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For Release: 08/08/2012

Integrys Energy Group, Inc.'s Second Quarter 2012 Earnings Impacted by Unseasonably Warm Weather

Weather and Competitive Pressures at Integrys Energy Services Were Key Drivers Behind Revised Guidance

Chicago – August 8, 2012 – Integrys Energy Group, Inc. (NYSE: TEG) recognized earnings on a Generally Accepted Accounting Principles (GAAP) basis and an adjusted basis as follows:

* This news release includes non-GAAP financial measures. Schedules that provide details on these measures and reconcile these measures to the most comparable GAAP figures are included with this news release.

Adjusted earnings exclude the effects of certain items that are not comparable from one period to the next.

Second Quarter Results

Adjusted earnings were down this quarter compared with the same quarter last year. The main driver of the decrease was the unusually warm weather in 2012. The natural gas utility segment in particular saw lower sales volumes due to weather. In addition, in the second quarter of 2012, The Peoples Gas Light and Coke Company and North Shore Gas Company recorded $7.9 million after tax of reserves against regulatory assets that had been accrued for recovery in the first quarter of 2012 related to decoupling mechanisms. Recovery of these amounts is uncertain after an order from the Illinois Commerce Commission stated that revenues to be collected by Peoples Gas and North Shore Gas under permanent decoupling mechanisms are subject to refund, pending the outcome of appeals in the Illinois Appellate Court. Refunds would be required if the Court overturns the decoupling mechanism and orders a refund of any amounts collected. As a result, financial results for this segment are more sensitive to volume fluctuations in 2012 than they were in the past. The negative impact of weather on earnings quarter over quarter at the natural gas utility segment, including the reserves against decoupling amounts, is estimated to be about $12 million after tax.

Adjusted earnings at the electric utility segment increased. The main driver was lower interest expense at Wisconsin Public Service Corporation due to the repayment of $150 million of longterm debt in August 2011.

Integrys Energy Services' adjusted earnings also increased quarter over quarter. Lower operating expenses more than offset reduced margins. Realized retail electric and natural gas margin decreases were mainly due to competitive pressure on per-unit margins, as well as warmer weather. In addition, energy asset margins were down due to the expiration of a long-term capacity contract in the fourth quarter of 2011.

"Absent the adverse weather impacts this quarter, our core utility earnings remain strong," said Charles A. Schrock, Chairman, President and Chief Executive Officer of Integrys Energy Group. "We continue to make good progress on our natural gas infrastructure and electric environmental retrofit projects."

Earnings Forecast

Integrys Energy Group's guidance range for 2012 diluted earnings per share on a GAAP basis is between $3.02 and $3.17. This guidance assumes continued operational improvements, the availability of generation units, and normal weather conditions for the rest of 2012. The company's guidance range for 2012 diluted earnings per share – adjusted is between $3.00 and $3.15. At this time, Integrys Energy Group is not estimating the impact of derivative and inventory accounting activities and is not projecting any additional special items for the rest of 2012.

Supplemental Data Package

A supplemental data package has been posted on Integrys Energy Group's website. It includes this news release, as well as financial statements, non-GAAP financial information, guidance information for diluted earnings per share, and quarterly financial information by reportable segment. The supplemental data package can be found at http://www.integrysgroup.com/investor/presentations.aspx.

Conference Call

An earnings conference call is scheduled for 8 a.m. Central time on Thursday, August 9, 2012. The call can be accessed 15 minutes prior to the scheduled start time by dialing 888-788-9425. Callers will be required to supply EARNINGS as the passcode and MR. STEVEN ESCHBACH as the leader. A replay of the conference call will be available through November 2, 2012, by dialing 888-568-0883.

Investors may also listen to the live conference or a replay on Integrys Energy Group's website at http://www.integrysgroup.com/investor/presentations.aspx.

PowerPoint slides will be posted on the website and will be referred to within the prepared remarks during the call. The slides will be available at 6 a.m. Central time on August 9.

Forward-Looking Statements

Financial results in this news release are unaudited. In this news release, Integrys Energy Group makes statements concerning its expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. These statements are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future results and conditions, but rather are subject to numerous management assumptions, risks, and uncertainties. Therefore, actual results may differ materially from those expressed or implied by these statements. Although Integrys Energy Group believes that these forward-looking statements and the underlying assumptions are reasonable, it cannot provide assurance that such statements will prove correct.

