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

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 [X]    No [  ]

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes [  ]    No [X]

Indicate the number of shares outstanding of each of the Registrant's classes of common stock as of the latest practicable date (September 30, 2004):

All of the membership interests of Wisconsin Gas LLC are owned by Wisconsin Energy Corporation.

Wisconsin Gas LLC, formerly Wisconsin Gas Company, is a natural gas distribution public utility which serves approximately 570,000 gas customers in Wisconsin. Wisconsin Gas, a limited liability company organized under the laws of the state of Wisconsin, is a wholly-owned subsidiary of Wisconsin Energy Corporation (Wisconsin Energy). Wisconsin Energy has integrated the gas operations and corporate support areas of Wisconsin Electric Power Company (Wisconsin Electric), Wisconsin Energy's wholly-owned electric, gas and steam utility, with Wisconsin Gas. In April 2002, Wisconsin Electric and Wisconsin Gas began doing business under the trade name "We Energies". Unless qualified by their context when used in this document, the terms the Company, Our, Us or We refer to Wisconsin Gas.

In connection with Wisconsin Energy's sale of WICOR, Inc. and its manufacturing subsidiaries to Pentair, Inc. effective July 31, 2004, WICOR transferred its ownership interest in Wisconsin Gas to Wisconsin Energy which resulted in us becoming a direct wholly-owned subsidiary of Wisconsin Energy, effective July 28, 2004. Prior to becoming a direct subsidiary of Wisconsin Energy, we converted from a Wisconsin corporation to a Wisconsin limited liability company and changed our name to Wisconsin Gas LLC. 

We have prepared the unaudited interim financial statements presented in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. We have condensed or omitted some information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles pursuant to these rules and regulations. Our financial statements should be read in conjunction with the financial statements and notes thereto included in our 2003 Annual Report on Form 10-K.

WISCONSIN GAS LLC
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)

Our accompanying unaudited condensed financial statements should be read in conjunction with Item 8, Financial Statements and Supplementary Data, in our 2003 Annual Report on Form 10-K. In the opinion of management, we have included all adjustments, normal and recurring in nature, necessary to a fair presentation of the results of operations, cash flows and financial position in the accompanying income statements, statements of cash flows and balance sheets. The results of operations for the three and nine months ended September 30, 2004 are not necessarily indicative of the results which may be expected for the entire fiscal year 2004 because of seasonal and other factors.

In connection with Wisconsin Energy's sale of WICOR, Inc. and its manufacturing subsidiaries to Pentair, Inc. effective July 31, 2004, WICOR transferred its ownership interest in Wisconsin Gas to Wisconsin Energy which resulted in us becoming a direct wholly-owned subsidiary of Wisconsin Energy, effective July 28, 2004. Prior to becoming a direct subsidiary of Wisconsin Energy, we converted from a Wisconsin corporation to a Wisconsin single member limited liability company and changed our name to Wisconsin Gas LLC. Wisconsin Energy is our sole member.

We account for goodwill under Statement of Financial Accounting Standards (SFAS) 142, Goodwill and Other Intangible Assets. Under SFAS 142, goodwill is not subject to amortization. However, goodwill is subject to fair value-based rules for measuring impairment, and resulting write-downs, if any, are to be reflected in operating expense.

To perform our annual test of goodwill, we are required to make various assumptions about our future profitability as compared to published projections for other similar businesses, capital expenditures and discount and growth rates. We assess the fair value by considering future discounted cash flows. This analysis is supplemented with a comparison of fair value based on public company trading multiples and merger and acquisition transaction multiples for similar companies. A significant change in these markets or a difference between actual results and our projections could result in an impairment loss related to a decrease in the goodwill asset. We perform our annual impairment test as of August 31.

We performed the annual assessment of our goodwill for impairment by applying fair value based tests as of August 31, 2004. In conjunction with the change in tax basis of our assets (see note 3), we recorded a deferred tax asset at the undiscounted estimated future tax cash benefits in accordance with SFAS 109. In determining the fair value of Wisconsin Gas for the annual goodwill impairment testing, the estimated future cash flows including tax benefits were discounted to arrive at the estimated fair value of Wisconsin Gas. The $51 million goodwill impairment charge recorded in the third quarter of 2004 resulted primarily from the impact of recording the deferred tax asset. Since the goodwill is not amortizable for tax purposes, there is no related tax benefit recorded on the goodwill impairment charge.

