WEC Energy Group, Inc. · NYSE:WEC
WEC Energy — Wisconsin Energy — Investor Presentation (December 2011)
27 slides from WEC Energy's investor presentation, December 2011
Slide 1: Wisconsin Energy Corporation December 2011
Wisconsin Energy Corporation V- December 2011
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: Key Areas to be Covered
Key Areas to be Covered Overview of Wisconsin Energy Retail Electric and Gas Utilities Power the Future Wholesale Electric Transmission Earnings Outlook 3
Slide 4: Overview of Wisconsin Energy
Overview of Wisconsin Energy Estimated Rate Base and Power the Future Investment Retail Electric and Gas Utilities $10.0 Billion Wisconsin, Michigan, and FERC $9.4 Billion jurisdictions $0.7 $0.7 48.5% to 53.5% equity for Wisconsin $2.7 Electric $2.7 10.4% allowed ROE $2.7 45% to 50% equit
Slide 5: Retail Electric and Gas Utilities
Retail Electric and Gas Utilities Largest electric and gas company in Wisconsin 1.1 million electric customers 1.0 million natural gas customers 5
Slide 6: Regulatory Environment
Regulatory Environment Wisconsin Commission Michigan Commission 3 Commissioners 3 Commissioners Gubernatorial appointment, Gubernatorial appointment, Senate confirmation Senate confirmation Chairman: Gubernatorial Chairman: Gubernatorial appointment appointment Terms Terms 6 ye
Slide 7: Rate Case Activity
Rate Case Activity Wisconsin Jurisdiction Filed an application with the Wisconsin Public Service Commission requesting no net increase in base rates in 2012 Authorizes the company to suspend amortization of $148M of regulatory costs in 2012 Authorizes $148M of carrying costs and depreciation o
Slide 8: Rate Case Activity
Rate Case Activity Wisconsin Jurisdiction Schedule for fuel case established with decision expected by the end of 2011 or early 2012 Requests the refund of $26 million from Wisconsin Electric’s settlement of spent nuclear fuel litigation with the U.S. Department of Energy Expect to file a full
Slide 9: Rate Case Activity
Rate Case Activity Michigan Jurisdiction Filed rate case on July 5 Requested $17.5 million annually -- a 9.9% increase Expect to self-implement $7.7 million in January 2012 If approved by the commission, this 4.4% increase could be offset by the Michigan portion of the DOE settlement This
Slide 10: Electric Retail Customer Base
Wisconsin Energy Electric Retail Customer Base 2010 Retail KWh Sales Mix Other 1% % of 2010 C&I Sector Electric Large C&I Small & Large Sales Residential 31% 36% Office 12.4% Small C&I Mining 11.4% 32% Retail 6.4% Health Care 5.7% 2010 Retail Revenues Paper & Products 5.5% Other 1% Primary Metals 5.
Slide 11: Updated Capital Spending Plan
Updated Capital Spending Plan On December 1, the board of directors reviewed a new 5-year capital spending program Management's plan calls for an investment of $3.5 billion in our core business over the period 2012 through 2016 Driven by spending on network reliability projects 11
Slide 12: Expected Levels of Investment and Depreciation
Retail Electric and Gas Utilities Expected Levels of Investment and Depreciation $1,000 $900 $836 $800 Millions of Dollars $142 $705 $700 $678 $71 $43 $625 $600 $24 $39 $270 $161 $500 $400 $300 $611 $586 $473 $200 $424 $330 $355 $260 $305 $100 $0 2011E 2012E 2013E 2014E Base Renewable Environmental
Slide 13: Projected Rate Base
Retail Electric and Gas Utilities Projected Rate Base *All other is comprised of customer advances, def. taxes, inventory and implied working capital. 13
Slide 14: Renewable Energy Opportunity
Renewable Energy Opportunity Renewable Portfolio Standard in Wisconsin 8.27%* Required Percentage for Wisconsin Electric Retail Sales 4.27%* 2.27% 2001-03 2010 2015 Baseline *Requirements at a Wisconsin state level are 5% and 10% in 2010 and 2015 respectively. In terms of energy this is estimated to
Slide 15: Renewable Energy Opportunity
Renewable Energy Opportunity Glacier Hills 162 MW Estimated investment of $361 million Expected completion December of 2011 Biomass 50MW Estimated investment of $255 million Approved by PSCW and Domtar Inc. Expected completion by the end of 2013 Wisconsin Electric has executed 16
Slide 16: Power the Future Expected Earnings
Power the Future Expected Earnings Earnings per Share Contribution Key Assumptions Consolidated Basis Cost estimate of $2 billion for $0.67 $0.66 WEC’s ownership of the coal units $0.48 Earnings contribution expected to grow somewhat over time as $0.21 debt repayment occurs 2009 2010 2011 2012 O
Slide 17: Wholesale Electric Transmission
Wholesale Electric Transmission Wisconsin Energy owns 26.2% of American Transmission Company (ATC) ATC is projected to contribute approximately 16 cents to our EPS this year Represents almost 8% of consolidated earnings ATC’s projected capital investment over the next ten years is $3.8 - $4.
