Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Investor Presentation (August 2020)
52 slides from Wec Energy's investor presentation, Aug 19, 2020
Slide 1: Focused on Performance: Investor Update August
Focused on Performance Investor Update: August * * * * One of America’s Most Reliable Utility Outstanding Best in the U.S. in Large Most Responsible in the Midwest Midsize Utility Customer Satisfaction (Top 2 Box) Companies for 2020 We Energies Wisconsin Public Service WEC Energy Group WEC Energy Gr
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: Company Statistics
Ya, WEC Vag, Energy Group Company Statistics = $30.0 billion market cap” = 1.6 million electric customers * 2.9 million natural gas customers = 60% ownership of American Transmission Company = 70,600 miles of electric distribution = 49,500 miles of gas distribution " $35.0 billion of assets = 9th Ja
Slide 4: Delivering reliable, affordable energy to our customers
WEC Energy Group “Delivering reliable, affordable energy to our customers. Reducing greenhouse gas emissions. Building and maintaining safe, resilient infrastructure. These imperatives continue to drive our decision-making, and the results are clear.” - Gale Klappa, WEC Energy Group Executive Chairm
Slide 5: Office of the Chair
Office of the Chair “Working together as a team, we will leverage the strengths of each individual as we write the next chapter of the company’s growth, development and service to our customers.” - Gale Klappa, Executive Chairman — Scott Lauber Kevin Fletcher Xia Liu Senior Executive Vice President
Slide 6: A Decade of EPS Growth
A Decade of EPS Growth $4.00 $3.50 = $3.00 + $2.50 = $2.00 + $1.50 + $1.00 = $0.50 $0.00 + 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 HM GAAP __ Wl Adjusted
Slide 7: Proven Track Record of Performance
Proven Track Record of Performance WOT EPS Guidance 2019 Exceeded 2018 Exceeded 2017 Exceeded 2016 Exceeded 2015 Exceeded 2014 Exceeded 2013 Exceeded 2012 Exceeded 2011 Exceeded 2010 Exceeded 2009 Exceeded 2008 Exceeded 2007 Exceeded 2006 Exceeded 2005 Exceeded 2004 Exceeded ina Energy Group
Slide 8: Solid Dividend Growth Continues
Solid Dividend Growth Continues Annualized Dividends Per Share In January, raised the $2.53** dividend by 7.2% toa new annual rate of $2.53 per share Targeting dividend payout of 65-70% of earnings Projecting dividend growth in line with earnings growth 2010 2011 2012 2013 2014 2015 2016 2017 2018 2
Slide 9: What's New?
Slide 10: Well Positioned for the Year
Positive indicators Well Positioned for the Year Q3 2020 Guidance: 74 to 76 cents per share = July weather and sales - better than projected = Disciplined expense reductions in place = Continue to project long-term EPS growth rate of 5-7% Reaffirming annual guidance $3.71 - $3.75 per share Expectati
Slide 11: Facing Unprecedented Circumstances
Facing Unprecedented Circumstances From a Position of Strength = Strong balance sheet = $1.9 billion of liquidity as of July 31, 2020 =» Executable capital plan with no need to issue additional equity = No open rate cases =» Recovery mechanisms for bad debt in place = Pension well-funded as of Dec.
