xcel energy NSP-WI_Q210-Q2008

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended June 30, 2008

or

For the transition period from to

Commission File Number: 001-03140

Northern States Power Company

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code (715) 839-2625

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 No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer Accelerated filer ⌧ Non-accelerated filer (Do not check if a smaller reporting company) Smaller Reporting Company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ⌧ No Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Northern States Power Co. (a Wisconsin corporation) meets the conditions set forth in General Instruction H (1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format specified in General Instruction H (2) to such Form 10-Q.

⌧ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Wisconsin

39-0508315 (State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1414 W. Hamilton Avenue,

Eau Claire, Wisconsin

54701 (Address of principal executive offices)

(Zip Code)

Class

Outstanding at Aug. 4, 2008 Common Stock, $100 par value 933,000 shares

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TABLE OF CONTENTS

This Form 10-Q is filed by Northern States Power Co., a Wisconsin corporation (NSP-Wisconsin). NSP-Wisconsin is a wholly owned subsidiary of Xcel Energy Inc. (Xcel Energy). Additional information on Xcel Energy is available on various filings with the Securities and Exchange Commission (SEC).

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PART I - FINANCIAL INFORMATION

Item l. Financial Statements (Unaudited)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 4. Controls and Procedures

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

Item 6. Exhibits

SIGNATURES

Certifications Pursuant to Section 302

Certifications Pursuant to Section 906

Statement Pursuant to Private Litigation

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PART 1. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS

NSP-WISCONSIN AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Thousands of Dollars)

See Notes to Consolidated Financial Statements

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Three Months Ended June 30,

Six Months Ended

June 30,

2008 2007 2008 2007

Operating revenues

Electric utility

$ 156,427

$ 153,141 $ 321,847

$ 302,372

Natural gas utility

31,497

21,818 110,090

84,700

Other

215

217 441

399

Total operating revenues

188,139

175,176 432,378

387,471

Operating expenses

Electric fuel and purchased power

90,999

92,862 191,427

181,525

Cost of natural gas sold and transported

23,816

15,461 85,699

65,087

Other operating and maintenance expenses

36,368

33,521 70,213

67,279

Conservation program expenses

2,543

1,854 5,085

3,709

Depreciation and amortization

14,450

13,446 28,559

26,677

Taxes (other than income taxes)

5,247

5,030 10,781

10,370

Total operating expenses 173,423 162,174 391,764 354,647

Operating income

14,716

13,002 40,614

32,824

Interest and other income, net

277

393 674

666

Allowance for funds used during construction — equity 78 304 373 461

Interest charges and financing costs

Interest charges — includes financing costs of $323, $312, $646 and

$621, respectively

5,656

5,611 11,583

11,343

Allowance for funds used during construction — debt

(182) (317) (605) (573)Total interest charges and financing costs

5,474

5,294 10,978

10,770

Income before income taxes

9,597

8,405 30,683

23,181

Income taxes 3,606 3,106 11,552 8,753

Net income

$ 5,991

$ 5,299 $ 19,131

$ 14,428

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NSP-WISCONSIN AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



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Six months Ended June 30,

2008 2007 Operating activities

Net income $ 19,131 $ 14,428

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 29,936

27,829

Deferred income taxes 1,813

4,477

Amortization of investment tax credits (340) (346)

Allowance for equity funds used during construction (373) (461)

Net realized and unrealized hedging and derivative transactions 490

811

Changes in operating assets and liabilities:

Accounts receivable 12,638

10,148

Accrued unbilled revenues 17,531

12,263

Inventories 3,471

3,293

Other current assets 441

355

Accounts payable (10,689) (4,343)

Net regulatory assets and liabilities 2,504

(11,019)Other current liabilities

1,774 3,065Change in other noncurrent assets

48

(1,270)Change in other noncurrent liabilities

492

497

Net cash provided by operating activities 78,867

59,727

Investing activities

Utility capital/construction expenditures (44,625) (36,537)

Allowance for equity funds used during construction 373

461

Other investments 197

(242)Net cash used in investing activities

(44,055) (36,318) Financing activities

Proceeds from notes payable to affiliate 243,300

162,900

Repayment of notes payable to affiliate (265,000) (169,150)

Repayment of long-term debt (16) (13)

Capital contributions from parent 8,188 3,002

Dividends paid to parent (18,888) (20,579)

Net cash used in financing activities (32,416) (23,840)

Net increase (decrease) in cash and cash equivalents

2,396

(431)Cash and cash equivalents at beginning of period

751

1,162

Cash and cash equivalents at end of period $ 3,147 $ 731

Supplemental disclosure of cash flow information:

Cash paid for interest (net of amounts capitalized)

$ 10,098

$ 10,108

Cash paid for income taxes (net of refunds received) 7,668 7,206

Supplemental disclosure of non-cash investing activities:

Property, plant and equipment additions in accounts payable $ 1,078

$ 1,011

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NSP-WISCONSIN AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)



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June 30, 2008

Dec. 31, 2007

ASSETS

Current assets:

Cash and cash equivalents $ 3,147

$ 751

Accounts receivable, net 56,102 69,183

Accounts receivable from affiliates 3,161

2,718

Accrued unbilled revenues 19,509

37,040

Inventories 30,052

33,523

Prepaid taxes 17,543

17,041

Deferred income taxes 22,075 13,532

Derivative instruments valuation 1,629

226

Prepayments and other 1,206

2,734

Total current assets 154,424

176,748

Property, plant and equipment, net

991,852

975,609

Other assets:

Regulatory assets

131,707

114,373

Prepaid pension asset 42,016 40,681

Other investments 4,705

4,902

Other 4,815

4,959

Total other assets 183,243

164,915

Total assets $ 1,329,519

$ 1,317,272

LIABILITIES AND EQUITY

Current liabilities:

Current portion of long-term debt $ 80,258

$ 80,266

Notes payable to affiliates 37,550

59,250

Accounts payable 28,103

37,454

Accounts payable to affiliates 23,519 25,691

Dividends payable to parent 9,327

9,522

Accrued payroll and benefits 6,058 5,916

Accrued interest 4,131

4,105

Derivative instruments valuation 39

460

Other 7,676 6,317

Total current liabilities 196,661 228,981

Deferred credits and other liabilities:

Deferred income taxes 192,483 181,506

Deferred investment tax credits 10,655

10,995

Regulatory liabilities 104,533

103,327

Pension and employee benefit obligations 26,514

26,328

Customer advances 18,829

18,462

Asset retirement obligations 2,938 2,902

Environmental liabilities 66,139

42,705

Other 1,238

1,064

Total deferred credits and other liabilities 423,329

387,289

Minority interest in subsidiaries

163

212

Commitments and contingent liabilities

Capitalization:

Long-term debt 235,426

235,402

Common stock — authorized 1,000,000 shares of $100 par value; outstanding 933,000 shares 93,300

93,300

Additional paid in capital 124,145

115,957

Retained earnings 257,275

256,951

Accumulated other comprehensive loss (780) (820)

Total common stockholder’s equity 473,940 465,388

Total liabilities and equity $ 1,329,519

$ 1,317,272

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NSP-WISCONSIN AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position of NSP-Wisconsin and its subsidiaries as of June 30, 2008, and Dec. 31, 2007; the results of operations for the three and six months ended June 30, 2008 and 2007; and cash flows for the six months ended June 30, 2008 and 2007. Due to the seasonality of electric and natural gas sales of NSP-Wisconsin, interim results are not necessarily an appropriate base from which to project annual results.

Except to the extent updated or described below, the significant accounting policies set forth in Note 1 to the consolidated financial statements in NSP-Wisconsin’s Annual Report on Form 10-K for the year ended Dec. 31, 2007, appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference. Fair Value Measurements –NSP-Wisconsin presents commodity derivatives at estimated fair values in its consolidated financial statements. The most observable inputs available are used to determine the fair value of each contract. In the absence of a quoted price for an identical contract in an active market, NSP-Wisconsin may use broker quotes for identical or similar contracts, or internally prepared valuation models to determine fair value.

Statement of Financial Accounting Standards (SFAS) No. 157 Fair Value Measurements (SFAS No. 157) — In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157, which provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. SFAS No. 157 also emphasizes that fair value is a market-based measurement, and sets out a fair value hierarchy with the highest priority being quoted prices in active markets. Fair value measurements are disclosed by level within that hierarchy. SFAS No. 157 was effective for financial statements issued for fiscal years beginning after Nov. 15, 2007. As of Jan. 1, 2008, NSP-Wisconsin adopted SFAS No. 157 for all assets and liabilities measured at fair value except for non-financial assets and non-financial liabilities measured at fair value on a non-recurring basis, as permitted by FASB Staff Position No. 157-2. The adoption did not have a material impact on its consolidated financial statements. For additional discussion and SFAS No. 157 required disclosures, see Note 9 to the consolidated financial statements. The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115 (SFAS No. 159) — In February 2007, the FASB issued SFAS No. 159, which provides companies with an option to measure, at specified election dates, many financial instruments and certain other items at fair value that are not currently measured at fair value. A company that adopts SFAS No. 159 will report unrealized gains and losses on items, for which the fair value option has been elected, in earnings at each subsequent reporting date. This statement also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. This statement was effective for fiscal years beginning after Nov. 15, 2007. Effective Jan. 1, 2008, NSP-Wisconsin adopted SFAS No. 159 and the adoption did not have a material impact on its consolidated financial statements. Business Combinations (SFAS No. 141 (revised 2007)) — In December 2007, the FASB issued SFAS No. 141R, which establishes principles and requirements for how an acquirer in a business combination recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141R is to be applied prospectively to business combinations for which the acquisition date is on or after the beginning of an entity’s fiscal year that begins on or after Dec. 15, 2008. NSP-Wisconsin will evaluate the impact of SFAS No. 141R on its consolidated financial statements for any potential business combinations subsequent to Jan. 1, 2009. Noncontrolling Interests in Consolidated Financial Statements, an Amendment of Accounting Research Bulletin (ARB) No. 51 (SFAS No. 160) — In December 2007, the FASB issued SFAS No. 160, which establishes accounting and reporting standards that require the ownership interest in subsidiaries held by parties other than the parent be clearly identified and presented in the consolidated balance sheets within equity, but separate from the parent’s equity; the amount of consolidated net income attributable to the parent and the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of earnings; and changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently. This statement is effective for fiscal years beginning on or after Dec. 15, 2008. NSP-Wisconsin is currently evaluating the impact of SFAS No. 160 on its consolidated financial statements.

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1. Significant Accounting Policies

2. Recently Issued Accounting Pronouncements

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Disclosures about Derivative Instruments and Hedging Activities (SFAS No. 161) — In March 2008, the FASB issued SFAS No. 161, which is intended to enhance disclosures to help users of the financial statements better understand how derivative instruments and hedging activities affect an entity’s financial position, financial performance and cash flows. SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, to require disclosures of objectives and strategies for using derivatives, gains and losses on derivative instruments, and credit-risk-related contingent features in derivative agreements. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after Nov. 15, 2008, with early application encouraged. NSP-Wisconsin is currently evaluating the impact of adoption of SFAS No. 161 on its consolidated financial statements. The Hierarchy of Generally Accepted Accounting Principles (GAAP) (SFAS No. 162) — In May 2008, the FASB issued SFAS No. 162, which establishes the GAAP hierarchy, identifying the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements. SFAS No. 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. NSP-Wisconsin does not believe that implementation of SFAS No. 162 will have any impact on its consolidated financial statements. Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements (Emerging Issues Task Force (EITF) Issue No. 06-4) — In June 2006, the EITF reached a consensus on EITF No. 06-4, which provides guidance on the recognition of a liability and related compensation costs for endorsement split-dollar life insurance policies that provide a benefit to an employee that extends to postretirement periods. Therefore, this EITF would not apply to a split-dollar life insurance arrangement that provides a specified benefit to an employee that is limited to the employee’s active service period with an employer. EITF No. 06-4 was effective for fiscal years beginning after Dec. 15, 2007, with earlier application permitted. Upon adoption of EITF No. 06-4 on Jan. 1, 2008, NSP-Wisconsin recorded a liability of $0.1 million, net of tax, as a reduction of retained earnings. Thereafter, changes in the liability are reflected in operating results. Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards (EITF No. 06-11) — In June 2007, the EITF reached a consensus on EITF No. 06-11, which states that an entity should recognize a realized tax benefit associated with dividends on nonvested equity shares and nonvested equity share units charged to retained earnings as an increase in additional paid in capital. The amount recognized in additional paid in capital should be included in the pool of excess tax benefits available to absorb potential future tax deficiencies on share-based payment awards. EITF No. 06-11 should be applied prospectively to income tax benefits of dividends on equity-classified share-based payment awards that are declared in fiscal years beginning after Dec. 15, 2007. The adoption of EITF No. 06-11 did not have a material impact on NSP-Wisconsin’s consolidated financial statements.