Forward-looking statements involve a number of risks and uncertainties. Some risks that could cause actual results to differ materially from those expressed or implied in forward-looking statements include those described in Item 1A of Integrys Energy Group's Annual Report on Form 10-K for the year ended December 31, 2011, as may be amended or supplemented in Part II, Item IA of its subsequently filed Quarterly Reports on Form 10-Q, and those identified below.

• The timing and resolution of rate cases and related negotiations, including recovery of deferred and current costs and the ability to earn a reasonable return on investment, and other regulatory decisions impacting the regulated businesses;
• Federal and state legislative and regulatory changes relating to the environment, including climate change and other environmental regulations impacting coal-fired generation facilities and renewable energy standards;
• Other federal and state legislative and regulatory changes, including deregulation and restructuring of the electric and natural gas utility industries, financial reform, health care reform, energy efficiency mandates, reliability standards, pipeline integrity and safety standards, and changes in tax and other laws and regulations to which Integrys Energy Group and its subsidiaries are subject;
• Costs and effects of litigation and administrative proceedings, settlements, investigations, and claims, including manufactured gas plant site cleanup, third-party intervention in permitting and licensing projects, compliance with Clean Air Act requirements at generation plants, and prudence and reconciliation of costs recovered in revenues through automatic gas cost recovery mechanisms;
• Changes in credit ratings and interest rates caused by volatility in the financial markets and actions of rating agencies and their impact on Integrys Energy Group's and its subsidiaries' liquidity and financing efforts;
• The risks associated with changing commodity prices, particularly natural gas and electricity, and the available sources of fuel, natural gas, and purchased power, including their impact on margins, working capital, and liquidity requirements;
• The timing and outcome of any audits, disputes, and other proceedings related to taxes;
• The effects, extent, and timing of additional competition or regulation in the markets in which Integrys Energy Group's subsidiaries operate;
• The ability to retain market-based rate authority;
• The risk associated with the value of goodwill or other intangible assets and their possible impairment;
• The investment performance of employee benefit plan assets and related actuarial assumptions, which impact future funding requirements;
• The impact of unplanned facility outages;
• Changes in technology, particularly with respect to new, developing, or alternative sources of generation;
• The effects of political developments, as well as changes in economic conditions and the related impact on customer use, customer growth, and the ability to adequately forecast energy use for all of Integrys Energy Group's customers;
• Potential business strategies, including mergers, acquisitions, and construction or disposition of assets or businesses, which cannot be assured to be completed timely or within budgets;
• The risk of terrorism or cyber security attacks, including the associated costs to protect assets and respond to such events;
• The risk of failure to maintain the security of personally identifiable information, including the associated costs to notify affected persons and to mitigate their information security concerns;
• The effectiveness of risk management strategies, the use of financial and derivative instruments, and the related recovery of these costs from customers in rates;
• The risk of financial loss, including increases in bad debt expense, associated with the inability of Integrys Energy Group's and its subsidiaries' counterparties, affiliates, and customers to meet their obligations;
• Unusual weather and other natural phenomena, including related economic, operational, and/or other ancillary effects of any such events;
• The ability to use tax credit and loss carryforwards;
• The financial performance of American Transmission Company and its corresponding contribution to Integrys Energy Group's earnings;
• The effect of accounting pronouncements issued periodically by standard-setting bodies; and
• Other factors discussed in reports Integrys Energy Group files with the United States Securities and Exchange Commission.

Except to the extent required by the federal securities laws, Integrys Energy Group undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

About Integrys Energy Group, Inc.

Integrys Energy Group is a diversified energy holding company with regulated natural gas and electric utility operations (serving customers in Illinois, Michigan, Minnesota, and Wisconsin), an approximate 34% equity ownership interest in American Transmission Company (a federally regulated electric transmission company operating in Wisconsin, Michigan, Minnesota, and Illinois), and nonregulated energy operations.

More information is available at www.integrysgroup.com.

For More Information, Contact:

• Steven P. Eschbach, CFA
  Vice President - Investor Relations
  Integrys Energy Group, Inc.
  312-228-5408