIONS	1

	1.1	"Account Balance"	1
	1.2	"Annual or Long-Term Performance Award"	2
	1.3	"Annual Company Contribution Amount"	2
	1.4	"Annual Company Matching Amount"	2
	1.5	"Annual Deferral Amount"	2
	1.6	"Annual Installment Method"	2
	1.7	"Annual Performance Share Amount"	3
	1.8	"Annual Restricted Stock Amount"	3
	1.9	"Annual Stock Option Amount"	3
	1.10	"Base Annual Salary"	3
	1.11	"Beneficiary"	4
	1.12	"Beneficiary Designation Form"	4
	1.13	"Board"	4
	1.14	"Change in Control"	4
	1.15	"Chief Executive Officer"	5
	1.16	"Claimant"	5
	1.17	"Code"	5
	1.18	"Committee"	5
	1.19	"Company"	5
	1.20	"Company Contribution Account"	6
	1.21	"Company Matching Account"	6
	1.22	"Deduction Limitation"	6
	1.23	"Deferral Account"	6
	1.24	"Disability"	6
	1.25	"Disability Benefit"	6
	1.26	"Dividend Deferral Account"	7
	1.27	"Election Form"	7
	1.28	"Eligible Stock Option"	7
	1.29	"Employee"	7
	1.30	"Employer(s)"	7
	1.31	"ERISA"	7
	1.32	"In Service Payout"	7
	1.33	"Inactive Participant"	7
	1.34	"401(k) Plan"	7
	1.35	"Measurement Funds"	7
	1.36	"Participant"	7
	1.37	"Performance Shares"	8
	1.38	"Performance Share Account"	8
	1.39	"Performance Share Amount"	8
	1.40	"Plan"	8
	1.41	"Plan Year"	8

Exhibit 10.2



	1.42	"Pre-Retirement Survivor Benefit"	8
	1.43	"Qualifying Gain"	8
	1.44	"Restricted Stock"	8
	1.45	"Restricted Stock Account"	9
	1.46	"Restricted Stock Amount"	9
	1.47	"Retirement", "Retire(s)" or "Retired"	9
	1.48	"Retirement Benefit"	9
	1.49	"Rollover Account"	9
	1.50	"Rollover Amount"	9
	1.51	"Severance Payments"	9
	1.52	"SERP Payments"	9
	1.53	"Stock"	9
	1.54	"Stock Option Account"	9
	1.55	"Stock Option Amount"	10
	1.56	"Termination Benefit"	10
	1.57	"Termination of Employment"	10
	1.58	"Trust"	10
	1.59	"Unforeseeable Financial Emergency"	10

ARTICLE 2		SELECTION, ENROLLMENT, ELIGIBILITY	10

	2.1	Selection by Committee	10
	2.2	Enrollment Requirements	10
	2.3	Eligibility; Commencement of Participation	11
	2.4	Termination of Participation and/or Deferrals	11

ARTICLE 3		DEFERRAL COMMITMENTS/COMPANY MATCHING/CREDITING/TAXES	11

	3.1	Maximum Deferral	11
	3.2	Election to Deter; Effect of Election Form	12
	3.3	Withholding of Annual Deferral Amounts	14
	3.4	Annual Company Contribution Amount	14
	3.5	Annual Company Matching Amount	15
	3.6	Stock Option Amount	16
	3.7	Restricted Stock Amount	16
	3.8	Performance Share Amount	16
	3.9	Deferred Dividend Equivalents	16
	3.10	Rollover Amount	16
	3.11	Investment of Trust Assets	17
	3.12	Sources of Stock	17
	3.13	Vesting	17
	3.14	Crediting/Debiting of Account Balances	18
	3.15	FICA and Other Taxes	21
	3.16	Distributions	22

ARTICLE 4		IN SERVICE PAYOUT; UNFORESEEABLE FINANCIAL EMERGENCIES;
WITHDRAWAL ELECTION			22

	4.1	In Service Payout	22

Exhibit 10.2



	4.2	Other Benefits Take Precedence Over In Service	23
	4.3	Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies	23
	4.4	Withdrawal Election	23

ARTICLE 5		RETIREMENT BENEFIT	24

	5.1	Retirement Benefit	24
	5.2	Payment of Retirement Benefit	24
	5.3	Death Prior to Completion of Retirement Benefit	24
	5.4	Special "Make Whole" Benefits	24

ARTICLE 6		PRE-RETIREMENT SURVIVOR BENEFIT	26

	6.1	Pre-Retirement Survivor Benefit	26
	6.2	Payment of Pre-Retirement Survivor Benefit	26

ARTICLE 7		TERMINATION BENEFIT	27

	7.1	Termination Benefit	27
	7.2	Payment of Termination Benefit	27

ARTICLE 8		DISABILITY WAIVER AND BENEFIT	27

	8.1	Disability Waiver	27
	8.2	Continued Eligibility; Disability Benefit	28

ARTICLE 9		BENEFICIARY DESIGNATION	28

	9.1	Beneficiary	28
	9.2	Beneficiary Designation; Change	28
	9.3	Acknowledgment	29
	9.4	No Beneficiary Designation	29
	9.5	Doubt as to Beneficiary	29
	9.6	Discharge of Obligations	29

ARTICLE 10		LEAVE OF ABSENCE	29

	10.1	Paid Leave of Absence	29
	10.2	Unpaid Leave of Absence	29

ARTICLE 11		TERMINATION, AMENDMENT OR MODIFICATION	29

	11.1	Termination	29
	11.2	Amendment	30
	11.3	Effect of Payment	31

ARTICLE 12		ADMINISTRATION	31

	12.1	Committee Duties	31
	12.2	Administration Upon Change In Control	32

iii

Exhibit 10.2



	12.3	Agents	32
	12.4	Binding Effect of Decisions	32
	12.5	Indemnity of Committee	32
	12.6	Employer Information	32
	12.7	Coordination with Other Benefits	33

ARTICLE 13		CLAIMS PROCEDURES	33

	13.1	Presentation of Claim	33
	13.2	Decision on Initial Claim	33
	13.3	Right to Review	34
	13.4	Decision on Review	34
	13.5	Form of Notice and Decision	35
	13.6	Legal Action	35

ARTICLE 14		TRUST	35

	14.1	Establishment of the Trust	35
	14.2	Interrelationship of the Plan and the Trust	35
	14.3	Distributions From the Trust	35

ARTICLE 15		MISCELLANEOUS	35

	15.1	Status of Plan	35
	15.2	Unsecured General Creditor	36
	15.3	Employer's Liability	36
	15.4	Nonassignability	36
	15.5	Not a Contract of Employment	36
	15.6	Furnishing Information	36
	15.7	Terms	36
	15.8	Captions	37
	15.9	Governing Law	37
	15.10	Notice	37
	15.11	Successors	37
	15.12	Validity	37
	15.13	Incompetent	37
	15.14	Court Order	37
	15.15	Distribution in the Event of Taxation	38
	15.16	Insurance	38
	15.17	Legal Fees To Enforce Rights After Change in Control	38
	15.18	Payout Under Special Circumstances	39

Exhibit 10.2

LEGACY WISCONSIN ENERGY CORPORATION

EXECUTIVE DEFERRED COMPENSATION PLAN

PURPOSE

The purpose of this Plan is to provide specified benefits to a select group of management and highly compensated Employees who contributed materially to the continued growth, development and business success of Wisconsin Energy Corporation, the predecessor of WEC Energy Group, Inc., and its former subsidiaries, if any, that sponsored this Plan. This Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA. The Plan was amended and restated effective as of July 23, 2004 (except as otherwise specifically provided, including amendments approved for equity‑based deferrals or Company stock investments credited on or after November 2, 2005).

Except as provided in the next sentence, any amounts that are earned, deferred and vested under the Plan as of December 31, 2004 are "grandfathered" (within the meaning of, and as determined in accordance with Code section 409A and the Treasury Regulations thereunder). Grandfathered pension make-whole benefits provided under section 5.4 are those benefits derived from compensation paid and credited to the Plan before January 1, 2005, provided such benefits were vested as of December 31, 2004. Therefore, such grandfathered amounts are not subject to Code section 409A and shall continue to be governed by the terms set forth herein. Effective as of January 1, 2005, the Company renamed the Plan the Legacy Wisconsin Energy Corporation Executive Deferred Compensation Plan. The Company also established the WEC Energy Group Executive Deferred Compensation Plan (previously, the Wisconsin Energy Corporation Executive Deferred Compensation Plan) (the "EDCP") as a new nonqualified deferred compensation plan and as a replacement plan for the portion of the Plan that maintained account balances during the Code section 409A transition period from January 1, 2005 through December 31, 2008 and that are subject to provisions of Code section 409A. As a result, no new employees shall participate in the Plan effective as of January 1, 2005, but shall begin participation in the EDCP if otherwise eligible pursuant to the terms of the EDCP.

The Plan was restated effective as of January 1, 2015, to reference any rabbi trust established by the Company and make other minor changes to administrative provisions which do not constitute material modifications to the Plan under Code section 409A. Effective as of January 1, 2016, the Plan was again restated to reflect the change in the name of the Company, to update information on Measurement Funds, to modify administrative provisions when no valid beneficiary designation exists and to update the claims procedures.

ARTICLE 1
DEFINITIONS

For purposes of this Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings:


1.1	"Account Balance" shall mean, with respect to a Participant, a credit on the records of the Employer equal to the sum of (i) the Deferral Account balance, (ii) the vested

Exhibit 10.2

Company Contribution Account balance, (iii) the Company Matching Account balance, (iv) the Stock Option Account balance, (v) the Restricted Stock Account balance, (vi) Performance Share Account balance, (vii) the Dividend Deferral Account balance and (viii) the Rollover Account balance. The Account Balance, and each other specified account balance, shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan.

1.2

"Annual or Long‑Term Performance Award" shall mean any compensation, in addition to Base Annual Salary relating to services performed during any calendar year, whether or not paid in such calendar year or included on the Form W‑2 for such calendar year, payable to a Participant as an Employee under any Employer's annual performance award and cash incentive plans, including any long‑term incentive plans as may be in existence from time to time, but excluding Severance Payments, SERP Payments and any stock options, restricted stock, performance shares, dividends and dividend equivalents provided under a plan or arrangement of any Employer.


1.3	"Annual Company Contribution Amount" shall mean, for any one Plan Year, the amount determined in accordance with section 3.4.


1.4	"Annual Company Matching Amount" for any one Plan Year shall be the amount determined in accordance with section 3.5.

1.5

"Annual Deferral Amount" shall mean that portion of a Participant's Base Annual Salary, Annual or Long‑Term Performance Award, Severance Payments and/or SERP Payments that a Participant elects to have, and is deferred, in accordance with Article 3, for any one Plan Year. Except with respect to Severance Payments and SERP Payments, in the event of a Participant's Retirement, Disability (if deferrals cease in accordance with section 8.1), death or a Termination of Employment prior to the end of a Plan Year, such year's Annual Deferral Amount shall be the actual amount withheld prior to such event.

1.6

"Annual Installment Method" shall be an annual installment payment over the number of years selected by the Participant, not to exceed 20, in accordance with this Plan, as set forth below. In each case for purposes of determining the amount of the installment payment to be made, the Account Balance of the Participant shall be valued as of the close of business on the last business day of the year preceding the year for which the payment is to be made. Each annual installment, regardless of the method selected, shall be payable within 60 days after February 1st of each year. The alternative methods allowable are as follows:

(a)

Fractional Method . The annual installment shall be calculated by multiplying this balance by a fraction, the numerator of which is one, and the denominator of which is the remaining number of annual payments due the Participant. By way of example, if the Participant elects a 10 year Annual Installment Method, the first payment shall be 1/10 of the Account Balance, calculated as described in this definition. The following year, the payment shall be 1/9 of the Account Balance, calculated as described in this definition.

Exhibit 10.2

(b)

Percentage or Fixed Dollar Method . The annual installment shall be calculated by multiplying this balance in the case of the percentage method, by the percentage selected by the Participant and paying out the resulting amount, or in the case of the fixed dollar method, by paying out the fixed dollar amount selected by the Participant, for the number of years selected by the Participant. However, in the event the dollar amount selected is greater than the Account Balance in any given year, the entire Account Balance will be distributed. Further, regardless of the method selected by the Participant, the final installment payment will include 100% of the then remaining Account Balance.

(c)

Special Installment Method . Under this alternative method, the Participant selects both the number of years and a specified interest rate, which is then used to calculate a level fixed dollar amount of annual payouts which would exhaust the Account Balance over such number of years, if actual performance of the elected Measurement Funds were identical to the specified interest rate. However, in recognition of the fact that such exact conformity is unlikely, in the event the calculated level fixed dollar amount is greater than the Account Balance in any given year, the entire Account Balance will be distributed. Further, the final installment payment will include 100% of the then remaining Account Balance.


1.7	"Annual Performance Share Amount" shall mean, with respect to a Participant for any one Plan Year, that portion of the Performance Share Amount attributable to Performance Shares which would otherwise vest during that year under a plan or arrangement of any Employer, but which is instead deferred in accordance with section 3.1(d) of this Plan.


1.8	"Annual Restricted Stock Amount" shall mean, with respect to a Participant for any one Plan Year, that portion of the Restricted Stock Amount attributable to Restricted Stock which would otherwise vest during that year and which is deferred in accordance with section 3.1(c) of this Plan.


1.9	"Annual Stock Option Amount" shall mean, with respect to a Participant for any one Plan Year, that portion of the Stock Option Amount which is attributable to Eligible Stock Option exercise during that year and which is deferred in accordance with section 3.1(b) of this Plan.

1.10

"Base Annual Salary" shall mean the annual cash compensation relating to services performed during any calendar year, whether or not paid in such calendar year or included on the Form W‑2 for such calendar year, excluding Severance Payments, SERP Payments, performance awards, bonuses, commissions, overtime, fringe benefits, relocation expenses, incentive payments, non‑monetary awards, directors fees and other fees, automobile and other allowances paid to a Participant for employment services rendered (whether or not such allowances are included in the Employee's gross income), stock options, restricted stock, performance shares, dividends and dividend equivalents provided under a plan or arrangement of any Employer. Base Annual Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or non‑qualified plans of any Employer and shall be calculated to include amounts not otherwise included in the Participant's gross income

Exhibit 10.2

under Code sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by any Employer; provided, however, that all such amounts will be included in compensation only to the extent that, had there been no such plan, the amount would have been payable in cash to the Employee.


1.11	"Beneficiary" shall mean one or more persons, trusts, estates or other entities, designated in accordance with Article 9, that are entitled to receive benefits under this Plan upon the death of a Participant.


1.12	"Beneficiary Designation Form" shall mean the form established from time to time by the Committee that a Participant completes, signs and returns to the Committee to designate one or more Beneficiaries.


1.13	"Board" shall mean the board of directors of the Company.


1.14	"Change in Control" with respect to the Company shall mean the occurrence of any one of the events set forth below:

(a)

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 (i) of paragraph (c) below; or

(b)

the following individuals cease for any reason to constitute a majority of the number of directors then serving individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's shareholders was approved or recommended by a vote of at least two‑thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or

(c)

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 (i) 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 (ii) 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

Exhibit 10.2

20% or more of the combined voting power of the Company's then outstanding securities; or

(d)

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


(e)	the Board of Directors of the Company 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 the stock of the Company.


1.15	"Chief Executive Officer" shall mean the Chief Executive Officer of the Company.


1.16	"Claimant" shall have the meaning set forth in section 13.1.


1.17	"Code" shall mean the Internal Revenue Code of 1986, as it may be amended from time to time.


1.18	"Committee" shall mean an internal administrative committee appointed by the Chief Executive Officer to administer the Plan in accordance with Article 12.


1.19	"Company" shall mean WEC Energy Group, Inc., a Wisconsin corporation, and any successor to all or substantially all of the Company's assets or business. Prior to June 29, 2015, the Company was known as Wisconsin Energy Corporation.

Exhibit 10.2

1.20

"Company Contribution Account" shall mean (i) the sum of the Participant's Annual Company Contribution Amounts, plus (ii) amounts credited in accordance with all the applicable crediting provisions of this Plan that relate to the Participant's Company Contribution Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant's Company Contribution Account.

1.21

"Company Matching Account" shall mean (i) the sum of all of a Participant's Annual Company Matching Amounts, plus (ii) amounts credited in accordance with all the applicable crediting provisions of this Plan that relate to the Participant's Company Matching Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant's Company Matching Account.

1.22

"Deduction Limitation" shall mean the following described limitation on a benefit that may otherwise be distributable pursuant to the provisions of this Plan. Except as otherwise provided, this limitation shall be applied to all distributions that are "subject to the Deduction Limitation" under this Plan. If an Employer determines in good faith prior to a Change in Control that there is a reasonable likelihood that any compensation paid to a Participant for a taxable year of the Employer would not be deductible by the Employer solely by reason of the limitation under Code section 162(m), then to the extent deemed necessary by the Employer to ensure that the entire amount of any distribution to the Participant pursuant to this Plan prior to the Change in Control is deductible, the Employer may defer all or any portion of a distribution under this Plan. Any amounts deferred pursuant to this limitation shall continue to be credited/debited with additional amounts in accordance with section 3.13 below, even if such amount is being paid out in installments. The amounts so deferred and amounts credited thereon shall be distributed to the Participant or his or her Beneficiary (in the event of the Participant's death) at the earliest possible date, as determined by the Employer in good faith, on which the deductibility of compensation paid or payable to the Participant for the taxable year of the Employer during which the distribution is made will not be limited by section 162(m), or if earlier, the effective date of a Change in Control. Notwithstanding anything to the contrary in this Plan, the Deduction Limitation shall not apply to any distributions made after a Change in Control.


1.23	"Deferral Account" shall mean (i) the sum of all of a Participant's Annual Deferral Amounts, plus (ii) amounts credited in accordance with all the applicable crediting provisions of this Plan that relate to the Participant's Deferral Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to his or her Deferral Account.


1.24	"Disability" shall mean a period of disability during which a Participant is unable to perform the material duties of his or her job, as determined by the Committee in its sole discretion.


1.25	"Disability Benefit" shall mean the benefit set forth in Article 8.

Exhibit 10.2

1.26

"Dividend Deferral Account" shall mean (i) the sum of the Participant's deferrals made pursuant to section 3.1(e) plus (ii) amounts credited/debited in accordance with all the applicable crediting/debiting provisions of this Plan that relate to the Participant's Dividend Deferral Account, less (iii) all distributions made to the Participant or his or her beneficiary pursuant to this Plan that relate to the Participant's Dividend Deferral Account.


1.27	"Election Form" shall mean the form established from time to time by the Committee that a Participant completes and submits in accordance with procedures established by the Committee to make an election under the Plan. To the extent authorized by the Committee, such form may be electronic or set forth in some other media or format.


1.28	"Eligible Stock Option" shall mean one or more non‑qualified stock option(s) selected by the Committee in its sole discretion and exercisable under a plan or arrangement of any Employer permitting a Participant under this Plan to defer gain with respect to such option.


1.29	"Employee" shall mean a person who is an employee of any Employer.


1.30	"Employer(s)" shall mean the Company and/or any of its subsidiaries that have been selected by the Board to participate in the Plan and have adopted the Plan as a sponsor.


1.31	"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.


1.32	"In Service Payout" shall mean the payout set forth in section 4.1.


1.33	"Inactive Participant" shall mean an individual who at one point was a Participant in the Plan or a predecessor non‑qualified deferred compensation plan and has an undistributed Account Balance, but is no longer eligible to make deferral elections under the Plan by reason of such individual's removal under section 2.4 hereof or otherwise.


1.34	"401(k) Plan" shall refer to all tax‑qualified profit sharing plans maintained by an Employer that incorporate provisions for elective deferral contributions by participating employees in accordance with section 401(k) of the Code.


1.35	"Measurement Funds" shall mean the hypothetical investment funds available under the Plan, as provided in section 3.14, to determine the earnings and losses credited to a Participant's Account Balance.

1.36

"Participant" shall mean any Employee or Retired Employee of any Employer (i) who is selected to participate in the Plan and who has not been removed, and (ii) who commences participation in the Plan. A spouse or former spouse of a Participant shall not be treated as a Participant in the Plan or have an account balance under the Plan, even if he or she has an interest in the Participant's benefits under the Plan as a result of applicable law or property settlements resulting from legal separation or divorce.

Exhibit 10.2


1.37	"Performance Shares" shall mean unvested performance shares with respect to Stock selected by the Committee in its sole discretion and awarded to the Participant under a plan or arrangement of any Employer.

1.38

"Performance Share Account" shall mean (i) the sum of the Participant's Annual Performance Share Amounts, plus (ii) amounts credited/debited in accordance with all the applicable crediting/debiting provisions of this Plan that relate to the Participant's Performance Share Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant's Performance Share Account.

1.39

"Performance Share Amount" shall mean, for any grant of Performance Shares, an amount equal to the value of Stock which would have been distributed to the Participant upon vesting of such Performance Shares, calculated using the average of the reported high and low prices for the Stock as of the day such Performance Shares would otherwise vest (if a business day) or as of the next following business day. Effective for Performance Shares deferred on or after November 2, 2005, such value shall be calculated using the closing price for the Stock as of the day such Performance Shares would otherwise vest (if a business day) or as of the next following business day.


1.40	"Plan" shall mean the Legacy Wisconsin Energy Corporation Executive Deferred Compensation Plan. Prior to January 1, 2005, the Plan was known as the Wisconsin Energy Corporation Executive Deferred Compensation Plan.


1.41	"Plan Year" shall mean a period beginning on January 1 of each calendar year and continuing through December 31 of such calendar year.


1.42	"Pre‑Retirement Survivor Benefit" shall mean the benefit set forth in Article 6.

1.43

"Qualifying Gain" shall mean the value accrued upon exercise of an Eligible Stock Option (i) using a Stock‑for‑Stock payment method and (ii) having an aggregate fair market value in excess of the total Stock purchase price necessary to exercise the option. In other words, the Qualifying Gain upon exercise of an Eligible Stock Option equals the total market value of the shares (or share equivalent units) acquired minus the total stock purchase price. For example, assume a Participant elects to defer the Qualifying Gain accrued upon exercise of an Eligible Stock Option to purchase 1000 shares of Stock at an exercise price of $20 per share, when Stock has a current fair market value of $25 per share. Using the Stock‑for‑Stock payment method, the Participant would deliver 800 shares of Stock (worth $20,000) to exercise the Eligible Stock Option and receive, in return, 800 shares of Stock plus a Qualifying Gain (in this case, in the form of an unfunded and unsecured promise to pay money or property in the future) equal to $5,000 ( i.e. , the current value of the remaining 200 shares of Stock).


1.44	"Restricted Stock" shall mean unvested shares of Stock which is restricted stock selected by the Committee in its sole discretion and awarded to the Participant under any stock incentive plan or arrangement of any Employer.

Exhibit 10.2

1.45

"Restricted Stock Account" shall mean (i) the sum of the Participant's Annual Restricted Stock Amounts, plus (ii) amounts credited/debited in accordance with all the applicable crediting/debiting provisions of this Plan that relate to the Participant's Restricted Stock Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant's Restricted Stock Account.

1.46

"Restricted Stock Amount" shall mean, for any grant of Restricted Stock, an amount equal to the value of such Restricted Stock, calculated using the average of the reported high and low prices for the Stock as of the day such Restricted Stock would otherwise vest (if a business day) or as of the next following business day. Effective for Restricted Stock deferred on or after November 2, 2005, such value shall be calculated using the closing price for the Stock as of the day such Restricted Stock would otherwise vest (if a business day) or as of the next following business day.


1.47	"Retirement", "Retire(s)" or "Retired" shall mean, with respect to an Employee, severance from employment from all Employers for any reason other than a leave of absence, death or Disability on or after the attainment of age fifty‑five (55).


1.48	"Retirement Benefit" shall mean the benefit set forth in Article 5.


1.49	"Rollover Account" shall mean a Participant's Rollover Amount, plus amounts credited/debited in accordance with all the applicable crediting/debiting provisions of this Plan that relate to the Participant's Rollover Account, less all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant's Rollover Account


1.50	"Rollover Amount" shall mean the amount determined in accordance with section 3.8.

1.51

"Severance Payments" shall mean any post‑termination amounts due a Participant in any calendar year under the Company's Special Executive Severance Policy or Executive Severance Policy or under any change in control contract between the Company and an Employee, on account of his or her Termination of Employment, whether or not paid in such calendar year or included on the Form W‑2 for such calendar year.

1.52

"SERP Payments" shall mean any distributions due a Participant in any calendar year resulting from his or her participation in the Legacy Wisconsin Energy Corporation Supplemental Executive Retirement Plan (prior to January 1, 2005, the Wisconsin Energy Corporation Supplemental Executive Retirement Plan), whether or not paid in such calendar year or included on the Form W‑2 for such calendar year.


1.53	"Stock" shall mean WEC Energy Group, Inc. common stock. Prior to June 29, 2015, "Stock" means Wisconsin Energy Corporation common stock.

1.54

"Stock Option Account" shall mean the sum of (i) the Participant's Annual Stock Option Amounts, plus (ii) amounts credited/debited in accordance with all the applicable crediting/debiting provisions of this Plan that relate to the Participant's Stock Option Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant's Stock Option Account.

Exhibit 10.2

1.55

"Stock Option Amount" shall mean, for any Eligible Stock Option, the amount of Qualifying Gains, calculated using the average of the reported high and low prices for the Stock as of the day of exercise (if a business day) or as of the next following business day. Effective for Eligible Stock Option deferrals on or after November 2, 2005, such value shall be calculated using the closing price for the Stock as of the day of exercise (if a business day) or as of the next following business day.


1.56	"Termination Benefit" shall mean the benefit set forth in Article 7.

1.57

"Termination of Employment" shall mean the severing of employment with all Employers, voluntarily or involuntarily, for any reason other than Retirement, Disability, death or an authorized leave of absence. However, if an Employee leaves employment with all Employers in connection with such Employee's immediate transfer to and acceptance of employment with another employer which is providing services essential to the utilities business conducted by the Company or an Employer, then such Employee will not be considered to have incurred a Termination of Employment. Instead, such Employee will be deemed to be continuing in the employ of an Employer for purposes of the Plan for so long as such Employee remains in the employ of such other employer and such employer continues to provide such services.


1.58	"Trust" shall mean any fund created by a rabbi trust agreement established by the Company, and as amended from time to time.

1.59

"Unforeseeable Financial Emergency" shall mean an unanticipated emergency that is caused by an event beyond the control of the Participant that would result in severe financial hardship to the Participant resulting from (i) a sudden and unexpected illness or accident of the Participant or a dependent of the Participant, (ii) a loss of the Participant's property due to casualty, or (iii) such other extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, all as determined in the sole discretion of the Committee.

ARTICLE 2
SELECTION, ENROLLMENT, ELIGIBILITY

2.1

Selection by Committee . Participation in the Plan shall be limited to a select group of management and highly compensated Employees of the Employers, as determined by the Committee. From that group, the Committee shall select Employees to participate in the Plan. The Committee may determine to limit a Participant's eligibility under the Plan to certain portions of the Plan as, for example, to permit a Participant to be eligible under the Plan for the purpose of deferring only Performance Share dividend equivalents pursuant to section 3.1(e) and for no other purpose. Notwithstanding anything in the Plan to the contrary, effective as of January 1, 2005, no new employees shall be eligible to participate in the Plan.


2.2	Enrollment Requirements . As a condition to participation, each selected Employee shall complete, timely submit an Election Form in accordance with procedures established by the Committee, and any other relevant forms within such time periods as

Exhibit 10.2

the Committee may prescribe. In addition, the Committee shall establish from time to time such other enrollment requirements as it determines in its sole discretion are necessary.

2.3

Eligibility; Commencement of Participation . Provided an Employee selected to participate in the Plan has met all enrollment requirements set forth in this Plan and required by the Committee, including returning all required documents to the Committee within the specified time period, that Employee shall commence participation in the Plan on the first day of the month following the month in which the Employee completes all enrollment requirements.

2.4

Termination of Participation and/or Deferrals . If the Committee determines in good faith that a Participant no longer qualifies as a member of a select group of management or highly compensated employees, as membership in such group is determined in accordance with sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, the Committee shall have the right, in its sole discretion, to take any or all of the following actions: (i) terminate any deferral election the Participant has made for the remainder of the Plan Year in which the Participant's membership status changes, (ii) prevent the Participant from making future deferral elections and/or (iii) immediately distribute the Participant's then Account Balance as a Termination Benefit and terminate the Participant's participation in the Plan. The Committee may also remove a Participant from continuing participation in the Plan at any time in its sole discretion and such individual shall become an Inactive Participant to the extent he or she still has an undistributed Account Balance.

ARTICLE 3
DEFERRAL COMMITMENTS/COMPANY MATCHING/CREDITING/TAXES


3.1	Maximum Deferral .

(a)

Base Annual Salary, Annual or Long‑Term Performance Award, Severance Payments SERP Payments and/or Make Whole Pension Supplements . For each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, Base Annual Salary, Annual or Long‑Term Performance Award, Severance Payments, SERP Payments and/or Make Whole Pension Supplements (as referenced in section 5.4(d)) up to the following maximum percentages for each deferral elected:



Deferral	Maximum Percentage
Base Annual Salary	100%
Annual or Long‑Term Performance Award	100%
Severance Payments	100%
SERP Payments	100%
Make Whole Pension Supplements	100%

Exhibit 10.2

Notwithstanding the foregoing, the Participant may change his or her election with respect to the Base Annual Salary portion of the Annual Deferral Amount on a monthly basis, by timely delivering to the Committee in accordance with its rules and procedures, before the end of the month preceding the month for which the election will be effective, a new Election Form for such purpose. Notwithstanding any other provision of this Plan, any Election form or revocation will be given prospective effect only and may not affect prior deferrals.


(b)	For each Eligible Stock Option, a Participant may elect to defer up to 100% of his or her Stock Option Amount.


(c)	For any grant of Restricted Stock, a Participant may elect to defer up to 100% of his or her Restricted Stock Amount.


(d)	For any grant of Performance Shares, a Participant may elect to defer up to 100% of his or her Performance Share Amount.


(e)	A Participant may elect to defer up to 100% of the dividend equivalents on any unvested Performance Shares under a plan or arrangement of any Employer.


(f)	Deferral of Stock Option Amounts, Restricted Stock Amounts, Performance Share Amounts and dividend equivalents on Performance Shares may also be limited by other terms or conditions as set forth in the plan or agreement under which such items may be granted.


3.2	Election to Defer; Effect of Election Form .

(a)

Base Annual Salary . A Participant's Election Form with respect to Base Annual Salary shall be filed with the Committee in accordance with its rules, but in no event later than the end of the month preceding the month for which the election will be effective. As noted above in section 3.1(a), a Participant may subsequently change or revoke his or her election with respect to Base Annual Salary, but only with prospective effect only, to take effect as of the first day of the month immediately following receipt of the new Election Form by the Committee. Therefore, any Election Form shall be irrevocable with respect to the portion of Base Annual Salary deferral during the period of time covered by such Form.

(b)

Annual or Long‑Term Performance Award . A Participant's Election Form with respect to Annual Performance Award shall be filed with the Committee in accordance with its rules, but in no event later than November 30 of any calendar year with respect to all or any part of an Annual Performance Award that might otherwise become payable on account of a Participant's services during such calendar year and in all events prior to the time that the Participant has earned an absolute and unconditional right to payment. Any such Election Form which is on file with the Committee on November 30 of a calendar year shall become irrevocable as of such date. When and as a Long-Term Performance Award

Exhibit 10.2

program is put into place, the Committee will establish rules for a Participant's Election Form similar to the above, and providing that such Election Form must be filed in all events prior to the time that the Participant has earned an absolute and unconditional right to payment and that such Election Form may not be revoked by the Participant once the filing deadline date has passed.


(c)	Severance Payments . A Participant's Election Form with respect to Severance Payments shall be filed with the Committee in accordance with its rules and the rules for a prior deferral election set forth in the documents or contracts providing for Severance Payments.

(d)

SERP Payments . A Participant's Election Form with respect to SERP Payments shall be filed with the Committee in accordance with its rules and any rules for a prior deferral election set forth in the SERP. However, notwithstanding any contrary provisions in the SERP, a Participant who is a participant in the SERP shall be allowed to both elect that a lump‑sum method of payment be made to such Participant at the time when payments are to commence under the terms of the SERP (the "SERP Starting Date") for the SERP "A" or "B" benefits or that such a lump sum be determined and then credited to such Participant's Account Balance under this Plan as of the SERP Starting Date with such Participant to be treated as having then "Retired" for purpose of this Plan (so that the Participant's election for a method of payout under Article 5 shall govern), provided that such an Election Form filed by the Participant with regard to the SERP is submitted to the Committee at least one year prior to the SERP Starting Date. Notwithstanding any other provision of this Plan to the contrary and notwithstanding any Election Form executed by any Participant at any time to the contrary, no SERP Payments which would have been made on or after April 1, 2004, in the absence of deferral shall be deferred to the Plan.


(e)	Make Whole Pension Supplements . Section 5.4(d) provides the rules applicable to Election Forms regarding Make Whole Pension Supplements.

(f)

Stock Option Deferral . For an election to defer Stock Option Amounts to be valid: (i) a separate irrevocable Election Form must be completed and signed by the Participant with respect to the Eligible Stock Option; (ii) the Election Form must be timely delivered to the Committee and accepted by the Committee at least six months prior to the date the Participant elects to exercise the Eligible Stock Option; (iii) the Election Form shall be irrevocable from and after the date which is six months prior to the date the Participant elects to exercise the Eligible Stock Option; and (iv) the Eligible Stock Option must be exercised using the Stock‑for‑Stock payment method (directly or by attestation).

(g)

Restricted Stock . For an election to defer Restricted Stock Amounts to be valid: (i) a separate irrevocable Election Form must be completed and signed by the Participant, with respect to the Restricted Stock to which such amounts relate; and (ii) such Election Form must be timely delivered to the Committee and accepted by the Committee at least six months prior to the date such Restricted Stock vests

Exhibit 10.2

under the terms of the plan or arrangement pursuant to which it was granted; and (iii) the Election Form shall be irrevocable from and after the date which is six months prior to the date such Restricted Stock vests under the terms of the plan or arrangement pursuant to which it was granted.

(h)

Performance Shares . For an election to defer Performance Share Amounts to be valid: (i) a separate irrevocable Election Form must be completed and signed by the Participant, with respect to the Performance Shares to which such amounts relate; and (ii) such Election Form must be timely delivered to the Committee and accepted by the Committee at least six months prior to the date such Performance Shares vest under the terms of the plan or arrangement pursuant to which they were issued; and (iii) the Election Form shall be irrevocable from and after the date which is six months prior to the date such Performance Shares vest under the terms of the plan or arrangement pursuant to which they were issued.

(i)

Performance Share Dividend Equivalents . A Participant's election form with respect to deferral of dividend equivalents with respect to Performance Shares shall be filed with the Committee in accordance with its rules, but in no event later than the day preceding the date for which the election will be effective. A Participant may subsequently change or revoke his or her election with respect to deferral of dividend equivalents with respect to Performance Shares, but only with prospective effect, to take effect as of the day following receipt of the new election form by the Committee. Therefore, any election form shall be irrevocable with respect to dividend equivalents relating to dividends declared during the period of time covered by an election form.

3.3

Withholding of Annual Deferral Amounts . For each Plan Year, the Base Annual Salary portion of the Annual Deferral Amount shall be withheld from each regularly scheduled Base Annual Salary payroll in equal amounts, as adjusted from time to time for increases and decreases in Base Annual Salary. The Annual or Long‑Term Performance Award, Severance Payments and SERP Payments portion of the Annual Deferral Amount shall be withheld at the time the Annual or Long‑Term Performance Award, Severance Payments and/or SERP Payments are or otherwise would be paid to the Participant, whether or not this occurs during the Plan Year itself.

3.4

Annual Company Contribution Amount . For each Plan Year, an Employer, in its sole discretion, may, but is not required to, credit any amount it desires to any Participant's Company Contribution Account under this Plan, which amount shall be for that Participant the Annual Company Contribution Amount for that Plan Year. The amount so credited to a Participant may be smaller or larger than the amount credited to any other Participant, and the amount credited to any Participant for a Plan Year may be zero, even though one or more other Participants receive an Annual Company Contribution Amount for that Plan Year. The Annual Company Contribution Amount, if any, shall be credited as of the last day of the Plan Year, unless the Employer in its sole discretion determines otherwise. If a Participant is not employed by an Employer as of the last day of a Plan Year other than by reason of his or her Retirement or death while employed, any Annual

Exhibit 10.2

Company Contribution Amount previously credited for that Plan Year shall be forfeited and become zero, unless the Employer in its sole discretion determines otherwise.

3.5 Annual Company Matching Amount . A Participant's Annual Company Matching Amount for any Plan Year shall be made for any Participant who elects some deferral of Base Annual Salary into this Plan. Prior to January 1, 2002, the Annual Company Matching Amount will depend on the structure of the relevant Employer's 401(k) Plan which applies to the Participant. To determine the Annual Company Matching Amount, it is necessary to identify the relevant Employer 401(k) Plan matching rate (the "Matching Rate") and the percentage of compensation subject to such matching rate (the "Eligible Compensation Percentage"). From and after January 1, 2002, the Annual Company Matching Amount will be determined by using the Matching Rate and the Eligible Compensation Percentage that applies to the Wisconsin Energy Corporation Employee Retirement Savings Plan, regardless of the actual 401(k) plan, if any, that applies to the Participant. In the Wisconsin Energy Corporation Employee Retirement Savings Plan, the Matching Rate is 50% and the Eligible Compensation Percentage is 6%. The formula for a Participant's Annual Company Matching Amount is the Matching Rate multiplied times "X", where X is the difference between the Eligible Compensation Percentage times the Participant's gross compensation eligible for matching under the relevant Employer 401(k) Plan before any reduction for deferrals of Base Annual Salary under this Plan and without regard to any Code limitations, and the Participant's "Deemed Maximum Elective Deferral ("DMED"). The DMED for any Participant is equal to the Eligible Compensation Percentage multiplied by such Participant's gross compensation eligible for matching under the relevant Employer 401(k) Plan, reduced by deferrals of Base Annual Salary under this Plan [but limited to the maximum compensation that can be considered under Code section 401(a)(17) ($200,000 for 2002)], provided that the result must be limited to the maximum allowable elective deferral permitted under Code section 402(g) ($11,000 for 2002) plus the maximum allowable catch‑up contribution under Code section 414(v) ($1,000 for 2002).

For example, assume Participant A, who is age 50 or older and eligible for catch‑up contributions, and Participant B, who is under 50, with gross Annual Base Salary of $300,000 and $150,000, each choose to defer 6% into this Plan. Both are covered or deemed to be covered by the Wisconsin Energy Corporation Employee Retirement Savings Plan. The Annual Company Matching Amount for each under this Plan is calculated as follows:

Matching Rate 50% Eligible Compensation Percentage 6%

DMED for A is 6% x $200,000 or $12,000
DMED for B is 6% x [$150,000 ‑ 9,000] or $8,460

Annual Matching Amount for A is 50% of "X,"

where "X" is 6% x $300,000 or $18,000

less DMED of 12,000

Therefore A's Annual Matching Amount is 6,000

Exhibit 10.2

50% x $6,000 or $3,000

Annual Matching Amount for B is 50% of "X,"

where "X" is 6% of $150,000 or $9,000

less DMED of 8,460

540

Therefore B's Annual Matching Amount is
50% x $540 or $270

For the year 2001 only, notwithstanding any other provision of this Plan, a Participant will automatically receive a Company Matching Amount equal to X times Y, where X equals the Matching Rate multiplied by the Eligible Compensation Percentage, and Y equals the amount of any Annual Performance Award, without regard to whether any part of the same is deferred under this Plan.

If in any case the relevant 401(k) Plan does not operate on the calendar year, the Committee in its sole discretion shall determine how the Participant's Annual Company Matching Amount shall be determined for any Participant who elects some deferral of Base Annual Salary into this Plan. The Committee may modify the method of calculating the Annual Matching Amount to take into account periodic credits rather than annual calculations, consistent with the principles expressed herein.


3.6	Stock Option Amount . Deferred Stock Option Amounts shall be credited to the Participant on the books of the Employer at the time Stock would otherwise have been delivered to the Participant pursuant to the Eligible Stock Option exercise, but for the election to defer.


3.7	Restricted Stock Amount . Deferred Restricted Stock Amounts shall be credited to the Participant on the books of the Employer at the time the Restricted Stock would otherwise vest under the terms of the plan or arrangement pursuant to which the Restricted Stock was granted, but for the election to defer.


3.8	Performance Share Amount . Deferred Performance Share Amounts shall be credited to the Participant on the books of the Employer at the time the Performance Shares would otherwise vest under the terms of the plan or arrangement pursuant to which the Performance Shares were granted, but for the election to defer.


3.9	Deferred Dividend Equivalents . Deferred dividend equivalents shall be credited to the Participant on the books of the Employer at the time the deferred dividend equivalents would otherwise have been paid in cash, but for the election to defer.

3.10

Rollover Amount . If a Participant or an individual was a participant in the Company's Executive Deferred Compensation Plan, the Wisconsin Gas Company Restoration Plan or any other non‑qualified deferred compensation plan of the Company or its affiliates (the "Prior Plans") and had an undistributed account balance in such plans as of a relevant determination date, and such person has become a Participant or Inactive Participant in this Plan, then such account balance, determined as of that date, shall be transferred on

Exhibit 10.2

such date to and be added to the Participant's or Inactive Participant's Account Balance under this Plan, and shall thereafter, subject to any necessary consents due to the terms of the Prior Plans, be governed by the terms and conditions of this plan, and shall be referred to as the "Rollover Amount." However, notwithstanding any other provisions of this Plan, the Account Balance of any Inactive Participant (or beneficiary thereof) who was not a continuing employee of an Employer on or after January 1, 2001 shall continue to be administered and distributed as provided under the terms of the relevant Prior Plan (unless and to the extent otherwise determined by the Committee in its sole discretion in a manner consistent with the terms of the relevant Prior Plan). Further, the Account Balance of any individual who was a participant in any Prior Plan who continues as an employee of an employer on or after January 1, 2001 and has become a Participant or Inactive Participant in this Plan will remain subject to the distribution method elected under the relevant Prior Plan unless and until a new distribution method has been elected under this Plan and become effective.

3.11

Investment of Trust Assets . The Trustee of the Trust shall be authorized, upon written instructions received from the Committee or investment manager appointed by the Committee, to invest and reinvest the assets of the Trust in accordance with the applicable Trust Agreement, including the disposition of Stock and reinvestment of the proceeds in one or more investment vehicles designated by the Committee.

3.12

Sources of Stock . If Stock is credited under the Plan in the Trust in connection with a deferral of Stock Option, Restricted Stock or Performance Share Amounts, the shares so credited shall be deemed to have originated, and shall be counted against the number of shares reserved, under such other plan, program or arrangement which awarded the Eligible Stock Option, Restricted Stock and Performance Shares.


3.13	Vesting .


(a)	A Participant shall at all times be 100% vested in his or her Deferral Account, Stock Option Account, Restricted Stock Account, Performance Share Account, Dividend Deferral Account, Company Matching Account and Rollover Account.


(b)	A Participant shall be vested in his or her Company Contribution Account in accordance with the vesting schedule, if any, contained in his or her Election Form.


(c)	In the event of a Change in Control, a Participant's Company Contribution Account shall immediately become 100% vested.

(d)

Notwithstanding subsection (c), the vesting schedule for a Participant's Company Contribution Account shall not be accelerated to the extent that the Committee determines that such acceleration would cause the deduction limitations of section 280G of the Code to become effective. In the event that all of a Participant's Company Contribution Account is not vested pursuant to such a determination, the Participant may request independent verification of the Committee's calculations with respect to the application of Code section 280G. In

Exhibit 10.2

such case, the Committee must provide to the Participant within 15 business days of such a request an opinion (which need not be unqualified) of the Company's independent auditors which opinion shall state that any limitation in the vested percentage hereunder is necessary to avoid the limits of Code section 280G and contain supporting calculations. The cost of such opinion shall be paid for by the Company.


3.14	Crediting/Debiting of Account Balances . Subject to section 3.14(f) and (g) below, and accordance with, and subject to, the rules and procedures that are established from time to time by the Committee in its sole discretion, amounts shall be credited or debited to a Participant's Account Balance in accordance with the following rules:

(a)

Election of Measurement Funds . Subject to section 3.14(f) and (g) below, a Participant, in connection with his or her initial deferral election in accordance with section 3.2 above, shall elect, on the Election Form, Measurement Fund(s) to be used to determine the additional amounts to be credited to his or her Account Balance, unless changed in accordance with the next sentence. Subject to section 3.14(f) and (g) below, commencing with the Participant's commencement of participation in the Plan and continuing thereafter, the Participant may (but is not required to) elect, by submitting an Election Form to the Committee that is accepted by the Committee, to add or delete Measurement Fund(s) to be used to determine the additional amounts to be credited to his or her Account Balance, or to change the portion of his or her Account Balance allocated to each previously or newly elected Measurement Fund. If an election is made in accordance with the previous sentence, it shall apply thereafter in accordance with the rules of the Committee for all subsequent periods in which the Participant participates in the Plan, unless changed in accordance with the previous provisions.


(b)	Proportionate Allocation . In making any election described in section 3.14(a) above, the Participant shall specify on the Election Form, in increments of one percentage point (1%), the percentage of his or her Account Balance to be allocated to a Measurement Fund (as if the Participant was making an investment in that Measurement Fund with that portion of his or her Account Balance).

(c)

Measurement Funds . Amounts credited to each Participant's Account Balance shall be deemed invested, in accordance with the Participant's directions, in Measurement Funds that are available under the Plan. The hypothetical investment funds available under the Plan shall be those designated by the Committee, from time to time in its discretion, following recommendations by the WEC Energy Group Investment Trust Policy Committee. Subject to section 3.14(f) and (g) below, the Participant may elect one or both of the following Measurement Funds for the purpose of crediting additional amounts to his or her Account Balance: (i) the Prime Rate Fund (described as a mutual fund that is 100% invested in a hypothetical debt instrument which earns interest at an annualized interest rate equal to the "Prime Rate" as reported each business day by the Wall Street Journal, with interest deemed reinvested in additional units of such hypothetical debt instrument); or (ii) a Company Stock Measurement Fund

Exhibit 10.2

(described as a mutual fund that is 100% invested in shares of Stock, with dividends deemed reinvested in additional shares of Stock). Effective for transactions into and out of the Company Stock Measurement Fund that are credited to a Participant's Account Balance on and after November 2, 2005, each share of Stock shall be valued using the closing price for the Stock on the day such transaction is credited.

Prior to January 1, 2015, additional Measurement Funds selected the Committee were available under the Plan. Investment allocations in place on December 31, 2014 for discontinued Measurement Funds shall remain in effect until changed by the Participant. A Participant may change the allocation of the Participant's Account Balance from the discontinued Measurement Funds to either the Prime Rate Fund or the Company Stock Measurement Fund in accordance with paragraph (a) above; no other changes are permitted. Once a Participant elects to change the allocation of amounts from discontinued Measurement Funds to the Prime Rate Fund or the Company Stock Measurement Fund, such amounts cannot be reallocated to the discontinued Measurement Funds.

Subject to section 3.14(f) and (g) below, as necessary, the Committee may, in its sole discretion, discontinue, substitute or add a Measurement Fund, subject to advance notice to Participants if the Committee determines, in its sole discretion, that such notice is necessary. The Committee also may suspend ( i.e. , freeze) an existing Measurement Fund at any time, subject to advance notice if the Committee determines necessary, thereby freezing the Measurement Fund as to the crediting of additional deemed investments subsequent to the effective date of the suspension.

(d)

Crediting or Debiting Method . The performance of each elected Measurement Fund (either positive or negative) will be determined by the Committee, in its reasonable discretion, based onthe performance of the Measurement Funds themselves. A Participant's Account Balance shall be credited or debited on a periodic basis based on the performance of each Measurement Fund selected by the Participant, as determined by the Committee in its sole discretion. The Participant's Annual Company Matching Amount shall be credited to his or her Company Matching Account for purposes of this section 3.14(d) no later than the end of the month following the month to which such amount relates. The Participant's Annual Stock Option Amount shall be credited to his or her Stock Option Account no later than the close of business on the first business day after the day on which the Eligible Stock Option was exercised or otherwise disposed of. The Participant's Annual Restricted Stock Amount shall be credited to his or her Restricted Stock Account no later than the close of business on the first business day after the day on which the Participant would have become vested in the Restricted Stock to which such amount relates, but for the election to defer. The Participant's Annual Performance Share Amount shall be credited to his or her Performance Share Account no later than the close of business on the first business day after the day on which the Participant would have become vested in the Performance Shares to which such amount relates but for the election to defer.

Exhibit 10.2

Deferrals of dividend equivalents pursuant to section 3.1(e) shall be credited to his or her Dividend Deferral Account no later than the close of business on the first business day after the day on which those amounts would have been paid to the Participant but for the election to defer.

(e)

No Actual Investment . Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Measurement Funds are to be used for measurement purposes only, and a Participant's election of any such Measurement Fund, the allocation to his or her Account Balance thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant's Account Balance shall not be considered or construed in any manner as an actual investment of his or her Account Balance in any such Measurement Fund. In the event that the Company or the Trustee (as that term is defined in the Trust), in its own discretion, decides to invest funds in any or all of the Measurement Funds, no Participant shall have any rights in or to such investments themselves. Without limiting the foregoing, a Participant's Account Balance shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Company or the Trust; the Participant shall at all times remain an unsecured creditor of the Company.

(f)

Special Rule for Stock Option, Restricted Stock and Performance Share Accounts . Notwithstanding any provision of this Plan that may be construed to the contrary, the Participant's Stock Option, Restricted Stock and Performance Share Accounts shall be deemed invested in the Company Stock Measurement Fund at all times prior to distribution from this Plan. Further, the Participant's Stock Option, Restricted Stock and Performance Share Accounts shall be distributed from this Plan in the form of cash.

(g)

Special Considerations for Participants Subject to section 16 of the Securities Exchange Act of 1934 . Prior to March 1, 2002, different rules pertained with respect to amounts allocated to the Company Stock Measurement Fund. The Company Matching Account had to be deemed invested in the Company Stock Measurement Fund at all times prior to distribution from the Plan. Such restriction was dropped from the Plan effective as of March 1, 2002. In order that any election by a Participant who is an officer or director subject to the reporting requirements and trading restrictions of Section 16 of the Securities Exchange Act of 1934 ("Section 16") will conform to Section 16, such a Participant should consult with the designated individual at the Company responsible for Section 16 reporting and compliance prior to making any election to move any part of his or her Account Balance into or out of the Company Stock Measurement Fund. In general, compliance with Section 16 will require that:


(i)	Any election to move any part of an Account Balance into or out of the Company Stock Measurement Fund (including any election to receive a payout in service under section 4.1, in the event of Unforeseeable Financial Emergency under section 4.3, or under the 10% withdrawal penalty rules of section 4.4), which elections will be deemed made for

Exhibit 10.2

purposes of these provisions only as of the date of such deemed investment transfers or proposed payouts, should only be effected if made at least six months following the date of the most recent "opposite way" election (as explained below) made by such Participant with respect to this Plan or any plan of the Company or its affiliates that also constituted a "discretionary transaction" within the meaning of Rule 16b‑3(b)(1) under Section 16.

(ii)

An "opposite way" election means (x) in case of an election by a Participant to move any part of an Account Balance into the Company Stock Measurement Fund, an election that was a disposition of Company Stock or an interest in a phantom Company Stock fund or similar security, or (y) in case of any election by a Participant to move any part of an Account Balance out of the Company Stock Measurement Fund, an election that was an acquisition of Stock or an interest in a phantom Company Stock fund or similar security.


(iii)	Any change of election to an alternative payout period made under section 5.2 or 7.2 by such a Participant may only be given effect if it is approved by the Compensation Committee or the Board of Directors of the Company.

The Company reserves the right to impose such restrictions as it determines to be appropriate, in is sole discretion, on any elections, dispositions or other matters under this Plan relating to the Company Stock Measurement Fund in order to comply with or qualify for exemption under Section 16.