In connection with Wisconsin Energy's sale of WICOR, Inc. and its manufacturing subsidiaries, WICOR transferred its ownership interest in Wisconsin Gas to Wisconsin Energy which resulted in us becoming a direct wholly-owned subsidiary of Wisconsin Energy. Prior to us becoming a direct subsidiary of

Comprehensive Income:   Comprehensive income includes all changes in member's equity during a period except those resulting from investments by and distributions to members. We had the following total comprehensive income during the nine months ended September 30, 2004 and 2003:

Prior to changing to a limited liability company on July 28, 2004, we were organized as a C-corporation. As a C-corporation, our equity at December 31, 2003 consisted of the following amounts, in millions:

We previously disclosed that we expect to fund $0.6 million for pension benefit plans during 2004. Any discretionary contributions in 2004 to other post-retirement benefit plans are expected to occur in December. Contributions to these post-retirement benefit plans are discretionary.

Employee Benefit Plans and Post-retirement Benefits:   In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Act) was signed into law. The Act introduced a prescription drug benefit program under Medicare as well as a federal subsidy to sponsors of retiree health care benefit plans. In the second quarter of 2004, the FASB issued FASB Staff Position (FSP) SFAS 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003.

In accordance with FSP 106-2, we chose to recognize the effects of the Act retroactively effective January 1, 2004 with the impacts calculated actuarially. As of September 30, 2004, the total pre-tax reduction of other post-retirement benefits expense was of $0.4 million under SFAS 106, Employers' Accounting for Post-Retirement Benefits Other Than Pensions. The annual pre-tax reduction in SFAS 106 expense is expected to total $0.5 million. Assumptions used to develop this reduction include those used in the determination of the annual SFAS 106 expense and also include expectations of how the federal program will ultimately operate. There are currently no written regulations that provide this level of detail regarding the ultimate operation of the subsidy program. It is expected that final regulations will be published in early 2005.

Postemployment benefits:   Postemployment benefits provided to former or inactive employees are recognized when an event occurs. The estimated liability for such benefits as of September 30, 2004 was $5.8 million and $2.9 million as of December 31, 2003.

Environmental Matters:   We periodically review our exposure for remediation costs as evidence becomes available indicating that our remediation liability has changed. Based on current information, we believe that future costs in excess of the amounts accrued and/or disclosed on all presently known and quantifiable environmental contingencies will not be material to our financial position or results of operations.

On September 28, 2004, Wisconsin Energy announced an enhanced severance package for selected non-officer management employees of it and its subsidiaries that elect to voluntarily resign (Voluntary Separation Plan) to help reduce upward pressure on operating expenses. Eligible employees have from October 4, 2004 through November 12, 2004 to apply to participate in this plan. Wisconsin Energy expects that at least 120 employees will volunteer for the Voluntary Separation Plan. As of September 30, 2004 we have recorded an accrual of $1.6 million ($1.0 million after tax) representing our estimate of the minimum obligation related to Wisconsin Gas. We expect to record additional costs in the fourth quarter of 2004, when the actual number of employees will be known. We do not expect the total costs under this plan for Wisconsin Gas to exceed $7.0 million.

Cautionary Factors:   Certain statements contained herein are Forward-Looking Statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-Looking Statements may be identified by reference to a future period or periods or by the use of forward looking terminology such as "may," "intends," "anticipates," "believes," "estimates," "expects," "forecasts," "objectives," "plans," "possible," "potential," "project" or similar terms or variations of these terms. Actual results may differ materially from those set forth in Forward-Looking Statements as a result of certain risks and uncertainties, including but not limited to, changes in political and economic conditions, equity and bond market fluctuations, varying weather conditions, governmental regulation and supervision, as well as other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission (SEC) including factors described throughout this d ocument and below in Factors Affecting Results, Liquidity and Capital Resources.

We had a net loss of $57.2 million during the third quarter of 2004 compared with a $5.9 million net loss during the third quarter of 2003.  Our net loss includes a goodwill impairment charge of $51 million.

A comparison follows of our operating revenues, gross margin and gas deliveries during the third quarter of 2004 with similar information for the third quarter of 2003 including favorable (better (B)) or unfavorable (worse (W)) variances. Gross margin is a better performance indicator than revenues because changes in the cost of gas sold flow through to revenue under gas cost recovery mechanisms.

For the three months ended September  30, 2004, gross margin increased $2.2 million or 8.7%. Our margins increased by approximately $4.7 million due to a February 2004 rate increase for the recovery of costs associated with the Ixonia Lateral, which was placed into service in December 2003. Recognition of $2.2 million of gas cost incentive revenues during the third quarter of 2003 under our gas cost recovery mechanisms partially offset the rise in gas operating revenues and gas margin, however, because we did not recognize any similar incentive revenues during the third quarter of 2004. For more information regarding the February 2004 rate increase, see Factors Affecting Results, Liquidity and Capital Resources -- Utility Rates and Regulatory Matters.

