WPS Resources Peoples Energy make progress toward completing merger

Green Bay, WI, and Chicago, IL, Jan. 10, 2007 — WPS Resources Corp. and Peoples Energy Corp. announced they have made significant progress toward obtaining the approvals needed to close their proposed merger, including:

* On January 9, 2007, WPS Resources and Peoples reached agreement with most of the interveners on the contested issues in the merger application pending before the Illinois Commerce Commission. The agreement is between the companies and the City of Chicago, the Cook County State’s Attorney’s Office, the Attorney General of the State of Illinois, the Citizens Utility Board, the Environmental Law and Policy Center, the Utility Workers Union of America, AFL-CIO, and UWUA Local Union No. 18007 (UWUA Local 18007). The staff of the Illinois Commerce Commission, which as a general rule does not join in settlement agreements, has signed the agreement to indicate that staff has no objection to and will not oppose the terms of the agreement. The agreement is memorialized in documents filed with the Illinois Commerce Commission. Discussions continue with the remaining intervening parties. All agreements must be presented to and are subject to approval by the Illinois Commerce Commission.

* On December 21, 2006, the Federal Energy Regulatory Commission approved the merger transaction.

* On December 6, 2006, the shareholders of WPS Resources and Peoples voted overwhelmingly to approve the completion of the merger.

A summary of major components of the Illinois agreement are:

* In the rate cases to be filed by Peoples Gas and North Shore Gas in 2007, the companies will use historical test years ended September 30, 2006, with adjustments for “known and measurable changes” through September 30, 2007. There will be adjustments for “known and measurable changes” for merger related annual synergy savings totaling about $13 million.

Peoples Gas’ and North Shore Gas’ recovery of merger-related costs incurred to achieve the synergy savings will be capped at about $45 million. The estimate of such costs provided in testimony filed previously with the Illinois Commerce Commission was about $47 million. Of this amount, about $35 million will be recovered through an annual cost recovery of about $7 million which will be provided through a five-year amortization period included in the 2007 rate case. The remaining costs, to the extent actually incurred, will be eligible for recovery through rates established in a future rate case.

* Peoples Gas and North Shore Gas will conduct certain operational studies proposed by Illinois Commerce Commission Staff to assist in improving customer service.

* In their next rate cases, Peoples Gas and North Shore Gas will propose energy efficiency programs with an aggregate cost of $7.5 million per year. It is anticipated the companies will not be obligated to fund these programs beyond the amount for which the Illinois Commerce Commission provides cost recovery in the rate case orders.

* Peoples Gas commits there will be no reorganization-related layoffs or reorganization-related position reductions among the UWUA Local 18007 employees. In addition, there will be a specific limited number of position upgrades and additions to the current union work force levels.

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