Slide 12: COVID-19 Regulatory Actions
COVID-19 Regulatory Actions msn | te | | eee pee Cant? oF ee Existing Rider Defer Defer Incremental O&M Defer et Use Track* Defer Rider She Late Payment Defer Soy ee Track* Defer Carry Cost on Deferrals pad Mek No Track* No Dockets Fife 20-0309 U-20757 20-427 “Commission has allowed tracking of thes
Slide 13: Electric Sales Volume Assumptions
Electric Sales Volume Assumptions Actual Sales sssssasessa2s Adjusted Sales Forecast 5/4/2020 8.0% 3.0% +0.5% -3% -7% -2.0% -7.0% -12.0% -17.0% -18% -22.0% Second Quarter Third Quarter Fourth Quarter 2020 2020 2020 We are forecasting total retail electric volumes* to decrease by approximately 4% for
Slide 14: New Carbon Reduction Goals — Electric Generation
New Carbon Reduction Goals — Electric Generation Achieved and anticipated CO, reductions (net mass) Baseline Reduction goals: -10% -20% % -30% below 2005 -40% levels by 2030 -50% 60% Net carbon a neutral ii by 2050 -90% -100% 2005 2019 2030 2050 « In 2019, met and exceeded our 2030 goal of reducing
Slide 15: Methane Reduction Goal
Methane Reduction Goal More than = halfway 0% qe towards Reduction Goal:* our goal -10% % -20% 0 by the year 2030 -30% from a 2011 baseline -40% —<$<$— = 2011 2019 2030 *This goal represents a decrease in the rate of methane emissions from the natural gas distribution lines in our network of 30% per
Slide 16: Infrastructure Investment: Tatanka Ridge Wind Farm
Infrastructure Investment Tatanka Ridge Wind Farm 56 GE wind turbines with a . capacity of ~155MW = Under development. Located in Deuel County, South Dakota Expected total investment: $235 million for an 85% ownership interest and substantially all of the tax benefits Expected returns are higher tha
Slide 17: Infrastructure Portfolio Investments
Infrastructure Portfolio Investments =» Returns projected to be higher than regulated business = Expected to qualify for 100% bonus depreciation Offtake Agreement __| Capacity Upstream Wind $307M for 90% ownership Affiliate of Allianz — ~200MW Energy Center 10-yrs Bishop Hill Il Wind 6 P WPPI Energy
Slide 18: Five-Year Capital Plan
-Year Capital Plan Five
Slide 19: 2020-2024 Capital Plan
2020-2024 Capital Plan ($ in billions) Total of $15.0 billion Gas Distribution Announced $5.7 Infrastructure |< ~ Projects \ Remaining bad Infrastructure 89 Projects . ° Generation $2.2 Electric ATC z eter ce 15% Distribution Investment* $2.8 $1.3 18% 9% * ATC is accounted for using the equity metho
Slide 20: Greater Opportunities in Natural Gas and Energy Infrastructure
Greater Opportunities in Natural Gas and Energy Infrastructure Average Asset Base 0) Projected Asset Base 12/31/2019 7 No 12/31/2024 $21.4 billion ae Growth $30.2 billion - 60h = ee ss Gas Distribution* 33% Gas Distribution* 37% We Power 14% nee at ia) Distribution 38% We Power Electric 11% Generati
Slide 21: New Liquefied Natural Gas (LNG) Facilities
New Liquefied Natural Gas (LNG) Facilities Taking steps to maintain reliable and affordable service for our customers These LNG facilities provide = We Energies is seeking approval for two a solution for Southeastern LNG facilities to address the need for Wisconsin to meet peak 4: ; r : élistomier d
Slide 22: Wisconsin Utilities: Investing in Zero-Carbon Generation
Wisconsin Utilities Investing in Zero-Carbon Generation » Solar generation technology has improved in efficiency, become more cost-effective and complements our summer demand curve. = Wisconsin Electric, Wisconsin Public Service and Madison Gas & Electric are partnering on major solar initiatives. =
Slide 23: Regional Economy
Regional Economy
Slide 24: Powering Industry Leaders in our Region
Powering Industry Leaders in our Region Foxconn HARIBO inves TKN amazon FINCANTIERI UN) FRESENIUS MARINETTE MARINE caring for life MOLSON CooL KOMATSU “NEXUS
Slide 25: Key Takeaways
Key Takeaways for WEC Energy Group = Track record of exceptional performance = Portfolio of premium businesses = Investment opportunities support 5-7% EPS growth with minimal impact on base rates = 100% of capital allocated to regulated businesses or contracted renewables/gas storage = Dividend grow
Slide 26: Appendix
Appendix la VWVEC fam Energy Group
Slide 27: Electric Generation, Distribution, Natural Gas Distribution
Electric Generation Electric Distribution Natural Gas Distribution PE@PLES GAS" UPPER “3 MICHIGAN € Gg ENERGY RESOURCES N@RTH SHORE GAS" MICHIGAN GAS UTILITIES® Energy Infrastructure Electric Transmission 60% ownership WEC SS Bluewater Infrastructure... ">" Gas Storage. fi.
