Presentation to the Wisconsin Industrial Energy Group (WIEG)

1. Presentation to the Wisconsin Industrial Energy Group (WIEG) T. Graham Edwards President & CEO August 9, 2007

2. Value of the Midwest ISO

3. Independent Market Monitor (IMM) 2006 State of the Market Report • IMM stated that the Midwest ISO market has been operating as excellent and continues to improve • IMM specifically pointed to specific areas of performance: • Daily generation commitment – RSG costs decreased by 62% • Generation dispatch and congestion management • Reliability – Prices on Midwest ISO seams are well arbitraged • Midwest ISO/PJM coordination – effectively managed constraints • Price signals – total congestion costs of $550 million in 2006 vs. $1.07 billion in 2005 (9 months annualized)

4. Reliability • Real Time Operations “Scorecard” • NERC Audit • Awarded 6 “Examples of Excellence” • Provided 13 Positive Observations • Contingency Reserve Sharing Group • Started 1/1/07 • Has resulted in a 39% reduction in reserve obligation • Projected annual savings between $59-118 million

5. Direct Quotes from WisconsinMarket Participants • Midwest ISO’s system of dispatch has been very beneficial, especially when not all of our generation resources were available • Our company is now on a level playing ground with other WI utilities now that the Midwest ISO market is in operation • Midwest ISO market provides our company access to lower cost wholesale energy supply and increased flexibility to manage fuel cost increases • We have the ability to import three times as many MW during stress conditions than prior to the market – much more liquid • The Midwest ISO LMP market is more efficient at implementing re-dispatch to address an overloaded transmission line than the NERC TLR system

6. Steps to Improve Services • Annual Stakeholders Meeting • Market Operating Committee • IT System Improvements • Ancillary Services Market (ASM) • Improvements to Generator Interconnection Queue

7. CAISO ERCOT MISO ISO-NE NYISO PJM ISO/RTO Cost Comparison Cost per megawatt-hour of Load Served ($/MWh) 1.20 1.00 0.80 ($/MWh) 0.60 0.40 0.20 0.00 1999 2000 2001 2002 2003 2004 2005 2006

8. Looking Ahead • Short-Term Priorities • Improving Operational Performance • Implementation of ASM • Moving forward with Resource Adequacy • Maintaining the Midwest ISO’s credit rating • Long-Term Vision • Strategic Plan - Direction to be adopted by our Board next week • Plan emphasis • Operational Performance • Value Creation • Positioning for Growth

9. Midwest ISO Aspirations

10. Midwest ISO’s Role in Regional Planning • Coordination of Regional Planning • Midwest Transmission Expansion Plan (MTEP) • Progress • What it’s NOT • Challenges

11. Demand Response • Board of Directors adopted guiding principals • “The Midwest ISO strives to have an open wholesale market where energy can be bought or sold in fair, efficient and non-discriminatory markets, while providing for reliable grid operations”

12. Demand Response – Action Items2007 • Remove disincentives to provide demand response in Real Time • Remove RSG penalty – Complete • Provide compensation for demand reductions when called during emergency conditions – Stakeholder discussion complete and filing being prepared • Increase accountability and availability of demand response relied upon to satisfy resource adequacy requirements • Module E update filing in December 2007

13. Demand Response – Action Items2008 • Expand opportunities for demand participation • New products tailored to demand resources – ASM • Improve price signals to better reflect supply and demand conditions • ASM • Modified LMP calculation to reflect marginal resource under development • Resolve market design and technical barriers to provide opportunities for direct market participation from dispersed demand response