3.15	FICA and Other Taxes .

(a)

Annual Deferral Amounts . For each Plan Year in which an Annual Deferral Amount is being withheld from a Participant or an Annual Company Matching Amount is Credited to a Participant, the Participant's Employer(s) shall withhold from that portion of the Participant's non‑deferred compensation, in a manner determined by the Employer(s), the Participant's share of FICA and other employment taxes on such amounts. If necessary, the Committee may reduce the Annual Deferral Amount in order to comply with this section 3.15.

(b)

Company Contribution Amounts . When a participant becomes vested in a portion of his or her Company Contribution Account, the Participant's Employer(s) shall withhold from the Participant's non‑deferred compensation, in a manner determined by the Employer(s), the Participant's share of FICA and other employment taxes. If necessary, the Committee may reduce the vested portion of the Participant's Company Contribution Account in order to comply with this section 3.15.


(c)	Annual Stock Option, Restricted Stock, Performance Share and Similar Amounts . For each Plan Year in which an Annual Stock Option Amount, Annual Restricted

Exhibit 10.2

Stock Amount, Annual Performance Share Amount and/or deferred dividend equivalent is being first credited to a Participant's Account Balance, the Participant's Employer(s) shall withhold from that portion of the Participant's non‑deferred compensation, in a manner determined by the Employer(s), the Participant's share of FICA and other employment taxes on such Annual Stock Option Amount, Annual Restricted Stock Amount, Annual Performance Share Amount and/or deferred dividend equivalent. If necessary, the Committee may reduce such deferrals in order to comply with this section 3.15.

3.16

Distributions . The Participant's Employer(s), or the trustee of the Trust, shall withhold from any payments made to a Participant under this Plan all federal, state and local income, employment and other taxes required to be withheld by the Employer(s), or the trustee of the Trust, in connection with such payments, in amounts and in a manner to be determined in the sole discretion of the Employer(s) and the trustee of the Trust. All lump‑sum payments and final payments of the remaining balance of any Account Balance shall be calculated based upon the value of the Account Balance determined (unless and until the Company chooses another ending valuation date) as of the last business day of the calendar year quarter immediately preceding the date of payment (the "Ending Valuation Date"). All rights on the part of a Participant or any other person to elect or change the Measurement Funds under section 3.14 shall be deemed to have ceased as of such Ending Valuation Date and no adjustment in the value of an Account Balance shall be considered for any purpose under the Plan after such Ending Valuation Date.

ARTICLE 4
IN SERVICE PAYOUT; UNFORESEEABLE FINANCIAL EMERGENCIES;
WITHDRAWAL ELECTION


4.1	In Service Payout .

(a)

In connection with and at the time of each election to defer an Annual Deferral Amount, a Participant may irrevocably elect, on a prospective basis only, to receive a future "In Service Payout" from the Plan with respect to such Annual Deferral Amount. Subject to the Deduction Limitation, the In Service Payout shall be a lump‑sum payment in an amount that is expressed either as a fixed dollar amount or as a percentage of the Annual Deferral Amount plus amounts credited or debited thereto, determined at the time that the In Service Payout becomes payable (rather than the date of a Termination of Employment). Subject to the Deduction Limitation and the other terms and conditions of this Plan, each In Service Payout elected shall be paid out during a 90 day period commencing immediately after the last day of any Plan Year designated by the Participant that is at least two Plan Years after the Plan Year in which the Annual Deferral Amount is actually deferred. By way of example, if a two year In Service Payout is elected with respect to an Annual Performance Award relating to services in 2002 that would otherwise be payable in 2003 but is actually deferred in 2003, the two year In Service Payout would become payable during a 90 day period commencing January 1, 2006.

Exhibit 10.2


(b)	A Participant's election to defer dividends under section 3.1(e) must be made annually and a Participant shall have the ability to elect to receive a future In Service Payout with respect to each year's annual Performance Share dividend equivalent deferrals pursuant to the same rules as described in paragraph (a) above.

(c)

If a Participant makes an election pursuant to paragraph (a) above with respect to the Annual Deferral Amount for any year, such election shall also apply to and shall result in an In Service Payout of the Annual Company Matching Amount for that year plus amounts credited or debited thereto, determined at the time the In Service Payout becomes payable. Such In Service Payout shall be made at the same time as the In Service Payout with respect to the Annual Deferral Amount for that year.

4.2

Other Benefits Take Precedence Over In Service . Should an event occur that triggers a benefit under Article 5, 6, 7 or 8, any Annual Deferral Amount, Annual Company Matching Amount and/or annual dividend equivalent deferral amount, plus amounts credited or debited thereon, that is subject to a In Service Payout election under section 4.1 shall not be paid in accordance with section 4.1 but shall be paid in accordance with the other applicable Article.

4.3

Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies . If the Participant experiences an Unforeseeable Financial Emergency, the Participant may petition the Committee to (i) suspend any deferrals required to be made by a Participant and/or (ii) subject to the Deduction Limitation, receive a partial or full payout from the Plan. The payout shall not exceed the lesser of the Participant's Account Balance, calculated as if such Participant were receiving a Termination Benefit, or the amount reasonably needed to satisfy the Unforeseeable Financial Emergency. If, subject to the sole discretion of the Committee, the petition for a suspension and/or payout is approved, suspension shall take effect upon the date of approval and any payout shall be made within 90 days of the date of approval.

4.4

Withdrawal Election . Subject to the Deduction Limitation, a Participant (or, after a Participant's death, his or her Beneficiary) may elect, at any time, to withdraw part or all of his or her Account Balance, calculated as if there had occurred a Termination of Employment as of the day of the election, less a withdrawal penalty equal to 10% of such amount (the net amount shall be referred to as the "Withdrawal Amount"). This election can be made at any time, before or after Retirement, Disability, death or Termination of Employment, and whether or not the Participant (or Beneficiary) is in the process of being paid pursuant to an installment payment schedule. If made before Retirement, Disability or death, a Participant's Withdrawal Amount shall be calculated based on his or her Account Balance as if there had occurred a Termination of Employment as of the day of the election. Any partial withdrawal must be at least equal to $25,000, or such higher amount as the Committee may establish from time to time. The Participant (or his or her Beneficiary) shall make this election by giving the Committee advance written notice of the election in a form determined from time to time by the Committee. The Participant

Exhibit 10.2

(or his or her Beneficiary) shall be paid the Withdrawal Amount within 90 days of his or her election.

ARTICLE 5
RETIREMENT BENEFIT


5.1	Retirement Benefit . Subject to the Deduction Limitation, a Participant who Retires shall receive, as a Retirement Benefit, his or her Account Balance.

5.2

Payment of Retirement Benefit . A Participant, in connection with his or her commencement of participation in the Plan, shall elect on an Election Form to receive the Retirement Benefit in a lump sum or pursuant to an Annual Installment Method. The Participant may annually change his or her election to an allowable alternative payout period by submitting a new Election Form to the Committee, provided that any such Election Form is submitted at least one year prior to the Participant's Retirement and is accepted by the Committee in its sole discretion. Any change to an alternative payout is also subject to the rules in section 3.14(g)(iii). The Election Form most recently accepted by the Committee shall govern the payout of the Retirement Benefit. Notwithstanding a Participant's election, if the Participant's Account Balance at the time of his or her Retirement is less than $10,000, payment of his or her Retirement Benefit shall be paid in a lump sum. If a Participant does not make any election with respect to the payment of the Retirement Benefit, then such benefit shall be payable in a lump sum. The lump‑sum payment shall be made, or installment payments shall commence, no later than 90 days after the last day of the Plan Year in which the Participant Retires. Any payment made shall be subject to the Deduction Limitation.

5.3

Death Prior to Completion of Retirement Benefit . If a Participant dies after Retirement but before the Retirement Benefit is paid in full, the Participant's unpaid Retirement Benefit payments shall continue and shall be paid to the Participant's Beneficiary (a) over the remaining number of years and in the same amounts as that benefit would have been paid to the Participant had the Participant survived, or (b) in a lump sum, if requested by the Beneficiary and allowed in the sole discretion of the Committee, that is equal to the Participant's unpaid remaining Account Balance.


5.4	Special "Make Whole" Benefits .

(a)

" Make Whole" Pension Benefit With Respect to Deferrals of Base Annual Salary . Base Annual Salary which is deferred pursuant to this Plan cannot be included in the compensation base for calculating retirement income under the qualified defined benefit pension plans of the Company and its affiliates (the "Pension Plans"). Therefore, a "make whole" benefit will be paid from this Plan as a pension supplement to or with respect to a Participant whose deferrals of Base Annual Salary result in a lesser pension payment under the Pension Plans. Such pension supplement shall equal the amount by which such Participant's pension under the Pension Plans (calculated for this purpose without regard to any limitation or benefits imposed by section 415 of the Code, or any limitation on annual compensation imposed by section 401(a)(17) of the Code; hereinafter,

Exhibit 10.2

the "IRS Limitations") was less because deferrals of Base Annual Salary under this Plan were not taken into account in the calculation of such participant's pension (but the amount of any supplemental pension benefit "A" applicable to the Participant under the Company's SERP shall be taken into account to avoid any duplication of the pension supplement provided hereunder). This section applies to all forms of pension payable under the Pension Plans, including pre‑retirement death benefits.

(b)

" Make Whole" Pension Benefit With Regard to Performance and Incentive Awards . Performance awards under the Company's prior Short‑Term Performance Plan and incentive awards made under a former incentive plan of the Company known as the Executive Incentive Compensation Plan are excluded from the compensation base under the Retirement Account Plan, a tax qualified defined benefit plan of Wisconsin Electric Power Company (the "Retirement Account Plan"). Similarly, special awards made from time to time as determined by the Board are likewise excluded. A "make whole" pension supplement was provided for under the terms of Article IX(2) of the prior Wisconsin Energy Corporation Executive Deferred Compensation Plan as amended and restated as of January 1, 1994 (the "Prior Company Plan") for any Participant in that plan whose pension benefit under the Retirement Account Plan would have been greater had such performance awards, incentive awards or special awards been included in the compensation base of the Retirement Account Plan, calculated without regard to the IRS limitations. As with section 5.4(a) above, supplemental pension benefit "A" shall be considered in order to avoid duplication. It is the intent of this section to continue to provide such "make whole" pension supplement and the provisions of such Article IX(2) of the Prior Company Plan are incorporated by reference and continue to apply hereunder, except as modified by other provisions of this section 5.4.

(c)

" Make Whole" Long‑Term Disability Benefit . It is the intent of this Plan that a Participant not suffer any loss with respect to a disability benefit under the disability benefit applicable to employees of the Company and its affiliates, if the Participant is eligible for and participating in the long‑term disability benefit plan of an Employer (the "LTD Plan") because of either the exclusion of Base Annual Salary deferred under this Plan from the compensation base under the LTD Plan (the "Salary Deferral Limit") or the special limitation on annual compensation which can be taken into account under the LTD Plan imposed by section 505(b)(7) of the Code (the "IRS Special Limit"). Therefore, in the event such a Participant becomes eligible for and begins to receive a disability benefit from the LTD Plan and the amount of such disability benefit is limited because of the application of the Salary Deferral Limit or the IRS Special Limit, a "make whole" disability benefit shall be paid from this Plan as a supplement to the disability limit paid from the LTD Plan. Such LTD supplement shall equal the monthly amount by which such Participant's disability benefit under the LTD Plan was less because of the application of the Salary Deferral Limit and the IRS Special Limit. Such LTD supplement shall commence at the same time as the disability benefit paid under the LTD Plan and continue for so long as such

Exhibit 10.2

disability benefit is paid. Such LTD supplement shall be paid out of general corporate assets or out of a grantor trust, but not out of any voluntary employees' beneficiary association or trust covered by section 501(c)(9) of the Code.

(d)

Form of Payment and Deferral Option . The "make whole" pension supplements provided for in this section 5.4(a) and (b) shall be payable in lump‑sum form at the same time as the benefit becomes payable to or with respect to the Participant under the relevant Pension Plan (as to the section 5.4(a) supplement) or under the Retirement Account Plan (as to the section 5.4(b) supplement). The terms and conditions of the relevant Pension Plan or the Retirement Account Plan shall provide the governing principles as to the calculation of the pension supplements arising under this section 5.4, except that the amount of the pension supplement shall not be actuarially adjusted if payment of the Participant's benefit under the relevant Pension Plan or the Retirement Account Plan occurs subsequent to the Participant's attainment of normal retirement age (as defined under the relevant Pension Plan or Retirement Account Plan). In lieu of receiving a lump-sum payment of the pension supplement, a Participant who becomes entitled to a pension supplement pursuant to section 5.4(a) or (b) will be allowed to elect that the relevant lump‑sum payment be determined and then credited to such Participant's Account Balance under this Plan as of the date the same would have otherwise been paid (the "Supplement Payment Date") (with such Participant to be treated as having then "Retired" for purposes of this Plan, so that the Participant's election for a method of payout under Article 5 shall govern), provided that such an Election Form filed by the Participant with regard to such pension supplement(s) is submitted to the Committee at least one year prior to the Supplemental Payment Date.

ARTICLE 6
PRE‑RETIREMENT SURVIVOR BENEFIT


6.1	Pre‑Retirement Survivor Benefit . Subject to the Deduction Limitation, the Participant's Beneficiary shall receive a Pre‑Retirement Survivor Benefit equal to the Participant's Account Balance if the Participant dies before he or she Retires, experiences a Termination of Employment or suffers a Disability.

6.2

Payment of Pre‑Retirement Survivor Benefit . A Participant, in connection with his or her commencement of participation in the Plan, shall elect on an Election Form whether the Pre‑Retirement Survivor Benefit shall be received by his or her Beneficiary in a lump sum or pursuant to an Annual Installment Method. The Participant may annually change this election to an allowable alternative payout period by submitting a new Election Form to the Committee, which form is accepted by the Committee in its sole discretion. The Election Form most recently accepted by the Committee prior to the Participant's death shall govern the payout of the Participant's Pre‑Retirement Survivor Benefit. If a Participant does not make any election with respect to the payment of the Pre‑Retirement Survivor Benefit, then such benefit shall be paid in a lump sum. Despite the foregoing, if the Participant's Account Balance at the time of his or her death is less than $25,000, payment of the Pre‑Retirement Survivor Benefit may be made, in the sole discretion of

Exhibit 10.2

the Committee, in a lump sum. The lump‑sum payment shall be made, or installment payments shall commence, no later than 90 days after the last day of the Plan Year in which the Committee is provided with proof that is satisfactory to the Committee of the Participant's death. Any payment made shall be subject to the Deduction Limitation.

ARTICLE 7
TERMINATION BENEFIT


7.1	Termination Benefit . Subject to the Deduction Limitation, the Participant shall receive a Termination Benefit, which shall be equal to the Participant's Account Balance if a Participant experiences a Termination of Employment prior to his or her Retirement, death or Disability.

7.2

Payment of Termination Benefit . A Participant, in connection with his or her participation in the Plan, shall elect on an Election Form to receive the Termination Benefit in a lump sum or over a period of five years in annual installments using the Fractional Method specified in section 1.6. The Participant may annually change his or her election to an allowable alternative by submitting a new Election Form to the Committee, provided that any such Election Form is submitted at least one year prior to the Participant's Termination of Employment and is accepted by the Committee in its sole discretion. Any change to an alternative payout is also subject to the rules in section 3.14(g)(iii). However, notwithstanding a Participant's election, if the Participant's Account Balance at the time of his or her Termination of Employment is less than $25,000, payment of his or her Termination Benefit shall be paid in a lump sum. If a Participant does not make any election with respect to the payment of the Termination Benefit, then such benefit shall be payable in a lump sum. The lump‑sum payment shall be made, or installment payments shall commence, no later than 90 days after the last day of the Plan Year in which the Participant experiences the Termination of Employment. Any payment made shall be subject to the Deduction Limitation.

ARTICLE 8
DISABILITY WAIVER AND BENEFIT


8.1	Disability Waiver .

(a)

Waiver of Deferral . A Participant who is determined by the Committee to be suffering from a Disability shall be (i) excused from fulfilling that portion of the Annual Deferral Amount commitment that would otherwise have been withheld from a Participant's Base Annual Salary, Annual or Long‑Term Performance Award, Severance Payments and/or SERP Payments for the Plan Year during which the Participant first suffers a Disability and (ii) excused from fulfilling the deferral of any Restricted Stock Amount, Performance Share Amount, Stock Option Amount or dividend equivalent deferral which would otherwise take place following the Committee determination. During the period of Disability, the Participant shall not be allowed to make any additional deferral elections, but will continue to be considered a Participant for all other purposes of this Plan.

Exhibit 10.2

(b)

Return to Work . If a Participant returns to employment after a Disability ceases, the Participant may elect to defer an Annual Deferral Amount, Stock Option Amount, Restricted Stock Amount, Performance Share Amount and dividend equivalents for the Plan Year following his or her return to employment or service and for every Plan Year thereafter while a Participant in the Plan; provided such deferral elections are otherwise allowed and an Election Form is delivered to and accepted by the Committee for each such election in accordance with section 3.2 above.

8.2

Continued Eligibility; Disability Benefit . A Participant suffering a Disability shall, for benefit purposes under this Plan, continue to be considered to be employed and shall be eligible for the benefits provided for in Articles 4, 5, 6 or 7 in accordance with the provisions of those Articles. Notwithstanding the above, the Committee shall have the right to, in its sole and absolute discretion and for purposes of this Plan only, to deem the Participant to have experienced a Termination of Employment at any time. Further, in the case of a Participant who is otherwise eligible to Retire, the Committee shall treat such Participant as having Retired as soon as practicable after such Participant is determined to be suffering a Disability. In either case the Participant shall receive a Disability Benefit equal to his or her Account Balance at the time of the Committee's determination; provided, however, that should the Participant otherwise have been eligible to Retire, he or she shall be paid in accordance with Article 5. If the Disability Benefit is not payable in accordance with Article 5, it shall be paid in a lump sum within 90 days of the Committee's exercise of such right. Any payment made shall be subject to the Deduction Limitation.

ARTICLE 9
BENEFICIARY DESIGNATION

9.1

Beneficiary . Each Participant shall have the right, at any time, to designate his or her Beneficiary(ies) (both primary as well as contingent) to receive any benefits payable under the Plan to a beneficiary upon the death of a Participant. The Beneficiary designated under this Plan may be the same as or different from the Beneficiary designation under any other plan of an Employer in which the Participant participates.

9.2

Beneficiary Designation; Change . A Participant shall designate his or her Beneficiary by completing a Beneficiary Designation Form, and returning it to the Committee or its designated agent. A Participant shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Committee's rules and procedures, as in effect from time to time. Upon the acceptance by the Committee of a new Beneficiary Designation Form, all Beneficiary designations previously submitted shall be canceled. The Committee shall be entitled to rely on the last Beneficiary Designation Form submitted by the Participant and accepted by the Committee prior to his or her death. In the event of a Participant's divorce, any designation of the Participant's former spouse as a Beneficiary shall be deemed void unless after the divorce the Participant completes a new designation naming such former spouse as a Beneficiary.

Exhibit 10.2


9.3	Acknowledgment . No designation or change in designation of a Beneficiary shall be effective until received and acknowledged in writing by the Committee or its designated agent.

9.4

No Beneficiary Designation . If a Participant fails to designate a Beneficiary as provided in sections 9.1, 9.2 and 9.3 above or, if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's benefits, then the remaining benefits in the Participant's Account Balance shall be paid to the Participant's surviving spouse, if none, to the Participant's descendants by right of representation or, if none, to the Participant's next of kin determined pursuant to the laws of the state in which the Company's principal place of business is located as if the Participant had died unmarried and intestate.


9.5	Doubt as to Beneficiary . If the Committee has any doubt as to the proper Beneficiary to receive payments pursuant to this Plan, the Committee shall have the right, exercisable in its discretion, to cause the Participant's Employer to withhold such payments until this matter is resolved to the Committee's satisfaction.


9.6	Discharge of Obligations . The payment of benefits under the Plan to a Beneficiary shall fully and completely discharge all Employers and the Committee from all further obligations under this Plan with respect to the Participant, and that Participant's Election Form(s) shall terminate upon such full payment of benefits.

ARTICLE 10
LEAVE OF ABSENCE


10.1	Paid Leave of Absence . If a Participant is authorized by the Participant's Employer for any reason to take a paid leave of absence from the employment of the Employer, the Participant shall continue to be considered employed by the Employer and the Annual Deferral Amount shall continue to be withheld during such paid leave of absence in accordance with section 3.2.

10.2

Unpaid Leave of Absence . If a Participant is authorized by the Participant's Employer for any reason to take an unpaid leave of absence from the employment of the Employer, the Participant shall continue to be considered employed by the Employer and the Participant shall be excused from making deferrals until the earlier of the date the leave of absence expires or the Participant returns to a paid employment status. Upon such expiration or return, deferrals shall resume for the remaining portion of the Plan Year in which the expiration or return occurs, based on the deferral election, if any, made for that Plan Year. If no election was made for that Plan Year, no deferral shall be withheld.

ARTICLE 11
TERMINATION, AMENDMENT OR MODIFICATION


11.1	Termination . Although each Employer anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee that any Employer will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, each Employer reserves the right to discontinue its sponsorship of the Plan and/or to terminate the Plan at

Exhibit 10.2

any time with respect to all of its participating Employees, by action of its board of directors or compensation committee. Upon the termination of the Plan with respect to any Employer, the Election Form(s) of the affected Participants who are employed by that Employer shall terminate. The terminating Employer may decide that the Account Balances of its participating Employees shall continue to be held under the provisions of this Plan (but with no further deferrals to be made after termination of the Plan by such Employer as to its participating Employees) until an event occurs which would otherwise cause a payout to be made hereunder. Any Company Contribution amounts which are not fully vested may continue to be so held under the Plan, even if other amounts in the Account Balances are not so held. Alternatively, the Employer may determine to distribute all Account Balances of affected Participants in a lump sum as soon as administratively practicable after the date of Plan termination. As a third alternative, the Employer may determine to proceed with distribution of Account Balances of the affected Participant's determined as if they had experienced a Termination of Employment on the date of Plan termination or, if Plan termination occurs after the date upon which a Participant was eligible to Retire, then with respect to that Participant as if he or she had Retired on the date of Plan termination. However, if an Employer terminates the Plan as to its participating Employees after a Change in Control, the Employer shall be required to pay such benefits in a lump sum, except as otherwise provided in section 15.18. The termination of the Plan shall not adversely affect any Participant or Beneficiary who has become entitled to the payment of any benefits under the Plan as of the date of termination; provided however, that the Employer shall have the right to accelerate installment payments without a premium or prepayment penalty by paying the Account Balance in a lump sum or using fewer years (provided that the present value of all payments that will have been received by a Participant at any given point of time under the different payment schedule shall equal or exceed the present value of all payments that would have been received at that point in time under the original payment schedule).

11.2

Amendment . The Company has the sole right to amend or modify the Plan and may do so at any time, in whole or in part, by the action of its Board of Directors, Compensation Committee or the Committee referred to in Article 12 below; provided, however, that: (i) no amendment shall be effective to decrease the value of a Participant's Account Balance in existence at the time the amendment or modification is made, and (ii) no amendment shall adversely affect any Participant or Beneficiary who has become entitled to benefits as of the date of the amendment. Further, during the pendency of a Potential Change in Control (as defined below) and at all times following a Change in Control, no amendment or modification may be made which in any way adversely affects the interests of any Participant with respect to amounts credited to such Participant's Account Balance as of the date of the amendment. A "Potential Change in Control" shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:


(a)	the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

Exhibit 10.2


(b)	the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

(c)

any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company's then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates); or


(d)	the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

The capitalized terms in the above definition have the same meaning as in the "Change in Control" definition set forth in section 1.14 of the Plan. The Company's power to amend or modify the Plan includes the power to suspend and, if it determines to do so, re‑institute the ability of any Participant or group of Participants to make deferrals under Article 3 at any time (any such suspension of the ability to make deferrals shall also suspend continued accruals of the make whole retirement benefits under section 5.4 as of the date deferrals are suspended or such other date as shall be specified by the Company) and such action may be taken by the Company's Board, the Compensation Committee or the Committee referred to in Article 12 herein.


11.3	Effect of Payment . The full payment of the applicable benefit under any provision of the Plan shall completely discharge all obligations to a Participant and his or her designated Beneficiaries under this Plan and the Participant's Election Form(s) shall terminate.

ARTICLE 12
ADMINISTRATION

12.1

Committee Duties . Except as otherwise provided in this Article 12, this Plan shall be administered by the Committee. Members of the Committee may be Participants under this Plan. The Committee (or the Chief Executive Officer if such individual chooses to so act) shall also have full and complete discretionary authority to (i) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Plan and (ii) decide or resolve any and all questions including interpretations of this Plan, as may arise in connection with the claims procedures set forth in Article 13 or otherwise with regard to the Plan. Any individual serving on the Committee who is a Participant shall not vote or act on any matter relating solely to himself or herself. The Chief Executive Officer may not act on any matter involving such officer's own participation in the Plan. All references to the Committee shall be deemed to include reference to the Chief Executive Officer. When making a determination or calculation, the Committee shall be entitled to rely on information furnished by a Participant or the Company. Notwithstanding any other provision of this Plan, the Committee shall have the power, in its sole and absolute discretion, to grant or deny a request from any Participant, Inactive Participant or Beneficiary for acceleration in payment of any Account Balance held with

Exhibit 10.2

respect to such person. This discretionary power shall reside with the Committee under this section 12.1 and with Administrator under section 12.2.

12.2

Administration Upon Change In Control . For purposes of this Plan, the Company shall be the "Administrator" at all times prior to the occurrence of a Change in Control. Upon and after the occurrence of a Change in Control, the "Administrator" shall be an independent third party selected by the individual who, at any time prior to such event, was the Company's Chief Executive Officer or, if there is no such officer or such officer does not act, by the Company's then highest ranking officer (the "Appointing Officer"). Upon the occurrence of a Change in Control, the Administrator shall have full and complete discretionary power to determine all questions arising in connection with the administration of the Plan and the interpretation of the Plan and Trust including, but not limited to benefit entitlement determinations. Upon and after the occurrence of a Change in Control, the Company must: (1) pay all reasonable administrative expenses and fees of the Administrator; (2) indemnify the Administrator against any costs, expenses and liabilities (including, without limitation, attorney's fees) of whatsoever kind and nature which may be imposed on, asserted against or incurred by the Administrator in connection with the performance of the Administrator hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of the Administrator or its employees or agents; and (3) supply full and timely information to the Administrator on all matters relating to the Plan, the Trust, the Participants and their Beneficiaries, the Account Balances of the Participants, including the dates of Retirement, Disability, death or Termination of Employment of the Participants, and such other pertinent information as the Administrator may reasonably require. Upon and after a Change in Control, the Administrator may be terminated (and a replacement appointed) only by either individual who was or could have been an Appointing Officer. Upon and after a Change in Control, the Administrator may not be terminated by the Company.


12.3	Agents . In the administration of this Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel who may be counsel to any Employer.


12.4	Binding Effect of Decisions . The decision or action of the Administrator with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.

12.5

Indemnity of Committee . All Employers shall indemnify and hold harmless the members of the Committee, and any other Employee to whom the duties of the Committee may be delegated, and the Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful misconduct by the Committee, any of its members, any such Employee or the Administrator.


12.6	Employer Information . To enable the Committee and/or Administrator to perform its functions, the Company and each Employer shall supply full and timely information to

Exhibit 10.2

the Committee and/or Administrator, as the case may be, on all matters relating to the compensation of its Participants, the dates of the Retirement, Disability, death or Termination of Employment of its Participants, and such other pertinent information as the Committee or Administrator may reasonably require.

12.7

Coordination with Other Benefits . The benefits provided for a Participant and Participant's Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Participant's Employer. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.

ARTICLE 13
CLAIMS PROCEDURES

13.1

Presentation of Claim . Any Participant or Beneficiary (such Participant or Beneficiary being referred to below as a "Claimant") may deliver to the Committee a written claim for benefits. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within 90 days after such notice was received by the Claimant. All other claims shall be made within 180 days of the date on which the event that caused the claim to arise occurred. The claim shall state with particularity the determination desired by the Claimant. A claim shall be considered to have been made when a written communication made by the Claimant or the Claimant's representative is received by the Committee.

13.2

Decision on Initial Claim . The Committee shall consider a Claimant's claim and provide written notice to the Claimant of any denial within a reasonable time, but no later than 90 days after receipt of the claim. If an extension of time beyond the initial 90-day period for processing is required, written notice of the extension shall be provided to the Claimant before the initial 90-day period expires indicating the special circumstances requiring an extension of time and the date by which the Committee expects to render a final decision. In no event shall the period, as extended, exceed 180 days. If the Committee denies, in whole or in part, the claim, the notice shall set forth in a manner calculated to be understood by the Claimant:.


(a)	The specific reasons for the denial of the claim, or any part thereof;


(b)	Specific references to pertinent Plan provisions upon which such denial was based;


(c)	A description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and


(d)	An explanation of the claim review procedure set forth in section 13.3 below, which explanation shall also include a statement of the Claimant's right to bring a civil action under ERISA section 502(a) following a denial of the claim upon review.

Exhibit 10.2

13.3

Right to Review . A Claimant is entitled to appeal any claim that has been denied in whole or in part. To do so, the Claimant must submit a written request for review with the Committee within 60 days after receiving a notice from the Committee that a claim has been denied, in whole or in part. Absent receipt by the Committee of a written request for review within such 60‑day period, the claim shall be deemed to be conclusively denied. The Claimant (or the Claimant's duly authorized representative) may:


(a)	Review and/or receive copies of, upon request and free of charge, all documents, records, and other information relevant to the Claimant's claim;


(b)	Submit written comments, documents, records or other information relating to the Claimant's claim, which the Committee shall take into account in considering the claim on review, without regard to whether such information was submitted or considered in the initial review of the claim; and/or


(c)	Request a hearing, which the Committee, in its sole discretion, may grant.

13.4


(a)	Specific reasons for the decision;


(b)	Specific references to the pertinent Plan provisions upon which the decision was based;


(c)	A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records or other

Exhibit 10.2

information relevant (within the meaning of Department of Labor Regulation section 2560.503-1(m)(8)) to the Claimant's claim;


(d)	A statement of the Claimant's right to bring a civil action under ERISA section 502(a) following a wholly or partially denied claim for benefits; and


(e)	Such other matters as the Committee deems relevant.


13.5	Form of Notice and Decision . Any notice or decision by the Committee under this Article 10 may be furnished electronically in accordance with Department of Labor Regulation section 2520.104b-(1)(c)(i), (iii) and (iv).

13.6

Legal Action . Any final decision by the Committee shall be binding on all parties. A Claimant's compliance with the foregoing provisions of this Article 13 is a mandatory prerequisite to a Claimant's right to commence any legal action with respect to any claim for benefits under this Plan. If a final determination of the Committee is challenged in court, such determination shall not be subject to de novo review and shall not be overturned unless proven to be arbitrary and capricious based on the evidence considered by the Committee at the time of such determination.

ARTICLE 14
TRUST

14.1

Establishment of the Trust . The Company shall establish a Trust and each Employer shall contribute such amounts to the Trust from time to time as it deems desirable. Notwithstanding the preceding sentence, each Employer shall at least annually transfer over to the Trust such assets as the Company determines, in its sole discretion, are necessary so that Trust assets are at least equal at the time of transfer to the balances in the Deferral, Company Contribution, Company Matching, Stock Option and Restricted Stock Accounts of Participants and Beneficiaries who had become entitled to benefits prior to November 1, 2003.

14.2


14.3	Distributions From the Trust . Each Employer's obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution shall reduce the Employer's obligations under this Plan.

ARTICLE 15
MISCELLANEOUS


15.1	Status of Plan . The Plan is intended to be a plan that is not qualified within the meaning of Code section 401(a) and that "is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or

Exhibit 10.2

highly compensated employees" within the meaning of ERISA. The Plan shall be administered and interpreted to the extent possible in a manner consistent with that intent.

15.2

Unsecured General Creditor . Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of an Employer. For purposes of the payment of benefits under this Plan, any and all of an Employer's assets shall be, and remain, the general, unpledged unrestricted assets of the Employer. An Employer's obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future.


15.3	Employer's Liability . An Employer's liability for the payment of benefits shall be defined only by the Plan and any Election Form(s), as entered into between the Employer and a Participant. An Employer shall have no obligation to a Participant under the Plan except as expressly provided in the Plan.

15.4

Nonassignability . Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are expressly declared to be, unassignable and non‑transferable to the maximum extent allowed by law. No part of the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor shall any part of the same, to the maximum extent allowed by law, be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise.

15.5

Not a Contract of Employment . The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between any Employer and the Participant. Such employment is hereby acknowledged to be an "at will" employment relationship that can be terminated at any time for any reason, or no reason, with or without cause, and with or without notice, unless expressly provided in a written employment agreement. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of any Employer as an Employee, or to interfere with the right of any Employer to discipline or discharge the Participant at any time.

15.6

Furnishing Information . A Participant or his or her Beneficiary will cooperate with the Committee by furnishing any and all information requested by the Committee and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of benefits hereunder, including but not limited to taking such physical examinations as the Committee may deem necessary.


15.7	Terms . Whenever any words are used herein in the masculine, they shall be construed as though they were in the feminine in all cases where they would so apply; and whenever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.

Exhibit 10.2


15.8	Captions . The captions of the articles, sections and paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.


15.9	Governing Law . Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the internal laws of the State of Wisconsin without regard to its conflicts of laws principles.


15.10	Notice . Any notice or filing required or permitted to be given to the Committee under this Plan shall be sufficient if in writing and hand‑delivered, or sent by registered or certified mail, to the address below:

Corporate Secretary

WEC Energy Group, Inc.
231 West Michigan Street

Milwaukee, Wisconsin 53203

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing and hand‑delivered, or sent by mail, to the last known address of the Participant.


15.11	Successors . The provisions of this Plan shall bind and inure to the benefit of the Participant's Employer and its successors and assigns and the Participant and the Participant's designated Beneficiaries.


15.12	Validity . In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.

15.13

Incompetent . If the Committee determines in its discretion that a benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling the disposition of that person's property, the Committee may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person. The Committee may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the account of the Participant and the Participant's Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such payment amount.

15.14

Court Order . The Committee is authorized to make any payments directed by court order in any action in which the Plan or the Committee has been named as a party. In addition, if a court determines that a spouse or former spouse of a Participant has an interest in the Participant's benefits under the Plan in connection with a property settlement or otherwise, the Committee in its sole discretion, shall have the right,

Exhibit 10.2

notwithstanding any election made by a Participant, to immediately distribute the spouse's or former spouse's interest in the Participant's benefits under the Plan to that spouse or former spouse.


15.15	Distribution in the Event of Taxation .

(a)

In General . If, for any reason, all or any portion of a Participant's benefits under this Plan becomes taxable to the Participant prior to receipt, a Participant may petition the Committee before a Change in Control, or the third party administrator after a Change in Control, for a distribution of that portion of his or her benefit that has become taxable. Upon the grant of such a petition, which grant shall not be unreasonably withheld (and, after a Change in Control, shall be granted), a Participant's Employer shall distribute to the Participant immediately available funds in an amount equal to the taxable portion of his or her benefit (which amount shall not exceed a Participant's unpaid Account Balance under the Plan). If the petition is granted, the tax liability distribution shall be made within 90 days of the date when the Participant's petition is granted. Such a distribution shall affect and reduce the benefits to be paid under this Plan.


(b)	Trust . If the Trust terminates in accordance with its terms and benefits are distributed from the Trust to a Participant in accordance therewith, the Participant's benefits under this Plan shall be reduced to the extent of such distributions.

15.16

Insurance . The Employers, on their own behalf or on behalf of the trustee of the Trust, and, in their sole discretion, may apply for and procure insurance on the life of the Participant, in such amounts and in such forms as the Trust may choose. The Employers or the trustee of the Trust, as the case may be, shall be the sole owner and beneficiary of any such insurance. The Participant shall have no interest whatsoever in any such policy or policies, and at the request of the Employers shall submit to medical examinations and supply such information and execute such documents as may be required by the insurance company or companies to whom the Employers have applied for insurance. The Participant may elect not to be insured.

15.17

Legal Fees To Enforce Rights After Change in Control . The Company and each Employer is aware that upon the occurrence of a Change in Control, the Company Board or the board of directors of a Participant's Employer (which might then be composed of new members) or a shareholder of the Company or the Participant's Employer, or of any successor corporation might then cause or attempt to cause the Company, the Participant's Employer or such successor to refuse to comply with its obligations under the Plan and might cause or attempt to cause the Company or the Participant's Employer to institute, or may institute, litigation seeking to deny Participants the benefits intended under the Plan. In these circumstances, the purpose of the Plan could be frustrated. Accordingly, if, following a Change in Control, it should appear to any Participant that the Company, the Participant's Employer or any successor corporation has failed to comply with any of its obligations under the Plan or any agreement thereunder or, if the Company, such Employer or any other person takes any action to declare the Plan void or

Exhibit 10.2

unenforceable or institutes any litigation or other legal action designed to deny, diminish or to recover from any Participant the benefits intended to be provided, then the Company and the Participant's Employer irrevocably authorize such Participant to retain counsel of his or her choice at the expense of the Company and the Participant's Employer (who shall be jointly and severally liable for all reasonable fees of such counsel) to represent such Participant in connection with the initiation or defense of any litigation or other legal action, whether by or against the Company, the Participant's Employer or any director, officer, shareholder or other person affiliated with the Company, the Participant's Employer or any successor thereto in any jurisdiction.

15.18

Payout Under Special Circumstances . Notwithstanding any other provision of this Plan, upon the happening of either of the following events, the Account Balances of all Participants, Inactive Participants and Beneficiaries shall be forthwith paid in a single lump sum, except in the case of an event constituting a Change in Control for any individual who has previously filed a special written irrevocable deferral election form under the SERP, or under a special written contract with the Company (including, without limitation, the senior officer change in control, severance and non‑compete agreements currently in effect) electing not to receive such an immediate lump sum but to instead be paid on another basis:


(a)	the occurrence of a Change in Control; or


(b)	should at any time Moody's or Standard & Poor's investment rating services classify the senior debt obligations of the Company as less than "investment grade" (which term shall mean senior debt obligations of the Company which are assigned to the top four grades, which as of the date of this document are AAA, AA, A and BBB by Standard & Poor's and Aaa, Aa, A and Baa by Moody's.

33307268v3

Exhibit 10.3

WEC ENERGY GROUP
EXECUTIVE DEFERRED COMPENSATION PLAN

Amended and Restated Effective as of January 1, 2016

Exhibit 10.3

TABLE OF CONTENTS



			Page
INTRODUCTION			1

ARTICLE 1		DEFINITIONS	1

ARTICLE 2		ELIGIBILITY AND PARTICIPATION	8
	2.1	Selection by Committee	8
	2.2	Participation	8
	2.3	Deferral Elections	8
	2.4	Form of Payment Elections	8
	2.5	Cessation of Participation	9

ARTICLE 3		DEFERRALS AND CONTRIBUTIONS	9
	3.1	Base Annual Salary	9
	3.2	Annual or Long-Term Performance Awards	10
	3.3	Restricted Stock	10
	3.4	Performance Shares or Units	11
	3.5	Dividend Equivalents	12
	3.6	Newly-Eligible Employees	12
	3.7	Annual Company Contribution Amount	12
	3.8	Company Matching Amount	13

ARTICLE 4		ACCOUNTS	14
	4.1	Establishment of Accounts	14
	4.2	Vesting	14
	4.3	Deemed Investments	15
	4.4	Taxes	17

ARTICLE 5		DISTRIBUTION OF ACCOUNT	18
	5.1	Time for Distribution	18
	5.2	In-Service Payout	18
	5.3	Benefits Upon Retirement	18
	5.4	Benefits Upon Separation from Service	19
	5.5	Benefits Upon Death	20
	5.6	Changes to Form of Payment	20
	5.7	Unforeseeable Emergency	21
	5.8	Change in Control	22
	5.9	Discretion to Accelerate Distribution	22

ARTICLE 6		LEAVE OF ABSENCE	23

ARTICLE 7		BENEFICIARY DESIGNATION	23
	7.1	Beneficiary	23
	7.2	Beneficiary Designation; Change	23
	7.3	No Beneficiary Designation	24

Exhibit 10.3

Table of Contents

(cont)



	7.4	Doubt as to Beneficiary	24
	7.5	Discharge of Obligations	24

ARTICLE 8		TERMINATION, AMENDMENT OR MODIFICATION	24
	8.1	Termination	24
	8.2	Amendment	25
	8.3	Effect of Payment	25

ARTICLE 9		ADMINISTRATION	26
	9.1	Plan Administration	26
	9.2	Powers, Duties and Procedures	26
	9.3	Administration Upon Change In Control	26
	9.4	Agents	27
	9.5	Binding Effect of Decisions	27
	9.6	Indemnity of Committee	27
	9.7	Employer Information	27
	9.8	Coordination with Other Benefits	27

ARTICLE 10		CLAIMS PROCEDURES	27
	10.1	Presentation of Claim	27
	10.2	Decisions on Initial Claim	28
	10.3	Right to Review	28
	10.4	Decision on Review	29
	10.5	Form of Notice and Decision	29
	10.6	Legal Action	29

ARTICLE 11		TRUST	30
	11.1	Establishment of the Trust	30
	11.2	Interrelationship of the Plan and the Trust	30
	11.3	Distributions From the Trust	30

ARTICLE 12		MISCELLANEOUS	30
	12.1	Status of Plan	30
	12.2	Unsecured General Creditor	30
	12.3	Employer's Liability	30
	12.4	Nonassignability	30
	12.5	Not a Contract of Employment	31
	12.6	Furnishing information	31
	12.7	Receipt and Release	31
	12.8	Incompetent	31
	12.9	Governing Law and Severability	31
	12.10	Notices and Communications	31
	12.11	Successors	32
	12.12	Insurance	32
	12.13	Legal Fees To Enforce Rights After Change in Control	32
	12.14	Terms	33
	12.15	Headings	33

Exhibit 10.3

WEC ENERGY GROUP
EXECUTIVE DEFERRED COMPENSATION PLAN

INTRODUCTION

The Plan was established effective January 1, 2005 and is known as the "WEC Energy Group Executive Deferred Compensation Plan." Prior to January 1, 2016, the Plan was known as the Wisconsin Energy Corporation Executive Deferred Compensation Plan.

The Plan is maintained by WEC Energy Group, Inc. (the "Company") to provide benefits to a select group of management and highly compensated employees who contribute materially to the continued growth, development and future business success of the Employers. The Plan shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").

The Plan is intended to comply with the provisions of section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), and any guidance and regulations issued thereunder. The Plan shall be interpreted and administered consistent with this intent and shall apply to all amounts deferred under the Plan on or after January 1, 2005. Such amounts include any amounts previously earned and deferred but not vested as of December 31, 2004 under the Legacy Wisconsin Energy Corporation Executive Deferred Compensation Plan, which the Company froze effective December 31, 2004, and is considered a "grandfathered" plan within the meaning of Code section 409A. Notwithstanding the foregoing, during the Code section 409A transition period in effect from January 1, 2005 through December 31, 2008, the Company permitted distribution elections and changes consistent with IRS transition relief, the elections and changes of which are otherwise documented via completed election forms.

The Plan was amended and restated effective as of September 8, 2009 to generally require Participants to elect a percentage of various compensation items to be deferred to the Plan for each Plan Year, rather than allowing Participants to elect to defer a fixed dollar amount. The Plan was further amended and restated effective as of January 1, 2015, to reflect administrative changes and reference a new rabbi trust established by the Company. Effective as of January 1, 2016, the Plan was again restated to reflect the change in the name of the Company and Plan, to update information on Measurement Funds and to clarify other administrative provisions.

ARTICLE 1

DEFINITIONS

Whenever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:


1.1	"Account" shall mean a bookkeeping account established for the benefit of a Participant under Article 4 utilized solely to measure and determine the amounts credited under the Plan on behalf of a Participant or Beneficiary. A Participant's Account may include one or more of the following sub‑Accounts, as more fully described in Article 4.

Exhibit 10.3

(a) Company Contribution Account,

(b) Company Matching Account,

(d) Dividend Deferral Account,

(e) Performance Share Account,

(f) Performance Unit Account, and

(g) Restricted Stock Account.

1.2

"Annual or Long‑Term Performance Award" shall mean any compensation, in addition to Base Annual Salary relating to services performed during any Plan Year, whether or not paid in such Plan Year or included on the Form W‑2 for such Plan Year, payable to a Participant under an Employer's annual performance award and cash incentive plans, including any long‑term incentive plans as may be in existence from time to time, but excluding severance payments, non‑qualified supplemental pension payments and any stock options or related gains, restricted stock, performance shares or units, dividends, dividend equivalents and any other equity‑based award provided under a plan or arrangement of any Employer.


1.3	"Annual Company Contribution Amount" shall mean, for any one Plan Year, the amount determined in accordance with section 3.7.


1.4	"Annual Deferral Amount" shall mean the portion of a Participant's Base Annual Salary and/or Annual or Long‑Term Performance Award that a Participant elects to defer in accordance with Article 3 for any one Plan Year.

1.5

"Annual Installment Method" shall mean an annual installment payment over a specified number of years as further described in sections 5.3 and 5.4. To determine the value of the Participant's Account balance for calculating an installment payment, the Participant's Account balance shall be valued as of the close of business on the last business day of the Plan Year preceding the Plan Year for which payment is to be made. Notwithstanding the foregoing, when determining the Account balance for calculating the first installment payment for a Participant who is a "specified employee" within the meaning of Code section 409A subject to a payment delay pursuant to section 5.3 or 5.4, the Participant's Account balance shall be valued as of the close of business on the last business day of the calendar quarter preceding the date the first payment is scheduled to occur. Each annual installment shall be calculated by multiplying the Account balance determined above, as the case may be, by a fraction, the numerator of which is one, and the denominator of which is the remaining number of annual payments due to the Participant. For example, if a 10‑year Annual Installment Method is specified, the first payment shall be 1/10 of the Account balance, valued as described herein. The following Plan Year, the payment shall be 1/9 of the Account balance, valued as described herein.

Exhibit 10.3

1.6

"Base Annual Salary" shall mean the annual cash compensation relating to services performed during a Plan Year, whether or not paid in, or included on the Form W‑2 for, such Plan Year, excluding severance payments, non‑qualified supplemental pension payments, performance awards, bonuses, commissions, overtime, fringe benefits, relocation expenses, incentive payments, non‑monetary awards, directors' fees and other fees, automobile and other allowances paid to an Eligible Employee for employment services rendered (whether or not such allowances are included in the Eligible Employee's gross income), stock options, restricted stock, performance shares or units, dividends, dividend equivalents and any other equity‑based award provided under a plan or arrangement of an Employer. Base Annual Salary shall be calculated before it is deferred or contributed by the Eligible Employee under a qualified or non‑qualified plan of an Employer and shall include amounts not otherwise included in the Eligible Employee's gross income under Code sections 125, 132(f)(4), 402(e)(3), 402(h) or 403(b) pursuant to plans established by an Employer; provided, however, that all such amounts shall be included in Base Annual Salary only to the extent that the amount would have been payable in cash to the Eligible Employee had there been no such plan.


1.7	"Beneficiary" shall mean one or more persons, trusts, estates or other entities designated by the Participant in accordance with Article 7 that are entitled to receive benefits under this Plan upon the death of a Participant.


1.8	"Board" shall mean the board of directors of the Company.


1.9	"Change in Control" shall mean, with respect to the Company, the occurrence of any one of the following dates, interpreted consistent with Treasury Regulation section 1.409A‑3(i)(5).

(a)

(b) Change in Effective Control .

(i)

The date any one Person, or more than one Person Acting as a Group, acquires (or has acquired during the 12‑month period ending on the date of the most recent acquisition by such Person or Persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company. Notwithstanding the foregoing, for purposes of this subparagraph, if any one Person, or more than one Person Acting as a Group, is considered to effectively control the Company, the acquisition of

Exhibit 10.3

additional control of the Company by the same Person or Persons is not considered to cause a Change in Control; or


(ii)	The date a majority of the members of the Company's Board is replaced during any 12‑month period by directors whose appointment or election is not endorsed by a majority of the members of the Company's Board before the date of the appointment or election.

(c)

Change in Ownership of a Substantial Portion of the Company's Assets . The date any one Person, or more than one Person Acting as a Group, acquires (or has acquired during the 12‑month period ending on the date of the most recent acquisition by such Person or Persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions. For purposes of this paragraph (c), "gross fair market value" means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. Notwithstanding the foregoing, a transfer of assets is not treated as a Change in Control if the assets are transferred to:


(i)	An entity that is controlled by the shareholders of the transferring corporation;


(ii)	A shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock;


(iii)	An entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company;


(iv)	A Person, or more than one Person Acting as a Group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company; or


(v)	An entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a Person described in clause (iv).

(d) "Person" and "Acting as a Group ."


(i)	For purposes of this section, "Person" shall have the meaning set forth in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended.

(ii)

Exhibit 10.3

considered to be Acting as a Group with the other shareholders only with respect to the ownership in that corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation. Notwithstanding the foregoing, Persons shall not be considered to be Acting as a Group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering.


1.10	"Chief Executive Officer" shall mean the Chief Executive Officer of the Company.


1.11	"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.


1.12	"Committee" shall mean an internal administrative committee appointed by the Chief Executive Officer to administer the Plan in accordance with Article 9.


1.13	"Company" shall mean WEC Energy Group, Inc., a Wisconsin corporation, and any successor to all or substantially all of the Company's assets or business. Prior to June 29, 2015, the Company was known as Wisconsin Energy Corporation.


1.14	"Company Matching Amount" shall mean, for any one Plan Year, the amount determined in accordance with section 3.8.


1.15	"Election Form" shall mean the form or forms established from time to time by the Committee that a Participant completes and submits in accordance with Committee rules to make a deferral election, make or change a payment form election, and/or make or change an investment election. To the extent authorized by the Committee, such form may be electronic or set forth in some other media or format.


1.16	"Eligible Employee" shall mean an employee of an Employer who satisfies the eligibility requirements set forth in Article 2.


1.17	"Employer" shall mean the Company and/or any of its subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Chief Executive Officer or the Board to participate in the Plan and have adopted the Plan as a sponsor.


1.18	"Ending Valuation Date" shall mean the last business day of the Plan Year immediately preceding the Plan Year of distribution of a lump sum payment or final installment payment, as the case may be.


1.19	"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.


1.20	"401(k) Plan" shall mean all tax‑qualified defined contribution retirement plans maintained by the Employer that permit employee elective deferral contributions in accordance with Code section 401(k).

Exhibit 10.3


1.21	"In‑Service Payout" shall mean distribution of all or a portion of an Annual Deferral Amount (including the related Company Matching Amount, if any), as of a specified date elected by a Participant.


1.22	"Measurement Funds" shall mean the hypothetical investment funds available under the Plan, as provided in section 4.3, to determine the earnings and losses credited to a Participant's Account.

1.23

"Participant" shall mean a current or former Eligible Employee who participates in the Plan in accordance with Article 2 and maintains an Account balance hereunder. A spouse or former spouse of a Participant shall not be treated as a Participant in the Plan or have an Account under the Plan, even if the spouse or former spouse has an interest in the Participant's Account as a result of applicable law or property settlements resulting from legal separation or divorce.


1.24	"Performance Shares" shall mean unvested shares with respect to Stock the amount of which vests based on achievement of certain performance criteria, all as determined under the applicable plan or arrangement of an Employer.


1.25	"Performance Share Amount" shall mean, for any grant of Performance Shares, the amount that would have been distributed to the Participant, but for an election to defer such amount under the Plan.


1.26	"Performance Units" shall mean unvested units representing the right to receive a cash payment whereby one unit has a value equal to one share of Stock, the amount of which vests based on achievement of certain performance criteria, all as determined and established pursuant to the applicable plan or arrangement of an Employer.


1.27	"Performance Unit Amount" shall mean, for any grant of Performance Units, the amount that would have been distributed to the Participant, but for an election to defer such amount under the Plan.


1.28	"Plan" shall mean the WEC Energy Group Executive Deferred Compensation Plan, including any amendments adopted hereto. Prior to January 1, 2016, the Plan was known as the Wisconsin Energy Corporation Executive Deferred Compensation Plan.