Slide 28: Environmental, Social & Governance Focus
Environmental, Social & Governance Focus Met and exceeded our 2030 target in 2019. Set new goals to reduce Carbon Goals carbon dioxide emissions from electric generation by 70% below 2005 levels by 2030 and to be net carbon neutral by 2050. Methane Reduce the rate of methane emissions by 30% per mil
Slide 29: Focused on Efficiency
Focused on Efficiency Reducing Day to Day O&M $1,342 Competitive excellence Productivity through technology Generation reshaping Delivering the future 2016 2017 2018 2019 Electric Residential Bills below National Average $1,313 _ = National $1,264 ———_ National average Average $1,200 $1,185 up 4% (f
Slide 30: Infrastructure Investment: Thunderhead Wind Energy Center
Infrastructure Investment Thunderhead Wind Energy Center 108 GE wind turbines with a capacity of ~300MW = Under development by Invenergy and located in Antelope and Wheeler Counties, Nebraska = Expected total investment: $381 million for a 90% ownership interest = Expected returns are higher than th
Slide 31: Infrastructure Investment: Blooming Grove Wind Farm
Infrastructure Investment Blooming Grove Wind Farm 94 GE wind turbines with a capacity of ~250MW = Under development by Invenergy and located in McLean County, Illinois = Expected total investment: $389 million for a 90% ownership interest = Expected returns are higher than those in our regulated bu
Slide 32: Infrastructure Investment: Coyote Ridge Wind Farm
Infrastructure Investment Coyote Ridge Wind Farm = Built by Avangrid Renewables in Brookings County, 39 GE wind turbines with South Dakota, within MISO footprint a capacity of ~97 MW Total investment: $145 million for an 80% ownership interest and substantially all of the tax benefits = Expected ret
Slide 33: Infrastructure Investment: Upstream Wind Energy Center
81 GE wind turbines with a capacity of ~200 MW Infrastructure Investment Upstream Wind Energy Center Built by Invenergy and located in Antelope County, Nebraska Total Investment: $307 million for a 90% ownership interest Expected to provide returns that are higher than those in our regulated busines
Slide 34: Infrastructure Investment: Bishop Hill III Wind Energy Center
53 GE wind turbines with a capacity of ~132 MW Infrastructure Investment Bishop Hill Ill Wind Energy Center Developed by Invenergy and placed into service in May 2018 Located in Henry County, Illinois Total investment: $166 million for a 90% ownership interest Expected to provide returns that are hi
Slide 35: "Delivering" the Future
“Delivering” the Future Project Highlights Electric Redesign/ Resilience + Major investments planned to address aging infrastructure Expect to spend $2.8 billion over the next 5 years on electric delivery Committed to delivering the future with infrastructure that will enhance efficiencies and reduc
Slide 36: Power the Future Investments
Power the Future Investments’ po NaturalGas | Coal Capacity 1,090 MW 1,030 MW * Investment $664 million $2 billion * ROE 12.7% 12.7% Equity 53% 55% In Service Dates Unit 1 — July 2005 Unit 1 — February 2010 Unit 2 —- May 2008 Unit 2 — January 2011 Lease Terms 25 years 30 years Cost Per Unit of Capac
Slide 37: $15.0 billion projected capital spend from 2020-2024
$15.0 billion projected capital spend from 2020-2024 Capital Plan Drives 5% to 7% EPS Growth 500 + = . $3.50 $3,322 $3,361 $212 $3,000 - $2,500 = ATC Investment = Energy Infrastructure $2,000 = MERC/MGU Blllinois $1,500 = WI/MI Gas Delivery* = WI/MI Electric Delivery $1,000 = WI/MI Generation** $500
Slide 38: Capital Plan Projections By Company
By Company Capital Plan Projections ¢¢ in mitions) Wisconsin Electric $701.9 $1,189.5 $926.7 Wisconsin Gas 184.8 267.7 268.2 Wisconsin Public Service 579.3 405.1 409.1 Upper Michigan Energy Corp 16.0 18.8 26.5 Wisconsin Segment 1,482.0 1,881.1 1,630.5 Peoples Gas 721.0 563.4 523.4 North Shore Gas 58
Slide 39: Diverse Portfolio of Regulated Businesses
Diverse Portfolio of Regulated Businesses By Business By Jurisdiction MI/MN 5% Gas Distribution 33% FERC Regulated 14% Electric Generation and Distribution 53% Based on 2019 average asset base. Excludes wind investments in our Energy Infrastructure segment WEC Energy Group
Slide 40: Composition of Asset Base
Composition of Asset Base Total 2019 Average Asset Base of $21.4 billion Asset Base-$B| _% of Total Wisconsin Electric $6.3 29.4% Wisconsin Gas 1.5 7.0 Wisconsin Public Service 3.4 15.9 Upper Michigan Energy Resources 0.4 1.9 Peoples Gas 3.0 14.0 North Shore Gas @s) 1.4 Minnesota Energy Resources 0.
