Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Investor Presentation (July 2015)
32 slides from Wec Energy's investor presentation, July 2015
Slide 1: July/August 2015
WEC Vz Energy Group July/August 2015
Slide 2: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward-Looking Information Much of the information contained in this presentation is forward-looking information based upon management’s current expectations and projections that involve risks and uncertainties. Forward-looking information includes, among other things
Slide 3: A Unique Value Proposition
An “Earn and Return” Company with a Low Risk Profile A Unique Value Proposition Targeted earnings per share growth of 6-8% for 2016 Beyond 2016, earnings per share expected to grow at 5-7% annually with more than 99% from regulated operations Enhanced total return outlook Raised dividend ove
Slide 4: A Transformational Step
A Transformational Step Wisconsin Energy has acquired Integrys in a transaction valued at $9 billion 3
Slide 5: Strategic Rationale for Transaction
An “Earn and Return” Company with a Low Risk Profile Strategic Rationale for Transaction Acquisition creates the leading electric and natural gas utility in the Midwest Meets or exceeds WEC’s acquisition criteria Earnings per share projected to be accretive from first full calendar year of com
Slide 6: WEC Energy Group
An “Earn and Return” Company with a Low Risk Profile WEC Energy Group Service Territory Company Statistics $14.9 billion market cap (1) 1.6 million electric customers 2.8 million gas customers 60% ownership of ATC 70,000 miles electric distribution 44,000 miles gas distribution $16.4 b
Slide 7: Building An Enduring Enterprise
An “Earn and Return” Company with a Low Risk Profile Building An Enduring Enterprise Green Bay, WI Chicago, IL Focused on the fundamentals World-class reliability Operating efficiency Financial discipline Exceptional customer care Milwaukee, WI Green Bay photo courtesy of Greater Green Bay C
Slide 8: Well Positioned for the Future
An “Earn and Return” Company with a Low Risk Profile Well Positioned for the Future Broadened Diversified across 5 (including FERC) transmission and gas regulatory jurisdictions business Strong financial condition Low near-term rate case risk $14.9 billion market cap enhances liquidity No requ
Slide 9: Leading Reliability and Customer Satisfaction
A Track Record of Performance Leading Reliability and Customer Satisfaction We Energies Most reliable utility in Midwest for 4th consecutive year and 7 of past 10 years Top quartile in the Midwest for customer service, power quality and reliability and (1) top quartile nationally for customer se
Slide 10: Industry Leading Total Shareholder Returns
A Track Record of Performance Industry Leading Total Shareholder Returns WEC is the only company that has grown earnings per share and dividends per share every year for the past 12 years 350% WEC 300% Dow Jones Utilities Average 250% 200% S&P Utilities Index 150% Philadelphia Utility Index 100% S&P
Slide 11: Industry Leading Dividend Growth
A Track Record of Performance Industry Leading Dividend Growth Dividend raised over 8% in June Dividend growth of 52.5% since 2012, including a 17.3% increase in 2015 Future dividend growth in line with earnings growth Targeting dividend payout of 65-70% of earnings Annualized Dividends Per
Slide 12: Strong Financial Condition
A Track Record of Performance Strong Financial Condition Electric and Gas Utilities Credit Ratings Distribution* Number of Utilities Issuers Utility Rating 120 Wisconsin Electric A- 100 Wisconsin Gas A 80 60 Wisconsin Public Service A- 40 Peoples Gas A- 20 North Shore Gas A- 0 AA - A A- BBB+ BBB BBB
Slide 13: A Diversified Regulated Portfolio
Positioned for the Future A Diversified Regulated Portfolio Regulated Business Mix Wisconsin Energy(1) WEC Energy Group(1) Gas Utility ATC Gas 23% 11% Utility Electric 17% Utility 77% ATC 6% Electric Utility 66% (1) Based on 2014 regulated earnings 12
Slide 14: Delivering the Future
Positioned for the Future Delivering the Future Anticipated annual capital investment of $1.3 – $1.4 billion Committed to investing in infrastructure that will: Renew and modernize our delivery networks Meet new environmental standards Reduce operating costs for customers 13
Slide 15: State-of-the-Art Generation Fleet
Positioned for the Future State-of-the-Art Generation Fleet Natural gas – 3,753 megawatts Port Washington Generating Station among the lowest cost combined-cycle plants in country Coal – 5,044 megawatts Oak Creek heat rate is top 5% in country 80% of generation equipped with latest emission co
Slide 16: Supporting a Clean Energy Future
Positioned for the Future Supporting a Clean Energy Future Over the past decade, WEC Energy Group has implemented a multi-emission strategy to achieve greater environmental benefit for lower cost Retired older, less-efficient coal-fired generation Added two combined cycle natural gas units Add
Slide 17: We Energies Major Construction Projects
