Customer Operations Consolidation Decision

1. Customer Operations Consolidation Decision Presentation by:Brian Kage General Manager – Strategy & Business Transformation – Customer Relations Integrys Energy Group, Inc.

2. Integrys Energy Group – A Leading Midwest Energy Company

3. Merger Timeline • September 2005 – Agreement to purchase Michigan and Minnesota Aquila properties announced • October 2005 – WPS/UppCo Implements new CIS • July 2006 – Implementation of Outsourced Solution for Aquila properties • July 2006 – Merger with Peoples Energy announced • February 2007 – Merger with Peoples Energy completed • December 2007 – Decision on Customer Relations Consolidation • 2007 – 2009 – Merger Integration Projects

4. Scenario for Decision • Recent Customer Experience with Stabilization of CIS Implementations • Large Scale IT Projects for Finance, HR, Infrastructure, and Work Management Projects Already Started • New Customer Relations Management Teams • Aggressive Rate Case Schedules in all Jurisdictions • Original Merger Analysis of CIS Decision Influenced by IT with Little Input from Customer Relations • Greater Expectations in Areas of Energy Efficiency and Demand Side Management

5. Project ICE (Integrys Customer Experience) • Ensure CIS decision is considered within broader framework of Customer Relations Service Model and Strategy • Quantify operational characteristics of existing Customer Relations service models • Ensure operational and regulatory risks are included in decision making process • Develop detailed estimates of synergies and cost to achieve for CIS consolidation • Develop common vision on how Integrys will provide Customer Relations in the future • Monitor other Customer Relations projects to ensure they support the common vision

6. Value Pyramid Key Goal: Impact to Customer Experience is Neutral to Positive Key Question: Which areas of the value pyramid require consistency?

7. Integrys Customer Experience “Creating positive memories for our customers by getting it right”

8. Optimization Key Initiatives • Increased Self Service • Improved Web Functionality • Improved IVR Navigation • Increased Promotion of Self-Service Options • Modify Call Center hours to peak times • Electronic Bill Presentment and Payment • Easier sign-up for EFT • Remove tie between E-bill and specific payment option • Increased electronic payment options • Improve Account Receivable Processing • Reduce Days of Sales Outstanding • Increase efficiency of collections • Combine receivables for collections agencies and sale of debt • Reduce Volume of Calls • First Call Resolution • Improved Bill Presentment and Quality • Improved Call Segmentation and Analysis

9. Challenging Road

10. Post-Merger Achievements Summary • Shareholders • Delivered permanent cost savings at a respectable ROI • Met/exceeded budget challenge • Mitigated the economy’s impact on write-offs and earnings • Customer • Improved service quality • New self-service functions and features showing greater preference by customers • New paperless billing and payment offering showing increased adoption • Culture-Employee • Addressed most urgent targeted training/development needs • Maintained alignment of CR strategy with Corporate strategy • Creating a higher performance culture through an execution-focused management model

11. Key Results • Synergy Savings of 15% as compared to the Pre-merger Customer Relations Budget • Good to Excellent Transactional Scores on Surveys • Improved JD Power Scores • Self Service Channel Strategy showing results: • Contacts 6%, agent-assisted 3% • 3.3M Contacts handled electronically (20%) • 1.2M Bills delivered electronically (141%) • 9.1M Payments received electronically (9%) • First Call Resolution Improved from 66% to 74%