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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2004

Securities Registered Pursuant to Section 12(b) of the Act:    None

Securities Registered Pursuant to Section 12(g) of the Act:

Serial Preferred Stock, 3.60% Series, $100 Par Value

Six Per Cent. Preferred Stock, $100 Par Value

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

    Yes  ¨    No  x

The aggregate market value of the common equity of Wisconsin Electric Power Company held by non-affiliates as of June 30, 2004 was zero. All of the common stock of Wisconsin Electric Power Company is held by Wisconsin Energy Corporation.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date (January 31, 2005):

Common Stock, $10 Par Value, 33,289,327 shares outstanding.

Documents Incorporated by Reference

Portions of Wisconsin Electric Power Company’s definitive information statement for its Annual Meeting of Stockholders, to be held on April 29, 2005, are incorporated by reference into Part III hereof.

2004 Form 10-K

WISCONSIN ELECTRIC POWER COMPANY

FORM 10-K REPORT FOR THE YEAR ENDED DECEMBER 31, 2004

TABLE OF CONTENTS

2004 Form 10-K

PART I

ITEM 1.    BUSINESS

INTRODUCTION

Wisconsin Electric Power Company, a wholly-owned subsidiary of Wisconsin Energy Corporation (Wisconsin Energy), was incorporated in the state of Wisconsin in 1896. Unless qualified by their context when used in this document, the terms Wisconsin Electric, the Company, our, us or we refer to Wisconsin Electric Power Company and its subsidiary. We are an electric, gas and steam utility which serves approximately 1,081,400 electric customers in Wisconsin and the Upper Peninsula of Michigan, approximately 437,800 gas customers in Wisconsin and approximately 460 steam customers in metro Milwaukee, Wisconsin. We maintain our principal executive offices in Milwaukee, Wisconsin.

We conduct our operations primarily in three operating segments: an electric utility segment, a natural gas utility segment and a steam utility segment. For further financial information about our business segments, see “Results of Operations” in Item 7 and “Note N–Segment Reporting” in the Notes to Consolidated Financial Statements in Item 8.

Wisconsin Energy is also the parent company of Wisconsin Gas LLC (Wisconsin Gas), a natural gas distribution utility which serves customers throughout Wisconsin, and Edison Sault Electric Company (Edison Sault), an electric utility which serves customers in the Upper Peninsula of Michigan. Wisconsin Electric and Wisconsin Gas have combined common functions and operate under the trade name of “We Energies.”

Power the Future Strategy: In late February 2001, Wisconsin Energy filed a petition with the Public Service Commission of Wisconsin (PSCW) starting the regulatory review process for a 10-year strategy, originally proposed in September 2000, to improve the supply and reliability of electricity in Wisconsin. As part of Wisconsin Energy’s Power the Future strategy, Wisconsin Energy is (1) investing in new natural gas-fired and coal-fired generating capacity; (2) upgrading our existing electric generating facilities and (3) investing in upgrades of our existing energy distribution system. The new generating capacity will be built by an affiliated company, W.E. Power LLC (We Power), and leased to us through long-term leases. Implementation of the Power the Future strategy is subject to a number of state and federal regulatory approvals and judicial review. Additional information concerning Power the Future may be found below in “Environmental Compliance,” as well as in Item 7.

Other: Bostco LLC (Bostco) is our non-utility subsidiary that develops and invests in real estate.

Cautionary Factors: Certain statements contained herein are “Forward-Looking Statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-Looking Statements include, among other things, statements regarding management’s expectations and projections regarding completion of construction projects, regulatory matters, fuel costs, sources of electric energy supply, gas deliveries, remediation costs, environmental and other capital expenditures, liquidity and capital resources and other matters. Also, Forward-Looking Statements may be identified by reference to a future period or periods or by the use of forward looking terminology such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “may,” “objectives,” “plans,” “possible,” “potential,” “projects” or similar terms or variations of these terms. Actual results may differ materially from those set forth in Forward-Looking Statements as a result of certain risks and uncertainties, including but not limited to, those risks and uncertainties described under the heading “Cautionary Factors” in Item 7 of this report, as well as other matters described under the heading “Factors Affecting Results, Liquidity and Capital Resources” in Item 7 of this report, and other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission (SEC) or otherwise described throughout this document.

UTILITY OPERATIONS

ELECTRIC UTILITY OPERATIONS

We are the largest electric utility in the state of Wisconsin. We generate, distribute and sell electric energy in southeastern (including the metropolitan Milwaukee area), east central and northern Wisconsin and in the Upper Peninsula of Michigan.

2004 Form 10-K

ITEM 1.    BUSINESS–(Cont’d)

Electric Sales

See “Selected Operating Data” in Item 6 for certain electric utility operating information by customer class during the period 2000 through 2004.

We are authorized to provide retail electric service in designated territories in the state of Wisconsin, as established by indeterminate permits, certificates of public convenience and necessity, or boundary agreements with other utilities, and in certain territories in the state of Michigan pursuant to franchises granted by municipalities. We also sell wholesale electric power.

Our electric energy sales to all classes of customers totaled approximately 31.2 million megawatt hours (mwh) during 2004, a 1.5% increase from 2003. Approximately 0.4 million of megawatt-hour sales during 2004 were to Edison Sault. We had approximately 1,081,400 electric customers at December 31, 2004, an increase of 1.3% since December 31, 2003.

Electric Sales Growth: Assuming moderate growth in the economy of our electric utility service territories and normal weather, we presently anticipate total retail and municipal electric kilowatt-hour sales to grow at an annual rate of 1.6% to 2.0% over the next five years. We also anticipate that our annual electric demand will grow at a rate of 2.0% to 3.0% over the next five years.

Sales to Large Electric Retail Customers: We provide electric utility service to a diversified base of customers in such industries as mining, paper, foundry, food products and machinery production, as well as to large retail chains.

Our largest retail electric customers are two iron ore mines located in the Upper Peninsula of Michigan. We currently have special negotiated power-sales contracts with these mines that expire in December 2007. The combined electric energy sales to the two mines accounted for 7.5% and 7.2% of our total electric utility energy sales during 2004 and 2003, respectively.

Sales to Wholesale Customers: During 2004, we sold wholesale electric energy to three municipally owned systems, two rural cooperatives and one municipal joint action agency located in the states of Wisconsin, Michigan and Illinois. We also made wholesale electric energy sales to 34 other public utilities and power marketers throughout the region under rates approved by the Federal Energy Regulatory Commission (FERC). Wholesale sales accounted for approximately 9.7% of our total electric energy sales and 4.1% of total electric operating revenues during 2004 compared with 9.5% of total electric energy sales and 4.0% of total electric operating revenues during 2003.

