WPS Resources Corporation and Peoples Energy Corporation Continue Making Progress toward Completing Merger

  
    
  
  
    
      Peoples Energy Corporation (NYSE: PGL):
    
    
      
        Agreement reached on resolution of issues with most intervening 
        parties in Illinois
      
      
        Proposed merger remains on track for completion during the first 
        quarter of 2007
      
    
    
      WPS Resources Corporation (NYSE: WPS) (“WPS 
      Resources”) and Peoples Energy Corporation 
      (NYSE: PGL) (“Peoples”) 
      announced that they have made significant progress toward obtaining the 
      approvals needed to close their proposed merger, including:
    
    
      
        On January 9, 2007, WPS Resources and Peoples reached agreement with 
        most of the interveners on the contested issues in the merger 
        application pending before the Illinois Commerce Commission. The 
        agreement is between the companies and the City of Chicago, the Cook 
        County State’s Attorney’s 
        Office, the Attorney General of the State of Illinois, the Citizens 
        Utility Board, the Environmental Law and Policy Center, the Utility 
        Workers Union of America, AFL-CIO, and UWUA Local Union No. 18007 
        (UWUA Local 18007). The Staff of the Illinois Commerce Commission, 
        which as a general rule does not join in settlement agreements, has 
        signed the agreement to indicate that Staff has no objection to and 
        will not oppose the terms of the agreement. The agreement is 
        memorialized in documents filed today with the Illinois Commerce 
        Commission. Discussions continue with the remaining intervening 
        parties. All agreements must be presented to and are subject to 
        approval by the Illinois Commerce Commission.
      
      
        On December 21, 2006, the Federal Energy Regulatory Commission 
        approved the merger transaction.
      
      
        On December 6, 2006, the shareholders of WPS Resources and Peoples 
        voted overwhelmingly to approve the completion of the merger.
      
    
    
      “We are pleased that our efforts to complete 
      this merger have been well received by the Federal Energy Regulatory 
      Commission, shareholders, and the communities in which we operate,” 
      stated Larry L. Weyers, Chairman, President and CEO of WPS Resources. 
      Weyers will become President and CEO of Integrys Energy Group, Inc., the 
      new name for the combined companies when the merger is completed. “We 
      are grateful to the parties for their cooperation in this agreement. We 
      will continue to work on resolving issues in Illinois and Wisconsin. We 
      continue to be hopeful of obtaining all the necessary regulatory 
      approvals to close the merger during the first quarter of 2007.”
    
    
      A summary of major components of the Illinois agreement are as follows:
    
    
      
        Inclusion of Synergy Savings and Costs to Achieve in Customer Rates
      
    
    
      In the rate cases to be filed by Peoples Gas and North Shore Gas in 
      2007, the companies will use historical test years ended September 30, 
      2006, with adjustments for “known and 
      measurable changes” through September 30, 
      2007. There will be adjustments for “known 
      and measurable changes” for merger related 
      annual synergy savings totaling about $13 million.
    
    
      Peoples Gas’ and North Shore Gas’ 
      recovery of merger-related costs incurred to achieve the synergy savings 
      will be capped at about $45 million. The estimate of such costs provided 
      in testimony filed previously with the Illinois Commerce Commission was 
      about $47 million. Of this amount, about $35 million will be recovered 
      through an annual cost recovery of about $7 million which will be 
      provided through a five-year amortization period included in the 2007 
      rate case. The remaining costs, to the extent actually incurred, will be 
      eligible for recovery through rates established in a future rate case.
    
    
      
        Service-Related Proposals
      
    
    
      Peoples Gas and North Shore Gas will conduct certain operational studies 
      proposed by Illinois Commerce Commission Staff to assist in improving 
      customer service.
    
    
      
        Energy Efficiency Programs and Funding
      
    
    
      In their next rate cases, Peoples Gas and North Shore Gas will propose 
      energy efficiency programs with an aggregate cost of $7.5 million per 
      year. It is anticipated the companies will not be obligated to fund 
      these programs beyond the amount for which the Illinois Commerce 
      Commission provides cost recovery in the rate case orders.
    