1.29	"Plan Year" shall mean the calendar year.


1.30	"Restricted Stock" shall mean unvested shares of Stock which is restricted stock selected by the Company's Compensation Committee, approved by the Board in its sole discretion, and awarded to the Participant under any Company stock incentive plan or arrangement.


1.31	"Restricted Stock Amount" shall mean, for any grant of Restricted Stock, the amount equal to the value of such Restricted Stock, calculated using the closing price for the Stock as of the day such Restricted Stock would otherwise vest (if a business day) or as of the next following business day.

Exhibit 10.3


1.32	"Retirement," "Retire(s)" or "Retired" shall mean an Employee's Separation from Service on or after attaining age 55 for any reason other than death.

1.33

"Separation from Service" shall mean the Participant's termination of employment with all Employers and other entities affiliated with the Company, voluntarily or involuntarily, for any reason other than on account of death, or as otherwise provided by the Department of Treasury in regulations promulgated under Code section 409A. For purposes of the foregoing, whether an entity is affiliated with the Company shall be determined pursuant to the controlled group rules of Code section 414, as modified by Code section 409A. Unless the employment relationship is terminated earlier by the Employer or the Participant, the following shall apply for determining a Separation from Service under the Plan:

(a)

Except as provided in paragraph (b), the Participant's employment relationship with the Employer shall be treated as continuing intact while the individual is on a military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed six months (or longer, if required by statute or contract). If the period of the leave exceeds six months and the Participant's right to reemployment is not provided either by statute or contract, the employment relationship is deemed to terminate on the first date immediately following such six‑month period.

(b)


1.34	"Stock" shall mean WEC Energy Group, Inc. common stock. Prior to June 29, 2015, "Stock" means Wisconsin Energy Corporation common stock.


1.35	"Trust" shall mean any fund created by a rabbi trust agreement established by the Company referencing the Plan, and as amended from time to time.

1.36

"Unforeseeable Emergency" shall mean, as determined by the Committee in its sole discretion, a severe financial hardship to the Participant resulting from (i) an illness or accident of the Participant, the Participant's spouse, the Participant's Beneficiary, or the Participant's dependent (as defined in Code section 152, without regard to Code section 152(b)(1), (b)(2), and (d)(1)(B)); (ii) loss of the Participant's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance); or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

Exhibit 10.3

ARTICLE 2
ELIGIBILITY AND PARTICIPATION

2.1

Selection by Committee . Participation in the Plan shall be limited to a select group of management and highly compensated employees of the Employer (as defined in ERISA sections 201(2), 301(a)(3) and 401(a)(1)), as determined by the Committee in its sole discretion. From that group, the Committee shall select the Eligible Employees to participate in the Plan. The Committee may limit the types of deferrals (identified in Article 3) an Eligible Employee may make under the Plan.

2.2

Participation . To begin participation in the Plan, an Eligible Employee shall properly complete and timely submit an Election Form in accordance with the Committee's rules. An Eligible Employee shall become a Participant on the first day on which a deferral of an elected amount is first credited to the Participant's Account. The Committee or its delegate may establish from time to time such other enrollment requirements as it determines in its sole discretion are necessary. Such Participant shall remain a Participant in the Plan until the Participant's Account balance is paid in full.

2.3

Deferral Elections . Election Forms shall be completed and submitted by the time periods set forth in Article 3 for the particular type of compensation elected for deferral or during such other enrollment period as the Committee determines in accordance with such Article. A Participant may change or revoke a deferral election any time before such election becomes irrevocable, which shall occur as of the applicable deadline specified in Article 3 unless the Committee establishes an earlier deadline. Unless the Committee determines otherwise, a new Election Form shall be required for each Plan Year in which a Participant requests to defer a type of compensation eligible for deferral.


2.4	Form of Payment Elections . A Participant's Election Form shall specify the form of payment, which shall be paid at the times specified in Article 5.

(a)

Duration of Election . The form of payment elected by the Participant shall govern all amounts credited to the Participant's Account for the Plan Year to which the Election Form applies, and earnings or losses on such amounts. The form of payment election shall also apply to each subsequent Plan Year's deferrals, and earnings or losses on such amounts, until changed on either a prospective or retroactive basis by the Participant pursuant to section 5.6.

(b)

Default Form of Payment . In the event the Participant has not elected a form of payment, all amounts credited to the Participant's Account for the Plan Year, and earnings or losses on such amounts, shall be paid in a single lump sum. This default form of payment shall apply to each subsequent Plan Year's deferrals, and earnings or losses on such amounts, unless and until the Participant elects a form of payment on a prospective basis or changes the form of payment on a retroactive basis pursuant to section 5.6.


(c)	Section 409A Transition Period Elections . Distribution elections made during the Code section 409A transition period that relate to amounts deferred in Plan Years

Exhibit 10.3

2005, 2006, 2007 and 2008, as the case may be, shall be honored for such respective amounts, even if such amounts are not credited to a Participant's Account until a later Plan Year.


2.5	Cessation of Participation .


(a)	The Committee shall have the sole discretionary authority to exclude a Participant from making further deferrals under the Plan with such exclusion becoming effective as of the first day of the immediately following Plan Year. Such Participant shall remain a Participant in the Plan until the Participant's Account balance is paid in full.


(b)	Elective deferrals made by a Participant or Beneficiary who receives a distribution due to an Unforeseeable Emergency pursuant to section 5.7 shall be cancelled due to such distribution if the Committee so decides in its discretion. In either event, the Participant (or Beneficiary, as applicable) shall remain a Participant in the Plan until the Participant's Account balance is paid in full.

(c)

Deferrals of Base Annual Salary made by a Participant who receives a distribution from a 401(k) Plan on account of a financial hardship shall be cancelled (and not merely suspended) for the Plan Year due to such distribution if the 401(k) Plan requires the Participant to cease qualified and non-qualified deferrals as a condition of receiving the distribution. Any deferral election under this Plan that relates to any other type of compensation to be paid within six months following the date of the hardship distribution shall also be cancelled (and not merely suspended). After the cancellation of a deferral election under this paragraph, a Participant may elect to defer Base Annual Salary to be paid in subsequent Plan Years and other types of compensation to be paid more than six months following the date of the hardship distribution in accordance with the requirements of Article 3, and the rules of Code section 409A and the regulations issued thereunder with respect to "initial deferral elections."


(d)	Notwithstanding anything in the Plan to the contrary, upon the earlier to occur of a Participant's Separation from Service or death, any outstanding deferral election shall be given effect to the extent any amounts covered by such election are paid after such event. Payment of deferred amounts shall be made pursuant to Article 5.

ARTICLE 3
DEFERRALS AND CONTRIBUTIONS


3.1	Base Annual Salary .


(a)	For each Plan Year, a Participant may elect to defer in any whole percentage up to 50% of the Participant's Base Annual Salary. Notwithstanding the foregoing, the Committee, in its sole discretion, may permit a Participant to elect to defer a fixed dollar amount instead of a percentage of the Participant's Base Annual Salary;

Exhibit 10.3

however such amount may not exceed 50% of the Participant's Base Annual Salary payable for such Plan Year.


(b)	A Participant's Election Form with respect to the deferral of Base Annual Salary shall be submitted in accordance with procedures established by the Committee before the beginning of each Plan Year in which the Base Annual Salary is earned.


(c)	Subject to section 2.3, such deferral elections shall be irrevocable as of the first day of the Plan Year to which the Election Form relates. Elections for Participants are separate and independent elections from an election to defer compensation under the 401(k) Plan.


3.2	Annual or Long‑Term Performance Awards .

(a)

For each Plan Year, a Participant may elect to defer in any whole percentage up to 50% of the Participant's Annual or Long‑Term Performance Award. Notwithstanding the foregoing, the Committee, in its sole discretion, may permit a Participant to elect to defer a fixed dollar amount instead of a percentage of the Participant's Annual or Long‑Term Performance Award; however, such amount may not exceed 50% of the Participant's Annual or Long‑Term Performance Award payable for such Plan Year.

(b)

A Participant's Election Form with respect to the deferral of an Annual or Long‑Term Performance Award shall be submitted in accordance with procedures established by the Committee before the beginning of the Plan Year in which the Award is earned. Notwithstanding the foregoing, to the extent the Committee determines that an Annual or Long‑Term Performance Award constitutes "performance based compensation" (within the meaning of Code section 409A and regulations issued thereunder), the Committee may permit a Participant to submit an Election Form on or before a date that occurs no later than six months before the end of the performance period. In no event shall an Election Form for performance based compensation be submitted and accepted when such compensation is readily ascertainable (within the meaning of Code section 409A and regulations issued thereunder).


(c)	Subject to section 2.3, such deferral elections shall be irrevocable as of the first day of the Plan Year to which the Election Form relates or the deadline established by the Committee for performance‑based compensation, as the case may be.


3.3	Restricted Stock .

(a)

The Committee, in its sole discretion, may allow Participants to elect to defer a portion of the Participant's Restricted Stock Amount. To the extent permitted by the Committee for any applicable grant of Restricted Stock, a Participant may elect to defer in any whole percentage up to 50% of the Participant's Restricted Stock Amount, subject to such other terms or conditions as set forth in the plan or

Exhibit 10.3

agreement under which such Restricted Stock was granted. Notwithstanding the foregoing, the Committee, in its sole discretion, may permit a Participant to elect to defer a fixed dollar amount instead of a percentage of the Participant's Restricted Stock Amount.

(b)

A Participant's Election Form with respect to the deferral of Restricted Stock Amounts shall be submitted in accordance with procedures established by the Committee before the beginning of the Plan Year in which the Restricted Stock is awarded, as determined under the terms of the plan or arrangement. Notwithstanding the foregoing, at the discretion of the Committee, an Election Form may be submitted within 30 days after the Restricted Stock is awarded, provided that the Restricted Stock's first vesting date is at least 12 months after the date the completed Election Form is delivered to and accepted by the Committee (taking into account any automatic vesting provisions upon certain terminations from employment that may occur before such 12 month period).


(c)	Subject to section 2.3, such deferral elections shall be irrevocable as of the first day of the Plan Year to which the Election Form relates, or the 30 ^th day after the Restricted Stock is awarded, as the case may be.


3.4	Performance Shares or Units .

(a)

The Committee, in its sole discretion, may allow Participants to elect to defer a portion of the Participant's Performance Share or Unit Amount. To the extent permitted by the Committee, a Participant may elect to defer in any whole percentage up to 50% of the Participant's Performance Share or Unit Amount, as the case may be, subject to such other terms or conditions as set forth in the plan or arrangement under which such Performance Shares were granted. Notwithstanding the foregoing, the Committee, in its sole discretion, may permit a Participant to elect to defer a fixed dollar amount instead of a percentage of the Participant's Performance Share or Unit Amount.


(b)	A Participant's Election Form with respect to the deferral of Performance Share Amounts or Performance Unit Amounts shall be submitted in accordance with procedures established by the Committee at the following times, determined at the Committee's discretion:


(i)	Before the beginning of the Plan Year in which the Performance Shares or Performance Units are awarded, as determined under the terms of the plan or arrangement; or


(ii)	A date that occurs no later than six months before the end of the performance period for such Award to the extent that the Committee determines that Performance Shares or Performance Units constitute "performance based compensation" (within the meaning of Code section 409A and regulations issued thereunder). In no event shall an Election Form for performance based compensation be submitted and

Exhibit 10.3

accepted when such compensation is readily ascertainable (within the meaning of Code section 409A and regulations issued thereunder).


(c)	Subject to section 2.3, such deferral elections shall be irrevocable as of: (i) the first day of the Plan Year to which the Election Form relates, (ii) the 30 ^th day after the Performance Share or Unit Award was granted, or (iii) the deadline established by the Committee for performance‑based compensation, as the case may be.


3.5	Dividend Equivalents .


(a)	The Committee, in its sole discretion, may allow Participants to elect to defer a portion of the dividend equivalents on unvested Performance Shares or Performance Units. Prior to January 1, 2010, a Participant could elect to defer up to 100% (in whole percentage) of the dividend equivalents on any unvested Performance Shares or Performance Units under a plan or arrangement of an Employer.


(b)	If dividend equivalents on Performance Shares and Performance Units were earned and paid annually, a Participant's Election Form with respect to the deferral of such dividend equivalents could be filed with the Committee before the beginning of the Plan Year in which the dividend equivalents to be deferred are otherwise earned and paid.


(c)	Subject to section 2.3, such deferral elections were irrevocable as of the first day of the Plan Year to which the Election Form relates.

3.6

Newly‑Eligible Employees . Notwithstanding anything in the Plan to the contrary, if the Committee, in its sole discretion, designates an employee as newly‑eligible to participate in the Plan effective as of any date other than January 1, the newly-Eligible Employee shall be given 30 days from the date the newly-Eligible Employee becomes eligible to participate in the Plan to complete and submit an Election Form with respect to Base Annual Salary and Annual or Long‑Term Performance Award deferrals, and such election shall apply only to amounts paid for services performed after the date on which the election is effective. Newly‑eligible for participation in the Plan shall be determined under the plan aggregation rules of Code section 409A.

3.7

Annual Company Contribution Amount . For each Plan Year, an Employer, in its sole discretion, may, but is not required to, credit any amount it desires as an Annual Company Contribution Amount to the Company Contribution Account of one or more Eligible Employees. The Annual Company Contribution Amount credited to a Participant may be smaller or larger than the amount credited to any other Participant, and the amount credited to any Participant for a Plan Year may be zero, even though one or more other Participants receive an Annual Company Contribution Amount for that Plan Year. Crediting of an Annual Company Contribution Amount for one Plan Year does not guarantee an Annual Company Contribution Amount for subsequent Plan Years. Notwithstanding the foregoing, if any portion of the Annual Company Contribution Amounts credited to a Participant's Company Contribution Account under the Legacy

Exhibit 10.3

Wisconsin Energy Corporation Executive Deferred Compensation Plan remains unvested as of December 31, 2004, such Amounts shall be treated as contributed under this Plan, and shall be subject to the terms and conditions set forth herein. Participants shall be permitted to make changes to payment form elections previously filed with respect to such amounts pursuant to section 5.6(c).


3.8	Company Matching Amount . A Company Matching Amount shall be made for any month in which Base Annual Salary and/or an Annual Performance Award is credited to a Participant's Account under this Plan. If no Base Annual Salary and/or Annual Performance Award is credited to a Participant's Account in a month, then no Company Matching Amount will be provided for such month.

(a)

The Company Matching Amount shall be determined by using the "matching contribution formula" under the WEC Energy Group Employee Retirement Savings Plan (the "ERSP") (previously, the Wisconsin Energy Corporation Employee Retirement Savings Plan), regardless of the actual 401(k) Plan, if any, that applies to the Participant. Between January 1, 2005 and December 31, 2007 (inclusive), the matching contribution formula under the ERSP is 50% on 6% of eligible compensation. On and after January 1, 2008, the matching contribution formula under the ERSP is 100% on up to 1% of eligible compensation and 50% on the next 6% of eligible compensation. Such matching contribution formula is subject to change under the ERSP. In this regard, any amendment to the ERSP that makes such change shall be incorporated herein by reference effective as of the date of any such change.


(b)	The formula for a Participant's Company Matching Amount is the applicable matching rate multiplied by "X." For purposes of the formula, X is the difference between (i) and (ii):


(i)	the result of the matching contribution formula calculated using the Participant's gross compensation for the month that is eligible under the relevant Employer 401(k) Plan determined before any reduction for deferrals of Base Annual Salary and Annual Performance Awards, if applicable, under this Plan and without regard to any Code limitations, and

(ii)

the Participant's "Deemed Maximum Match" ("DMM"). The DMM for any Participant is equal to the result of the matching contribution formula calculated using the Participant's gross compensation for the month that is eligible for matching under the relevant Employer 401(k) Plan. For purposes of this clause (ii), such Participant's gross compensation shall first be reduced by Base Annual Salary and Annual Performance Award deferrals under this Plan. Further, for each month in which the DMM is calculated, it will be assumed that the Participant is contributing the necessary elective deferral amount to the relevant 401(k) Plan for such month so that the Participant would receive the maximum match under the ERSP. Notwithstanding the foregoing, when determining the DMM, the Plan will apply the relevant Code limitations, determined on an annual

Exhibit 10.3

basis, including maximum Compensation that can be considered under Code section 401(a)(17), and the maximum allowable elective deferral permitted under Code section 402(g).

If the relevant 401(k) Plan does not operate on the calendar year, the Committee in its sole discretion shall determine how the Participant's Company Matching Amount shall be calculated. The Committee may modify the method of calculating the Company Matching Amount, as it determines necessary, in its sole discretion.

ARTICLE 4
ACCOUNTS

4.1

Establishment of Accounts . Bookkeeping accounts shall be established for each Participant to reflect the deferrals of amounts made for the Participant's benefit, together with adjustments for income, gains or losses attributable thereto, and any payments from the Plan. Accounts are established solely for the purpose of tracking deferrals made by Participants or contributions made by an Employer and any income adjustments thereto. The Accounts shall not be used to segregate assets for payment of any amounts deferred or allocated under the Plan, and shall not constitute or be treated as a trust fund of any kind.


4.2	Vesting . A Participant shall be vested and have a nonforfeitable right to the amounts credited to the Participant's sub-Accounts, adjusted for deemed income, gains and losses attributable thereto, as follows:

(a) Company Contribution Account .


(i)	Vesting Schedule . A Participant shall be vested and have a nonforfeitable right to amounts credited, if any, in the Participant's Company Contribution Account in accordance with the vesting schedule, if any, set forth in the Participant's Election Form or other written agreement with such Participant.


(ii)	Separation from Service . If a Participant Separates from Service for any reason other than Retirement or death before the last day of a Plan Year, any Annual Company Contribution Amount previously credited for that Plan Year shall be forfeited and become zero, unless the Employer in its sole discretion determines otherwise.

(iii)

Change in Control . In the event of a Change in Control, amounts credited to a Participant's Company Contribution Account shall immediately become 100% vested. Notwithstanding the foregoing, the vesting schedule for a Participant's Annual Company Contribution Amounts shall not be accelerated to the extent that the Committee determines that such acceleration would cause the deduction limitations of Code section 280G to become effective. If all of a Participant's Annual Company Contribution Amounts are not vested pursuant to such a determination, the Participant may request independent verification of the Committee's

Exhibit 10.3

calculations with respect to the application of Code section 280G. In such case, the Committee shall provide to the Participant within 15 business days of such request an opinion (which need not be unqualified) of the Company's independent auditors, which opinion shall state that any limitation in the vested percentage hereunder is necessary to avoid the limits of Code section 280G and contain supporting calculations. The cost of such opinion shall be paid by the Company.

Other Accounts . A Participant shall at all times be 100% vested and have a nonforfeitable right to amounts credited to the Participant's Company Matching Account, Deferral Account, Dividend Deferral Account, Performance Share Account, Performance Unit Account and Restricted Stock Account.

4.3

Deemed Investments . Subject to paragraphs (b) and (h) below, and in accordance with, and subject to, the rules and procedures that are established from time to time by the Committee in its sole discretion, amounts shall be credited or debited to a Participant's Account in accordance with the following rules. The Committee's discretion includes the right to supersede the specific rights identified below, with or without retroactive effect:

(a)

Measurement Funds . Amounts credited to each Participant's Account shall be deemed invested, in accordance with the Participant's directions, in Measurement Funds that are available under the Plan. The hypothetical investment funds available under the Plan shall be those designated by the Committee, from time to time in its discretion, following recommendations by the WEC Energy Group Investment Trust Policy Committee. Subject to paragraphs (b) and (h) below, a Participant may elect one or both of the following Measurement Funds for the purpose of crediting additional amounts to the Participant's Account: (i) the Prime Rate Fund (described as a mutual fund that is 100% invested in a hypothetical debt instrument which earns interest at an annualized interest rate equal to the "Prime Rate" as reported each business day by the Wall Street Journal , with interest deemed reinvested in additional units of such hypothetical debt instrument), or (ii) a Company Stock Measurement Fund (described as a mutual fund that is 100% invested in shares of Stock, with dividends deemed reinvested in additional shares of Stock).

Prior to January 1, 2015, additional Measurement Funds selected the Committee were available under the Plan. Investment allocations in place on December 31, 2014 for discontinued Measurement Funds shall remain in effect until changed by the Participant. However, such investment allocations shall not apply to any deferrals or contributions credited under the Plan after December 31, 2014. A Participant may change the allocation of the Participant's Account from the discontinued Measurement Funds to either the Prime Rate Fund or the Company Stock Measurement Fund in accordance with paragraph (c) below; no other changes are permitted. Once a Participant elects to change the allocation of amounts from discontinued Measurement Funds to the Prime Rate Fund or the Company Stock Measurement Fund, such amounts cannot be reallocated to the discontinued Measurement Funds.

Exhibit 10.3

Subject to paragraphs (b) and (h) below, the Committee may, in its sole discretion, discontinue, substitute or add a Measurement Fund, subject to advance notice to Participants if the Committee determines, in its sole discretion, that such notice is necessary. The Committee also may suspend ( i.e. , freeze) an existing Measurement Fund at any time, subject to advance notice if the Committee determines necessary, thereby freezing the Measurement Fund as to the crediting of additional deemed investments subsequent to the effective date of the suspension.

(b)

Special Rule for Restricted Stock and Performance Share Amounts . Notwithstanding any provision of this Plan to the contrary, the Participant's Restricted Stock Amounts and Performance Share Amounts deferred under the Plan that would have otherwise been distributed in Stock shall be deemed invested in the Company Stock Measurement Fund at all times before distribution from this Plan. Further, the Participant's Restricted Stock and Performance Share Amounts shall be distributed from this Plan in the form of cash.

(c)

Election of Measurement Funds . Subject to paragraphs (b) and (h), a Participant shall elect on the Participant's initial Election Form Measurement Funds to be used to determine the additional amounts to be credited to the Participant's Account, unless changed pursuant to rules as the Committee shall determine, in its discretion, from time to time. However, subject to paragraphs (b) and (h) and any rules and procedures established from time to time by the Committee in its sole discretion, the Participant may elect to add or delete one or more Measurement Funds to be used to determine the additional amounts to be credited to the Participant's Account, or to change the portion of the Account allocated to each previously or newly elected Measurement Fund. Such rules may include, but are not limited to, rules and/or trading policies that govern the timing, frequency, and manner in which elections are made to allocate or reallocate deemed investment amounts among the Measurement Funds, and may be modified at any time and from time to time by the Committee in its sole discretion. If an election is made to change a Measurement Fund, it shall become effective and apply thereafter in accordance with the rules of the Committee for all subsequent periods in which the Participant participates in the Plan, unless changed in accordance with the previous provisions. All rights of a Participant or any other person to elect or change the Measurement Funds under this section shall be deemed to have ceased as of the Ending Valuation Date and no adjustment in the value of an Account balance shall be considered for any purpose under the Plan after such Ending Valuation Date. If a Participant fails to elect a Measurement Fund for all or a portion of the Participant's Account, the amounts for which there is no valid election shall be deemed invested in the Prime Rate Fund.


(d)	Proportionate Allocation . In making any election described in paragraph (c) above, the Participant shall specify on the Election Form, in increments of 1%, the percentage of the Participant's Account balance to be allocated to a Measurement Fund (as if the Participant was making an investment in that Measurement Fund with that portion of the Participant's Account balance).

Exhibit 10.3

(e)

Crediting or Debiting Method . The performance of each elected Measurement Fund (either positive or negative) shall be determined by the Committee, in its sole discretion, based on the performance of the Measurement Funds themselves. A Participant's Account shall be credited or debited on a periodic basis based on the performance of each Measurement Fund selected by the Participant, as determined by the Committee in its sole discretion, provided that no adjustment in the value of a Participant's Account balance shall be considered after the Ending Valuation Date.

(f)

No Actual Investment . Notwithstanding any other provision of this Plan to the contrary, the Measurement Funds shall be used for measurement purposes only, and a Participant's election of any Measurement Fund, the allocation of the Participant's Account thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant's Account shall not be considered or construed in any manner as an actual investment of the Participant's Account balance in any such Measurement Fund. If the Employer or the trustee of the Trust, in its sole discretion, decides to invest funds in any or all of the Measurement Funds, no Participant shall have any rights in or to such investments themselves. Notwithstanding the foregoing, a Participant's Account balance shall at all times be a bookkeeping entry only and shall not represent any investment made on the Participant's behalf by the Employer or the trustee; the Participant shall at all times remain an unsecured creditor of the Company.

(g)

Investment of Trust Assets . If the Committee deposits amounts in a Trust, the trustee of the Trust shall be authorized, upon written instructions received from the Committee or an investment manager appointed by the Committee, to invest and reinvest the assets of the Trust in accordance with the applicable Trust Agreement, including the disposition of Stock and reinvestment of the proceeds in one or more investment vehicles designated by the Committee.

(h)

Special Considerations for Participants Subject to Section 16 of the Securities Exchange Act of 1934 . In order for any deferral election under this Plan by a Participant who is an officer subject to the reporting requirements and trading restrictions of Section 16 of the Securities Exchange Act of 1934 ("Section 16") to conform to Section 16, the Participant shall consult with the Company's designated individual responsible for Section 16 reporting and compliance before making any election to move any part of the Participant's Account into or out of the Company Stock Measurement Fund. The Company reserves the right to impose such restrictions as it determines necessary, in its sole discretion, on any elections, transactions or other matters under this Plan relating to the Company Stock Measurement Fund to comply with or qualify for exemption under Section 16.


4.4	Taxes . A Participant's Employer shall withhold from a Participant's non‑deferred compensation any employment taxes the Employer is required to withhold with respect to amounts deferred under the Plan at the times required under applicable regulations promulgated by the Department of the Treasury. To the extent not previously withheld,

Exhibit 10.3

the Employer, or the trustee of the Trust, shall withhold from any payments made to a Participant under this Plan all federal, state and local income, employment and other taxes required to be withheld by the Employer, or the trustee of the Trust, in connection with such payments, in amounts and in a manner to be determined in the sole discretion of the Employer or the trustee of the Trust, as the case may be.

ARTICLE 5
DISTRIBUTION OF ACCOUNT


5.1	Time for Distribution . Except as otherwise provided in section 5.7, distribution of a Participant's Account shall be made on the earliest to occur of:


(a)	The date elected by a Participant under section 5.2 with respect to an In‑Service Payout;


(b)	The date set forth in section 5.3 with respect to the Participant's Retirement;


(c)	The date set forth in section 5.4 with respect to the Participant's Separation from Service;


(d)	The date set forth in section 5.5 with respect to the Participant's death; or


(e)	The date set forth in section 5.8 with respect to a Separation from Service after a Change in Control.

Notwithstanding any other provision of the Plan to the contrary, in no event shall the distribution of any Account be accelerated to a time earlier than which it would otherwise have been paid, whether by amendment of the Plan, exercise of the Committee's discretion or otherwise, except as permitted by section 5.9 or Treasury Regulations issued pursuant to Code section 409A.

5.2

In‑Service Payout . A Participant may irrevocably select, on the Participant's Election Form, a Plan Year to receive a lump‑sum In‑Service Payout of all or part of an Annual Deferral Amount (including Company Matching Amounts thereto). The earliest Plan Year in which a Participant can elect an In‑Service Payout is the third Plan Year after the Plan Year in which the deferral actually occurs. For example, an election to defer Base Annual Salary in December 2015 that is actually deferred in 2016 may be distributed no earlier than in 2019. Payment shall be made during the first 90 days of the Plan Year elected for distribution.

5.3

Benefits Upon Retirement . Upon a Participant's Retirement, the Participant's Account shall be paid or begin to be paid during the first 90 days of the Plan Year following the Plan Year of the Participant's Retirement. Notwithstanding the foregoing, distributions made to "specified employees" (determined pursuant to Treasury Regulation section 1.409A‑1(i)) upon Retirement shall be paid or begin to be paid no earlier than the first day of the seventh month following the Participant's Retirement, unless the Participant dies during such six‑month period in which case section 5.5 shall apply.

Exhibit 10.3

Subsequent installment payments shall be made thereafter during the first 90 days of the Plan Year in which the installment is due.

Payment shall be made in such form as determined below, taking into account any changes to an elected form of payment pursuant to section 5.6.

(a) A Participant's Account balance shall be paid in a lump sum if:

(i) timely elected by the Participant pursuant to the Plan,


(ii)	the Participant's Account balance at the time of Retirement is $10,000 or less even if the Participant elected an installment payment form, or

(iii) no valid payment election is in effect when distribution is to be made.


(b)	Subject to paragraph (a)(ii) and section 5.8, a Participant may elect to receive payment of the Participant's Account balance in any number of installments up to ten. The amount of each installment shall be determined using the Annual Installment Method.

5.4

Benefits Upon Separation from Service . Upon a Participant's Separation from Service for any reason other than Retirement or death, the Participant's Account shall be paid or begin to be paid during the first 90 days of the Plan Year following the Plan Year of the Participant's Separation from Service. Notwithstanding the foregoing, distributions made to "specified employees" (determined pursuant to Treasury Regulation section 1.409A‑1(i)) upon such separation shall be paid or begin to be paid no earlier than the first day of the seventh month following the Participant's Separation from Service unless the Participant dies during such six‑month period in which case section 5.5 shall apply. If an Annual Installment Method is in effect, subsequent installment payments shall be made thereafter during the first 90 days of the Plan Year in which the installment is due.

Payment shall be made in such form as determined below, taking into account any changes to an elected form of payment pursuant to section 5.6.

(a) A Participant's Account balance shall be paid in a lump sum if:

(i) timely elected by the Participant pursuant to the Plan,


(ii)	the Participant's Account balance at the time of Separation from Service is $25,000 or less even if the Participant elected an installment payment form, or

(iii) no valid payment election is in effect when distribution is to be made.


(b)	Subject to paragraph (a)(ii) and section 5.8, a Participant may elect to receive payment of the Participant's Account balance in five installments. The amount of each installment shall be determined using the Annual Installment Method.

Exhibit 10.3


5.5	Benefits Upon Death . Upon the Participant's death, the Plan Administrator shall pay to the Participant's Beneficiary a benefit equal to the remaining balance in the Participant's Account. Payment shall be made in accordance with the provisions below.

(a)

Death While In Pay Status or After a Separation from Service . If the Participant dies after commencing an installment form of payment, but before the entire benefit is paid in full, the Participant's unpaid installment payments shall continue to be paid to the Participant's Beneficiary over the remaining number of years as that benefit would have been paid to the Participant had the Participant survived. In the event a Participant dies after a Separation from Service, but before actual payment is made or begins, this paragraph shall apply and payment to the Participant's Beneficiary shall be paid or begin to be paid at the same time as if the Participant had survived.

(b)

Death Prior to a Separation from Service . If a Participant dies prior to a Separation from Service, the Participant's Account shall be paid or begin to be paid to the Participant's Beneficiary during the first 90 days of the Plan Year following the Plan Year of the Participant's death, regardless of whether the Participant is a specified employee. Payment shall be made in such form as determined below, taking into account any changes to an elected form of payment pursuant to section 5.6.


(i)	A Participant's Account balance shall be paid to the Participant's Beneficiary in a lump sum if:


(A)	timely elected by the Participant pursuant to the Plan,


(B)	the Participant's Account balance at the time of death is $25,000 or less even if the Participant elected an installment payment form, or


(C)	no valid payment election is in effect when distribution is to be made.


(ii)	Subject to clause (i)(B), a Participant may elect payment of the Participant's Account balance upon death in any number of installments up to ten. The amount of each installment shall be determined using the Annual Installment Method.


5.6	Changes to Form of Payment .


(a)	Prospective Changes . A Participant may select an alternate form of payment for amounts not yet subject to an irrevocable election in accordance with the rules for completing and submitting elections in section 2.3 and Article 3.


(b)	Retroactive Changes . A Participant may elect to change the form of payment for amounts that are subject to a deferral election that is irrevocable:

Exhibit 10.3


(i)	A Participant who has elected a lump sum distribution may later change such election to an installment payment, provided the first installment payment shall be deferred to a date that is at least five years after the date the lump sum distribution would otherwise have been made.


(ii)	A Participant who has an installment election in effect may change such election to a lump sum payment, provided the lump sum payment shall be deferred to a date that is at least five years after the date the initial installment payment would otherwise have commenced.


(iii)	A Participant who has an installment election for payment upon Retirement, may change the number of installments, provided that the first installment payment shall be deferred to a date that is at least five years after the date the initial installment payment would otherwise have commenced.

Any such election changes pursuant to this paragraph shall be completed in accordance with Committee rules and must be made at least 12 months before the event triggering distribution occurs. Therefore, if the event triggering distribution occurs before such 12 month period has elapsed, then the election to change the payment form shall not take effect. Notwithstanding anything in this paragraph (b) to the contrary, the five‑year delay described above shall not apply to changes in the form of payment upon death.

(c)

Changes Pursuant to Section 409A Transition Relief . Notwithstanding the foregoing provisions of this section, on or before December 31, 2008, Participants may make changes to payment form elections previously filed with respect to amounts deferred under the Plan that relate to Plan Years 2005, 2006, 2007 and 2008 consistent with transition relief provided by the Department of the Treasury in Notice 2006‑79, Notice 2007‑86 and proposed regulations promulgated under Code section 409A. If a Participant makes such a change, then the last election validly in effect as of December 31, 2008 shall be treated as the "initial" election for purposes of applying the rules set forth in paragraph (b).

5.7

Unforeseeable Emergency . A Participant may request that all or a portion of the Participant's Account be distributed in a lump sum at any time by submitting a request to the Committee in a form and manner acceptable to the Plan Administrator demonstrating that the Participant has suffered an Unforeseeable Emergency, and that the distribution is necessary to alleviate the financial hardship created by the Unforeseeable Emergency.

(a)

Exhibit 10.3

by the cessation of deferrals under the Plan. In this regard, all deferral elections scheduled for the remainder of the Plan Year in which such distribution is made shall be cancelled. If a Participant's outstanding deferral election is cancelled, a Participant shall be required to make a new election pursuant to Articles 2 and 3 to resume active participation in the Plan.

(b)

Upon a finding that the Participant has suffered an Unforeseeable Emergency, the Committee shall distribute to the Participant the lesser of (i) the portion of the Participant's Account that is necessary to satisfy the Unforeseeable Emergency, plus taxes attributable thereto or (ii) the Account balance. Distributions made pursuant to this section shall be made within 90 days after the Committee has reviewed and approved the request.

5.8

Change in Control . Notwithstanding any other provision of the Plan to the contrary, in the event a Participant incurs a Separation from Service within 18 months after a Change in Control, the Employer shall distribute the Participant's entire Account in a lump sum payment within 90 days after such Separation from Service. Notwithstanding the foregoing, distributions made to "specified employees" (determined pursuant to Treasury Regulation section 1.409A‑1(i)) upon Separation from Service shall be paid or begin to be paid no earlier than the first day of the seventh month following the Participant's Separation from Service, unless the Participant dies during such six‑month period in which case section 5.5 shall apply.


5.9	Discretion to Accelerate Distribution .


(a)	The Committee shall have the discretion to make a distribution, or accelerate the time or schedule of payment, from a Participant's Account if payment is required for:


(i)	FICA, FUTA and/or the corresponding withholding provisions of applicable state and local taxes with respect to compensation deferred under the Plan. Any such distribution shall not exceed the aggregate of such tax withholding and shall reduce the Participant's Account balance to the extent of such distributions; or


(ii)	payment of state, local or foreign tax obligations arising from participation in the Plan that apply to an amount deferred under the Plan and FUTA resulting from such payment. Any such payment shall not exceed the amount of such taxes due as a result of Plan participation.

(b)

The Committee or a Plan representative is authorized to accelerate the time or schedule of a payment under the Plan to an individual other than the Participant, or to make a payment under the Plan to an individual other than the Participant, to the extent necessary to fulfill a domestic relations order (as defined in Code section 414(p)(1)(B)). Payment to an alternate payee under a domestic relations order shall be made in a lump sum within 90 days after the Committee or Plan representative approves such order.

Exhibit 10.3


(c)	The Committee shall have the discretion to accelerate the time or schedule of a payment under the Plan if the Plan fails to meet the requirements of Code section 409A and regulations promulgated thereunder, provided that any such payment does not exceed the amount required to be included in income as a result of such failure.

ARTICLE 6
LEAVE OF ABSENCE

If a Participant is authorized by an Employer to take a paid or unpaid bona fide leave of absence for any reason, the employment relationship is treated as continuing intact and deferral elections shall remain in force if the period of such leave does not exceed six months, or, if longer, so long as the Participant retains a right to reemployment under an applicable statute or by contract. If the Participant is on a leave of absence during the time for filing Election Forms, the Participant shall be permitted to complete an Election Form for the upcoming Plan Year. Upon return from leave, deferrals shall occur pursuant to the Election Form in effect for that Plan Year. If no election was made for the Plan Year in which the Participant returns from leave, no deferral shall be withheld.

If the leave of absence exceeds six months and the Participant does not retain a right to reemployment under an applicable statute or by contract, the Participant shall be deemed to have incurred a Separation from Service as of the first date immediately following such six‑month period. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Participant to be unable to perform the duties of the Participant's position of employment or any substantially similar position of employment, the Participant's relationship with the Employer shall be treated as continuing intact for a period of up to 29 months, unless earlier terminated by the Employer or Participant. In this event, the Participant's Account shall be distributed pursuant to section 5.3 or 5.4, as applicable.

ARTICLE 7
BENEFICIARY DESIGNATION


7.1	Beneficiary . Each Participant may, at any time, designate one or more Beneficiaries (both primary as well as contingent) to receive any benefits payable under the Plan upon the Participant's death. The Beneficiary designated under this Plan may be the same as or different from the Beneficiary designation under any other plan of an Employer in which the Participant participates.

7.2

Beneficiary Designation; Change . A Participant shall designate a Beneficiary by submitting a Beneficiary designation in a form and manner approved by the Committee or its designated agent. To the extent authorized by the Committee, such designation may be electronic or set forth in some other media or format. A Participant may change a Beneficiary designation in accordance with the Committee's rules and procedures, as in effect from time to time. Upon the acceptance by the Committee of a new Beneficiary designation, all Beneficiary designations previously submitted shall be canceled. The

Exhibit 10.3

Committee shall rely on the last completed Beneficiary designation submitted by the Participant before the Participant's death. In the event of a Participant's divorce, any designation of the Participant's former spouse as a Beneficiary shall be deemed void unless after the divorce the Participant completes a new designation naming such former spouse as a Beneficiary.

7.3

No Beneficiary Designation . If a Participant fails to designate a Beneficiary as provided in this Article 7 or, if all designated Beneficiaries predecease the Participant or die before complete distribution of the Participant's Account, then the remaining benefits in the Participant's Account shall be paid to the Participant's surviving spouse, if none, to the Participant's descendants by right of representation or, if none, to the Participant's next of kin determined pursuant to the laws of the state in which the Company's principal place of business is located as if the Participant had died unmarried and intestate.


7.4	Doubt as to Beneficiary . If the Committee has any doubt as to the proper Beneficiary to receive payments under this Plan, the Committee may, in its sole discretion, require the Participant's Employer to withhold such payments until the matter is resolved to the Committee's satisfaction.


7.5	Discharge of Obligations . The complete payment of benefits under the Plan to a Beneficiary shall fully and completely discharge all Employers and the Committee from all further obligations under this Plan with respect to the Participant, and the Participant's Election Form shall terminate upon such full payment of benefits.

ARTICLE 8
TERMINATION, AMENDMENT OR MODIFICATION


8.1	Termination .

(a)

Although each Employer anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee that an Employer will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, each Employer reserves the right to discontinue its participation in the Plan and/or to terminate the Plan at any time with respect to all of its participating Eligible Employees, by action of its board of directors or compensation committee. Upon the termination of the Plan with respect to any Employer, any elections to defer compensation under the Plan of Participants who are employed by that Employer shall terminate as of the last day of the Plan Year containing the termination date. The termination of the Plan shall not reduce the amount of any benefit the Participant or Beneficiary is entitled to receive under the Plan as of the termination date. Except as provided in paragraph (b) below, Account balances shall be maintained under the Plan until such amounts would otherwise have been distributed in accordance with the terms of the Plan and Participants' validly filed payment elections.


(b)	Notwithstanding any provision in the Plan to the contrary, upon termination of the Plan, the Board or Compensation Committee of the Company reserves the

Exhibit 10.3

discretion to accelerate distribution of Participants' Account (including those Participants in pay status pursuant to an installment election) in accordance with regulations promulgated by the Department of the Treasury under Code section 409A.

8.2

Amendment . The Company may, in its sole discretion, amend or modify the Plan at any time, in whole or in part, by action of its Board, Compensation Committee or the Committee; provided, however, that no amendment shall decrease the amount of any Participant's Account as of the date of the amendment. Further, during the pendency of a Potential Change in Control (as defined below) and at all times following a Change in Control, no amendment or modification may be made which in any way adversely affects the interests of any Participant with respect to amounts credited to such Participant's Account as of the date of the amendment. A "Potential Change in Control" shall be deemed to have occurred if one of the following events occurs:


(a)	The Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;


(b)	The Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

(c)

Any Person becomes the Beneficial Owner (within the meaning of Rule 13d‑3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of Stock representing 15% or more of either the then outstanding shares of stock of the Company or the combined voting power of the Company's then outstanding Stock (not including the Stock beneficially owned by such Person or any Stock acquired directly from the Company or its affiliates); or


(d)	The Board adopts a resolution to the effect that, for purposes of this Plan, a Potential Change in Control has occurred.

Except as otherwise noted, the capitalized terms in the above definition have the same meaning as set forth in section 1.9. The Company's power to amend or modify the Plan includes the power to suspend or freeze participation in the Plan, provided such suspension or freeze does not cause a prohibited acceleration of compensation under Code section 409A. In such circumstance, the Company may, in its sole discretion, reinstitute the ability of any Participant or group of Participants to make deferrals under Article 3 at any time, provided such action is taken consistent with Code section 409A. Such action may be taken by the Board, the Company's Compensation Committee or the Committee.


8.3	Effect of Payment . The full payment of the Participant's Account under any provision of the Plan shall completely discharge the Plan's and Employer's obligations to the Participant and the Participant's Beneficiaries under this Plan and the Participant's Election Forms shall terminate.

Exhibit 10.3

ARTICLE 9
ADMINISTRATION

9.1

Plan Administration . Except as otherwise provided in this Article 9, the Plan shall be administered by the Committee. Members of the Committee may be Participants under this Plan. Any individual serving on the Committee who is a Participant shall not vote or act on any matter relating solely to such individual. The Chief Executive Officer may not act on any matter involving such officer's own participation in the Plan. All references to the Committee shall be deemed to include reference to the Chief Executive Officer.

9.2

Powers, Duties and Procedures . The Committee (or the Chief Executive Officer if such individual chooses to so act) shall have full and complete discretionary authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration of the Plan, and (ii) decide or resolve any and all questions including interpretations of the Plan, as may arise in connection with the claims procedures set forth in Article 10 or otherwise with regard to the Plan. The Committee shall have complete control and authority to determine the rights and benefits of all claims, demands and actions arising out of the provisions of the Plan of any Participant or Beneficiary or other person having or claiming to have any interest under the Plan. When making a determination or calculation, the Committee may rely on information furnished by a Participant or the Employer. Benefits under the Plan shall be paid only if the Committee decides in its sole discretion that the Participant or Beneficiary is entitled to them. The Committee or the Chief Executive Officer may delegate such powers and duties as it determines for the efficient administration of the Plan.

9.3

Administration Upon Change In Control . For purposes of this Plan, the Company shall be the "Administrator" at all times before a Change in Control. Upon and after a Change in Control, the Administrator shall be an independent third party selected by the individual who, at any time before such event, was the Company's Chief Executive Officer or, if there is no such officer or such officer does not act, by the Company's then highest ranking officer (the "Appointing Officer"). Upon a Change in Control, the Administrator shall have full and complete discretionary power to determine all questions arising in connection with the administration of the Plan and the interpretation of the Plan and Trust including, but not limited to, benefit entitlement determinations. Upon and after a Change in Control, the Company shall (i) pay all reasonable administrative expenses and fees of the Administrator; (ii) indemnify the Administrator against any costs, expenses and liabilities (including, without limitation, attorney's fees) of whatever kind and nature which may be imposed on, asserted against or incurred by the Administrator in connection with the performance of the duties hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of the Administrator or its employees or agents; and (iii) supply full and timely information to the Administrator on all matters relating to the Plan, the Trust, the Participants and their Beneficiaries, the Account balances of the Participants, including the dates of Retirement, Disability, death or Separation from Service and such other pertinent information as the Administrator may reasonably require. Upon and after a Change in Control, the Administrator may be terminated (and a replacement appointed) only by an Appointing

Exhibit 10.3

Officer. Upon and after a Change in Control, the Administrator may not be terminated by the Company.


9.4	Agents . In the administration of this Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel who may be counsel to an Employer.

9.5

9.6

Indemnity of Committee . All Employers shall indemnify and hold harmless the members of the Committee, and any other employee to whom the duties of the Committee may be delegated, and the Administrator, as defined in section 9.3, against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful misconduct by the Committee, any of its members or any such employee or the Administrator.


9.7	Employer Information . To enable the Committee and/or Administrator to perform its functions, each Employer shall supply full and timely information to the Committee on all matters relating to the compensation of its Participants, the dates of the Retirement, disability, death or Separation from Service and such other pertinent information as the Committee may reasonably require.


9.8	Coordination with Other Benefits . The benefits provided to a Participant and the Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of an Employer. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.

ARTICLE 10
CLAIMS PROCEDURES

10.1

Exhibit 10.3

10.2

Decision on Initial Claim . The Committee shall consider a Claimant's claim and provide written notice to the Claimant of any denial within a reasonable time, but no later than 90 days after receipt of the claim. If an extension of time beyond the initial 90‑day period for processing is required, written notice of the extension shall be provided to the Claimant before the initial 90‑day period expires indicating the special circumstances requiring an extension of time and the date by which the Committee expects to render a final decision. In no event shall the period, as extended, exceed 180 days. If the Committee denies, in whole or in part, the claim, the notice shall set forth in a manner calculated to be understood by the Claimant:


(a)	The specific reasons for the denial of the claim, or any part thereof;


(b)	Specific references to pertinent Plan provisions upon which such denial was based;


(c)	A description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and


(d)	An explanation of the claim review procedure set forth in section 10.3 below, which explanation shall also include a statement of the Claimant's right to bring a civil action under ERISA section 502(a) following a denial of the claim upon review.

10.3

Right to Review . A Claimant is entitled to appeal any claim that has been denied in whole or in part. To do so, the Claimant must submit a written request for review with the Committee within 60 days after receiving a notice from the Committee that a claim has been denied, in whole or in part. Absent receipt by the Committee of a written request for review within such 60‑day period, the claim shall be deemed to be conclusively denied. The Claimant (or the Claimant's duly authorized representative) may:


(a)	Review and/or receive copies of, upon request and free of charge, all documents, records, and other information relevant to the Claimant's claim;


(b)	Submit written comments, documents, records or other information relating to the Claimant's claim, which the Committee shall take into account in considering the claim on review, without regard to whether such information was submitted or considered in the initial review of the claim; and/or


(c)	Request a hearing, which the Committee, in its sole discretion, may grant.

If a Claimant requests to review and/or receive copies of relevant information pursuant to paragraph (a) above before filing a written request for review, the 60‑day period for submitting the written request for review will be tolled during the period beginning on the date the Claimant makes such request and ending on the date the Claimant reviews or receives such relevant information.

Exhibit 10.3

10.4

Decision on Review . The Committee shall render its decision on review promptly, and not later than 60 days after it receives a written request for review of the denial, unless a hearing is held or other special circumstances require additional time. In such case, the Committee will notify the Claimant, before the expiration of the initial 60‑day period and in writing, of the need for additional time, the reason the additional time is necessary, and the date (no later than 60 days after expiration of the initial 60‑day period) by which the Committee expects to render its decision on review. Notwithstanding the foregoing, if the Committee determines that an extension of the initial 60‑day period is required due to the Claimant's failure to submit information necessary for the Committee to decide the claim, the time period by which the Committee must make its determination on review shall be tolled from the date on which the notification of the extension is sent to the Claimant until the date on which the Claimant responds to the request for additional information. The decision on review shall be written in a manner calculated to be understood by the Claimant, and shall contain:


(a)	Specific reasons for the decision;


(b)	Specific references to the pertinent Plan provisions upon which the decision was based;


(c)	A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records or other information relevant (within the meaning of Department of Labor Regulation section 2560.503‑1(m)(8)) to the Claimant's claim;


(d)	A statement of the Claimant's right to bring a civil action under ERISA section 502(a) following a wholly or partially denied claim for benefits; and


(e)	Such other matters as the Committee deems relevant.


10.5	Form of Notice and Decision . Any notice or decision by the Committee under this Article 10 may be furnished electronically in accordance with Department of Labor Regulation section 2520.104b‑(1)(c)(i), (iii) and (iv).

10.6

Legal Action . Any final decision by the Committee shall be binding on all parties. A Claimant's compliance with the foregoing provisions of this Article 10 is a mandatory prerequisite to a Claimant's right to commence any legal action with respect to any claim for benefits under this Plan. Any such legal action must be initiated no later than 180 days after the Committee renders its final decision. If a final determination of the Committee is challenged in court, such determination shall not be subject to de novo review and shall not be overturned unless proven to be arbitrary and capricious based on the evidence considered by the Committee at the time of such determination.

Exhibit 10.3

ARTICLE 11
TRUST


11.1	Establishment of the Trust . The Company may establish a Trust and, if established, each Employer shall contribute such amounts to the Trust from time to time as it deems desirable.

11.2


11.3	Distributions From the Trust . Each Employer's obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution shall reduce the Employer's obligations under this Plan.

ARTICLE 12
MISCELLANEOUS

12.1

Status of Plan . The Plan is intended to be a plan that is not qualified within the meaning of Code section 401(a) and that is unfunded for tax purposes and "is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees" (within the meaning of ERISA). The Plan shall be administered and interpreted in a manner consistent with that intent.

12.2

Unsecured General Creditor . Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of an Employer, Company or of any other person and nothing in the Plan shall be construed to give any employee or any other person such rights. The Plan constitutes a mere promise by the Company or Employer to make payments in accordance with the terms of the Plan and Participants and Beneficiaries shall have the status of general unsecured creditors solely of the Employer employing the Participant.


12.3	Employer's Liability . The liability of an Employer for the payment of benefits shall be defined only by the Plan and any Election Forms, as entered into between the Employer and a Participant. An Employer shall have no obligation to a Participant under the Plan except as expressly provided in the Plan.

12.4

Nonassignability . Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are expressly declared to be, unassignable and non‑transferable to the maximum extent allowed by law. No part of the amounts payable shall, before actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor shall any part of the same, to the maximum extent allowed by law, be transferable by operation of

Exhibit 10.3

law in the event of a Participant's or any other person's bankruptcy or insolvency or, except as provided in section 5.9(b), be transferable to a spouse as a result of a property settlement or otherwise.

12.5

Not a Contract of Employment . The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between any Employer and the Participant. Such employment is hereby acknowledged to be an "at will" employment relationship that can be terminated at any time for any reason, or no reason, with or without cause, and with or without notice, unless expressly provided in a written employment agreement between an Employer and a Participant. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of any Employer as an employee, or to interfere with the right of any Employer to discipline or discharge the Participant at any time, with or without cause, or to modify the Base Annual Salary or Annual or Long‑Term Performance Award at any time.


12.6	Furnishing Information . A Participant or Beneficiary shall cooperate with the Committee by furnishing any and all information requested by the Committee and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of benefits hereunder.

12.7

12.8

Incompetent . If the Committee determines in its discretion that a benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling disposition of that person's property, the Committee may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person. The Committee may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the Account of the Participant and the Participant's Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such payment amount.

12.9

12.10

Exhibit 10.3

employee, Participant, Beneficiary or other person at the last known address on the Employer's or Company's records. All elections, designations, requests, notices, instructions and other communications from a Participant, Beneficiary or other person to the Committee required or permitted under the Plan shall be in such form as is prescribed from time to time by the Committee, and shall be mailed by first‑class mail, transmitted via facsimile or other electronic media or delivered to such location as shall be specified by the Committee. Such communication shall be deemed to have been given and delivered only upon actual receipt by the Committee at such location.