Electric System Reliability Matters: Electric energy sales are impacted by seasonal factors and varying weather conditions from year-to-year. As a summer peaking utility, we reached our 2004 electric peak demand obligation of 5,722 megawatts on July 20, 2004 and our all-time electric peak demand obligation of 6,376 megawatts on August 21, 2003. The summer period is the most relevant period for capacity planning purposes for us due to cooling load.

We are a member of the MAIN reliability council. MAIN guidelines direct members to have a minimum 14.12% planning reserve margin in place prior to the upcoming peak season. PSCW guidelines for electric utilities in Wisconsin advise a minimum 18% planning reserve margin. The Michigan Public Service Commission (MPSC) has not provided guidelines in this area.

We had adequate capacity to meet all of our firm electric load obligations during 2004 and expect to have adequate capacity to meet all of our firm obligations during 2005. For additional information, see “Factors Affecting Results, Liquidity and Capital Resources” in Item 7. For additional information regarding our generation facilities, see Item 2.

Competition

Prior to 2003, the nation’s electric utility industry had been following a trend towards restructuring and increased competition. However, given electric reliability problems experienced in the eastern United States during the summer of 2003 and in the state of California in 2001 and 2002, which had previously restructured its electric

2004 Form 10-K

ITEM 1.    BUSINESS–(Cont’d)

industry framework, and given the current status of restructuring initiatives in regulatory jurisdictions where we primarily do business, we do not expect to be affected by a significant change in electric regulation in the next five years. The PSCW has been and remains focused on electric reliability infrastructure issues for the state of Wisconsin. The state of Michigan implemented electric retail access in 2002 and the FERC continues to strongly support large Regional Transmission Organizations (RTO) such as the Midwest Independent Transmission System Operator, Inc. (Midwest ISO). For additional information, see “Factors Affecting Results, Liquidity and Capital Resources” in Item 7.

Electric Supply

The table below indicates our sources of electric energy supply as a percentage of sales for the three years ended December 31, 2004 as well as an estimate for 2005:

We have not built a base load generating plant since the mid-1980’s. Over the past few years, we have seen an increase in natural gas as a fuel source to meet increased customer demand for electricity. Wisconsin Energy’s Power the Future plan includes the addition of 2,320 megawatts of generating capacity over the next seven years. We Power is currently building two 545-megawatt natural gas units at an existing site in Port Washington, Wisconsin. The first natural gas unit is expected to be operational early in the third quarter of 2005. The second natural gas unit is expected to be operational by the end of the second quarter of 2008. We Power has also received approval from the PSCW to build two 615-megawatt coal units at an existing site in Oak Creek, Wisconsin. The approval to build these coal units has been challenged, and this matter is scheduled to be heard by the Supreme Court of Wisconsin in March 2005. See Item 7, “Factors Affecting Results, Liquidity and Capital Resources–Power the Future” for further discussions on the legal and regulatory challenges associated with the proposed coal plants.

We believe that Wisconsin Energy’s Power the Future plan will allow us to manage the mix of fuels used to generate electricity for our customers. We believe that it is in the best interests of our customers to provide a diverse fuel mix that is expected to maintain a stable, reliable and affordable energy supply in our service territory.

Our net generation totaled 29.0 million megawatt hours during 2004 compared with 27.8 million megawatt hours during 2003 and 27.6 million megawatt hours during 2002. When compared with the past three years, net generation as a percent of our total electric energy supply is expected to decrease during 2005 in large part due to the Port Washington unit retirements associated with construction of two natural gas-fired generation facilities at the same site, one of which is expected to become operational in 2005, and two nuclear generating facility outages scheduled for 2005. Purchased power is expected to be the primary source of additional electric energy supply required to meet load growth in the next year.

2004 Form 10-K

ITEM 1.    BUSINESS–(Cont’d)

Our average fuel and purchased power costs per megawatt hour by fuel type for the years ended December 31 are shown below.

We use natural gas to fuel our peaking units that are designed to run for short durations. The Port Washington natural gas-fired units being constructed by We Power as part of Power the Future are combined cycle facilities that are designed to run for longer durations and at a lower operating cost as compared to a peaking unit.

Coal costs in 2004 were adversely affected by the failure of one of our transportation suppliers to deliver coal under a long-term contract, forcing us to obtain replacement coal at substantially higher prices. We are currently evaluating various remedies available for this delivery failure under the transportation contract.

The fuel costs for coal and nuclear generation are relatively stable as the fuel costs are under long-term contracts. However, many existing coal and rail contracts expire at the end of 2005. Based on current market conditions, we expect coal and transportation costs to increase more significantly than our most recent historical trend beginning in 2006.

The costs for natural gas and purchased power, which is primarily natural gas-fired, are more volatile and have experienced significant increases since 2002. Beginning in late 2003 and concurrent with the approval of the PSCW, we established hedging programs to mitigate significant price fluctuations due to gas prices. This hedging program is generally implemented on an 18 month forward-looking basis. Proceeds related to the natural gas hedging program are reflected in the 2004 average costs of Natural Gas and Purchased Power shown above.

Our installed capacity by fuel type for the years ended December 31 is shown below.

Coal-Fired Generation

Coal Supply: We diversify the coal supply for our power plants by purchasing coal from mines in northern and central Appalachia as well as from various western mines. During 2005, 97.6% of our projected coal requirements of 10.5 million tons will be under contracts which are not tied to 2005 market pricing fluctuations. We do not anticipate any problem in procuring our remaining 2005 coal requirements through short-term or spot purchases. Our coal-fired generation consists of six operating plants with a dependable capability of approximately 3,334 megawatts.

2004 Form 10-K

ITEM 1.    BUSINESS–(Cont’d)

Following is a summary of the annual tonnage amounts for our principal long-term coal contracts by the month and year in which the contracts expire.

As of the beginning of 2005, we had approximately a 77-day supply of coal in inventory at our coal-fired facilities.

Coal Deliveries: Approximately 75% of our 2005 coal requirements are expected to be delivered by unit trains owned or leased by us. The unit trains will transport coal for the Oak Creek and Pleasant Prairie Power Plants from Wyoming mines. Coal from Pennsylvania and Colorado mines is also transported via rail to Lake Erie or Lake Michigan transfer docks and delivered to the Valley and Milwaukee County Power Plants. Montana and Wyoming coal for Presque Isle Power Plant is transported via rail to Superior, Wisconsin, placed in dock storage and reloaded into lake vessels for plant delivery. Central Appalachia and Colorado coal bound for Presque Isle Power Plant is shipped via rail to Lake Erie and Lake Michigan (Chicago) coal transfer docks, respectively, for lake vessel delivery to the plant.

Environmental Matters: For information regarding emission restrictions, especially as they relate to coal-fired generating facilities, see “Environmental Compliance.”

