Wec Energy Group, Inc. · NYSE:WEC

Wec Energy — Investor Presentation (March 2023)

56 slides from Wec Energy's investor presentation, Mar 27, 2023

  1. Slide 1: Investor Update: April 2023

    Investor Update: April 2023 Our “ESG” Progress Plan Update Investing in Efficiency, Sustainability and Growth Best in the U.S. in Large Customer Satisfaction ESource We Energies Named #1 Energy Company in America by Business Customers Escalent Finalist for the S&P Global Energy Award in Corporate So

  2. 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

  3. Slide 3: The Premier Energy Company in America's Heartland

    3 The Premier Energy Company in America’s Heartland  $28.0 billion market cap*  4.6 million retail customers  60% ownership of American Transmission Company  $41.9 billion of assets * As of Feb. 28, 2023

  4. Slide 4: A History of Quality Earnings Growth

    4 A History of Quality Earnings Growth $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 GAAP Adjusted** 2023 Guidance * Estimated based on 2023 guidance midpoint of $4.60 per share. ** See Appendix for r

  5. Slide 5: Consistent Performance Over Time

    5 Consistent Performance Over Time EPS Guidance 2022 Exceeded  2021 Exceeded  2020 Exceeded  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 Exceede

  6. Slide 6: Strong Dividend Growth Continues

    6 In January, raised the dividend by 7.2% to a new annual rate of $3.12 per share* Strong Dividend Growth Continues Top decile dividend growth in industry** ** Reflects current and expected dividends declared in 2023 *Annualized based on 1st quarter 2023 dividend of 78 cents per share

  7. Slide 7: Strong Dividend Growth Continues

    7 $0.80 $1.04 $1.20 $1.445 $1.56 $1.83* $1.98 $2.08 $2.21 $2.36 $2.53 $2.71 $2.91 $3.12 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E Strong Dividend Growth Continues Targeting dividend payout of 65%-70% of earnings Projecting dividend growth in line with earnings growth * A

  8. Slide 8: What's New?

    8 What’s New?

  9. Slide 9: Earnings Guidance Update

    9  Affirmed 2023 earnings guidance of $4.58 to $4.62 per share*  In light of one of the warmest winters in history, first quarter earnings guidance lowered to a range of $1.56 to $1.58 per share*  Previous first quarter earnings guidance was $1.68 to $1.72 per share Earnings Guidance Update *Assu

  10. Slide 10: Weather Event at Samson I Solar Farm

    10  WEC Infrastructure purchased Samson I Solar Farm on Feb. 24th  In early March, Samson I was damaged by a wind storm in Texas  Certain sections across approximately 40 percent of the park incurred some amount of damage  Full damage assessment is underway  We are pursuing insurance and warran

  11. Slide 11: Advancing our renewable/reliability goals

    11 Project Approved Investment1 Darien Solar-Battery Park $400 million West Riverside Energy Center First Option $102 million Koshkonong Solar-Battery Park $585 million 1 Reflects amounts approved by the PSCW. Project estimates and final costs may vary. The Wisconsin Commission has approved more tha

  12. Slide 12: Wisconsin Utilities - Rate Review

    12  Authorized Return on Equity - 9.80 percent  Equity component of capital structure rises to 53 percent  Scope for 2024 Limited Re-Opener  Limited reopener for 2024 rates will address recovery of capital investments that achieve commercial operation in 2023 and 2024  Will also address project

  13. Slide 13: Illinois Rate Reviews

    13  Peoples Gas will not seek an extension of the automatic bill adjustment rider QIP.  With natural gas prices expected to decline this year and next year, we project customer bills to stay largely flat as new rates take effect in 2024.  Chicago home heating bills are below other major U.S. citi

  14. Slide 14: Organic Flow Battery Storage New Clean Energy Pilot Project

    14  Leading a pilot project to test a new form of long-duration energy storage on the U.S. electric grid.  Partnering with EPRI and CMBlu Energy  This energy storage system uses a proprietary technology that incorporates environmentally friendly materials ‘a green battery.’  The project will tes

  15. Slide 15: Increasing Five-Year Capital Plan by $2.4 Billion

    15 $4,693 $6,440 $3,356 $3,556 $2,811 $2,673 $3,053 $3,021 $542 $529 $1,345 $1,953 $1,900 $1,928 $17,700 $20,100 2022-2026 2023-2027 Energy Infrastructure ATC* MERC/MGU Illinois WI Gas Delivery** WI Electric Delivery** WI Generation** N e w P la n F o rm e r P la n ESG Progress Plan Supports 6.5% to

  16. Slide 16: Robust Growth in Asset Base

    16 $26.5 billion $38.4 billion 2022A 2027E* Robust Growth in Asset Base *Estimated year-end average asset base Expect long-term EPS growth of 6.5% to 7.0% per year. 7.7% Growth

  17. Slide 17: Investing $5.4 billion in Regulated Renewables

    17 Solar  505 MW under construction  270 MW received regulatory approval  Planning for additional 1,135 MW  Qualifies for Production Tax Credits Battery  316 MW received regulatory approval  Planning for additional 400 MW  Qualifies for Investment Tax Credits Wind  82 MW received regulatory