The following table compares our gross margin and natural gas therm deliveries by customer class during the third quarter of 2004 with similar information for the third quarter of 2003.

Other operation and maintenance expenses decreased by $1.0 million or 4.5% during the third quarter of 2004 when compared with the third quarter of 2003.  Our bad debt expenses were $3.6 million lower during the third quarter of 2004 due to the deferral of residential bad debts pursuant to an order from the Public Service Commission of Wisconsin (PSCW) in June 2004.  We did not receive similar authority from the PSCW to defer 2003 bad debt costs until the fourth quarter.  This decrease was partially offset by $1.6 million in severance costs associated with the Voluntary Severance Program. For more information regarding the deferral of bad debt costs, see Factors Affecting Results, Liquidity and Capital Resources -- Utility Rates and Regulatory Matters.

The $51 million impairment charge during the third quarter of 2004 resulted primarily from the impact of the contribution of the deferred tax asset by Wisconsin Energy.

Interest expense increased by $1.8 million for the three months ended September 30, 2004 compared to the same period in 2003. This increase reflects the December 2003 issuance of $125 million of unsecured 5.20% Debentures due December 1, 2015, the proceeds of which were used to reduce short-term borrowings. In addition, with the completion of the Ixonia Lateral in December 2003, we stopped capitalizing interest associated with this project.

We incurred a net loss of $36.0 million during the first nine months of 2004 compared to $17.7 million of net income during the first nine months of 2003, primarily due to a goodwill impairment charge of $51 million in the third quarter of 2004 and higher interest expense. Gross margin increased slightly between the comparative periods because of higher revenues resulting from a rate increase which almost completely offset the effects of warmer winter weather during 2004 on volumes of gas sales. Higher costs during the first nine months of 2004 linked to Wisconsin's public benefits legislation were offset by the deferral of residential bad debt expenses that was authorized by the PSCW in June 2004.

A comparison follows of our operating revenues, gross margin and gas deliveries during the first nine months of 2004 with similar information for the first nine months of 2003. Gross margin is a better performance indicator than revenues because changes in the cost of gas sold flow through to revenue under gas cost recovery mechanisms. Operating revenues decreased by $19.9 million or 3.9% due primarily to a weather-related decrease in therm deliveries.

For the nine months ended September 30, 2004, gross margin increased $3.0 million or 2.0% when compared to the nine months ended September 30, 2003. This was due primarily to a February 2004 rate increase associated with costs for the Ixonia Lateral which increased our gross margin by approximately $12.4 million.  For more information regarding the February 2004 rate increase, see Factors Affecting Results, Liquidity and Capital Resources -- Utility Rates and Regulatory Matters. 

Less favorable winter weather in 2004 as compared to 2003 reduced therm deliveries by 5.2% between the comparative periods, offsetting most of the impact of the rate increase.  As measured by heating degree days, the first nine months of 2004 were 7.9% warmer than the same period during 2003.  As a result, we estimate that weather reduced our gross margin by approximately $7.2 million between the comparative periods. In addition, we recognized $2.2 million of gas cost incentive revenues during 2003. We did not recognize any similar incentive revenues during the first nine months of 2004.

The following table compares our gross margin and natural gas therm deliveries by customer class during the first nine months of 2004 with similar information for the first nine months of 2003.

Other operation and maintenance expenses decreased by $0.9 million or 1.1% during the first nine months of 2004 when compared with the first nine months of 2003. This decrease reflects the deferral of residential bad debt write-offs incurred during 2004 in excess of amounts included in current utility rates which were partially offset by additional costs linked to Wisconsin's public benefits legislation. Partial recovery of the additional costs associated with the Wisconsin public benefits legislation is included in the February 2004 rate increase. The decrease was further offset by $1.6 million in severance costs associated with the Voluntary Severance Program.

For more information regarding the deferral of bad debt costs, see Factors Affecting Results, Liquidity and Capital Resources -- Other Utility Rate and Regulatory Matters.

The $51 million impairment charge recorded during the third quarter of 2004 resulted primarily from the impact of the contribution of the deferred tax asset by Wisconsin Energy.

Interest expense increased by $5.3 million for the nine months ended September 30, 2004 compared to the same period in 2003. This increase reflects the December 2003 issuance of $125 million of unsecured 5.20% Debentures due December 1, 2015, the proceeds of which were used to reduce short-term borrowings. Also, in connection with the completion of the Ixonia Lateral in December 2003, we stopped capitalizing interest associated with this project.