Nuclear Generation

Point Beach Nuclear Plant: We own two 518-megawatt electric generating units at Point Beach Nuclear Plant (Point Beach) in Two Rivers, Wisconsin. The United States Nuclear Regulatory Commission (NRC) operating licenses for Point Beach expire in October 2010 for Unit 1 and in March 2013 for Unit 2. We and the Nuclear Management Company, LLC (NMC) filed an application with the NRC in February 2004 to renew the operating licenses for both of our nuclear reactors for an additional 20 years. Based upon the NRC’s published schedule, we expect the NRC to make a decision on the license extension application by January 2006. For additional information concerning Point Beach, see “Factors Affecting Results, Liquidity and Capital Resources” in Item 7 and “Note F–Nuclear Operations” in the Notes to Consolidated Financial Statements in Item 8.

Nuclear Management Company: NMC, owned by our affiliate WEC Nuclear Corporation and the affiliates of four other unaffiliated investor-owned utilities in the region, operates Point Beach. NMC operates eight nuclear generating units at six sites in the states of Wisconsin, Minnesota, Michigan, and Iowa with a total combined generating capacity of approximately 4,600 megawatts as of December 31, 2004. We continue to own Point Beach and retain exclusive rights to the energy generated by the plant as well as financial responsibility for the safe operation, maintenance and decommissioning of Point Beach. For further information, see “Factors Affecting Results, Liquidity and Capital Resources” in Item 7.

Nuclear Fuel Supply: We purchase uranium concentrates (Yellowcake) and contract for its conversion, enrichment and fabrication. There have been numerous events in the nuclear fuel supply market that have affected the price of uranium concentrates, conversion service and enrichment services. The price of the fuel commodities has risen steadily since the fourth quarter of 2003, and we anticipate that the price will continue to rise due to current demand exceeding current supply. NMC is continually monitoring the nuclear fuel commodities market to assess current and future commodity pricing and adjusting purchasing strategies to address changes in the market conditions. We maintain title to the nuclear fuel until fabricated fuel assemblies are delivered to Point Beach; it is then sold to and leased back from the Wisconsin Electric Fuel Trust. For further information concerning this nuclear fuel lease, see “Note G–Long-Term Debt” in the Notes to Consolidated Financial Statements in Item 8.

Uranium Requirements: We require approximately 400,000 pounds of Yellowcake to refuel a generating unit at Point Beach. Point Beach has staggered fuel cycles that are expected to average approximately 18 months in duration. The supply of Yellowcake for these refuelings is currently provided through one long-term contract,

2004 Form 10-K

ITEM 1.    BUSINESS–(Cont’d)

which supplies 100% of the annual requirements through 2007, with an option to extend the current contract through 2009.

Conversion: We have a long-term contract through NMC with a provider of uranium conversion services to supply 100% of the conversion requirements for the Point Beach reactors through 2005. We have the option to utilize an NMC fleet contract for conversion services to meet approximately 56% of our conversion requirements through 2006. We are currently pursuing additional contracts for conversion services for Point Beach to meet the remaining 2006 requirements and additional contracts for supply beyond 2006.

Enrichment: We effectively have one long-term contract and another contract through NMC that provide for 100% of the required enrichment services for the Point Beach reactors through the year 2006 and approximately 38% of the enrichment services requirements through 2009.

Fabrication: Fabrication of fuel assemblies from enriched uranium for Point Beach is covered under a contract with Westinghouse Electric Company, LLC for the balance of the plant’s current operating licenses.

Used Nuclear Fuel Storage & Disposal: For information concerning used fuel storage and disposal issues, see “Factors Affecting Results, Liquidity and Capital Resources” in Item 7.

Nuclear Decommissioning: We provide for costs associated with the eventual decommissioning of Point Beach through the use of an external trust fund. Payments to this fund, together with investment results, brought the balance in the fund at December 31, 2004 to approximately $737.8 million. For additional information regarding decommissioning, see “Note F–Nuclear Operations” in the Notes to Consolidated Financial Statements in Item 8.

Nuclear Plant Insurance: For information regarding nuclear plant insurance, see “Factors Affecting Results, Liquidity and Capital Resources” in Item 7 and “Note F–Nuclear Operations” in the Notes to Consolidated Financial Statements in Item 8.

Hydroelectric Generation

Our hydroelectric generating system consists of thirteen operating plants with a total installed capacity of approximately 89 megawatts and a dependable capability of approximately 57 megawatts. Of these thirteen plants, twelve are licensed by the FERC. The thirteenth plant, with an installed generating capacity of approximately 2 megawatts, does not require a license. Of the twelve licensed plants, eleven plants, representing a total of 85 megawatts of installed capacity, have long-term licenses from the FERC. A fourteenth non-operating plant, the Sturgeon project, was not relicensed and is in the process of being removed. Staged removal of the Sturgeon project has commenced and is scheduled to be completed by 2006.

Natural Gas-Fired Generation

Our natural gas-fired generation consists of four owned operating plants with a dependable capability of approximately 888 megawatts, and four operating plants under contract with a dependable capability of approximately 1,098 megawatts. In addition, early in the third quarter of 2005, we expect to add 545 megawatts of natural gas-fired generation under long-term lease with the first of two units at the Port Washington plant under Wisconsin Energy’s Power the Future plan. The second 545-megawatt unit at Port Washington is estimated to come on line in 2008.

With the exception of one plant under contract, which purchases its own natural gas and transportation services, we purchase natural gas for these plants on the spot market from gas marketers and producers and we arrange for transportation of the natural gas to our plants and plants under contract. We have interruptible balancing and storage agreements that are intended to facilitate the variable usage pattern of the plants.

The PSCW has approved a program that allows us to hedge up to 75% of our estimated gas purchases for electric generation. This program is intended to minimize the volatility of natural gas prices to our customers. The costs of this program are included in our fuel and purchased power costs.

2004 Form 10-K

ITEM 1.    BUSINESS–(Cont’d)

Oil-Fired Generation

Fuel oil is used for the combustion turbines at the Point Beach and Germantown Power Plants units 1-4. It is also used for boiler ignition and flame stabilization at the Presque Isle Power Plant, as backup for ignition at the Pleasant Prairie Power Plant and as a backup fuel for the natural gas-fired turbines discussed above. Our oil-fired generation has a dependable capability of approximately 275 megawatts. The natural gas facilities burn oil only if natural gas is not available due to constraints on the natural gas pipeline and/or at the local gas distribution company that delivers gas to the plants. Fuel oil requirements are purchased under partnering agreements with suppliers that assist us with inventory tracking and oil market price trends.

Purchase Power Commitments

We enter into short and long-term purchase power commitments to meet a portion of our anticipated electric energy supply needs. The following table identifies our purchase power commitments with unaffiliated companies over the next five years:

The majority of these purchase power commitments are tolling arrangements whereby we are responsible for the procurement, delivery and cost of natural gas fuel related to specific units identified in the contracts. The energy costs for the balance of the commitments are tied to the costs of natural gas.