Slide 18: Wholesale Electric Transmission
Wholesale Electric Transmission Non-exclusive joint venture between Duke Energy and ATC (DATC) announced in April Adds potential investment opportunities outside ATC’s current footprint Ownership is split 50/50 between Duke and ATC In September, DATC submitted the first set of proposed trans
Slide 19: Wholesale Electric Transmission Expected Earnings
Wholesale Electric Transmission Expected Earnings Projected Capital Expenditures Key Assumptions (Millions of Dollars) ATC projects a need for $3.8 - $4.4 $310 billion of transmission improvements $272 in its footprint from 2011 to 2020 $267 Implies average $35 million effective annual rate base
Slide 20: Projected Earnings Base for 2010 - 2012
Projected Earnings Base for 2010 - 2012 2010A 2011E 2012E Electric and Gas Utilities $1.34 $1.44 to $1.47 $6.6 billion rate base Power the Future (1) $0.48 $0.66 $0.67 Wholesale Electric Transmission (2) $0.15 $0.16 $0.17 Unallocated holding company debt(3) ($0.05) ($0.13) ($0.09) $1.92 $2.13 to $2.
Slide 21: Forecast of Electric Sales 2011
Forecast of Electric Sales 2011 2011 Forecast vs. 2011 Forecast vs. 2010 Actual 2010 Normalized Residential -3.2% -0.4% Small C&I -1.0% 0.5% Large C&I (ex. Mines) -2.8% -2.0% Total Large C&I -2.2% -1.6% Total Retail -2.1% -0.6% 21
Slide 22: Financing Policy
Financing Policy Capital Structure Goals Maintain debt to capital below 55% by the end of 2013 Actual ratio was 54.1% at the end of 2010 Assumes half of hybrid securities are treated as common equity 22
Slide 23: Dividend
Dividend Move to a dividend payout ratio that is competitive with our peers The directors plan to raise the quarterly dividend in January to 30 cents a share – equivalent to an annual rate of $1.20 a share 15.4 percent increase over the 2011 amount Our policy is to trend to a 60 percent payo
Slide 24: Share Repurchases
Share Repurchases To maintain appropriate financial strength and provide value to our investors, we have: Implemented a share repurchase plan – through the end of 2013 – that calls for us to buy back up to $300 million of Wisconsin Energy common stock through open market purchases or privately n
Slide 25: Projected Growth in Earnings and Dividends
Projected Growth in Earnings and Dividends Earnings per Share Dividends per Share $2.13 to $1.04 $2.16 $1.92 $1.60 $0.80 $0.68 2009A 2010A 2011E 2009A 2010A 2011E 25
Slide 26: Potential Investment Opportunities
Potential Investment Opportunities Divestiture of energy assets by the State of Wisconsin Investment in fuel flexibility at new Oak Creek coal units Investment in aging gas and electric distribution infrastructure Renewable energy investments beyond 2016 Investment in aging generation faci
Slide 27: Key Takeaways on Wisconsin Energy
Key Takeaways on Wisconsin Energy Power the Future program now complete Highly visible earnings and strong cash flow Solid utility franchises with rate base growth Investment in American Transmission Company provides an additional regulated growth opportunity Positioned to deliver among th
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