For Release: 01/04/2013

Wisconsin Public Service Reaches Agreement with U.S. EPA

Operations at older coal-fired generating units are affected. WPS previously announced installing environmental controls at Weston 3.

Green Bay, WI - Wisconsin Public Service Corporation (WPS), a subsidiary of Integrys Energy Group (NYSE: TEG) has reached a settlement agreement with the U.S. Environmental Protection Agency (EPA). The EPA filed a Notice of Violation against WPS in November 2009 alleging that the utility had not obtained the proper air permits for improvements it made to electric generating units to ensure electric reliability as far back as 1994. WPS does not admit any wrongdoing.

"We acted then using what we believed to be the proper process for making the improvements," said Terry Jensky, WPS Vice President of Generation Assets. "Many utilities across the country followed the same procedures and they have or are now facing similar action from the EPA."

In the settlement, WPS agreed to retire, refuel or repower its coal-fired Weston Plant units 1 & 2 (near Wausau, WI), as well as Pulliam Plant units 5 & 6 in Green Bay. The deadline for completing the activities is June 1, 2015. All of these actions are consistent with our evolving generation strategy as we align our portfolio to the best interests of our customers and other stakeholders.

The settlement included a provision for WPS to install its previously announced innovative ReACT™ environmental controls at its Weston 3 generator (321 megawatts). The system will reduce emissions of several pollutants and will position the unit to be in compliance with future EPA regulations. The ReACT™ installation will be the first commercial application of this technology in the United States. After detailed review and analysis, WPS opted to move forward with ReACT™ in advance of the settlement.

Following Public Service Commission of Wisconsin approval, the ReACT™ project will take more than 3.5 years to complete and bring more than 200 temporary, high-paying construction jobs to the Wausau, WI area.

In addition, WPS agreed to more restrictive limits on emissions than current air permits require for Pulliam units 7 & 8, as well as at its other coal-fired generators system wide. It may result in some coal-fired generators operating less. Any power lost will be replaced by some combination of natural gas-fired generation or purchases from the market.

WPS has previously installed emissions control technologies at both Weston and Pulliam to reduce emissions of sulfur dioxide, nitrogen oxide, mercury and particulate matter.

Weston units 1 & 2 have a combined nameplate generating capacity of 135 megawatts, while the capacity of Pulliam 5 & 6 is 112.5 megawatts. The Pulliam units were built around 1950, while Weston 1 became operational in 1954, with Weston 2 following in 1960.

WPS said that it expects the settlement along with current economic conditions will likely lead to employee staff reductions within its energy supply operations area. The ultimate number of employees affected won't be determined until decisions are finalized.

Also in the settlement, WPS agreed to pay a civil penalty of $1.2 million, as well as commit to spending $6 million for beneficial environmental projects.

Potential projects identified include:

Also as a provision of the settlement, WPS will provide $300,000 in seed money to fund a study to evaluate the feasibility of a "community digester" project within its service area that would accept manure from nearby farms to be used to generate electricity.

Other potential projects include the conversion of a select number of fleet vehicles from gasoline or diesel fuel to compressed natural gas, and the installation of solar panels on selected community or buildings owned by not-for-profit organizations within its service area.

The contributions to the Forest Service and Park Service must be made within 45 days. The rest of the projects must be completed within 5 years of plan approval.

The settlement was filed in the U.S. District Court for the Eastern District of Wisconsin, and is subject to a 30-day public comment period and final court approval.

About Wisconsin Public Service Corporation

Wisconsin Public Service Corporation, a wholly owned subsidiary of Integrys Energy Group, Inc. (NYSE: TEG), is an investor-owned electric and natural gas utility headquartered in Green Bay, Wisconsin. It serves approximately 441,000 electric customers and 319,000 natural gas customers in residential, agricultural, industrial, and commercial markets. It also provides electric power to wholesale customers. The company’s service area includes northeastern Wisconsin and an adjacent portion of Upper Michigan. Additional information is available online at www.wisconsinpublicservice.com.

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