On May 24, 2007, Wisconsin Electric Power Company ("WEPCO"), a wholly owned subsidiary of Wisconsin Energy Corporation, entered into a letter agreement with FPL Energy Point Beach LLC ("FPLE"), an indirect wholly owned subsidiary of FPL Group, Inc. (the "Letter Agreement"). The Letter Agreement effectively amends the Asset Sale Agreement between WEPCO, FPLE and FPL Capital Group, Inc., dated as of December 19, 2006, for the purchase of WEPCO's Point Beach Nuclear Power Plant (the "ASA"). The parties entered into the Letter Agreement in anticipation of receiving a private letter ruling from the United States Internal Revenue Service relating to the transfer of assets in WEPCO's Qualified Decommissioning Fund (the "Ruling").

The terms of the Letter Agreement will become effective only upon receipt of the Ruling and WEPCO's decision to proceed under the Ruling, if approved by the Public Service Commission of Wisconsin (the "PSCW").

If WEPCO were to proceed under the Ruling, WEPCO would be allowed to retain a greater amount of the assets in its nuclear decommissioning funds than are currently permitted under the ASA.

If WEPCO chooses to proceed under the Ruling, WEPCO must transfer to FPLE the greater of: (i) $360 million, subject to interest at an annual rate of 5.5% after August 31, 2007; (ii) the minimum amount sufficient to comply with all rules and orders of the United States Nuclear Regulatory Commission related to decommissioning funding; and (iii) the amount required by the PSCW (the "Decommissioning Target"). The purchase price of approximately $998 million, which is subject to certain adjustments, also would be decreased by $47 million. In addition, if the Decommissioning Target is greater than $360 million, the purchase price would be increased in an amount equal to 25% of the difference between the Decommissioning Target and $360 million. Certain purchase price adjustments related to WEPCO's Decommissioning Fund would no longer apply to the transaction.

In addition, pursuant to the terms of the Letter Agreement, certain representations, warranties and covenants contained in the ASA would have no further force and effect. The Letter Agreement contains customary representations and warranties related to general requirements for decommissioning funds.