Slide 41: Balanced Sales Mix
Balanced Sales Mix 2019 Retail MWh Deliveries Mix* 35% Large C&l by Segment Paper 23% Foundry (SIC 33) 11% Mining/Minerals 11% lsc eS oe Food/Agriculture 9% 35% 35% Other Manufacturing 8% Metal (SIC 34,35,37) 7% Medical 5% Residential Education 4% plus Farm Chemical 4% 30% Printing 3% Office 2% Othe
Slide 42: Wisconsin Segment
Wisconsin Segment Longer-Term Sales Forecast Benefits from Regional Economic Growth —_ Year-over-Year 2022 - 2024 1.2% - 1.5% Sales Growth Forecast (weather-normalized) 1.2% - 1.5%
Slide 43: Foxconn in Wisconsin
Foxconn in Wisconsin Foxconn = Expected capital investment by Foxconn of Foxconn announced $10 billion dollars July 26, 2017, Wisconsin's largest » Goal of creating 13,000 jobs, and an estimated economic development 22,000 indirect jobs created throughout Wisconsin project and largest ; . . corporat
Slide 44: Balance Sheet Remains Strong
Balance Sheet Remains Strong Funds from Operations/Debt Holding Company Debt to Total Debt 19.0% 30% 18.0% 17.0% 25% 16.0% 15.0% 14.0% 20% 13.0% 12.0% 11.0% 10.0% 15% 10% 2019 2020-2024E 2019 2020-2024E Electric and Gas Utilities Credit Ratings Distribution* fy Din Utiliti es ilities § 125 y Wiscons
Slide 45: Quarterly EPS Earnings Drivers
a) Quarterly EPS Earnings Drivers woo 008 | Primary Driver: + $0.03 FERC Order ‘Simon Diiver Primary Drivers: gpl gel ee Taxes and other, partially : ") Feros offset by Rabbi Trust? Primary Drivers: * $0.07 Weather $0.04 Day to Day osm $0.01 Other 2019 Q2 EPS Utility Operations” ATC Energy Infrastru
Slide 46: Rate-Making Parameters by Company
Rate-Making Parameters by Company Equity Layer) | Authorized ROE Wisconsin Electric 50.0%-55.0% 10.0% Wisconsin Public Service 50.0%-55.0% 10.0% Wisconsin Gas 50.0%-55.0% 10.2% Peoples Gas 50.33% 9.05% North Shore Gas 50.48% 9.05% Minnesota Energy Resources 50.9% 9.7% Michigan Gas Utilities 52% 9.9%
Slide 47: Electric and Gas Rate Case Settlements
Electric and Gas Rate Case Settlements We Energies & Wisconsin Public Service PSCW approved the rate settlements in a final written order on December 19 Authorized return on equity: = Wisconsin Electric — 10.0% = Wisconsin Gas — 10.2% = Wisconsin Public Service — 10.0% Capital structure equity compo
Slide 48: Key Rate Making Components
Key Rate Making Components Michigan— Minnesota— | Electric & | Wisconsin— | Wisconsin— Gas Gas Gas Electric Gas Pipeline Replacement Rider Bad Debt Rider v Bad Debt Escrow Accounting Residential Residential Decoupling v v Fuel Cost Recovery 1 for 1 recovery of prudent fuel costs +/- 2% band Cen Uphe
Slide 49: Regulatory Environment
Regulatory Environment Wisconsin Illinois = Governor Tony Evers (D) = Governor J.B. Pritzker (D) = Commission = Commission = Gubernatorial appointment, = Gubernatorial appointment, Senate Senate confirmation confirmation = Chairman: Gubernatorial appointment = Chairman: Gubernatorial appointment = 6
Slide 50: Industry Leading Total Shareholder Returns
Industry Leading Total Shareholder Returns* Over the past decade, WEC Energy Group has consistently delivered among the best total returns in the industry _S 400% 350% 300% 250% 200% 150% 100% 50% 0% * Total return including reinvested dividends for the periods ended December 31, 2019 «==WEC Energy
Slide 51: Contact Information
Contact Information M. Beth Straka Senior Vice President — Investor Relations and Corporate Communications Beth.Straka@wecenergygroup.com 414-221-4639 Ashley Knutson Investor Relations Analyst Ashley.Knutson@wecenergygroup.com 414-221-3339 WEC Energy Group
Slide 52: Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP)
Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP) Reported EPS — GAAP basis $ 3.79 $ 2.96 Tax benefit related to Tax Cuts and Jobs Act of 2017 $ (0.65) - Acquisition Costs = $ 0.01 Adjusted EPS — Non-GAAP basis* $ 3.14 $ 2.97 * WEC Energy Group has provided adjusted earnings per share
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