Electric Transmission and Energy Markets

American Transmission Company: Effective January 1, 2001, we transferred all of our electric utility transmission assets to American Transmission Company LLC (ATC) in exchange for an ownership interest in this new company. Joining ATC was consistent with the FERC’s Order No. 2000, designed to foster competition, efficiency and reliability in the electric industry.

ATC is owned and governed by the utilities that contributed facilities or capital in accordance with 1999 Wisconsin Act 9. At December 31, 2004, we owned approximately 33.2% of ATC.

ATC’s sole business is to provide reliable, economic electric transmission service to all customers in a fair and equitable manner. Specifically, ATC plans, constructs, operates, maintains and expands transmission facilities it owns to provide for adequate and reliable transmission of electric power. ATC is expected to provide comparable service to all customers, including us, and to support effective competition in energy markets without favoring any market participant. ATC is regulated by the FERC for all rate terms and conditions of service and is a transmission-owning member of the Midwest ISO. As of February 1, 2002, operational control of ATC’s transmission system was transferred to the Midwest ISO. We are a non-transmission owning member and customer of the Midwest ISO.

We have contracted to provide, at cost, services required by ATC and which ATC is not able to provide itself at this time. Services include transmission line and substation operation and maintenance, engineering, project, real estate, environmental, supply chain, control center, accounting and miscellaneous services. The annual cost of the services that we provided was approximately
$20.7 million, $30.9 million, and $51.5 million during 2004, 2003, and 2002, respectively, and is expected to continue to decline in future years as ATC provides more of these services itself.

Midwest ISO: In connection with its status as a FERC approved RTO, the Midwest ISO is in the process of developing and implementing a bid-based energy market. In March 2004, Midwest ISO filed a proposed Energy

2004 Form 10-K

ITEM 1.    BUSINESS–(Cont’d)

Markets Tariff that was approved by the FERC, subject to modification, in August 2004 and which will govern the operation of the market. The scheduled implementation date for the bid-based energy market is April 1, 2005.

In the Midwest ISO, base transmission costs are currently being paid by load serving entities (LSEs) located in the service territories of each Midwest ISO transmission owner in proportion to the load served by the LSE versus the total load of the service territory. This “license plate” rate design is scheduled to be replaced after a six-year phase-in of rates in Midwest ISO; but it also was the subject of a proceeding in which a new rate design governing service in the combined Midwest ISO and PJM Interconnection, L.L.C (PJM) service territories was to be developed. In November 2004, FERC issued an order allowing the existing Midwest ISO license plate rate design to continue until at least February 1, 2008.

Lost Revenue Charges: The FERC permits transmission owning utilities that have not joined an RTO to propose a charge to recover revenues that would be lost as a result of RTO membership. These lost revenues result from FERC’s requirement that, within an RTO and for transmission between the systems operated by the Midwest ISO and PJM, entities that currently pay a transmission charge to move energy through or out of a neighboring transmission system will no longer pay this charge to the neighboring transmission system owner or operator upon the neighboring transmission system owner or operator joining an RTO.

For further information, see “Factors Affecting Results, Liquidity and Capital Resources” in Item 7.

Renewable Electric Energy

Wisconsin Energy’s Power the Future plan includes a commitment to significantly increase the amount of renewable energy generation we utilize beyond that required by Wisconsin law. Our target is to provide 5% of our retail electric sales in Wisconsin from renewable energy resources by the year 2011. In addition, we have an “Energy For Tomorrow^®” renewable energy program to provide our customers the opportunity to purchase energy from renewable resources.

Wisconsin’s public benefits legislation requires that for 2005, retail energy providers supply 1.2% of a three year average of their Wisconsin retail electric sales from renewable energy. The required minimum percentage increases to 2.2% by the year 2011. For more information about public benefits see “Regulation” below.

GAS UTILITY OPERATIONS

We are authorized to provide retail gas distribution service in designated territories in the state of Wisconsin, as established by indeterminate permits, certificates of public convenience and necessity, or boundary agreements with other utilities. We also transport customer-owned gas. Our gas utility operates in three distinct service areas: west and south of the City of Milwaukee, the Appleton area and areas within Iron and Vilas Counties, Wisconsin.

Gas Deliveries

Our gas utility business is highly seasonal due to the heating requirements of residential and commercial customers. Annual gas sales are also impacted by the variability of winter temperatures.

See “Selected Operating Data” in Item 6 for selected gas utility operating information by customer class during the period 2000 through 2004.

We delivered approximately 835.1 million therms of gas during 2004, including customer-owned transported gas, a 6.0% decrease compared with 2003. At December 31, 2004, we were transporting gas for 368 customers who purchased gas directly from other suppliers. Transported gas accounted for approximately 34% of the total volumes that we delivered during 2004, 35% during 2003 and 38% during 2002. We had approximately 437,800 gas customers at December 31, 2004, an increase of approximately 2.1% since December 31, 2003.

Our maximum daily send-out during 2004 was 682,933 dekatherms on January 29, 2004.

2004 Form 10-K

ITEM 1.    BUSINESS–(Cont’d)

Sales to Large Gas Customers: We provide gas utility service to a diversified base of industrial customers who are largely within our electric service territory. Major industries served include the paper, food products and fabricated metal products industries. Fuel used for our electric energy supply represents our largest transportation customer.

Gas Deliveries Growth: We currently forecast total therm deliveries of natural gas to grow at an annual rate of approximately 1.0% over the next five-years. This forecast reflects a current year normalized sales level and assumes moderate growth in the economy of our gas utility service territories and normal weather.

Competition

Competition in varying degrees exists between natural gas and other forms of energy available to consumers. Many of our large commercial and industrial customers are dual-fuel customers that are equipped to switch between natural gas and alternate fuels. We offer lower-priced interruptible rates and transportation services for these customers to enable them to reduce their energy costs and use gas rather than other fuels. Under gas transportation agreements, customers purchase gas directly from gas marketers and arrange with interstate pipelines and us to have the gas transported to the facilities where it is used. We earn substantially the same margin (difference between revenue and cost of gas) whether we sell and transport gas to customers or only transport their gas.

Our future ability to maintain our present share of the industrial dual-fuel market (the market that is equipped to use gas or other fuels) depends on our success and the success of third-party gas marketers in obtaining long-term and short-term supplies of natural gas at competitive prices compared to other sources and in arranging or facilitating competitively-priced transportation service for those customers that desire to buy their own gas supplies.

Federal and state regulators continue to implement policies to bring more competition to the gas industry. For information concerning proceedings by the PSCW to consider how its regulation of gas distribution utilities should change to reflect the changing competitive environment in the gas industry, see “Factors Affecting Results, Liquidity and Capital Resources” in Item 7. While the gas utility distribution function is expected to remain a highly regulated, monopoly function, the sales of the natural gas commodity and related services are expected to become increasingly subject to competition from third parties. However, it remains uncertain if and when the current economic disincentives for small customers to choose an alternative gas commodity supplier may be removed such that we begin to face competition for the sale of gas to our smaller firm customers.