12.11	Successors . The provisions of this Plan shall bind and inure to the benefit of the Participant's Employer and its successors and assigns and the Participant and the Participant's designated Beneficiaries.

12.12

12.13

Legal Fees To Enforce Rights After Change in Control . The Employer is aware that upon the occurrence of a Change in Control, the Board (which might then be composed of new members) or a shareholder of the Employer, or of any successor corporation, might then cause or attempt to cause the Employer or such successor to refuse to comply with its obligations under the Plan and might cause or attempt to cause the Employer to institute, or may institute, litigation seeking to deny Participants the benefits intended under the Plan. In these circumstances, the purpose of the Plan could be frustrated. Accordingly, if, following a Change in Control, it should appear to any Participant that the Employer or any successor corporation has failed to comply with any of its obligations under the Plan or any agreement thereunder or, if the Employer or any other person takes any action to declare the Plan void or unenforceable or institutes any litigation or other legal action designed to deny, diminish or to recover from any Participant the benefits intended to be provided, then the Employer irrevocably authorizes such Participant to retain counsel of the Participant's choice at the expense of the Employer (who shall be jointly and severally liable for all reasonable fees of such counsel) to represent such Participant in connection with the initiation or defense of any litigation or other legal action, whether by or against the Employer or any director, officer, shareholder or other person affiliated with the Employer or any successor thereto in any jurisdiction. If paid by the Participant, the Employer shall reimburse such legal fees no later than December 31st of the year following the year in which the expense was incurred.

Exhibit 10.3


12.14	Terms . Whenever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.


12.15	Headings . Headings and subheadings in the Plan are inserted for convenience only and shall not control or affect the meaning or construction of any of its provisions.

33019216v6

Exhibit 10.6

WEC ENERGY GROUP

DIRECTORS' DEFERRED COMPENSATION PLAN

Amended and Restated Effective as of January 1, 2016

Exhibit 10.6

TABLE OF CONTENTS



			Page
ARTICLE 1		DEFINITIONS	1

	1.1	"Account"	1
	1.2	"Annual Installment Method"	1
	1.3	"Beneficiary"	2
	1.4	"Board"	2
	1.5	"Chairman"	2
	1.6	"Change in Control"	2
	1.7	"Code"	3
	1.8	"Committee"	3
	1.9	"Company"	4
	1.10	"Directory"	4
	1.11	"Election Form"	4
	1.12	"Ending Valuation Date"	4
	1.13	'Fees'	4
	1.14	"In-Service Payout"	4
	1.15	"Measurement Funds"	4
	1.16	"Participant"	4
	1.17	"Plan"	4
	1.18	"Plan Year"	4
	1.19	"Restricted Stock"	4
	1.20	"Restricted Stock Amount"	4
	1.21	"Separation from Service	5
	1.22	"Stock"	5
	1.23	"Trust"	5
	1.24	"Unforeseeable Emergency"	5

ARTICLE 2		PARTICIPATION	5

	2.1	Participation	5
	2.2	Deferral Elections	5
	2.3	Form of Payment Elections	5
	2.4	Cessation of Participation	6

ARTICLE 3		DEFERRALS AND CONTRIBUTIONS	6

	3.1	Deferral of Fees	6
	3.2	Restricted Stock	7
	3.3	New Directors	7

ARTICLE 4		ACCOUNTS	7

	4.1	Establishment of Accounts	7
	4.2	Vesting	8
	4.3	Deemed Investments	8
	4.4	Taxes	10

Exhibit 10.6

Table of Contents

(continued)



ARTICLE 5		DISTRIBUTION OF ACCOUNT	10

	5.1	Time for Distribution	10
	5.2	In-Service Payout	11
	5.3	Benefits Upon Separation from Service	11
	5.4	Benefits Upon Death	11
	5.5	Changes to Form of Payment	12
	5.6	Unforeseeable Emergency	13
	5.7	Change in Control	13
	5.8	Discretion to Accelerate Distribution	13

ARTICLE 6		BENEFICIARY DESIGNATION	14

	6.1	Beneficiary	14
	6.2	Beneficiary Designation; Change	14
	6.3	Acknowledgment	15
	6.4	No Beneficiary Designation	15
	6.5	Doubt as to Beneficiary	15
	6.6	Discharge of Obligatons	15

ARTICLE 7		TERMINATION, AMENDMENT OR MODIFICATION	15

	7.1	Termination	15
	7.2	Amendment	16
	7.3	Effect of Payment	16

ARTICLE 8		ADMINISTRATION	16

	8.1	Plan Administration	16
	8.2	Powers, Duties and Procedures	17
	8.3	Administration Upon Change in Control	17
	8.4	Agents	17
	8.5	Binding Effect of Decisions	17
	8.6	Indemnity of Committee	18
	8.7	Company and Participating Subsidiary Information	18
	8.8	Coordination with Other Benefits	18

ARTICLE 9		CLAIMS PROCEDURES	18

	9.1	Presentation of Claim	18
	9.2	Decision on Initial Claim	19
	9.3	Right to Review	19
	9.4	Decision on Review	20
	9.5	Form of Notice and Decision	20
	9.6	Legal Action	20

ARTICLE 10		TRUST	20

	10.1	Establishment of the Trust	20
	10.2	Interrelationship of the Plan and the Trust	21
	10.3	Distributions From the Trust	21

Exhibit 10.6

Table of Contents

(continued)



ARTICLE 11		MISCELLANEOUS	21

	11.1	Unsecured General Creditor	21
	11.2	Company's Liability	21
	11.3	Nonassignability	21
	11.4	Not a Contract of Service	21
	11.5	Furnishing Information	21
	11.6	Receipt and Release	22
	11.7	Incompetent	22
	11.8	Governing Law and Severability	22
	11.9	Notices and Communications	22
	11.10	Successors	22
	11.11	Insurance	22
	11.12	Legal Fees To Enforce Rights After Change in Control	23
	11.13	Terms	23
	11.14	Headings	23

iii

Exhibit 10.6

WEC ENERGY GROUP
DIRECTORS' DEFERRED COMPENSATION PLAN

INTRODUCTION

The Plan was established effective January 1, 2005 and is known as the "WEC Energy Group Directors' Deferred Compensation Plan." Prior to January 1, 2016, the Plan was known as the Wisconsin Energy Corporation Directors' Deferred Compensation Plan.

The Plan is maintained by WEC Energy Group, Inc. (the "Company") as a method of paying directors' compensation that will aid the Company and its participating subsidiaries, if any, in attracting and retaining as members of their Boards of Directors persons whose abilities, experience and judgment can contribute to the continued progress of the Company and such subsidiaries. The Plan shall be unfunded for tax purposes.

The Plan is intended to comply with the provisions of section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), and any guidance and regulations issued thereunder. The Plan shall be interpreted and administered consistent with this intent and shall apply to all amounts deferred under the Plan on or after January 1, 2005. Such amounts include any amounts previously earned and deferred but not vested as of December 31, 2004 under the Legacy Wisconsin Energy Corporation Directors' Deferred Compensation Plan, which the Company froze effective December 31, 2004, and is considered a "grandfathered" plan within the meaning of Code section 409A. Notwithstanding the foregoing, during the Code section 409A transition period in effect from January 1, 2005 through December 31, 2008, the Company permitted distribution elections and changes consistent with IRS transition relief, the elections and changes of which are otherwise documented via completed election forms.

The Plan was amended and restated effective as of January 1, 2015, to reflect administrative changes and reference a new rabbi trust established by the Company. Effective as of January 1, 2016, the Plan was again restated to reflect the change in the name of the Company and Plan and to clarify other administrative provisions.

ARTICLE 1 DEFINITIONS

Whenever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:

1.1 "Account" shall mean a bookkeeping account established for the benefit of a Participant under Article 4 utilized solely to measure and determine the amounts credited under the Plan on behalf of a Participant or Beneficiary.

1.2 "Annual Installment Method " shall mean an annual installment payment over a specified number of years as further described in section 5.3. To determine the value of the Participant's Account balance for calculating an installment payment, the Participant's Account balance shall be valued as of the close of business on the last business day of the Plan Year preceding the Plan Year for which payment is to be made. Each annual installment shall be calculated by multiplying this Account balance by a fraction, the numerator of which is one, and the denominator of which is the remaining number of

Exhibit 10.6

annual payments due to the Participant. For example, if a 10-year Annual Installment Method is specified, the first payment shall be 1/10 of the Account balance, valued as described herein. The following Plan Year, the payment shall be 1/9 of the Account balance, valued as described herein.

1.3 "Beneficiary" shall mean one or more persons, trusts, estates or other entities designated by the Participant in accordance with Article 6 that are entitled to receive benefits under this Plan upon the death of a Participant.

1.4 "Board" shall mean the board of directors of the Company, and the board of directors of any subsidiary of the Company on which Directors serve.

1.5 "Chairman" shall mean the Chairman of the Board of the Company.

1.6 "Change in Control" shall mean, with respect to the Company, the occurrence of any one of the following dates, interpreted consistent with Treasury Regulation section 1.409A‑3(i)(5).

(a)


(b)	Change in Effective Control .

(i)


(ii)	The date a majority of the members of the Company's Board is replaced during any 12‑month period by directors whose appointment or election is not endorsed by a majority of the members of the Company's Board before the date of the appointment or election.


(c)	Change in Ownership of a Substantial Portion of the Company's Assets . The date any one Person, or more than one Person Acting as a Group, acquires (or has acquired during the 12‑month period ending on the date of the most recent acquisition by such Person or Persons) assets from the Company that have a total

Exhibit 10.6

gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions. For purposes of this paragraph (c), "gross fair market value" means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. Notwithstanding the foregoing, a transfer of assets is not treated as a Change in Control if the assets are transferred to:


(i)	An entity that is controlled by the shareholders of the transferring corporation;


(ii)	A shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock;


(iii)	An entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company;


(iv)	A Person, or more than one Person Acting as a Group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company; or


(v)	An entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a Person described in clause (iv).


(d)	"Person" and "Acting as a Group ."


(i)	For purposes of this section, "Person" shall have the meaning set forth in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended.

(ii)

For purposes of this section, Persons shall be considered to be "Acting as a Group" if they are owners of a corporation that enter into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. If a Person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be Acting as a Group with the other shareholders only with respect to the ownership in that corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation. Notwithstanding the foregoing, Persons shall not be considered to be Acting as a Group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering.

1.7 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.

1.8 "Committee" shall mean an internal administrative committee appointed by the Chief Executive Officer of the Company to administer the Plan in accordance with Article 8.

Exhibit 10.6

1.9 "Company" shall mean WEC Energy Group, Inc., a Wisconsin corporation, and any successor to all or substantially all of the Company's assets or business. Prior to June 29, 2015, the Company was known as Wisconsin Energy Corporation.

1.10 "Director" shall mean, solely for purposes of this Plan, any director of the Company or a participating subsidiary who is not also an officer or employee of the Company or any of its subsidiaries. This Plan is solely for "outside" Directors.

1.11 "Election Form" shall mean the form or forms established from time to time by the Committee that a Participant completes, signs and returns to the Committee to make a deferral election, make or change a payment form election, and/or make or change an investment election. To the extent authorized by the Committee, such form may be electronic or set forth in some other media or format.

1.12 "Ending Valuation Date" shall mean the last business day of the Plan Year immediately preceding the Plan Year of distribution of a lump‑sum payment or final installment payment, as the case may be.

1.13 "Fees" shall mean the annual fees, meeting fees and any other fees payable to a Director for services, and shall exclude any income from stock options or other equity‑based awards.

1.14 "In‑Service Payout" shall mean distribution, as of a specified date elected by a Participant, of all or a portion of Fees deferred in accordance with Article 3.

1.15 "Measurement Funds" shall mean the hypothetical investment funds available under the Plan, as provided in section 4.3, to determine the earnings and losses credited to a Participant's Account.

1.16 "Participant" shall mean any Director who elects to participate in the Plan in accordance with Article 2 and maintains an Account balance hereunder. A spouse or former spouse of a Participant shall not be treated as a Participant in the Plan or have an Account under the Plan, even if the spouse or former spouse has an interest in the Participant's Account as a result of applicable law or property settlements resulting from legal separation or divorce.

1.17 "Plan" shall mean the WEC Energy Group Directors' Deferred Compensation Plan, including any amendments adopted hereto. Prior to January 1, 2016, the Plan was known as the Wisconsin Energy Corporation Directors' Deferred Compensation Plan.

1.18 "Plan Year" shall mean the calendar year.

1.19 "Restricted Stock" shall mean unvested shares of Stock which is restricted stock selected by the Company's Compensation Committee, approved by the Board in its sole discretion, and awarded to the Participant under any Company stock incentive plan or arrangement.

1.20 "Restricted Stock Amount" shall mean, for any grant of Restricted Stock, the amount equal to the value of such Restricted Stock, calculated using the average of the reported

Exhibit 10.6

high and low prices for the Stock as of the day such Restricted Stock would otherwise vest (if a business day) or as of the next following business day.

1.21 "Separation from Service" shall mean the Participant's termination of service with the Company and other entities affiliated with the Company, voluntarily or involuntarily, for any reason other than death, or as otherwise provided by the Department of Treasury in regulations promulgated under Code section 409A. For purposes of the foregoing, whether an entity is affiliated with the Company shall be determined pursuant to the controlled group rules of Code section 414, as modified by Code section 409A.

1.22 "Stock" shall mean WEC Energy Group, Inc. common stock. Prior to June 29, 2015, "Stock" means Wisconsin Energy Corporation common stock.

1.23 "Trust" shall mean any fund created by a rabbi trust agreement established by the Company referencing the Plan, and as amended from time to time.

1.24 "Unforeseeable Emergency" shall mean, as determined by the Committee in its sole discretion, a severe financial hardship to the Participant resulting from (i) an illness or accident of the Participant, the Participant's spouse, the Participant's Beneficiary, or the Participant's dependent (as defined in Code section 152, without regard to Code section 152(b)(1), (b)(2), and (d)(1)(B)), (ii) loss of the Participant's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance), or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

ARTICLE 2

PARTICIPATION

2.1 Participation . To begin participation in the Plan, a Director shall properly complete and timely submit an Election Form in accordance with the Committee's rules. A Director shall become a Participant on the first day on which a deferral of an elected amount is first credited to the Participant's Account. The Committee or its delegate may establish from time to time such other enrollment requirements as it determines in its sole discretion are necessary. Such Participant shall remain a Participant in the Plan until the Participant's Account balance is paid in full.

2.2 Deferral Elections . Election Forms shall be completed by the time periods set forth in Article 3 for the particular type of compensation elected for deferral or during such other enrollment period as the Committee determines in accordance with such Article. A Participant may change or revoke a deferral election any time before such election becomes irrevocable, which shall occur as of the applicable deadline specified in Article 3 unless the Committee establishes an earlier deadline. Unless the Committee determines otherwise, a new Election Form shall be required for each Plan Year in which a Participant requests to defer a type of compensation eligible for deferral.

2.3 Form of Payment Elections . A Participant's Election Form shall specify the form of payment, which shall be paid at the times specified in Article 5.

Exhibit 10.6

(a)

(b)

(c)

Section 409A Transition Period Elections . Distribution elections made during the Code section 409A transition period that relate to amounts deferred in Plan Years 2005, 2006, 2007 and 2008, as the case may be, shall be honored for such respective amounts, even if such amounts are not credited to a Participant's Account until a later Plan Year or the Participant chose a form of payment that was offered under the Legacy Wisconsin Energy Corporation Directors' Deferred Compensation Plan, but not under the Plan.

2.4 Cessation of Participation .


(a)	Elective deferrals made by a Participant or Beneficiary who receives a distribution due to an Unforeseeable Emergency pursuant to section 5.6 will be canceled due to such distribution if the Committee so decides in its discretion. In either event, the Participant (or Beneficiary, as applicable) shall remain a Participant in the Plan until the Participant's Account balance is paid in full.


(b)	Notwithstanding anything in the Plan to the contrary, upon the earlier to occur of a Participant's Separation from Service or death, any outstanding deferral election shall be given effect to the extent any amounts covered by such election are paid after such event. Payment of deferred amounts shall be made pursuant to Article 5.

ARTICLE 3
DEFERRALS AND CONTRIBUTIONS

3.1 Deferral of Fees . For each Plan Year, a Director may elect to defer all or any Fees. A Participant's Election Form with respect to any Fees shall be filed with the Committee before the beginning of each Plan Year in which such Fees are earned. Subject to section 2.2, such deferral elections shall be irrevocable as of the first day of the Plan Year to which the Election Form relates.

Exhibit 10.6

3.2 Restricted Stock .

(a)

The Committee, in its sole discretion, may allow Participants to elect to defer a portion of the Participant's Restricted Stock Amount. To the extent permitted by the Committee for any grant of Restricted Stock, a Participant may elect to defer up to 100% (in any whole percentage) of the Participant's Restricted Stock Amount, subject to such other terms or conditions as set forth in the plan or agreement under which such Restricted Stock was granted.

(b)

A Participant's Election Form with respect to the deferral of Restricted Stock Amounts shall be submitted in accordance with procedures established by the Committee before the beginning of the Plan Year in which the Restricted Stock is awarded, as determined under the terms of the plan or arrangement. Notwithstanding the foregoing, at the discretion of the Committee, an Election Form may be submitted within 30 days after the Restricted Stock is awarded, provided that the Restricted Stock's first vesting date is at least 12 months after the date the completed Election Form is delivered to and accepted by the Committee (taking into account any automatic vesting provisions upon certain terminations from service that may occur before such 12 month period).


(c)	Subject to section 2.2, such deferral elections shall be irrevocable as of the first day of the Plan Year to which the Election Form relates, or the 30th day after the Restricted Stock is awarded, as the case may be.

3.3 New Directors . A newly‑elected Director shall be first eligible to participate in the Plan (as determined in accordance with plan aggregation rules set forth in Code section 409A) as of January 1 immediately following the effective date of the Director's election and may enroll as of that applicable open enrollment period. However, the Committee, in its sole discretion, may deem it advisable to approve an eligibility date other than January 1 for a newly-elected Director and, only in that circumstance, shall a Director be given 30 days from the date the Director becomes first elected as a Director to complete and submit an Election Form with respect to Fees, and such election shall apply only to Fees paid for services performed after the date on which the election is effective.

ARTICLE 4

ACCOUNTS

4.1 Establishment of Accounts . Bookkeeping accounts shall be established for each Participant to reflect the deferrals of amounts made for the Participant's benefit, together with adjustments for income, gains or losses attributable thereto, and any payments from the respective sub‑Accounts. Accounts are established solely for the purpose of tracking deferrals made by Participants and any income adjustments thereto. The Accounts shall not be used to segregate assets for payment of any amounts deferred or allocated under the Plan, and shall not constitute or be treated as a trust fund of any kind. Fee deferrals shall be withheld and credited to the Account as of the date or dates on which the Fees would otherwise be paid to the Participant or as soon as administratively feasible. Restricted Stock Amount deferrals shall be credited to the Account as of the date the

Exhibit 10.6

Restricted Stock would otherwise vest under the terms of the plan or arrangement pursuant to which the Restricted Stock was granted, but for the election to defer.

4.2 Vesting . A Participant shall at all times be 100% vested and have a nonforfeitable right to amounts credited to the Participant's Account, adjusted for deemed income, gains and losses attributable thereto.

4.3 Deemed Investments . Subject to paragraphs (b) and (h) below, and in accordance with, and subject to, the rules and procedures that are established from time to time by the Committee in its sole discretion, amounts shall be credited or debited to a Participant's Account in accordance with the following rules. The Committee's discretion includes the right to supersede the specific rights identified below, with or without retroactive effect:

(a)

Measurement Funds . Amounts credited to each Participant's Account shall be deemed invested, in accordance with the Participant's directions, in Measurement Funds that are available under the Plan. The hypothetical investment funds available under the Plan shall be those designated by the Committee, from time to time in its discretion, following recommendations by the WEC Energy Group Investment Trust Policy Committee. Subject to paragraphs (b) and (h) below, a Participant may elect one or more of the following Measurement Funds for the purpose of crediting additional amounts to the Participant's Account: (i) any Measurement Fund if any are selected by the Committee from time to time, (ii) the Prime Rate Fund (described as a mutual fund that is 100% invested in a hypothetical debt instrument which earns interest at an annualized interest rate equal to the "Prime Rate" as reported each business day by the Wall Street Journal, with interest deemed reinvested in additional units of such hypothetical debt instrument), or (iii) a Company Stock Measurement Fund (described as a mutual fund that is 100% invested in shares of Stock, with dividends deemed reinvested in additional shares of Stock).

(b)

Special Rule for Restricted Stock Amounts . Notwithstanding any provision of this Plan to the contrary, the Participant's Restricted Stock Amounts deferred under the Plan that would have otherwise been distributed in Stock shall be deemed invested in the Company Stock Measurement Fund at all times before distribution from this Plan. Further, the Participant's Restricted Stock Amounts shall be distributed from this Plan in the form of cash.


(c)	Election of Measurement Funds . Subject to paragraphs (b) and (h), a Participant shall elect on the Participant's initial Election Form Measurement Funds to be

Exhibit 10.6

used to determine the additional amounts to be credited to the Participant's Account, unless changed pursuant to rules as the Committee shall determine, in its discretion, from time to time. However, subject to paragraphs (b) and (h) and any rules and procedures established from time to time by the Committee in its sole discretion, the Participant may elect to add or delete one or more Measurement Funds to be used to determine the additional amounts to be credited to the Participant's Account, or to change the portion of the Account allocated to each previously or newly elected Measurement Fund. Such rules may include, but are not limited to, rules and/or trading policies that govern the timing, frequency, and manner in which elections are made to allocate or reallocate deemed investment amounts among the Measurement Funds, and may be modified at any time and from time to time by the Committee in its sole discretion. If an election is made to change a Measurement Fund, it shall become effective and apply thereafter in accordance with the rules of the Committee for all subsequent periods in which the Participant participates in the Plan, unless changed in accordance with the previous provisions. All rights of a Participant or any other person to elect or change the Measurement Funds under this section shall be deemed to have ceased as of the Ending Valuation Date and no adjustment in the value of an Account balance shall be considered for any purpose under the Plan after such Ending Valuation Date.


(d)	Proportionate Allocation . In making any election described in paragraph (c) above, the Participant shall specify on the Election Form, in increments of 1%, the percentage of the Participant's Account balance to be allocated to a Measurement Fund (as if the Participant was making an investment in that Measurement Fund with that portion of the Participant's Account balance).

(e)

(f)

No Actual Investment . Notwithstanding any other provision of this Plan to the contrary, the Measurement Funds shall be used for measurement purposes only, and a Participant's election of any Measurement Fund, the allocation of the Participant's Account thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant's Account shall not be considered or construed in any manner as an actual investment of the Participant's Account balance in any such Measurement Fund. If the Company or the trustee of the Trust, in its sole discretion, decides to invest funds in any or all of the Measurement Funds, no Participant shall have any rights in or to such investments themselves. Notwithstanding the foregoing, a Participant's Account balance shall at all times be a bookkeeping entry only and shall not represent any investment

Exhibit 10.6

made on the Participant's behalf by the Company or the trustee; the Participant shall at all times remain an unsecured creditor of the Company.

(g)

(h)

Special Considerations for Participants Subject to Section 16 of the Securities Exchange Act of 1934 . In order for any deferral election under this Plan by a Participant who is a Director subject to the reporting requirements and trading restrictions of Section 16 of the Securities Exchange Act of 1934 ("Section 16") to conform to Section 16, the Participant shall consult with the Company's designated individual responsible for Section 16 reporting and compliance before making any election to move any part of the Participant's Account into or out of the Company Stock Measurement Fund. The Company reserves the right to impose such restrictions as it determines necessary, in its sole discretion, on any elections, transactions or other matters under this Plan relating to the Company Stock Measurement Fund to comply with or qualify for exemption under Section 16.

4.4 Taxes . Any applicable tax withholding or reporting requirements with regard to amounts paid from this Plan shall be satisfied as determined by the Company in its sole discretion.

ARTICLE 5
DISTRIBUTION OF ACCOUNT

5.1 Time for Distribution . Except as otherwise provided in section 5.6, distribution of a Participant's Account shall be made on the earliest to occur of:


(a)	The date elected by a Participant under section 5.2 with respect to an In‑Service Payout;


(b)	The date set forth in section 5.3 with respect to the Participant's Separation from Service;


(c)	The date set forth in section 5.4 with respect to the Participant's death; or


(d)	The date set forth in section 5.7 with respect to a Separation from Service after a Change in Control.

Notwithstanding any other provision of the Plan to the contrary, in no event shall the distribution of any Account be accelerated to a time earlier than which it would otherwise have been paid, whether by amendment of the Plan, exercise of the Committee's discretion or otherwise, except as permitted by section 5.8 or Treasury Regulations issued pursuant to Code section 409A.

Exhibit 10.6

5.2 In-Service Payout . A Participant may irrevocably select, on the Participant's Election Form, a Plan Year to receive a lump-sum In-Service Payout of all or part of an annual Fee deferral amount. The earliest Plan Year in which a Participant can elect an In-Service Payout is the third Plan Year after the Plan Year in which the deferral actually occurs. For example, an election to defer Fees in December 2015 that is actually deferred in 2016 may be distributed no earlier than in 2019. Payment shall be made during the first 90 days of the Plan Year elected for distribution.

5.3 Benefits Upon Separation from Service . Upon a Participant's Separation from Service for any reason other than death, the Participant's Account shall be paid or begin to be paid during the first 90 days of the Plan Year following the Plan Year of the Participant's Separation from Service. Subsequent installment payments shall be made thereafter during the first 90 days of the Plan Year in which the installment is due.

Subject to section 5.7 and taking into account any changes to an elected form of payment pursuant to section 5.5, a Participant may elect to receive payment of the Participant's Account balance:


(i)	in a lump sum, or


(ii)	in any number of installments up to ten. The amount of each installment shall be determined using the Annual Installment Method.

Notwithstanding any election to receive payment in installments, if the Participant's Account Balance at the time of the Participant's Separation from Service is $10,000 or less, the Participant's Account Balance will be paid in a lump sum. In addition, if no valid payment election is in effect when distribution is to be made, then the Participant's Account balance shall be paid in a lump sum.

5.4 Benefits Upon Death . Upon the Participant's death, the Plan Administrator shall pay to the Participant's Beneficiary a benefit equal to the remaining balance in the Participant's Account. Payment shall be made in accordance with the provisions below.

(a)

(b)

Death Prior to a Separation from Service . If a Participant dies during a period of service as a Director, the Participant's Account shall be paid or begin to be paid to the Participant's Beneficiary during the first 90 days of the Plan Year following the Plan Year of the Participant's death. Payment shall be made in such form as determined below, taking into account any changes to an elected form of payment pursuant to section 5.5.

Exhibit 10.6


(i)	A Participant's Account balance shall be paid to the Participant's Beneficiary in a lump sum if:


(A)	timely elected by the Participant pursuant to the Plan,


(B)	the Participant's Account balance at the time of death is $25,000 or less even if the Participant elected an installment payment form, or


(C)	no valid payment election is in effect when distribution is to be made.


(ii)	Subject to clause (i)(B), a Participant may elect payment of the Participant's Account balance upon death in any number of installments up to ten. The amount of each installment shall be determined using the Annual Installment Method.

5.5 Changes to Form of Payment .


(a)	Prospective Changes . A Participant may select an alternate form of payment for amounts not yet subject to an irrevocable election in accordance with the rules for completing and submitting elections in section 2.2 and Article 3.


(b)	Retroactive Changes . A Participant may elect to change the form of payment for amounts that are subject to a deferral election that is irrevocable:


(i)	A Participant who has elected a lump‑sum distribution may later change such election to an installment payment, provided the first installment payment shall be deferred to a date that is at least five years after the date the lump‑sum distribution would otherwise have been made.


(ii)	A Participant who has an installment election in effect may change such election to a lump‑sum payment, provided the lump‑sum payment shall be deferred to a date that is at least five years after the date the initial installment payment would otherwise have commenced.


(iii)	A Participant who has an installment election for payment upon Separation from Service, may change the number of installments, provided that the first installment payment shall be deferred to a date that is at least five years after the date the initial installment payment would otherwise have commenced.

Any such election changes pursuant to this paragraph shall be completed in accordance with Committee rules and must be made at least 12 months before the event triggering distribution occurs. Therefore, if the event triggering distribution occurs before such 12 month period has elapsed, then the election to change the payment form shall not take effect. Notwithstanding anything in this paragraph (b) to the contrary, the five-year delay described above shall not apply to changes in the form of payment upon death.

Exhibit 10.6

(c)

5.6 Unforeseeable Emergency . A Participant may request that all or a portion of the Participant's Account be distributed in a lump sum at any time by submitting a written request to the Committee demonstrating that the Participant has suffered an Unforeseeable Emergency, and that the distribution is necessary to alleviate the financial hardship created by the Unforeseeable Emergency.

(a)

The Committee shall have the sole discretionary authority to determine whether a Participant has suffered an Unforeseeable Emergency, which shall be determined based on the relevant facts and circumstances of each case. In making such a determination, no distribution pursuant to this section shall be made to the extent that such Unforeseeable Emergency is or may be relieved through reimbursement or compensation by insurance or otherwise, or by liquidation of the Participant's assets (unless such liquidation itself would cause a severe financial hardship), or by the cessation of deferrals under the Plan. In this regard, all deferral elections scheduled for the remainder of the Plan Year in which such distribution is made may be cancelled, as determined by the Committee in its discretion. If the Committee cancels a Participant's outstanding deferral election, a Participant shall be required to make a new election pursuant to Article 2 and Article 3 to resume active participation in the Plan.

(b)

5.7 Change in Control . Notwithstanding any other provision of the Plan to the contrary, in the event a Participant incurs a Separation from Service within 18 months after a Change in Control, the Company shall distribute the Participant's entire Account in a lump‑sum payment within 90 days after such Separation from Service.

5.8 Discretion to Accelerate Distribution .


(a)	The Committee shall have the discretion to make a distribution, or accelerate the time or schedule of payment, from a Participant's Account if payment is required:

Exhibit 10.6


(i)	Under the withholding provisions of applicable state and local taxes with respect to compensation deferred under the Plan. Any such distribution shall not exceed the aggregate of such tax and shall reduce the Participant's Account balance to the extent of such distributions; or


(ii)	For payment of state, local or foreign tax obligations arising from participation in the Plan that apply to an amount deferred under the Plan. Any such payment shall not exceed the amount of such taxes due as a result of Plan participation.

(b)

The Committee or a Plan representative is authorized to accelerate the time or schedule of a payment under the Plan to an individual other than the Participant, or to make a payment under the Plan to an individual other than the Participant, to the extent necessary to fulfill a domestic relations order (as defined in Code section 414(p)(1)(B)). Payment to an alternate payee under a domestic relations order shall be made in a lump sum within 90 days after the Committee or Plan representative approves such order.


(c)	The Committee shall have the discretion to accelerate the time or schedule of a payment under the Plan if the Plan fails to meet the requirements of Code section 409A and regulations promulgated thereunder, provided that any such payment does not exceed the amount required to be included in income as a result of such failure.

ARTICLE 6
BENEFICIARY DESIGNATION

6.1 Beneficiary . Each Participant may, at any time, designate one or more Beneficiaries (both primary as well as contingent) to receive any benefits payable under the Plan upon the Participant's death. The Beneficiary designated under this Plan may be the same as or different from the Beneficiary designation under any other Company plan in which the Participant participates.

6.2 Beneficiary Designation; Change . A Participant shall designate a Beneficiary by completing a beneficiary designation form established by the Committee or its delegate, and returning it to the Committee or its designated agent. To the extent authorized by the Committee, such form may be electronic or set forth in some other media or format. A Participant may change a Beneficiary designation by completing, signing and otherwise complying with the terms of the beneficiary designation form and the Committee's rules and procedures, as in effect from time to time. Upon the acceptance by the Committee of a new beneficiary designation form, all Beneficiary designations previously submitted shall be canceled. The Committee shall rely on the last completed beneficiary designation form submitted by the Participant and accepted by the Committee before the Participant's death. In the event of a Participant's divorce, any designation of the Participant's former spouse as a Beneficiary shall be deemed void unless after the divorce the Participant completes a new designation naming such former spouse as a Beneficiary.

Exhibit 10.6

6.3 Acknowledgment . No Beneficiary designation or change in Beneficiary designation shall be effective until accepted by the Committee or a Plan representative.

6.4 No Beneficiary Designation . If a Participant fails to designate a Beneficiary as provided in this Article 6 or, if all designated Beneficiaries predecease the Participant or die before complete distribution of the Participant's Account, then the remaining benefits in the Participant's Account shall be paid to the Participant's surviving spouse, if none, to the Participant's descendants by right of representation or, if none, to the Participant's next of kin determined pursuant to the laws of the state in which the Company's principal place of business is located as if the Participant had died unmarried and intestate.

6.5 Doubt as to Beneficiary . If the Committee has any doubt as to the proper Beneficiary to receive payments under this Plan, the Committee may, in its sole discretion, require the Company or a participating subsidiary to withhold such payments until the matter is resolved to the Committee's satisfaction.

6.6 Discharge of Obligations . The complete payment of benefits under the Plan to a Beneficiary shall fully and completely discharge the Company, each participating subsidiary and the Committee from all further obligations under this Plan with respect to the Participant, and the Participant's Election Form shall terminate upon such full payment of benefits.

ARTICLE 7
TERMINATION, AMENDMENT OR MODIFICATION

7.1 Termination .

(a)

Although the Company anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee that the Company will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, the Company reserves the right to discontinue its participation in the Plan and/or to terminate the Plan at any time or to exclude any participating subsidiary from further participation at any time by action of the Company's Board or the Company's Compensation Committee. Upon the termination of the Plan by the Company or exclusion of any participating subsidiary, any election to defer compensation under the Plan by Participants who are then in service shall terminate as of the last day of the Plan Year containing the termination date. The termination of the Plan shall not reduce the amount of any benefit the Participant or Beneficiary is entitled to receive under the Plan as of the termination date. Except as provided in paragraph (b) below, Account balances shall be maintained under the Plan until such amounts would otherwise have been distributed in accordance with the terms of the Plan and Participants' validly filed payment elections.


(b)	Upon termination of the Plan, the Company's Board or the Company's Compensation Committee reserves the discretion to accelerate distribution of Participants' Account (including those Participants in pay status pursuant to an installment election) in accordance with regulations promulgated by the Department of the Treasury under Code section 409A.

Exhibit 10.6

7.2 Amendment . The Company may, in its sole discretion, amend or modify the Plan at any time, in whole or in part, by action of its Board, Compensation Committee or the Committee; provided, however, that no amendment shall decrease the amount of any Participant's Account as of the date of the amendment. Further, during the pendency of a Potential Change in Control (as defined below) and at all times following a Change in Control, no amendment or modification may be made which in any way adversely affects the interests of any Participant with respect to amounts credited to such Participant's Account as of the date of the amendment. A "Potential Change in Control" shall be deemed to have occurred if one of the following events occurs:


(a)	The Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;


(b)	The Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

(c)


(d)	The Company's Board adopts a resolution to the effect that, for purposes of this Plan, a Potential Change in Control has occurred.

Except as otherwise noted, the capitalized terms in the above definition have the same meaning as set forth in section 1.6. The Company's power to amend or modify the Plan includes the power to suspend or freeze participation in the Plan, provided such suspension or freeze does not cause a prohibited acceleration of compensation under Code section 409A. In such circumstance, the Company may, in its sole discretion, reinstitute the ability of any Participant or group of Participants to make deferrals under Article 3 at any time, provided such action is taken consistent with Code section 409A. Such action may be taken by the Board, the Company's Compensation Committee or the Committee.

7.3 Effect of Payment . The full payment of the Participant's Account under any provision of the Plan shall completely discharge the obligations of the Company and each participating subsidiary to the Participant and the Participant's Beneficiaries under this Plan, and the Participant's Election Forms shall terminate.

ARTICLE 8
ADMINISTRATION

8.1 Plan Administration . Except as otherwise provided in this Article 8, the Plan shall be administered by the Committee. Members of the Committee may be Participants under this Plan. Any individual serving on the Committee who is a Participant shall not vote or act on any matter relating solely to such individual. The Chairman may not act on any

Exhibit 10.6

matter involving such individual's own participation in the Plan. All references to the Committee shall be deemed to include reference to the Chairman.

8.2 Powers, Duties and Procedures . The Committee (or the Chairman if such individual chooses to so act) shall have full and complete discretionary authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration of the Plan, and (ii) decide or resolve any and all questions including interpretations of the Plan, as may arise in connection with the claims procedures set forth in Article 9 or otherwise with regard to the Plan. The Committee shall have complete control and authority to determine the rights and benefits of all claims, demands and actions arising out of the provisions of the Plan of any Participant or Beneficiary or other person having or claiming to have any interest under the Plan. When making a determination or calculation, the Committee may rely on information furnished by a Participant or the Company. Benefits under the Plan shall be paid only if the Committee decides in its sole discretion that the Participant or Beneficiary is entitled to them. The Committee or the Chairman may delegate such powers and duties as it determines for the efficient administration of the Plan.

8.3 Administration Upon Change In Control . For purposes of this Plan, the Company shall be the "Administrator" at all times before a Change in Control. Upon and after a Change in Control, the Administrator shall be an independent third party selected by the individual who, at any time before such event, was the Company's Chief Executive Officer or, if there is no such officer or such officer does not act, by the Company's then highest ranking officer (the "Appointing Officer"). Upon a Change in Control, the Administrator shall have full and complete discretionary power to determine all questions arising in connection with the administration of the Plan and the interpretation of the Plan and Trust including, but not limited to, benefit entitlement determinations. Upon and after a Change in Control, the Company shall (i) pay all reasonable administrative expenses and fees of the Administrator, (ii) indemnify the Administrator against any costs, expenses and liabilities (including, without limitation, attorney's fees) of whatever kind and nature which may be imposed on, asserted against or incurred by the Administrator in connection with the performance of the duties hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of the Administrator or its employees or agents, and (iii) supply full and timely information to the Administrator on all matters relating to the Plan, the Trust, the Participants and their Beneficiaries, the Account balances of the Participants, including the dates of death or Separation from Service and such other pertinent information as the Administrator may reasonably require. Upon and after a Change in Control, the Administrator may be terminated (and a replacement appointed) only by an Appointing Officer. Upon and after a Change in Control, the Administrator may not be terminated by the Company.

8.4 Agents . In the administration of this Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel who may be counsel to the Company.

8.5 Binding Effect of Decisions . Notwithstanding any other provision of the Plan to the contrary, the Committee or its delegate shall have complete discretion to interpret the

Exhibit 10.6

Plan and to decide all matters under the Plan. Any such interpretation shall be final, conclusive and binding on all Participants, Beneficiaries and any person claiming under or through any Participant, in the absence of clear and convincing evidence that the Committee acted arbitrarily and capriciously.

8.6 Indemnity of Committee . The Company and each participating subsidiary shall indemnify and hold harmless the members of the Committee, and any other person who is an employee of the Company or a participating subsidiary and to whom the duties of the Committee may be delegated, and the Administrator, as defined in section 8.3, against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful misconduct by the Committee, any of its members or any such employee or the Administrator.

8.7 Company and Participating Subsidiary Information . To enable the Committee and/or Administrator to perform its functions, the Company and each participating subsidiary shall supply full and timely information to the Committee on all matters relating to the compensation of its Participants, the dates of death or Separation from Service and such other pertinent information as the Committee may reasonably require.

8.8 Coordination with Other Benefits . The benefits provided to a Participant and the Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program in which the Participant is eligible to participate. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.

ARTICLE 9
CLAIMS PROCEDURES

9.1 Presentation of Claim . Any Participant or Beneficiary (such Participant or Beneficiary being referred to below as a "Claimant") may deliver to the Committee a written claim for benefits. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within 90 days after such notice was received by the Claimant. All other claims shall be made within 180 days of the date on which the event that caused the claim to arise occurred. The claim shall state with particularity the determination desired by the Claimant. A claim shall be considered to have been made when a written communication made by the Claimant or the Claimant's representative is received by the Committee.

Exhibit 10.6

9.2 Decision on Initial Claim . The Committee shall consider a Claimant's claim and provide written notice to the Claimant of any denial within a reasonable time, but no later than 90 days after receipt of the claim. If an extension of time beyond the initial 90‑day period for processing is required, written notice of the extension shall be provided to the Claimant before the initial 90‑day period expires indicating the special circumstances requiring an extension of time and the date by which the Committee expects to render a final decision. In no event shall the period, as extended, exceed 180 days. If the Committee denies, in whole or in part, the claim, the notice shall set forth in a manner calculated to be understood by the Claimant:


(a)	The specific reasons for the denial of the claim, or any part thereof;


(b)	Specific references to pertinent Plan provisions upon which such denial was based;


(c)	A description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and


(d)	An explanation of the claim review procedure set forth in section 9.3 below, which explanation shall also include a statement of the Claimant's right to bring a civil action under ERISA section 502(a) following a denial of the claim upon review.

9.3 Right to Review . A Claimant is entitled to appeal any claim that has been denied in whole or in part. To do so, the Claimant must submit a written request for review with the Committee within 60 days after receiving a notice from the Committee that a claim has been denied, in whole or in part. Absent receipt by the Committee of a written request for review within such 60‑day period, the claim shall be deemed to be conclusively denied. The Claimant (or the Claimant's duly authorized representative) may:


(a)	Review and/or receive copies of, upon request and free of charge, all documents, records, and other information relevant to the Claimant's claim;


(b)	Submit written comments, documents, records or other information relating to the Claimant's claim, which the Committee shall take into account in considering the claim on review, without regard to whether such information was submitted or considered in the initial review of the claim; and/or


(c)	Request a hearing, which the Committee, in its sole discretion, may grant.

Exhibit 10.6

9.4 Decision on Review . The Committee shall render its decision on review promptly, and not later than 60 days after it receives a written request for review of the denial, unless a hearing is held or other special circumstances require additional time. In such case, the Committee will notify the Claimant, before the expiration of the initial 60‑day period and in writing, of the need for additional time, the reason the additional time is necessary, and the date (no later than 60 days after expiration of the initial 60‑day period) by which the Committee expects to render its decision on review. Notwithstanding the foregoing, if the Committee determines that an extension of the initial 60‑day period is required due to the Claimant's failure to submit information necessary for the Committee to decide the claim, the time period by which the Committee must make its determination on review shall be tolled from the date on which the notification of the extension is sent to the Claimant until the date on which the Claimant responds to the request for additional information. The decision on review shall be written in a manner calculated to be understood by the Claimant, and shall contain:


(a)	Specific reasons for the decision;


(b)	Specific references to the pertinent Plan provisions upon which the decision was based;


(c)	A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records or other information relevant (within the meaning of Department of Labor Regulation section 2560.503‑1(m)(8)) to the Claimant's claim;


(d)	A statement of the Claimant's right to bring a civil action under ERISA section 502(a) following a wholly or partially denied claim for benefits; and


(e)	Such other matters as the Committee deems relevant.

9.5 Form of Notice and Decision . Any notice or decision by the Committee under this Article 9 may be furnished electronically in accordance with Department of Labor Regulation section 2520.104b‑(1)(c)(i), (iii) and (iv).

9.6 Legal Action . Any final decision by the Committee shall be binding on all parties. A Claimant's compliance with the foregoing provisions of this Article 10 is a mandatory prerequisite to a Claimant's right to commence any legal action with respect to any claim for benefits under this Plan. Any such legal action must be initiated no later than 180 days after the Committee renders its final decision. If a final determination of the Committee is challenged in court, such determination shall not be subject to de novo review and shall not be overturned unless proven to be arbitrary and capricious based on the evidence considered by the Committee at the time of such determination.

ARTICLE 10
TRUST

10.1 Establishment of the Trust . The Company may establish a Trust and, if established, the Company and each participating subsidiary shall contribute such amounts to the Trust from time to time as it deems desirable.

Exhibit 10.6

10.2 Interrelationship of the Plan and the Trust . The provisions of the Plan shall govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions of the Trust shall govern the rights of the Company and each participating subsidiary, Participants and the creditors of the Company and each participating subsidiary to the assets transferred to the Trust. The Company and each participating subsidiary shall at all times remain liable to carry out their obligations under the Plan.

10.3 Distributions From the Trust . The obligations of the Company and each participating subsidiary under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution shall reduce their obligations under this Plan.

ARTICLE 11
MISCELLANEOUS

11.1 Unsecured General Creditor . Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of the Company and each participating subsidiary or any other person, and nothing in the Plan shall be construed to give any Director or any other person such rights. The Plan constitutes a mere promise by the Company and each participating subsidiary to make payments in accordance with the terms of the Plan, and Participants and Beneficiaries shall have the status of general unsecured creditors solely of the Company or participating subsidiary making such promise.

11.2 Company's Liability . The liability of the Company and each participating subsidiary for the payment of benefits shall be defined only by the Plan and any Election Forms, as entered into between the Company and a Participant. Neither the Company nor any participating subsidiary shall have any obligation to a Participant under the Plan except as expressly provided in the Plan.

11.3 Nonassignability . Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are expressly declared to be, unassignable and non‑transferable to the maximum extent allowed by law. No part of the amounts payable shall, before actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor shall any part of the same, to the maximum extent allowed by law, be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency or, except as provided in section 5.8(b), be transferable to a spouse as a result of a property settlement or otherwise.

11.4 Not a Contract of Service . Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of the Company or any participating subsidiary.

11.5 Furnishing Information . A Participant or Beneficiary shall cooperate with the Committee by furnishing any and all information requested by the Committee and take

Exhibit 10.6

such other actions as may be requested in order to facilitate the administration of the Plan and the payments of benefits hereunder.

11.6 Receipt and Release . Any payment to any Participant or Beneficiary in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims against the Company and each participating subsidiary, the Committee and a trustee (if any) under the Plan, and the Committee may require such Participant or Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect.

11.7 Incompetent . If the Committee determines in its discretion that a benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling disposition of that person's property, the Committee may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person. The Committee may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the Account of the Participant and the Participant's Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such payment amount.

11.8 Governing Law and Severability . To the extent not preempted by ERISA, the provisions of this Plan shall be construed, administered and interpreted according to the internal laws of the State of Wisconsin without regard to its conflicts of laws principles. If any provision is held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective.

11.9 Notices and Communications . All notices, statements, reports and other communications from the Committee to any employee, Participant, Beneficiary or other person required or permitted under the Plan shall be deemed to have been duly given when personally delivered to, when transmitted via facsimile or other electronic media or when mailed overnight or by first‑class mail, postage prepaid and addressed to, such employee, Participant, Beneficiary or other person at the last known address on the Company's records. All elections, designations, requests, notices, instructions and other communications from a Participant, Beneficiary or other person to the Committee required or permitted under the Plan shall be in such form as is prescribed from time to time by the Committee, and shall be mailed by first‑class mail, transmitted via facsimile or other electronic media or delivered to such location as shall be specified by the Committee. Such communication shall be deemed to have been given and delivered only upon actual receipt by the Committee at such location.

11.10 Successors . The provisions of this Plan shall bind and inure to the benefit of the Company and each participating subsidiary and their successors and assigns and the Participant and the Participant's designated Beneficiaries.

11.11 Insurance . The Company and each participating subsidiary, on their own behalf or on behalf of the trustee of the Trust, and, in its sole discretion, may apply for and procure insurance on the life of the Participant, in such amounts and in such forms as the Company or participating subsidiaries may choose. The Company and each participating subsidiary or the trustee of the Trust, as the case may be, shall be the sole owner and

Exhibit 10.6

beneficiary of any such insurance. The Participant shall have no interest whatsoever in any such policy or policies, and at the request of the Company or a participating subsidiary shall submit to medical examinations and supply such information and execute such documents as may be required by the insurance company or companies to whom the Company or a participating subsidiary has applied for insurance. The Participant may elect not to be insured.

11.12 Legal Fees To Enforce Rights After Change in Control . The Company and each participating subsidiary are aware that upon the occurrence of a Change in Control, the Company's Board or the board of directors of a Participant's participating subsidiary (which might then be composed of new members) or a shareholder of the Company, or of any successor corporation, might then cause or attempt to cause the Company, a participating subsidiary or such successor to refuse to comply with its obligations under the Plan and might cause or attempt to cause the Company or a participating subsidiary to institute, or may institute, litigation seeking to deny Participants the benefits intended under the Plan. In these circumstances, the purpose of the Plan could be frustrated. Accordingly, if, following a Change in Control, it should appear to any Participant that the Company, a participating subsidiary or any successor corporation has failed to comply with any of its obligations under the Plan or any agreement thereunder or, if the Company, such a participating subsidiary or any other person takes any action to declare the Plan void or unenforceable or institutes any litigation or other legal action designed to deny, diminish or to recover from any Participant the benefits intended to be provided, then the Company and such participating subsidiary irrevocably authorize such Participant to retain counsel of the Participant's choice at the expense of the Company and such participating subsidiary (who shall be jointly and severally liable for all reasonable fees of such counsel) to represent such Participant in connection with the initiation or defense of any litigation or other legal action, whether by or against the Company, the participating subsidiary or any director, officer, shareholder or other person affiliated with the Company, the participating subsidiary or any successor thereto in any jurisdiction. If paid by the Participant, the Company or such participating subsidiary shall reimburse such legal fees no later than December 31 ^st of the year following the year in which the expense was incurred.

11.13 Terms . Whenever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.

11.14 Headings . Headings and subheadings in the Plan are inserted for convenience only and shall not control or affect the meaning or construction of any of its provisions.

33019980v4

Exhibit 10.7

WEC ENERGY GROUP
NON-QUALIFIED RETIREMENT SAVINGS PLAN

Amended and Restated Effective as of January 1, 2016

TABLE OF CONTENTS



			Page
INTRODUCTION			1

ARTICLE 1		DEFINITIONS	1

ARTICLE 2		ELIGIBILITY AND PARTICIPATION	6
	2.1	Eligibility and Participation	6
	2.2	Cessation of Participation	7

ARTICLE 3		CONTRIBUTIONS	7
	3.1	Eligibility for Non-qualified Employer Pension Contributions	7
	3.2	Annual Non-qualified Employer Pension Contribution Amount	7

ARTICLE 4		ACCOUNTS	8
	4.1	Establishment of Accounts	8
	4.2	Vesting	8
	4.3	Deemed Investments	9
	4.4	Taxes	11

ARTICLE 5		DISTRIBUTION OF ACCOUNT	11
	5.1	Time for Distribution	11
	5.2	Payment Forms and Election	11
	5.3	Benefits Upon Separation from Service	12
	5.4	Benefits Upon Death	12
	5.5	Changes to Form of Payment	13
	5.6	Change in Control	13
	5.7	Discretion to Accelerate Distribution	14

ARTICLE 6		LEAVE OF ABSENCE	14

ARTICLE 7		BENEFICIARY DESIGNATION	15
	7.1	Beneficiary	15
	7.2	Beneficiary Designation; Change	15
	7.3	Acknowledgment	15
	7.4	No Beneficiary Designation	15
	7.5	Doubt as to Beneficiary	15
	7.6	Discharge of Obligations	16

ARTICLE 8		TERMINATION, AMENDMENT OR MODIFICATION	16
	8.1	Termination	16
	8.2	Amendment	16
	8.3	Effect of Payment	17

ARTICLE 9		ADMINISTRATION	17
	9.1	Plan Administration	17
	9.2	Powers, Duties and Procedures	17
	9.3	Administration Upon Change In Control	17
	9.4	Agents	18



TABLE OF CONTENTS
(cont)
			Page
	9.5	Binding Effect of Decisions	18
	9.6	Indemnity of Committee	18
	9.7	Employer Information	18
	9.8	Coordination with Other Benefits	18

ARTICLE 10		CLAIMS PROCEDURES	19
	10.1	Presentation of Claim	19
	10.2	Decision on Initial Claim	19
	10.3	Right to Review	19
	10.4	Decision on Review	20
	10.5	Form of Notice and Decision	20
	10.6	Legal Action	21

ARTICLE 11		TRUST	21
	11.1	Establishment of the Trust	21
	11.2	Interrelationship of the Plan and the Trust	21
	11.3	Distributions From the Trust	21

ARTICLE 12		MISCELLANEOUS	21
	12.1	Status of Plan	21
	12.2	Unsecured General Creditor	21
	12.3	Employer's Liability	21
	12.4	Nonassignability	22
	12.5	Not a Contract of Employment	22
	12.6	Furnishing Information	22
	12.7	Receipt and Release	22
	12.8	Incompetent	22
	12.9	Governing Law and Severability	22
	12.10	Notices and Communications	23
	12.11	Successors	23
	12.12	Insurance	23
	12.13	Legal Fees To Enforce Rights After Change in Control	23
	12.14	Terms	24
	12.15	Headings	24

Exhibit 10.7

WEC ENERGY GROUP
NON-QUALIFIED RETIREMENT SAVINGS PLAN

INTRODUCTION

The Plan was established effective January 1, 2015 and is known as the "WEC Energy Group Non-qualified Retirement Savings Plan." Prior to January 1, 2016, the Plan was known as the Wisconsin Energy Corporation Non-qualified Retirement Savings Plan.

