Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Wisconsin Energy — Investor Presentation (August 2014)
37 slides from Wec Energy's investor presentation, Aug 11, 2014
Slide 1: Wisconsin Energy Corporation August 2014
Exhibit 99.1 Wa Wisconsin Energy (mm Corporation August 2014
Slide 2: Cautionary Statement Regarding Forward-Looking Information
2 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 thin
Slide 3: Overview: Retail Electric and Gas Utilities
3 Largest electric and gas company in Wisconsin 1.1 million electric customers 1.1 million natural gas customers Overview Retail Electric and Gas Utilities
Slide 4: Investment Thesis: An Earn and Return Company
4 Investment Thesis An “Earn and Return” Company with a Low Risk Profile Positive free cash flow Targeted EPS growth of 4%-6% Best in class dividend growth - targeting a dividend payout ratio of 65%-70% of earnings in 2017 Implies 7%-8% dividend growth annually 2015-2017 Proven management
Slide 5: Consistent Earnings and Dividend Growth
5 Wisconsin Energy is the only company in the S&P Electric Index S&P Utilities Index Philadelphia Utility Index Dow Jones Utilities Average that has grown earnings per share and dividends per share every year since 2003 A Track Record of Performance Consistent Earnings and Dividend Growth
Slide 6: Industry Leading Total Shareholder Returns
6 A Track Record of Performance Industry Leading Total Shareholder Returns One Year Three Year Five Year Ten Year Wisconsin Energy 16.1% 55.5% 131.8% 227.1% S&P Utilities Index 13.2% 37.5% 62.3% 141.8% S&P Electric Index 7.8% 29.7% 38.7% 132.4% Philadelphia Utility Index 11.0% 31.6% 53.0% 137.1% Dow
Slide 7: Industry Leading Dividend Growth
7 Targeting dividend payout ratio of 65 - 70 percent of earnings in 2017 A Track Record of Performance Industry Leading Dividend Growth $0.44 $0.46 $0.50 $0.54 $0.68 $0.80 $1.04 $1.20 $1.45 $1.56 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E
Slide 8: Leading Reliability and Customer Satisfaction
8 A Track Record of Performance Leading Reliability and Customer Satisfaction Named the most reliable utility … In the U.S. in 2013 In the Midwest nine of the past 12 years During 2013, achieved highest customer satisfaction ratings in past decade … likely best ever
Slide 9: Power the Future Investments – Natural Gas Capacity
9 A Track Record of Performance Power the Future Investments – Natural Gas Capacity 1,090 MW Investment $664 million ROE 12.7% Equity 53% In Service Dates Unit 1 – July 2005 Unit 2 – May 2008 Cost Per Unit of Capacity $609/kW Meeting the Region’s Energy Needs
Slide 10: Power the Future Investments – Coal
10 Capacity 1,030 MW1 Investment $2 billion1 ROE 12.7% Equity 55% In Service Dates Unit 1 – February 2010, Unit 2 – January 2011 Cost Per Unit Approximately of Capacity $1,950/kW 1 All capacity and investment amounts reflect WEC ownership only. Demonstrated capacity for the coal units is 1,057 MW –
Slide 11: Dramatic Change in Environmental Performance
11 A Track Record of Performance Dramatic Change in Environmental Performance From 2000 to 2014... Power plant capacity up 50% Emissions of nitrogen oxide sulfur dioxide down 80% mercury particulate matter
Slide 12: Strong Financial Foundation
12 A Track Record of Performance Strong Financial Foundation Moody’s S&P Fitch WEC(1) A2 A- A- WE A1 A- A WG A1 A A- Well-Funded Pension … Over 100% funded at year-end 2013 More than $330 million in contributions in 2011 and 2012 Solid credit ratings … Positive Cash Flow … Project $500 million
Slide 13: Summary of our Core Business
13 A Track Record of Performance Summary of our Core Business Retail Electric and Gas Utilities Wisconsin, Michigan, and FERC jurisdictions 48.5% to 53.5% equity for Wisconsin Electric 10.4% allowed ROE 45% to 50% equity for Wisconsin Gas 10.5% allowed ROE Power the Future 53% to 55%
