SECURITIES AND EXCHANGE COMMISSION

(Release No. 35-27946)

Filings Under the Public Utility Holding Company Act of 1935, as amended ("Act")

February 11, 2005

Notice is hereby given that the following filing(s) has/have been made with the Commission pursuant to provisions of the Act and rules promulgated under the Act. All interested persons are referred to the application(s) and/or declaration(s) for complete statements of the proposed transaction(s) summarized below. The application(s) and/or declaration(s) and any amendment(s) is/are available for public inspection through the Commission's Branch of Public Reference.

Interested persons wishing to comment or request a hearing on the application(s) and/or declaration(s) should submit their views in writing by March 8, 2005 to the Secretary, Securities and Exchange Commission, Washington, D.C. 20549-0609, and serve a copy on the relevant applicant(s) and/or declarant(s) at the address(es) specified below. Proof of service (by affidavit or, in the case of an attorney at law, by certificate) should be filed with the request. Any request for hearing should identify specifically the issues of facts or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in the matter. After March 8, 2005, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective.

Wisconsin Energy Corporation et al. (70-10276)

Wisconsin Energy Corporation ("Wisconsin Energy") 231 West Michigan Street, Milwaukee, WI 53201 and W.E. Power, LLC, 301 West Wisconsin Avenue, Milwaukee, WI 53203 ("W.E. Power" and together, "Applicants"), have filed an application ("Application") under sections 9(a), 10 and 3(a)(1) of the Act.

I. Introduction

Applicants request authorization to acquire two 545 MW gas-fired, combined cycle generating units located in Port Washington, Wisconsin ("Port Washington Units") which are being constructed by Port Washington Generating Station, LLC ("Project Company"), an indirect subsidiary company of W.E. Power.

II. Description of the Applicants

A. Wisconsin Energy

Applicants state that Wisconsin Energy is a Wisconsin Corporation and an exempt public utility holding company under section 3(a)(1) of the Act.¹ Wisconsin Energy's utility subsidiaries include Wisconsin Electric Power Company ("Wisconsin Electric"), Wisconsin Gas LLC ("Wisconsin Gas"), Edison Sault Electric Company ("Edison Sault"), American Transmission Company LLC ("ATC"), ATC Management Inc. ("ATC Management") and W.E. Power. Applicants state that, on a consolidated basis for the year ended December 31, 2003, Wisconsin Energy had total operating revenues of more than $4 billion. Applicants further state that, as of September 30, 2004, Wisconsin Energy had consolidated total assets of $9.012 billion.

Wisconsin Electric, a Wisconsin corporation, is a wholly owned, direct, public utility company subsidiary of Wisconsin Energy. Wisconsin Electric owns electric generation and distribution facilities located in Wisconsin and the Upper Peninsula of Michigan and natural gas distribution facilities located in Wisconsin. Applicants state that Wisconsin Electric claims exemption under section 3(a)(1) by rule 2 and is also the subject of S.E.C. File No. 70-10110, requesting an exemption by order.

Wisconsin Electric generates, distributes, and sells, both at wholesale and retail, electric energy in a territory of approximately 12,000 square miles, with a population estimated at 2,300,000 in southeastern Wisconsin, east central, and northern Wisconsin, and in the upper peninsula of Michigan. Applicants state that, as of and for the year ended December 31, 2003, Wisconsin Electric had approximately 1,068,000 electric customers and electric operating revenues of $1.986 billion and total operating revenues of $2.522 billion. Applicants further state that, on a consolidated basis, as of September 30, 2004, Wisconsin Electric had total assets of $6.678 billion.

Wisconsin Electric also purchases, distributes and sells natural gas to retail customers and transports customer-owned gas in three distinct service areas of approximately 3,800 square miles in Wisconsin. Applicants state that Wisconsin Electric's gas service territory has an estimated population of 1,200,000 and as of December 31, 2003, Wisconsin Electric served approximately 428,700 gas customers. Applicants state that Wisconsin Electric's gas distribution system includes approximately 8,800 miles of mains connected at 22 gate stations to the pipeline transmission systems of ANR Pipeline Company, Guardian Pipeline, L.L.C., Natural Gas Pipeline Company of America, Northern Natural Gas Company, and Great Lakes Transmission Company. In addition, Wisconsin Electric has a liquefied natural gas storage plant with a send-out capability of 70,000 dekatherms per day.

Applicants state that Wisconsin Electric operates two district steam systems that supply steam for space heating and process uses. These systems are located in Milwaukee and in Wauwatosa, Wisconsin and are subject to regulation by the Public Service Commission of Wisconsin ("PSCW").

Applicants state that Wisconsin Gas, a Wisconsin limited liability company, is a wholly-owned, direct gas public utility subsidiary of Wisconsin Energy authorized to provide retail gas distribution service in designated territories Wisconsin and transports customer-owned gas. Applicants state that Wisconsin Gas also provides water utility service to customers in the suburban Milwaukee area and is subject to the regulation of the PSCW as to retail gas and water rates, standards of service, issuance of long-term securities, construction of certain new facilities, transactions with affiliates, billing practices and various other matters. For the year ended December 31, 2003, Wisconsin Gas had operating revenues of $714.8 million and as of September 30, 2004, Wisconsin Gas had total assets of approximately $1.357 billion.