The Company froze eligibility under the RAP for non-represented (management) employees who were hired, rehired, or transferred from a union to non-represented position on or after January 1, 2015. In lieu of participating in the RAP, those employees will be eligible for Qualified Employer Pension Contributions under the 401(k) Plan. This Plan provides supplemental retirement benefits to a select group of management and highly compensated employees who are eligible for those Qualified Employer Pension Contributions.

Effective January 1, 2016, the Plan was amended and restated to reflect the change in the name of the Company and Plan, to add accruals for Disabled Participants, to modify provisions relating to form of payment elections, to update information on Measurement Funds and to clarify other administrative provisions.

ARTICLE 1

DEFINITIONS

Whenever used herein, the following terms have the meanings set forth below:


1.1	“Account” shall mean a bookkeeping account established for the benefit of a Participant under Article 4 utilized solely to measure and determine the amounts credited under the Plan on behalf of a Participant or Beneficiary.


1.2	“Annual Non-qualified Employer Pension Contribution Amount” shall mean, for any one Plan Year, the amount determined in accordance with Section 3.2.

1.3

“Annual Installment Method” shall mean an annual installment payment over a specified number of years. To determine the value of the Participant’s Account balance for calculating an installment payment, the Participant’s Account balance shall be valued as of the close of business on the last business day of the Plan Year preceding the Plan Year for which payment is to be made. Notwithstanding the foregoing, when determining the

Exhibit 10.7

Account balance for calculating the first installment payment for a Participant who is a “specified employee” within the meaning of Code Section 409A subject to a payment delay pursuant to Section 5.3 or 5.6, the Participant’s Account balance shall be valued as of the close of business on the last business day of the calendar quarter preceding the date the first payment is scheduled to occur. Each annual installment shall be calculated by multiplying the Account balance determined above, as the case may be, by a fraction, the numerator of which is one, and the denominator of which is the remaining number of annual payments due to the Participant. For example, if a 5-year Annual Installment Method is specified, the first payment shall be 1/5 of the Account balance, valued as described herein. The following Plan Year, the payment shall be 1/4 of the Account balance, valued as described herein.

1.4

“Base Annual Salary” shall mean the annual cash compensation relating to services performed during a Plan Year, whether or not paid in, or included on the Form W-2 for, such Plan Year, excluding severance payments, non-qualified supplemental pension payments, performance awards, bonuses, commissions, overtime, fringe benefits, relocation expenses, incentive payments, non-monetary awards, directors’ fees and other fees, automobile and other allowances paid to an Eligible Employee for employment services rendered (whether or not such allowances are included in the Eligible Employee’s gross income), stock options, restricted stock, performance shares or units, dividends, dividend equivalents and any other equity-based award provided under a plan or arrangement of an Employer. Base Annual Salary shall be calculated before it is deferred or contributed by the Eligible Employee under a qualified or non-qualified plan of an Employer and shall include amounts not otherwise included in the Eligible Employee’s gross income under Code Sections 125, 132(f)(4), 402(e)(3), 402(h) or 403(b) pursuant to plans established by an Employer; provided, however, that all such amounts shall be included in Base Annual Salary only to the extent that the amount would have been payable in cash to the Eligible Employee had there been no such plan.


1.5	“Beneficiary” shall mean one or more persons, trusts, estates or other entities designated by the Participant in accordance with Article 7 that are entitled to receive benefits under this Plan upon the death of a Participant.


1.6	“Board” shall mean the board of directors of the Company.


1.7	“Change in Control” shall mean, with respect to the Company, the occurrence of any one of the following dates, interpreted consistent with Treasury Regulation Section‑1.409A‑3(i)(5).

(a)

Exhibit 10.7

additional stock by the same Person or Persons is not considered to cause a Change in Control.


(b)	Change in Effective Control .

(i)


(ii)	The date a majority of the members of the Company’s Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board before the date of the appointment or election.

(c)


(i)	An entity that is controlled by the shareholders of the transferring corporation;


(ii)	A shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock;


(iii)	An entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company;


(iv)	A Person, or more than one Person Acting as a Group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company; or


(v)	An entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a Person described in clause (iv).

Exhibit 10.7


(d)	“ Person” and “Acting as a Group. ”


(i)	For purposes of this Section, “Person” shall have the meaning set forth in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended.

(ii)


1.8	"Chief Executive Officer" shall mean the Chief Executive Officer of the Company.


1.9	“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.


1.10	“Committee” shall mean an internal administrative committee appointed by the Chief Executive Officer to administer the Plan in accordance with Article 9.


1.11	“Company” shall mean WEC Energy Group, Inc., a Wisconsin corporation, and any successor to all or substantially all of the Company’s assets or business. Prior to June 29, 2015, the Company was known as Wisconsin Energy Corporation.


1.12	“Company Stock” shall mean WEC Energy Group, Inc. common stock. Prior to June 29, 2015, "Company Stock" means Wisconsin Energy Corporation common stock.


1.13	“Compensation Committee” shall mean the Compensation Committee of the Board.


1.14	"Disabled Participant" shall mean a Participant who is receiving benefits under a long-term disability plan sponsored by an Employer. A Participant will cease to be a Disabled Participant upon Separation from Service.


1.15	"EDCP" shall mean the WEC Energy Group Executive Deferred Compensation Plan, as amended from time to time, or any successor to such plan. Prior to January 1, 2016, the EDCP was known as the Wisconsin Energy Corporation Executive Deferred Compensation Plan.


1.16	“Election Form” shall mean the form or forms established from time to time by the Committee that a Participant completes and submits in accordance with Committee rules to designate a form of payment pursuant to Section 5.2 and/or make or change an

Exhibit 10.7

investment election. To the extent authorized by the Committee, such form may be electronic or set forth in some other media or format.


1.17	"Eligible Employee" shall mean an employee of an Employer who is designated as eligible to participate in the Plan in accordance with Section 2.1


1.18	“Employer” shall mean the Company and/or any of its subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Board or the Chief Executive Officer to participate in the Plan and have adopted the Plan as a sponsor.


1.19	“Ending Valuation Date” shall mean the last business day of the Plan Year immediately preceding the Plan Year of distribution of a lump sum payment or final installment payment, as the case may be.


1.20	“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.


1.21	“401(k) Plan” shall mean the WEC Energy Group Employee Retirement Savings Plan, as amended from time to time, or any successor to such plan. Prior to January 1, 2016, the 401(k) Plan was known as the Wisconsin Energy Corporation Employee Retirement Savings Plan.


1.22	"IRS Limitations" shall mean the limitation on tax-qualified benefits imposed by Code Section 415, Code Section 401(a)(17), or any other limitation on tax-qualified benefits to which a participant may be entitled under a plan sponsored by the Company.


1.23	“Measurement Funds” shall mean the hypothetical investment funds available under the Plan, as provided in Section 4.3, to determine the earnings and losses credited to a Participant’s Account.

1.24

“Participant” shall mean a current or former Eligible Employee who participates in the Plan in accordance with Article 2 and maintains an Account balance hereunder. A spouse or former spouse of a Participant shall not be treated as a Participant in the Plan or have an Account under the Plan, even if the spouse or former spouse has an interest in the Participant’s Account as a result of applicable law or property settlements resulting from legal separation or divorce.


1.25	“Plan” shall mean the WEC Energy Group Non-qualified Retirement Savings Plan, including any amendments adopted hereto. Prior to January 1, 2016, the Plan was known as the Wisconsin Energy Corporation Non-qualified Retirement Savings Plan.


1.26	“Plan Year” shall mean the calendar year.


1.27	"Qualified Employer Pension Contribution" shall mean "qualified employer pension contribution" as defined under the 401(k) Plan.


1.28	“Separation from Service” shall mean the Participant’s termination of employment with all Employers and other entities affiliated with the Company, voluntarily or involuntarily,

Exhibit 10.7

for any reason other than on account of death, or as otherwise provided by the Department of Treasury in regulations promulgated under Code Section 409A. For purposes of the foregoing, whether an entity is affiliated with the Company shall be determined pursuant to the controlled group rules of Code Section 414, as modified by Code Section 409A. Unless the employment relationship is terminated earlier by the Employer or the Participant, the following shall apply for determining a Separation from Service under the Plan:

(a)

(b)

Where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Participant to be unable to perform the duties of the Participant's position of employment or any substantially similar position of employment, the Participant’s relationship with the Employer shall be treated as continuing intact for a period of 29 months and will be deemed to terminate on the first date immediately following such 29 month period.


1.29	"STPP" shall mean the WEC Energy Group Short-Term Performance Plan, as amended from time to time, or any successor to such plan. Prior to January 1, 2016, the STPP was known as the Wisconsin Energy Corporation Short-Term Performance Plan.


1.30	“Trust” shall mean any fund created by a rabbi trust agreement established by the Company referencing the Plan, and as amended from time to time.

ARTICLE 2
ELIGIBILITY AND PARTICIPATION

2.1

Eligibility and Participation . The Chief Executive Officer, the Board or the Compensation Committee may designate those key employees of the Employer eligible to participate in the Plan ("Eligible Employees"), provided that participation in the Plan shall be limited to a select group of management and highly compensated employees of the Employer (as defined in ERISA Sections 201(2), 301(a)(3) and 401(a)(1)) hired, rehired or transferred into a non-represented (management) position with the Company on or after January 1, 2015. An Eligible Employee shall become a Participant as of the date determined by the Chief Executive Officer, the Board or the Compensation Committee and remain a Participant in the Plan until the Participant's Account is paid in full.

Exhibit 10.7

2.2

Cessation of Participation . The Chief Executive Officer, the Board or the Compensation Committee shall have the discretionary authority to exclude a Participant from receiving further contributions under the Plan with such exclusion becoming effective as of the first day of the immediately following Plan Year. Such Participant shall remain a Participant in the Plan until the Participant's Account balance is paid in full.

ARTICLE 3
CONTRIBUTIONS


3.1	Eligibility for Non-qualified Employer Pension Contributions . A Participant shall be eligible to receive an Annual Non-qualified Employer Pension Contribution Amount for the Plan Year if the Participant satisfies the following requirements:


(a)	The Participant is employed by an Employer on the last day of the Plan Year; and


(b)	The Participant completes 1,000 hours of service (as calculated under the 401(k) Plan) during such Plan Year.

Notwithstanding the foregoing, a Participant who is a Disabled Participant or terminates employment prior to the last day of the Plan Year by reason of death, attainment of age 59 1/2, or attainment of age 55 with 10 years of vesting service (as calculated under the 401(k) Plan on an elapsed time basis) shall be eligible to receive an Annual Non-qualified Employer Pension Contribution Amount for the Plan Year.


3.2	Annual Non-qualified Employer Pension Contribution Amount . For each Plan Year, the Annual Non-qualified Employer Pension Contribution Amount provided under this Article 3 shall equal (a) less (b), subject to (c) and (d) below:


(a)	The Qualified Employer Pension Contribution that would have been allocated to the Participant's account under the 401(k) Plan for the Plan Year, calculated without regard to IRS Limitations and taking into account:


(i)	All Base Annual Salary, whether paid and/or deferred to the EDCP in the Plan Year;


(ii)	STPP awards, whether paid and/or deferred to the EDCP in the Plan Year; and


(iii)	Any other bonus award which has been approved by the Board, Committee or Chief Executive Officer of the Company for inclusion in calculating the Annual Non-qualified Employer Pension Contribution Amount for the Plan Year.


(b)	The Qualified Employer Pension Contribution that was actually allocated to the Participant's account under the 401(k) Plan.

Exhibit 10.7

(c)

The Qualified Employer Pension Contribution shall be determined by using the formula under the 401(k) Plan applicable to the Participant with the adjustments outlined in paragraph (a) above. On and after January 1, 2015, the Qualified Employer Pension Contribution formula under the 401(k) Plan is 6% of eligible compensation. Such Qualified Employer Pension Contribution formula is subject to change under the 401(k) Plan. In this regard, any amendment to the 401(k) Plan that makes such change shall be incorporated herein by reference effective as of the date of any such change.


(d)	During any period while a Participant is a Disabled Participant, the Participant's Base Annual Salary shall be determined by imputing compensation to the Disabled Participant using the rate of Base Annual Salary paid to the Participant immediately before becoming a Disabled Participant.

ARTICLE 4
ACCOUNTS

4.1

Establishment of Accounts . Bookkeeping accounts shall be established for each Participant to reflect the contributions made for the Participant’s benefit, together with adjustments for income, gains or losses attributable thereto, and any payments from the Plan. Accounts are established solely for the purpose of tracking contributions made by an Employer and any income adjustments thereto. The Accounts shall not be used to segregate assets for payment of any amounts allocated under the Plan, and shall not constitute or be treated as a trust fund of any kind.


4.2	Vesting . A Participant shall become 100% vested and have a nonforfeitable right to the amounts credited to the Participant's Account, adjusted for deemed income, gains and losses attributable thereto, upon the earliest to occur of the following:


(a)	Completion of three years of vesting service as determined under the 401(k) Plan for vesting in the Qualified Employer Pension Contribution;


(b)	The occurrence of a Change in Control; or


(c)	The Participant's death or attainment of age 59-1/2 (the normal retirement age under the 401(k) Plan) while employed by an Employer.

Notwithstanding the foregoing, the vesting schedule for a Participant’s Account shall not be accelerated to the extent that the Committee determines that such acceleration would cause the deduction limitations of Code Section 280G to become effective. If the Participant’s Account is not vested pursuant to such a determination, the Participant may request independent verification of the Committee’s calculations with respect to the application of Code Section 280G. In such case, the Committee shall provide to the Participant within 15 business days of such request an opinion (which need not be unqualified) of the Company’s independent auditors, which opinion shall state that any limitation in the vested percentage hereunder is necessary to avoid the limits of Code

Exhibit 10.7

Section 280G and contain supporting calculations. The cost of such opinion shall be paid by the Company.

4.3

Deemed Investments . Subject to paragraph (g) below, and in accordance with, and subject to, the rules and procedures that are established from time to time by the Committee in its sole discretion, amounts shall be credited or debited to a Participant’s Account in accordance with the following rules. The Committee’s discretion includes the right to supersede the specific rights identified below, with or without retroactive effect:

(a)

Measurement Funds . Amounts credited to each Participant’s Account shall be deemed invested, in accordance with the Participant’s directions, in Measurement Funds that are available under the Plan. The hypothetical investment funds available under the Plan shall be those designated by the Committee, from time to time in its discretion, following recommendations by the WEC Energy Group Investment Trust Policy Committee. Subject to paragraph (g) below, a Participant may elect one or both of the following Measurement Funds for the purpose of crediting additional amounts to the Participant's Account: (i) the Prime Rate Fund (described as a mutual fund that is 100% invested in a hypothetical debt instrument which earns interest at an annualized interest rate equal to the "Prime Rate" as reported each business day by the Wall Street Journal , with interest deemed reinvested in additional units of such hypothetical debt instrument), or (ii) a Company Stock Measurement Fund (described as a mutual fund that is 100% invested in shares of Company Stock, with dividends deemed reinvested in additional shares of Company Stock).

Subject to paragraph (g) below, the Committee may, in its sole discretion, discontinue, substitute or add a Measurement Fund, subject to advance notice to Participants if the Committee determines, in its sole discretion, that such notice is necessary. The Committee also may suspend ( i.e. , freeze) an existing Measurement Fund at any time, subject to advance notice if the Committee determines necessary, thereby freezing the Measurement Fund as to the crediting of additional deemed investments subsequent to the effective date of the suspension.

(b)

Election of Measurement Funds . Subject to paragraphs (g), a Participant shall elect Measurement Funds to be used to determine the additional amounts to be credited to the Participant's Account, unless changed pursuant to rules as the Committee shall determine, in its discretion, from time to time. However, subject to paragraphs (g) and any rules and procedures established from time to time by the Committee in its sole discretion, the Participant may elect to add or delete one or more Measurement Funds to be used to determine the additional amounts to be credited to the Participant's Account, or to change the portion of the Account allocated to each previously or newly elected Measurement Fund. Such rules may include, but are not limited to, rules and/or trading policies that govern the timing, frequency, and manner in which elections are made to allocate or reallocate deemed investment amounts among the Measurement Funds, and may be modified at any time and from time to time by the Committee in its sole

Exhibit 10.7

discretion. If an election is made to change a Measurement Fund, it shall become effective and apply thereafter in accordance with the rules of the Committee for all subsequent periods in which the Participant participates in the Plan, unless changed in accordance with the previous provisions. All rights of a Participant or any other person to elect or change the Measurement Funds under this Section shall be deemed to have ceased as of the Ending Valuation Date and no adjustment in the value of an Account balance shall be considered for any purpose under the Plan after such Ending Valuation Date. If a Participant fails to elect a Measurement Fund for all or a portion of the Participant's Account, the amounts for which there is no valid election shall be deemed invested in the Prime Rate Fund.


(c)	Proportionate Allocation . In making any election described in paragraph (b) above, the Participant shall specify on the Election Form, in increments of 1%, the percentage of the Participant's Account balance to be allocated to a Measurement Fund (as if the Participant was making an investment in that Measurement Fund with that portion of the Participant's Account balance).

(d)

Crediting or Debiting Method . The performance of each elected Measurement Fund (either positive or negative) shall be determined by the Committee, in its sole discretion, based on the performance of the Measurement Funds themselves. A Participant’s Account shall be credited or debited on a periodic basis based on the performance of each Measurement Fund selected by the Participant, as determined by the Committee in its sole discretion, provided that no adjustment in the value of a Participant’s Account balance shall be considered after the Ending Valuation Date.

(e)

No Actual Investment . Notwithstanding any other provision of this Plan to the contrary, the Measurement Funds shall be used for measurement purposes only, and a Participant’s election of any Measurement Fund, the allocation of the Participant's Account thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant’s Account shall not be considered or construed in any manner as an actual investment of the Participant's Account balance in any such Measurement Fund. If the Employer or the trustee of the Trust, in its sole discretion, decides to invest funds in any or all of the Measurement Funds, no Participant shall have any rights in or to such investments themselves. Notwithstanding the foregoing, a Participant’s Account balance shall at all times be a bookkeeping entry only and shall not represent any investment made on the Participant's behalf by the Employer or the trustee; the Participant shall at all times remain an unsecured creditor of the Company.

(f)

Investment of Trust Assets . If the Committee deposits amounts in a Trust, the trustee of the Trust shall be authorized, upon written instructions received from the Committee or an investment manager appointed by the Committee, to invest and reinvest the assets of the Trust in accordance with the applicable Trust Agreement, including the disposition of Company Stock and reinvestment of the proceeds in one or more investment vehicles designated by the Committee.

Exhibit 10.7

(g)

Special Considerations for Participants Subject to Section 16 of the Securities Exchange Act of 1934 . In order for any election under this Plan by a Participant who is an officer subject to the reporting requirements and trading restrictions of Section 16 of the Securities Exchange Act of 1934 (“Section 16”) to conform to Section 16, the Participant shall consult with the Company’s designated individual responsible for Section 16 reporting and compliance before making any election to move any part of the Participant's Account into or out of the Company Stock Measurement Fund. The Company reserves the right to impose such restrictions as it determines necessary, in its sole discretion, on any elections, transactions or other matters under this Plan relating to the Company Stock Measurement Fund to comply with or qualify for exemption under Section 16.

4.4

Taxes . A Participant’s Employer shall withhold from a Participant’s non-deferred compensation any employment taxes the Employer is required to withhold with respect to amounts deferred under the Plan at the times required under applicable regulations promulgated by the Department of the Treasury. To the extent not previously withheld, the Employer, or the trustee of the Trust, shall withhold from any payments made to a Participant under this Plan all federal, state and local income, employment and other taxes required to be withheld by the Employer, or the trustee of the Trust, in connection with such payments, in amounts and in a manner to be determined in the sole discretion of the Employer or the trustee of the Trust, as the case may be.

ARTICLE 5
DISTRIBUTION OF ACCOUNT


5.1	Time for Distribution . Distribution of a Participant’s Account shall be made on the earliest to occur of:


(a)	The date set forth in Section 5.3 with respect to the Participant’s Separation from Service;


(b)	The date set forth in Section 5.4 with respect to the Participant’s death; or


(c)	The date set forth in Section 5.6 with respect to a Separation from Service after a Change in Control.

Notwithstanding any other provision of the Plan to the contrary, in no event shall the distribution of any Account be accelerated to a time earlier than which it would otherwise have been paid, whether by amendment of the Plan, exercise of the Committee’s discretion or otherwise, except as permitted by Section 5.7 or Treasury regulations issued pursuant to Code Section 409A.


5.2	Payment Forms and Election . A Participant may elect the form of payment for amounts credited to the Participant's Account by completing and timely submitting an Election Form in accordance with the Committee's rules.


(a)	Payment Forms . A Participant may elect to receive payment in the form of a lump sum or installments of two to ten years. The amount of each installment

Exhibit 10.7

shall be determined using the Annual Installment Method. Notwithstanding the foregoing, if the Participant's Account balance is $75,000 or less at the time of Separation from Service, the Participant's Account shall be paid in a lump sum.

(b)

Timing of Election . A Participant must complete and submit an Election Form for a Plan Year before the beginning of the Plan Year to which the Election Form relates. Notwithstanding the foregoing, if the Committee, in its sole discretion, designates an employee as newly‑eligible to participate in the Plan effective as of any date other than January 1, the newly-Eligible Employee shall complete and submit an Election Form prior to the date the Eligible Employee begins participating in the Plan. Newly‑eligible for participation in the Plan shall be determined under the plan aggregation rules of Code Section 409A.

(c)

Duration of Election . The form of payment elected by the Participant shall govern all contributions credited to the Participant's Account for the Plan Year to which the Election Form applies, and earnings or losses on such amounts. The form of payment election shall also apply to each subsequent Plan Year's contributions, and earnings or losses on such amounts, until changed on either a prospective or retroactive basis by the Participant pursuant to section 5.5.

(d)

Default Form of Payment . In the event the Participant has not elected a form of payment, all amounts contributions to the Participant's Account for the Plan Year, and earnings or losses on such amounts, shall be paid in a single lump sum. This default form of payment shall apply to each subsequent Plan Year's contributions and earnings or losses on such amounts, unless and until the Participant elects a form of payment on a prospective basis or changes the form of payment on a retroactive basis pursuant to section 5.5.

5.3

Benefits Upon Separation from Service . Upon a Participant’s Separation from Service, the Participant’s Account shall be paid or begin to be paid during the first 90 days of the Plan Year following the Plan Year of the Participant’s Separation from Service. Notwithstanding the foregoing, distributions made to “specified employees” (determined pursuant to Treasury Regulation Section 1.409A‑1(i)) upon such separation shall be paid or begin to be paid no earlier than the first day of the seventh month following the Participant’s Separation from Service unless the Participant dies during such six-month period in which case Section 5.4 shall apply. If an Annual Installment Method is in effect, subsequent installment payments shall be made thereafter during the first 90 days of the Plan Year in which the installment is due. Payment shall be made in such form as determined under Section 5.2, taking into account any changes to an elected form of payment pursuant to Section 5.5.


5.4	Benefits Upon Death . Upon the Participant’s death, the Plan Administrator shall pay to the Participant’s Beneficiary a benefit equal to the remaining balance in the Participant’s Account. Payment shall be made in accordance with the provisions below.


(a)	Death While In Pay Status or After a Separation from Service . If the Participant dies after commencing an installment form of payment, but before the entire

Exhibit 10.7

benefit is paid in full, the Participant’s unpaid installment payments shall continue to be paid to the Participant’s Beneficiary over the remaining number of years as that benefit would have been paid to the Participant had the Participant survived. In the event a Participant dies after a Separation from Service, but before actual payment is made or begins, this paragraph shall apply and payment to the Participant’s Beneficiary shall be paid or begin to be paid at the same time as if the Participant had survived.

(b)

Death Prior to a Separation from Service . If a Participant dies prior to a Separation from Service, the Participant’s Account shall be paid or begin to be paid to the Participant’s Beneficiary during the first 90 days of the Plan Year following the Plan Year of the Participant’s death, regardless of whether the Participant is a specified employee. Payment shall be made in such form as determined under Section 5.2, taking into account any changes to an elected form of payment pursuant to Section 5.5.


5.5	Changes to Form of Payment .


(a)	Prospective Changes . A Participant may select an alternate form of payment for contributions made to the Participant's Account for future Plan Years in accordance with the rules for completing and submitting Election Forms in Section 5.2.


(b)	Retroactive Changes . A Participant may elect to change the form of payment for amounts in the Participant's Account as follows:


(i)	A Participant who has elected a lump sum distribution may later change such election to an installment payment, provided the first installment payment shall be deferred to a date that is at least five years after the date the lump sum distribution would otherwise have been made.


(ii)	A Participant who has an installment election in effect may change such election to a lump sum payment, provided the lump sum payment shall be deferred to a date that is at least five years after the date the initial installment payment would otherwise have commenced.

Any such election changes pursuant to this paragraph shall be completed in accordance with Committee rules and must be made at least 12 months before the event triggering distribution occurs. Therefore, if the event triggering distribution occurs before such 12 month period has elapsed, then the election to change the payment form shall not take effect. Notwithstanding anything in this Section 5.5 to the contrary, the five-year delay described above shall not apply to changes in the form of payment upon death.


5.6	Change in Control . Notwithstanding any other provision of the Plan to the contrary, in the event a Participant incurs a Separation from Service within 18 months after a Change in Control, the Employer shall distribute the Participant’s entire Account in a lump sum payment within 90 days after such Separation from Service. Notwithstanding the

Exhibit 10.7

foregoing, distributions made to “specified employees” (determined pursuant to Treasury Regulation Section 1.409A-1(i)) upon Separation from Service shall be paid or begin to be paid no earlier than the first day of the seventh month following the Participant’s Separation from Service, unless the Participant dies during such six-month period in which case Section 5.4 shall apply.


5.7	Discretion to Accelerate Distribution .


(a)	The Committee shall have the discretion to make a distribution, or accelerate the time or schedule of payment, from a Participant’s Account if payment is required for:


(i)	FICA, FUTA and/or the corresponding withholding provisions of applicable state and local taxes with respect to compensation deferred under the Plan. Any such distribution shall not exceed the aggregate of such tax withholding and shall reduce the Participant’s Account balance to the extent of such distributions; or


(ii)	payment of state, local or foreign tax obligations arising from participation in the Plan that apply to an amount deferred under the Plan and FUTA resulting from such payment. Any such payment shall not exceed the amount of such taxes due as a result of Plan participation.

(b)


(c)	The Committee shall have the discretion to accelerate the time or schedule of a payment under the Plan if the Plan fails to meet the requirements of Code Section 409A and regulations promulgated thereunder, provided that any such payment does not exceed the amount required to be included in income as a result of such failure.

ARTICLE 6
LEAVE OF ABSENCE

If a Participant is authorized by an Employer to take a paid or unpaid bona fide leave of absence for any reason, the employment relationship is treated as continuing intact if the period of such leave does not exceed six months, or longer, so long as the Participant retains a right to reemployment under an applicable statute or by contract.

Exhibit 10.7

period. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Participant to be unable to perform the duties of the Participant's position of employment or any substantially similar position of employment, the Participant’s relationship with the Employer shall be treated as continuing intact for a period of up to 29 months, unless earlier terminated by the Employer or Participant. In this event, the Participant’s Account shall be distributed pursuant to Section 5.3.

ARTICLE 7
BENEFICIARY DESIGNATION


7.1	Beneficiary . Each Participant may, at any time, designate one or more Beneficiaries (both primary as well as contingent) to receive any benefits payable under the Plan upon the Participant's death. The Beneficiary designated under this Plan may be the same as or different from the Beneficiary designation under any other plan of an Employer in which the Participant participates.

7.2


7.3	Acknowledgment . No Beneficiary designation or change in Beneficiary designation shall be effective until accepted by the Committee or a Plan representative.

7.4

No Beneficiary Designation . If a Participant fails to designate a Beneficiary as provided in this Article 7 or, if all designated Beneficiaries predecease the Participant or die before complete distribution of the Participant’s Account, then the remaining benefits in the Participant’s Account shall be paid to the Participant's surviving spouse, if none, to the Participant's descendants by right of representation or, if none, to the Participant's next of kin determined pursuant to the laws of the state in which the Company's principal place of business is located as if the Participant had died unmarried and intestate.


7.5	Doubt as to Beneficiary . If the Committee has any doubt as to the proper Beneficiary to receive payments under this Plan, the Committee may, in its sole discretion, require the Participant’s Employer to withhold such payments until the matter is resolved to the Committee’s satisfaction.

Exhibit 10.7


7.6	Discharge of Obligations . The complete payment of benefits under the Plan to a Beneficiary shall fully and completely discharge all Employers and the Committee from all further obligations under this Plan with respect to the Participant, and the Participant’s Election Form shall terminate upon such full payment of benefits.

ARTICLE 8
TERMINATION, AMENDMENT OR MODIFICATION


8.1	Termination .

(a)

Although each Employer anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee that an Employer will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, each Employer reserves the right to discontinue its participation in the Plan and/or to terminate the Plan at any time with respect to all of its participating Eligible Employees, by action of its board of directors or compensation committee. The termination of the Plan shall not reduce the amount of any benefit the Participant or Beneficiary is entitled to receive under the Plan as of the termination date. Except as provided in paragraph (b) below, Account balances shall be maintained under the Plan until such amounts would otherwise have been distributed in accordance with the terms of the Plan and Participants’ validly filed payment elections.


(b)	Notwithstanding any provision in the Plan to the contrary, upon termination of the Plan, the Board of Directors or Compensation Committee reserves the discretion to accelerate distribution of Participants’ Account (including those Participants in pay status pursuant to an installment election) in accordance with regulations promulgated by the Department of the Treasury under Code Section 409A.

8.2

Amendment . The Company may, in its sole discretion, amend or modify the Plan at any time, in whole or in part, by action of its Board, Compensation Committee or the Committee; provided, however, that no amendment shall decrease the amount of any Participant’s Account as of the date of the amendment. Further, during the pendency of a Potential Change in Control (as defined below) and at all times following a Change in Control, no amendment or modification may be made which in any way adversely affects the interests of any Participant with respect to amounts credited to such Participant’s Account as of the date of the amendment. A “Potential Change in Control” shall be deemed to have occurred if one of the following events occurs:


(a)	The Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;


(b)	The Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;


(c)	Any Person becomes the Beneficial Owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of Company Stock representing 15% or more of either the then outstanding shares of

Exhibit 10.7

stock of the Company or the combined voting power of the Company’s then outstanding Company Stock (not including the Company Stock beneficially owned by such Person or any Company Stock acquired directly from the Company or its affiliates); or


(d)	The Board adopts a resolution to the effect that, for purposes of this Plan, a Potential Change in Control has occurred.

Except as otherwise noted, the capitalized terms in the above definition have the same meaning as set forth in Section 1.7. The Company’s power to amend or modify the Plan includes the power to suspend or freeze participation in the Plan, provided such suspension or freeze does not cause a prohibited acceleration of compensation under Code Section 409A.


8.3	Effect of Payment . The full payment of the Participant’s Account under any provision of the Plan shall completely discharge the Plan’s and Employer’s obligations to the Participant and Beneficiaries under this Plan and the Participant’s Election Forms shall terminate.

ARTICLE 9
ADMINISTRATION


9.1	Plan Administration . Except as otherwise provided in this Article 9, the Plan shall be administered by the Committee. Members of the Committee may be Participants under this Plan. Any individual serving on the Committee who is a Participant shall not vote or act on any matter relating solely to himself or herself.

9.2

Powers, Duties and Procedures . The Committee shall have full and complete discretionary authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration of the Plan, and (ii) decide or resolve any and all questions including interpretations of the Plan, as may arise in connection with the claims procedures set forth in Article 10 or otherwise with regard to the Plan. The Committee shall have complete control and authority to determine the rights and benefits of all claims, demands and actions arising out of the provisions of the Plan of any Participant or Beneficiary or other person having or claiming to have any interest under the Plan. When making a determination or calculation, the Committee may rely on information furnished by a Participant or the Employer. Benefits under the Plan shall be paid only if the Committee decides in its sole discretion that the Participant or Beneficiary is entitled to them. The Committee may delegate such powers and duties as it determines for the efficient administration of the Plan.

9.3

Exhibit 10.7

Administrator shall have full and complete discretionary power to determine all questions arising in connection with the administration of the Plan and the interpretation of the Plan and Trust including, but not limited to, benefit entitlement determinations. Upon and after a Change in Control, the Company shall (i) pay all reasonable administrative expenses and fees of the Administrator, (ii) indemnify the Administrator against any costs, expenses and liabilities (including, without limitation, attorney’s fees) of whatever kind and nature which may be imposed on, asserted against or incurred by the Administrator in connection with the performance of the duties hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of the Administrator or its employees or agents, and (iii) supply full and timely information to the Administrator on all matters relating to the Plan, the Trust, the Participants and their Beneficiaries, the Account balances of the Participants, including the dates of death or Separation from Service and such other pertinent information as the Administrator may reasonably require. Upon and after a Change in Control, the Administrator may be terminated (and a replacement appointed) only by an Appointing Officer. Upon and after a Change in Control, the Administrator may not be terminated by the Company.


9.4	Agents . In the administration of this Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel who may be counsel to an Employer.

9.5

9.6

Indemnity of Committee . All Employers shall indemnify and hold harmless the members of the Committee, and any other employee to whom the duties of the Committee may be delegated, and the Administrator, as defined in Section 9.3, against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful misconduct by the Committee, any of its members or any such employee or the Administrator.


9.7	Employer Information . To enable the Committee and/or Administrator to perform its functions, each Employer shall supply full and timely information to the Committee on all matters relating to the compensation of its Participants, the dates of the death or Separation from Service and such other pertinent information as the Committee may reasonably require.


9.8	Coordination with Other Benefits . The benefits provided to a Participant and the Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of an Employer. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.

Exhibit 10.7

ARTICLE 10
CLAIMS PROCEDURES

10.1

10.2


(a)	The specific reasons for the denial of the claim, or any part thereof;


(b)	Specific references to pertinent Plan provisions upon which such denial was based;


(c)	A description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and


(d)	An explanation of the claim review procedure set forth in Section 10.3 below, which explanation shall also include a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following a denial of the claim upon review.

10.3


(a)	Review and/or receive copies of, upon request and free of charge, all documents, records, and other information relevant to the Claimant’s claim;

Exhibit 10.7


(b)	Submit written comments, documents, records or other information relating to the Claimant's claim, which the Committee shall take into account in considering the claim on review, without regard to whether such information was submitted or considered in the initial review of the claim; and/or


(c)	Request a hearing, which the Committee, in its sole discretion, may grant.

10.4

Decision on Review . The Committee shall render its decision on review promptly, and not later than 60 days after it receives a written request for review of the denial, unless a hearing is held or other special circumstances require additional time. In such case, the Committee will notify the Claimant, before the expiration of the initial 60-day period and in writing, of the need for additional time, the reason the additional time is necessary, and the date (no later than 60 days after expiration of the initial 60-day period) by which the Committee expects to render its decision on review. Notwithstanding the foregoing, if the Committee determines that an extension of the initial 60-day period is required due to the Claimant’s failure to submit information necessary for the Committee to decide the claim, the time period by which the Committee must make its determination on review shall be tolled from the date on which the notification of the extension is sent to the Claimant until the date on which the Claimant responds to the request for additional information. The decision on review shall be written in a manner calculated to be understood by the Claimant, and shall contain:


(a)	Specific reasons for the decision;


(b)	Specific references to the pertinent Plan provisions upon which the decision was based;


(c)	A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records or other information relevant (within the meaning of Department of Labor Regulation Section 2560.503-1(m)(8)) to the Claimant’s claim;


(d)	A statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following a wholly or partially denied claim for benefits; and


(e)	Such other matters as the Committee deems relevant.


10.5	Form of Notice and Decision . Any notice or decision by the Committee under this Article 10 may be furnished electronically in accordance with Department of Labor Regulation Section 2520.104b-(1)(c)(i), (iii) and (iv).

Exhibit 10.7

10.6

Legal Action . Any final decision by the Committee shall be binding on all parties. A Claimant’s compliance with the foregoing provisions of this Article 10 is a mandatory prerequisite to a Claimant’s right to commence any legal action with respect to any claim for benefits under this Plan. Any such legal action must be initiated no later than 180 days after the Committee renders its final decision. If a final determination of the Committee is challenged in court, such determination shall not be subject to de novo review and shall not be overturned unless proven to be arbitrary and capricious based on the evidence considered by the Committee at the time of such determination.

ARTICLE 11
TRUST


11.1	Establishment of the Trust . The Company may establish a Trust and, if established, each Employer shall contribute such amounts to the Trust from time to time as it deems desirable.

11.2


11.3	Distributions From the Trust . Each Employer’s obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution shall reduce the Employer’s obligations under this Plan.

ARTICLE 12
MISCELLANEOUS

12.1

12.2

Unsecured General Creditor . Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of an Employer, Company or of any other person and nothing in the Plan shall be construed to give any employee or any other person such rights. The Plan constitutes a mere promise by the Company or Employer to make payments in accordance with the terms of the Plan and Participants and Beneficiaries shall have the status of general unsecured creditors solely of the Employer employing the Participant.


12.3	Employer’s Liability . The liability of an Employer for the payment of benefits shall be defined only by the Plan and any Election Forms, as entered into between the Employer and a Participant. An Employer shall have no obligation to a Participant under the Plan except as expressly provided in the Plan.

Exhibit 10.7

12.4

Nonassignability . Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable to the maximum extent allowed by law. No part of the amounts payable shall, before actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor shall any part of the same, to the maximum extent allowed by law, be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency or, except as provided in Section 5.7(b), be transferable to a spouse as a result of a property settlement or otherwise.

12.5


12.6	Furnishing Information . A Participant or Beneficiary shall cooperate with the Committee by furnishing any and all information requested by the Committee and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of benefits hereunder.

12.7

12.8

Incompetent . If the Committee determines in its discretion that a benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling disposition of that person's property, the Committee may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person. The Committee may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the Account of the Participant and the Participant's Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such payment amount.


12.9	Governing Law and Severability . To the extent not preempted by ERISA, the provisions of this Plan shall be construed, administered and interpreted according to the

Exhibit 10.7

internal laws of the State of Wisconsin without regard to its conflicts of laws principles. If any provision is held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective.

12.10

Notices and Communications . All notices, statements, reports and other communications from the Committee to any employee, Participant, Beneficiary or other person required or permitted under the Plan shall be deemed to have been duly given when personally delivered to, when transmitted via facsimile or other electronic media or when mailed overnight or by first-class mail, postage prepaid and addressed to, such employee, Participant, Beneficiary or other person at the last known address on the Employer’s or Company’s records. All elections, designations, requests, notices, instructions and other communications from a Participant, Beneficiary or other person to the Committee required or permitted under the Plan shall be in such form as is prescribed from time to time by the Committee, and shall be mailed by first-class mail, transmitted via facsimile or other electronic media or delivered to such location as shall be specified by the Committee. Such communication shall be deemed to have been given and delivered only upon actual receipt by the Committee at such location.


12.11	Successors . The provisions of this Plan shall bind and inure to the benefit of the Participant’s Employer and its successors and assigns and the Participant and the Participant’s designated Beneficiaries.

12.12

12.13

Exhibit 10.7

counsel) to represent such Participant in connection with the initiation or defense of any litigation or other legal action, whether by or against the Employer or any director, officer, shareholder or other person affiliated with the Employer or any successor thereto in any jurisdiction. If paid by the Participant, the Employer shall reimburse such legal fees no later than December 31 ^st of the year following the year in which the expense was incurred.


12.14	Terms . Whenever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.


12.15	Headings . Headings and subheadings in the Plan are inserted for convenience only and shall not control or affect the meaning or construction of any of its provisions.

31987534v4

Exhibit 10.19

WEC ENERGY GROUP

OMNIBUS STOCK INCENTIVE PLAN

Amended and Restated Effective as of January 1, 2016

Exhibit 10.19

WEC ENERGY GROUP

OMNIBUS STOCK INCENTIVE PLAN

Table of Contents



		Page
1.	Purpose	1
2.	Administration	1
3.	Eligibility	2
4.	Benefits	2
5.	Shares Reserved	2
6.	Stock Options	3
7.	Stock Appreciation Rights	3
8.	Stock Awards	4
9.	Performance Units	4
10.	Restricted Stock Units	5
11.	Dividend Equivalents	5
12.	Performance Goals; Compliance with Code Section 162(m)	5
13.	Non-transferability	7
14.	Change in Control	7
15.	Award Agreements; Other Provisions	8
16.	Settlement of Benefits; Compliance with Section 409A	8
17.	Fair Market Value	11
18.	Adjustment Provisions	11
19.	Taxes	12
20.	Term of Program; Amendment, Modification or Cancellation of Benefits	12
21.	Amendment or Termination of Plan	12

33100521

Exhibit 10.19



22.	Shareholder Approval	12
23.	Clawback	13

33100521

Exhibit 10.19

WEC ENERGY GROUP

OMNIBUS STOCK INCENTIVE PLAN

1. Purpose. The Plan was established effective December 15, 1993 and is known as the "WEC Energy Group Omnibus Stock Incentive Plan." Prior to January 1, 2016, the Plan was known as the Wisconsin Energy Corporation Omnibus Stock Incentive Plan. The Plan is maintained by WEC Energy Group, Inc. (the "Company") (Prior to June 29, 2015, the Company was known as Wisconsin Energy Corporation). The purpose of the Plan is to enable the Company to offer directors, officers and key employees of the Company and its subsidiaries performance-based incentives and other equity interests in the Company, thereby attracting, retaining and rewarding such individuals and strengthening the mutuality of interest between such individuals and the Company's shareholders. The Plan was amended effective as of January 1, 2008 (the "2008 Restatement") and most recently amended effective May 5, 2011 (the "2011 Restatement") to increase the number of shares of common stock available for benefits, and make other changes in the administration of the Plan. The Plan is hereby amended and restated effective January 1, 2016, to reflect the change to the name of the Company and update the history of the Plan.

2. Administration. The Plan shall be administered by a committee (the "Committee") which shall be the Compensation Committee of the Board of Directors or another committee consisting of not less than two directors of the Company appointed by the Board of Directors who are not employees. It is intended that the Committee members shall, at all times, qualify as "non-employee" directors within the meaning of Securities and Exchange Commission Regulation Section 240.16b-3 and as "outside directors" within the meaning of Section 162(m) of the Internal Revenue Code, as amended (the "Code"). However, the failure to so qualify shall not affect the validity of any actions taken by the Committee in accordance with the provisions of the Plan. If for any reason the Committee does not qualify to administer the Plan, the Board of Directors may appoint a new Committee so as to comply. If, at any time, one or more members of the Committee is not an "outside director" within the meaning of Section 162(m) of the Code, then all determinations made pursuant to paragraph 12 with respect to a benefit that is intended to qualify for the performance-based exception to Section 162(m) shall be made by a subcommittee of the Committee consisting of all members who are outside directors, and such subcommittee shall constitute the Committee for all purposes hereof. The Committee shall have full authority to select the persons to whom benefits are granted, to determine the terms and conditions of all benefits and of award agreements, to approve any modifications to the terms and conditions of any outstanding benefit, to make all adjustments and determinations provided for in the Plan, and to interpret and construe all terms of the Plan and of any award agreement. All determinations made by the Committee in the administration of the Plan and the benefits granted hereunder shall be final, conclusive and binding on all parties. The Committee may specify the number of benefits to be granted to a group of key employees (other than officers subject to Section 16 of the Exchange Act), and the terms and conditions of such benefits, and delegate to the Chief Executive Officer, or any other officer of the Company, the authority to determine how such benefits shall be allocated among the key employees, and any benefit so granted to a key employee shall be considered to have been approved by the Committee for all purposes of the Plan.

33100521

Exhibit 10.19

3. Eligibility. Benefits under the Plan shall be granted only to directors, officers and key employees of the Company and its subsidiaries selected initially and from time-to-time thereafter by the Committee on the basis of the special importance of their services in the management, development and operations of the Company and its subsidiaries.

4. Benefits. The benefits awarded under the Plan shall consist of (a) stock options, (b) stock appreciation rights, (c) stock awards, (d) performance units, (e) restricted stock units, and (f) dividend equivalents, as the Committee, in its discretion, determines.

5. Shares Reserved .

(a) Subject to adjustment pursuant to paragraph 18, there is hereby reserved for issuance under the Plan an aggregate of 16,500,000 shares of common stock of the Company, plus the number of shares authorized for issuance under the 2008 Restatement that either are not reserved for issuance pursuant to benefits outstanding on the date on which this amendment and restatement of the Plan is approved by the shareholders pursuant to paragraph 22, or are reserved for issuance pursuant to a benefit that subsequently lapses, expires, terminates or is cancelled or are subsequently reacquired as described below. Shares reserved for issuance may be authorized but unissued, treasury, or repurchased shares.

(b) The number of shares available for issuance shall be reduced by (i) the number of shares subject to each option or stand-alone stock appreciation right (defined in paragraph 7) granted, and by (ii) 4.23 multiplied by the number of shares issued under all other awards except options and stock appreciation rights, or the number reserved for issuance pursuant to a grant of restricted stock units or performance units (other than benefits made pursuant to the 2008 Restatement).

(c) If there is a lapse, expiration, termination or cancellation of any benefit prior to the issuance of shares thereunder or if shares are issued and thereafter are reacquired by the Company pursuant to rights reserved upon issuance thereof, those shares may again be used for new benefits under this Plan; provided that, in the case of a lapse, expiration, termination or cancellation of a stock award, or award of restricted stock units, not made pursuant to the 2008 Restatement, the number of shares that may be used for new benefits shall be the same number by which the number of available shares was reduced when the benefit was granted taking into account the 4.23 multiplier. In addition, shares that are not issued or are reacquired because the Committee elects to settle a benefit in cash, or a number of shares of stock are used to pay the exercise price or tax withholding obligation on a benefit, shall not again be available for new benefits.

(d) No participant may receive benefits in any calendar year during the term of the Plan in excess of the limits set forth below (each of which limits shall be applied separately).

(i) In the case of options and stand-alone stock appreciation rights, benefits covering a maximum of 750,000 shares; and

33100521

Exhibit 10.19

(ii) In the case of stock awards, performance units and restricted stock units, 750,000 shares (determined prior to application of the 4.23 multiplier).

In the case of a performance-based award that provides for a target number of shares and also provides that a larger number of shares (not exceeding twice the target) may be granted if the performance criteria are exceeded, the limits set forth above shall be based on the target award, provided that for purposes of paragraph 5(b), the number of shares available for issuance shall be reduced by the number of shares actually issued.

6. Stock Options. Stock options shall consist of options to purchase shares of common stock of the Company and shall be either incentive stock options or non‑qualified stock options as determined by the Committee and as specified in the applicable award agreement. If the award agreement does not specify, the stock option shall be considered non-qualified. The option price shall be not less than 100% of the fair market value of the shares on the date the stock option is granted (or 110% of fair market value in the case of an incentive stock option granted to a 10% shareholder as defined in Section 422(b)(6) of the Code) and the price may be paid by check or, in the discretion of the Committee, by means of tendering, either directly or by attestation, shares of common stock of the Company then owned by the participant, by reducing the number of shares delivered upon exercise of the stock option, by broker‑assisted cashless exercise, or by any combination of the foregoing methods or any other method consistent with applicable law that the Committee, in its sole discretion, approves. Stock options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at grant and set forth in the award agreement; provided, however, that except as otherwise provided in paragraph 14 or 18, no stock option shall be exercisable prior to six months after the stock option grant date nor later than ten years (or five years in the case of an incentive stock option granted to a 10% shareholder) after the grant date. The aggregate fair market value (determined as of the time the stock option is granted) of the shares of common stock with respect to which incentive stock options are exercisable for the first time by a participant during any calendar year (under all option plans of the Company and its subsidiaries) shall not exceed $100,000. If, as a result of any accelerated vesting pursuant to an award agreement or as otherwise provided by the Committee, the number of shares with respect to which incentive stock options become exercisable during a year exceeds such limit, the stock options shall constitute incentive stock options to the extent of such limit in the order granted, and the excess shall be considered non-qualified options.

7. Stock Appreciation Rights. Stock appreciation rights may be granted either to the holder of any stock option granted hereunder (a "tandem stock appreciation right") or to a participant separate from any stock options granted to such participant (a "stand-alone stock appreciation right") and shall be subject to such terms and conditions consistent with the Plan as the Committee shall impose from time to time, including the following:

(a) A tandem stock appreciation right may be granted with respect to a stock option at the time of its grant or at any time thereafter up to six months prior to the stock options expiration. Tandem stock appreciation rights will permit the holder to surrender any related stock option or portion thereof which is then exercisable and elect to receive in exchange therefor cash in an amount equal to:

33100521

Exhibit 10.19

(i) The excess of the fair market value on the date of such election of one share of common stock over the option price, multiplied by

(ii) The number of shares covered by such option or portion thereof which is so surrendered.

(b) Stand-alone stock appreciation rights shall be granted pursuant to an award agreement that shall specify the exercise price (which shall not be less than the fair market value of a share of stock on the grant date), and shall also specify the time or times at which the stock appreciation right can be exercised, subject to such additional terms and conditions to exercise as shall be determined by the Committee at grant; provided, however, that except as otherwise provided in paragraph 14 or 18, no stand‑alone stock appreciation right shall be exercisable prior to six months after the grant date nor later than ten years after the grant date. Upon exercise of all or a portion of a stand-alone stock appreciation right, the holder will be entitled to receive cash in an amount equal to:

(i) The excess of the fair market value on the date of such election of one share of common stock over the exercise price, multiplied by

(ii) The number of shares covered by such stock appreciation right or portion thereof which is so exercised.

(c) The Committee shall have the discretion to satisfy a participant's right to receive the amount of cash determined under paragraph (a) or (b) hereof in whole or in part by the delivery of common stock of the Company valued as of the date of the participant's election.

8. Stock Awards. Stock awards will consist of common stock transferred to participants without other payment therefor as additional compensation for their services to the Company or one of its subsidiaries. A stock award shall be subject to such terms and conditions as the Committee determines appropriate including, without limitation, restrictions on the sale or other disposition of such shares, the right of the Company to reacquire such shares without payment of consideration upon termination of the participant's employment within specified periods and conditions requiring that the shares be earned in whole or in part upon the achievement of performance goals established by the Committee over a designated period of time.

9. Performance Units. Performance units shall consist of monetary units granted to participants which may be earned in whole or in part if the Company achieves certain performance goals established by the Committee over a designated period of time. Each performance unit shall represent the conditional right of a participant to receive a payment equal to fair market value of a share of common stock on the settlement date, subject to satisfaction of such conditions as the Committee shall specify.

10. Restricted Stock Units. Restricted stock units shall consist of the grant to a participant of the right to receive upon the satisfaction of the conditions specified by the Committee, a specified number of shares of common stock without other payment therefor as additional compensation for the participants' services to the Company or one of its subsidiaries. A

33100521

Exhibit 10.19

restricted stock unit award shall be subject to such terms and conditions as the Committee determines appropriate that must be satisfied prior to the transfer of the stock including, without limitation, continued employment through specified dates or the achievement of performance goals established by the Committee.