Positioned for the Future We Energies Major Construction Projects Western Wisconsin gas distribution expansion Less than projected $175 million Projected in-service date: fourth quarter 2015 Projects at our new Oak Creek units $21 million expected investment for plant modifications $58 milli
Slide 18: WPS Major Construction Projects
Positioned for the Future WPS Major Construction Projects Weston 3 plant environmental upgrade (ReACT™) $345 million expected investment Projected completion: early 2016 System Modernization and Reliability Project (SMRP) $220 million of total investment expected from 2014-2018 Converting ov
Slide 19: Peoples Gas Major Construction Projects
Positioned for the Future Peoples Gas Major Construction Projects Accelerated Main Replacement Project (AMRP) 20-year program to modernize natural gas infrastructure in City of Chicago Investment recovery under Qualified Infrastructure Plant Rider (QIP) ~ projected $250 million average annual in
Slide 20: Rate Base Investment
Positioned for the Future Rate Base Investment By Business - $16.4 billion* Retail Electric and Gas Utilities $1.7 Wisconsin, Illinois, Michigan, Minnesota, and Utilities FERC jurisdictions $2.7 PTF $11.9 Transmission Power the Future 12.7% ROE fixed through 25/30 year lease agreements By St
Slide 21: American Transmission Company – Traditional Footprint
Positioned for the Future American Transmission Company – Traditional Footprint Projected Capital Expenditures Key Assumptions (Millions of Dollars) ATC rate base at year end 2015: $491 $486 $3.1 billion $386 ATC projected capital program 2014 $295 $292 – 2023: $3.3-$3.9 billion $231 Implies a
Slide 22: American Transmission Company – Outside the Traditional Footprint
Positioned for the Future American Transmission Company – Outside the Traditional Footprint Joint venture between Duke Energy and ATC (DATC) Ownership split 50/50 between Duke and ATC WEC interest - 30% Investment opportunities: Potential expansion of California’s Path 15 transmission line
Slide 23: Key Merger Provisions
Balanced Regulatory Environment Key Merger Provisions • Earnings cap at Wisconsin Electric and Wisconsin Gas Wisconsin • Joint Resource Plan for capacity needs of Wisconsin Electric and Wisconsin Public Service • 2-year requirement for minimum level of jobs • 2-year base rate freeze Illinois • 3-yea
Slide 24: Rate Case Update
Balanced Regulatory Environment Rate Case Update Wisconsin Filed a Wisconsin Public Service case in April for rates effective January 2016 Michigan Filed a Michigan Gas Utilities case in June for interim rates effective January 2016* Minnesota Plan to file a Minnesota Energy Resources ca
Slide 25: Key Takeaways of WEC Energy Group
Poised for Growth Key Takeaways of WEC Energy Group Leading electric and natural gas utility in the Midwest and a top ten natural gas distribution company Long-term earnings per share growth of 5-7% and enhanced shareholder returns Majority ownership in ATC brings opportunity for additional tr
Slide 26: Appendix
Wa WEC Vz Energy Group Appendix
Slide 27: Regulatory Environment
Regulatory Environment Wisconsin Commission Michigan Commission 3 Commissioners 3 Commissioners Gubernatorial appointment, Senate Gubernatorial appointment, Senate confirmation confirmation Chairman: Gubernatorial appointment Chairman: Gubernatorial appointment 6-year staggered ter
Slide 28: Regulatory Environment
Regulatory Environment Illinois Commission Minnesota Commission 5 Commissioners 5 Commissioners Gubernatorial appointment, Senate Gubernatorial appointment, Senate confirmation confirmation Chairman: Gubernatorial appointment Chairman: Gubernatorial appointment 5-year staggered ter
Slide 29: Key Rate Making Components
Key Rate Making Components Wisconsin – Wisconsin – Area PGL NSG MERC MGU Electric Gas Michigan Gas Pipeline Replacement Rider X Bad Debt Rider X X Bad Debt Escrow Accounting WE WG Decoupling X X X Partial 1 for 1 recovery of prudent fuel Fuel Cost Recovery 1 for 1 PGA recovery of prudent fuel costs
Slide 30: Composition of Rate Base
Composition of Rate Base Total Rate Base of $16.4 Billion 1.0% Wisconsin Electric 1.3% Wisconsin Gas 1.3% 10.6% We Power WPS 11.1% 35.1% Peoples Gas North Shore Gas 16.5% Minnesota Energy Resources 6.2% 17.0% Michigan Gas Utilities ATC Actual 2014 Rate Base 29
Slide 31: Rate-Making Parameters By Company
Rate-Making Parameters By Company Utility Equity Layer Allowed ROE Wisconsin Electric 51%* 10.2% WPS 51%* 10.2% Wisconsin Gas 49.5%* 10.3% Peoples Gas 50.33% 9.05% North Shore Gas 50.48% 9.05% Minnesota Energy Resources 50.31% 9.35% Michigan Gas Utilities 48.62% 10.25% *Represents mid-point 30
Slide 32: Precedent Transactions
Precedent Transactions Announce Closing Target Acquiror 1-Day FY1 FY2 Transaction Equity Price/Book Enterprise Date Date Premium P/E P/E Value ($mm) Value Value/ ($mm) Rate Base 02/25/2015 Pending UIL Iberdrola 25%(1) 21.7x 20.4x $4,674 $2,983 2.2x 1.95x 12/03/2014 Pending HE NEE 19% 21.3x 18.1x $4,