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3. Selected Balance Sheet Data

(Thousands of Dollars) June 30, 2008

Dec. 31, 2007

Accounts receivable, net:

Accounts receivable $ 59,044 $ 72,013

Less allowance for bad debts (2,942) (2,830)

$ 56,102

$ 69,183

Inventories:

Materials and supplies $ 4,801

$ 4,283

Fuel 13,840

13,457

Natural gas 11,411

15,783

$ 30,052 $ 33,523

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Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 (FIN 48) — NSP-Wisconsin is a member of the Xcel Energy affiliated group that files consolidated income tax returns. In the first quarter of 2008, the Internal Revenue Service (IRS) completed an examination of Xcel Energy’s federal income tax returns for 2004 and 2005 (and research credits for 2003). The IRS did not propose any material adjustments for those tax years. Tax year 2004 is the earliest open year and the statute of limitations applicable to Xcel Energy’s 2004 federal income tax return remains open until Dec. 31, 2009. Xcel Energy expects the IRS to commence their examination of tax years 2006 and 2007 in the third quarter of 2008. As of June 30, 2008, NSP-Wisconsin’s earliest open tax year in which an audit can be initiated by state taxing authorities under applicable statutes of limitations is 2003. There currently are no state income tax audits in progress. The amount of unrecognized tax benefits was $0.9 million and $1.1 million on Dec. 31, 2007 and June 30, 2008, respectively. The unrecognized tax benefit balance included $0.1 million and $0.2 million of tax positions on Dec. 31, 2007 and June 30, 2008, respectively, which if recognized would affect the annual effective tax rate. In addition, the unrecognized tax benefit balance included $0.8 million and $0.9 million of tax positions on Dec. 31, 2007 and June 30, 2008, respectively, for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. A change in the period of deductibility would not affect the effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period. The increase in the unrecognized tax benefit balance of $0.1 million from April 1, 2008 to June 30, 2008, was due to the addition of similar uncertain tax positions related to ongoing activity. NSP-Wisconsin’s amount of unrecognized tax benefits could significantly change in the next 12 months when the IRS and state audits resume. However, at this time, it is not reasonably possible to estimate an overall range of possible change. The liability for interest related to unrecognized tax benefits on Dec. 31, 2007, was not material. The change in the interest liability from Dec. 31, 2007, to June 30, 2008, was not material. No amounts were accrued for penalties as of June 30, 2008.

Except to the extent noted below, the circumstances set forth in Note 10 to the consolidated financial statements included in NSP-Wisconsin’s Annual Report on Form 10-K for the year ended Dec. 31, 2007 appropriately represent, in all material respects, the current status of other rate matters, and are incorporated herein by reference. The following include unresolved proceedings that are material to NSP-Wisconsin’s financial position. Pending and Recently Concluded Regulatory Proceedings — Public Service Commission of Wisconsin (PSCW) Base Rate Electric and Gas Rate Case — In January 2008, the PSCW issued the final written order in NSP-Wisconsin’s 2008 test year rate case, approving an electric rate increase of approximately $39.4 million, or 8.1 percent, and a natural gas rate increase of $5.3 million, or 3.3 percent. The rate increase was based on a 10.75 percent return on equity and a 52.5 percent common equity ratio. New rates went into effect Jan. 9, 2008. On Aug. 1, 2008, NSP-Wisconsin filed an application with the PSCW requesting authority to increase retail electric rates by $47.1 million, which represents an overall increase of 8.6 percent. In the application, NSP-Wisconsin requested the PSCW to

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(Thousands of Dollars) June 30, 2008

Dec. 31, 2007

Property, plant and equipment, net:

Electric utility plant $ 1,391,305 $ 1,338,188

Natural gas utility plant 170,172

167,593

Common utility and other property 109,746

108,289

Construction work in progress 35,383 52,705

Total property, plant and equipment 1,706,606 1,666,775

Less accumulated depreciation (714,754) (691,166)

$ 991,852

$ 975,609

4. Income Taxes

5. Rate Matters

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reopen the 2008 base rate case for the limited purpose of adjusting 2009 base electric rates to reflect forecast increases in production and transmission costs, as authorized by the PSCW. The requested increase in electric rates is related to investments in cleaner sources of energy and transmission lines to reliably meet customers’ electric demand and increasing costs for fuel and purchased power. No changes are being requested to the capital structure or ROE authorized by the PSCW in the 2008 base rate case. Public hearings to address NSP-Wisconsin’s rate request will be held later this fall at the PSCW. No specific dates for hearings or prehearing conferences have been scheduled as of this time. Other 2008 Electric Fuel Cost Recovery — On May 2, 2008, the PSCW approved NSP-Wisconsin’s request to increase Wisconsin retail electric rates on an interim basis. The PSCW approved $19.7 million, or 3.8 percent, on an annual basis, to recover increases in fuel and purchased power costs. NSP-Wisconsin expects that the surcharge will generate approximately $13 million in additional revenues in 2008. The increase in fuel costs is primarily driven by fuel and purchased power costs, including replacement power costs associated with unplanned plant outages. Fuel costs for the remainder of 2008 are expected to be significantly higher than approved by the PSCW in NSP-Wisconsin’s 2008 rate case. The increased rates went into effect May 6, 2008. The revenues that NSP-Wisconsin collects are subject to refund with interest at a rate of 10.75 percent, pending PSCW review and final approval. Fuel Cost Recovery Rulemaking — In June 2006, the PSCW opened a rulemaking docket to address potential revisions to the electric fuel cost recovery rules. Wisconsin statutes prohibit the use of automatic adjustment clauses by large investor-owned electric public utilities. The statutes authorize the PSCW to approve a rate increase for these utilities to allow for the recovery of costs caused by an emergency or extraordinary increase in the cost of fuel. In August 2007, the PSCW staff issued its draft revisions to the fuel rules and requested comments. The proposed rules incorporate a plan year fuel cost forecast, deferred accounting for differences between actual and forecast costs (if the difference is greater than 2 percent), and an after the fact reconciliation proceeding to allow the opportunity to recover or refund the deferred balance. On July 3, 2008, the PSCW officially issued its proposed revisions to the fuel rules for public comment, and set a hearing date of August 4, 2008. The proposed revisions to the rules are substantively the same as the version issued in August 2007, described above. If approved as proposed, the new rules would be effective with rate requests filed after January 1, 2009. Bay Front Emission Controls Certificate of Authority — In March 2008, the PSCW issued a certificate of authority and order approving NSP-Wisconsin’s application to install equipment relating to combustion improvement and nitrogen oxide (NOx) emission controls in boilers 1 and 2 at the Bay Front power plant in Ashland County, Wisconsin. Construction began in May and is expected to be completed in the fall of 2008.

Except as noted below, the circumstances set forth in Notes 10 and 11 to the consolidated financial statements in NSP-Wisconsin’s Annual Report on Form 10-K for the year ended Dec. 31, 2007 and Note 5 to the consolidated financial statements in this Quarterly Report on Form 10-Q appropriately represent, in all material respects, the current status of commitments and contingent liabilities and are incorporated herein by reference. The following include unresolved contingencies that are material to NSP-Wisconsin’s financial position. Environmental Contingencies NSP-Wisconsin has been, or is currently, involved with the cleanup of contamination from certain hazardous substances at several sites. In many situations, NSP-Wisconsin believes it will recover some portion of these costs through insurance claims. Additionally, where applicable, NSP-Wisconsin is pursuing, or intends to pursue, recovery from other potentially responsible parties (PRP) and through the rate regulatory process. New and changing federal and state environmental mandates can also create added financial liabilities for NSP-Wisconsin, which are normally recovered through the rate regulatory process. To the extent any costs are not recovered through the options listed above, NSP-Wisconsin would be required to recognize an expense. Site Remediation — NSP-Wisconsin must pay all or a portion of the cost to remediate sites where past activities of NSP-Wisconsin or other parties have caused environmental contamination. Environmental contingencies could arise from various

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6. Commitments and Contingent Liabilities

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situations including sites of former manufactured gas plants (MGPs) operated by NSP-Wisconsin, its predecessors, or other entities; and third party sites, such as landfills, to which NSP-Wisconsin is alleged to be a PRP that sent hazardous materials and wastes. At June 30, 2008, the liability for the cost of remediating these sites was estimated to be $67.2 million, of which $1.1 million was considered to be a current liability. Manufactured Gas Plant Sites Ashland Manufactured Gas Plant Site — NSP-Wisconsin was named a PRP for creosote and coal tar contamination at a site in Ashland, Wis. The Ashland/Northern States Power Lakefront Superfund Site (Ashland site) includes property owned by NSP-Wisconsin, which was previously an MGP facility and two other properties: an adjacent city lakeshore park area, on which an unaffiliated third party previously operated a sawmill, and an area of Lake Superior’s Chequemegon Bay adjoining the park. In September 2002, the Ashland site was placed on the National Priorities List. A final determination of the scope and cost of the remediation of the Ashland site is not currently expected until early 2009. NSP-Wisconsin continues to work with the Wisconsin Department of Natural Resources (WDNR) to access state and federal funds to apply to the ultimate remediation cost of the entire site. In October 2004, the WDNR filed a lawsuit in Wisconsin state court for reimbursement of past oversight costs incurred at the Ashland site between 1994 and March 2003 in the approximate amount of $1.4 million. The lawsuit has been stayed. NSP-Wisconsin has recorded an estimate of its potential liability. All costs paid to the WDNR are expected to be recoverable in rates. In November 2005, the Environmental Protection Agency (EPA) Superfund Innovative Technology Evaluation Program (SITE) Program accepted the Ashland site into its program. As part of the SITE program, NSP-Wisconsin proposed and the EPA accepted a site demonstration of an in situ, chemical oxidation technique to treat upland ground water and contaminated soil. The fieldwork for the demonstration study was completed in February 2007. In 2007, NSP-Wisconsin spent $1.5 million in the development of the work plan, the operation of the existing interim response action and other matters related to the site. In June 2007, the EPA modified its remedial investigation report to establish final remedial action objectives (RAOs) and preliminary remediation goals (PRGs) for the Ashland site. The RAOs and PRGs could potentially impact the development and evaluation of remedial options for ultimate site cleanup. In October 2007, the EPA approved the series of reports included in the remedial investigation (RI) report. The draft feasibility study, which develops and assesses the alternatives for cleaning up the site, was prepared by NSP-Wisconsin and was submitted to the EPA in October 2007. The EPA commented on the draft feasibility study in February 2008, and a revised feasibility study addressing EPA’s concerns was submitted in May 2008. The estimated remediation costs for the site range between $49.7 million and $137.5 million, including costs set forth in the revised feasibility study, as well as estimates for WDNR past oversight costs, outside legal and consultant costs and work plan costs. In addition to potential liability for remediation, NSP-Wisconsin may also have liability for natural resource damages (NRD) at the Ashland site. NSP-Wisconsin has indicated to the relevant natural resource trustees its interest in engaging in discussions concerning the assessment of natural resources injuries and in proposing various restoration projects in an effort to fully and finally resolve all NRD claims. NSP-Wisconsin is not able to estimate its potential exposure for NRD at the site, but has recorded an estimate of its potential liability based upon the minimum of its estimated range of potential exposure. Until the EPA and the WDNR select a remediation strategy for the entire site and determine NSP-Wisconsin’s level of responsibility, NSP-Wisconsin’s liability for the actual cost of remediating the Ashland site and the time frame over which the amounts may be paid out are not determinable. NSP-Wisconsin has recorded a liability of $65.9 million based on management’s best estimate of remediation costs. NSP-Wisconsin has deferred, as a regulatory asset, the costs accrued for the Ashland site based on an expectation that the PSCW will continue to allow NSP-Wisconsin to recover payments for MGP-related environmental remediation from its customers. The PSCW has consistently authorized recovery in NSP-Wisconsin rates of all remediation costs incurred at the Ashland site and has authorized recovery of similar remediation costs for other Wisconsin utilities. External MGP remediation costs are subject to deferral in the Wisconsin retail jurisdiction and are reviewed for prudence as part of the Wisconsin biennial retail rate case process. In addition, in 2003, the Wisconsin Supreme Court rendered a ruling that reopens the possibility that NSP-Wisconsin may be able to recover a portion of the remediation costs from its insurance carriers. Any insurance proceeds received by NSP-Wisconsin will be credited to ratepayers.

