Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Wisconsin Energy — Investor Presentation (December 2013)
34 slides from Wec Energy's investor presentation, Dec 9, 2013
Slide 1: Wisconsin Energy Corporation December 2013
Exhibit 99.1 Wa Wisconsin Energy (mm Corporation December 2013
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% in 2017 Implies 7%-8% dividend growth annually 2015-2017 $300 million share buyback pro
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 8.9% 63.0% 76.2% 285.2% S&P Utilities Index 1.3% 28.2% 1.9% 169.7% S&P Electric Index -0.5% 24.6% -4.5% 167.8% Philadelphia Utility Index -0.6% 25.3% 0.3% 166.6% Dow Jon
Slide 7: Industry Leading Dividend Growth
7 Targeting dividend payout ratio of 65 - 70 percent of earnings in 2017 * Quarterly dividends Where We Go From Here Industry Leading Dividend Growth
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 2012, 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 2013... 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 A3 A- A- WE A2 A- A WG A2 A- A- Well Funded Pension … More than 99% funded at year end 2012 More than $330 million in contributions in 2011 and 2012 Solid credit ratings … Positive Cash Flow … Project $500 milli
Slide 13: Pension Funding Status
13 A Track Record of Performance Pension Funding Status Percentage Funded through 2012 40% 50% 60% 70% 80% 90% 100% Major US Utilities Average *Company 1 is more than 100% funded Source: Wolfe Research and company filings
Slide 14: Summary of our Core Business
14 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 15: Major Segment Earnings for 2011 – 2013
15 Where We Go From Here Major Segment Earnings for 2011 – 2013 2011A 2012A 2013E Electric and Gas Utilities $1.44 $1.55 $1.60 to $1.65 Power the Future (1) $0.66 $0.69 $0.71 Wholesale Electric Transmission (2) $0.16 $0.17 $0.18 Unallocated holding company debt (3) ($0.08) ($0.06) ($0.06) $2.18 $2.3
Slide 16: Delivering the Future
16 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
Slide 17: Solid Capital Investment in our Core Business
17 Where We Go From Here Solid Capital Investment in our Core Business (In millions) 48 83 82 61 96 97 137 173 102 125 108 84 211 224 208 214 220 227 189 188 330 188 194 200 83 $668 $668 $723 $588 $617 $607 $0 $100 $200 $300 $400 $500 $600 $700 $800 2013 2014 2015 2016 2017 2018 Customer Service & I
Slide 18: Western Wisconsin Gas Expansion
18 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 Propane conversion - eight municipalities have passed franchise resolutions to receive natural gas service Frac sand mining
Slide 19: Renewable Energy Investments
19 Where We Go From Here Renewable Energy Investments Biomass Plant 50MW Investment of approximately $269 million Commercial operation began in November of 2013 Montfort Wind Energy Center 30MW Purchased from a subsidiary of NextEra Energy, Inc. Purchase price of $27 million Approv
Slide 20: Valley Power Plant
20 In 2012 announced plans to convert Valley from coal to natural gas Targeting completion of the conversion for late 2015 or early 2016 Follows completion of a $26 million gas pipeline upgrade with expected completion in 2014 Currently seeking regulatory approvals Where We Go From Here Vall
Slide 21: Twin Falls Hydroelectric Powerhouse
21 In 2012 announced plans to build a new powerhouse at Twin Falls Existing powerhouse is in need of repair All major permits have been obtained 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 Hydro
Slide 22: Michigan Retail Choice
22 Where We Go From Here Michigan Retail Choice Two iron ore mines in Michigan’s Upper Peninsula switched to an alternate energy supplier effective September 1 No impact on our 2013 earnings guidance Pursuing multiple steps for 2014 MISO informed us that we cannot suspend operations at our P
Slide 23: Growth at American Transmission Company
23 Where We Go From Here Growth at American Transmission Company ATC projects a need for $3.0-$3.6 billion of transmission investments in its footprint from 2013-2022 ATC’s prior plan called for $3.9-$4.8 billion of in- footprint investments from 2012-2021 Excludes potential transmission proje
Slide 24: Multiple Opportunities Being Evaluated
24 Where We Go From Here Multiple Opportunities Being Evaluated Additional capital for fuel blending at the Oak Creek Expansion units Divestiture of energy assets by the State of Wisconsin New transmission projects outside of Wisconsin and Michigan through our 26.2 percent ownership of America
Slide 25: Industry Leading Dividend Growth
25 Where We Go From Here Industry Leading Dividend Growth The board of directors raised the quarterly dividend in July to 38.25 cents a share – equivalent to an annual rate of $1.53 a share This represents a 12.5% increase over the previous quarterly rate Accelerates our dividend action that w
Slide 26: Financial Flexibility for Share Repurchases
26 Where We Go From Here Financial Flexibility for Share Repurchases The board of directors has authorized management to purchase up to $300 million of Wisconsin Energy common stock from 2014 – 2017 Original share buyback program authorized management to purchase up to $300 million of Wisconsin
Slide 27: Holding Company Debt Retirement
27 Where we go from here Holding Company Debt Retirement Our free cash position enables us to consider the early retirement of holding company obligations Two major debt instruments at the holding company $200 million bond with a 6.2% coupon expiring in 2033 $500 million hybrid security with
Slide 28: Key Takeaways on Wisconsin Energy
28 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 Final regulatory approvals in place Well managed utility franchises with rate base growth Investment in American Tran
Slide 29: Appendix
Appendix
Slide 30: Wisconsin Jurisdiction Rate Case Summary
30 Where We Go From Here Wisconsin Jurisdiction Rate Case Summary Public Service Commission of Wisconsin (PSCW) authorized 2.6% increase in net customer bills in 2013 and 2014 (after applying expected proceeds from a renewable energy tax grant) Non-fuel rate increase prior to credits: 4.8% or
Slide 31: Projected Rate Base
31 Where We Go From Here Projected Rate Base $6.0 $6.7 $7.3 $7.5 $0.6 $0.3 $0.1 $0.3 ($0.2) ($0.4) ($0.6) ($0.7) $6.4 $6.6 $6.8 $7.1 -$2 -$1 $0 $1 $2 $3 $4 $5 $6 $7 $8 2012A 2013E 2014E 2015E Bi llio ns o f D oll ar s Average Total Utility Rate Base PPE CWIP All Other* *All other is comprised of cus
Slide 32: DATC Joint Venture
32 Non-exclusive joint venture between Duke Energy and ATC (DATC) announced in April 2011 Adds potential investment opportunities outside ATC’s current footprint Ownership is split 50/50 between Duke and ATC DATC has proposed transmission projects for MISO’s Midwest Transmission Expansion Pl
Slide 33: Forecast of Electric Sales
33 Where We Go From Here Forecast of Electric Sales 2013 Forecast vs. 2012 Actual 2013 Forecast vs. 2012 Normalized Residential -2.3% 0.1% Small C&I 0.2% 0.3% Large C&I (ex. Mines) -0.9% 0.2% Total Large C&I -3.2% -2.4% Total Retail -1.8% -0.7% Based on our customer demand for distribution services
Slide 34: Regulatory Environment
34 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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