Applicants state that Edison Sault is a wholly owned, direct electric public utility subsidiary of Wisconsin Energy. Edison Sault is authorized to provide retail electric service in certain territories in Michigan and is subject to the regulation of the Michigan Public Service Commission as to various matters associated with retail electric service in Michigan. Applicants state that Edison Sault generates, distributes and sells electric energy in a territory of approximately 2,000 square miles with a population of approximately 55,000 in the eastern upper peninsula of Michigan and also provides wholesale electric service under contract with one rural cooperative. On a consolidated basis, as of and for the year ended December 31, 2003, Edison Sault had total assets of approximately $72.4 million and operating revenues of approximately $42.4 million.

ATC is a Wisconsin limited liability company organized in response to Wisconsin legislation as a single-purpose transmission company to assume ownership and operation of the transmission facilities that had previously belonged to Wisconsin Electric, Edison Sault and several other Wisconsin electric utility companies. Applicants state that in return for the transfer of the transmission facilities, Wisconsin Electric and Edison Sault each acquired membership interests in ATC and Wisconsin Electric acquired shares in ATC Management, a Wisconsin corporation organized to provide management services to ATC. As of December 31, 2003, Wisconsin Energy owned, through Wisconsin Electric and Edison Sault, 39.4 percent of ATC, and through Wisconsin Electric, 40.1 percent of ATC Management.

B. W.E. Power, LLC

W.E. Power, a Wisconsin limited liability company, is a wholly owned, direct intermediate holding company subsidiary of Wisconsin Energy. Applicants state that W.E. Power was formed in 2001 to design, construct, own, finance and lease to Wisconsin Electric 2,320 megawatts of new generating capacity in Wisconsin, including the generating and transmission facilities discussed below. Applicants state that W.E. Power does not and will not own any facilities directly. W.E. Power directly owns a 100 percent interest in Project Company.

C. Project Company

Applicants state that Project Company, a Wisconsin limited liability company, was formed specifically to develop, construct and own a 100 percent interest in the Port Washington Units. In addition, Project Company will develop, construct and own a 100 percent interest in certain transmission facilities necessary to interconnect the Port Washington Units with the ATC transmission grid.

III. Proposed Transaction

Applicants request authorization for Project Company to acquire the Port Washington Units and the associated transmission facilities necessary to interconnect the units with the ATC transmission grid ("Transaction"). Upon completion of construction and the satisfaction of certain conditions precedent, including the successful testing of the units, Project Company will lease the Port Washington Units to Wisconsin Electric under the terms of 25-year facility leases, one for each unit ("Facility Leases"), and certain other related contractual arrangements ("Lease Transaction"). Applicants state that once the Port Washington Units are operational, control of the appurtenant transmission facilities will be transferred to ATC.

Applicants propose to implement the Lease Transaction using a "leased generation" structure specifically authorized under Wisconsin's "Leased Generation Law."² Applicants state that this law establishes a new regulatory framework under which nonutility affiliates may develop, construct and own large-scale dedicated generating facilities within the state of Wisconsin and lease those facilities to their regulated, franchised public utility affiliates. The legislative intent behind the Leased Generation Law is to "provide an incentive for utility holding companies to continue to provide generation services for the affiliate utility's native load customers."³ To that end, Applicants state that the statute specifically permits a public utility company to acquire generating resources by leasing them from an affiliate as an alternative to the public utility company constructing the generating facilities itself. The Leased Generation Law allows a public utility company to build generation indirectly through an affiliate. The Leased Generation Law is limited to leases between a public utility company and an affiliated entity; it does not apply to leases between a public utility company and third parties.

Once the lease provisions become effective, Wisconsin Electric will make fixed monthly lease payments to Project Company for the terms of the Facility Leases. In return, Wisconsin Electric will have the right to possess and operate the Port Washington Units. The Port Washington Units will be integrated with, and operated as part of, Wisconsin Electric's existing regulated generation fleet. Wisconsin Electric will be responsible for all operations, maintenance, and fuel costs for the Port Washington Units.

Applicants state that neither Project Company nor its immediate parent, W.E. Power, will operate or control the Port Washington Units or associated transmission facilities. At the end of the terms of the Facility Leases, Wisconsin Electric may, at its option, renew each Facility Lease for a renewal term determined under the terms of the Facility Lease, buy each Port Washington Unit outright from Project Company or return the units to Project Company in good condition.

Wisconsin Energy requests an order affirming that, following the Transaction, it will continue to be exempt under section 3(a)(1) of the Act and W.E. Power will become and exempt intermediate holding company under section 3(a)(1) of the Act.

For the Commission by the Division of Investment Management, pursuant to delegated authority.

Endnotes

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¹ See Wisconsin Energy Corp., HCAR No. 24267 (Dec. 18, 1986), as most recently confirmed in Wisconsin Energy Corp., et al., HCAR No. 27329 (Dec. 28, 2000) ("2000 Order").

² See 2001 Wis. Legis. Serv. 16, § 3008mc (West) (codified as Wis. Stat. § 196.52(9)(a)(3)(2002)).

³ See Approval of Affiliated Interest Transactions Between W.E. Power; Wisconsin Elec. Power Co.; and Wisconsin Energy Corp., PSCW Docket Nos. 05-AE-109, 05-CE-117, 137-CE-104, and 6650-CG-211 (December 19, 2002) ("PSCW Order")