Gas Supply, Pipeline Capacity and Storage

We have been able to meet our contractual obligations with both our suppliers and our customers despite periods of severe cold and unseasonably warm weather.

Pipeline Capacity and Storage: Wisconsin Energy has a one-third ownership interest in Guardian pipeline, which receives its gas supply at the Joliet, Illinois market hub. The other interstate pipelines serving Wisconsin originate in three major gas producing areas of North America: the Oklahoma and Texas basins, the Gulf of Mexico and western Canada. We have contracted for long-term firm capacity from each of these areas. This strategy reflects our belief that overall supply security is enhanced by geographic diversification of the supply portfolios and that Canada represents an important long-term source of reliable, competitively-priced gas.

Because of the daily and seasonal variations in gas usage in Wisconsin, we have also contracted for substantial underground storage capacity, primarily in Michigan. Storage capacity enables us to manage significant changes in daily demand and to optimize our overall gas supply and capacity costs. We generally inject gas into storage during the spring and summer months and withdraw it in the winter months. As a result, we can contract for less long-line pipeline capacity than would otherwise be necessary, and can purchase gas on a more uniform daily basis from suppliers year-round. Each of these capabilities enables us to reduce our overall costs.

We also maintain high deliverability storage in the Southeast production areas, as well as in our market area. This storage capacity is designed to deliver gas when other supplies cannot be delivered during extremely cold weather in the producing areas, which can reduce long-line supply.

We hold firm daily transportation and storage capacity entitlements from pipelines and other service providers under long-term contracts.

Term Gas Supply: We currently have contracts for firm supplies with terms in excess of 30 days with suppliers for gas acquired at the Joliet, Illinois market hub and in the three producing areas discussed above. The pricing of the term

2004 Form 10-K

ITEM 1.    BUSINESS–(Cont’d)

contracts is based upon first of the month indices. Combined with our storage capability, we believe that the volume of gas under contract is sufficient to meet our forecasted firm peak day demand.

Secondary Market Transactions: Capacity release is a mechanism by which pipeline long-line and storage capacity and gas supplies under contract can be resold in the secondary market. Local distribution companies, like our gas operations, must contract for capacity and supply sufficient to meet the firm peak day demand of our customers. Peak or near peak demand days generally occur only a few times each year. Capacity release facilitates higher utilization of contracted capacity and supply during those times when the full contracted capacity and supply are not needed by us, helping to mitigate the fixed costs associated with maintaining peak levels of capacity and gas supply. Through pre-arranged agreements and day-to-day electronic bulletin board postings, interested parties can purchase this excess capacity and supply. The proceeds from these transactions are passed through to ratepayers, subject to our gas cost incentive mechanism pursuant to which we have an opportunity to share in the cost savings. See “Factors Affecting Results, Liquidity and Capital Resources–Rates and Regulatory Matters” in Item 7 for information on the gas cost recovery mechanism. During 2004, we continued our active participation in the capacity release market.

Spot Market Gas Supply: We expect to continue to make gas purchases in the 30-day spot market as price and other circumstances dictate. We have supply relationships with a number of sellers from whom we purchase spot gas.

Hedging Gas Supply Prices: We have PSCW approval to hedge (i) up to 50% of planned flowing gas supply using NYMEX-based natural gas options, (ii) up to 10% of planned flowing gas supply using NYMEX based natural gas future contracts, and (iii) up to 33% of planned storage withdrawals using NYMEX based natural gas options. Those approvals allow us to pass 100% of the hedging costs (premiums and brokerage fees) and proceeds (gains and losses) through our purchase gas adjustment mechanism. Hedge targets (volumes) are provided annually to the PSCW as part of our five-year gas supply plan filing.

To the extent that opportunities develop and our physical supply operating plans will support them, we also have PSCW approval to utilize NYMEX based natural gas derivatives to capture favorable forward market price differentials. That approval provides for 100% of the related proceeds to accrue to our gas cost recovery (incentive) mechanism.

Guardian Pipeline: Wisconsin Energy has a one-third interest in a joint venture, Guardian Pipeline, L.L.C. (Guardian). Two unaffiliated companies also have one-third interests. Guardian owns an interstate natural gas pipeline from the Joliet, Illinois market hub to southeastern Wisconsin that is designed to serve the growing demand for natural gas in Wisconsin and Northern Illinois. Guardian pipeline began commercial operation in early December 2002. Currently, Guardian has firm precedent agreements to transport 87% of its 750,000 dekatherms per day pipeline design capacity.

Neither Wisconsin Electric nor Wisconsin Gas has an ownership interest in Guardian. However, Wisconsin Gas has committed to purchase 650,000 dekatherms (approximately 87% of the pipeline’s total capacity) per day of capacity on the pipeline over a long-term contract that expires in December 2012. In December of each year, Wisconsin Gas assigns its excess capacity for our use.

STEAM UTILITY OPERATIONS

Our steam utility generates, distributes and sells steam supplied by our Valley and Milwaukee County Power Plants. We operate a district steam system in downtown Milwaukee and the near south side of Milwaukee. Steam is supplied to this system from our Valley Power Plant, a coal-fired cogeneration facility. We also operate the steam production and distribution facilities of the Milwaukee County Power Plant located on the Milwaukee County Grounds in Wauwatosa, Wisconsin.

Annual sales of steam fluctuate from year to year based upon system growth and variations in weather conditions. During 2004, the steam utility had $22.0 million of operating revenues from the sale of 2,869 million pounds of steam compared with $22.5 million of operating revenues from the sale of 3,073 million pounds of steam during 2003. As of December 31, 2004 and 2003, steam was used by approximately 460 customers for processing, space heating, domestic hot water and humidification.

2004 Form 10-K

ITEM 1.    BUSINESS–(Cont’d)

UTILITY RATE MATTERS

See “Factors Affecting Results, Liquidity and Capital Resources–Rates and Regulatory Matters” in Item 7.

REGULATION

We are an exempt holding company under Section 3(a)(1) of the Public Utility Holding Company Act of 1935, as amended, and Rule 2 hereunder and, accordingly, are exempt from that law’s provisions other than with respect to certain acquisitions of securities of a public utility. For information on how rates are set, see “Factors Affecting Results, Liquidity and Capital Resources–Rates and Regulatory Matters” in Item 7.

We are subject to the regulation of the PSCW as to retail electric, gas and steam rates in the state of Wisconsin, standards of service, issuance of securities, construction of certain new facilities, transactions with affiliates, billing practices and various other matters. We are subject to regulation of the PSCW as to certain levels of short-term debt obligations. We are subject to the regulation of the MPSC as to the various matters associated with retail electric service in the state of Michigan as noted above except as to issuance of securities, construction of certain new facilities, levels of short-term debt obligations and advance approval of transactions with affiliates. Our hydroelectric facilities are regulated by the FERC. We are subject to regulation of the FERC with respect to wholesale power service and accounting.

