FIRST SUPPLEMENTAL INDENTURE

This First Supplemental Indenture, dated as of March 5, 2007 (this “ First Supplemental Indenture ”), by and among Peoples Energy Corporation, an Illinois corporation (“ PEC ”), Integrys Energy Group, Inc., a Wisconsin corporation (“ Integrys ”), and The Bank of New York Trust Company, N.A. (successor to Bank One Trust Company National Association) (the “ Trustee ”), as trustee under the Original Indenture (defined below).

WHEREAS, PEC entered into that certain Indenture, dated as of January 18, 2001 (the “ Original Indenture ”), with the Trustee (as supplemented by this First Supplemental Indenture, the “ Indenture ”);

WHEREAS, PEC currently has issued and Outstanding Securities under the Original Indenture in the principal amount of $325,000,000 senior unsecured 6.90% notes, due January 15, 2011 (the “ Notes ”);

WHEREAS, pursuant to that certain Agreement and Plan of Merger dated as of July 8, 2006 (the “ Merger Agreement ”), by and among PEC, Integrys, and Wedge Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Integrys (“ Wedge ”), PEC and Wedge have merged, with PEC as the surviving corporation (the “ Merger ”), and, as a result of the Merger, PEC is a wholly-owned subsidiary of Integrys;

WHEREAS, Integrys desires to fully and unconditionally guarantee the due and punctual payment obligations of PEC with respect to the Notes as long as the Notes remain Outstanding;

WHEREAS, Section 902 of the Original Indenture provides, among other things, that PEC, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into an indenture supplemental to the Original Indenture with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series affected by such supplemental indenture; and

WHEREAS, the Holders of the Notes are the only Outstanding Securities affected by the First Supplemental Indenture, the Holders of not less than a majority in principal amount of the Notes have consented to the execution of this First Supplemental Indenture, the execution of this First Supplemental Indenture is authorized and permitted by Section 902 of the Original Indenture, all conditions precedent provided for in the Original Indenture relating to the execution of the First Supplemental Indenture have been complied with, and all things necessary to make this First Supplemental Indenture a valid agreement of PEC, Integrys, and the Trustee in accordance with its terms have been done;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, PEC, Integrys, and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

Section 101.    Capitalized Terms . Capitalized terms used herein without definition shall have the meanings ascribed to them in the Original Indenture.

Section 102.    Guaranty . Integrys does hereby fully and unconditionally guarantee for the benefit of the Holders and the Trustee (the “ Guaranty ”) (a) the due and punctual payment of the principal of, premium, if any, and interest on, all the Notes, whether at Stated Maturity, by declaration of acceleration, call for redemption or otherwise, the due and punctual payment of interest on overdue principal of, premium, if any, and interest on all of the Notes, if any, and the due and punctual performance of all other obligations of PEC to the Holders or the Trustee in accordance with the terms of the Indenture, and (b) in case of any extension of time of payment or renewal of any Notes or any such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration, or otherwise.

In case of the failure of PEC to punctually make any such payment of principal, premium, if any, or interest, Integrys hereby agrees to cause any such payment to be made promptly when and as the same shall become due and payable, whether at Stated Maturity, by declaration of acceleration, call for redemption or otherwise, and as if such payment were made by PEC.

Integrys hereby agrees that its obligations under the Guaranty shall be as if it were principal debtor and not merely surety, and shall be absolute and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of any Note or the Indenture, any failure to enforce the provisions of any Note or the Indenture, or any waiver, modification or indulgence granted to PEC with respect thereto, by the Holder of any Note or the Trustee, or any other circumstance which may otherwise constitute a legal or equitable discharge of a surety or guarantor; provided, however, that, notwithstanding the foregoing, no such waiver, modification, or indulgence shall, without the consent of Integrys, increase the principal amount of a Note or the interest rate thereon or increase any premium payable upon redemption thereof. Integrys hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of a merger or bankruptcy of PEC, any right to require a proceeding first against PEC, protest or notice with respect to any Note or the indebtedness evidenced thereby or with respect to any sinking fund payment required pursuant to the terms of a Note issued under the Indenture, and all demands whatsoever, and covenants that the Guaranty will not be discharged with respect to any Note except by payment in full of the principal of (and premium, if any) and interest on such Note. The Guaranty shall constitute a guaranty of payment and not of collection and shall not be impaired by the failure to endorse evidence of the Guaranty on any Note.

Integrys shall be subrogated to all rights of the Holder of a Note against PEC in respect of any amounts paid to such Holder by Integrys pursuant to the provisions of the Guaranty; provided, however, that Integrys shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation until the principal of (and premium, if any) and interest on all Notes have been paid in full.

Section 103.    Restrictions on Liens .

After the date of the First Supplemental Indenture and so long as any Notes are Outstanding, Integrys will not pledge, mortgage, hypothecate or grant a security interest in, or permit any mortgage, pledge, security interest or other lien upon, any capital stock of any Integrys Subsidiary now or hereafter directly or indirectly owned by Integrys to secure any Indebtedness (hereinafter defined), without making effective provisions whereby the Outstanding Notes shall be (so long as such other Indebtedness shall be so secured) equally and ratably secured with any and all such other Indebtedness and any other indebtedness similarly entitled to be equally and ratably secured; provided, however, that this restriction shall not apply to nor prevent the creation or existence of (i) any mortgage, pledge, security interest, lien or encumbrance upon any such capital stock (A) created at the time of the acquisition of such capital stock by Integrys or within one year after such time to secure all or a portion of the purchase price for such capital stock or (B) existing thereon at the time of the acquisition thereof by Integrys (whether or not the obligations secured thereby are assumed by Integrys), or (ii) any extension, renewal or refunding of any mortgage, pledge, security interest, lien or encumbrance described in clause (i) above on capital stock of any Integrys Subsidiary theretofore subject thereto (or substantially the same capital stock) or any portion thereof.

For purposes of this Section 103, “ Indebtedness ” means all indebtedness, whether or not represented by bonds, debentures, notes or other securities, created or assumed by Integrys or any Integrys Subsidiary for the repayment of money borrowed. All indebtedness for money borrowed secured by a lien upon property owned by Integrys or any Integrys Subsidiary and upon which indebtedness for money borrowed Integrys or such Integrys Subsidiary customarily pays interest, although Integrys or such Integrys Subsidiary has not assumed or become liable for the payment of such indebtedness for money borrowed, shall for purposes of this Section 103 be deemed to be indebtedness of Integrys or such Integrys Subsidiary. All indebtedness for money borrowed of others guaranteed as to payment of principal by Integrys or any Integrys Subsidiary or in effect guaranteed by Integrys or such Integrys Subsidiary through a contingent agreement to purchase such indebtedness for money borrowed shall be deemed for purposes of this Section 103 to be Indebtedness of Integrys or such Integrys Subsidiary, but no other contingent obligation of Integrys or any Integrys Subsidiary in respect of indebtedness for money borrowed or other obligations incurred by others shall for purposes of this Section 103 be deemed to be Indebtedness of Integrys or such Integrys Subsidiary.

In case Integrys or any Integrys Subsidiary shall propose to pledge, mortgage, hypothecate or grant a security interest in any capital stock of any Integrys Subsidiary owned by Integrys or such Integrys