Integrys Energy Group

Annual Shareholders Meeting - May 18, 2006

"Commitment to Value" *

by Larry L. Weyers
Chairman, President, and Chief Executive Officer

Commitment to value is at the heart of our vision and the key to our success as we implement our strategy. We strive to serve our shareholders and customers and to create value every step of the way. It is gratifying when others recognize and acknowledge results. This year we were especially proud to receive national recognition when Forbes magazine named WPS Resources as the utility industry's "Best Managed Company in America" and Fortune magazine named us the Most Admired Energy Company in America. These are two of the most prestigious national awards we received, but there are a number of others and they are listed in our Annual Report or you can see the display in the lobby before you depart today.

How does a relatively small company in our industry headquartered in Green Bay, Wisconsin, attract recognition at the national level? The answer is obvious to me. The commitment of our employees is easily recognized. It is expressed in their commitment to customers, commitment to doing-the-right thing, and commitment to value. We are committed to creating, preserving, and sharing value with all stakeholders-customers, shareholders, communities, and employees. Our corporate mission is to "Provide customers with the best value in energy and related services." The vision we have for our company is "People creating a world-class energy company." We are and have been, people creating value.

When we developed our vision, some were critical because they thought becoming a world-class energy company was too lofty a goal for our then--small company.

It doesn't seem too lofty a goal now, does it?

This past year our WPS team has created substantial value:

The total return to shareholders in 2005 was 15.3 percent assuming reinvestment of dividends.
Longer term, we provided shareholders with a 14.1 percent average annual return from 2001 through 2005 as noted in The Wall Street Journal on February 27. The industry average was 5.6 percent.
We reduced the risk profile of our company for customers and investors by greatly reducing our exposure to nuclear risk, restructuring our investment in the Sunbury plant to reduce financial risk, and hedging the value of our synthetic fuel tax credits against the rising cost of oil.

We have improved our corporate governance in the wake of the corporate scandals that shook America. Our management team worked closely with your elected representatives, our Board of Directors, and now our corporate governance score as ranked by Institutional Shareholder Services is better than 95.5 percent of the S&P 400 companies and better than 87.7 percent of utility companies. That's real value for investors trying to pick a company they can trust with their investment dollars.

We also created value by refocusing our efforts on environmental stewardship. This is evident by board level commitment to environmental oversight. We completed an analysis of our carbon footprint complete with plans to reduce carbon emissions. We took aim at sulfur dioxide, mercury, and nitrogen oxide emissions with plans to reduce all. Personnel in our generating business unit have embarked on a rigorous overhaul of our compliance protocols. We are chartering an Environmental Management System that is consistent with ISO 14001 requirements, and we are tightening our policies, procedures, monitoring, and accountability. A further description of our actions and renewed dedication to environmental stewardship is highlighted in the Environmental Performance Report mailed with our Annual Report entitled, "The Nature of our Commitment."

We created value for customers. Once again our utility and non-utility operations received high marks from J.D. Powers and MastioGale, respectively, for customer service. We are proud of our record for customer service, but we are also aware of our customer's concerns with rising energy costs. Costs for our regulated utilities have been rising largely due to our construction projects which are necessary for reliability and to improve the aging infrastructure in Wisconsin. High prices for natural gas and coal and increasing costs for transmission are also contributing to rising costs for energy. But we have taken steps to control these costs including:

Our utility operating and maintenance cost increases (excluding fuel, transmission, and purchased power) have been held to zero for 2006 and 2007.
We have implemented a program we call "Competitive Excellence" that is designed to take non-value-added costs permanently out of our processes.
We have installed a rigorous project management system throughout our enterprise to ensure our projects, both big and small, are completed on schedule, within budget, and provide the desired functionality.
We are working with the Public Service Commission of Wisconsin to potentially lower our requested rate increase for 2007 and cap price increases for 2008 and 2009.

I am pleased to report that we are about to enter a period of several years of relative rate stability. Our construction expenditures, that have been a major driver of rate increases, will be greatly reduced in 2008 when we complete the construction of Wausau to Duluth transmission line. I predict today that WPS Resources will once again be one of the lowest cost producers in Wisconsin and the Upper Midwest in just a few years.

Customers are rightly concerned about rising energy costs, but we must put that concern into perspective. A study recently completed by Drs. David Wegge and Kevin Quinn from St. Norbert College indicates that inflation-adjusted prices have risen for energy in Wisconsin by about 9 percent since 1995. However, over the period 1980 through 2004 the inflation-adjusted price for energy in Wisconsin decreased by 20 percent.

There is no question that we have a proven track record for creating value in recent years. But how do we continue to create value in the future?