The following summarizes our cash flows during the first nine months of 2004 and 2003:

Cash provided by operating activities increased to $67.7 million during the first nine months of 2004 compared with $66.6 million during the same period in 2003. This increase was due in large part to lower working capital requirements between the comparative periods due to a greater impact from natural gas withdrawn from storage and improved collection of accounts receivable balances.

During the first nine months of 2004, we invested a total of $46.7 million, a decrease of $59.8 million over the same period in 2003, primarily due to completion of construction on the Ixonia Lateral project in 2003.

During the nine months ended September 30, 2004, we reduced short-term borrowings by $22.1 million compared with an increase of $38.9 million for the first nine months of 2003. Our earnings and cash flows are seasonal and vary depending upon the impact of weather.

Cash requirements during the remaining three months of 2004 are expected to be met primarily through internally generated funds, short-term borrowings and existing lines of credit.

We have access to outside capital markets and have been able to generate funds internally and externally to meet our capital requirements. Our ability to attract the necessary financial capital at reasonable terms is critical to our overall strategic plan. We believe that we have adequate capacity to fund our operations for the foreseeable future through our borrowing arrangements and internally generated cash.

As of September 30, 2004, we had approximately $200 million of available unused lines of bank back-up credit facilities. On September 30, 2004, we had approximately $111.0 million of total short-term debt outstanding.

We review our bank back-up credit facility needs on an ongoing basis and expect to be able to maintain adequate credit facilities to support our operations. The following table summarizes the facility at September 30, 2004:

The following table shows our capitalization structure at September 30, 2004 and at December 31, 2003:

Access to capital markets at a reasonable cost is determined in large part by credit quality. The following table summarizes the ratings of our debt securities by Standard & Poors Corporation (S&P), Moody's Investors Service (Moody's) and Fitch Ratings (Fitch) as of September 30, 2004.

The security rating outlooks assigned by S&P, Moody's and Fitch for us are all stable.

We believe these security ratings should provide a significant degree of flexibility in obtaining funds on competitive terms. However, these security ratings reflect the views of the rating agencies only. An explanation of the significance of these ratings may be obtained from each rating agency. Such ratings are not a recommendation to buy, sell or hold securities, but rather an indication of creditworthiness. Any rating can be revised upward or downward or withdrawn at any time by a rating agency if it decides that the circumstances warrant the change. Each rating should be evaluated independently of any other rating.

Capital requirements during the remainder of 2004 are expected to be principally for capital expenditures. Our 2004 annual capital expenditure budget is approximately $72 million.

Off-Balance Sheet Arrangements:   We are a party to various financial instruments with off-balance sheet risk as a part of our normal course of business, which may include, from time to time, financial guarantees and letters of credit, which support construction projects, commodity contracts and other payment obligations. Our estimated maximum exposure under these agreements is zero as of September 30, 2004.

Contractual Obligations/Commercial Commitments:   Our total contractual obligations and other commercial commitments as of September 30, 2004 decreased compared with December 31, 2003 as periodic payments related to these types of obligations were greater than new commitments made in the ordinary course of business during the nine months ended September 30, 2004.

Credit Rating Risk: We do not have any credit agreements that would require material changes in payment schedules or terminations as a result of a credit rating downgrade. We do have certain agreements in the form of employee benefit plans that could require, in the event of a credit ratings change to below investment grade, an accelerated payment. At September 30, 2004, we estimate that the potential payments under these agreements that could result from credit rating downgrades totaled approximately $0.7 million.

Limited Rate Adjustment Request:   In July, 2003, we filed an application with the PSCW for an increase in gas rates for anticipated 2004 revenue deficiencies associated with costs for construction of the Ixonia Lateral and increased costs linked to Wisconsin's public benefits legislation. The filing identified anticipated revenue deficiencies in 2004 in the amount of $26.2 million (3.9%). The PSCW approved an increase in gas rates of $25.9 million in an order effective March 2004.

Request for Deferral of Uncollectible Accounts Receivable:   Due to a combination of unusually high natural gas prices, a soft economy within our service territory, and limited governmental assistance available to low-income customers, we have seen a significant increase in residential uncollectible accounts receivable. Because of this, we sent a letter to the PSCW in May 2004 requesting authority to defer for future rate recovery all residential bad debt expenses incurred during 2004 in excess of amounts included in current utility rates. In June 2004, we received authorization for the deferral from the PSCW. We estimate that we will defer approximately $6.0 million during all of 2004.