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Third Party and Other Environmental Site Remediation Asbestos Removal — Some of NSP-Wisconsin’s facilities contain asbestos. Most asbestos will remain undisturbed until the facilities that contain it are demolished or renovated. NSP-Wisconsin removal costs for asbestos are expected to be immaterial; therefore, no asset retirement obligation was recorded. See additional discussion of asset retirement obligations in Note 11 of the NSP-Wisconsin Annual Report on Form 10-K for the year ended Dec. 31, 2007. It may be necessary to remove some asbestos to perform maintenance or make improvements to other equipment. The cost of removing asbestos as part of other work is immaterial and is recorded as incurred as operating expenses for maintenance projects, capital expenditures for construction projects or removal costs for demolition projects. Other Environmental Requirements Clean Air Interstate Rule — In March 2005, the EPA issued the Clean Air Interstate Rule (CAIR) to further regulate sulfur dioxide (SO2) and NOx emissions. The objective of CAIR is to cap emissions of SO2 and NOx in the eastern United States, including Wisconsin. CAIR addresses the transportation of fine particulates, ozone and emission precursors to nonattainment downwind states. CAIR has a two-phase compliance schedule, beginning in 2009 for NOx and 2010 for SO2, with a final compliance deadline in 2015 for both emissions. Under CAIR, each affected state will be allocated an emissions budget for SO2 and NOx that will result in significant emission reductions. It will be based on stringent emission controls and forms the basis for a cap-and-trade program. State emission budgets or caps decline over time. States can choose to implement an emissions reduction program based on the EPA’s proposed model program, or they can propose another method, which the EPA would need to approve. On July 11, 2008, the D.C. Circuit Court of Appeals vacated CAIR in its entirety and remanded the rule to EPA. NSP-Wisconsin is currently analyzing the opinion and its implications, and will update the following discussion of CAIR pending further review. NSP-Wisconsin has generating facilities that would be impacted by CAIR. The preliminary estimate of capital expenditures associated with compliance with CAIR for the integrated electric production and transmission system of NSP-Wisconsin and NSP-Minnesota, jointly referred to as the NSP System, is $41.4 million, which would be a cost sharable through the Interchange Agreement with NSP-Minnesota. NSP-Wisconsin purchases of CAIR NOx allowances are estimated at $1.6 million in 2009 and $1.7 million in 2010. NSP-Wisconsin believes the cost of any required capital investment or allowance purchases will be recoverable from customers. NSP-Wisconsin will continue to review these cost projections in light of the court’s opinion vacating CAIR. Clean Air Mercury Rule — In March 2005, the EPA issued the Clean Air Mercury Rule (CAMR), which regulated mercury emissions from power plants. In February 2008, the D. C. Circuit Court of Appeals vacated CAMR, which impacts federal CAMR requirements but not necessarily state-only rules. Given the many uncertainties created by the court’s opinion, it is not possible at this time to provide an accurate summary of applicable federal mercury requirements or cost estimates. Federal Clean Water Act — The federal Clean Water Act requires the EPA to regulate cooling water intake structures to assure that these structures reflect the “best technology available” (BTA) for minimizing adverse environmental impacts. In July 2004, the EPA published phase II of the rule, which applies to existing cooling water intakes at steam-electric power plants. Several lawsuits were filed against the EPA in the United States Court of Appeals for the Second Circuit challenging the phase II rulemaking. In January 2007, the court issued its decision and remanded virtually every aspect of the rule to the EPA for reconsideration. In June 2007, the EPA suspended the deadlines and referred any implementation to each state’s best professional judgment until the EPA is able to fully respond to the court-ordered remand. As a result, the rule’s compliance requirements and associated deadlines are currently unknown. It is not possible to provide an accurate estimate of the overall cost of this rulemaking at this time due to the many uncertainties involved. In April 2008, the U.S. Supreme Court granted limited review of the Second Circuit’s opinion to determine whether the EPA has the authority to consider costs and benefits in assessing BTA. A decision is not expected until 2009. Legal Contingencies Lawsuits and claims arise in the normal course of business. Management, after consultation with legal counsel, has recorded an estimate of the probable cost of settlement or other disposition of them. The ultimate outcome of these matters cannot presently be determined. Accordingly, the ultimate resolution of these matters could have a material adverse effect on NSP-Wisconsin’s financial position and results of operations.

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Gas Trading Litigation Arandell vs. e prime, Xcel Energy, NSP-Wisconsin et al. — e prime was a subsidiary of Xcel Energy Markets Holdings Inc., which is a wholly owned subsidiary of Xcel Energy. Among other things, e prime was in the business of natural gas trading and marketing. e prime has not engaged in natural gas trading or marketing activities since 2003. In February 2007, a complaint was filed alleging that NSP-Wisconsin, Xcel Energy and e prime, among others, engaged in fraud and anticompetitive activities in conspiring to restrain the trade of natural gas and manipulate natural gas prices. The plaintiffs seek a declaration that contracts for natural gas entered into between Jan. 1, 2000 and Oct. 31, 2002 are void, that they are entitled to repayment for amounts paid for natural gas during that time period, and that treble damages are appropriate. The case was filed in the Wisconsin State Court (Dane County), and then removed to U.S. District Court for the Western District of Wisconsin. In June 2007, the plaintiffs filed a motion to remand the matter to state court, which was denied, and the matter was transferred by the Multi-District Litigation panel to Federal District Court Judge Pro in Nevada, who is the judge assigned to western area wholesale natural gas marketing litigation. In July 2007, plaintiffs filed an amended complaint in Federal District Court in Nevada, which includes allegations against NRG, a former Xcel Energy subsidiary. This gas-trading lawsuit is in the early procedural stages of litigation. In February 2008, the court denied the defendants’ motions for summary judgment, granted plaintiffs’ motion to conduct limited discovery, and stated that defendants may renew their summary judgment motions upon completion of discovery. Environmental Litigation Carbon Dioxide Emissions Lawsuit — In July 2004, the attorneys general of eight states and New York City, as well as several environmental groups, filed lawsuits in U.S. District Court in the Southern District of New York against five utilities, including Xcel Energy, the parent company of NSP-Wisconsin, to force reductions in carbon dioxide (CO2) emissions. The other utilities include American Electric Power Co., Southern Co., Cinergy Corp. and Tennessee Valley Authority. The lawsuits allege that CO2 emitted by each company is a public nuisance as defined under state and federal common law because it has contributed to global warming. The lawsuits do not demand monetary damages. Instead, the lawsuits ask the court to order each utility to cap and reduce its CO2 emissions. In October 2004, Xcel Energy and the other defendants filed a motion to dismiss the lawsuit. On Sept. 19, 2005, the court granted the motion to dismiss on constitutional grounds. Plaintiffs filed an appeal to the Second Circuit Court of Appeals. In June 2007 the Second Circuit Court of Appeals issued an order requesting the parties to file a letter brief regarding the impact of the United States Supreme Court’s decision in Massachusetts v. EPA, 127 S.Ct. 1438 (April 2, 2007) on the issues raised by the parties on appeal. Among other things, in its decision in Massachusetts v. EPA, the United States Supreme Court held that CO2 emissions are a “pollutant” subject to regulation by the EPA under the Clean Air Act. In response to the request of the Second Circuit Court of Appeals, in June 2007, the defendant utilities filed a letter brief stating the position that the United States Supreme Court’s decision supports the arguments raised by the utilities on appeal. The Court of Appeals has taken the matter under advisement and is expected to issue an opinion in due course. Comer vs. Xcel Energy Inc. et al. — In April 2006, Xcel Energy received notice of a purported class action lawsuit filed in U.S. District Court in the Southern District of Mississippi. The lawsuit names more than 45 oil, chemical and utility companies, including Xcel Energy, the parent company of NSP-Wisconsin, as defendants and alleges that defendants’ CO2 emissions “were a proximate and direct cause of the increase in the destructive capacity of Hurricane Katrina.” Plaintiffs allege in support of their claim, several legal theories, including negligence and public and private nuisance and seek damages related to the loss resulting from the hurricane. Xcel Energy believes this lawsuit is without merit and intends to vigorously defend itself against these claims. In August 2007, the court dismissed the lawsuit in its entirety against all defendants on constitutional grounds. In September 2007, plaintiffs filed a notice of appeal to the Fifth Circuit Court of Appeals. Oral arguments will be presented to the Court of Appeals on Aug. 6, 2008. It is uncertain when the Court will reach a decision. Native Village of Kivalina vs. Xcel Energy Inc. et al. — In February 2008, the City and Native Village of Kivalina, Alaska, filed a lawsuit in U.S. District Court for the Northern District of California against Xcel Energy, the parent company of NSP-Wisconsin, and 23 other oil, gas and coal companies. The suit was brought on behalf of approximately 400 native Alaskans, the Inupiat Eskimo, who claim that Defendants’ emission of CO2 and other greenhouse gases contribute to global warming, which is harming their village. Plaintiffs claim that as a consequence, the entire village must be relocated at a cost of between $95 million and $400 million. Plaintiffs assert a nuisance claim under federal and state common law, as well as a claim asserting “concert of action” in which defendants are alleged to have engaged in tortious acts in concert with each other. Xcel Energy was not named in the civil conspiracy claim. Xcel Energy believes the claims asserted in this lawsuit are without merit and joined with other utility defendants in filing a motion to dismiss on June 30, 2008. Employment, Tort and Commercial Litigation MGP Insurance Coverage Litigation — In October 2003, NSP-Wisconsin initiated discussions with its insurers regarding the availability of insurance coverage for costs associated with the remediation of four former MGP sites located in Ashland,