The following table compares the source of our operating revenues by regulatory jurisdiction for each of the three years in the period ended December 31, 2004.

For information concerning the implementation of full electric retail competition in the state of Michigan effective January 1, 2002, see “Factors Affecting Results, Liquidity and Capital Resources” in Item 7.

Operation and construction relating to our Point Beach Nuclear Plant are subject to regulation by the NRC. Our operations are also subject to regulations, where applicable, of the United States Environmental Protection Agency (EPA), the Wisconsin Department of Natural Resources (WDNR), the Michigan Department of Natural Resources and the Michigan Department of Environmental Quality.

Electric Reliability Legislation: In 1998, the Wisconsin State Legislature passed and the Governor of Wisconsin signed into law 1997 Wisconsin Act 204, intended to address concerns with electric reliability in the state of Wisconsin. 1997 Wisconsin Act 204 included new requirements concerning market power which utilities and their affiliates must meet in order to construct generating facilities. The requirements apply to electric utility facilities in excess of 100 megawatts.

Public Benefits: Public benefits legislation was included in 1999 Wisconsin Act 9. The law created new funding which is adjusted annually to be collected by all electric utilities and remitted to the Wisconsin Department of Administration (DOA). The law also required utilities to continue to collect the funds at existing levels for low-income, conservation and environmental research and development programs and to transfer the funds for these

2004 Form 10-K

ITEM 1.    BUSINESS–(Cont’d)

programs to the DOA. We implemented this change in October 2000. The utilities’ traditional role of providing these programs has shifted to the DOA, which administers the funds for a statewide public benefits program. As part of its order authorizing the construction of We Power’s two coal units under Wisconsin Energy’s Power the Future strategy, the PSCW required us to implement an energy efficiency program for the years 2005-2008 in addition to the DOA-administered programs.

This law also requires that for 2005, retail energy providers supply 1.2% of a three-year average of their Wisconsin retail electric sales from renewable energy. The required minimum percentage increases to 2.2% by the year 2011.

ENVIRONMENTAL COMPLIANCE

Environmental Expenditures

Expenditures for environmental compliance and remediation issues are included in anticipated capital expenditures described in “Liquidity and Capital Resources” in Item 7. For further information concerning air quality standards and rulemaking initiated by the EPA, including estimated costs of compliance, see “Factors Affecting Results, Liquidity and Capital Resources” in Item 7.

Our compliance with federal, state and local environmental protection requirements resulted in capital expenditures of approximately $78 million in 2004 compared with $15 million in 2003. Expenditures incurred during 2004 primarily included costs associated with the installation of pollution abatement facilities at our power plants. These expenditures are expected to approximate $147 million during 2005, reflecting nitrogen oxide (NO_x), sulfur dioxide (SO₂) and other pollution control equipment needed to comply with various rules promulgated by the EPA.

We estimate that our operation, maintenance and depreciation expenses for fly ash removal equipment and other environmental protection systems were approximately $52 million during 2004 and $51 million during 2003.

Solid Waste Landfills

We provide for the disposal of non-ash related solid wastes and hazardous wastes through licensed independent contractors, but federal statutory provisions impose joint and several liability on the generators of waste for certain cleanup costs. Currently there are no active cases.

Coal-Ash Landfills

Some early designed and constructed coal-ash landfills may allow the release of low levels of constituents resulting in the need for various levels of remediation. Where we have become aware of these conditions, efforts have been expended to define the nature and extent of any release, and work has been performed to address these conditions. For additional information, see “Note P–Commitments and Contingencies” in the Notes to Consolidated Financial Statements in Item 8. Sites currently undergoing remediation and/or monitoring include:

Lakeside Property: During 2001, we completed an investigation of property that was used primarily for coal storage, fuel oil transport and coal ash disposal in support of the former Lakeside Power Plant in St. Francis, Wisconsin. Excavation and utilization of residual coal at the site, slope stabilization and cover construction have been completed. Currently, discussion is taking place with neighbors and other interested parties to determine the ultimate use of the remediated property and some other adjacent land that we also own. Future costs for remediation of this site are estimated to be approximately $1.0 million.

Oak Creek North Landfill: Groundwater impairments at this landfill, located in the City of Oak Creek, Wisconsin, prompted us to investigate, during 1998, the condition of the existing cover and other conditions at the site. Surface water drainage improvements were implemented at this site during 1999 and 2000, which are expected to eliminate ash contact with water and remove unwanted ponding of water near monitoring systems. Future costs for remediation are estimated to be approximately $1.5 million and involve reconfiguration of the site and construction of a new cap, which will be accomplished as a part of site upgrades needed to facilitate construction of the new power plants.

2004 Form 10-K

ITEM 1.    BUSINESS–(Cont’d)

Manufactured Gas Plant Sites

We are reviewing and addressing environmental conditions at a number of former manufactured gas plant sites. See “Environmental Matters” in Item 3 and “Note P–Commitments and Contingencies” in the Notes to Consolidated Financial Statements in Item 8.

Air Quality

The 1990 amendments to the Federal Clean Air Act mandate significant nationwide reductions in air emissions. The most significant sections of this law applicable to the country’s electric utilities are the acid rain and non-attainment provisions. The acid rain provisions limit SO₂ and NO_x emissions in phases. The amendments’ Phase II requirements are having a minimal impact on our utilities because of existing cost effective compliance strategies and previous actions taken.

The 1-hour ozone non-attainment rules implemented by the state of Wisconsin and ozone transport rules implemented by the state of Michigan, both under authority of the Federal Clean Air Act, will limit NO_x emissions in phases ending in 2007.

In 2004, the EPA began implementing the National Ambient Air Quality Standards for 8-hour ozone and fine particulate matter (PM_2.5).

See “Factors Affecting Results, Liquidity and Capital Resources” in Item 7 for information concerning National Ambient Air Quality Standards established during 1997 by the EPA and ozone non-attainment rulemaking promulgated by the EPA during 1998.

Wisconsin Energy’s Power the Future strategy provides a plan to meet our growing demand for electricity while using environmentally friendly equipment. Wisconsin Energy plans to build two coal units (the Elm Road units) at the site of our existing Oak Creek Power Plant. The Elm Road units will use a supercritical pulverized coal design and state-of-the-art emission controls. Two natural gas-fired units are being constructed at our existing Port Washington Power Plant site, where older, less efficient coal-fired units installed before 1950 were retired in 2003 and 2004. Implementation of Wisconsin Energy’s Power the Future plan also provides for upgrades to our existing power plants and modernization to increase efficiency and reduce emissions. As a result of the use of the latest emission reduction technologies on the new units, and the installation of equipment to reduce emissions on certain of our existing coal-fired units, the plan is expected to result in a significant reduction in SO₂, NO_x and mercury emissions. In addition to the positive environmental attributes of the generation technologies, the plan involves an increased commitment to conservation and renewable fuels, as well as a commitment to reduce greenhouse gases. For further information about Wisconsin Energy’s Power the Future strategy, see “Factors Affecting Results, Liquidity and Capital Resources–Power the Future–Elm Road” in Item 7.

