WEC Energy (WEC) 10-Q 2009 Q1 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

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

For the Quarterly Period EndedMarch 31, 2009

Commission	Registrant; State of Incorporation		IRS Employer
File Number	Address; and Telephone Number		Identification No.
001-09057	WISCONSIN ENERGY CORPORATION		39-1391525
		(A Wisconsin Corporation)
		231 West Michigan Street
		P.O. Box 1331
		Milwaukee, WI 53201
		(414) 221-2345

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that 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 Web site, 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[  ]    No[  ]

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 [  ] (Do not                      Smaller reporting company [  ]
                                            check if a 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]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date (March 31, 2009):

Common Stock, $.01 Par Value, 116,914,008 shares outstanding.

		WISCONSIN ENERGY CORPORATION
		FORM 10-Q REPORT FOR THE QUARTER ENDED MARCH 31, 2009
		TABLE OF CONTENTS
Item			Page
	Introduction .......................................................................................................................		7
	Part I -- Financial Information
1.	Financial Statements
	Consolidated Condensed Income Statements ...................................................................		8
	Consolidated Condensed Balance Sheets .........................................................................		9
	Consolidated Condensed Statements of Cash Flows ........................................................		10
	Notes to Consolidated Condensed Financial Statements ..................................................		11
2.	Management's Discussion and Analysis of
	Financial Condition and Results of Operations .................................................................		26
3.	Quantitative and Qualitative Disclosures About Market Risk ..............................................		42
4.	Controls and Procedures ........................................................................................................		42
	Part II -- Other Information
1.	Legal Proceedings ..................................................................................................................		43
1A.	Risk Factors .........................................................................................................................		43
2.	Unregistered Sales of Equity Securities and Use of Proceeds ...............................................		44
6.	Exhibits ...................................................................................................................................		45
	Signatures ...............................................................................................................................		46

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DEFINITION OF ABBREVIATIONS AND INDUSTRY TERMS
The abbreviations and terms set forth below are used throughout this report and have the meanings assigned to them below:
Wisconsin Energy Subsidiaries and Affiliates
Primary Subsidiaries
Edison Sault	Edison Sault Electric Company
We Power	W.E. Power, LLC
Wisconsin Electric	Wisconsin Electric Power Company
Wisconsin Gas	Wisconsin Gas LLC
Significant Assets
OC 1	Oak Creek expansion Unit 1
OC 2	Oak Creek expansion Unit 2
PWGS	Port Washington Generating Station
PWGS 1	Port Washington Generating Station Unit 1
PWGS 2	Port Washington Generating Station Unit 2
Other Affiliates
ERS	Elm Road Services, LLC
Minergy	Minergy LLC
Wispark	Wispark LLC
Federal and State Regulatory Agencies
EPA	United States Environmental Protection Agency
FERC	Federal Energy Regulatory Commission
IRS	Internal Revenue Service
MPSC	Michigan Public Service Commission
PSCW	Public Service Commission of Wisconsin
SEC	Securities and Exchange Commission
Environmental Terms
ANPR	Advanced Notice of Proposed Rulemaking
BART	Best Available Retrofit Technology
BTA	Best Technology Available
CAA	Clean Air Act
CAIR	Clean Air Interstate Rule
CAMR	Clean Air Mercury Rule
CAVR	Clean Air Visibility Rule
CWA	Clean Water Act
NAAQS	National Ambient Air Quality Standards
NOx	Nitrogen Oxide
PM2.5	Fine Particulate Matter
RACT	Reasonably Available Control Technology
SIP	State Implementation Plan
SO2	Sulfur Dioxide
WPDES	Wisconsin Pollution Discharge Elimination System
Other Terms and Abbreviations
ALJ	Wisconsin Administrative Law Judge
ARRs	Auction Revenue Rights
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Bechtel	Bechtel Power Corporation
Compensation Committee	Compensation Committee of the Board of Directors
CPCN	Certificate of Public Convenience and Necessity
Energy Policy Act	Energy Policy Act of 2005
FNTP	Full Notice To Proceed
FTRs	Financial Transmission Rights
Junior Notes	Wisconsin Energy's 2007 Series A Junior Subordinated Notes due 2067 issued in May 2007
LMP	Locational Marginal Price
LSEs	Load Serving Entities
MISO	Midwest Independent Transmission System Operator, Inc.
MISO Energy Markets	MISO Energy and Operating Reserves Markets
OTC	Over-the-Counter
Point Beach	Point Beach Nuclear Power Plant
PTF	Power the Future
PSEG	Public Service Enterprise Group
RTO	Regional Transmission Organization
RSG	Revenue Sufficiency Guarantee
Measurements
Btu	British Thermal Unit(s)
Dth	Dekatherm(s) (One Dth equals one million Btu)
MW	Megawatt(s) (One MW equals one million watts)
MWh	Megawatt-hour(s)
Watt	A measure of power production or usage
Accounting Terms
AFUDC	Allowance for Funds Used During Construction
CWIP	Construction Work in Progress
FASB	Financial Accounting Standards Board
FIN	FASB Interpretation
FSP	FASB Staff Position
GAAP	Generally Accepted Accounting Principles
OPEB	Other Post-Retirement Employee Benefits
SFAS	Statement of Financial Accounting Standards
Accounting Pronouncements
FIN 46	Consolidation of Variable Interest Entities
FIN 46(R)	Consolidation of Variable Interest Entities (Revised 2003)
FSP FIN 46(R)-8	Disclosures about Consolidation of Variable Interest Entities
SFAS 71	Accounting for the Effects of Certain Types of Regulation
SFAS 123R	Share-Based Payment (Revised 2004)
SFAS 133	Accounting for Derivative Instruments and Hedging Activities
SFAS 144	Accounting for the Impairment or Disposal of Long-Lived Assets
SFAS 149	Amendment of SFAS 133 on Derivative Instruments and Hedging Activities
SFAS 157	Fair Value Measurements
SFAS 160	Noncontrolling Interests in Consolidated Financial Statements
SFAS 161	Disclosures about Derivative Instruments and Hedging Activities