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Chippewa Falls, Eau Claire and LaCrosse, Wis. In lieu of participating in discussions, in October 2003, two of NSP-Wisconsin’s insurers, St. Paul Fire & Marine Insurance Co. and St. Paul Mercury Insurance Co., commenced litigation against NSP-Wisconsin in Minnesota state district court. In November 2003, NSP-Wisconsin commenced suit in Wisconsin state circuit court against St. Paul Fire & Marine Insurance Co. and its other insurers. Subsequently, the Minnesota court enjoined NSP-Wisconsin from pursuing the Wisconsin litigation. The Wisconsin action remains in abeyance. NSP-Wisconsin has reached settlements with 22 insurers and these insurers have been dismissed from both the Minnesota and Wisconsin actions. In July 2007, the Minnesota state court issued a decision on allocation, reaffirming its prior rulings that Minnesota law on allocation should apply and ordering the dismissal, without prejudice, of eleven insurers whose coverage would not be triggered under such an allocation method. In September 2007, NSP-Wisconsin commenced an appeal in the Court of Appeals for Minnesota challenging the dismissal of these carriers. In November 2007, Ranger Insurance Company (Ranger) and TIG Insurance Company (TIG) filed a motion to dismiss NSP-Wisconsin’s appeal, asserting that NSP-Wisconsin’s failure to serve Continental Insurance Company, as successor in interest to certain policies issued by Harbor Insurance Company (Harbor), requires dismissal of NSP-Wisconsin’s appeal. In February 2008, the Court of Appeals issued an order deferring a decision on the procedural motion filed by Harbor and TIG and referring the motion to the panel assigned to consider the merits of the appeal. In April 2008, the Court of Appeals issued an order staying briefing and other appellate proceedings until further order of the court. The order was issued in response to NSP-Wisconsin’s request that oral argument be deferred pending a decision by the Wisconsin Supreme Court in Plastics Engineering Co. vs. Liberty Mutual Insurance Co. In Plastics Engineering Co., the Wisconsin Supreme Court will consider the method of allocation to be adopted in Wisconsin. The PSCW has established a deferral process whereby clean-up costs associated with the remediation of former MGP sites are deferred and, if approved by the PSCW, recovered from ratepayers. Carrying charges associated with these clean-up costs are not subject to the deferral process and are not recoverable from ratepayers. Any insurance proceeds received by NSP-Wisconsin will be credited to ratepayers. None of the aforementioned lawsuit settlements are expected to have a material effect on NSP-Wisconsin’s consolidated financial statements. Stray Voltage — In November 2001, Ralph and Karline Schmidt filed a complaint against NSP-Wisconsin alleging that electricity provided by NSP-Wisconsin harmed their dairy herd resulting in decreased milk production, lost profits and income, property damage and seek compensatory, punitive and treble damages. Plaintiffs allege compensatory damages of $1.0 million and pre-verdict interest of $1.2 million. In addition, plaintiffs allege an unspecified amount of damages related to nuisance. The trial court’s grant of summary judgment to NSP-Wisconsin on the bases of the statute of limitations and the filed rate doctrine was reversed by the Wisconsin Court of Appeals, District IV, in September 2006. NSP-Wisconsin filed its petition for review with the Wisconsin Supreme Court in October 2006, which was granted by the Wisconsin Supreme Court in February 2007. In December 2007, the Wisconsin Supreme Court issued its decision affirming the decision of the Court of Appeals and remanding the case to the Circuit Court. A trial date is scheduled for Oct. 12 – 30, 2009. In November 2001, August C. Heeg Jr. and Joanne Heeg filed a complaint against NSP-Wisconsin alleging that electricity provided by NSP-Wisconsin harmed their dairy herd resulting in decreased milk production, lost profits and income, property damage and seek compensatory, punitive and treble damages. Plaintiffs allege compensatory damages of $1.9 million and pre-verdict interest of $6.1 million. In addition, plaintiffs allege an unspecified amount of damages related to nuisance. The trial court’s grant of summary judgment to NSP-Wisconsin on the bases of the statute of limitations and the filed rate doctrine was reversed by the Wisconsin Court of Appeals, District IV, in September 2006. NSP-Wisconsin has filed a petition for review with the Wisconsin Supreme Court. In March 2008, the Wisconsin Supreme Court denied NSP-Wisconsin’s petition for review. A trial date is scheduled for June 15 – 30, 2009.

NSP-Wisconsin has an intercompany borrowing arrangement with NSP-Minnesota, with interest charged at NSP-Minnesota’s short-term borrowing rate. At June 30, 2008 and Dec. 31, 2007, NSP-Wisconsin had short-term borrowings under this intercompany arrangement of $36.9 million and $58.6 million, respectively. The weighted average interest rates at June 30, 2008 and Dec. 31, 2007 were 3.06 percent and 5.58 percent, respectively. Clearwater Investments Inc., an NSP-Wisconsin subsidiary, also had notes payable outstanding as of June 30, 2008 and Dec. 31, 2007, to Xcel Energy, in the amount of $0.7 million.

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7. Short-Term Borrowings

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NSP-Wisconsin uses derivative instruments in connection with its utility commodity price and interest rate activities, including forward contracts, futures, swaps and options. Qualifying hedging relationships are designated as a hedge of a forecasted transaction or future cash flow (cash flow hedge). The types of qualifying hedging transactions that NSP-Wisconsin is currently engaged in are discussed below. Cash Flow Hedges Commodity Cash Flow Hedges — NSP-Wisconsin enters into derivative instruments to manage variability of future cash flows from changes in commodity prices. These derivative instruments are designated as cash flow hedges for accounting purposes. At June 30, 2008, NSP-Wisconsin had various commodity-related contracts designated as cash flow hedges extending through March 2009. The fair value of these cash flow hedges is deferred as a regulatory asset or liability. This classification is based on the regulatory recovery mechanisms in place. This could include the purchase or sale of energy or energy-related products, the use of natural gas to generate electric energy or gas purchased for resale. Interest Rate Cash Flow Hedges — NSP-Wisconsin enters into interest rate lock agreements, including treasury-rate locks and forward starting swaps, that effectively fix the yield or price on a specified treasury security for a specific period. These derivative instruments are designated as cash flow hedges for accounting purposes. At June 30, 2008, NSP-Wisconsin had net losses of $0.1 million in accumulated other comprehensive income that is expected to be recognized in earnings during the next 12 months. The following table shows the major components of the derivative instruments valuation in the consolidated balance sheets at June 30 and Dec. 31:

The impact of qualifying cash flow hedges on NSP-Wisconsin’s accumulated other comprehensive income, included as a component of common stockholder’s equity, is detailed in the following table:

Effective Jan. 1, 2008, NSP-Wisconsin adopted SFAS No. 157 for recurring fair value measurements. SFAS No. 157 provides a single definition of fair value and requires enhanced disclosures about assets and liabilities measured at fair value. SFAS No. 157 establishes a hierarchal framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value. The three levels defined by the SFAS No. 157 hierarchy and examples of each level are as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices. Level 2 – Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs. Level 3 – Significant inputs to pricing have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation.

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8. Derivative Valuation and Financial Impacts

June 30, 2008 Dec. 31, 2007


Derivative InstrumentsValuation -

Assets

Derivative Instruments Valuation -Liabilities

Derivative Instruments Valuation -

Assets

Derivative InstrumentsValuation -Liabilities

Natural gas hedging derivative instruments

$ 1,629

$ 39 $ 226

$ 460

Total $ 1,629 $ 39 $ 226 $ 460

Six months ended June 30,

(Thousands of Dollars) 2008

2007

Accumulated other comprehensive loss related to cash flow hedges at Jan. 1 $ (820) $ (899)

After-tax net realized losses on derivative transactions reclassified into earnings 40 38

Accumulated other comprehensive loss related to cash flow hedges at June 30 $ (780) $ (861)

9. Fair Value Measurements

Table of Contents

NSP-Wisconsin held several commodity derivatives measured at fair value on a recurring basis as of June 30, 2008. Fair value for these commodity derivatives was determined based on observable prices for similar forward contracts, or internally prepared option valuation models using observable forward curves and volatilities. Given the observability of the primary inputs to pricing, commodity derivatives of $1.6 million at June 30, 2008, were assigned a Level 2 under the SFAS No. 157 hierarchy.

Interest and other income, net of nonoperating expenses, for the three and six months ended June 30 consisted of the following:

NSP-Wisconsin has two reportable segments, regulated electric utility and regulated natural gas utility.

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10. Detail of Interest and Other Income, Net

Three months ended June 30,


(Thousands of dollars) 2008 2007 2008 2007

Interest income

$ 280

$ 513

$ 730 $ 880

Other nonoperating income

24

—

56 —

Insurance policy expenses (27) (120) (112) (211)Other nonoperating expenses — — —

(3)Total interest and other income, net

$ 277

$ 393

$ 674 $ 666

11. Segment Information


Regulated Electric Utility

Regulated Natural Gas

Utility

All Other

Reconciling Eliminations

Consolidated Total

Three months ended June 30, 2008

Revenues from:

External customers

$ 156,427

$ 31,497

$ 215 $ —

$ 188,139

Internal customers

84

716

— (800) —

Total revenues

$ 156,511

$ 32,213

$ 215 $ (800) $ 188,139

Segment net income (loss)

$ 6,134

$ (38) $ (105) $ —

$ 5,991

Three months ended June 30, 2007

Revenues from:

External customers

$ 153,141

$ 21,818

$ 217 $ —

$ 175,176

Internal customers 69 650 — (719) —

Total revenues

$ 153,210

$ 22,468

$ 217 $ (719) $ 175,176

Segment net income (loss)

$ 5,791

$ (350) $ (142) $ —

$ 5,299


Regulated Electric Utility

Regulated Natural Gas

Utility

All Other

Reconciling Eliminations

Consolidated Total

Six months ended June 30, 2008

Revenues from:

External customers

$ 321,847

$ 110,090

$ 441 $ —

$ 432,378

Internal customers

123

800

— (923) —

Total revenues

$ 321,970

$ 110,890

$ 441 $ (923) $ 432,378

Segment net income

$ 13,683

$ 5,375

$ 73 $ —

$ 19,131

Six months ended June 30, 2007

Revenues from:

External customers $ 302,372 $ 84,700 $ 399 $ — $ 387,471

Internal customers 98 1,160 — (1,258) —

Total revenues

$ 302,470

$ 85,860

$ 399 $ (1,258) $ 387,471

Segment net income (loss) $ 11,571 $ 3,019 $ (162) $ — $ 14,428

Table of Contents 12. Comprehensive Income The components of total comprehensive income are shown below:

13. Benefit Plans and Other Postretirement Benefits Pension and other postretirement benefit disclosures below generally represent Xcel Energy consolidated information unless specifically identified as being attributable to NSP-Wisconsin. Components of Net Periodic Benefit Cost (Credit)

(1) Includes qualified and non-qualified pension net periodic benefit cost.

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Six months ended

June 30,

(Millions of dollars)

2008

2007 2008

2007

Net income

$ 5,991

$ 5,299 $ 19,131

$ 14,428

Other comprehensive income:

After-tax net realized losses on derivatives transactions reclassified into earnings

19

19 40

38

Other comprehensive income

19

19 40

38

Comprehensive income

$ 6,010

$ 5,318 $ 19,171

$ 14,466


2008 (1)

2007 (1) 2008

2007

(Thousands of Dollars) Pension Benefits

Postretirement Health Care Benefits

Xcel Energy Inc.