Clean Water Act

Section 316(b) of the Clean Water Act requires that the location, design, construction and capacity of cooling water intake structures reflect the best technology available (BTA) for minimizing adverse environmental impact. This law dates back to 1972; however, prior to September 2004, there have not been federal rules that define precisely how states and EPA regions would determine that an existing intake meets BTA requirements. This rule establishes, for the first time, national performance standards and compliance alternatives for existing facilities that are designed to minimize the potential adverse environmental impacts to aquatic organisms associated with water withdrawals from cooling water intakes. Costs associated with implementation of the rule for our Oak Creek Power Plant, and We Power’s Elm Road Generating Station and Port Washington Generating Station have been included in project costs. Studies to determine costs, if any that may be associated with our other existing facilities are expected to take place over the next three years.

2004 Form 10-K

ITEM 1.    BUSINESS–(Cont’d)

OTHER

Research and Development: We had immaterial research and development expenditures in the last three years, primarily for improvement of service and abatement of air and water pollution by our electric utility operations. Research and development activities include work done by employees, consultants and contractors, plus sponsorship of research by industry associations.

Employees: At December 31, 2004, we had 4,791 total employees, of which 3,395 were represented under labor agreements. We had the following employees represented under labor agreements with the following bargaining units as of December 31, 2004.

During 2004, labor and management successfully renegotiated four of these contracts covering 2,967 employees.

2004 Form 10-K

ITEM 2.    PROPERTIES

We own our principal properties outright, except that the major portion of electric utility distribution lines, steam utility distribution mains and gas utility distribution mains and services are located, for the most part, on or in streets and highways and on land owned by others.

Effective January 1, 2001, we exited the electric transmission business by contributing all of our transmission assets to ATC in exchange for an equity interest in this new company. For further information, see “Electric Utility Operations” in Item 1.

As of December 31, 2004, we own the following generating stations with dependable capabilities during 2004 as indicated.

As of December 31, 2004, our electric utility operated approximately 21,900 pole-miles of overhead distribution lines and 20,400 miles of underground distribution cable, as well as approximately 352 distribution substations and 267,700 line transformers.

As of December 31, 2004, our gas distribution system included approximately 8,983 miles of mains connected at 22 gate stations to the pipeline transmission systems of ANR Pipeline Company, Guardian, Natural Gas Pipeline Company of America, Northern Natural Pipeline Company and Great Lakes Transmission Company. We have a liquefied natural gas storage plant which converts and stores in liquefied form natural gas received during periods of low consumption. The liquefied natural gas storage plant has a send-out capability of 70,000 dekatherms per day. We also have a propane air system for peaking purposes. This propane air system will provide approximately 2,000 dekatherms per day of supply to the system.

Where electric distribution lines and services and gas distribution mains and services occupy private property, we have obtained consents, permits or easements for these installations from owners of those properties, generally without an examination of ownership records.

2004 Form 10-K

ITEM 2.    PROPERTIES–(Cont’d)

As of December 31, 2004, the combined steam systems supplied by the Valley and Milwaukee County Power Plants consisted of approximately 43 miles of both high pressure and low pressure steam piping, nine miles of walkable tunnels and other pressure regulating equipment.

We own various office buildings and service centers throughout our service area.

ITEM 3.    LEGAL PROCEEDINGS

In addition to those legal proceedings discussed below, we are currently, and from time to time, subject to claims and suits arising in the ordinary course of business. Although the results of these legal proceedings cannot be predicted with certainty, we believe, after consultation with legal counsel, that the ultimate resolution of these proceedings will not have a material adverse effect on our financial statements.

ENVIRONMENTAL MATTERS

We are subject to federal, state and certain local laws and regulations governing the environmental aspects of our operations. We believe that, perhaps with immaterial exceptions, our existing facilities are in compliance with applicable environmental requirements.

EPA Information Requests: We responded to an EPA request for information pursuant to Comprehensive Environmental Response, Compensation and Liability Act Section 104(e) for the Solvay Coke and Gas Site located in Milwaukee, Wisconsin. All potentially responsive records and corporate legal files have been reviewed and responsive information was provided in October 2004. A predecessor company of ours owned a parcel of property that is within the property boundaries of the site. Although we have not accepted responsibility for costs of any sort related to the property, remediation cost estimates and reserves continue to be included in the estimated manufactured gas plant values reported in “Note P–Commitments and Contingencies” in the Notes to Consolidated Financial Statements in Item 8.

See “Environmental Compliance” in Item 1 and “Environmental Matters,” “Manufactured Gas Plant Sites,” “Ash Landfill Sites” and “EPA Information Requests” in “Note P–Commitments and Contingencies” in the Notes to Consolidated Financial Statements, which are incorporated by reference herein, for a discussion of matters related to certain solid waste and coal-ash landfills, manufactured gas plant sites and air quality.

UTILITY RATE MATTERS

See “Factors Affecting Results, Liquidity and Capital Resources–Rates and Regulatory Matters” in Item 7 for information concerning rate matters in the jurisdictions where we do business.

OTHER MATTERS

Used Nuclear Fuel Storage and Removal: See “Factors Affecting Results, Liquidity and Capital Resources–Nuclear Operations” in Item 7 for information concerning the United States Department of Energy’s breach of a contract with us that required the Department of Energy to begin permanently removing used nuclear fuel from Point Beach Nuclear Plant by January 31, 1998.

Stray Voltage: In recent years, several actions by dairy farmers have been commenced or claims made against us for loss of milk production and other damages to livestock allegedly caused by stray voltage resulting from the operation of our electrical system.

On June 25, 2003, the Wisconsin Supreme Court upheld a Court of Appeals decision that affirmed a jury’s verdict against us, awarding $1.2 million to the plaintiffs in a stray voltage lawsuit. The Wisconsin Supreme Court rejected the argument that if a utility company’s measurement of stray voltage is below the PSCW “level of concern,” such

2004 Form 10-K

ITEM 3.    LEGAL PROCEEDINGS–(Cont’d)

company cannot be found negligent in stray voltage cases. The Supreme Court decision held that PSCW regulations regarding stray voltage were only minimum standards to be considered by a jury in stray voltage litigation. However, the Supreme Court remanded back to the trial court its requirement imposed on us to replace a cable with an ungrounded distribution line. In February 2005, the parties reached an agreement in principle to settle all remaining issues in the case.