11. Dividend Equivalents. Dividend equivalents shall consist of the award to a participant, in connection with the award of a stock option, stand-alone stock appreciation right, performance unit or restricted stock unit, of a cash payment equal to all or a portion of the dividends that the participant would have received had the participant owned the number of shares of stock subject to the benefit on the record date for dividends paid by the Company. Dividends equivalents may be granted either at the same time the underlying benefit is granted, or at any time while the benefit is outstanding, and shall be subject to such terms and conditions as the Committee determines appropriate that must be satisfied prior to the transfer of the stock including, without limitation, continued employment through specified dates or the achievement of performance goals established by the Committee; provided, however, that if the underlying benefit is conditioned upon the achievement of performance goals, receipt of the dividend equivalent payments shall be conditioned at least upon achievement of a performance goal (which need not be the same goal), plus any additional conditions that the Committee deems appropriate. Dividend equivalent payments shall be paid at the times specified in the award agreement, which may be the record date for payment of the dividend, the date on which the underlying benefit either vests or is settled, or such other time or times as the Committee determines provided that the time of payment satisfies the requirements of Code Section 409A and the regulations thereunder. Notwithstanding the foregoing, payment of dividend equivalents granted with respect to a stock option or stand-alone stock appreciation right shall in no event be conditioned upon the participant's exercise of the underlying option or stock appreciation right.

12. Performance Goals; Compliance with Code Section 162(m). Vesting or settlement of any benefit may be conditioned upon the achievement of such performance goals as the Committee determines, which may include, without limitation any one or more of the following:

(i) Earnings per share

(ii) Net earnings;

(iii) Operating earnings;

(iv) Return measures on shareholder equity, including total shareholder return;

(v) Return on assets;

(vi) Cash flow;

(vii) Pre-tax earnings;

(viii) Sales;

(ix) Operating margin;

33100521

Exhibit 10.19

(x) Pre-tax margins;

(xi) Pre-tax or after-tax return on invested capital;

(xii) Pre-tax or after-tax return on equity;

(xiii) Gross profit margin; or

(xiv) Stock price.

Each performance goal may be expressed on an absolute and/or relative basis and may be expressed in terms of growth in or maintenance of a specified performance goal, and may be based on or otherwise employ comparisons based on internal targets, the past performance of the Company or any business unit thereof, and/or the past or current performance of other companies. The award agreement shall define the applicable performance goal, which definition may provide for adjustments and may include or exclude items, including but not limited to: realized investment gains and losses; other comprehensive income and accumulated other comprehensive income; extraordinary, unusual or infrequent items; effects of accounting changes, currency fluctuations, acquisitions, divestitures, or financing activities; expenses for restructuring or productivity initiatives and other non-operating items; provided, however, that except as otherwise provided by the Committee, the meaning of any term used in a performance goal that has an established definition under generally accepted accounting principles or generally accepted auditing standards shall have such meaning.

In the case of a benefit (other than a stock option or stand-alone stock appreciation right) that is intended to satisfy the requirements for the exception to the limitation on deductibility under Section 162(m) of the Code for performance-based compensation, the following shall apply:

(a) the performance goal shall be based solely upon one or more of the criteria listed above and shall be established by the Committee not later than the 90th day of the performance period (or within the first 25% of a performance period of less than one year);

(b) that any adjustments to the performance goals for the benefit which is designed to qualify for the performance-based exception to Section 162(m) shall be provided for in the terms of the original award agreement and based upon objectively determinable items so that a third party with knowledge of the relevant performance results could calculate the amount of the benefit to be paid to the participant;

(c) no amount shall be paid pursuant to a benefit intended to qualify for the performance-based exception until the Committee has certified the extent to which the applicable performance goal has been satisfied; and

(d) the Committee shall have no authority to increase the amount of any such benefit.

For purposes of the preceding paragraph, any benefit that is based solely upon one or more of the foregoing performance goals shall be presumed to be intended to qualify for the performance‑based exception unless otherwise provided in the award agreement. Nothing

33100521

Exhibit 10.19

contained herein shall be construed to prevent the Committee from granting any benefit that does not satisfy the performance-based exception to any participant, regardless of whether such Participant is or may become subject to Section 162(m) of the Code. No benefits may be granted that are intended to qualify for the performance-based exception (other than options and stock appreciation rights) after the fifth annual shareholder meeting that occurs after the meeting at which this restatement of the Plan is approved pursuant to paragraph 22 unless, prior to such date, the provisions of this paragraph 12 are again approved by the shareholders.

13. Non-transferability. Incentive stock options, nonqualified stock options and other benefits granted under this Plan shall not be transferable for value or consideration other than by will or the laws of descent and distribution and each stock option and stock appreciation right shall be exercisable during the participant's lifetime only by the participant or the participant's guardian or legal representative.

14. Change in Control. In the event of a change in control of the Company, all outstanding stock options and stock appreciation rights shall become immediately exercisable and all other benefits shall immediately vest with all performance goals deemed fully achieved. For these purposes, a "change in control" shall be deemed to have occurred if the event set forth in any one of the following subparagraphs shall have occurred:

(a) 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 (i) of paragraph (c) below; or

(b) 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 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

(c) 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 (i) 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 (ii) 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

33100521

Exhibit 10.19

affiliates) representing 20% or more of the combined voting power of the Company's then outstanding securities; or

(d) 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.

For purposes of this "change of control" definition, the following terms shall have the meaning set forth below:

"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 the stock of the Company.

15. Award Agreements; Other Provisions. The terms and conditions of any benefit shall be set forth in an award agreement, which may also include such other provisions (whether or not applicable to the benefit awarded to any other participant) as the Committee determines appropriate, including such provisions as may be required to comply with federal or state securities laws and stock exchange requirements and understandings or conditions as to the participant's employment.

16. Settlement of Benefits; Compliance with Section 409A .

(a) All benefits shall be settled by the transfer of cash or stock, as the Committee determines, regardless of the method set forth in the award agreement, upon exercise or at such other time or times as set forth in the award agreement. Anything else contained in this Plan or an award agreement to the contrary notwithstanding, the Committee may settle any benefit by the transfer either of cash, of shares of common stock with an equivalent fair market value, or a combination of cash and stock, and the manner of settlement shall not affect the original characterization of the benefit, except that a transfer of stock in settlement of performance units or dividend equivalents originally designated to be settled in cash shall reduce the number of shares of stock available for issuance under the Plan.

33100521

Exhibit 10.19

(b) It is the Company's intent that any benefits granted under this Plan be structured to be exempt from Section 409A of the Code, including all Treasury Regulations and other guidance issuance pursuant thereto or to comply with the requirements of deferred compensation subject to Section 409A. To the extent any benefit under this Plan constitutes deferred compensation as defined in Section 409A (a "409A award"), the rules of this paragraph 16 shall apply to the extent required by Section 409A, notwithstanding any provision of the Plan or any award agreement to the contrary. For purposes of this paragraph 16, a benefit shall constitute a 409A award only if and to the extent either

(i) it is a benefit (other than a stock option, stand-alone stock appreciation right, or stock award) that is not subject to a substantial risk of forfeiture as defined in Section 409A (by reason of the participant having attained eligibility for retirement under an award agreement or employment agreement, having a definition of resignation for good reason in an employment agreement that is inconsistent with Section 409A, or otherwise), and the settlement of such benefit by the taxable payment of cash, stock or other property to the participant either actually occurs after the later of March 15 of the calendar year following the year in which the benefit ceases to be subject to a substantial risk of forfeiture (the "409A required payment date"), or the terms of the Plan or the benefit provide for the benefit to be settled after such date, or upon or after the occurrence of any event, that will or may occur later than the 409A required payment date; or

(ii) the Committee determines in good faith that the benefit is a 409A award.

(c) If any amount becomes payable under any 409A award by reason of a participant's termination of employment, and such participant incurs a termination of employment as defined by the Plan or the benefit that is not a "separation from service," as defined by Section 409A, then the participant's right to such payment, to the extent not already vested, shall be fully vested on the date of the termination of employment, but payment shall be deferred until the earliest of (i) the date the participant incurs a separation from service (or six months thereafter to the extent required by paragraph 16(e), (ii) the date that a "change in control event" with respect to the participant occurs as defined in Section 409A, (iii) the participant's death, and (iv) if the terms of the benefit provide for payment upon a specific vesting date, such vesting date. In such case, the Plan and benefit shall be construed as if "termination of employment" meant "separation from service." The Committee shall not exercise its discretion under the Plan in a manner inconsistent with the foregoing provisions.

(d) If any amount becomes payable under any 409A award by reason of a Change in Control, and a Change in Control occurs as defined by the Plan or the award agreement that is not a "change in control event" with respect to such participant, as defined by Section 409A, then the participant's right to such payment, to the extent not already vested, shall be fully vested on the date of the Change in Control, and the amount of such payment shall be determined as of such date, but payment shall be deferred until the earliest of (i) the date on which a change in control event occurs with respect to the participant, (ii) the date on which the participant incurs a separation from service (or six months thereafter to the extent required by paragraph 16(e), (iii) the participant's

33100521

Exhibit 10.19

death, and (iv) if the terms of the benefit provide for payment upon a specific vesting date, such vesting date.

(e) No amount that becomes payable under any 409A award by reason of a participant's separation from service will be made to a participant who is a "specified employee" (as defined by Section 409A) until the earlier of: (i) the first day following the sixth month anniversary of the participant's separation from service, or (ii) the participant's date of death.

(f) To the extent that payment of any amount is required to be deferred to a specific date (the "409A deferral date") by reason of Section 409A, all amounts that would otherwise have been paid prior to the 409A deferral date shall be paid in a single lump sum on the first business day following the 409A deferral date, and the Committee may, in its sole discretion (but shall in no event be required to) permit an earlier payment to a participant to the extent necessary to alleviate a "severe financial hardship" resulting from an "unforeseeable emergency", as defined in Section 409A.

(g) For purposes of Section 409A, each "payment" (as defined by Section 409A) made under this Plan with respect to a 409A award shall be considered a "separate payment" for purposes of Section 409A.

(h) Any payment with respect to a 409A award that becomes payable upon a specified vesting date, as defined in the Plan or benefit, shall be paid as soon as practical after such vesting date, but not later than the last day of the calendar year in which the vesting date occurs (or, if later, the fifteenth day of the third month after the month that includes the vesting date).

(i) No participant shall have any right to defer the amount received upon exercise of a stock option or stock appreciation right. To the extent a participant is entitled to elect to defer the amount received upon settlement of any other benefit to a non-qualified deferred compensation plan maintained by the Company, such deferral shall be elected and administered in accordance with Section 409A, and the right to defer shall be disregarded for purposes of applying the short‑term deferral rules to payments made under benefits granted hereunder, as provided under in Treasury Regulation Section 1.409A-1(b)(4).

(j) The Committee shall use commercially reasonable efforts to administer this Plan and each benefit in a manner that is consistent with Section 409A. Notwithstanding the foregoing, if any benefit granted under this Plan would fail to meet the requirements of Section 409A with respect to such benefit, then such benefit shall remain in effect and be subject to taxation in accordance with Section 409A. Neither the Company nor any member of the Committee shall have any liability for any tax imposed on a participant by Section 409A, and if any tax is imposed on the participant, the participant shall have no recourse against the Company or any member of the Committee for payment of any such tax.

33100521

Exhibit 10.19

17. Fair Market Value. The fair market value of the Company's common stock at any time shall be determined on the basis of the trading price of the stock in such manner as the Committee may deem equitable or as required by applicable law or regulation which shall include regulations regarding the determination of fair market value promulgated under Code Section 409A.

18. Adjustment Provisions .

(a) If the Company shall at any time take any action that changes, or could change, the number of issued shares of common stock or the value of the outstanding stock (including, without limitation, by reason of a stock dividend, recapitalization, reclassification, issuance of Stock, issuance of rights to purchase Stock, extraordinary cash dividend, issuance of securities convertible into or exchangeable for Stock, merger, consolidation, stock split, reverse stock split, spin-off, combination, exchange or conversion of shares, or any other similar type of event), the Committee shall make such adjustments to the number of shares available for issuance of benefits, and to the terms of outstanding benefits, as it may in its sole discretion determine to be appropriate and equitable to prevent any increase or decrease in the value of benefits, including without limitation changes in the (i) number and kind of shares of stock or other property (including cash) that may thereafter be issued in settlement of a benefit, including outstanding benefits, (ii) exercise price, grant price, or purchase price relating to any benefit; provided that, with respect to stock options or stock appreciation rights, such adjustment shall be made in accordance with Section 424(h) of the Code, as revised in accordance with Section 409A of the Code; (iii) performance goals, and (iv) individual limitations applicable to benefits.

(b) Notwithstanding any other provision of this Plan, and without affecting the number of shares reserved or available hereunder, the Board of Directors may authorize the issuance or assumption of benefits in connection with any merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate.

(c) In the event of any merger, consolidation or reorganization of the Company with any other corporation, if the Company will not be the surviving entity, the Committee may either provide for there to be substituted, on an equitable basis as determined by the Committee, for each share of common stock then reserved for issuance under the Plan and for each share of common stock then subject to a benefit granted under the Plan, the number and kind of shares of stock, other securities, cash or other property to which holders of common stock of the Company will be entitled pursuant to the transaction; or may provide for each outstanding benefit to be fully vested and for there to be paid to the holder thereof the value in cash of the benefit as established by the terms of such transaction in full settlement of the participant's rights under the benefit; provided that, in the case of a stock option or stand-alone stock appreciation right, the amount paid shall be equal to the fair market value, as so determined of the value of the stock subject to the benefit over the exercise price of the benefit, and if the fair market value does not exceed the exercise price the stock option or stock appreciation right may be cancelled without payment of additional compensation.

33100521

Exhibit 10.19

19. Taxes. The Company shall be entitled to withhold the amount of any tax attributable to any shares deliverable under the Plan after giving the person entitled to receive the shares notice as far in advance as practicable and the Company may defer making delivery as to any benefit if any such tax is payable until indemnified to its satisfaction. The Committee may, in its discretion and subject to rules which it may adopt, permit a participant to pay all or a portion of the taxes arising in connection with any benefit under the Plan by electing to have the Company withhold shares of common stock from the shares otherwise deliverable to the participant, having a fair market value equal to the amount to be withheld.

20. Term of Program; Amendment, Modification or Cancellation of Benefits. No benefit shall be granted more than ten years after May 5, 2011, the date of the approval of the amendments to this Plan by the shareholders of the Company. The terms and conditions applicable to any benefits granted prior to such date may at any time be amended, modified or canceled by the Committee, or the Committee may waive any conditions to the vesting or settlement of any such benefits; provided that, except as otherwise provided in this Plan or an award agreement, or as the Committee determines to be necessary to satisfy any applicable law (including Section 409A of the Code), the Committee shall not cancel any outstanding benefit, or amend or modify any outstanding benefit, in a manner that is materially adverse to the participant to whom such benefit was granted without the prior written consent of the participant. However, the Company will not reduce the exercise price of outstanding options or cancel outstanding options and grant replacement options having a lower exercise price without the approval of the Company's shareholders. Adjustments pursuant to paragraph 18 shall not be subject to the foregoing limits of this paragraph 20.

21. Amendment or Termination of Plan. The Board of Directors may, at any time, amend or terminate the Plan, provided that (i) no such action may adversely affect any outstanding benefit previously awarded, in the absence of written consent by the participant, except for amendments that the Board of Directors determines to be necessary to satisfy any applicable law (including Section 409A of the Code), and (ii) adjustments pursuant to paragraph 18 shall not be subject to the foregoing limit of this paragraph 21. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding awards may not be amended to reduce the exercise price of outstanding options or stock appreciation rights or cancel outstanding options or stock appreciation rights in exchange for cash, other awards or options or stock appreciation rights with an exercise price that is less than the exercise price of the original options or stock appreciation rights without stockholder approval.

22. Shareholder Approval. The 2011 Restatement was adopted by the Board of Directors on January 20, 2011, subject to shareholder approval at the annual meeting to be held in 2011. Shareholder approval of the 2011 Restatement was obtained on May 5, 2011. This amendment and restatement of the Plan reflects the change to the name of the Company and updates the history of the Plan. Shareholder approval was not required for these immaterial changes to the Plan. Shareholder approval of amendments to the Plan shall be obtained if required pursuant to securities laws or exchange requirements on which the Company's stock is listed.

33100521

Exhibit 10.19

23. Clawback. As determined appropriate by the Committee, any benefit awarded under the Plan to an officer subject to Section 16 of the Exchange Act may include provisions requiring its forfeiture (regardless of whether or not the benefit is otherwise vested) and/or recoupment by any method determined appropriate by the Committee, including but not limited to offset against other benefits under the Plan, if such benefit or any portion thereof is determined to be an Excess Award. For purposes of this section, an 'Excess Award' shall mean all or any portion of a benefit granted under the Plan that the Committee determines, in its sole discretion, either (A) was granted, vested and/or settled based on the financial results that were subsequently restated in any material respect due to conduct by the participant that the independent directors of the Board of Directors or a committee of such board determine, in their sole discretion, was knowing, intentionally fraudulent or illegal, (B) the value of such benefit was affected by the financial results that were subsequently restated in any material respect as provided in (A), or a forfeiture or recoupment is otherwise required by any provision of applicable law or exchange listing requirements.

33100521

Exhibit 10.24

WEC ENERGY GROUP, INC.

TERMS and CONDITIONS GOVERNING

DIRECTOR RESTRICTED STOCK AWARD

EFFECTIVE JAN. 2016

WHEREAS , the Company believes it to be in the best interests of the Company, its subsidiaries and its stockholders for its directors to increase their stock ownership in the Company in order that they will thus have a greater incentive to direct the Company’s affairs in such a way that its shares may become more valuable; and

WHEREAS , the Director serves the Company or one of its subsidiaries as director (“Covered Service”);

NOW, THEREFORE , in consideration of these premises and the services to be performed by the Director, the Company grants this restricted stock award to the Director on the following terms and conditions.


1.	DEFINED TERMS

All capitalized terms used in this award and not otherwise defined herein are defined in the Plan.


2.	RESTRICTED STOCK GRANT

The Company grants to the Director a restricted stock award for the number shares of common stock of the Company (the “Common Stock”) specified in the notice of grant.


3.	VESTING OF GRANT

The restricted stock shall become vested upon the first to occur, if any, of the following events:


(a)	The Director’s completion of three year(s) of Covered Service following the date of grant.


(b)	The Director’s Covered Service ceases because of death or disability (which shall mean such illness or injury as renders the Director unable to perform Covered Service).


(b)	A Change of Control of the Company, as defined in paragraph 14 of the Plan, while the Director is in Covered Service.

The period of time during which the shares covered by this restricted stock award are forfeitable is referred to as the “Restricted Period.” If the Director’s Covered Service terminates during the Restricted Period before the shares have vested in accordance with the provisions of this award, such restricted stock shall be forfeited to the Company on the date of such termination, without any further obligation of the Company to the Director and all rights of the Director with respect to such restricted stock shall terminate; provided that the Committee may, in its discretion, vest the restricted stock upon the Director’s termination of Covered Service.

Exhibit 10.24

WEC ENERGY GROUP, INC.

TERMS and CONDITIONS GOVERNING

DIRECTOR RESTRICTED STOCK AWARD

EFFECTIVE JAN. 2016


4.	RIGHTS DURING RESTRICTED PERIOD; NON-TRANSFERABILITY

During the Restricted Period, the Director shall have the right to vote the restricted stock; however, all cash dividends, stock dividends, stock rights or other securities issued with respect to the restricted stock (collectively, the “Proceeds”) shall be forfeitable and subject to the same restrictions as exist regarding the original shares of restricted stock. All cash dividends paid during the Restricted Period will be used to acquire additional restricted shares. The restricted stock shall be nontransferable during the Restricted Period, except by will or the laws of descent and distribution.


5.	CUSTODY

The restricted stock, along with any Proceeds, may be credited to Director in book entry form and shall be held, by the Company or an agent for the Company until the applicable restrictions have expired. If any certificates are issued for shares of restricted stock during the Restricted Period, such certificates shall bear an appropriate legend as determined by the Company referring to the applicable terms, conditions and restrictions and the Director shall deliver a signed, blank stock power to the Company relating thereto.


6.	PLAN GOVERNS

Notwithstanding anything in this award, the terms of this award shall be subject to the terms of the Plan, a copy of which may be obtained by the Director from the Secretary of the Company, and this award is subject to all interpretations, amendments, rules and regulations established by the Committee from time to time pursuant to the Plan.

Exhibit 10.27

WEC ENERGY GROUP, INC.

RESTRICTED STOCK AWARD
TERMS AND CONDITIONS

2016


1.	AWARD

Subject to the terms, conditions and restrictions provided in the Notice of Restricted Stock Award (the “Notice”), this Stock Award and the Plan, WEC Energy Group, Inc. (f/k/a/ Wisconsin Energy Corporation) (the “Company”) grants to the Employee a restricted stock award pursuant to the Wisconsin Energy Corporation Omnibus Stock Incentive Plan as amended and restated effective as of May 5, 2011 (the “Plan”). The Stock Award covers a number of shares of the common stock of the Company, as set forth in the Notice, effective as of the date set forth in the Notice (the “Award Date”). The shares granted under the Stock Award shall be referred to as “Restricted Stock.”


2.	RESTRICTED PERIOD; VESTING

(a)

Restricted Period. During the period beginning on the Award Date and ending on the day before the third anniversary of the Award Date (the “Restricted Period”), to the extent that all or any portion of the Stock Award is not vested, the Employee may not sell, transfer, pledge, assign, or otherwise alienate or hypothecate, voluntarily or involuntarily, shares covered by the non-vested portion of the Stock Award, except by will or the laws of descent and distribution. As the Stock Award vests in accordance with subsection 2(b), the vested portion of the Stock Award shall be free of the foregoing restrictions.


(b)	Vesting. As long as the Employee remains an employee of the Company or its subsidiaries, the Stock Award will vest over the Restricted Period in accordance with the following schedule:



Years of Service from the Award Date Less than 1 At least 1, but less than 2 At least 2, but less than 3 At least 3	% of Shares Becoming Vested (rounded to the nearest whole share) 0% 33.33% 33.33% 33.34%

For purposes of the foregoing, “Years of Service” shall commence as of the Award Date and mean years of service completed with the Company or a subsidiary. No termination of employment shall be deemed to have occurred by reason of a transfer of the Employee between the Company and a subsidiary or between two subsidiaries.


(c)	Notwithstanding subsection 2(b), the following provisions shall govern:

Exhibit 10.27

(i)

Termination due to Death or Disability; Occurrence of Change in Control. If, during the Restricted Period, (A) the Employee’s employment with the Company and its subsidiaries terminates by reason of the Employee’s disability or death or (B) a Change in Control (as defined in paragraph 14 of the Plan), any unvested portion of the Stock Award shall become fully vested with respect to all shares covered by the Stock Award and all transfer restrictions shall lapse. For purposes of the foregoing, “disability” shall mean separation from the service of the Company or a subsidiary because of such illness or injury as renders the Employee unable to perform the material duties of the Employee’s job.

(ii)

Other Termination. If the Employee’s employment terminates for any reason other than those described in paragraph (i) during the Restricted Period (excluding transfers as noted under subsection 2(b)), the Employee shall forfeit all shares covered by the unvested portion of the Stock Award (determined above in subsection 2(b)) as of the date of such termination, without any further obligation of the Company to the Employee and all rights of the Employee with respect to such Restricted Stock shall terminate. Notwithstanding the foregoing, the Compensation Committee may, in its discretion, vest shares upon the Employee’s termination from employment.


3.	RIGHTS DURING RESTRICTED PERIOD

The Employee, during the Restricted Period, shall have the right to vote the Restricted Stock and receive any dividends on the Restricted Stock. Any dividends declared on the Restricted Stock shall be paid to Employee through payroll. Such dividends shall not be subject to the vesting schedule or any other restrictions as exist regarding the original shares of Restricted Stock.


4.	CUSTODY

The Restricted Stock may be credited to the Employee in book entry form and shall be held in custody by the Company or an agent for the Company until the applicable restrictions have expired. If any certificates are issued for shares of Restricted Stock during the Restricted Period, such certificates shall bear an appropriate legend as determined by the Company referring to the applicable terms, conditions and restrictions and the Employee shall deliver a signed, blank stock power to the Company relating thereto.


5.	TAX WITHHOLDING

The Company shall be entitled to withhold the amount of any tax attributable to the Stock Award by withholding a portion of shares to defray all or a portion of any applicable taxes, withholding the required amounts from other compensation payable to the Employee, or by such other method determined by the Committee (including, but not limited to, requiring a cash payment by Employee to the Company), in its discretion.

Exhibit 10.27

6. IMPACT ON OTHER BENEFITS

The value of the Restricted Stock awarded hereunder, either on the Award Date or at the time such shares become vested, shall not be includable as compensation or earnings for purposes of any other benefit plan or program offered by the Company or its subsidiaries.


7.	REGISTRATION

(a)

Any shares issued pursuant to the Stock Award hereunder shall be shares that are listed for trading on a national securities exchange and registered under the Securities Act of 1933, as amended. The Company does not have an obligation to sell or issue shares that are not so registered. In the event that shares are not effectively registered, but can be issued by virtue of an exemption under the Securities Act of 1933, as amended, the Company may issue shares to the Employee if the Employee represents that such shares are being acquired as an investment and not with a view to, or for sale in connection with, the distribution of any such shares. Certificates for shares issued under the circumstances of the preceding sentence shall bear an appropriate legend reciting such representation.

(b)

In no event shall the Company be required to sell, issue or deliver shares pursuant to this Stock Award if, in the opinion of the Committee, the issuance thereof would constitute a violation by either the Employee or the Company of any provision of any law or regulation of any governmental authority or any securities exchange. As a condition of any sale or issuance of shares deliverable under the Stock Award, the Company may place legends on the shares, issue stop-transfer orders and require such agreements or undertakings from the Employee as the Company may deem necessary or advisable to assure compliance with any such law or regulation.


8.	PLAN GOVERNS

Notwithstanding anything in this Stock Award, the terms of this Stock Award shall be subject to the provisions of the Plan, a copy of which is available electronically through the website of the broker servicing the Plan or may otherwise be obtained from a member of the Executive Compensation & Benefits staff. This Award is subject to all interpretations, amendments, rules and regulations established by the Compensation Committee from time to time pursuant to the Plan. In the event of an express conflict between any term, provision or condition of this Stock Award and those of the Plan, the terms, provisions or conditions of the Plan shall control. Any term, condition or provision on which the Award is silent shall be governed and administered in accordance with the terms, conditions or provisions of the Plan.


9.	NO EMPLOYMENT RIGHTS

Nothing in this Stock Award shall confer upon the Employee the right to continue in the employ of the Company or any of its subsidiaries, or to interfere with or limit the right of the Company or of such subsidiary to terminate the Employee’s employment at any time.

Exhibit 10.27


10.	UNDERTAKING BY EMPLOYEE

The Employee hereby agrees to take whatever additional actions and execute whatever additional documents the Compensation Committee may, in its discretion, deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Employee pursuant to the express provisions of this Stock Award and the Plan.


11.	BINDING EFFECT

This Award shall be binding upon, and inure to the benefit of, the successors and assigns of the Company and upon persons who acquire the right to receive shares covered by the Stock Award hereunder by will or through the laws of descent and distribution.


12.	HEADINGS

Headings of the paragraphs contained in this Stock Award are inserted for convenience and reference and shall not be used in interpreting or construing the terms and provisions of the Award.


13.	ENTIRE AWARD; MODIFICATION

This Award and the Plan constitutes the entire agreement between the parties with respect to the terms and supersede all prior or written or oral negotiations, commitments, representations and agreements with respect thereto. The terms and conditions set forth in this Stock Award may only be modified or amended in a writing, signed by both parties.


14.	SEVERABILITY

In the event any one or more of the provisions of this Stock Award shall be held invalid, illegal or unenforceable in any respect in any jurisdiction, such provision or provisions shall be automatically deemed amended, but only to the extent necessary to render such provision or provisions valid, legal and enforceable in such jurisdiction, and the validity, legality and enforceability of the remaining provisions of this Stock Award shall not in any way be affected or impaired thereby.

* * *

Exhibit 10.29

WEC ENERGY GROUP, INC

NON-QUALIFIED STOCK OPTION AWARD

TERMS AND CONDITIONS

2016


1.	DEFINED TERMS

All capitalized terms used in this option and not otherwise defined herein are defined in the attached Appendix or in the Wisconsin Energy Corporation Omnibus Stock Incentive Plan as amended and restated effective as of May 5, 2011 (the “Plan”).


2.	OPTION GRANT

WEC Energy Group, Inc. (f/k/a/ Wisconsin Energy Corporation) (the “Company”) grants to the Employee an option to purchase shares of common stock of the Company (the “Common Stock”), the amount of which is specified in the notice of the grant, at an option price also specified in the notice. This option is not intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).


3.	VESTING OF OPTION

Except as otherwise provided herein, this option shall be exercisable only prior to the Expiration Date (as defined in paragraph 4), and then only as set forth in the following schedule:



Years from Date of Option Grant	% of Shares Exercisable
Less than 3 At least 3	0% 100%

Notwithstanding the foregoing, this option shall become immediately exercisable upon the occurrence of any of the following events (the “Special Vesting Events”):


(i)	the termination of the Employee’s employment with the Company or a subsidiary by reason of Retirement, Disability or death, or, if such termination of employment described herein occurs prior to the six month anniversary of the date of option grant, the six month anniversary of the date of option grant; or


(ii)	the occurrence of a Change in Control of the Company while the Employee is employed by the Company or a subsidiary.

Any unvested shares are immediately forfeited upon the Employee’s cessation of employment with the Company or a subsidiary prior to the occurrence of a Special Vesting Event. However, the Committee may, in its discretion, vest options upon separation.

33055223

Exhibit 10.29


4.	TERM OF OPTION

All rights to exercise this option shall terminate on the Expiration Date which is the earliest of the following dates:


(i)	three months after the Employee’s termination of employment with the Company or a subsidiary prior to the occurrence of a Special Vesting Event, or


(ii)	ten years from the date of grant .


5.	METHOD OF EXERCISE

This option may be exercised by appropriate notice in writing delivered to the Corporate Secretary of the Company, or by any other method approved by the Committee. The consideration to be paid for the shares to be issued upon exercise of the option, including the method of payment, shall be determined by the Committee. Such consideration may consist entirely of cash or check or combination thereof or broker-assisted cashless exercise or such other consideration or method of payment for the issuance of shares, in all cases to the extent permitted by applicable law.


6.	NON-TRANSFERABILITY; DEATH; DESIGNATED BENEFICIARY

This option is not transferable by the Employee otherwise than by will or the laws of descent and distribution, except for transfers to family members and family partnerships. This option is exercisable during the Employee’s lifetime only by the Employee.

If the Employee dies after termination of employment without any Special Vesting Event having occurred but during the option period and before the Expiration Date specified in paragraph 4 hereof, this option may be exercised, to the extent otherwise vested, in the manner described in paragraph 5 hereof, by the Employee’s “Designated Beneficiary” (defined below) or if none or if the Designated Beneficiary does not survive the Employee, by the Employee’s estate or the person to whom the option passes by will or the laws of descent and distribution, but only within a period of:


(a)	two years after the Employee’s death, or


(b)	ten years from the date of grant, whichever period is shorter.

To the extent that this option may be exercisable after the death of the Employee (whether before or after termination of employment), this option may be exercised by the “Designated Beneficiary” of the Employee. The “Designated Beneficiary” shall be the beneficiary or beneficiaries designated by the Employee in a writing filed with the Committee in such form and at such time as the Committee may require. In the absence of a living Designated Beneficiary, any rights or benefits that would have been exercisable by or distributable to the Employee shall be exercised by or distributed to the legal representative of Employee’s estate or the person to whom the option passes by will or by the laws of descent and distribution. If a Designated Beneficiary who has survived the Employee dies before exercise of all rights option or before complete distribution of benefits under this option, then any rights that would have been

33055223

Exhibit 10.29

exercisable by the Designated Beneficiary shall be exercised by the legal representative of the estate of the Designated Beneficiary, and any benefits distributable to the Designated Beneficiary shall be distributed to the legal representative of the estate of the Designated Beneficiary.


7.	REGISTRATION

If at any time during the option period the Company shall be advised by its counsel that shares deliverable upon exercise of the option are required to be registered under the Securities Act of 1933 (“Act”) or any state securities laws, or that delivery of the shares must be accompanied or preceded by a prospectus meeting the requirements of that Act or such state securities laws, the Company will use its best efforts to effect the registration or provide the prospectus not later than a reasonable time following each exercise of this option, but delivery of shares by the Company may be deferred until the registration is effected or the prospectus is available. The Employee shall have no interest in shares covered by this option until certificates for the shares are issued, or in lieu of certificates, shares are credited to the Employee’s account in the book-entry form.


8.	ADJUSTMENTS

If the Company shall at any time change the number of shares of its Common Stock without new consideration to the Company (such as by stock dividend, stock split or similar transaction), the total number of shares then remaining subject to purchase hereunder shall be changed in proportion to the change in issued shares and the option price per share shall be adjusted so that the total consideration payable to the Company upon the purchase of all shares not theretofore purchased shall not be changed. If during the term of this option, the Common Stock of the Company shall be changed into another kind of stock or into securities of another corporation, cash, evidence of indebtedness, other property or any combination thereof (the “Acquisition Consideration”), whether as a result of reorganization, sale, merger, consolidation, or other similar transaction, the Committee shall cause adequate provision to be made whereby the Employee shall thereafter be entitled to receive upon the due exercise of this option the Acquisition Consideration the Employee would have been entitled to receive for Common Stock acquired through exercise of this option immediately prior to the effective date of such transaction.


9.	WITHHOLDING

The Company shall be entitled to satisfy any tax withholding obligations arising with respect to the exercise of this option in whole or in part by withholding a portion of shares to defray all or a portion of any applicable taxes, withholding the required amounts from other compensation payable to the Employee, or by such other method determined by the Committee (including, but not limited to, requiring a cash payment by Employee to the Company), in its discretion.


10.	IMPACT ON OTHER BENEFITS

The income attributable to the exercise of this option shall not be includable as compensation or earnings for purposes of any other benefit plan or program offered by the Company or its subsidiaries.

33055223

Exhibit 10.29


11.	PLAN GOVERNS

Notwithstanding anything in this option, the terms of this option shall be subject to the terms of the Plan, a copy of which may be obtained electronically through the website of the broker servicing the Plan or may otherwise be obtained a member of the Executive Compensation & Benefits staff, and this option is subject to all interpretations, amendments, rules and regulations established by the Committee from time to time pursuant to the Plan.

33055223

Exhibit 10.29

APPENDIX

This is an appendix to the WEC Energy Group, Inc. Terms and Conditions governing an award of Non-Qualified Stock Options under the Wisconsin Energy Corporation Omnibus Stock Incentive Plan as amended and restated effective as of May 5, 2011.

As used in the Terms & Conditions, the terminology set forth below shall have the following meanings:


(a)	“Cause” means:

(i)

the willful and continued failure of the Employee to substantially perform the Employee’s duties (other than a failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Employee by the Board of Directors of the Company, the Compensation Committee or an elected officer of the Company which specifically identifies the manner in which the Board, the Committee or the elected officer believes that the Employee has not substantially performed the Employee’s duties, or

(ii)

the willful engaging by the Employee in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. However no act, or failure to act, on the Employee’s part shall be considered “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that the Employee’s action or omission was in the best interest of the Company.


(b)	“Disability” means separation from the service of the Company or a subsidiary because of such illness or injury as renders the Employee unable to perform the material duties of the Employee’s job.


(c)	“Retirement” means separation from the Service of the Company or a subsidiary either at or after attainment of age 55 and completion of at least ten years of service or at or after age 60.

33055223

Exhibit 21.1

WEC ENERGY GROUP, INC.

SUBSIDIARIES AS OF DECEMBER 31, 2015

The following table includes the subsidiaries of WEC Energy Group, a diversified holding company incorporated in the state of Wisconsin, as well as the percent of ownership, as of December 31, 2015 :



Subsidiary *	State of Incorporation or Organization	Percent Ownership
Wisconsin Electric Power Company	Wisconsin	100%
ATC Management Inc.	Wisconsin	26.24%
American Transmission Company LLC	Wisconsin	23.04%
Bostco LLC	Wisconsin	100%

Wisconsin Gas LLC	Wisconsin	100%

ATC Holding LLC	Wisconsin	100%
American Transmission Company LLC	Wisconsin	3.20%

W.E. Power, LLC	Wisconsin	100%
Elm Road Generating Station Supercritical, LLC	Wisconsin	100%
Elm Road Services, LLC	Wisconsin	100%
Port Washington Generating Station, LLC	Wisconsin	100%

Wisvest LLC	Wisconsin	100%

Wispark LLC	Wisconsin	100%

Wisconsin Energy Capital Corporation	Wisconsin	100%

WEC Business Services LLC	Delaware	100%

Integrys Holding, Inc.	Wisconsin	100%
Wisconsin Public Service Corporation	Wisconsin	100%
WPS Leasing, Inc.	Wisconsin	100%
Wisconsin Valley Improvement Company	Wisconsin	27.1%
Wisconsin River Power Company	Wisconsin	50%
WPS Investments, LLC	Wisconsin	10.83%
American Transmission Company LLC	Wisconsin	34.07%
ATC Management Inc.	Wisconsin	32%
ATC Management Inc.	Wisconsin	2%
WPS Investments, LLC	Wisconsin	89.17%
American Transmission Company LLC	Wisconsin	34.07%
Michigan Gas Utilities Corporation	Delaware	100%
Minnesota Energy Resources Corporation	Delaware	100%
Peoples Energy, LLC	Illinois	100%
The Peoples Gas Light and Coke Company	Illinois	100%
North Shore Gas Company	Illinois	100%
Peoples Energy Ventures, LLC	Delaware	100%
Integrys Transportation Fuels, LLC	Delaware	100%
Pinnacle CNG Company, LLC	Texas	100%
Pinnacle CNG Systems, LLC	Texas	100%
Trillium USA Company, LLC	Delaware	100%
Trillium USA, LLC	Delaware	100%
EVO Trillium, LLC	Delaware	15%
WPS Power Development, LLC	Wisconsin	100%
WPS Visions, Inc.	Wisconsin	100%
Penvest, Inc.	Michigan	100%


*	Omits the names of certain subsidiaries, which if considered in the aggregate as a single subsidiary, would not constitute a "significant subsidiary" as of December 31, 2015 . Indirectly owned subsidiaries are listed under the subsidiaries through which WEC Energy Group, Inc. holds ownership.

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-199561 and 333-204556 on Form S-3 and Registration Statement Nos. 333-161151 and 333-177572 on Form S-8 of our reports dated February 26, 2016 , relating to the consolidated financial statements and financial statement schedules of WEC Energy Group, Inc. and subsidiaries (the “Company”), and the effectiveness of the Company’s internal control over financial reporting, appearing in this Annual Report on Form 10-K of the Company for the year ended December 31, 2015 .

/s/DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin

February 26, 2016

Exhibit 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in Registration Statement Nos. 333-199561 and 333-204556 on Form S-3 and Registration Statement Nos. 333-161151 and 333-177572 on Form S-8 of WEC Energy Group, Inc. and subsidiaries of our report dated February 2, 2016, relating to the financial statements of American Transmission Company LLC, appearing in this Annual Report on Form 10-K of WEC Energy Group, Inc. and subsidiaries for the year ended December 31, 2015.

/s/DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin

February 26, 2016

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, Gale E. Klappa, certify that:


1.	I have reviewed this annual report on Form 10-K of WEC Energy Group, Inc.;


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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	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


d)	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: February 26, 2016

/s/GALE E. KLAPPA

Gale E. Klappa

Chairman and Chief Executive Officer

(Principal Executive Officer)

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, J. Patrick Keyes, certify that:


1.	I have reviewed this annual report on Form 10-K of WEC Energy Group, Inc.;


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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	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


d)	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: February 26, 2016

/s/J. PATRICK KEYES

J. Patrick Keyes

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

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 Annual Report of WEC Energy Group, Inc. (the "Company") on Form 10-K for the period ended December 31, 2015 , as filed with the Securities and Exchange Commission on February 26, 2016 (the "Report"), I, Gale E. Klappa, Chairman and 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/GALE E. KLAPPA

Gale E. Klappa

Chairman and Chief Executive Officer

February 26, 2016

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 Annual Report of WEC Energy Group, Inc. (the "Company") on Form 10-K for the period ended December 31, 2015 , as filed with the Securities and Exchange Commission on February 26, 2016 (the "Report"), I, J. Patrick Keyes, Executive Vice President and 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/J. PATRICK KEYES

J. Patrick Keyes

Executive Vice President and Chief Financial Officer

February 26, 2016

Exhibit 99.1

AMERICAN TRANSMISSION COMPANY LLC

Financial Statements and Independent Auditors’ Report

As of December 31, 2015 and 2014

and for the Years Ended December 31, 2015, 2014 and 2013

Exhibit 99.1



American Transmission Company LLC

Table of Contents

Independent Auditors' Report .............................................................................................................		3

Financial Statements

	Statements of Operations for the Years Ended December 31, 2015, 2014 and 2013 .................	4

	Balance Sheets as of December 31, 2015 and 2014 ..................................................................	5

	Statements of Cash Flows for the Years Ended December 31, 2015, 2014 and 2013 ................	6

	Statements of Changes in Members' Equity for the Years Ended December 31, 2015, 2014 and 2013 .............................................................................................................................................	7

	Notes to Financial Statements as of December 31, 2015 and 2014 and for the Years Ended December 31, 2015, 2014 and 2013 ...........................................................................................	8-33

Management's Discussion and Analysis of Financial Condition and Results of Operations ............		34-53

Qualitative Disclosures about Market Risks ...........................................................................................		53

Exhibit 99.1

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors of ATC Management Inc.,

Corporate Manager of American Transmission Company LLC Pewaukee, Wisconsin

We have audited the accompanying financial statements of American Transmission Company LLC (the “Company”), which comprise the balance sheets as of December 31, 2015 and 2014, and the related statements of operations, changes in members’ equity, and cash flows for each of the three years in the period ended December 31, 2015, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of American Transmission Company LLC as of December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 in accordance with accounting principles generally accepted in the United States of America.

Milwaukee, Wisconsin

February 2, 2016

Exhibit 99.1

American Transmission Company LLC

Statements of Operations

For the Years Ended December 31, 2015, 2014 and 2013

(In Thousands)



	2015		2014		2013
Operating Revenues
Transmission Service Revenue	$	614,277	$	633,550	$	624,922
Other Operating Revenue	1,559		1,483		1,414
Total Operating Revenues	615,836		635,033		626,336

Operating Expenses
Operations and Maintenance	162,840		162,902		161,129
Depreciation and Amortization	133,265		124,074		114,808
Taxes Other than Income	23,216		20,475		19,132
Total Operating Expenses	319,321		307,451		295,069

Operating Income	296,515		327,582		331,267



Other Income, Net	1,176		117		831

Earnings Before Interest and Members' Income Taxes	297,691		327,699		332,098



Interest Expense	97,250		88,970		84,484

Earnings Before Members' Income Taxes	$	200,441	$	238,729	$	247,614

The accompanying notes are an integral part of these financial statements.

Exhibit 99.1

American Transmission Company LLC

Balance Sheets

As of December 31, 2015 and 2014

(In Thousands)



ASSETS	December 31, 2015			December 31, 2014
Property, Plant and Equipment
Transmission Plant	$	4,655,719		$	4,400,823
General Plant	122,745			108,902
Less-Accumulated Depreciation	(1,100,828		)	(1,022,123		)
	3,677,636			3,487,602
Construction Work in Progress	229,824			180,058
Net Property, Plant and Equipment	3,907,460			3,667,660


Current Assets
Cash and Cash Equivalents	—			97
Accounts Receivable	59,694			55,984
Prepaid Expenses	6,707			6,303
Current Portion of Regulatory Assets	10,772			719
Other Current Assets	3,347			3,307
Total Current Assets	80,520			66,410


Regulatory and Other Assets
Equity Investment in Unconsolidated Subsidiary	37,077			35,317
Regulatory Assets	393			9,343
Other Assets	12,646			16,355
Total Regulatory and Other Assets	50,116			61,015
Total Assets	$	4,038,096		$	3,795,085

CAPITALIZATION AND LIABILITIES
Capitalization
Members' Equity (See Note 3 for redemption provisions)	$	1,662,828		$	1,617,202
Long-term Debt (excluding current portion)	1,800,029			1,701,000
Total Capitalization	3,462,857			3,318,202


Current Liabilities
Accounts Payable	16,947			11,746
Accrued Interest	23,947			24,198
Other Accrued Liabilities	50,424			42,918
Current Portion of Regulatory Liabilities	12,617			14,299
Current Maturities of Long-term Debt	—			100,000
Short-term Debt	226,313			119,904
Total Current Liabilities	330,248			313,065


Regulatory and Other Long-term Liabilities
Regulatory Liabilities	236,551			146,525
Other Long-term Liabilities	8,440			17,293
Total Regulatory and Other Long-term Liabilities	244,991			163,818


Commitments and Contingencies (See Note 7)	—			—
Total Capitalization and Liabilities	$	4,038,096		$	3,795,085

The accompanying notes are an integral part of these financial statements.

Exhibit 99.1

American Transmission Company LLC

Statements of Cash Flows

For the Years Ended December 31, 2015, 2014 and 2013

(In Thousands)



	2015			2014			2013
Cash Flows from Operating Activities
Earnings Before Members' Income Taxes	$	200,441		$	238,729		$	247,614
Adjustments to Reconcile Earnings Before Members' Income Taxes to Net
Cash Provided by Operating Activities-
Depreciation and Amortization	133,265			124,074			114,808
Bond Discount and Debt Issuance Cost Amortization	582			537			488
Equity Earnings in Unconsolidated Subsidiary Investment	(1,760		)	(1,998		)	(1,842		)
Change in-
Accounts Receivable	(3,710		)	9,795			(9,260		)
Other Current Assets	(4,134		)	5,325			(3,010		)
Accounts Payable	69			(2,545		)	1,576
Accrued Liabilities	(713		)	3,735			6,076
Regulatory Liabilities	71,918			12,759			11,511
Other, Net	(7,020		)	(2,550		)	(1,745		)
Total Adjustments	188,497			149,132			118,602
Net Cash Provided by Operating Activities	388,938			387,861			366,216


Cash Flows from Investment Activities
Capital Expenditures for Property, Plant and Equipment	(339,159		)	(334,731		)	(328,414		)
Investment in Unconsolidated Subsidiary	—			(1,600		)	(32,800		)
Return of Capital from Unconsolidated Subsidiary	—			—			3,700
Insurance Proceeds Received for Damaged Property, Plant and Equipment	—			646			—
Net Cash Used in Investing Activities	(339,159		)	(335,685		)	(357,514		)


Cash Flows from Financing Activities
Distribution of Earnings to Members	(174,815		)	(204,125		)	(195,484		)
Issuance of Membership Units for Cash	20,000			50,000			40,000
Issuance (Repayment) of Short-term Debt, Net	106,390			(160,541		)	113,884
Issuance of Long-term Debt, Net of Issuance Costs	98,099			249,752			—
Repayment of Long-term Debt	(100,000		)	—			—
Advances Received for Construction	440			12,797			32,856
Other, Net	10			38			(75		)
Net Cash Used in Financing Activities	(49,876		)	(52,079		)	(8,819		)


Net Change in Cash and Cash Equivalents	(97		)	97			(117		)

Cash and Cash Equivalents, Beginning of Period	97			—			117
Cash and Cash Equivalents, End of Period	$	—		$	97		$	—

Supplemental Disclosures of Cash Flows Information
Cash Paid for-
Interest	$	92,529		$	85,556		$	83,489
Significant Non-cash Investing or Financing Transactions-
Accruals and Payables Related to Construction Costs	$	36,208		$	24,771		$	33,841

The accompanying notes are an integral part of these financial statements.

Exhibit 99.1

American Transmission Company LLC

Statements of Changes in Members' Equity

As of December 31, 2015, 2014 and 2013

(In Thousands)



Members' Equity as of December 31, 2012		$	1,440,468

Membership Units Outstanding at December 31, 2012	82,154



Issurance of Membership Units		$	40,000

Earnings Before Members' Income Taxes		247,614

Distribution of Earnings to Members		(195,484		)

Members' Equity as of December 31, 2013		$	1,532,598

Membership Units Outstanding at December 31, 2013	84,614



Issuance of Membership Units		$	50,000

Earnings Before Members' Income Taxes		238,729

Distribution of Earnings to Members		(204,125		)

Members' Equity as of December 31, 2014		$	1,617,202

Membership Units Outstanding at December 31, 2014	87,588



Issuance of Membership Units		$	20,000

Earnings Before Members' Income Taxes		200,441

Distribution of Earnings to Members		(174,815		)

Members' Equity as of December 31, 2015		$	1,662,828

Membership Units Outstanding at December 31, 2015	88,740

The accompanying notes are an integral part of these financial statements.

Exhibit 99.1

American Transmission Company LLC

Notes to Financial Statements as of December 31, 2015 and 2014 and for the Years Ended

December 31, 2015, 2014 and 2013

(1) Nature of Operations and Summary of Significant Accounting Policies

(a) General

American Transmission Company LLC (the “Company”) was organized, as a limited liability company under the Wisconsin Limited Liability Company Act, as a single-purpose, for-profit electric transmission company. The Company’s purpose is to plan, construct, operate, own and maintain electric transmission facilities to provide an adequate and reliable transmission system that meets the needs of all users on the system and supports equal access to a competitive, wholesale, electric energy market.

The Company currently owns and operates the electric transmission system, under the direction of the Midcontinent Independent System Operator, Inc. (MISO), in parts of Wisconsin, Illinois, Minnesota and the Upper Peninsula of Michigan. The Company is subject to regulation by the Federal Energy Regulatory Commission (FERC) as to rates, terms of service and financing, and by state regulatory commissions as to other aspects of business, including the construction of electric transmission assets.

The Company’s five largest customers are also members and account for approximately 80 percent of the Company’s operating revenues. The rates for these transmission services are subject to review and approval by FERC. In addition, several members provide operational, maintenance and construction services to the Company. The agreements under which these services are provided are subject to review and approval by the Public Service Commission of Wisconsin (PSCW). See Note (8) for details of the various transactions between the Company and its members.

The Company evaluated potential subsequent events through February 2, 2016, which is the date these statements were available to be issued.

(b) Corporate Manager

The Company is managed by a corporate manager, ATC Management Inc. (“Management Inc.”). The Company and Management Inc. have common ownership and operate as a single functional unit. Under the Company’s operating agreement, Management Inc. has complete discretion over the business of the Company and provides all management services to the Company at cost. The Company itself has no employees and no governance structure separate from Management Inc. The Company’s operating agreement establishes that all expenses of Management Inc. are the responsibility of the Company. These expenses consist primarily of payroll, benefits, payroll-related taxes and other employee-related expenses. All such expenses are recorded in the Company’s accounts as if they were direct expenses of the Company.

Exhibit 99.1

As of December 31, the following net payables to Management Inc. were included in the Company’s balance sheets (in thousands):



	2015		2014
Other Accrued Liabilities	$	15,054	$	14,300
Other Long-term Liabilities	490		9,436
Net Amount Payable to Management Inc.	$	15,544	$	23,736

Amounts included in other accrued liabilities are primarily payroll- and benefit-related accruals. Amounts included in other long-term liabilities relate primarily to certain long-term compensation arrangements covering Management Inc. employees, as described in Note (2). The payable to Management Inc. is partially offset by a $15.1 million and $14.3 million receivable as of December 31, 2015 and 2014, respectively, for income taxes paid on Management Inc.’s behalf by the Company. The income taxes paid are due to temporary differences relating to the tax deductibility of certain employee-related costs. As these temporary differences reverse in future years, Management Inc. will receive cash tax benefits and will then repay the advances from the Company.

Under the authority of the MISO Open Access Transmission, Energy and Operating Reserve Markets Tariff (“MISO Tariff”), which is regulated by FERC, the Company provides wholesale electric transmission service to eligible entities within its service area. The Company charges for these services under FERC-approved rates. The MISO Tariff specifies the general terms and conditions of service on the Company’s transmission system and establishes the rates and amounts to be paid for those services. The Company does not take ownership of the electricity that it transmits.