Service cost

$ 14,929

$ 14,555 $ 1,211

$ 1,205

Interest cost 44,677 43,028 12,894 11,635

Expected return on plan assets

(68,697) (66,525) (8,425) (7,582)Amortization of transition obligation — —

3,644 3,677Amortization of prior service cost (credit)

5,166

6,487 (544) (545)

Amortization of net loss

3,511

4,555 3,031

2,106

Net periodic benefit cost (credit)

(414) 2,100 11,811

10,496

Credits not recognized due to the effects of regulation 1,925 2,894 — —

Additional cost recognized due to the effects of regulation

—

— 973

973

Net benefit cost recognized for financial reporting

$ 1,511

$ 4,994 $ 12,784

$ 11,469

NSP-Wisconsin

Net benefit cost (credit) recognized for financial reporting

$ (166) $ (254) $ 506

$ 355

Table of Contents

(1) Includes qualified and non-qualified pension net periodic benefit cost. Discussion of financial condition and liquidity for NSP-Wisconsin is omitted per conditions set forth in general instructions H (1) (a) and (b) of Form 10-Q for wholly owned subsidiaries. It is replaced with management’s narrative analysis and the results of operations set forth in general instructions H (2) (a) of Form 10-Q for wholly owned subsidiaries (reduced disclosure format). Forward-Looking Information The following discussion and analysis by management focuses on those factors that had a material effect on NSP-Wisconsin’s financial condition and results of operations during the periods presented, or are expected to have a material impact in the future. It should be read in conjunction with the accompanying unaudited consolidated financial statements and notes. Except for the historical statements contained in this report, the matters discussed in the following discussion and analysis are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should” and similar expressions. Actual results may vary materially. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them to reflect changes that occur after that date. Factors that could cause actual results to differ materially include, but are not limited to: general economic conditions, including the availability of credit and its impact on capital expenditures and the ability of Xcel Energy and its subsidiaries to obtain financing on favorable terms; business conditions in the energy industry; actions of credit rating agencies; competitive factors, including the extent and timing of the entry of additional competition in the markets served by NSP-Wisconsin; unusual weather; effects of geopolitical events, including war and acts of terrorism; state, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, have an impact on rates or have an impact on asset operation or ownership or impose environmental compliance conditions; structures that affect the speed and degree to which competition enters the electric and natural gas markets; costs and other effects of legal and administrative proceedings, settlements, investigations and claims, actions of accounting regulatory bodies; the items described under Factors Affecting Results of Continuing Operations; and the other risk factors listed from time to time by NSP-Wisconsin in reports filed with the SEC, including “Risk Factors” in Item 1A of NSP-Wisconsin’s Form 10-K for the year ended Dec. 31, 2007 and Exhibit 99.01 to this report on Form 10-Q for the quarter ended June 30, 2008.

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2008 (1)

2007 (1) 2008

2007


Pension Benefits

Postretirement Health Care Benefits

Xcel Energy Inc.

Service cost

$ 31,702

$ 31,040 $ 2,675

$ 2,906

Interest cost

85,260

82,626 25,440

25,238

Expected return on plan assets (137,169) (132,416) (15,925) (15,200)Amortization of transition obligation

—

— 7,288

7,288

Amortization of prior service cost (credit) 10,332 12,974 (1,088) (1,090)

Amortization of net loss 6,370 8,422 5,749 7,100

Net periodic benefit cost (credit)

(3,505) 2,646 24,139

26,242

Credits not recognized due to the effects of regulation

4,517

5,574 —

—

Additional cost recognized due to the effects of regulation — — 1,946 1,946

Net benefit cost recognized for financial reporting

$ 1,012

$ 8,220 $ 26,085

$ 28,188

NSP-Wisconsin

Net benefit cost (credit) recognized for financial reporting

$ (555) $ (490) $ 1,006

$ 957

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Market Risks NSP-Wisconsin is exposed to market risks, including changes in commodity prices and interest rates, as disclosed in Item 7A — Quantitative and Qualitative Disclosures About Market Risk in its annual report on Form 10-K for the year ended Dec. 31, 2007. Commodity price and interest rate risks for NSP-Wisconsin are mitigated in most jurisdictions due to cost-based rate regulation. At June 30, 2008, there were no material changes to the financial market risks that affect the quantitative and qualitative disclosures presented as of Dec. 31, 2007. RESULTS OF OPERATIONS NSP-Wisconsin’s net income was $19.1 million for the six three months of 2008, compared with $14.4 million for the first six months of 2007. Electric Utility Margin The following table details the change in electric revenues and margin. Electric production expenses tend to vary with the quantity of electricity sold and changes in the unit costs of fuel and purchased power. The fuel and purchased power cost recovery mechanism of the Wisconsin jurisdiction may not allow for complete recovery of all expenses and, therefore, dramatic changes in costs or periods of extreme temperatures can impact earnings.

The following summarizes the components of the changes in base electric revenues and base electric margin for the six months ended June 30: Base Electric Revenues

Base Electric Margin

18


(Millions of Dollars)

2008

2007

Total electric utility revenues

$ 322

$ 302

Electric fuel and purchased power

(192) (182)Total electric utility margin $ 130 $ 120

Margin as a percentage of revenues

40.4% 39.7%


2008 vs. 2007

Base rate changes $ 16

Interchange agreement billing with NSP-Minnesota

(11)2007 fuel refund

10

Fuel and purchased power cost recovery

4

Firm wholesale

1

Increased revenues due to leap year (weather normalized impact)

1

Estimated impact of weather (1)Total increase in base electric revenues

$ 20


2008 vs. 2007

Base rate changes

$ 16

Interchange agreement billing with NSP-Minnesota (net of deferrals) (11)Fuel and purchased power cost recovery

6

Purchased capacity cost (2)Firm wholesale

1

Increased margin due to leap year (weather normalized impact)

1

Estimated impact of weather

(1)Total increase in base electric margin

$ 10

Table of Contents

Natural Gas Utility Margins The following table details the change in natural gas revenues and margin. The cost of natural gas tends to vary with changing sales requirements and unit cost of natural gas purchases. However, due to purchased natural gas cost recovery mechanisms for retail customers, fluctuations in the cost of natural gas have little effect on natural gas margin.

The following summarizes the components of the changes in natural gas revenues and margin for the six months ended June 30: Natural Gas Revenues

Natural Gas Margin

Non-Fuel Operating Expense and Other Items Other Operating and Maintenance Expenses — The following summarizes the components of the changes in other operating and maintenance expense for the six months ended June 30:

Depreciation and Amortization — Depreciation and amortization expense increased by approximately $1.9 million, or 7.1 percent, for the first six months of 2008 compared with the first six months of 2007. The increase was primarily due to normal system expansion. Conservation program expenses — Conservation program expenses increased approximately $1.4 million, or 37.1 percent, for the first six months of 2008, compared to the same period in 2007. The higher expense is attributable to the ongoing expansion of such programs as designed, in part, to meet certain regulatory commitments. Income taxes — Income tax expense increased by $2.8 million for the first six months of 2008, compared with the first six months of 2007. The increase in income tax expense was primarily due to an increase in pretax income. The effective tax rate was 37.6 percent for the first six months of 2008, compared with 37.8 percent for the same period in 2007.

19



2008

2007

Natural gas revenues

$ 110

$ 85

Cost of natural gas purchased and transported

(86) (65) Natural gas margin

$ 24

$ 20


2008 vs. 2007

Purchased natural gas adjustment clause recovery

$ 20

Estimated impact of weather 2

Base rate changes

1

Other

2

Total increase in natural gas revenues

$ 25


2008 vs. 2007

Estimated impact of weather

$ 2

Base rate changes

1

Other 1

Total increase in natural gas margin

$ 4


2008 vs. 2007

Higher plant generation costs

$ 1

Higher labor costs

1

Other

1

Total increase in other operating and maintenance expenses $ 3

Table of Contents

Regulation Summary of Recent Regulatory Developments The Federal Energy Regulatory Commission (FERC) has jurisdiction over rates for electric transmission service in interstate commerce and electricity sold at wholesale, hydro facility licensing, natural gas transportation, accounting practices and certain other activities of NSP-Wisconsin. State and local agencies have jurisdiction over many of NSP-Wisconsin’s activities, including regulation of retail rates and environmental matters. See additional discussion in the summary of recent federal regulatory developments and public utility regulation sections of the NSP-Wisconsin Annual Report on Form 10-K for the year ended Dec. 31, 2007.In addition to the matters discussed below, see Note 5 to the consolidated financial statements for a discussion of other regulatory matters. Electric Reliability Standards Matters — The electric production and transmission system of NSP-Minnesota is managed as an integrated system with that of NSP-Wisconsin, jointly referred to as the NSP System. On Sept. 18, 2007, portions of the NSP System and transmission systems west and north of the NSP System briefly islanded from the rest of the Eastern Interconnection, as a result of a series of transmission line outages. The initial transmission line outage appears to have occurred on the NSP-Minnesota transmission system due to a failure of a 345 KV conductor during severe weather, and approximately 6,000 NSP-Wisconsin customers temporarily lost power. The Midwest Reliability Organization (MRO), the North American Electric Reliability Council (NERC) regional entity responsible for oversight of electric system reliability in the upper Midwest, including the NSP System, has initiated an independent incident analysis. In addition, NERC has initiated a compliance investigation to determine if violations of mandatory NERC reliability standards contributed to the event. Xcel Energy is cooperating with the MRO incident analysis and NERC compliance investigation. In June 2008, PSCo was subject to an audit of its compliance with NERC and regional reliability standards by Western Electricity Coordinating Council (WECC), the NERC regional entity for the PSCo system. In response to information identified in during the audit, Xcel Energy conducted a comprehensive review of the maintenance records for all relay devices on the NSP System. That review NSP-Minnesota and NSP-Wisconsin did not have documentation demonstrating that all relay devices on the NSP System had been maintained on the schedule in Xcel Energy’s adopted maintenance plan. In June 2008, the NSP System filed a self-report regarding the maintenance plan violations with the MRO. Xcel Energy is uncertain if self-report will result in financial penalties being imposed on NSP-Minnesota and NSP-Wisconsin. Item 4. CONTROLS AND PROCEDURES Disclosure Controls and Procedures NSP-Wisconsin maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed in reports that it files or submits under the Securities Exchange Act of 1934 (Exchange Act) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports under the Exchange Act is accumulated and communicated to management, including the chief executive officer (CEO) and chief financial officer (CFO), allowing timely decisions regarding required disclosure. As of the end of the period covered by this report, based on an evaluation carried out under the supervision and with the participation of NSP-Wisconsin’s management, including the CEO and CFO, of the effectiveness of its disclosure controls and procedures, the CEO and CFO have concluded that NSP-Wisconsin’s disclosure controls and procedures are effective. Internal Control Over Financial Reporting No change in NSP-Wisconsin’s internal control over financial reporting has occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, NSP-Wisconsin’s internal control over financial reporting. Part II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS In the normal course of business, various lawsuits and claims have arisen against NSP-Wisconsin. After consultation with legal counsel, NSP-Wisconsin has recorded an estimate of the probable cost of settlement or other disposition for such matters. See Notes 5 and 6 of the consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion of legal proceedings, including Regulatory Matters and Commitments and Contingent Liabilities, which are hereby incorporated by reference. Reference also is made to Item 3 and Notes 10 and 11 of NSP-Wisconsin’s Annual Report on Form 10-K for the year ended Dec. 31, 2007 for a description of certain legal proceedings presently pending.

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Table of Contents

Item 1A. RISK FACTORS NSP-Wisconsin’s risk factors are documented in Item 1A of Part I of its 2007 Annual Report on Form 10-K, which is incorporated herein by reference. There have been no material changes to the risk factors. Item 6. EXHIBITS

*Indicates incorporation by reference

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3.01*

Amended and restated articles of incorporation of Northern States Power Company, a Wisconsin corporation, (Exhibit 3.01 to Form S-4 (file no. 333-112033) Jan. 21, 2004).

3.02

By-Laws of Northern States Power Company, a Wisconsin corporation, as amended Dec. 6, 2001 and June 3, 2008. 31.01

Principal Executive Officer’s and Principal Financial Officer’s certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.01

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.01

Statement pursuant to Private Securities Litigation Reform Act of 1995.