Slide 14: Major Segment Earnings for 2012 – 2014
14 Where We Go From Here Major Segment Earnings for 2012 – 2014 2012A 2013A 2014E Electric and Gas Utilities $1.55 $1.67 $1.72 to $1.78 Power the Future (1) $0.69 $0.72 $0.73 Wholesale Electric Transmission (2) $0.17 $0.18 $0.19 Unallocated holding company debt (3) ($0.06) ($0.06) ($0.06) $2.35 $2.5
Slide 15: Delivering the Future
15 Where We Go From Here Delivering the Future From 2014 through 2018, our plan is to invest $3.2 to $3.5 billion in needed infrastructure projects that will: Renew and modernize our grid Meet new environmental standards Reduce our operating costs for customers From 2014 through 2023, our
Slide 16: Five-Year Capital Investment in our Retail Utilities
16 Where We Go From Here Five-Year Capital Investment in our Retail Utilities (Projected Investment, In millions) 48 83 82 61 96 97 137 173 157 125 108 84 211 224 208 214 220 227 189 188 330 188 194 200 83 $668 329 $668 342 $778 359 $588 388 $617 409 $607 426 $0 $100 $200 $300 $400 $500 $600 $700 $8
Slide 17: Delivering the Future – Electric Overview
17 Between 2014 and 2018, we plan to: Rebuild 2,000 miles of electric distribution lines that are more than 50 years old Replace: 18,500 power poles 20,000 transformers Hundreds of substation components Where We Go From Here Delivering the Future – Electric Overview
Slide 18: Delivering the Future – Gas Overview
18 Between 2014 and 2018, we also plan to: Replace: 1,100 miles of vintage plastic and steel gas mains 83,000 individual gas distribution lines 233,000 meter sets Where We Go From Here Delivering the Future – Gas Overview
Slide 19: Ten-Year Capital Investment in our Retail Utilities
19 Where We Go From Here Ten-Year Capital Investment in our Retail Utilities (Projected Investment, In millions) 48 83 82 61 96 97 90 50 50 60 60 137 173 157 125 108 84 90 90 90 90 90 211 224 208 214 220 227 230 240 250 260 260 189 188 330 188 194 200 210 210 260 260 250 83 $668 $668 $778 $588 $617
Slide 20: Ten-Year Capital Projection 2014 - 2023
20 Where We Go From Here Ten-Year Capital Projection 2014 - 2023 Plus Additional Growth Opportunities ATC – Traditional Footprint $3.0 to $3.6 billion WEC Ownership 26.2% DATC – Outside ATC Traditional Footprint $4.0 billion + WEC Interest 13.1% Natural Gas Expansion/Conversion State
Slide 21: Western Wisconsin Gas Expansion
21 Where We Go From Here Western Wisconsin Gas Expansion Additional natural gas distribution capacity needed to address reliability and to meet growth in customer demand Frac sand mining - increase from 10 to 115 licensed sand mining operations since 2010 Propane conversion - ten municipalitie
Slide 22: Renewable Energy Investments
22 Where We Go From Here Renewable Energy Investments Biomass plant completed 50MW Investment of $269 million Commercial operation began in November of 2013 Renewable fleet in place Glacier Hills Wind Park (162 MW, in service since 2011) Blue Sky Green Field Wind Park (145 MW, in servi
Slide 23: Valley Power Plant
23 Converting Valley from coal to natural gas Unit 1 conversion underway Targeting completion for both Units 1 and 2 in late 2015 Follows construction of a gas pipeline upgrade with expected in-service in 2014 Where We Go From Here Valley Power Plant Projected conversion cost for Valley: $
Slide 24: Twin Falls Hydroelectric Powerhouse
24 Building a new powerhouse at Twin Falls as existing powerhouse is in need of repair Construction began in the fall of 2013 with scheduled completion in 2016 Expected cost: $60 to $65 million Where We Go From Here Twin Falls Hydroelectric Powerhouse
Slide 25: Fuel Flexibility Project