The Company’s FERC-approved formula rate tariff (“Company’s Tariff”) for the revenue requirement determined under Attachment O of the MISO Tariff includes a true-up provision that meets the requirements of an alternative revenue program as defined in the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) Topic 980, “Regulated Operations.” Accordingly, the Company recognizes revenue for providing transmission system access to its customers during the rate year based on the revenue requirement formula in the Company’s Tariff. Annually, the Company prepares a forecast for the upcoming rate year of total operating expenses, projected rate base resulting from planned construction and other capital expenditures, and projected revenues to be received from MISO. From this forecast, the Company computes an annual projected total revenue requirement for the rate year. Based on the criteria in the MISO Tariff, the Company also calculates its regional cost-sharing revenue requirements which, in addition to other forecasted revenues from MISO and other sources, are subtracted from the total revenue requirement to determine the Company’s annual network revenue requirement. The annual network revenue requirement is billed to and collected from network transmission customers in twelve equal monthly installments throughout the rate year. Subsequent to the rate year, the Company compares actual results from the rate year to the forecast to determine any under or over-collection of revenue from network and regional customers. In accordance with ASC Topic 980, the Company accrues or defers revenues that are higher or lower, respectively, than the amounts collected during the rate year. An accumulated over- collected true-up balance is classified as a regulatory liability in the balance sheets and an accumulated under-collected true-up balance is classified as a regulatory asset in the balance sheets. The Company is

Exhibit 99.1

required to refund any over-collected network amounts, plus interest, within two fiscal years subsequent to the rate year, with the option to accelerate all or a portion of any such refund, and is permitted to include any under-collected network amounts, plus interest, in annual network billings two fiscal years subsequent to the rate year. Under these true-up provisions, the Company refunded to network customers, through their monthly bills, $9.9 million in 2015, a net amount of $10.4 million in 2014, and $1.3 million in 2013. The Company also has FERC-approved true-up provisions for MISO regional cost-sharing revenues to refund over collections or receive under collections in the second year subsequent to the rate year. The Company refunded, inclusive of interest, a net amount of $3.9 million to regional customers in 2015, $6.3 million in 2013 and collected, inclusive of interest, a net amount of $2.8 million from regional customers in 2014. See Note 1(h) for more information on the Company’s true-up provisions.

The Company records a reserve for revenue subject to refund when such refund is probable and can be reasonably estimated.

The Company is currently operating under a settlement agreement approved by FERC in 2004. The Company may elect to change, or intervenors may request a change to, the Company’s revenue requirement formula at any time. A change to the revenue requirement formula could result in reduced rates and have an adverse effect on the Company’s financial position, results of operations and cash flows. If no filings are made by either the Company or other parties, the current terms of the settlement agreement will continue in effect.

On November 12, 2013, MISO, the Company and numerous other MISO transmission owners were named as respondents in a complaint filed at FERC pursuant to Section 206 of the Federal Power Act (“Section 206”) by several customer groups located within the MISO service area. The complaint claims that the respondents’ transmission rates are no longer just and reasonable and seeks, among other things, to reduce the MISO base return on equity (ROE). The Company and the other MISO transmission owners responded to the complaint with a motion to dismiss and answer objecting to the claims of the complainants. On October 16, 2014, FERC determined that the complaint raises issues of material fact that cannot be resolved with the information in the record at this point. As a result, FERC put the matter of whether the MISO transmission owner base ROE is unjust and unreasonable to hearing and settlement procedures, and established a refund date of November 12, 2013. However, the settlement process was terminated in December 2014. FERC ordered hearing proceedings to begin in January 2015 and an initial decision in the complaint was received from the administrative law judge (ALJ) on December 22, 2015. FERC, which is not bound by the ALJ decision, is expected to rule on this complaint by October 2016.

In a related matter, on February 12, 2015, a group of public power entities filed a second Section 206 complaint against the base ROE of the Company and other MISO transmission owners, claiming that the current ROEs are no longer just and reasonable. The Company and the other transmission owners named in the complaint filed an answer with FERC on March 11, 2015, requesting that FERC deny the complaint. On June 18, 2015, FERC found that the complaint raises issues of material fact that cannot be resolved based upon the record. FERC set the matter for hearing procedures and set a refund effective date of February 12, 2015. On July 10, 2015, the ALJ set the schedule for the hearing procedures, which will conclude with the initial decision from the ALJ due June 30, 2016.

Further details related to these complaints are discussed in Note 7(a).

Exhibit 99.1

(d) Transmission and General Plant and Related Depreciation

Transmission plant is recorded at the original cost of construction which includes materials, construction overhead and outside contractor costs. Additions to, and significant replacements of, transmission assets are charged to property, plant and equipment at cost; replacements of minor items are charged to maintenance expense. The cost of transmission plant is charged to accumulated depreciation when an asset is retired.

The provision for depreciation of transmission assets is an integral part of the Company’s cost of service under FERC-approved rates. Depreciation rates include estimates for future removal costs and salvage value. Amounts collected in depreciation rates for future removal costs are included in regulatory liabilities in the balance sheets, as described in Note 1(h). Costs that the Company incurs to remove an asset when not under a legal obligation to do so are charged against the regulatory liability. Depreciation expense on transmission assets, including a provision for removal costs, as a percentage of average transmission plant was 2.74 percent in both 2015 and 2014 and 2.73 percent in 2013.

General plant, which includes buildings, office furniture and equipment, and computer hardware and software, is recorded at cost. Depreciation is recorded at straight-line rates over the estimated useful lives of the assets, which range from five to 60 years.

(e) Asset Retirement Obligations

Consistent with ASC Topic 410, “Asset Retirement and Environmental Obligations,” the Company records a liability at fair value for a legal asset retirement obligation (ARO) in the period in which it is incurred. When a new legal obligation is recorded, the costs of the liability are capitalized 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. In accordance with ASC Topic 980, the Company recognizes regulatory assets or liabilities, as described in Note 1(h), for the timing differences between when it recovers the ARO in rates and when it recognizes these costs under ASC Topic 410. At the end of the asset's useful life, the Company settles the obligation for its recorded amount and records the gain or loss in the appropriate regulatory account.

The Company has recognized AROs primarily related to asbestos, lead-based paint and polychlorinated biphenyls contained in its electrical equipment. AROs are recorded as other long-term liabilities in the balance sheets. The following table describes all changes to AROs for the years ended December 31, 2015 and 2014 (in thousands):



	2015			2014
Asset Retirement Obligations at January 1	$	7,552		$	7,242
Accretion	375			361
Liabilities Settled	(88		)	(51		)
Asset Retirement Obligations at December 31	$	7,839		$	7,552

Exhibit 99.1

(f) Interconnection Agreements

The Company routinely enters into interconnection agreements with entities planning to build generation facilities. The Company will construct the interconnection facilities; however, the generator will finance and bear all financial risk of constructing the interconnection facilities under these agreements. The Company will own and operate the interconnection facilities when the generation facilities become operational and will reimburse the generator for construction costs plus interest. If the generation facilities do not become operational, the Company has no obligation to reimburse the generator for costs incurred during construction.

In cases in which the Company is contractually obligated to construct the interconnection facilities, the Company receives cash advances for construction costs from the generators. During construction, the Company includes actual costs incurred in construction work in progress (CWIP) and records liabilities for the cash advances from the generators, along with accruals for interest. The accruals for interest are capitalized and included in CWIP. The construction costs and accrued interest related to interconnection agreements that are included in CWIP are not included as a component of the Company’s rate base until the generation facilities become operational and the Company has reimbursed the generator.

At December 31, 2015 and 2014 the Company had no active projects related to these agreements. Therefore, at December 31, 2015 and 2014 there were no amounts included in CWIP or liabilities related to cash advances from generator interconnection agreements.

(g) Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

(h) Regulatory Accounting

The Company’s accounting policies conform to ASC Topic 980. Accordingly, assets and liabilities that result from the regulated ratemaking process are recorded that would otherwise not be recorded under accounting principles generally accepted in the United States of America for non-regulated companies. Certain costs are recorded as regulatory assets as incurred and are recognized in the statements of operations at the time they are reflected in rates. As such, regulatory assets are not included as a component of rate base and do not earn a current return. Regulatory liabilities represent amounts that have been collected in current rates to recover costs that are expected to be incurred, or refunded to customers, in future periods.

In accordance with ASC Topic 715, “Compensation – Retirement Benefits,” the Company recognizes the funded status of its postretirement benefit plan, measured as the amount by which its accumulated postretirement benefit obligation is less than or greater than the fair value of the assets that fund its plan. Since the Company expects to refund or recover these amounts in future rates, a regulatory liability or asset has been established for an amount equal to the ASC Topic 715 asset or liability.

In accordance with ASC Topic 980, an accumulated over-collected revenue true-up balance is classified as a regulatory liability in the balance sheets and an accumulated under-collected revenue true-up balance is classified as a regulatory asset in the balance sheets.

Exhibit 99.1

The Company recognizes a regulatory asset or liability for the cumulative difference between amounts recognized for AROs under ASC Topic 410 and amounts recovered through depreciation rates related to these obligations.

As of December 31, regulatory assets included the following amounts (in thousands):



	2015		2014
Revenue True-ups, Including Interest
2013 Regional Cost-sharing Revenue Collected in 2015	$	—	$	719
2014 Multi-Value Projects Revenue to be Collected in 2016	1,490		1,486
2014 Scheduling Revenue to be Collected in 2016	4,887		4,877
2015 Scheduling Revenue to be Collected in 2017	393		—
Other Network Revenue to be Collected in 2016	4,395		—
Postretirement Benefit Plan Amounts to be Recovered through Future Rates	—		2,980
Total Regulatory Assets	$	11,165	$	10,062

As of December 31, these amounts were classified in the balance sheets as follows (in thousands):



	2015		2014
Current Portion of Regulatory Assets	$	10,772	$	719
Regulatory Assets (long term)	393		9,343
Total Regulatory Assets	$	11,165	$	10,062

As described in Note 1(d), the Company’s depreciation rates include an estimate for future asset removal costs. The cumulative amounts that have been collected for future asset removal costs which do not represent AROs are reflected as regulatory liabilities.

The Company recorded regulatory liabilities of $85.4 million and $18.3 million at December 31, 2015 and 2014, respectively, related to the MISO transmission owner complaints discussed in Notes 1(c) and 7(a).

Exhibit 99.1

As of December 31, regulatory liabilities included the following amounts (in thousands):



	2015		2014
Revenue True-ups, Including Interest
2013 Network Revenue Refunded in 2015	$	—	$	4,739
2013 Scheduling Revenue Refunded in 2015	—		128
2013 Multi-Value Projects Revenue Refunded in 2015	—		4,469
2014 Network Revenue to be Refunded in 2016	1,728		6,638
2014 Regional Cost-sharing Revenue to be Refunded in 2016	5,915		5,733
2015 Network Revenue to be Refunded in 2017	877		—
2015 Multi-Value Projects Revenue to be Refunded in 2017	2,876		—
2015 Regional Cost-sharing Revenue to be Refunded in 2017	2,828		—
Other Regional Cost-sharing Revenue to be Refunded in 2016	4,974		—
Return on Equity Refund Liability	85,380		18,348
Recognition of Over-funded Post Retirement Benefit Plan	5,714		—
Non-ARO Removal Costs Collected in Rates	137,940		119,047
Cumulative Difference between ARO Costs Collected in Rates and ARO
Recognition under ASC Topic 410	936		1,722
Total Regulatory Liabilities	$	249,168	$	160,824

As of December 31, these amounts were classified in the balance sheets as follows (in thousands):



	2015		2014
Current Portion of Regulatory Liabilities	$	12,617	$	14,299
Regulatory Liabilities (long term)	236,551		146,525
Total Regulatory Liabilities	$	249,168	$	160,824

The Company continually assesses whether regulatory assets continue to meet the criteria for probability of future recovery. This assessment includes consideration of factors such as changes in the regulatory environment, recent rate orders to other regulated entities under the same jurisdiction and the status of any pending or potential deregulation legislation. If the likelihood of future recovery of any regulatory asset becomes less than probable, the affected assets would be written off in the period in which such determination is made.

Exhibit 99.1

(i) Other Assets

As of December 31, other assets included the following (in thousands):



	2015		2014
Unamortized Debt Issuance Costs	$	9,311	$	8,993
Deferred Project Costs	551		5,155
Other	2,784		2,207
Total Other Assets	$	12,646	$	16,355

Deferred project costs are expenditures directly attributable to the construction of transmission assets. These costs are recorded as other assets in the balance sheets until all required regulatory approvals are obtained and construction begins, at which time the costs are transferred to CWIP. In accordance with its FERC-approved settlement agreement, the Company is allowed to expense and recover in rates, in the year incurred, certain preliminary survey and investigation costs related to study and planning work performed in the early stages of construction projects. Other costs, such as advance equipment purchases, continue to be deferred as described above. Approximately $8.3 million, $15.5 million and $19.0 million of preliminary survey and investigation costs were included in operations and maintenance expense for 2015, 2014 and 2013, respectively.

(j) Impairment of Long-lived Assets

The Company reviews the carrying values of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying values may not be recoverable under ASC Topic 360, ”Property, Plant and Equipment.” Impairment would be determined based upon a comparison of the undiscounted future operating cash flows to be generated during the remaining life of the assets to their carrying amounts. An impairment loss would be measured as the amount that an asset’s carrying amount exceeds its fair value. As long as its assets continue to be recovered through the ratemaking process, the Company believes that such impairment is unlikely.

(k) Income Taxes

The Company is a limited liability company that has elected to be treated as a partnership under the Internal Revenue Code and applicable state statutes. The Company’s members (except certain tax-exempt members) report their share of the Company’s earnings, gains, losses, deductions and tax credits on their respective federal and state income tax returns. Earnings before members’ income taxes reported in the statements of operations are the net income of the Company. Accordingly, these financial statements do not include a provision for federal or state income tax expense. See Note (6) for further discussion of income taxes.

Exhibit 99.1

(l) Construction Agreement

In December 2012, the Company entered into an agreement with the Wisconsin Department of Transportation (WisDOT) to relocate seven overhead 138 kilovolt (kV) transmission lines as part of the WisDOT’s expansion of the interchange between Interstate Highway 894-94 and U.S. Highway 45 in Milwaukee, Wisconsin, known as the Zoo Interchange. Under the agreement, the WisDOT began making the first of its periodic advances to the Company in January 2013, which the Company used to offset its costs to relocate the seven lines. The Company received approximately $12.2 million and $32.8 million in advances under the agreement during 2014 and 2013, respectively. The Company’s obligation under this agreement was completed in 2014 and no additional payments were received during 2015. The Company will not receive any additional payments from the WisDOT related to this agreement.

(m) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to apply policies and make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for items such as depreciable lives of property, plant and equipment, removal costs associated with asset retirements, tax provisions included in rates, actuarially-determined benefit costs, accruals for construction costs and operations and maintenance expenses. As additional information becomes available, or actual amounts are determined, the recorded estimates are revised. Consequently, operating results can be affected by revisions to prior accounting estimates.

(n) New Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update No. (ASU) 2014-09, Revenue from Contracts with Customers (ASC Topic 606). The new recognition and measurement rules introduced by ASU 2014-09 will replace nearly all existing revenue guidance, including most industry-specific guidance, and will, with a few exceptions, apply to all contracts with customers.

Under the guidance in ASU 2014-09, the selling entity is required to perform the following recognition and measurement steps in order to recognize revenue:

1) Identify the contract with a customer

2) Identify the separate performance obligations within a contract

3) Determine the transaction price


4)	Allocate the transaction price to the separate performance obligations, typically on the basis of the relative standalone selling prices of each distinct good or service


5)	Recognize revenue when, or as, each performance obligation is satisfied, either over a period of time or at a point in time.

In July 2015, FASB voted in favor of a one-year delay in the implementation of ASU 2014-09. A final ASU was issued by FASB in August 2015 making ASU 2014-09 effective for the Company for the annual reporting period ending December 31, 2019 and interim reporting periods within 2019; but the Company

Exhibit 99.1

may, at its discretion, adopt ASU 2014-09 effective for the annual reporting period ending December 31, 2018, and interim reporting periods within 2018, in order to align its accounting methods with those of its members who are public companies. The Company is currently evaluating the impacts of the new standard but does not believe it will have a material impact to its current revenue recognition and measurement practices.

In April 2015, FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (ASC Topic 835), which changes the presentation of debt issuance costs in financial statements. Under the guidance in ASU 2015-03, the Company will present such costs in the balance sheets as a direct deduction from the related debt liability, rather than as an asset. Amortization of the costs will be reported as interest expense. ASU 2015-03 is required to be applied retrospectively to all prior periods and will become effective for the Company for the annual reporting period ending December 31, 2016, and interim periods beginning in 2017. However, the Company may, at its discretion, adopt ASU 2015-03 for interim periods beginning in 2016. ASU 2015-03 requires an entity to disclose in the first fiscal year after the entity’s adoption date, and in the interim periods within the first fiscal year, the following:

1) The nature of and reason for the change in accounting principle

2) The transition method

3) A description of the prior-period information that has been retrospectively adjusted


4)	The effect of the change on the financial statement line item (i.e. the debt issuance cost asset and the debt liability).

The Company, which intends to adopt ASU 2015-03 for interim and annual periods beginning in 2016, does not expect the adoption of ASU 2015-03 to have a material effect on its financial position, results of operations or cash flows.

In April 2015, FASB issued ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (ASC Topic 350), which provides guidance to customers about whether a cloud computing arrangement includes a software license. Under the guidance in ASU 2015-05, if a cloud computing arrangement includes a software license, the Company would account for the software license portion of the arrangement consistent with the acquisition of other software licenses, whereas if the arrangement does not include a software license, the Company would account for the arrangement consistent with a service contract. ASU 2015-05 may be applied prospectively or retrospectively, at the Company’s discretion, with certain differences in disclosure requirements. ASU 2015-05 will become effective for the Company for the annual reporting period ending December 31, 2016, and interim periods beginning in 2017. However, the Company may, at its discretion, adopt ASU 2015-05 for interim periods beginning in 2016. The Company does not expect the adoption of ASU 2015-05 to have a material effect on its financial position, results of operations or cash flows.

Exhibit 99.1

(2) Benefits

Management Inc. sponsors several benefit plans for its employees. These plans include certain postretirement medical, dental and life insurance benefits (“postretirement healthcare benefits”). The weighted-average assumptions related to the postretirement medical benefits, as of the measurement date, are as follows:



	2015	2014	2013
Discount Rate	4.57%	4.12%	4.95%
Medical Cost Trend:
Immediate Range	6.10%	6.60%	7.50%
Ultimate Range	4.50%	4.00%	4.00%
Long-term Rate of Return on Plan Assets	5.00%	5.00%	6.00%

The components of Management Inc.’s postretirement healthcare benefit costs for 2015, 2014 and 2013 are as follows (in thousands):



	2015			2014			2013
Service Cost	$	1,447		$	1,111		$	1,426
Interest Cost	1,173			1,049			960
Amortization of Prior Service Credit	(569		)	(569		)	(569		)
Amortization of Net Actuarial Loss (Gain)	276			(11		)	308
Expected Return on Plan Assets	(1,291		)	(1,200		)	(1,375		)
Net Periodic Postretirement Cost	$	1,036		$	380		$	750

To recognize the funded status of its postretirement healthcare benefit plans in accordance with ASC Topic 715, Management Inc. recorded a long-term asset of $5.7 million at December 31, 2015, and a long-term liability of $3.0 million at December 31, 2014. In addition, the Company had the following amounts not yet reflected in net periodic benefit cost and included in its regulatory accounts, which the Company believes will be refunded or recovered as a component of operating expense in future rates, at December 31 (in thousands):



	2015			2014
Prior Service Credit	$	(8,941	)	$	(3,016	)
Accumulated Loss	3,227			5,996
Regulatory Asset (Liability) for Amounts to be Included in Future Rates	$	(5,714	)	$	2,980

The assumed medical cost trend rates are critical assumptions in determining the service and interest cost and accumulated postretirement healthcare benefit obligation for the Company’s medical and dental plans. A one-

Exhibit 99.1

percent change in the medical cost trend rates, holding all other assumptions constant, would have the following effects for 2015 (in thousands):



	One-Percent		One-Percent
	Increase		Decrease
Effect on Total of Service and Interest Cost Components	$	227	$	(165	)
Effect on Postretirement Benefit Obligation at the End of the Year	4,222		(3,221		)

In 2016, the Company will recognize a $1.3 million prior service credit in its net periodic postretirement healthcare benefit cost.

The funded status of the Company’s postretirement healthcare benefit plans as of December 31 is as follows (in thousands):



	2015			2014
Change in Projected Benefit Obligation:
Accumulated Postretirement Benefit Obligation at January 1	$	28,695		$	21,356
Amendments	(6,493		)	—
Service Cost	1,447			1,111
Interest Cost	1,173			1,049
Benefits Paid	(597		)	(276		)
Actuarial Losses (Gains)	(4,430		)	5,455
Benefit Obligation at December 31	$	19,795		$	28,695

Change in Plan Assets:
Fair Value of Plan Assets at January 1	$	25,715		$	25,355
Employer Contributions	973			290
Actual Return (Loss) on Plan Assets (Net of Expenses)	(905		)	306
Net Benefits Paid	(274		)	(236		)
Fair Value at December 31	$	25,509		$	25,715

Funded Status at December 31	$	5,714		$	(2,980	)

The benefit obligation at December 31, 2015, decreased due to plan amendments that reduced the Company’s expected future costs and changes in the assumptions used to calculate the benefit obligation. These changes in assumptions include the use of a higher discount rate, a lower medical cost trend rate as shown in the weighted average assumptions table above and updated mortality assumptions based on mortality tables issued by the Society of Actuaries.

The Company does not anticipate contributing to the plan for postretirement healthcare benefit obligations during

2016.

Exhibit 99.1

The Company anticipates net retiree healthcare benefit payments for the next 10 years to be as follows (in thousands):



2016	$	492
2017	546
2018	589
2019	588
2020	580
2021-2025	3,909
Total	$	6,704

To fund postretirement healthcare benefit obligations, the Company periodically contributes to its Voluntary Employees’ Beneficiary Association (VEBA) trust. The VEBA trust, along with the 401(h) trust previously established by the Company to fund postretirement healthcare benefits, are discretionary trusts with a long-term investment objective to preserve and enhance the post inflation value of the trusts’ assets, subject to cash flow requirements, while maintaining an acceptable level of volatility.

The composition of the fair value of total plan assets held in the trusts as of December 31, along with targeted allocation percentages for each major category of plan assets in the trusts, is as follows:



	2015	2014	Target	Range
U.S. Equities	34.1%	38.3%	32.5%	+/-5%
Non-U.S. Equities	32.3%	28.2%	32.5%	+/-5%
Fixed Income	33.6%	33.5%	35.0%	+/-5%
	100%	100%	100%

The Company appoints a trustee to maintain investment discretion over trust assets. The trustee is responsible for holding and investing plan assets in accordance with the terms of the Company’s trust agreement, including investing within the targeted allocation percentages. In late 2014, the Company updated the targeted allocation percentages for the plan assets. As of December 31, 2014, the trustee was in the process of updating the portfolio to reflect these new targets.

The asset classes designated above and described below serve as guides for the selection of individual investment vehicles by the trustee:


•	U.S. Equities – Strategy of achieving long-term growth of capital and dividend income through investing primarily in common stock of companies in the U.S. stock market with the Wilshire 5000 Index (or a comparable broad U.S. stock index) as the investment benchmark.


•	Non-U.S. Equities – Strategy of achieving long-term growth of capital and dividend income through investing primarily in common stock of companies in the non-U.S. stock markets with the Morgan Stanley Capital Index All Country World ex-U.S Index (or a comparable broad non-U.S. stock index) as the investment benchmark.

Exhibit 99.1


•	Fixed Income – Strategy of achieving total return from current income and capital appreciation by investing in a diversified portfolio of fixed-income securities with the Barclays Capital Aggregate Index (or a comparable broad bond index) as the investment benchmark.

The objective of the investment vehicles is to minimize risk of large losses by effective diversification. The investment vehicles will attempt to rank better than the median vehicle in their respective peer group. However, these investments are intended to be viewed over the long term; during the short term, there will be fluctuations in rates of return characteristic of the securities markets.

The Company measures its plan assets at fair value according to the hierarchy set forth in ASC Topic 715. The three levels of the fair value hierarchy under ASC Topic 715 are:

Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets in active markets that the Company’s postretirement healthcare benefit plans have the ability to access.

Level 2 Observable market-based inputs or unobservable inputs that are corroborated by market data.

Inputs to the valuation methodology include:

• Quoted prices for similar assets in active markets

• Quoted prices for identical or similar assets in inactive markets

• Inputs other than quoted prices that are observable for the asset


•	Inputs that are derived principally from, or corroborated by, observable market data by correlation or other means

Level 3 Inputs to the valuation methodology that are unobservable and not corroborated by market data.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

There have been no changes to the methodologies used at December 31, 2015 and 2014. The following are descriptions of the valuation methodologies used for investments measured at fair value:


•	Money Market Fund: Valued at cost plus accrued interest, which approximates the fair value of the net asset value of the shares held by the plan at year-end.

• Mutual Funds: Valued at the net asset value of shares held by the plan at year-end.

Exhibit 99.1

The following table contains, by level within the fair value hierarchy, the Company’s postretirement healthcare benefit account investments at fair value as of December 31 (in thousands):



2015	Level 1		Level 2		Level 3		Total
U.S. Equity Mutual Funds	$	8,703	$	—	$	—	$	8,703
Non-U.S. Equity Mutual Fund	8,245		—		—		8,245
Fixed Income Mutual Funds	8,329		—		—		8,329
Money Market Fund	—		232		—		232
Total	$	25,277	$	232	$	—	$	25,509



2014	Level 1		Level 2		Level 3		Total
U.S. Equity Mutual Funds	$	9,848	$	—	$	—	$	9,848
Non-U.S. Equity Mutual Fund	7,243		—		—		7,243
Fixed Income Mutual Funds	8,376		—		—		8,376
Money Market Fund	—		248		—		248
Total	$	25,467	$	248	$	—	$	25,715

During 2015 and 2014, the Company had no transfers between Level 1 and Level 2 measurements and no transfers into or out of Level 3 measurements. Measurements for the Company’s Level 2 inputs are based on inputs other than quoted prices that are observable for these assets.

Management Inc. sponsors a defined contribution money-purchase pension plan, in which substantially all employees participate, and makes contributions to the plan for each participant based on several factors. Contributions made by Management Inc. to the plan and charged to expense totaled $3.5 million, $3.3 million and $3.1 million in 2015, 2014 and 2013, respectively.

Management Inc. also provides a deferred compensation plan for certain employees. The plan allows for the elective deferral of a portion of an employee’s base salary and incentive compensation and also contains a supplemental retirement and 401(k) component. As of December 31, 2015 and 2014, $18.1 million and $17.7 million, respectively, were included in other long-term liabilities related to this deferred compensation plan. Deferred amounts are taxable to the employee when paid, but the Company recognizes compensation expense in the period earned. Amounts charged to expense, including interest accruals, were $1.4 million, $2.0 million and $2.1 million in 2015, 2014 and 2013, respectively.

(3) Members’ Equity

The Company’s members include investor-owned utilities, municipalities, municipal electric companies and electric cooperatives.

Distribution of earnings to members is at the discretion of Management Inc. The operating agreement of the Company established a target for distribution of 80 percent of annual earnings before members’ income taxes.

Exhibit 99.1

During 2015, 2014 and 2013, the Company distributed $175 million, $204 million and $195 million, respectively, of its earnings to its members. On January 27, 2016, the board of directors of Management Inc. approved a distribution for the fourth quarter of 2015, in the amount of $22.8 million, that was paid on January 29, 2016, bringing the total distributions related to 2015 earnings to 80 percent of earnings before members’ income taxes.

Each of the Company’s members has the right to require the Company to redeem all or a portion of its membership interests, so long as such interests have been outstanding for at least 12 months. However, the Company is not required to effect the redemption by non-managing members if Management Inc., in its sole discretion as the corporate manager, elects to purchase, in lieu of redemption, such membership interests for either a specified amount of cash or a specified number of shares of its common stock. After such purchase, Management Inc. shall be deemed the owner of such membership interests.

During 2015, the Company issued 1,152,328 units to members in exchange for $20.0 million in cash. During

2014 and 2013 the Company issued members 2,974,510 units for $50.0 million in cash and 2,459,468 units for

$40.0 million in cash, respectively.

Management Inc. has issued shares of its common stock to each of the Company’s members or their affiliates in proportion to their ownership interests in the Company. Holders of Management Inc. common stock have the rights of shareholders under Wisconsin law, including the right to elect directors of the corporate manager.

(4) Debt

(a) Credit Facility

The Company’s $350 million, five-year revolving credit facility, which had a termination date of December 7, 2017, was amended and restated on June 12, 2015. The amended credit facility is $400 million and has a five-year term which expires on June 12, 2020. The facility provides backup liquidity to the Company’s commercial paper program. The Company has not borrowed under the revolving credit facility. However, interest rates on outstanding borrowings under the facility would be based on a floating rate plus a margin. The applicable margin, which is based on the Company’s debt rating of A1/A+ or equivalent, is currently 0.8 percent.

The revolving credit facility contains restrictive covenants, including restrictions on liens, certain mergers, sales of assets, acquisitions, investments, transactions with affiliates, change of control, conditions on prepayment of other debt and the requirement of the Company to meet certain financial reporting obligations. The revolving credit facility provides for certain customary events of default, including a targeted total-debt-to-total-capitalization ratio that is not permitted to exceed 65 percent at any given time. The Company was not in violation of any financial covenants under its credit facility during the periods included in these financial statements.

The Company had no outstanding balance under its credit facility as of December 31, 2015 or 2014.

Exhibit 99.1

(b) Commercial Paper

The Company currently has a $400 million unsecured, private placement, commercial paper program. Investors are limited to qualified institutional buyers and institutional accredited investors. Maturities may be up to 364 days from date of issue, with proceeds to be used for working capital and other capital expenditures. Pricing is par, less a discount or, if interest-bearing, at par. The Company had $226 million of commercial paper outstanding as of December 31, 2015 at an average rate of 0.40 percent and $120 million of commercial paper outstanding as of December 31, 2014 at an average rate of 0.23 percent. Commercial paper is included in short-term debt in the balance sheets. As defined by the commercial paper program, no customary events of default took place during the periods covered by the accompanying financial statements.

The following table summarizes the Company’s long-term debt outstanding as of December 31 (in thousands):



	2015		2014
Senior Notes at stated rate of 7.02%, due August 31, 2032	$	50,000	$	50,000
Senior Notes at stated rate of 6.79%, due on dates ranging from
August 31, 2024 to August 31, 2043	100,000		100,000
Senior Notes at stated rate of 4.992%, matured and paid April 15, 2015	—		100,000
Senior Notes at stated rate of 5.59%, due December 1, 2035	100,000		100,000
Senior Notes at stated rate of 5.91%, due August 1, 2037	250,000		250,000
Senior Notes at stated rate of 5.58%, due April 30, 2018	200,000		200,000
Senior Notes at stated rate of 5.40%, due May 15, 2019	150,000		150,000
Senior Notes at stated rate of 4.59%, due February 1, 2022	100,000		100,000
Senior Notes at stated rate of 5.72%, due April 1, 2040	50,000		50,000
Senior Notes at stated rate of 4.17%, due March 14, 2026	75,000		75,000
Senior Notes at stated rate of 4.27%, due March 14, 2026	75,000		75,000
Senior Notes at stated rate of 5.17%, due March 14, 2041	150,000		150,000
Senior Notes at stated rate of 4.37%, due April 18, 2042	150,000		150,000
Senior Notes at stated rate of 3.74%, due January 22, 2029	50,000		50,000
Senior Notes at stated rate of 4.67%, due January 22, 2044	50,000		50,000
Senior Notes at stated rate of 3.35%, due December 11, 2024	75,000		75,000
Senior Notes at stated rate of 3.60%, due December 11, 2029	29,000		29,000
Senior Notes at stated rate of 4.31%, due December 11, 2044	47,000		47,000
Senior Notes at stated rate of 3.45%, due April 14, 2025	50,000		—
Senior Notes at stated rate of 3.70%, due April 14, 2030	21,000		—
Senior Notes at stated rate of 4.41%, due April 14, 2045	28,000		—
Other Long-term Notes Payable	29		—
Total Long-term Debt	$	1,800,029	$	1,801,000
Less: Current Maturities	—		(100,000		)
Net Long-term Debt	$	1,800,029	$	1,701,000

Exhibit 99.1

The senior notes rank equivalent in right of payment with all of the Company’s existing and future unsubordinated, unsecured indebtedness and senior in right of payment to all subordinated indebtedness of the Company.

The senior notes contain restrictive covenants, which include restrictions on liens, certain mergers and sales of assets, and the requirement of the Company to meet certain financial reporting obligations. The senior notes also provide for certain customary events of default, none of which occurred during the periods covered by the accompanying financial statements.

Future maturities of the Company’s senior notes are as follows (in millions):



2016	$	—
2017	—
2018	200
2019	150
202	—
Thereafter	1,450
	$	1,800

The senior notes contain an optional redemption provision whereby the Company is required to make the note holders whole on any redemption prior to maturity. The notes may be redeemed at any time, at the Company’s discretion, at a redemption price equal to the greater of 100 percent of the principal amount of the notes plus any accrued interest or the present value of the remaining scheduled payments of principal and interest from the redemption date to the maturity date discounted to the redemption date on a semiannual basis at the then-existing Treasury rate plus 30 to 50 basis points, plus any accrued interest.

During November 2014, the Company entered into an agreement with a group of investors, through a private placement offering, to issue $250 million of senior notes to be funded in two tranches. Closing of the notes and funding of the first $151 million took place on December 11, 2014 with interest due semiannually on June 11 and December 11, beginning on June 11, 2015. The $151 million is comprised of $75 million of 10-year, unsecured 3.35 percent senior notes; $29 million of 15-year, unsecured 3.60 percent senior notes; and $47 million of 30-year, unsecured 4.31 percent senior notes. The notes will mature on December 11, 2024, 2029 and 2044, respectively.

Funding of the remaining $99 million took place on April 14, 2015 and is comprised of $50 million of 10-year, unsecured 3.45 percent senior notes; $21 million of 15-year, unsecured 3.70 percent senior notes; and $28 million of 30-year, unsecured 4.41 percent senior notes. Interest is due semiannually on April 14 and October 14, beginning on October 14, 2015, and the notes will mature on April 14, 2025, 2030 and 2045, respectively. The Company used the proceeds of these notes to repay $100 million of long-term debt that matured on April 15, 2015.

During November 2013, the Company entered into an agreement with a group of investors, through a private placement offering, to issue $50 million of 15-year, unsecured 3.74 percent senior notes and $50 million of 30-year, unsecured 4.67 percent senior notes. The closing and funding of the notes occurred on January 22, 2014. The notes pay interest semiannually on January 22 and July 22, beginning on July 22, 2014. The notes will mature on January 22, 2029 and January 22, 2044, respectively.

Exhibit 99.1

(5) Fair Value of Financial Instruments

The carrying amount of the Company’s financial instruments included in current assets and current liabilities approximates fair value due to the short maturity of such financial instruments. The fair value of the Company’s long-term debt is estimated based upon quoted market values for the same or similar issuances or upon the quoted market prices of U.S. Treasury issues having a similar term to maturity, adjusted for the Company’s credit ratings.

The carrying amount and the estimated fair value of the Company’s long-term debt at December 31 are as follows (in millions):



	2015		2014
Carrying Amount	$	1,800	$	1,801

Estimated Fair Value	2,030		2,152

(6) I ncome Taxes

The Company is allowed to recover in rates, as a component of its cost of service, the amount of income taxes that are the responsibility of its members. Accordingly, the Company includes a provision for its members’ federal and state current and deferred income tax expenses and amortization of the excess deferred tax reserves and deferred investment tax credits in its regulatory financial reports and rate filings. For purposes of determining the Company’s revenue requirement under FERC-approved rates, rate base is reduced by an amount equivalent to members’ net accumulated deferred income taxes, including excess deferred income tax reserves. Such amounts were approximately $614 million, $568 million and $498 million in 2015, 2014 and 2013, respectively, and are primarily related to accelerated tax depreciation and other plant-related differences. The 2015, 2014 and 2013 revenues include recovery of $107 million, $103 million and $98.9 million, respectively, of income tax expense.

On January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012 (“2012 Tax Act”), which extended the 50 percent bonus depreciation through 2013. The 2012 Tax Act also allowed a transitional 50 percent bonus depreciation for self-constructed assets that had started construction before December 31, 2013, and were in service by December 31, 2014. On December 19, 2014, the Tax Increase Prevention Act of 2014 (“2014 Tax Act”) was signed in to law extending the 50 percent bonus depreciation through 2014. The 2014 Tax Act allowed a transitional 50 percent bonus depreciation for self-constructed assets that had started construction before December 31, 2014, and are placed in service by December 31, 2015. On December 18, 2015, the Protecting Americans from Tax Hikes Act of 2015 (“2015 Tax Act”) was passed by Congress extending the 50 percent bonus depreciation through 2017 and allowing bonus depreciation on qualified assets of 40 percent in 2018 and 30 percent in 2019. The 2015 Tax Act allows for a transitional 30 percent bonus depreciation for self- constructed assets that start construction before December 31, 2019, and are placed in service by December 31, 2020.

ASC Topic 740, “Income Taxes,” provides guidance on recognition thresholds and measurement of a tax position taken or expected to be taken in a tax return, including whether an entity is taxable in a particular jurisdiction. This guidance applies to all entities, including pass-through entities such as the Company. The

Exhibit 99.1

Company does not consider any of its tax positions to be uncertain, including the Company’s position that it qualifies as a pass-through entity in the federal and Wisconsin tax jurisdictions. Additionally, the Company had no unrecognized tax benefits and was assessed no material amounts of interest or penalties during 2015, 2014 or 2013. The Company is no longer subject to examination by the Internal Revenue Service for tax years prior to 2013 or any state jurisdiction for tax years prior to 2011. In the event the Company would be assessed interest or penalties by a taxing authority related to income taxes, interest would be recorded in interest expense and penalties would be recorded in other expense in the statements of operations.

(7) Commitments and Contingencies

(a) MISO Return on Equity Complaints

As mentioned above, on November 12, 2013, MISO, the Company and numerous other MISO transmission owners were named as respondents in a complaint filed at FERC pursuant to Section 206 by several customer groups located within the MISO service area. These complainants claimed that the following aspects of the respondents’ transmission rates were no longer just and reasonable: the base 12.38 percent ROE in MISO and the Company’s 12.2 percent ROE; hypothetical capital structures that have an equity component greater than 50 percent; and certain incentive ROE adders used by a limited number of MISO transmission owners, of which the Company is not one. The Company currently uses a hypothetical 50 percent debt, 50 percent equity capital structure, as approved by FERC, in calculating its revenue requirement. The complainants requested FERC to order the base MISO ROE reset to 9.15 percent, equity components of hypothetical capital structures be restricted to 50 percent and that relevant incentive ROE adders be discontinued. The complainants requested that FERC establish expedited hearing and settlement procedures to address the issues raised, and that FERC grant the effective date of any refund as the date of the complainants filing. During the first quarter of 2014, the Company and the other MISO transmission owners responded to the complaint with a motion to dismiss and answer objecting to the claims of the complainants, and filed an answer in response to pleadings of the complainants and certain other parties.

On October 16, 2014, FERC issued an order which:


•	denied the portion of the complaint seeking to restrict the use of capital structures that include more than 50 percent common equity;

•

addressed the base ROE of the MISO transmission owners and the Company, determining that the complaint regarding the transmission owner base ROE raises issues of material fact that cannot be resolved with the information in the record at this point. As a result, FERC put the matter of whether the MISO transmission owner base ROE is unjust and unreasonable to hearing and settlement procedures, and established a refund period for the complaint of November 12, 2013 to February 11, 2015. The settlement process, however, was terminated in December 2014 and FERC ordered formal hearing proceedings to begin in January 2015;


•	denied the portion of the complaint requesting the termination of the incentive ROE adders used by certain transmission owners other than the Company;

Exhibit 99.1

•

indicated that it expects the parties’ evidence and discounted cash flow (DCF) analysis to be guided by its June 19, 2014, order regarding the Section 206 complaint against ISO New England (ISO-NE) transmission owners, which set the precedent for using a two-step DCF analysis for establishing ROEs for electric transmission. This new method is similar to that used for natural gas pipelines, and incorporates a two-step process utilizing both short- and long-term growth projections to establish an ROE. FERC previously used only short-term growth projections.

FERC also issued an order on October 16, 2014, addressing the ISO-NE transmission owner ROE complaint, confirming that the U.S. gross domestic product growth rate is the appropriate long-term growth rate to use in the two-step DCF methodology.

On April 6, 2015, the Company and the other transmission owners named in the complaint filed testimony with FERC in response to the complainants’ February 23, 2015 testimony, which supported a reduced ROE, as discussed above. The April 6, 2015, testimony analyzes and critiques the evidence filed by the complainants and offers evidence, which follows FERC precedent for establishing ROEs for electric transmission, supporting a higher ROE than requested by the complainants. On May 15, 2015, FERC trial staff filed its testimony in response to the testimonies previously filed by both parties. In August 2015 the transmission owners and other parties involved in the proceeding participated in a hearing at FERC and filed briefs on September 21, 2015.

The ALJ issued an initial decision on the complaint on December 22, 2015, with a base ROE recommendation of 10.32 percent. FERC is expected to rule on this proceeding by October 2016 and is not bound by the ALJ decision and could set the ROE higher or lower than the ALJ recommendation.

In a related matter, on February 12, 2015, a group of public power entities filed a second Section 206 complaint against the base ROE of the Company and other MISO transmission owners, claiming that they are no longer just and reasonable. The complainants proposed an ROE of 8.67 percent, which they claimed was derived using FERC’s new DCF methodology for establishing electric transmission base ROEs. The Company and the other transmission owners named in the complaint filed an answer with FERC on March 11, 2015, requesting that FERC deny the complaint. On June 18, 2015, FERC found that the complaint raises issues of material fact that cannot be resolved based upon the record. FERC set the matter for hearing procedures and set a refund effective date of February 12, 2015. On July 10, 2015, the ALJ set the schedule for the hearing procedures, which will conclude with the initial decision from the ALJ due June 30, 2016. On September 2, 2015, the complainants and intervenors filed testimony. The Company and the other transmission owners named in the complaint filed testimony on October 20, 2015, and FERC trial staff filed its testimony on November 23, 2015. The Company and the other respondents in the complaint filed cross-answering testimony on December 30, 2015. During January 2016, the complainants and intervenors supporting the complainants filed rebuttal testimony and the parties involved in the proceeding provided updates of ROE studies used in prior testimony. The hearing is scheduled to commence February 16, 2016.

As a result of the second complaint, it is possible that FERC will order an ROE that is different than the ultimate outcome of the first complaint. In that event, it is expected that the ROE decision from the second complaint would supersede the ROE decision in the first complaint. Therefore, the new ROE would be applied to the February 12, 2015 to May 11, 2016, refund period for the second complaint and from the date of the order going forward.

Exhibit 99.1

The Company believes it is probable that a refund will be required upon ultimate resolution of this matter and has recorded regulatory liabilities, inclusive of interest, of $85.4 million and $18.3 million as of December 31, 2015 and 2014, respectively. The Company also recorded $63.8 million and $18.3 million as reductions to transmission service revenue in the statements of operations at December 31, 2015 and 2014, respectively, related to this liability. The Company is unable to make a better estimate of probable losses or estimate the range of reasonably possible losses in excess of the amount recorded. FERC’s ultimate decision could have a material impact to the Company’s financial position, results of operations and cash flows.

In a separate, but related matter, on November 6, 2014, a large group of transmission-owning members of MISO, including the Company, asked FERC to approve a 50 basis-point incentive ROE adder for participating in MISO and voluntarily relinquishing functional control of their transmission facilities to the Regional Transmission Organization. On January 5, 2015, FERC accepted the proposal of the Company and the other transmission owners. FERC approved the adder subject to it being applied to a base ROE shown to be just and reasonable based on an updated DCF analysis resulting from the first ROE complaint proceeding, and subject to the resulting ROE being within the zone of reasonableness determined in the first ROE complaint proceeding. The adder became effective January 6, 2015, subject to refund, and FERC accepted the transmission owners’ request to defer collection of the adder pending the outcome of the first complaint proceeding.

(b) Operating Leases

The Company leases both office and data center space and certain transmission-related equipment under non-cancelable operating leases. Amounts incurred were approximately $6.5 million annually during 2015, 2014 and 2013.

Future minimum lease payments under non-cancelable operating leases for the years ending December 31 are as follows (in millions):



2016	$	6.5
2017	6.4
2018	6.4
2019	5.8
2020	5.8
Thereafter	34.0
	$	64.9

On April 20, 2010, the Company entered into two agreements with the U.S. Department of Energy (DOE), accepting investment grants for up to 50 percent of the cost of the related projects. The grants, totaling $12.7 million, were used to invest in smart grid technologies incorporated into the Company’s transmission system. The funds the Company received from the DOE under the grant award agreements reduced the

Exhibit 99.1

amount of investment in such projects upon which the Company earns a return. During construction, which was completed in October 2013, the Company invoiced the DOE and received payments under these agreements. Per the terms of these agreements, the Company completed independent audits of the smart grid projects during 2012, 2013 and 2014, the results of which were submitted to the DOE. The reports were concluded with no audit findings and, per the Smart Grid agreements, the Company has no further audit requirements related to these projects.

(d) MISO Revenue Distribution

Periodically, the Company receives adjustments to revenues that were allocated to it by MISO in prior periods. Some of these adjustments may result from disputes filed by transmission customers. The Company does not expect any such adjustments to have a significant impact on its financial position, results of operations or cash flows since adjustments of this nature are typically offset by its true-up provision in the revenue requirement formula.

(e) Potential Adverse Legal Proceedings

The Company has been, and will likely in the future become, party to lawsuits, potentially including suits that may involve claims for which it may not have sufficient insurance coverage. The Company’s liability related to utility activities is limited by FERC-approved provisions of the MISO Tariff that limit potential damages to direct damages caused by the Company’s gross negligence or intentional misconduct.

(f) Environmental Matters

In the future, the Company may become party to proceedings pursuant to federal and/or state laws or regulations related to the discharge of materials into the environment. Such proceedings may involve property the Company acquired from the contributing utilities. Pursuant to the asset purchase agreements executed with the contributing utilities beginning January 1, 2001, the contributing utilities will indemnify the Company for 25 years from such date for any environmental liability resulting from the previous ownership of the property.

(8) Related-Party Transactions

(a) Membership Interests

To maintain its targeted debt-to-capitalization ratio, the Company was authorized by Management Inc.’s board of directors to request up to $125 million of additional capital through voluntary additional capital calls (VACCs) during 2016, including $15 million it received in January 2016. The Company received a total of $20 million, $50 million and $40 million through VACCs in 2015, 2014 and 2013, respectively. The increase in the VACC for 2016 is primarily due to higher expected capital spending than the previous years. The participating members receive additional membership units at the current book value per unit at the time of each contribution. Contributions from capital calls are recognized when received.

Exhibit 99.1

(b) Corporate Restructuring

During 2016, ATC Management Inc. plans to undertake a corporate restructuring whereby certain owners will exchange their interests in the Company for interests in a new holding company, ATC Holdco LLC (“Holdco”). Under this holding company structure, Holdco will own all investments outside of the Company’s traditional footprint, as well as interests in the Company matching the current aggregate ownership interests of the exchanging Company members. Those owners of the Company who wish to participate in investments outside of the traditional footprint are able to do so through Holdco, while those owners interested only in investing in the traditional footprint will continue to own the Company directly. The corporate restructuring, through the creation of a holding company, formally separates the Company’s development activities, including its interest in DATC, discussed in Note 8(c), from its traditional footprint activities. The Company currently has applications for approval of the corporate restructuring pending before FERC, the PSCW, and the Illinois Commerce Commission. The restructuring is contingent upon approvals of these applications which are anticipated to occur between February and November of 2016.

The Company and Duke Energy hold equal equity ownership in the Duke-American Transmission Company LLC (DATC), which was created to seek opportunities to acquire, build, own and operate new transmission projects that meet potential customers’ capacity and voltage requirements and future needs. DATC continues to evaluate new projects and opportunities, and participates in the competitive bidding process on projects it considers to be viable.

DATC owns the Zephyr Power Transmission Project (“Zephyr”) and is continuing the design and development of the proposed transmission line, which would deliver wind energy generated in eastern Wyoming to California and the southwestern United States. DATC acquired Zephyr from a subsidiary of Pathfinder Renewable Wind Energy LLC (“Pathfinder”). The 500 kV high-voltage direct-current transmission line, which will be between 500 miles and 850 miles long, has an estimated cost of $2.5 billion to $3.5 billion. Pathfinder is developing a wind power project on more than 100,000 acres near Chugwater, Wyoming, and has committed to use at least 2,100 megawatts (MW) of the Zephyr project’s 3,000 MW capacity. If certain milestones materialize under the project agreement, DATC would be required to pay, directly or indirectly, Pathfinder’s share of regulatory phase project costs of up to $5 million incurred for a period of time to be specified during 2016 by the parties to the agreement; however, DATC has the right to terminate the project between December 15, 2016 and January 15, 2017. DATC has received FERC approval to charge negotiated rates consistent with FERC approvals for Zephyr’s previous owners.

Path 15 is an existing 84-mile, 500 kV transmission line in central California. DATC owns 72 percent of the transmission rights of Path 15, which it purchased from Atlantic Power Corporation in April 2013 for approximately $56 million cash and the assumption of approximately $137 million of debt. Pacific Gas & Electric has an 18 percent interest in the transmission rights to Path 15 through its ownership and operation of the connecting Los Banos and Gates substations. The remaining 10 percent interest in the transmission rights to Path 15 is owned by the Western Area Power Administration, which operates and maintains the line. On February 18, 2014, Path 15 filed its rate case with FERC. On May 29, 2015, FERC approved a negotiated settlement for an annual revenue requirement of $25.9 million for the rate period of 2014 through 2016. Path 15 expects to file its next rate case in February 2017 utilizing 2016 as the test year.

Exhibit 99.1

On July 18, 2013, DATC secured a $30 million, five-year credit facility from U.S. Bank N.A. As a stipulation of that facility, the Company and Duke Energy executed a guarantee agreement on that same date with U.S. Bank N.A. to each guarantee 50 percent of the obligations under the credit facility agreement. Currently, there is no outstanding balance under the credit facility.

The balance in the Company’s investment in DATC was $37.1 million and $35.3 million at December 31,

2015 and 2014, respectively, and is accounted for under the equity method of accounting.

(d) Operations and Maintenance, Project Services and Common Facilities Agreements

The Company operates under Operation and Maintenance Agreements whereby certain contributing utilities, municipalities and cooperatives provide operational, maintenance and construction services to the Company at a fully-allocated cost.

The Company and certain of its affiliates may perform engineering and construction services for each other, subject to the restrictions and reporting requirements specified in orders that have been approved by the PSCW. To prevent cross-subsidization between affiliated entities, the PSCW ordered that services be performed at a fully-allocated cost of the party providing services, and reported annually to the PSCW.

Some operation and maintenance agreements require the Company to utilize a minimum level of service. The amount of services utilized by the Company has exceeded the minimum in each year.

Under these agreements, the Company was billed approximately $38.0 million, $32.8 million and $35.5 million in 2015, 2014 and 2013, respectively. Accounts payable and other accrued liabilities include amounts payable to these companies of $3.1 million and $2.4 million at December 31, 2015 and 2014, respectively.

(e) Transmission Service

Revenues from the Company’s members were approximately 90 percent of the Company’s transmission service revenue for the years ended December 31, 2015, 2014 and 2013.

(f) Management Inc.