On February 26, 2004, a Wisconsin jury awarded $850,000 to a dairy farmer who alleged that our distribution system caused damages to his livestock. We have filed an appeal in this decision. The claim made against us in this case is not expected to have a material adverse effect on our financial statements. One other stray voltage case was pending; however, the parties reached an agreement in principle to settle all issues in the case. For additional information, see “Factors Affecting Results, Liquidity and Capital Resources–Legal Matters” in Item 7.

Electromagnetic Fields: Claims have been made or threatened against electric utilities across the country for bodily injury, disease or other damages allegedly caused or aggravated by exposure to electromagnetic fields associated with electric transmission and distribution lines. Results of scientific studies conducted to date have not established the existence of a causal connection between electromagnetic fields and any adverse health affects. We believe that our facilities are constructed and operated in accordance with applicable legal requirements and standards. Currently, there are no cases pending or threatened against us with respect to damage caused by electromagnetic fields.

For information regarding additional legal matters, see “Factors Affecting Results, Liquidity and Capital Resources–Legal Matters” in Item 7.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of our security holders during the fourth quarter of 2004.

2004 Form 10-K

EXECUTIVE OFFICERS OF THE REGISTRANT

The names, ages at December 31, 2004 and positions of our executive officers are listed below along with their business experience during the past five years. All officers are appointed until they resign, die or are removed pursuant to the Bylaws. There are no family relationships among these officers, nor is there any agreement or understanding between any officer and any other person pursuant to which the officer was selected. Reference to Wisconsin Gas LLC includes time spent with its predecessor, Wisconsin Gas Company.

Gale E. Klappa. Age 54.

•    Wisconsin Energy Corporation–Chairman of the Board and Chief Executive Officer since May 2004. President since April 2003.

•    Wisconsin Electric Power Company–Chairman of the Board since May 2004. President and Chief Executive Officer since August 2003.

•    Wisconsin Gas LLC–Chairman of the Board since May 2004. President and Chief Executive Officer since August 2003.

•    Southern Company–Executive Vice President, Chief Financial Officer and Treasurer from March 2001 to April 2003. Chief Strategic Officer from October 1999 to March 2001. Southern Company is a public utility holding company serving the southeastern United States.

•    Director of Wisconsin Energy Corporation, Wisconsin Electric Power Company and Wisconsin Gas LLC since 2003.

Charles R. Cole. Age 58.

•    Wisconsin Electric Power Company–Senior Vice President since 2001. Vice President of Distribution Operations from 1999 to 2000.

•    Wisconsin Gas LLC–Senior Vice President since July 2004.

Stephen P. Dickson. Age 44.

•    Wisconsin Energy Corporation–Controller since 2000.

•    Wisconsin Electric Power Company–Controller since 2000.

•    Wisconsin Gas LLC–Controller since 1998.

Frederick D. Kuester. Age 54.

•    Wisconsin Energy Corporation–Executive Vice President since May 2004.

•    Wisconsin Electric Power Company–Executive Vice President since May 2004. Chief Operating Officer since October 2003.

•    Wisconsin Gas LLC–Executive Vice President since May 2004.

•    Mirant Corporation–Senior Vice President–International from 2001 to October 2003 and Chief Executive Officer of Mirant Asia-Pacific Limited from 1999 to October 2003. Mirant is a multi-national energy company that produces and sells electricity. Mirant Corporation and certain of its subsidiaries voluntarily filed for bankruptcy in July 2003. Other than certain Canadian subsidiaries, none of Mirant’s international subsidiaries filed for bankruptcy.

Allen L. Leverett. Age 38.

•    Wisconsin Energy Corporation–Executive Vice President since May 2004. Chief Financial Officer since July 2003.

•    Wisconsin Electric Power Company–Executive Vice President since May 2004. Chief Financial Officer since July 2003.

•    Wisconsin Gas LLC–Executive Vice President since May 2004. Chief Financial Officer since July 2003.

•    Georgia Power Company–Executive Vice President, Treasurer and Chief Financial Officer from May 2002 to July 2003. Assistant Treasurer from 2000 to 2002. Georgia Power Company is a utility affiliate of Southern Company, which is a public utility holding company serving the southeastern United States.

•    Southern Company Services, Inc.–Vice President and Treasurer from 2000 to 2002. Vice President of Financial Planning and Analysis from 1997 to 2000. Southern Company Services is also an affiliate of Southern Company.

2004 Form 10-K

EXECUTIVE OFFICERS OF THE REGISTRANT–(Cont’d)

Kristine A. Rappé. Age 48.

• Wisconsin Energy Corporation–Senior Vice President and Chief Administrative Officer since May 2004. Vice President from 2003 to April 2004. Corporate Secretary from 2001 to August 2004.

• Wisconsin Electric Power Company–Senior Vice President and Chief Administrative Officer since May 2004. Corporate Secretary from 2001 to August 2004. Vice President from 2001 to April 2004. Vice President of Customer Services from 1995 to 2001.

• Wisconsin Gas LLC–Senior Vice President and Chief Administrative Officer since May 2004. Corporate Secretary from 2001 to August 2004. Vice President from 2001 to April 2004.

Larry Salustro. Age 57.

• Wisconsin Energy Corporation–Executive Vice President since May 2004. General Counsel since 2000. Senior Vice President from 2000 to April 2004.

• Wisconsin Electric Power Company–Executive Vice President since May 2004. General Counsel since 2000. Senior Vice President from 2000 to April 2004. Vice President–Legal, Regulatory and Governmental Affairs from 1997 to 2000.

• Wisconsin Gas LLC–Executive Vice President since May 2004. General Counsel since 2000. Senior Vice President from 2000 to April 2004.

Certain executive officers also hold offices in Wisconsin Energy’s non-utility subsidiaries.

PART II

DIVIDENDS AND COMMON STOCK PRICES

Dividends declared on our common stock during the two most recent fiscal years are set forth below. Dividends were paid entirely in cash. Dividends were paid to our sole common stockholder, Wisconsin Energy Corporation. There is no established public trading market for our common stock.

Subject to any regulatory restriction or other limitations on the payment of dividends, future dividends will be at the discretion of the board of directors and will depend upon, among other factors, earnings, financial condition and other requirements.

Various financing arrangements and regulatory requirements impose certain restrictions on our ability to transfer funds to Wisconsin Energy in the form of cash dividends, loans or advances. Under Wisconsin law, we are prohibited from loaning funds, either directly or indirectly, to Wisconsin Energy.

2004 Form 10-K

ITEM 6.    SELECTED FINANCIAL DATA

WISCONSIN ELECTRIC POWER COMPANY

CONSOLIDATED SELECTED FINANCIAL AND STATISTICAL DATA

CONSOLIDATED SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

2004 Form 10-K

WISCONSIN ELECTRIC POWER COMPANY

SELECTED OPERATING DATA