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements contained in this report are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based upon management's current expectations and are subject to risks and uncertainties that could cause our actual results to differ materially from those contemplated in the statements. Readers are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements include, among other things, statements concerning management's expectations and projections regarding earnings, completion of construction projects, regulatory matters, fuel costs, sources of electric energy supply, coal and gas deliveries, remediation costs, environmental and other capital expenditures, liquidity and capital resources and other matters. In some cases, forward-looking statements may be identified by reference to a future period or periods or by the use of forward-looking te rminology such as "anticipates," "believes," "estimates," "expects," "forecasts," "guidance," "intends," "may," "objectives," "plans," "possible," "potential," "projects" or similar terms or variations of these terms.

Actual results may differ materially from those set forth in forward-looking statements. In addition to the assumptions and other factors referred to specifically in connection with these statements, factors that could cause our actual results to differ materially from those contemplated in any forward-looking statements or otherwise affect our future results of operations and financial condition include, among others, the following:

• Factors affecting utility operations such as unusual weather conditions; catastrophic weather-related or terrorism-related damage; availability of electric generating facilities; unscheduled generation outages, or unplanned maintenance or repairs; unanticipated events causing scheduled generation outages to last longer than expected; unanticipated changes in fossil fuel, purchased power, coal supply, gas supply or water supply costs or availability due to higher demand, shortages, transportation problems or other developments; nonperformance by electric energy or natural gas suppliers under existing power purchase or gas supply contracts; environmental incidents; electric transmission or gas pipeline system constraints; unanticipated organizational structure or key personnel changes; collective bargaining agreements with union employees or work stoppages; or inflation rates.

• Factors affecting the economic climate in our service territories such as customer growth; customer business conditions, including demand for their products and services; and changes in market demand and demographic patterns.

• Timing, resolution and impact of pending and future rate cases and negotiations, including recovery for new investments as part of our PTF strategy, environmental compliance, transmission service, fuel costs and costs associated with the implementation of the MISO Energy Markets.

• Regulatory factors such as changes in rate-setting policies or procedures; changes in regulatory accounting policies and practices; industry restructuring initiatives; transmission or distribution system operation and/or administration initiatives; required changes in facilities or operations to reduce the risks or impacts of potential terrorist activities; required approvals for new construction; and the siting approval process for new generation and transmission facilities and new pipeline construction.

• Increased competition in our electric and gas markets and continued industry consolidation.

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• Factors which impede or delay execution of our PTF strategy, including the adverse interpretation or enforcement of permit conditions by the permitting agencies; construction delays; and obtaining the investment capital from outside sources necessary to implement the strategy.

• Factors which may affect successful implementation of the settlement agreement with the two parties who were challenging the WPDES permit for the Oak Creek expansion.