As discussed in Note 1(b), Management Inc. manages the Company. Management Inc. charged the Company approximately $106 million, $101 million and $96.6 million in 2015, 2014 and 2013, respectively, primarily for employee-related expenses. These amounts were charged to the applicable operating expense accounts, or capitalized as CWIP or other assets, as appropriate. The amounts are recorded in the Company's accounts in the same categories in which the amounts would have been recorded had the Company incurred the costs directly.

Exhibit 99.1

(9) Quarterly Financial Information (unaudited)



	Three Months Ended

	2015
	March 31		June 30			September 30		December 31			Total

Operating Revenues	$	152,357	$	165,171		$	164,515	$	133,793		$	615,836
Operating Expenses	79,951		80,326			78,059		80,985			319,321
Operating Income	72,406		84,845			86,456		52,808			296,515

Operating Income (Expense, Net)	62		(81		)	585		610			1,176
Interest Expense, Net	24,483		24,172			23,655		24,940			97,250

Earnings Before Members' Income Taxes	$	47,985	$	60,592		$	63,386	$	28,478		$	200,441


	2014
	March 31		June 30			September 30		December 31			Total

Operating Revenues	$	163,337	$	159,990		$	163,643	$	148,063		$	635,033
Operating Expenses	78,623		74,405			76,561		77,862			307,451
Operating Income	84,714		85,585			87,082		70,201			327,582

Operating Income (Expense, Net)	388		322			693		(1,286		)	117
Interest Expense, Net	21,996		22,242			22,204		22,528			88,970

Earnings Before Members' Income Taxes	$	63,106	$	63,665		$	65,571	$	46,387		$	238,729

Because of seasonal factors impacting the Company’s business, particularly the maintenance and construction programs, quarterly results are not necessarily comparable. In general, due to the Company’s rate formula, revenues and operating income will increase throughout the year, as the Company’s rate base increases through expenditures for CWIP. All of 2015 and the fourth quarter of 2014 decreased as a result of the revenue refund liability recorded as a result of the MISO transmission owner base ROE complaints, discussed in Note 7(a).

Exhibit 99.1

American Transmission Company LLC

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

The management of ATC Management Inc. (“Management Inc.”), corporate manager of American Transmission Company LLC (the “Company”), believes the following discussion provides information that is relevant to an assessment and understanding of the Company’s results of operations and financial condition. This discussion should be read in conjunction with the financial statements and notes to those statements.

The Company and Management Inc. have common ownership and operate as a single functional unit. All employees who serve the Company are employees of Management Inc. The Company pays the expenses of Management Inc. Management Inc. has issued shares of its common stock to each of the Company’s members or their affiliates in proportion to their ownership interests in the Company. Holders of Management Inc. common stock have the rights of shareholders under Wisconsin law, including the right to elect directors of the corporate manager.

The Company’s purpose is to plan, construct, operate, own and maintain electric transmission facilities to provide an adequate and reliable transmission system that meets the needs of all users on the system and supports equal access to a competitive, wholesale, electric energy market. The Company currently owns and operates the electric transmission system in parts of Wisconsin, Illinois, Minnesota and the Upper Peninsula of Michigan. Since it was established, the Company has invested and placed into service $3.8 billion in transmission projects within its service area. Management believes that it is necessary to continue to strengthen and expand the Company’s transmission system to deliver electricity to its current customer base. Further expansion of the Company’s transmission system will relieve constraints, allow additional generation capacity to be connected to the system, enhance wholesale competition and permit entry by new competitors in electricity generation. While the Company’s initial focus was to expand import capability and improve the reliability of the transmission infrastructure, the Company continues to seek partnerships and review opportunities to build new transmission beyond its current service area.

The Company is a transmission-owning member of the Midcontinent Independent System Operator, Inc. (MISO) and is required to seek MISO’s direction for certain operational actions it plans to perform within its system. The Company is also required to coordinate planning activities for new projects or system upgrades with MISO, and certain projects may require review and approval by MISO before implementation. MISO has operational control over the Company’s system and directs the manner in which the Company performs operations. MISO also monitors and controls congestion, approves transmission maintenance outages and negotiates with generators on the timing of generator maintenance outages.

Under the authority of the MISO Open Access Transmission, Energy and Operating Reserve Markets Tariff (“MISO Tariff”), which is regulated by the Federal Energy Regulatory Commission (FERC), the Company provides wholesale electric transmission service to eligible entities within its service area. The MISO Tariff specifies the general terms and conditions of service on the Company’s transmission system and establishes the rates and amounts to be paid for those services. The Company does not take ownership of the electricity that it transmits.

The Company’s revenue requirement is designed to reimburse it for all reasonable operating expenses, as well as to provide a return on assets employed in the provision of transmission services. In accordance with FERC policy, the Company’s revenue requirement also includes an estimate of income taxes payable by the Company’s taxable members on the equity portion of the return on rate base. The Company’s rate base consists of the original cost of assets in service,

Exhibit 99.1

reduced by accumulated depreciation and deferred income taxes associated with those assets, in addition to other components authorized by the MISO Tariff. The weighted-average cost of capital, or return rate, applied to rate base is intended to cover the cost of debt financing and provide equity holders a reasonable return on their investment. Since 2001, the Company’s allowed after-tax rate of return on common equity has been 12.2 percent.

The Company’s FERC-approved formula rate tariff (“Company’s Tariff”) allows the Company to use a hypothetical 50 percent debt, 50 percent equity capital structure and calculate and collect its revenue requirement on a forecasted basis, subject to true-up. Additionally, the Company’s Tariff allows the Company to include construction work in progress for new transmission in rate base, and expense preliminary survey and investigation (PSI) costs for new transmission in the current year. Annually, the Company prepares a forecast for the upcoming rate year of total operating expenses, projected rate base resulting from planned construction and other capital expenditures, and projected revenues to be received from MISO. From this forecast, the Company computes an annual projected total revenue requirement for the rate year. Based on the criteria in the MISO Tariff, the Company also calculates its regional cost-sharing revenue requirements which, in addition to other forecasted revenues from MISO and other sources, are subtracted from the total revenue requirement to determine the Company’s annual network revenue requirement. The annual network revenue requirement is billed to, and collected from, network transmission customers in twelve equal monthly installments throughout the rate year. Subsequent to the rate year, the Company compares actual results from the rate year to the forecast to determine any under- or over- collection of revenue from network and regional customers. In accordance with the requirements of an alternative revenue program as defined in the Financial Accounting Standards Board’s Financial Accounting Standards Codification (ASC) Topic 980, “Regulated Operations,” the Company accrues or defers revenues that are higher or lower, respectively, than the amounts collected during the rate year. In accordance with ASC Topic 980, the Company classifies an accumulated over-collected true-up balance as a regulatory liability and an accumulated under-collected true-up balance as a regulatory asset in the balance sheets. The Company is required to refund any over-collected amounts, plus interest, within two fiscal years subsequent to the rate year, with the option to accelerate all or a portion of any such refund, and is permitted to include any under-collected amounts, plus interest, in annual network billings two fiscal years subsequent to the rate year. During 2015, the Company refunded to network customers, through their monthly bills, $9.9 million, inclusive of interest. The Company also has FERC-approved true-up provisions for MISO regional cost-sharing revenues to refund over collections or receive under collections in the second year subsequent to the rate year. During 2015, the Company refunded, inclusive of interest, a net amount of $3.9 million to regional customers related to prior years under these true-up provisions.

The Company records a reserve for revenue subject to refund when such refund is probable and can be reasonably estimated.

Exhibit 99.1

Pending Regulatory Matters

MISO Return on Equity Complaints

On November 12, 2013, MISO, the Company and numerous other MISO transmission owners were named as respondents in a complaint filed at FERC pursuant to Section 206 of the Federal Power Act (“Section 206”) by several customer groups located within the MISO service area. These complainants claimed that the following aspects of the respondents’ transmission rates were no longer just and reasonable: the base 12.38 percent return on equity (ROE) in MISO and the Company’s 12.2 percent ROE; hypothetical capital structures that have an equity component greater than 50 percent; and certain incentive ROE adders used by a limited number of MISO transmission owners, of which the Company is not one. The Company currently uses a hypothetical 50 percent debt, 50 percent equity capital structure, as approved by FERC, in calculating its revenue requirement. The complainants requested FERC to order the base MISO ROE reset to 9.15 percent, equity components of hypothetical capital structures be restricted to 50 percent and that relevant incentive ROE adders be discontinued. The complainants requested that FERC establish expedited hearing and settlement procedures to address the issues raised, and that FERC grant the effective date of any refund as the date of the complainants filing. During the first quarter of 2014, the Company and the other MISO transmission owners responded to the complaint with a motion to dismiss and answer objecting to the claims of the complainants, and filed an answer in response to pleadings of the complainants and certain other parties.

On October 16, 2014, FERC issued an order which:


•	denied the portion of the complaint seeking to restrict the use of capital structures that include more than 50 percent common equity;

•

addressed the base ROE of the MISO transmission owners and the Company, determining that the complaint regarding the transmission owner base ROE raises issues of material fact that cannot be resolved with the information in the record at this point. As a result, FERC put the matter of whether the MISO transmission owner base ROE is unjust and unreasonable to hearing and settlement procedures, and established a refund period of November 12, 2013 to February 11, 2015. The settlement process, however, was terminated in December 2014. FERC ordered formal hearing proceedings to begin in January 2015;


•	denied the portion of the complaint requesting the termination of the incentive ROE adders used by certain transmission owners other than the Company;

•

indicated that it expects the parties’ evidence and discounted cash flow (DCF) analysis to be guided by FERC’s June 19, 2014, order regarding the Section 206 complaint against ISO New England (ISO-NE) transmission owners, which set the precedent for using a two-step DCF analysis for establishing ROEs for electric transmission. This new method is similar to that used for natural gas pipelines, and incorporates a two-step process utilizing both short-term and long-term growth projections to establish an ROE. FERC previously used only short-term growth projections.

FERC also issued an order on October 16, 2014, in the ISO-NE transmission owner ROE complaint, confirming that the U.S. gross domestic product growth rate is the appropriate long-term growth rate to use in the two-step DCF methodology.

Exhibit 99.1

On April 6, 2015, the Company and the other transmission owners named in the complaint filed testimony with FERC in response to the complainants’ February 23, 2015 testimony, which supported a reduced ROE as discussed above. On May 15, 2015, FERC trial staff filed its testimony in response to the testimonies previously filed by both parties. In August 2015 the transmission owners and other parties involved in the proceeding participated in a hearing at FERC and filed briefs on September 21, 2015.

The administrative law judge (ALJ) issued an initial decision on the complaint on December 22, 2015, with a base ROE recommendation of 10.32 percent. FERC is expected to rule on this proceeding by October 2016 and is not bound by the ALJ decision and could set the ROE higher or lower than the ALJ recommendation.

In a related matter, on February 12, 2015, a group of public power entities filed a second Section 206 complaint against the base ROE of the Company and other MISO transmission owners, claiming that they are no longer just and reasonable. The complainants proposed an ROE of 8.67 percent, which they claimed was derived using FERC’s new DCF methodology for establishing electric transmission base ROEs. The Company and the other transmission owners named in the complaint filed an answer with FERC on March 11, 2015, requesting that FERC deny the complaint. On June 18, 2015, FERC found that the complaint raises issues of material fact that cannot be resolved based upon the record. FERC set the matter for hearing procedures and set a refund effective date of February 12, 2015. On July 10, 2015, the ALJ set the schedule for the hearing procedures, which will conclude with the initial decision from the ALJ due June 30, 2016. On September 2, 2015, the complainants and intervenors filed testimony. The Company and the other transmission owners named in the complaint filed testimony on October 20, 2015, and FERC trial staff filed its testimony on November 23, 2015. The Company and the other respondents in the complaint filed cross-answering testimony on December 30, 2015. During January 2016, the complainants and intervenors supporting the complainants filed rebuttal testimony and the parties involved in the proceeding provided updates of ROE studies used in prior testimony. The hearing is scheduled to commence February 16, 2016.

Exhibit 99.1

ROE being within the zone of reasonableness determined in the first ROE complaint proceeding. The adder became effective January 6, 2015, subject to refund, and FERC accepted the transmission owners’ request to defer collection of the adder pending the outcome of the first complaint proceeding.

FERC Order No. 1000

With respect to transmission planning, FERC Order No. 1000 (“Order 1000”) requires that public utility transmission providers, such as MISO, participate in a regional transmission planning process which produces a single regional transmission plan, and that adjoining transmission planning regions must coordinate their efforts with respect to efficient and cost-effective transmission solutions. In addition, each transmission provider must amend its tariff to include procedures for considering transmission needs driven by public policy requirements, which include duly enacted laws or regulations passed by a local governmental entity, and to consider transmission needs driven by federal or state laws or regulations. Order 1000 also calls for the removal of federal rights of first refusal from FERC-approved tariffs and agreements, subject to certain limitations. The Company cannot predict with certainty the impact of Order 1000; however, the Company believes that the transmission planning requirements, combined with the removal of the federal rights of first refusal will, in most instances, assist the Company in expansion outside of its original service area and in seeking opportunities to develop, construct, own and operate transmission facilities throughout North America, including through the activities of Duke-American Transmission Company LLC (DATC). Further details related to DATC are outlined in the Capital Resources and Requirements section below.

Results of Operations

Revenues

The Company’s operating revenues for 2015, 2014, and 2013, which include reductions in both 2015 and 2014 for the revenue refund liability related to the MISO transmission owner base ROE complaints, discussed above in Pending Regulatory Matters, are outlined in the following table:



(In Thousands)							2015 vs. 2014					2014 vs. 2013
							Increase			Percentage		Increase			Percentage
	2015		2014		2013		(Decrease)			Change		(Decrease)			Change

Network Service Revenue	$	500,653	$	516,335	$	514,462	$	(15,682	)	(3.0	)%	$	1,873		0.4	%
Regional Cost-Sharing Revenue	82,718		82,681		84,168		37			0.0	%	(1,487		)	(1.8	)%
Multi-Value Projects Revenue	6,586		9,438		4,976		(2,852		)	(30.2	)%	4,462			89.7	%
Point-to-Point Revenue	8,168		9,063		9,572		(895		)	(9.9	)%	(509		)	(5.3	)%
Other Transmission Service Revenue	16,152		16,033		11,744		119			0.7	%	4,289			36.5	%
Transmission Service Revenue	614,277		633,550		624,922		(19,273		)	(3.0	)%	8,628			1.4	%
Other Operating Revenue	1,559		1,483		1,414		76			5.1	%	69			4.9	%
Total Operating Revenues	$	615,836	$	635,033	$	626,336	$	(19,197	)	(3.0	)%	$	8,697		1.4	%

Exhibit 99.1

The revenue requirement for each year represents the total amount that the Company is entitled to collect from all revenue sources, which include the following:

Network Service Revenue consists of charges paid by the Company’s network customers to reserve transmission capacity on the Company’s system. The annual network revenue requirement is divided among all of the Company’s network customers based on their historic usage of the system, known as load-ratio share. The charges for an individual customer are billed in even monthly installments during the year and are not dependent upon actual usage. Thus, the Company’s network service billings during a given year will not vary once the revenue requirement and rates are determined for each year. In the event new network customers join the Company’s network during the year, the load-ratio share and monthly charges of each customer are adjusted prospectively. Although network service is provided under the MISO Tariff, the Company bills and collects its own network service revenue, subject to true-up as discussed above in the Executive Overview, under a billing agreement with MISO.

Regional Cost-Sharing Revenue is related to projects that meet the criteria for cost-sharing under MISO’s Regional Expansion Criteria and Benefits (RECB) plan. Revenue related to RECB projects is calculated according to the appropriate MISO methodology and excluded from the Company’s network service billings. Instead, such revenues are billed, on behalf of the Company, by MISO across its footprint according to its FERC-approved cost allocation methodology. Regional cost-sharing revenues are also trued up on an annual basis.

Multi-Value Projects (MVP) Revenue is related to projects that meet the criteria for MVP cost-sharing under MISO’s Tariff. Upon meeting certain criteria, these projects are eligible to have 100 percent of their costs allocated regionally. MVPs are designed to support energy policy mandates, provide multiple economic benefits, or provide a combination of reliability and economic benefits, and revenue related to such projects is calculated according to the appropriate MISO methodology. Similar to regional cost-sharing revenues, MISO bills these amounts on behalf of the Company, across the MISO footprint according to its FERC-approved cost allocation methodology. As a result, the Company excludes these amounts from its network service billings. Like network and RECB revenues, MVP revenues are trued up on an annual basis.

Point-to-Point Revenue relates to charges for delivering energy from specific points on the transmission system to other specific points on the transmission system. All point-to-point transactions are administered and billed by MISO; the Company receives a portion of the revenue from each transaction based on the MISO revenue allocation methodology. The point-to-point service revenue that the Company will realize each year depends on the length, duration and other terms of the firm contracts MISO has for point-to-point service and the volume of electricity transmitted as non-firm service. Variations in point-to-point service revenues do not affect the Company’s results of operations, however, because, under the true-up mechanism described above, any over- collection or under-collection as measured against the Company’s point-to-point service revenue projected in the current revenue requirement would be a component of any true-up adjustment recorded for network service revenue.

Other Transmission Service Revenue consists of control area service revenue, such as scheduling, system control and dispatch services.

Other Operating Revenue is derived from other transmission-related services provided to third parties that are not provided under regulated tariffs and rental of certain transmission and administrative property and equipment by third parties.

Revenue Requirement and True-up

Exhibit 99.1

The revenue requirement calculations for 2015, 2014 and 2013, excluding the revenue refund liability related to the MISO transmission owner base ROE complaints in both 2015 and 2014, discussed above in Pending Regulatory Matters, are outlined in the table below:



(In Thousands)										2015 vs. 2014					2014 vs. 2013
										Increase			Percentage		Increase			Percentage
	2015			2014			2013			(Decrease)			Change		(Decrease)			Change

Return on Rate Base
Average Rate Base	$	3,050,267		$	2,907,879		$	2,774,342		$	142,388		4.9	%	$	133,537		4.8	%
Weighted-Average Rate of Return	8.49		%	8.47		%	8.49		%	0.02		%			(0.02		)%
Return on Rate Base	259,008			246,303			235,586			12,705			5.2	%	10,717			4.5	%

Provision for Income Taxes	107,445			103,489			98,922			3,956			3.8	%	4,567			4.6	%
Total Return and Income Taxes	366,453			349,792			334,508			16,661			4.8	%	15,284			4.6	%

Recoverable Operating Expenses
Recoverable Operations and Maintenance Expenses	156,848			159,109			157,936			(2,261		)	(1.4	)%	1,173			0.7	%
Depreciation and Amortization	133,265			124,074			114,808			9,191			7.4	%	9,266			8.1	%
Taxes Other than Income	23,104			20,406			19,084			2,698			13.2	%	1,322			6.9	%
Total Recoverable Operating Expenses	313,217			303,589			291,828			9,628			3.2	%	11,761			4.0	%

Total Revenue Requirement	679,670			653,381			626,336			26,289			4.0	%	27,045			4.3	%
Less: Total Revenue Billed	685,753			659,197			646,571			26,556			4.0	%	12,626			2.0	%
Trup-up Refund	$	(6,083	)	$	(5,816	)	$	(20,235	)	$	(267	)			$	14,419

The Company continues to make significant investments in the transmission system, constructing new transmission lines, as well as rebuilding existing lines and replacing aging equipment, in order to improve the reliable performance of the system. This ongoing construction activity results in additional rate base upon which the Company is allowed to earn a return. Accordingly, average net plant in rate base increased approximately $189 million during 2015. Partially offsetting this increase in rate base was an increase in average deferred income taxes of approximately $46.6 million, which are included as an offset to the Company’s rate base. As such, average rate base increased approximately $142 million.

During December 2014, the Company issued $151 million of long-term debt which was primarily used to reduce the amount of short-term debt outstanding. The long-term debt, which was issued at a higher rate than the short- term debt, increased the debt rate component of the weighted-average rate of return during 2015 compared to 2014. Partially offsetting this increase was the April 2015 issuance of $99 million of long-term debt used to repay $100 million of higher interest long-term debt. The net increase in the weighted-average rate of return and the increase in average rate base resulted in a 5.2 percent increase in return on rate base in 2015 compared to 2014.

During 2014, the Company’s average net plant in rate base increased approximately $201 million primarily as a result of its construction program described above. Partially offsetting this increase in rate base was an increase in average deferred income taxes of approximately $69.7 million. Due to these and other factors, average rate base increased approximately $134 million.

Partially offsetting the 2014 increase to average rate base is a decrease in the weighted debt rate, which is a component of the weighted-average rate of return used to determine the Company’s return on rate base. During

Exhibit 99.1

January and December 2014, the Company issued a total of $251 million of long-term debt which was primarily used to reduce the amount of short-term debt outstanding. This long-term debt was issued at lower rates than the existing long-term debt and reduced the debt rate component of the weighted-average rate of return during 2014 as compared to 2013. These changes resulted in a 4.5 percent net increase in return on rate base during 2014.

The provision for income taxes collected in rates generally increases in proportion to the increase in equity return on rate base. Partially offsetting this increase in 2015 was an additional $1.3 million of excess deferred income taxes that the Company amortized during the year, which reduced the amount of income taxes the Company collected from its customers through its rate formula.

Recoverable operating expenses increased 3.2 percent during 2015 compared to 2014, and 4.0 percent during 2014 compared to 2013, described in detail below.

The above changes resulted in overall increases of 4.0 percent in the Company’s 2015 revenue requirement as compared to 2014, and 4.3 percent in the Company’s 2014 revenue requirement as compared to 2013.

Earnings Overview

The Company’s earnings and operating income for 2015, 2014 and 2013 are shown in the table below:



(In Thousands)							2015 vs. 2014					2014 vs. 2013
							Increase			Percentage		Increase			Percentage
	2015		2014		2013		(Decrease)			Change		(Decrease)			Change

Operating Income	$	296,515	$	327,582	$	331,267	$	(31,067	)	(9.5	)%	$	(3,685	)	(1.1	)%

Earnings Before Members' Income Taxes	$	200,441	$	238,729	$	247,614	$	(38,288	)	(16.0	)%	$	(8,885	)	(3.6	)%

The decrease in operating income in both 2015 and 2014 was primarily due to the revenue refund liability the Company recorded each year related to the MISO transmission owner base ROE complaints, discussed above in Pending Regulatory Matters, and increased costs related to the Company’s business development activities as the Company continues to pursue opportunities for expansion beyond its current service area. Partially offsetting these decreases were increases in the Company’s return on rate base, discussed above.

In addition to these changes in operating income, earnings before members’ income taxes decreased in 2015 due to an increase in interest expense which is not recoverable through the Company’s rate formula discussed below.

Exhibit 99.1

Operating Expenses

The Company’s operating expenses for 2015, 2014 and 2013 are outlined in the table below:



(In Thousands)							2015 vs. 2014					2014 vs. 2013
							Increase			Percentage		Increase			Percentage
	2015		2014		2013		(Decrease)			Change		(Decrease)			Change

Operations and Maintenance	$	154,558	$	147,428	$	142,117	$	7,130		4.8	%	$	5,311		3.7	%
Preliminary Survey & Investigation (PSI)	8,282		15,474		19,012		(7,192		)	(46.5	)%	(3,538		)	(18.6	)%
Total Operations and Maintenance	162,840		162,902		161,129		(62		)	(0.0)%		1,773			1.1	%

Depreciation and Amortization	133,265		124,074		114,808		9,191			7.4	%	9,266			8.1	%
Taxes Other than Income	23,216		20,475		19,132		2,741			13.4	%	1,343			7.0	%
Total Operating Expenses	$	319,321	$	307,451	$	295,069	$	11,870		3.9	%	$	12,382		4.2	%

The net increase in operations and maintenance expenses during 2015 compared to 2014 was mainly related to the following areas:


•	Employee-related costs increased $2.8 million, which was primarily due to a lower portion of capitalized labor, increased staffing for system protection and information technology, and increased post-retirement healthcare costs.


•	Costs related to the Company’s business development activities, which are not recovered through the Company’s rate formula, increased $2.3 million as the Company continues to pursue opportunities for expansion beyond its current service area.


•	Asset maintenance costs increased $1.3 million primarily related to transformer repair work, transmission line inspections, vegetation management activities and bushing replacements across a portion of the system. These costs were partially offset by a decrease in substation maintenance activities such as snow plowing and corrective maintenance due to favorable weather conditions during 2015.


•	Information technology costs increased $0.7 million, primarily related to software maintenance and telecommunication costs.


•	Fees paid for jointly-owned substation facilities increased $0.3 million due to the Company’s increased transmission investment at those facilities.

The above increases were partially offset by a higher allocation of administrative and general costs to capital during 2015, resulting in an estimated $0.5 million decrease to operations and maintenance costs.

The net increase in operations and maintenance expenses during 2014 compared to 2013 was mainly related to the following areas:


•	Employee-related costs increased $2.7 million, which was primarily due to increases in operations, infrastructure, compliance, and asset management, as well as increased medical costs.


•	Certain construction costs that are not related to the addition of new units of transmission property are accounted for as maintenance expense; such costs increased by $1.3 million.


•	Costs related to the Company’s business development activities, which are not recovered through the Company’s rate formula, increased $0.8 million as the Company continues to pursue opportunities for expansion beyond its current service area.


•	Information technology costs increased $1.5 million, primarily related to software installations and upgrades, software maintenance and licensing fees, and telecommunication costs.

Exhibit 99.1


•	Substation utility usage fees increased $0.2 million.


•	Outside consulting and employee training and recruiting costs increased $0.6 million.


•	Other fees and expenses increased $0.7 million.

The above increases were partially offset by the following decreases:


•	The Company had a higher allocation of administrative and general costs to capital during 2014, resulting in an estimated $0.5 million decrease to operations and maintenance costs.


•	Maintenance costs decreased by $2.0 million primarily related to accelerated inspection and review initiatives in 2013, including aerial and ground inspections of transmission equipment which did not continue at the accelerated pace during 2014. Additionally, reduced vegetation management and equipment repair activities during 2014 contributed to the decrease.

The decrease in PSI costs incurred by the Company during 2015 compared to 2014 was mainly related to the Cardinal – Hickory Creek, Badger Coulee, Bay Lake, Branch River, and various line rebuild projects. Further details related to the Cardinal – Hickory Creek, Badger Coulee, and Bay Lake projects are discussed below in the Major Projects update section.

The decrease in PSI costs incurred by the Company during 2014 compared to 2013 was mainly related to decreases in the Bay Lake project, partially offset by increases in the Badger Coulee, Branch River and various line rebuild projects. Further details related to the Bay Lake and Badger Coulee projects are discussed in the Major Projects update section below.

Depreciation and amortization expense increased during each year presented in these financial statements, mainly due to additional assets placed in service as a result of the Company’s construction program discussed above.

Taxes other than income taxes increased in each year presented in these financial statements primarily due to increases in property taxes.

Interest Expense

Components of the Company’s net interest expense for 2015, 2014 and 2013 are shown below:



(In Thousands)							2015 vs. 2014					2014 vs. 2013
							Increase			Percentage		Increase			Percentage
	2015		2014		2013		(Decrease)			Change		(Decrease)			Change

Interest Expense on Long-term Debt	$	92,498	$	87,811	$	83,495	$	4,687		5.3	%	$	4,316		5.2	%
Interest Expense on Commercial Paper	362		447		482		(85		)	(19.0	)%	(35		)	(7.3	)%
Other Interest Expense	4,390		712		507		3,678			516.6	%	205			40.4	%
Interest Expense	$	97,250	$	88,970	$	84,484	$	8,280		9.3	%	$	4,486		5.3	%

Interest expense on long-term debt increased in 2015 primarily due to the issuance of $151 million of senior notes in December 2014, partially offset by the refinancing of $100 million of senior notes with lower interest senior notes in April 2015. These debt issuances are discussed below in Capital Resources and Requirements.

Exhibit 99.1

Interest expense on long-term debt increased in 2014 due to the issuance of $100 million of senior notes in January 2014, and $151 million of senior notes in December 2014, discussed in Capital Resources and Requirements below.

Interest expense on commercial paper decreased during both 2015 and 2014 primarily due to a lower volume of commercial paper issuances each year.

Other interest expense, which is not recoverable through the Company’s rate formula, increased during 2015 compared to 2014 primarily due to accrued interest on the revenue refund liability the Company recorded related to the MISO transmission owner base ROE complaints, discussed above in Pending Regulatory Matters, and increased interest expense on revenue over-collections in accordance with the Company’s true-up provision in its tariff.

Other interest expense, which is not recoverable through the Company’s rate formula, increased during 2014 compared to 2013 primarily due to increased interest expense on 2013 and 2014 revenue over-collections, in accordance with the Company’s true-up provision in its tariff.

Liquidity and Capital Resources

Cash Flows

Net cash provided by operating activities was $389 million during 2015 compared to $388 million during 2014 and $366 million during 2013. The increases in both 2015 and 2014 were primarily related to increases in cash collected from customers, partially offset by increases in the amount of cash paid for operating expenses and interest, discussed above.

During 2015 net cash used in investing activities was $339 million compared to $336 million during 2014 and $358 million during 2013. These changes were primarily related to the Company’s construction activity and investment in DATC. In April 2013 the Company invested additional funds in DATC related to the purchase of Path 15, described in detail below, which caused net cash used in investing activities to be higher during 2013 compared to

2014 and 2015.

Changes in net cash used in financing activities during 2015, 2014 and 2013 are outlined in the following table:



										2015 vs. 2014			2014 vs. 2013
(In Thousands)	2015			2014			2013			Change			Change

Distribution of Earnings to Members	$	(174,815	)	$	(204,125	)	$	(195,484	)	$	29,310		$	(8,641	)
Issuance of Membership Units for Cash	20,000			50,000			40,000			(30,000		)	10,000
Issuance (Repayment) of Short-term Debt, Net	106,390			(160,541		)	113,884			266,931			(274,425		)
Issuance of Long-term Debt, Net of Issuance Costs	98,099			249,752			—			(151,653		)	249,752
Repayment of Long-term Debt	(100,000		)	—			—			(100,000		)	—
Advances Received for Construction	440			12,797			32,856			(12,357		)	(20,059		)
Other, Net	10			38			(75		)	(28		)	113
Net Cash Used in Financing Activities	$	(49,876	)	$	(52,079	)	$	(8,819	)	$	2,203		$	(43,260	)

Exhibit 99.1

Since its inception, the Company has distributed 80 percent of its earnings before members’ income taxes to its owners and intends to continue to do so in the future. Actual cash distributions to members for each year relate to earnings for the twelve months ended September 30 each year. The revenue refund liability recorded in 2014 related to the first MISO transmission owner base ROE complaint, discussed above in Pending Regulatory Matters, was recorded during the fourth quarter of 2014, reducing earnings paid to members on January 30, 2015. Additional revenue refund liability amounts recorded during the first three quarters of 2015 reduced current year earnings paid to members during 2015. The revenue refund liability recorded during the fourth quarter of 2015 reduced earnings paid to members on January 29, 2016. Partially offsetting the 2015 decrease in distributions caused by the revenue refund liability is the Company’s growth in earnings resulting from its investments in rate base, discussed above.

The change in cash provided by issuance of member units is a function of funding requirements for construction and investments in DATC.

The Company issued $99 million of long-term debt during 2015 and used the proceeds to repay $100 million of long-term debt that matured on April 15, 2015. During 2014 the Company issued $251 million of long-term debt and used the proceeds to pay down short-term debt balances.

Advances received for construction were related to contributions the Company received to aid construction of various projects driven by customer need. These contributions offset the costs the Company incurs and places into rate base related to these projects. During 2014 these advances were primarily related to cash the Company received from the Wisconsin Department of Transportation related to construction of the Zoo Interchange project in Milwaukee. This project was completed at the end of 2014. Therefore, no further advances were received related to this project during 2015.

Major Projects

The Badger Coulee transmission line project (“Badger Coulee”) is owned by five utilities and cooperatives: the Company, Northern States Power Company (NSP) which is an affiliate of Xcel Energy Services, Inc., Dairyland Power Cooperative, WPPI Energy, and SMMPA Wisconsin, LLC. The Company holds 50 percent interest in Badger Coulee, which has an estimated total cost of $580 million. The project is a 180-mile, 345 kilovolt (kV) electric transmission line connecting the Company’s facilities near Madison, Wisconsin to a substation owned by NSP near La Crosse, Wisconsin. Badger Coulee was approved by MISO in 2011 and designated as an MVP under the terms of the MISO tariff. Therefore, the costs of the project will be shared across the entire MISO region. The project received a Certificate of Public Convenience and Necessity (CPCN) from the Public Service Commission of Wisconsin (PSCW) in April 2015 and the Company is preparing for the start of construction.

The Cardinal – Hickory Creek project (Cardinal – Hickory Creek) is being developed jointly by the Company, ITC Midwest LLC which is an affiliate of ITC Holdings Corp., and Dairyland Power Cooperative. The Company holds a 45.5 percent interest in the project. Cardinal – Hickory Creek is a planned 125-mile, 345 kV electric transmission line which would connect the Company’s Cardinal substation near Madison, Wisconsin to facilities to be constructed by ITC Midwest near Dubuque, Iowa. Like Badger Coulee, Cardinal – Hickory Creek has also been designated as an MVP, with its costs to be shared across the entire MISO region. The project will require, at a minimum, a CPCN from the PSCW, similar approval from the Iowa Utilities Board and federal approval to cross the Mississippi River.

Exhibit 99.1

The Company’s Bay Lake Project (“Bay Lake”) will reinforce the electrical transmission grid in the Upper Peninsula of Michigan and northeastern Wisconsin. The Michigan portion of Bay Lake was approved by the Michigan Public Service Commission in 2014 and is currently under construction. It includes a 58-mile, 138 kV line between the Holmes substation in Menominee County, Michigan and the Old Mead Road substation in Escanaba, Michigan and is estimated to cost $120 million. The Wisconsin portion will include a 345 kV line and a 138 kV line, each approximately 40 miles in length, between the North Appleton substation in the Green Bay, Wisconsin area to the Morgan substation in Oconto Falls, Wisconsin. The Wisconsin portion of the project was approved by the PSCW in May 2015 with an estimated cost of $328 million. The Company is currently preparing for construction of this portion of the project. Much of Bay Lake has been designated as a regionally cost-shared project under MISO’s RECB plan.

Capital Resources and Requirements

The Company has plans for approximately $471 million in new transmission construction projects and other capital spending in 2016. During the fourth quarter of 2015 the Company released its new ten-year transmission assessment and expects that it could incur between $3.7 billion and $4.5 billion in capital expenditures over the next ten years, most of which will not be subject to the provisions of Order 1000. These estimates are based on the Company’s current capital forecast and projected ten-year transmission planning and needs assessment, much of which remains subject to regulatory approval and continuing analysis of system needs. Wisconsin and surrounding states have introduced renewable portfolio standards which target higher future levels of generation from renewable resources. As the utilities in and surrounding the Company’s transmission system implement plans to address existing or future state and federal renewable goals, there may be significant additional transmission construction required to support such plans. Future retirements of generation units in response to U.S. Environmental Protection Agency standards could also result in additional transmission requirements.

The Company and Duke Energy hold equal equity ownership in DATC, which was created to seek opportunities to acquire, build, own and operate new transmission projects that meet potential customers’ capacity and voltage requirements and future needs. DATC continues to evaluate new projects and opportunities, and participates in the competitive bidding process on projects it considers to be viable.

DATC owns the Zephyr Power Transmission Project (“Zephyr”) and is continuing the design and development of the proposed transmission line, which would deliver wind energy generated in eastern Wyoming to California and the southwestern United States. DATC acquired Zephyr from a subsidiary of Pathfinder Renewable Wind Energy LLC (“Pathfinder”). The 500 kV, high-voltage, direct-current transmission line, which will be between 500 miles and 850 miles long, has an estimated cost of $2.5 billion to $3.5 billion. Pathfinder is developing a wind power project on more than 100,000 acres near Chugwater, Wyoming, and has committed to use at least 2,100 megawatts (MW) of the Zephyr project's 3,000 MW capacity. If certain milestones materialize under the project agreement, DATC would be required to pay, directly or indirectly, Pathfinder’s share of regulatory phase project costs of up to $5 million incurred for a period of time to be specified during 2016 by the parties to the agreement; however, DATC has the right to terminate the project between December 15, 2016 and January 15, 2017. DATC has received FERC approval to charge negotiated rates consistent with FERC approvals for Zephyr’s previous owners.

Exhibit 99.1

$56 million cash and the assumption of approximately $137 million of debt. Pacific Gas & Electric has an 18 percent interest in the transmission rights to Path 15 through its ownership and operation of the connecting Los Banos and Gates substations. The remaining 10 percent interest in the transmission rights to Path 15 is owned by the Western Area Power Administration, which operates and maintains the line. On February 18, 2014, Path 15 filed its rate case with FERC. On May 29, 2015, FERC approved a negotiated settlement for an annual revenue requirement of $25.9 million for the rate period of 2014 through 2016. Path 15 expects to file its next rate case in February 2017 utilizing 2016 as the test year.

The ability to construct transmission assets is dependent upon the Company obtaining extensive regulatory approvals, including siting, from the PSCW and other regulatory bodies. Management believes regulatory and siting issues pose the key risks to completing and placing transmission assets in service because unlike the Company’s rates, which are under the jurisdiction of FERC, state regulatory bodies have jurisdiction over construction. Proceedings related to permit approvals provide a forum for public opposition, which can cause delays, prevent the Company from obtaining the approvals needed to construct transmission facilities, or in some instances, could lead to the cancellation of a project after construction has commenced and the Company has incurred costs. Generally, costs that the Company has incurred for uncompleted projects have not been significant; however, there is potential for higher costs to be incurred related to larger projects. The MISO Tariff contains provisions to recover costs if the project was included in MISO’s Transmission Expansion Plan, required by MISO, or otherwise approved by MISO. If recovery is not realized through the MISO Tariff, the Company will seek recovery of such costs through its FERC-regulated rate formula; however, there is no guarantee that such recovery will be allowed by FERC. If recovery is not realized through the MISO Tariff, or recovered through rates, these costs would be charged against earnings.

The Company is required to seek approval from FERC to issue short- and long-term notes and debt securities. Likewise, the Company must also receive FERC authorization to issue member equity interests and Management Inc. shares. Effective for a two-year period beginning July 1, 2014, the Company is authorized by FERC to issue, subject to certain restrictions, short- and long-term notes and debt securities such that the aggregate balance does not exceed $3.1 billion outstanding at any one time. The Company is also authorized to issue member interests and Management Inc. shares in an aggregate amount such that the balance does not exceed $2.6 billion outstanding at any one time. Pursuant to this authorization, the Company must report to FERC all issuances, guarantees, or assumptions of liabilities within 30 days. The Company has completed all filings as required.

In the short term, the Company intends to finance construction with commercial paper offerings. As its $400 million commercial paper borrowing capacity is utilized, the Company plans to refinance outstanding commercial paper through long-term debt offerings in the private placement and/or public debt markets, which it believes remain

Exhibit 99.1

accessible at attractive rates and terms. Information regarding the Company’s short-term borrowings for the periods ended December 31 is as follows (in millions):



	Three Months						Twelve Months
	2015			2014			2015			2014
Maximum Amount of Total Short-term Debt Outstanding
(based on daily outstanding balances)	$	236		$	304		$	236		$	304
Average Amount of Total Short-term Debt Outstanding
(based on daily outstanding balances)	$	201		$	227		$	151		$	219
Weighted-average Interest Rates	0.29		%	0.20		%	0.23		%	0.21		%

The timing and amount of construction requirements have a significant impact on the Company’s liquidity and cash requirements. Based on its ten-year capital expenditure forecast, management anticipates that, under the Company’s tariff, its credit ratings will remain at investment grade and the Company will continue to have access to the capital it needs to continue to fund business activities, including its investment in DATC, while also maintaining compliance with its debt covenants. Management intends to target a total-debt-to-total-capitalization ratio of 50 to 55 percent, consistent with the maintenance of an “A” credit rating and tier one commercial paper ratings.

As of December 31, 2015 and 2014, the Company’s debt was rated as outlined in the table below:



	Fitch	Moody's	Standard & Poors

Commercial Paper	F-1	P-1	A-1

Senior Unsecured/Issuer	A+	A1	A+

If the Company cannot maintain its current credit rating, future financing costs could increase, future financing flexibility could be reduced, future access to capital could be difficult and future ability to finance capital expenditures demanded by the market could be impaired. Furthermore, management cannot provide assurance that the Company will be able to secure the additional sources of financing needed to fund the significant capital requirements associated with its ten-year capital expenditure forecast. If financing is unavailable, the Company may be forced to defer portions of its construction program, which would negatively impact the Company’s financial position, results of operations and cash flows. In addition, some expenditures may not result in assets on which the Company will earn a return, as discussed above.

As a backup to its commercial paper program, the Company’s $350 million, five-year revolving credit facility, which had a termination date of December 7, 2017, was amended and restated on June 12, 2015. The amended credit facility is $400 million and has a five-year term which expires on June 12, 2020. While the Company does not intend to borrow under the revolving credit facility, interest rates on outstanding borrowings under the facility would be based on a floating rate plus a margin. The revolving credit facility contains restrictive covenants, including restrictions on liens, certain mergers, sales of assets, acquisitions, investments, transactions with affiliates, change of control, conditions on prepayment of other debt and the requirement of the Company to meet certain financial reporting obligations. The revolving credit facility provides for certain customary events of default, including a targeted total-debt-to-total-capitalization ratio that is not permitted to exceed 65 percent at any given time. The

Exhibit 99.1

Company was not in violation of any financial covenants under its debt agreements during the periods included in these financial statements. It is the Company’s intent and past practice to increase the commercial paper program with any corresponding increase in its revolving credit facility.

During November 2014, the Company entered into an agreement with a group of investors, through a private placement offering, to issue $250 million of senior notes to be funded in two tranches. Closing of the notes and funding of the first $151 million took place on December 11, 2014, with interest due semiannually on June 11 and December 11, beginning on June 11, 2015. The $151 million is comprised of $75 million of 10-year, unsecured 3.35 percent senior notes; $29 million of 15-year, unsecured 3.60 percent senior notes; and $47 million of 30-year, unsecured 4.31 percent senior notes. The notes will mature on December 11, 2024, 2029 and 2044, respectively.

Funding of the remaining $99 million took place on April 14, 2015 and is comprised of $50 million of 10-year, unsecured 3.45 percent senior notes; $21 million of 15-year, unsecured 3.70 percent senior notes; and $28 million of 30-year, unsecured 4.41 percent senior notes. Interest is due semiannually on April 14 and October 14, beginning on October 14, 2015, and will mature on April 14, 2025, 2030 and 2045, respectively. The proceeds of these notes were used to repay the $100 million of senior notes that matured on April 15, 2015.

The Company maintains its targeted debt-to-capitalization ratio through reinvested earnings and additional voluntary equity infusions from its members. The Company believes that its members will continue to fund its equity needs. Accordingly, the Company requested a voluntary capital call of $20 million, which it received in quarterly installments throughout 2015. The Company has been authorized by Management Inc.’s board of directors to request up to $125 million of additional capital through voluntary additional capital calls during 2016. The increase in the authorized capital call for 2016 is primarily due to higher expected capital spending than the previous year.

The Company’s operating agreement provides that the board of directors of its corporate manager, Management Inc., will determine the timing and amount of distributions to be made to the Company’s members. In this agreement, the corporate manager also declared its intent, subject to certain restrictions, to distribute an amount equal to 80 percent of the Company’s earnings before members’ income taxes. The Company’s operating agreement also provides that it may not pay, and no member is entitled to receive, any distribution that would generally cause the Company to be unable to pay its debts as they become due. Cash available for distribution for any period consists of cash from operations after provision for capital expenditures, debt service and reserves established by Management Inc. The Company has distributed 80 percent of its earnings before taxes to its members in each year since inception.

Exhibit 99.1

Long-term Contractual Obligations and Commercial Commitments

The Company’s contractual obligations and other commitments as of December 31, 2015, representing cash obligations that are considered to be firm commitments, are as follows (in thousands):



			Payment Due Within						Due After
	Total		1 Year		2 –3 Years		4 –5 Years		5 Years
Senior Notes	$	1,800,000	$	—	$	200,000	$	150,000	$	1,450,000
Interest Payments on Senior Notes	1,457,585		91,539		173,448		144,558		1,048,040
Operating Leases	64,888		6,483		12,833		11,588		33,984
Total Contractual Obligations and Other Commitments	$	3,322,473	$	98,022	$	386,281	$	306,146	$	2,532,024

The Company currently contracts with several vendors and utility providers for certain operations and maintenance services. Certain of the agreements contain minimum purchase requirements, as further discussed below. The Company met these obligations in all prior years and management believes it will continue to meet these obligations in the future.

Related-Party Transactions

In accordance with the Company’s operating agreement, a corporate manager, Management Inc., manages the Company and has complete discretion over the Company’s business. The Company and Management Inc. have common ownership and operate as a single functional unit. Accordingly, Management Inc. provides all management services to the Company at cost. The Company itself has no employees. The operating agreement states that all expenses of Management Inc. are the responsibility of the Company. These expenses consist primarily of payroll, benefits, payroll-related taxes and other employee expenses, and are recorded in the Company’s accounts as if they were direct charges of the Company.

The Company and certain of its affiliates may perform engineering and construction services for each other, subject to restrictions and reporting requirements specified in orders that have been approved by the PSCW. To prevent cross-subsidization between affiliated entities, the PSCW ordered that services be performed at a fully- allocated cost of the party providing services, and reported annually to the PSCW.

During 2016, ATC Management Inc. plans to undertake a corporate restructuring whereby certain owners will exchange their interests in the Company for interests in a new holding company, ATC Holdco LLC (“Holdco”). Under this holding company structure, Holdco will own all investments outside of the Company’s traditional footprint, as well as interests in the Company matching the current aggregate ownership interests of the exchanging Company members. Those owners of the Company who wish to participate in investments outside of the traditional footprint are able to do so through Holdco, while those owners interested only in investing in the traditional footprint will continue to own the Company directly. The corporate restructuring, through the creation of a holding company, formally separates the Company’s development activities, including its interest in DATC, from its traditional footprint activities. The Company currently has applications for approval of the corporate restructuring pending before FERC, the PSCW, and the Illinois Commerce Commission. The restructuring is contingent upon approvals of these applications which are anticipated to occur between February and November of 2016.

Exhibit 99.1

Regulatory and Operating Environment

MISO is the tariff administrator for all of its transmission-owning members. MISO and the Company made a joint filing with FERC that created a separate pricing zone for the Company within the MISO Tariff. The Company’s rates for service are administered under the MISO Tariff; however, the Company periodically files with FERC for approval of changes to the formula that determines its revenue requirements.

Under the provisions of the MISO Tariff, Network Integrated Transmission Service (NITS) provided by the Company is separately invoiced from charges incurred in the MISO energy markets. As a means to insulate transmission revenues from exposure to market risk associated with the MISO energy markets, all revenues for transmission service rendered under the provisions of the MISO Tariff are held in a trust which is an operating account for the benefit of the transmission owners. This account is separate from any other funds. Revenues derived by the Company for NITS, which comprise greater than 80 percent of the Company’s total revenue, are further insulated from market risk because the Company invoices and collects these amounts directly from its customers. As a result, the majority of the Company’s revenues are not collected by MISO or the trust.

Certain transmission projects that the Company may seek to construct are potentially entitled to regional cost- sharing rate treatment if such projects meet the criteria established under the provisions of the MISO Tariff. The Company has an increasing number of projects that meet the criteria of this regional cost-sharing arrangement. While the formula for determining the revenue requirement for projects subject to regional cost-sharing is different from the formula used for determining the Company’s network revenue requirement, it recovers the Company’s costs associated with such projects. While it is likely that a larger portion of the Company’s future revenues will be derived from transmission customers outside of the Company’s service area, as more of the Company’s transmission construction projects qualify for regional cost-sharing, the Company expects that it will continue to earn its allowed return on its assets under these cost allocation arrangements and will continue to pursue transmission projects that benefit its customers.

FERC is required by the Energy Policy Act of 2005 to implement mandatory electric transmission reliability standards, which are to be enforced by an electric reliability organization. Effective June 2007, FERC approved the mandatory adoption of certain reliability standards, along with enforcement actions for violators of those standards, including fines of up to $1 million per day per violation, which would not be recoverable through the Company’s revenue requirement and would be charged against earnings. The North American Electric Reliability Corporation (NERC) was assigned the responsibility of developing and enforcing these mandatory reliability standards. Through delegation agreements, NERC has authorized regional entities to provide regulatory oversight and monitoring of the Company’s reliability standards compliance program. Currently, both Midwest Reliability Organization and ReliabilityFirst Corporation are authorized by NERC to provide regulatory oversight of the Company. The Company administers a reliability standards compliance program, which is intended to assure compliance, and continually assesses its transmission system assets and operations against the mandatory reliability standards promulgated by NERC and those of the regional entities. The Company believes that it meets the applicable reliability standards in all material respects, although further investment in its transmission system and an increase in operations and maintenance activities will likely be required to maintain compliance, sustain and improve reliability, and assure conformance with any new reliability standards that may be issued by NERC and made mandatory through FERC approval.

Exhibit 99.1

On November 24, 2015, the Division of Audits and Accounting (DAA) within the Office of Enforcement of FERC notified the Company that it was commencing a periodic financial audit of the Company. Certain employees of Management Inc. met with FERC DAA staff in December 2015, and substantive audit field work is expected to commence in early 2016. At this time, the Company is unable to predict whether any findings will result from this audit.

Legal Matters

Environmental Matters

Critical Accounting Estimates

The preparation of financial statements requires the use of certain estimates, which involves judgments regarding future events. These judgments, in and of themselves, could materially impact the financial statements and disclosures based on varying assumptions.

Regulatory Accounting

The Company operates on rates established in the Company’s Tariff, which are designed to recover the cost of service and provide a reasonable return to its owners. Under regulatory accounting, assets and liabilities that result from the regulated ratemaking process are recorded that would otherwise not be recorded under accounting principles generally accepted in the United States of America for non-regulated companies. Certain costs are recorded as regulatory assets as incurred and are recognized in the statements of operations at the time they are reflected in rates. Regulatory liabilities represent amounts that have been collected in current rates to recover costs that are expected to be incurred, or refunded to customers, in future periods. As discussed above in Pending Regulatory Matters, the Company recorded a regulatory liability to reflect the probable reduction in its ROE. This refund liability is based on estimates which could be materially different than the actual outcome of the proceeding.

The Company charges depreciation expense to build a reserve for the future cost to remove certain assets. This accrual is charged against depreciation expense in the statements of operations. These amounts are based on historical estimates, which the Company reviewed during a depreciation study in 2011. The Company will continue to review such estimates as it conducts future depreciation studies and expects the next study to occur in 2016.

Exhibit 99.1

As of December 31, 2015, the Company had $11.2 million in regulatory assets and $249 million in regulatory liabilities.

Property, Plant and Equipment

The Company develops estimates of capital, cost of removal and expense components for its construction projects and focuses on consistent application of capitalization policies in accordance with the FERC Uniform System of Accounts. As such, it allocates these costs based on estimates established during the planning phase of the projects. These estimates are reviewed and updated during the project and finalized upon completion of the projects. Although these estimates cause variation in the timing and amounts allocated between capital, cost of removal and expense, the Company strives to minimize variation between statement of operations and balance sheet accounts.

Qualitative Disclosures about Market Risks

The Company manages its interest rate risk by limiting its variable rate exposure and continually monitoring the effects of market changes on interest rates. Under the terms of the Company’s settlement agreement, variable- rate interest exposure is mitigated because interest on borrowed funds is included as a component of the Company’s capital structure used to determine its return on rate base in its revenue requirement formula. To the extent that lenders who hold commitments in the Company’s credit agreement become unable to meet those obligations, the Company intends to pursue other options to maintain its short-term borrowing capacity. These options may include requesting higher commitments from the remaining lenders in the Company’s existing credit agreement or adding additional lenders to the Company’s existing credit agreement. To the extent that any of these options result in increased borrowing costs, the Company believes such costs would be recoverable as a component of its revenue requirement.

The Company has a significant concentration of major customers; its five largest customers generate approximately 80 percent of its operating revenue on an ongoing basis. The Company closely monitors the business and credit risk associated with its major customers. These major customers all have investment-grade debt ratings.