We regularly include forward-looking statements in documents such as this report and in other public documents or oral presentations. Such statements are based upon management's current expectations and are subject to risks and uncertainties that could cause our actual results to differ materially from those contemplated in the statements. Readers are cautioned not to place undue reliance on the forward-looking statements. When used in written documents or oral presentations, our intent is that terms such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "may," "objectives," "plans," "possible," "potential," "projects" or similar expressions identify our forward-looking statements. In addition to the assumptions and other factors referred to specifically in connection with such statements, factors that could cause our actual results to differ materially from those contemplated in any forward-looking statements include, among others, the following:

• Factors affecting utility operations such as: unusual weather conditions; catastrophic weather-related or terrorism-related damage; unplanned maintenance or repairs; unanticipated changes in gas supply or water supply costs or availability due to higher demand, shortages, transportation problems or other developments; nonperformance by natural gas suppliers under existing gas supply contracts; environmental incidents; gas pipeline system constraints; unanticipated organizational structure or key personnel changes; collective bargaining agreements with union employees or work stoppages; inflation rates; or demographic and economic factors affecting utility service territories or operating environment.

• Regulatory factors such as: unanticipated changes in rate-setting policies or procedures; unanticipated changes in regulatory accounting policies and practices; industry restructuring initiatives; distribution system operation and/or administration initiatives; recovery of costs of previous investments made under traditional regulation; recovery of costs associated with adoption of changed accounting standards; required changes in facilities or operations to reduce the risks or impacts of potential terrorist activities; required approvals for new construction; or changes in the regulations from the Wisconsin Department of Natural Resources related to the siting approval process for new pipeline construction.

• Unexpected difficulties or unanticipated effects of the qualified five-year electric and gas rate freeze ordered by the Public Service Commission of Wisconsin as a condition of its approval in 2000 of the merger of Wisconsin Energy Corporation and WICOR, Inc.

• The changing gas utility environment as market-based forces replace strict industry regulation and other competitors enter the gas markets resulting in increased wholesale and retail competition.

• Consolidation of the industry as a result of the combination and acquisition of utilities in the Midwest, nationally and globally.

• Changes in social attitudes regarding the utility and power industries.

• Customer business conditions including demand for their products or services and supply of labor and material used in creating their products and services.

• The cost and other effects of legal and administrative proceedings, settlements, investigations and claims, and changes in those matters.

• Factors affecting the availability or cost of capital such as: changes in interest rates and other general capital market conditions; our capitalization structure; market perceptions of the utility industry or us; or security ratings.

• Federal, state or local legislative factors such as changes in tax laws or rates; changes in trade, monetary and fiscal policies, laws and regulations; gas industry restructuring initiatives; changes in environmental laws and regulations; or changes in allocation of energy assistance, including state public benefits funds.

• Authoritative generally accepted accounting principle or policy changes from such standard setting bodies as the Financial Accounting Standards Board, the Securities and Exchange Commission and the Public Company Accounting Oversight Board.

• Unanticipated technological developments that result in competitive disadvantages and create the potential for impairment of existing assets.

• Other business or investment considerations that may be disclosed from time to time in our Securities and Exchange Commission filings or in other publicly disseminated written documents.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

*****

For certain other information which may impact our future financial condition or results of operations, see Item 1, Financial Statements -- Notes to Condensed Financial Statements, in Part I of this report as well as Item 1, Legal Proceedings, in Part II of this report.

For information concerning market risk exposures at Wisconsin Gas, see Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations -- Factors Affecting Results, Liquidity and Capital Resources -- Market Risks and Other Significant Risks in Part I of this report and in Part I of our Quarterly Reports on Form 10-Q for the periods ended March 31 and June 30, 2004. For information concerning other market risk exposures, see Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations -- Factors Affecting Results, Liquidity and Capital Resources -- Market Risks and Other Significant Risks, in Part II of Wisconsin Gas' 2003 Annual Report on Form 10-K.

Disclosure Controls and Procedures:   Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act.

Internal Control Over Financial Reporting:   There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The following should be read in conjunction with Item 3, Legal Proceedings, in Part I of our 2003 Annual Report on Form 10-K and Item 1, Legal Proceedings, in Part II of our Quarterly Reports on Form 10-Q for the periods ended March 31 and June 30, 2004.

In addition to those legal proceedings discussed in our reports to the SEC, we are currently, and from time to time, subject to claims and suits arising in the ordinary course of business. Although the results of these legal proceedings cannot be predicted with certainty, we believe, after consultation with legal counsel, that the ultimate resolution of these proceedings will not have a material adverse effect on our financial statements.

See Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations -- Factors Affecting Results, Liquidity and Capital Resources in Part I of this report for information concerning rate matters in the jurisdiction where we do business.

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.