• The impact of recent and future federal, state and local legislative and regulatory changes, including electric and gas industry restructuring initiatives; changes to the Federal Power Act and related regulations under the Energy Policy Act and enforcement thereof by FERC and other regulatory agencies; changes in allocation of energy assistance, including state public benefits funds; changes in environmental, tax and other laws and regulations to which we are subject; and changes in the application of existing laws and regulations.

• 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.

• The cost and other effects of legal and administrative proceedings, settlements, investigations, claims and changes in those matters.

• Impacts of the significant contraction in the global credit markets affecting the availability and cost of capital.

• Other factors affecting our ability to access the capital markets, including general capital market conditions; our capitalization structure; market perceptions of the utility industry, us or any of our subsidiaries; and our credit ratings.

• The investment performance of our pension and other post-retirement benefit plans.

• The effect of accounting pronouncements issued periodically by standard setting bodies.

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

• 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 performance of projects undertaken by our non-utility businesses.

• The cyclical nature of property values that could affect our real estate investments.

• Changes to the legislative or regulatory restrictions or caps on non-utility acquisitions, investments or projects, including the State of Wisconsin's public utility holding company law.

• Other business or investment considerations that may be disclosed from time to time in our SEC filings or in other publicly disseminated written documents, including the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2008.

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

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INTRODUCTION

Wisconsin Energy Corporation is a diversified holding company which conducts its operations primarily in two operating segments: a utility energy segment and a non-utility energy segment. Unless qualified by their context when used in this document, the terms Wisconsin Energy, the Company, our, us or we refer to the holding company and all of its subsidiaries. Our primary subsidiaries are Wisconsin Electric, Wisconsin Gas, We Power and Edison Sault.

Utility Energy Segment:   Our utility energy segment consists of: Wisconsin Electric, which serves electric customers in Wisconsin and the Upper Peninsula of Michigan, gas customers in Wisconsin and steam customers in metropolitan Milwaukee, Wisconsin; Wisconsin Gas, which serves gas customers in Wisconsin; and Edison Sault, which serves electric customers in the Upper Peninsula of Michigan. Wisconsin Electric and Wisconsin Gas operate under the trade name of "We Energies".

Non-Utility Energy Segment:   Our non-utility energy segment consists primarily of We Power. We Power was formed in 2001 to design, construct, own and lease to Wisconsin Electric the new generating capacity included in our PTF strategy. See Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2008 Annual Report on Form 10-K for more information on PTF.

We have prepared the unaudited interim financial statements presented in this Form 10-Q pursuant to the rules and regulations of the SEC. We have condensed or omitted some information and note disclosures normally included in financial statements prepared in accordance with GAAP pursuant to these rules and regulations. This Form 10-Q, including the financial statements contained herein, should be read in conjunction with our 2008 Annual Report on Form 10-K, including the financial statements and notes therein.

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PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WISCONSIN ENERGY CORPORATION
CONSOLIDATED CONDENSED INCOME STATEMENTS
(Unaudited)
				Three Months Ended March 31
				2009	2008
	Operating Revenues			$1,396.2	$1,431.1
	Operating Expenses
		Fuel and purchased power		266.4	338.2
		Cost of gas sold		502.7	560.2
		Other operation and maintenance		334.4	369.4
		Depreciation, decommissioning
			and amortization	85.8	77.7
		Property and revenue taxes		28.1	27.1
	Total Operating Expenses			1,217.4	1,372.6
	Amortization of Gain			64.2	159.0
	Operating Income			243.0	217.5
	Equity in Earnings of Transmission Affiliate			14.3	11.5
	Other Income, net			6.3	10.6
	Interest Expense, net			40.8	39.2
	Income from Continuing
		Operations Before Income Taxes		222.8	200.4
	Income Taxes			81.3	77.4
	Income from Continuing Operations			141.5	123.0
	Income from Discontinued
		Operations, Net of Tax		-	0.2
	Net Income			$141.5	$123.2
	Earnings Per Share (Basic)
			Continuing operations	$1.21	$1.05
			Discontinued operations	-	-
	Total Earnings Per Share (Basic)			$1.21	$1.05
	Earnings Per Share (Diluted)
			Continuing operations	$1.20	$1.04
			Discontinued operations	-	-
	Total Earnings Per Share (Diluted)			$1.20	$1.04
	Weighted Average Common
		Shares Outstanding (Millions)
			Basic	116.9	116.9
			Diluted	118.0	118.3
	Dividends Per Share of Common Stock			$0.3375	$0.27
	The accompanying Notes to Consolidated Condensed Financial Statements are an integral part
	of these financial statements.