Table of Contents

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on Aug. 4, 2008.

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Northern States Power Co. (a Wisconsin corporation)(Registrant)

/s/ TERESA S. MADDEN

Teresa S. Madden

Vice President and Controller

/s/ BENJAMIN G.S. FOWKE III

Benjamin G.S. Fowke III

Vice President and Chief Financial Officer

Exhibit 3.02

NORTHERN STATES POWER COMPANY (a Wisconsin corporation)

BY-LAWS

(As amended June 3, 2008)

ARTICLE I. Meetings of the Shareholders

Section 1. Annual Meeting. The annual meeting of the shareholders of the Company shall be held at such time and place,

either within or without the State of Wisconsin, as the Board of Directors may by resolution from time to time determine for the purpose of electing Directors and for the transaction of such other business as may be brought before the meeting. If for any reason the annual meeting shall not be held at the time herein provided for, the same may be held at any time thereafter upon notice as hereinafter provided, or the business thereof may be transacted at any special meeting called for that purpose.

Section 2. Special Meetings. Special meetings of the shareholders of the Company may be called by the Chairman of the

Board, the President or Vice President or by order of the Board of Directors whenever they deem it necessary. The corporation shall call a special meeting of shareholders if the holders of at least 10 percent of all of the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting sign, date and deliver to the corporation one or more written demands for the meeting describing one or more purposes for which it is to be held. The corporation shall give notice of such a special meeting within thirty (30) days after the date that the demand is delivered to the corporation. Such special meetings shall be held at a location, either within or without the State of Wisconsin, as may be stated in the notice of the meeting.

Section 3. Notice of Meetings. Notice of the time and place of the annual and of each special meeting of shareholders shall be given by the Secretary, at least two days before such meeting, to each of the shareholders entitled to vote at such meeting, by posting the same in a postage-prepaid letter, addressed to each such shareholder at the address left with the Secretary of the Company, or at his last known address, or by delivering the same personally. The notice of the special meeting shall also set forth the objects of the meeting. Any or all of the shareholders may waive notice of any annual or special meeting, and the presence of any shareholder in person or by proxy at any meeting shall be deemed a waiver of notice thereof by him. Meetings of the holders of stock may be held at any time and place and for any purpose without notice when all of the shareholders entitled to vote at such meeting are present in person or by proxy or shall waive notice and consent to the holding of such meeting.

Section 4. Voting at Shareholders’ Meetings. At all meetings of the shareholders, each shareholder entitled to vote at each

meeting shall be entitled to one vote for each share of stock standing registered in his name at the time of the closing of the transfer books for such meeting, or if such transfer books shall not have been closed, then for each share of stock standing registered in his name at the time of such meeting, which vote may be given personally or by proxy authorized in writing.

Section 5. Quorum and Voting Requirements. Shares may take action on a matter at a meeting only if a quorum of the

shares exists. Except as otherwise provided in the Articles of Incorporation or the Wisconsin Business Corporation Law, a majority of the shares shall constitute a quorum. If a quorum exists, except in the case of the election of directors, action on a matter shall be approved if the votes cast favoring the action exceed the votes cast opposing the action. Each director shall be elected by a plurality of the votes cast by the shares at a meeting at which a quorum is present. In any case, in the absence of a quorum, the shareholders attending or represented at the time and place at which a meeting shall have been called may adjourn such meeting from time to time and place to place until a quorum shall be present, and at any adjourned meeting at which a quorum shall be present any business may be transacted which might have been transacted by a quorum of the shareholders at the meeting as originally convened.

Section 6. Presiding Officer and Secretary. The Chairman of the Board shall preside at all meetings of the shareholders,

and in his absence or disability or at his request the President shall preside, and in the absence or disability of both said officers a Vice President shall preside. The Secretary or Assistant Secretary of the Company shall act as Secretary at all meetings of the shareholders, but in their absence the shareholders or presiding officer may appoint any person to act as Secretary of the meeting.

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ARTICLE II.

Board of Directors

Section 1. Number, Qualification and Vacancies. Par. 1. The business and property of the Company shall be managed and controlled by a Board composed of three (3) Directors, which may be increased to such greater number, not exceeding seven (7), as may be determined by the Board of Directors or by the shareholders in accordance with the provisions of this Article. The number of directors shall be determined by the Board of Directors, and if the Board fails to make such determination then the number may be determined by the shareholders. Par. 2. A Director shall hold office until the next annual meeting of the shareholders and until his successor is elected and qualified. Par. 3. During the intervals between annual meetings the number of Directors may be increased, and may be decreased by the number of vacancies then existing, by the Board of Directors, within the limitations of Section 1, Par. 1, of this Article, and in case of any such increase the Board may fill the vacancies so created. Par. 4. Vacancies in the Board of Directors may be filled by the remaining members of the Board though less than a quorum. Section 2. Place of Meeting. Any meeting of the Board of Directors may be held at the principal office of the Company in

Eau Claire, or at any other place within or without the State of Wisconsin which may be from time to time established by the By-Laws of the corporation or by resolution of the Board, or which may be agreed to in writing by a majority the Directors of the corporation.

Section 3. Regular and Special Meetings. A regular annual meeting of the Board of Directors shall be held immediately

following the holding of the annual shareholders’ meeting in each year, for the election of officers and the transaction of such other business as may come before the meeting. Other regular meetings of the Board may be held at such times and places, either within or without the State

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of Wisconsin as the Board of Directors may by resolution from time to time determine. Special meetings of the Board shall be held whenever called by the Chairman of the Board, President, Vice President, Secretary or any two Directors in writing. No notice of the annual meeting or of regular meetings of the Board need be given. Notice of each special meeting may be given to each Director in person; by mail or other method of delivery; by telephone, including voice mail; answering machine or answering service; or by other electronic means, including facsimile or e-mail to his residence or usual place of business at least two days before the meeting. Meetings of the Board may be held at any time and place either within or without the State of Wisconsin, and for any purpose, without notice, when all of the Directors are present at or shall waive notice and consent to the holding of such meeting. All or any of the Directors may waive notice of any meeting and the presence of a Director at any meeting of the Board shall be deemed a waiver of notice thereof by him.

Section 4. Quorum. A majority of the Directors in office at a meeting regularly called shall constitute a quorum. In the absence of a quorum the Directors present at the time and place at which a meeting shall have been duly called may adjourn the meeting from time to time and place to place until a quorum shall be present.

Section 5. Compensation. The Board of Directors may by resolution establish a fixed fee and authorize payment of

expenses for services as Director, with an additional fee and expenses for attendance at each special meeting. Nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefor.

Section 6. Members of the executive, special or standing committees may be allowed like compensation as for special

meetings of the Board of Directors for attending committee meetings. Section 7. Indemnification.

Par. 1. Certain Definitions. All capitalized terms used in this Section 7 and not otherwise hereinafter defined in this Par. 1 shall have the meaning set forth in Section 180.0850 of the Statute. The following capitalized terms (including any plural forms thereof) used in this Section 7 shall be defined as follows:

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(a) “Affiliate” shall include, without limitation, any corporation, partnership, joint venture, employee benefit

plan, trust, or other enterprise that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Company.

(b) “Authority” shall mean the entity selected by the Director or Officer to determine his or her right to

indemnification pursuant to Par. 4. (c) “Board” shall mean the entire then elected and serving Board of Directors of the Company, including all

members thereof who are Parties to the subject Proceeding or any related Proceeding. (d) “Breach of Duty” shall mean the Director or Officer breached or failed to perform his or her duties to the

Company and his or her breach of or failure to perform those duties is determined, in accordance with Par. 4, to constitute misconduct under Section 180.0851(2) (a) 1, 2, 3, or 4 of the Statute.

(e) “Company,” as used herein and as defined in the Statute and incorporated by reference into the definitions

of certain other capitalized terms used herein, shall mean Northern States Power Company, including, without limitation, any successor corporation or entity to Northern States Power Company by way of merger, share exchange, or acquisition of all or substantially all of the capital stock or assets of Northern States Power Company.

(f) “Director or Officer” shall have the meaning set forth in the Statute; provided, that, for purposes of this

Section 7, it shall be conclusively presumed that any Director or Officer serving as a director, officer, partner, trustee, member of any governing or decision-making committee, employee, or agent of an Affiliate shall be so serving at the request of the Company.

(g) “Disinterested Quorum” shall mean a quorum of the Board who are not Parties to the subject Proceeding or

any related Proceeding. (h) “Party” shall have the meaning set forth in the Statute; provided, that, for purposes of this Section 7, the

term ‘Party” shall also include any Director or Officer who is or was a witness in a Proceeding at a time when he or she has not otherwise been formally named a Party thereto.

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(i) “Proceeding” shall have the meaning set forth in the Statute; provided, that, for purposes of this Section 7,

the term “Proceeding” shall also include all Proceedings (i) brought under (in whole or in part) the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, their respective state counterparts, and/or any rule or regulation promulgated under any of the foregoing; (ii) brought before an Authority or otherwise to enforce rights hereunder; (iii) any appeal from a Proceeding; and (iv) any Proceeding in which the Director or Officer is a plaintiff or petitioner because he or she is a Director or Officer; provided, however, that any such Proceeding under subsection (iv) is authorized by a majority vote of a Disinterested Quorum.

(j) “Statute” shall mean Sections 180.0850 through 180.0859, inclusive, of the Wisconsin Business

Corporation Law, in effect, including any amendments thereto, but in the case of any such amendment, only to the extent such amendment permits or requires the Company to provide broader indemnification rights than the Statute permitted or required the Company to provide prior to such amendment.

Par. 2. Mandatory Indemnification. To the fullest extent permitted or required by the Statute, the Company shall indemnify a Director or Officer against all Liabilities incurred by or on behalf of such Director or Officer in connection with a Proceeding in which the Director or Officer is a Party because he or she is a Director or Officer. Par. 3. Procedural Requirements.

(a) A Director or Officer who seeks indemnification under Par. 2 shall make a written request therefor to the Company. Subject to Par. 3(b), within sixty (60) days of the Company’s receipt of such request, the Company shall pay or reimburse the Director or Officer for the entire amount of Liabilities incurred by the Director or Officer in connection with the subject Proceeding (net of any Expenses previously advanced pursuant to Par. 5).

(b) No indemnification shall be required to be paid by the Company pursuant to Par. 2 if, within such sixty (60)

day period, (i) a Disinterested Quorum, by a majority vote thereof, determines that the Director or Officer requesting indemnification engaged in misconduct constituting a Breach of duty or (ii) a Disinterested Quorum cannot be obtained.

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(c) In either case of nonpayment pursuant to Par. 3(b), the Board shall immediately authorize by resolution that

an Authority, as provided in Par. 4, determine whether the Director’s or Officer’s conduct constituted a Breach of Duty and, therefore, whether indemnification should be denied hereunder.

(d) (i) If the Board does not authorize an Authority to determine the Director’s or Officer’s right to

indemnification hereunder within such sixty (60) day period and/or (ii) if indemnification of the requested amount of Liabilities is paid by the Company, then it shall be conclusively presumed for all purposes that a Disinterested Quorum has affirmatively determined that the Director or Officer did not engage in misconduct constituting a Breach of Duty and, in the case of subsection (i) above (but not subsection (ii)), indemnification by the Company of the requested amount of Liabilities shall be paid to the Director or Officer immediately.

Par. 4. Determination of Indemnification.

(a) If the Board authorizes an Authority to determine a Director’s or Officer’s right to indemnification pursuant to Par. 3, then the Director or Officer requesting indemnification shall have the absolute discretionary authority to select one of the following as such Authority.