The answer is embedded in the commitment of our employees and our strategic plan. We have already spoken about the commitment of our employees. Let's take a closer look at the strategic plan. It is very straightforward:

We will continue to invest in quality utility operations similar to our investments in Weston 4, American Transmission Company, Michigan Gas Utilities, and our future natural gas distribution operations in Minnesota.
We will expand the businesses and footprint of WPS Energy Services.
We will deploy portfolio and asset management techniques to manage risk and provide our targeted returns.
We will maintain the financial strength of our company to provide quality credit ratings, dividends, good returns for investors, and average annual earnings-per-share growth of 6 to 8 percent.

We have shown that we can execute this strategy and that it produces great results. We are committed to working this model and creating value for our shareholders.

As you know, there are always a few hurdles and hiccups along the way. Let me address a few of those most recently in the news media and a few of the concerns expressed by shareholders when they returned their proxies.

The stock price is down 17 percent from its 52-week high. There are many possible contributing factors, but we do not see any long-term material change in the company that would sustain this reduced valuation. In the short term, earnings will be negatively impacted by our acquisition of natural gas properties in Michigan and Minnesota. That is due to the fact that those acquisitions will close after the heating season ended in 2006. This will have a negative impact on 2006 earnings, but we are confident those acquisitions will have a positive long-term impact. We have taken steps to strengthen our investor relations program, and we expect to see the impact of that effort soon.

The Sierra Club and Clean Wisconsin have raised concerns about emissions at the Pulliam power plant. These units are some of the oldest units operating in Wisconsin. These units do not have the environmental characteristics of newer units and that is one of the reasons we are investing in newer, more environmentally acceptable units such as Weston 4 and the Fox Energy Center. We are working with the Sierra Club to reach a mutually acceptable resolution of their concerns.

We have received criticism of the process we used to license the Weston 4 project. The licensing process requires judgments by professionals and every day our engineers and other professionals make judgments and decisions related to that project and others. I have confidence in their judgment and I know there is no inclination by them to make a less-than-optimal decision or to circumvent the required process. We are taking steps to reconfirm our commitment to transparency in our dealings with regulators, interested parties, and the public.

You may also have heard of allegations that the decision made by the Public Service Commission of Wisconsin that allowed us to sell the Kewaunee nuclear power plant is somehow tied to a fundraiser for the Governor. Nothing could be further from the truth, and the facts provide no support for these allegations. We do not take these allegations lightly and will cooperate fully in any investigation into the transaction, confident that when the facts are known, it will be clear that nothing improper occurred.

In recent years WPS has increased its participation in the political process. Shareholders have questioned the reason for this increased level of activity. The answer is simple. A few years ago the political process in Wisconsin began having a greater impact on our industry. This started with Act 204 in 1998 and Act 9 In 1999. Decisions normally made by regulators were now being made by legislators. We were forced to become more active or our customers, shareholders, and employees could suffer the consequences of us not being at the table. Simply put, we would be doing a disservice to our stakeholders if we were not represented. So we became more politically active, making sure that all our actions are within the bounds of the law and consistent with our corporate values and in the best interest of our stakeholders. Our employees and retirees, who are also voters, are concerned about their elected officials receiving a more balanced flow of information about our industry. We can provide that balance and will continue to do so to ensure that the interests of our customers, shareholders, communities, and employees will not be harmed by political decisions.

Finally, many of you have expressed concerns about the level of compensation provided to our officers and directors. Our compensation policy is simple. We believe that everyone at every level should have the opportunity to earn compensation consistent with the competitive value of the job they perform. If we pay less, we will lose valuable talent. If we pay more, we will become uncompetitive. Each year the Board of Directors hires one of the premier compensation consultants in the United States to help them determine compensation levels and set compensation policy.

As you have heard, we have been very busy creating value this past year, and we have "raised the bar" for creating excellence. We will continue our commitment to creating value for customers, shareholders, communities, and employees. Perhaps we will attract more recognition and awards. If not, we will still have the satisfaction of knowing we are creating value. We thank you for your trust and investment in WPS Resources. Our employees and I take pride in our commitment to you and thank you for your recognition by entrusting your investment to us. Thank you for your attention.

* Forward-Looking Statements:

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. You can identify these statements by the fact that they do not relate strictly to historical or current facts and often include words such as "anticipate," "expect," "intend" and other similar words. Forward-looking statements are beyond the ability of WPS Resources to control and, in many cases, WPS Resources cannot predict what factors would cause actual results to differ materially from those indicated by forward-looking statements. Please see WPS Resources' periodic reports filed with the Securities and Exchange Commission (including its 10-K and 10-Qs) for a listing of certain factors that could cause actual results to differ materially from those contained in forward-looking statements.