fitch afffirms ratings for Wisconsin Energy Corp. and subsidiairies; outlook stable

June 20 (Reuters) - NEW YORK, June 20 (Fitch) Fitch Ratings has affirmed the
ratings of Wisconsin
Energy Corp. (WEC) and its subsidiaries Wisconsin Electric Power Co. (WEPCO),
Wisconsin Gas LLC (WI Gas), Wisconsin Energy Capital Corp. (WECC), and Elm Road
Generating Station Supercritical LLC (ERGSS). Approximately $4.9 billion of debt
is affected by today's rating actions. The Rating Outlook for all entities is
Stable. A full list of rating actions follows at the end of this release.

KEY RATING DRIVERS

Cash Flow Stability

WEC's credit profile and Stable Rating Outlook reflects the solid credit profile
and relatively predictable cash flows of its two regulated operating
subsidiaries, WEPCO and WI Gas. Management strategy is focused on its core
utility operations which benefit from a balanced regulatory compact in
Wisconsin, which accounts for the vast majority of consolidated earnings and
cash flows.

Constructive Regulatory Compact

The tariff structure in Wisconsin is favorable with above-average authorized
returns on equity (ROEs), the use of forward-looking test years, a healthy
equity component in the capital structure, a partial cash return on construction
work in progress (CWIP), and fuel and purchased power recovery mechanisms.
Additionally, the regulatory treatment of PTF allows WEPCO to recover in retail
rates the rental payments made to an affiliate as part of the long-term leased
generation contract for the four PTF units.

Conservative Management Strategy

Fitch expects WEC's parent-only leverage to modestly improve over the next few
years. WEC's performance is strong and benefits from rate base additions and
anticipated additional cash flows stemming from bonus depreciation on the Oak
Creek expansion units. Fitch expects WEC to be cash flow positive in the
forecast period with cash allocated towards reducing parent-level debt,
executing share repurchases, increasing dividends, and supporting future utility
base investments.

Solid Financial Profile

Fitch expects WEC's EBITDA/Interest expense to average 4.9 times (x) and
Debt/EBITDA, 3.6x, over 2012 - 2015 time period. Credit protection measures are
in line with Fitch's target ratios for the current rating category albeit at the
lower end of its peers with similar risk profiles. Importantly, Fitch recognizes
the continued improvement in leverage and coverage metrics from the 2010-2011
levels when EBIDTA/Interest was below 4.7x, and Debt/EBITDA, above 4.3x.

Adequate Liquidity

WEC has adequate liquidity to support future financing needs with $450 million
available under a bank credit facility that matures in December 2013. WEPCO and
WI Gas have separate credit facilities of $500 million and $300 million,
respectively. As of March 31, 2012, approximately $688 million was available
under all three credit agreements. Consolidated debt maturities over the next
several years are considered by Fitch to be manageable and are as follows: $375
million in 2013, $300 million in 2014, $375 million in 2015. Fitch expects WEC
to refinance these obligations as they become due. Fitch notes that WEC is free
cash flow positive throughout the forecast period, which will provide further
liquidity cushion if needed. Fitch forecasts free cash flow to total
approximately $430 million over the 2012 - 2015 time period.

Elevated Capital Spending

Fitch expects WEC to continue to have elevated capital spending plans through
2016. Total consolidated capital expenditures are expected to be approximately
$3.5 billion over the 2012 - 2016 period. Capex spending for environmental
compliance, including WEPCO's existing Oak Creek coal units, is expected to
amount to approximately $153 million, while renewables investment spending is
projected to be approximately $185 million over 2012-2014. Remaining capex
primarily targets investments in utility aging network and infrastructure.

Fitch expects WEC to use a balanced mix of internally generated funds and debt
issuances to finance capex. Potential pressure on credit metrics should be
alleviated by WEC's favorable free cash flow position which management intends
to leverage on to fund part of its capital investments.

Fitch estimates that WEPCO's credit protection measures will remain solid over
the forecast period. Fitch projects EBITDA/Interest to approximate 5.7x, and
Debt/EBITDA, 3.7x, over 2012-2016. Credit protection measures are in line with
Fitch's target ratios for the current rating category. Fitch's projections
assume WEPCO will receive adequate tariff relief in its pending rate case. An
unfavorable outcome would likely stress financial measures and could lead to a
negative rating action.

WEPCO filed for a net base rate increase for its electric customers of $99.3
million, to be effective January 2013. The proposed increase is based on a
52.35% regulatory common equity ratio and a 10.4% ROE. In the same filing, WEPCO
requested an additional net increase in electric rates of approximately $103.8
million, effective in 2014.

The rate request targets cost recovery of previously-approved investments in
pollution-control equipment at the old Oak Creek units, the Glacier Hills Wind
Park project which went online in December 2011, construction costs at the
Rothschild biomass plant, and the finalization of Oak Creek PTF expansion costs.

Fitch expects WI Gas' credit protection measures to weaken over 2012 - 2016, but
remain adequate for the current rating category. Fitch projects EBITDA/Interest
to approximate 6.0x and Debt/EBITDA, 3.9x, over the forecast period. The
pressure on credit metrics is associated with additional leverage to finance
capital investments, which are projected to be higher than historical norms.
Capex is estimated to grow by 40-50% from 2008-2011 levels. Capex targets
investments in WI Gas' aging infrastructure. Timely and adequate recovery of
capital investments will be critical to maintaining current ratings. Fitch could
consider a negative rating action if Debt/EBITDA crosses over the 4.0x range.

ERGSS ratings reflect the strong linkage with WEPCO. ERGSS services its debt
obligations with lease rental payments from WEPCO. As such, the ratings for
ERGSS reflect the credit quality of WEPCO.

WECC was the funding vehicle for WEC's former non-regulated operations. The debt
obligations of WECC are supported by an agreement with WEC. As such, the ratings
of WECC reflect the credit quality of WEC.

Fitch has affirmed the following ratings:

WEC

--Issuer Default Rating (IDR) at 'A-';

--Senior unsecured debt at 'A-';

--Junior subordinated debentures at 'BBB';

--Short-Term IDR and commercial paper (CP) at 'F2'.

WECC

--IDR at 'A-';

--Senior unsecured debt at 'A-'.

WEPCO

--IDR at 'A';

--Senior unsecured debt at 'A+';

--Preferred stock at 'A-';

--Short-Term IDR and CP at 'F1'.

WI Gas

--IDR at 'A';

--Senior unsecured debt at 'A+';

--Short-Term IDR and CP at 'F1'.

ERGSS

--IDR at 'A';

--Senior unsecured debt at 'A+'.