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WISCONSIN ENERGY CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
			(Unaudited)
			March 31, 2009	December 31, 2008
			(Millions of Dollars)
Assets
Property, Plant and Equipment
	In service		$         10,088.6	$           9,909.4
	Accumulated depreciation		(3,370.4)	(3,312.9)
			6,718.2	6,596.5
	Construction work in progress		1,807.4	1,829.9
	Leased facilities, net		74.8	76.2
		Net Property, Plant and Equipment	8,600.4	8,502.6
Investments
	Restricted cash		145.0	172.4
	Equity investment in transmission affiliate		285.5	276.3
	Other		39.0	41.6
		Total Investments	469.5	490.3
Current Assets
	Cash and cash equivalents		17.1	32.5
	Restricted cash		183.6	214.1
	Accounts receivable		527.6	369.5
	Accrued revenues		223.1	341.2
	Materials, supplies and inventories		251.3	344.7
	Regulatory assets		98.6	82.5
	Prepayments and other		231.5	323.0
		Total Current Assets	1,532.8	1,707.5
Deferred Charges and Other Assets
	Regulatory assets		1,211.8	1,261.1
	Goodwill		441.9	441.9
	Other		154.7	214.4
		Total Deferred Charges and Other Assets	1,808.4	1,917.4
Total Assets			$         12,411.1	$         12,617.8
Capitalization and Liabilities
Capitalization
	Common equity		$           3,439.6	$           3,336.9
	Preferred stock of subsidiary		30.4	30.4
	Long-term debt		4,083.4	4,074.7
		Total Capitalization	7,553.4	7,442.0
Current Liabilities
	Long-term debt due currently		12.3	61.8
	Short-term debt		791.3	602.3
	Accounts payable		303.9	441.0
	Regulatory liabilities		263.1	310.8
	Other		335.2	319.2
		Total Current Liabilities	1,705.8	1,735.1
Deferred Credits and Other Liabilities
	Regulatory liabilities		1,062.7	1,084.4
	Deferred income taxes - long-term		829.4	814.0
	Deferred revenue, net		592.2	545.4
	Pension and other benefit obligations		317.8	635.0
	Other		349.8	361.9
		Total Deferred Credits and Other Liabilities	3,151.9	3,440.7
Total Capitalization and Liabilities			$         12,411.1	$         12,617.8
The accompanying Notes to Consolidated Condensed Financial Statements are an integral part
	of these financial statements.

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WISCONSIN ENERGY CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
				Three Months Ended March 31
				2009	2008
				(Millions of Dollars)
Operating Activities
	Net income			$                  141.5	$                  123.2
	Reconciliation to cash
		Depreciation, decommissioning and amortization		87.6	82.4
		Amortization of gain		(64.2)	(159.0)
		Equity in earnings of transmission affiliate		(14.3)	(11.5)
		Distributions from transmission affiliate		11.4	8.3
		Deferred income taxes and investment tax credits, net		(2.8)	(9.9)
		Deferred revenue		48.6	50.9
		Contributions to benefit plans		(289.3)	(48.4)
		Change in -	Accounts receivable and accrued revenues	(40.0)	(106.8)
			Inventories	93.4	126.2
			Other current assets	14.7	18.7
			Accounts payable	(119.5)	5.8
			Accrued income taxes, net	82.0	85.7
			Deferred costs, net	11.5	44.6
			Other current liabilities	16.2	44.1
		Other, net		43.5	89.5
Cash Provided by Operating Activities				20.3	343.8
Investing Activities
	Capital expenditures			(171.4)	(348.2)
	Investment in transmission affiliate			(6.3)	-
	Proceeds from asset sales, net			0.1	9.1
	Change in restricted cash			57.9	88.3
	Other, net			(23.3)	(20.1)
Cash Used in Investing Activities				(143.0)	(270.9)
Financing Activities
	Exercise of stock options			3.0	2.7
	Purchase of common stock			(5.6)	(5.5)
	Dividends paid on common stock			(39.5)	(31.6)
	Issuance of long-term debt			11.5	-
	Retirement and repurchase of long-term debt			(51.7)	(148.0)
	Change in short-term debt			189.0	105.7
	Other, net			0.6	0.6
Cash Provided by (Used in) Financing Activities				107.3	(76.1)
Change in Cash and Cash Equivalents				(15.4)	(3.2)
Cash and Cash Equivalents at Beginning of Period				32.5	27.4
Cash and Cash Equivalents at End of Period				$                    17.1	$                    24.2
The accompanying Notes to Consolidated Condensed Financial Statements are an integral part of these
	financial statements.

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