(i) An independent legal counsel; provided, that such counsel shall be mutually selected by such

Director or Officer and by a majority vote of a Disinterested Quorum or, if a Disinterested Quorum cannot be obtained, then by a majority vote of the Board;

(ii) A panel of three (3) arbitrators selected from the panels of arbitrators of the American Arbitration

Association in Eau Claire, Wisconsin; provided, that (A) one arbitrator shall be selected by such Director or Officer, the second arbitrator shall be selected by a majority vote of the Board, and the third arbitrator shall be selected by the two (2) previously selected arbitrators, and (B) in all other respects, such panel shall be governed by the American Arbitration Association’s then existing Commercial Arbitration Rules; or

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(iii) A court pursuant to and in accordancewith Section 180.0854 of the Statute.

(b) In any such determination by the selected Authority there shall exist a rebuttable presumption that the

Director’s or Officer’s conduct did not constitute a Breach of Duty and that indemnification against the requested amount of Liabilities is required. The burden of rebutting such a presumption by clear and convincing evidence shall be on the Company or such other party asserting that such indemnification should not be allowed.

(c) The Authority shall make its determination within sixty (60) days of being selected and shall submit a

written opinion of its conclusion simultaneously to both the Company and the Director or Officer. (d) If the Authority determines that indemnification is required hereunder, the Company shall pay the entire

requested amount of Liabilities (net of any Expenses previously advanced pursuant to Par. 5), including interest thereon at a reasonable rate, as determined by the Authority, within ten (10) days of receipt of the Authority’s opinion; provided, that, if it is determined by the Authority that a Director or Officer is entitled to indemnification as to some claims, issues, or matters, but not as to other claims, issues, or matters, involved in the subject Proceeding, the Company shall be required to pay (as set forth above) only the amount of such requested Liabilities as the Authority shall deem appropriate in light of all of the circumstances of such Proceeding.

(e) The determination by the Authority that indemnification is required hereunder shall be binding upon the

company regardless of any prior determination that the Director or Officer engaged in a Breach of Duty. (f) All Expenses incurred in the determination process under this Par. 4 by either the Company or the Director

or Officer, including, without limitation, all Expenses of the selected Authority, shall be paid by the Company.

Par. 5. Mandatory Allowance of Expenses.

(a) The Company shall pay or reimburse, within ten (10) days after the receipt of the Director’s or Officer’s written request therefor, the reasonable Expenses of the Director or Officer as such Expenses are incurred; provided the following conditions are satisfied:

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(i) The Director or Officer furnishes to the Company an executed written certificate affirming his or her

good faith belief that he or she has not engaged in misconduct which constitutes a Breach of Duty; and (ii) The Director or Officer furnishes to the Company an unsecured executed written agreement to repay

any advances made under this Par. 5, if it is ultimately determined by an Authority that he or she is not entitled to be indemnified by the Company for such Expenses pursuant to Par. 4.

(b) If the Director or Officer must repay any previously advanced Expenses pursuant to this Par. 5, such

Director or Officer shall not be required to pay interest on such amounts.

Par. 6. Indemnification and Allowance of Expenses of Employees and Agents.

(a) The Company shall indemnify an employee of the Company who is not a Director or Officer, to the extent that he or she has been successful on the merits or otherwise in defense of a Proceeding, for all reasonable Expenses incurred in the Proceeding if the employee was a Party because he or she was an employee of the Company.

(b) The Company shall indemnify any person who was or is a Party or is threatened. to be made a Party to any

threatened, pending, or completed Proceeding, other than an action by or in the right of the Company, by reason of the fact that he or she is or was an employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against Liabilities and Expenses actually and reasonably incurred by him or her in connection with the Proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the company, and, with respect to any criminal Proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not

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opposed to the best interest of the Company, and, with respect to any criminal Proceeding, had reasonable cause to believe that his or her conduct was unlawful.

(c) The Company shall indemnify any person who was or is a Party or is threatened to be made a Party to any threatened, pending, or completed Proceeding, by or in the right of the Company to procure a judgment in its favor by reason of the fact that he or she is or was an employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against Expenses actually and reasonably incurred by him or her in connection with the defense or settlement of the Proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interest of the Company, except that no indemnification shall be made in respect to any claim, issue, or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his or her duty to the Company, unless and only to the extent that the court in which such Proceeding was brought shall determine upon application, that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such Expenses which such court shall deem proper.

(d) Any action taken or omitted to be taken by an employee or agent of the Company in good faith and in

compliance with or pursuant to any order, determination, approval, or permission made or given by a commission, Board, official, or other agency of the United States or of any state or other governmental authority with respect to the property or affairs of the Company over which such commission, board, official, or agency has jurisdiction or authority or purports to have jurisdiction or authority shall be deemed prima facie to be in compliance with the applicable standard of conduct set forth in Par. 6(b) or 6(c), whether or not it may thereafter be determined that such order, determination, approval, or permission was unauthorized, erroneous, unlawful, or otherwise improper.

(e) In addition to the indemnification required by Par. 6(a) through 6(d), the Board may, in its sole and

absolute discretion as it deems appropriate, pursuant to a majority vote thereof, indemnify against Liabilities incurred by, and/or provide for the allowance of reasonable Expenses of, an employee or authorized agent of the Company acting within the scope of his or her duties as such and who is not otherwise a Director or Officer.

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Par. 7. Insurance. The Company may purchase and maintain insurance on behalf of a Director or Officer or any individual who is or was an employee or authorized agent of the Company against any Liability asserted against or incurred by such individual in his or her capacity as such or arising from his or her status as such, regardless of whether the Company is required or permitted to indemnify against any such Liability under this Section 7. Par. 8. Notice to the Company. A Director or Officer shall promptly notify the Company in writing when he or she has actual knowledge of a Proceeding which may result in a claim of indemnification against Liabilities or allowance of Expenses hereunder, but the failure to do so shall not relieve the Company of any liability to the Director or Officer hereunder unless the Company shall have been irreparably prejudiced by such failure (as determined by an Authority selected pursuant to Par. 4(a)). Par. 9. Severability. If any provision of this Section shall be deemed invalid or inoperative, or if a court of competent jurisdiction determines that any of the provisions of this Section 7 contravene public policy, this Section 7 shall be construed so that the remaining provisions shall not be affected, but shall remain in full force and effect, and any such provisions which are invalid or inoperative or which contravene public policy shall be deemed, without further action or deed by or on behalf of the Company, to be modified, amended, and/or limited, but only to the extent necessary to render the same valid and enforceable. Par. 10. Nonexclusivity of Section 7. The rights of a Director or Officer (or any other person) granted under this Section 7 shall not be deemed exclusive of any other rights to indemnification against Liabilities or allowance of Expenses which the Director or Officer (or such other person) may be entitled to under any written agreement, Board resolution, vote of shareholders of the Company or otherwise, including, without limitation, under the Statute. Nothing contained in his Section 7 shall be deemed to limit the Company’s obligations to indemnify against Liabilities or allow Expenses to a Director of Officer under the Statute. Par. 11. Contractual Nature of Section 7; Repeal or Limitation of Rights. This Section 7 shall be deemed to be a contract between the Company and each Director and Officer and any repeal or other limitation of this Section 7 or any

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repeal or limitation of the Statute or any other applicable law shall not limit any rights of indemnification against Liabilities or allowance of Expenses then existing or arising out of events, acts or omissions occurring prior to such repeal or limitation, including, without limitation, the right to indemnification against Liabilities or allowance of Expenses for Proceedings commenced after such repeal or limitation to enforce this Section 7 with regard to acts, omissions or events arising prior to such repeal or limitation. Par. 12. Continuation of Indemnification. The indemnification provided by this Section 7 shall continue as to a person who has ceased to be a Director, Officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.

Section 8. Telephonic Meetings. Only as herein provided, members of the Board of Directors (and any committees thereof) may participate in regular or special meetings by, or through the use of, any means of communication by which all participants may simultaneously hear each other, such as by conference telephone. If a meeting is conducted by such means, then at the commencement of such meeting the Chairman of the Board (or chairman of the committee) shall inform the participating Directors that a meeting is taking place at which official business may be transacted. Any participant in a meeting by such means shall be deemed present in person at such meeting.

Section 9. Action Without Meetings. Action required or permitted to be taken at the Board of Directors meeting may

be taken without a meeting if the action is taken by a majority of the Directors in office when the action is taken. The action shall be evidenced by one or more written consents describing the action taken, signed by each Director consenting to such action.

ARTICLE III. Committees

Section 1. Creation and Powers. The Board of Directors by resolution adopted by the affirmative vote of a majority of

all of the directors then in office may create one or more committees, appoint members of the Board of Directors to serve on the committees and designate other members of the Board of Directors to serve as alternates. Each committee shall have two or more members who shall, unless otherwise provided by the Board of Directors, serve at the pleasure of the Board of Directors. A committee may be authorized to exercise the authority of the

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Board of Directors, except that a committee may not do any of the following: (a) authorize distributions; (b) approve or propose to shareholders action that the Wisconsin Business Corporation Law requires to be approved by shareholders; (c) fill vacancies on the Board of Directors or, unless the Board of Directors provides by resolution that vacancies on a committee shall be filled by the affirmative vote of the remaining committee members, on any Board committee; (d) approve a plan of merger not requiring shareholder approval; (g) authorize or approve reacquisition of shares, except according to a formula or method prescribed by the Board of Directors; and (h) authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares, except that the Board of Directors may authorize a committee to do so within limits prescribed by the Board of Directors. Unless otherwise provided by the Board of Directors in creating the committee, a committee may employ counsel, accountants and other consultants to assist it in the exercise of its authority.

Section 2. Meetings and Quorum. A committee meeting shall be held at such time and place as the committee shall fix

or whenever called by order of the Chairman of the Board, the President, or a majority of the committee. A majority of the members of a committee shall constitute a quorum. A committee shall cause to be kept a full and accurate record of all of its acts and proceedings.

ARTICLE IV.

Officers

Section 1. Designation, Term and Vacancies. The general officers of the corporation shall be a Chairman of the Board, a President, and one or more Vice Presidents any of whom may have such additional designation as the Board of Directors may provide, a Secretary and one or more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers, a Controller and such subordinate officers as may from time to time be elected by the Board of Directors. The filling of the office of Chairman of the Board shall be discretionary with the Board of Directors. If such office be vacant, the functions thereof shall be performed by the office of the President. Any two or more of the offices may be held by the same person, except the offices of President and Secretary, and the offices of President and Vice President. Vacancies occurring among the officers of the corporation shall be filled by the Board of Directors. All officers elected by the Board shall

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hold office until the next annual meeting of the Directors and until their successors are elected and qualified, provided, however, that any officer may be removed at any time by the affirmative vote of a majority of the whole Board. All other officers, agents and employees shall hold office during the pleasure of the Board.

Section 2. Chief Executive Officer. The Board of Directors shall designate the Chief Executive Officer of the Company. Section 3. Duties of Chairman of the Board. The Chairman of the Board shall preside at all meetings of the Board of

Directors; he shall be ex officio a member of all standing committees, and shall have such other powers and perform such other duties as may be prescribed by the Board.

Section 4. President. The President shall have general supervision and direction of the affairs of the company and shall

have all the powers and duties appurtenant to the office of President of a corporation. He shall preside at meetings of the Board of Directors in the absence or disability of the Chairman of the Board. He shall be ex officio a member of all standing committees. He shall have power to appoint and discharge, subject to the approval of the Directors, employees or agents of the Company and fix their compensation; make and sign agreements in the name and behalf of the Company; he shall report to the Board all matters within his knowledge which the interest of the Company may require to be brought to their notice; he shall make such other reports to the shareholders and the Board as may be required of him; and shall perform all such other duties as are properly required of him by the Board.