    
      
        Utility Workers Union of America, AFL-CIO, and UWUA Local No. 18007
      
    
    
      Peoples Gas commits there will be no reorganization-related layoffs or 
      reorganization-related position reductions among the UWUA Local 18007 
      employees. In addition, there will be a specific limited number of 
      position upgrades and additions to the current union work force levels.
    
    
      About WPS Resources Corporation
    
    
      WPS Resources (NYSE: WPS), based in Green Bay, Wisconsin, is a holding 
      company with five major subsidiaries providing electric and natural gas 
      energy and related services in both regulated and non-regulated energy 
      markets. Its largest subsidiary is Wisconsin Public Service Corporation, 
      a regulated electric and natural gas utility serving northeastern 
      Wisconsin and a portion of Michigan's Upper Peninsula. Wisconsin Public 
      Service serves more than 425,000 electric customers and 308,000 natural 
      gas customers. Minnesota Energy Resources Corporation is a regulated 
      natural gas utility serving more than 200,000 customers throughout 
      Minnesota. Michigan Gas Utilities Corporation is a regulated natural gas 
      utility serving 161,000 customers in lower Michigan. Another subsidiary, 
      Upper Peninsula Power Company, is a regulated electric utility that 
      serves approximately 52,000 electric customers in Michigan's Upper 
      Peninsula.
    
    
      WPS Resources' major non-regulated subsidiary consists of WPS Energy 
      Services, Inc., a diversified non-regulated energy supply and services 
      company serving commercial, industrial and wholesale customers and 
      aggregated groups of residential customers. Its principal market is the 
      northeast quadrant of the United States and adjacent portions of Canada. 
      Its principal operations are in Illinois, Maine, Michigan, Ohio, Texas, 
      Virginia, and Wisconsin in the United States and Alberta, Ontario, and 
      Quebec in Canada. WPS Energy Services also owns and/or operates 
      non-regulated electric generation facilities in Wisconsin, Maine, 
      Pennsylvania, New York, and New Brunswick, Canada; steam production 
      facilities in Arkansas and Oregon; and a partial interest in a synthetic 
      fuel processing facility in Kentucky.
    
    
      Visit the WPS Resources Web site at www.wpsr.com 
      for additional information.
    
    
      About Peoples Energy
    
    
      Peoples Energy, (NYSE: PGL) a member of the S&P 500, is a diversified 
      energy company consisting of three primary business segments: Gas 
      Distribution, Oil and Gas Production, and Energy Marketing. Peoples Gas 
      and North Shore Gas, regulated utilities, deliver natural gas to about 
      one million customers in the City of Chicago and 54 communities in 
      northeastern Illinois. The company’s 
      non-utility businesses include Peoples Energy Services (PESC) and 
      Peoples Energy Production (PEP). PESC, launched in 1996, serves more 
      than 40,000 customers, providing a portfolio of products to manage the 
      energy needs of business, institutional and residential consumers. PEP 
      is primarily engaged in the acquisition and development of proven 
      onshore natural gas reserves with upside potential in a limited number 
      of strategic supply basins. Value is then added through drilling 
      programs, production enhancements and reservoir optimization.
    
    
      Visit Peoples’ website at www.peoplesenergy.com 
      for more information.
    
    
      Forward-Looking Statements
    
    
      This press release contains forward-looking statements within the 
      meaning of Section 21E of the Securities Exchange Act of 1934. You can 
      identify these statements by the fact that they do not relate strictly 
      to historical or current facts and often include words such as “anticipate,” 
      “expect,” “intend,” 
      “may,” “could,” 
      “project,” “believe” 
      and other similar words. Forward-looking statements are beyond the 
      ability of WPS Resources and Peoples Energy to control and, in many 
      cases, neither WPS Resources nor Peoples Energy can predict what factors 
      would cause actual results to differ materially from those indicated by 
      forward-looking statements. Please see WPS Resources’ 
      and Peoples Energy’s periodic reports filed 
      with the Securities and Exchange Commission (including their 10-Ks and 
      10-Qs) for listings of certain factors that could cause actual results 
      to differ materially from those contained in forward-looking statements. 
      All forward-looking statements included in this press release are based 
      upon information presently available, and neither WPS Resources nor 
      Peoples Energy assume any obligation to update any forward-looking 
      statements.