25 Where We Go From Here Fuel Flexibility Project To Date: have achieved sustained operation on 20% PRB coal blend In July, asked the Wisconsin Commission to approve $25 million of additional capital for plant modifications that will enable testing of up to 100% PRB coal Further investment may
Slide 26: Wisconsin Rate Case Summary
26 Where We Go From Here Wisconsin Rate Case Summary Wisconsin has biennial rate cycle Two year forward looking test years Apply in 2014 for 2015 and 2016 rates Settlement for ROE, capital structure, and base rate changes reached in May Wisconsin Electric ROE of 10.2%, Wisconsin Gas ROE of
Slide 27: Presque Isle Power Plant
27 Where We Go From Here Presque Isle Power Plant Entered into ‘System Support Resource’ (SSR) agreement with MISO in January 2014 for payments to support operation of Presque Isle power plant Filed for next SSR effective October of 2014 Several recent FERC orders may impact the SSR payments
Slide 28: Growth at American Transmission Company
28 Where We Go From Here Growth at American Transmission Company $370 $411 $541 $97 $108 $142 2014 2015 2016 ATC WEC portion (26.2%) Key Assumptions ATC rate base at year end 2014 is projected to be about $2.9 billion ATC projects a need for $3.0-$3.6 billion of transmission improvements in its
Slide 29: DATC
29 Where We Go From Here DATC Joint venture between Duke Energy and ATC (DATC) Ownership is split 50/50 between Duke and ATC DATC has identified three distinct investment opportunities California’s Path 15 transmission line (purchased interest on April 30, 2013) Transmission projects in th
Slide 30: Industry Leading Dividend Growth
30 Where We Go From Here Industry Leading Dividend Growth The board of directors raised the quarterly dividend in January to 39 cents a share – equivalent to an annual rate of $1.56 a share Represents a 30% increase over the rate in effect during 2012 The board of directors also affirmed a tar
Slide 31: Key Takeaways on Wisconsin Energy
31 Key Takeaways on Wisconsin Energy An “Earn and Return” Company with a Low Risk Profile Power the Future program now complete Highly visible earnings and strong cash flow Well-managed utility franchises with rate base growth Investment in American Transmission Company provides an additiona
Slide 32: Appendix
Appendix
Slide 33: Projected Rate Base
33 Where We Go From Here Projected Rate Base $6.7 $7.3 $7.5 $8.0 $0.3 $0.1 $0.3 $0.1 ($0.4) ($0.6) ($0.7) ($0.6) $6.6 $6.8 $7.1 $7.5 -$1 $0 $1 $2 $3 $4 $5 $6 $7 $8 $9 2013A 2014E 2015E 2016E Bi llio ns o f D oll ar s Average Total Utility Rate Base PPE CWIP All Other* *All other is comprised of cust
Slide 34: Electric Retail Customer Base
34 Electric Retail Customer Base Large C&I 30% Small C&I 36% Residential 33% Other 1% 2013 Retail KWh Sales Mix* C&I Sector Largest Segments* % of 2013 Electric C&I Sales Office 13.5% Retail 7.0% Primary Metals 6.6% Health Care 6.3% Food 5.7% Education 5.3% Hospitality 5.0% C&I Machinery 4.7% Large
Slide 35: Forecast of Electric Sales (Delivered Volumes)
35 Forecast of Electric Sales* 2014 Forecast vs. 2013 Actual 2014 Forecast vs. 2013 Normalized Residential -0.6% 0.4% Small C&I -0.4% 0.3% Large C&I (ex. Mines) 1.0% 0.9% Total Retail w/o Mines 0.0% 0.5% *Delivered Volumes
Slide 36: Forecast of Electric Sales (Supply and Distribution Volumes)
36 Forecast of Electric Sales* 2014 Forecast vs. 2013 Actual 2014 Forecast vs. 2013 Normalized Residential -0.6% 0.4% Small C&I -0.6% 0.1% Large C&I (ex. Mines) -0.7% -0.8% Total Retail w/o Mines -0.6% -0.1% *Supply and Distribution Volumes
Slide 37: Regulatory Environment
37 Regulatory Environment Wisconsin Commissioners Name Party Began Serving Term Ends Phil Montgomery Chairman R 03/2011 03/2017 Eric Callisto D 05/2008 03/2015 Ellen Nowak R 07/2011 03/2019 Wisconsin Commission 3 Commissioners Gubernatorial appointment, Senate confirmation Chairman: Gubernat
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