Section 5. Vice President. Each Vice President shall be vested with all the powers and shall perform all the duties of the

President in the absence or disability of the latter, unless or until the Directors shall otherwise determine. He shall have such other powers and perform such other duties as shall be prescribed by the Directors.

Section 6. Secretary. The Secretary shall give, or cause to be given, notice of all meetings of shareholders and Directors

and all other notices required by law or the By-Laws of the Company and in case of his absence or refusal or neglect so to do, any such notices may be given by any person thereunto directed by the President or by the Directors and shareholders, upon whose requisition the meeting is called as provided in the By-Laws.

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He shall record all proceedings of the meetings of the shareholders and the Directors and any committees of the corporation

in the book or books to be kept for that purpose, and shall perform such other duties as may be assigned to him by the Directors or by the President.

Section 7. Assistant Secretary. Each Assistant Secretary shall be vested with all the powers and shall perform all the duties

of the Secretary in the absence or disability of the latter and he shall perform such duties as may be prescribed by the Board of Directors.

Section 8 Treasurer. The Treasurer shall have the custody of all funds, securities, evidences of indebtedness, and other

valuable documents of the Company, and shall deposit all money and other valuable effects in the name and to the credit of the Company, and in such depositories as may be designated by the Board of Directors.

He shall give, or cause to be given, receipts and acquittances for moneys paid in on account of the Company. He shall

disburse the funds of the Company as may be ordered by the Board or the President, taking proper vouchers for such disbursements. He shall enter, or cause to be entered, in the books of the Company to be kept for that purpose, full and accurate accounts of

all moneys received and paid out on account of the Company, and whenever required by the President or Directors, he shall render a statement of his cash accounts.

He shall keep or cause to be kept, such other books as will show a true record of the expenses, losses, assets, gains and

liabilities of the Company. He shall perform all such other duties as the Board of Directors may from time to time prescribe or require. Section 9. Assistant Treasurer. Each Assistant Treasurer shall be vested with all the powers and shall perform all the duties

of the Treasurer in the absence or disability of the latter, and shall perform such other duties as may be prescribed by the Board of Directors.

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Section 10 Controller. The Controller shall establish and enforce accounting policies and procedures, and establish and

implement internal accounting control practices and systems to preserve the integrity and accuracy of the Company’s books of accounts. The Controller shall also be responsible for preparing the corporate operating and capital budgets and providing timely reports of budget deviations and financial performance. The Controller shall perform such other duties as the Board of Directors may from time to time prescribe or require.

Section 11. Execution of Cheques, etc. Cheques, drafts, acceptances, bills of exchange and promissory notes of the

Company shall be signed in such manner as may from time to time be directed by resolution of the Board. Section 12. Bonds of Officers and Employees. Any executive officer of the Company may be required by resolution of the

Board to give a bond for the faithful discharge of his duties in such amount and wish such sureties and containing such conditions as the Board of Directors may approve. Any other employee of the Company may be required by resolution of the Board or by direction of the President to give a bond in such sum and with such sureties and containing such conditions as the Board of Directors may approve. Any bond so required of any officer or employee of the Company may be the undertaking of a surety company and the premium therefor may be paid by the Company.

Section 13. Duties and Delegation of Duties. Each officer shall have the authority and shall perform the specific duties

reflected under the officer titles noted in sections 2 – 10 above. In addition they shall perform the duties as may be assigned by the Board of Directors, the Chairman of the Board, or the President, or as shall be conferred or required by law or these Bylaws, or as shall be normally incidental to the office. The President, the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer and any Vice President of the Corporation (including Executive Vice Presidents and Assistant Vice Presidents) may execute and deliver instruments and contracts on behalf of the Corporation and otherwise may bind the Corporation. In addition, any of the foregoing officer-signatories, and the board of directors of the Corporation, may delegate to any other person, in writing the authority to execute and deliver instruments and contracts on behalf of the Corporation and otherwise bind the Corporation.

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ARTICLE V.

Shares of Stock

Section 1. Certificates of Stock. All certificates for shares of the capital stock of the Company shall be in such form not inconsistent with the Articles of Incorporation of the Company as shall be approved by the Board of Directors, and shall be signed by the President or Vice President and by the Secretary or Assistant Secretary, and shall not be valid unless so signed. All certificates shall be consecutively numbered, and the name of the person owning the shares represented thereby, with the number of such shares and the date of issuance, shall be entered on the Company’s books. All certificates surrendered shall be canceled, and no new certificate issued until the former certificate for the same number of shares shall have been surrendered and canceled, except in cases provided for in Section 4 of this Article.

Section 2. Transfer of Shares. Shares of stock of the corporation shall be transferable in person or by attorney by the

endorsement and delivery of the stock certificate and the registry of such transfer on the books of the corporation. The transfer books of the corporation may be closed for such period as the Board of Directors shall direct previous to and on the day of the annual or any special meeting of the shareholders, and may also be closed by the Board for such time as may be deemed advisable for dividend purposes, and during such time no stock shall be transferable.

Section 3. Addresses of Shareholders. Every shareholder shall furnish the Secretary with an address to which notices of

meetings and all other notices may be served upon or mailed to him, and in default thereof notices may be addressed to him at his last known address.

Section 4. Lost and Destroyed Certificates. The Board of Directors may direct that a new certificate or certificates may be

issued in place of any certificate or certificates theretofore issued by the Company, alleged to have been lost or destroyed, and the Board of Directors, when authorizing the issuance of such new certificate or certificates, may in their discretion and as a condition precedent thereto, require the owner of such lost or destroyed certificate or certificates, or his legal representatives, to give to the Company a bond in such sum as they may direct as indemnity against any claim that may be made against the Company.

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Section 5. Regulations. The Board of Directors shall have power and authority to make all such rules and regulations as

they may deem expedient concerning the issue, transfer and registration of certificates for shares of the capital stock of the Company.

ARTICLE VI. Dividends.

The Board of Directors may declare dividends from the surplus or net profits of the corporation as they may in their

discretion from time to time determine. Any dividends declared upon the stock shall be payable upon such dates as may be from time to time fixed by the Board.

ARTICLE VII.

Seal.

The Common corporate seal is, and until otherwise ordered and directed by the Board of Directors shall be, an impression upon paper of wax bearing the words: “NORTHERN STATES POWER COMPANY, CORPORATE SEAL, WISCONSIN.” One or more duplicate dies for impressing such seal may be kept and used.

ARTICLE VIII.

Amendment of By-Laws.

These By-Laws may be altered, amended or repealed by the affirmative vote of a majority of the stock issued and outstanding and entitled to vote thereat at any regular or special meeting of the shareholders of the Company if notice of the proposed alteration or amendment or repeal be contained in the notice of such meeting, or by the affirmative vote of a majority of the Board of Directors of the Company.

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Exhibit 31.01

Certifications

I, Michael L. Swenson, certify that:

1. I have reviewed this report on Form 10-Q of Northern States Power Co. (a Wisconsin corporation); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact

necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in

all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and

procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed

under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be

designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our

conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during

the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over

financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial

reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the

registrant’s internal control over financial reporting.

Date: Aug. 4, 2008

/s/ MICHAEL L. SWENSON

Michael L. Swenson

President and Chief Executive Officer

I, Benjamin G.S. Fowke III, certify that:

1. I have reviewed this report on Form 10-Q of Northern States Power Co. (a Wisconsin corporation); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact

necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in

all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and

procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed

under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be

designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our

conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during

the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over

financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial

reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the

registrant’s internal control over financial reporting.

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Date: Aug. 4, 2008




Exhibit 32.01

Officer Certification

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Northern States Power Company, a Wisconsin Corporation (NSP-Wisconsin) on Form 10-Q for the quarter ended June 30, 2008, as filed with the Securities and Exchange Commission on the date hereof (Form 10-Q), each of the undersigned officers of NSP-Wisconsin certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document. A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to NSP-Wisconsin and will be retained by NSP-Wisconsin and furnished to the Securities and Exchange Commission or its staff upon request.

(1) The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of NSP-Wisconsin as of the dates and for the periods expressed in the Form 10-Q.

Date: Aug. 4, 2008

/s/ MICHAEL L. SWENSON

Michael L. Swenson

President and Chief Executive Officer




Exhibit 99.01

NSP-Wisconsin Cautionary Factors

The Private Securities Litigation Reform Act provides a “safe harbor” for forward-looking statements to encourage such disclosures without the threat of litigation, providing those statements are identified as forward-looking and are accompanied by meaningful, cautionary statements identifying important factors that could cause the actual results to differ materially from those projected in the statement. Forward-looking statements are made in written documents and oral presentations of NSP-Wisconsin. These statements are based on management’s beliefs as well as assumptions and information currently available to management. When used in NSP-Wisconsin’s documents or oral presentations, the words “anticipate,” “estimate,” “expect,” “projected,” objective,” “outlook,” “forecast,” “possible,” “potential” and similar expressions are intended to identify forward-looking statements. In addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements, factors that could cause NSP-Wisconsin’s actual results to differ materially from those contemplated in any forward-looking statements include, among others, the following:

NSP-Wisconsin undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors should not be construed as exhaustive.

• Economic conditions, including their impact on capital expenditures and the ability of NSP-Wisconsin to obtain financing on favorable terms, inflation rates and monetary fluctuations;

• Business conditions in the energy business;

• Trade, monetary, fiscal, taxation and environmental policies of governments, agencies and similar organizations in geographic

areas where NSP-Wisconsin has a financial interest;

• Customer business conditions, including demand for their products or services and supply of labor and materials used in creating their products and services;

• Financial or regulatory accounting principles or policies imposed by the Financial Accounting Standards Board, the SEC, the

Federal Energy Regulatory Commission and similar entities with regulatory oversight;

• Availability or cost of capital such as changes in: interest rates; market perceptions of the utility industry, Xcel Energy or NSP-Wisconsin; or security ratings;

• Factors affecting utility operations such as unusual weather conditions; catastrophic weather-related damage; unscheduled

generation outages, maintenance or repairs; unanticipated changes to fossil fuel, nuclear fuel or natural gas supply costs or availability due to higher demand, shortages, transportation problems or other developments; nuclear or environmental incidents; or electric transmission or natural gas pipeline constraints;

• Employee workforce factors, including loss or retirement of key executives, collective bargaining agreements with union

employees, or work stoppages;

• Increased competition in the utility industry;

• State and federal legislative and regulatory initiatives that affect cost and investment recovery, have an impact on rate structures and affect the speed and degree to which competition enters the electric and natural gas markets; industry restructuring initiatives; transmission system operation and/or administration initiatives; recovery of investments made under traditional regulation; nature of competitors entering the industry; retail wheeling; a new pricing structure; and former customers entering the generation market;

• Rate-setting policies or procedures of regulatory entities, including environmental externalities, which are values established

by regulators assigning environmental costs to each method of electricity generation when evaluating generation resource options;

• Nuclear regulatory policies and procedures, including operating regulations and spent nuclear fuel storage;

• Social attitudes regarding the utility and power industries;

• Cost and other effects of legal and administrative proceedings, settlements, investigations and claims;

• Technological developments that result in competitive disadvantages and create the potential for impairment of existing

assets;

• Significant slowdown in growth or decline in the U.S. economy, delay in growth or recovery of the U.S. economy or increased cost for insurance premiums, security and other items;

• Risks associated with implementation of new technologies; and

• Other business or investment considerations that may be disclosed from time to time in NSP-Wisconsin’s SEC filings,

including “Risk Factors” in Item 1A of NSP-Wisconsin’s Annual Report on Form 10-K for the year ended Dec. 31, 2007, or in other publicly disseminated written documents.

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Economy & Finance

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