  18. Slide 18: WEC Infrastructure Portfolio – Green and Growing

    18 SD IL NE Plan to invest $1.9 Billion (2023-2027) WEC Infrastructure Portfolio – Green and Growing In-service Under development Total Project Capacity (MW) Investment (in millions) Wind ● Upstream 200 $307 ● Bishop Hill III 132 166 ● Coyote Ridge 97 145 ● Blooming Grove 250 389 ● Tatanka Ridge 155

  19. Slide 19: Modernizing Our Gas-Fueled Generation Fleet

    19 Modernizing Our Gas-Fueled Generation Fleet Retiring  Weston 2  74 MW  Retired: Feb. 2023  Additional 126 MW of older, less-efficient gas generation expected to retire in 2023 and 2024 Building Weston RICE units  Received regulatory approval on Mar. 31, 2022  128 MW  Expected investment: $

  20. Slide 20: Exiting Coal

    20  Near-term retirements planned:  Oak Creek Units 5-6: 528 MW (May 2024)  Oak Creek Units 7-8: 611 MW (late in 2025)  Columbia Units 1-2: 300 MW (by June 1, 2026)  Enhancing fuel flexibility (gas blending) at Oak Creek Power the Future units  By the end of 2030, we expect to use coal only as

  21. Slide 21: American Transmission Company

    21 $532 $707 $712 $661 $643 $319 $424 $427 $397 $386 2023 2024 2025 2026 2027 ATC WEC portion 60% American Transmission Company 5-year (2023-2027) WEC projected capital investment:  Ongoing ATC: $1.7 billion  Tranche 1 (2025-2027): $0.3 billion Future ATC Opportunity  ATC’s estimated investment i

  22. Slide 22: Carbon Reduction Goals – Electric Generation

    22 *Includes projection of potential carbon offsets by 2050 Carbon Reduction Goals – Electric Generation We have established aggressive carbon reduction goals for our electric generating fleet, aligned with or surpassing global emissions pathways aimed at limiting warming to 1.5°C. Reduction goals:

  23. Slide 23: Methane Reduction

    23 Goal: Net zero by the end of 2030** * Represents a decrease in the rate of methane emissions, per mile, from the natural gas distribution lines in our network from a 2011 baseline. ** This goal applies to emissions from WEC Energy Group natural gas distribution companies calculated in accordance

  24. Slide 24: Regional Economy

    24 Regional Economy

  25. Slide 25: Powering Industry Leaders in our Region

    25 Powering Industry Leaders in our Region

  26. Slide 26: Wisconsin Segment Longer-Term Sales Forecast 2025-2027

    26 Wisconsin Segment Longer-Term Sales Forecast 2025-2027 Electric 0.7%-1.0% Gas 0.7%-1.0% Sales Growth Forecast (weather-normalized) Year-Over-Year

  27. Slide 27: Key Takeaways for WEC Energy Group

    27  Track record of top decile performance among regulated utilities  Industry leading earnings quality  ESG Progress Plan drives premium EPS growth of 6.5% to 7.0%  No need to issue equity through forecast period  100% of capital allocated to regulated businesses or contracted renewables  Div

  28. Slide 28: Appendix

    Appendix | VAie VA Energy Group

  29. Slide 29: WEC Energy Group business lines

    29 Electric Distribution Electric Transmission 60% ownership Electric Generation Energy Infrastructure Natural Gas Distribution

  30. Slide 30: Inflation Reduction Act Customer Benefit and Investment Opportunity

    30  Extension of Production Tax Credits (PTC) and Investment Tax Credits (ITC)  PTC option for solar projects  Potential opportunities at WEC infrastructure segment  ITC for stand-alone electric storage projects  Tax Credit “transferability” likely to provide additional options for monetization

  31. Slide 31: Commitment to ESG

    31 Reduce carbon dioxide emissions from electric generation 60% by the end of 2025 and 80% by the end of 2030 – both from a 2005 baseline. Long-term goal of net-zero carbon emissions from our generating fleet by 2050 Planned exit from coal by the end of 2035 Targeting net-zero methane emissions from

  32. Slide 32: Electricity Supply by Fuel Type

    32 Electricity Supply by Fuel Type (megawatt-hours delivered to regulated utility customers) 73% 32% 7% 37% 32% 17% 22% 24% 3% 8% 39% 2005 2022 2030E 2035 2050 Coal Natural Gas Nuclear Renewables Exiting Coal <5% Net carbon neutral goal Planned exit from coal

  33. Slide 33: Reducing Greenhouse Gas Emissions

    33 Reducing Greenhouse Gas Emissions 0.78 0.41 0.33 0.16 0** 2005 2022 2025E 2030E 2050E Greenhouse gas intensity* (metric tons CO2/MWh) *Includes owned electric generation, purchased power and WEC Infrastructure (WECI). The environmental attributes of the WECI renewable facilities are or may be the

  34. Slide 34: Investment in Regulated Renewables

    34 Plan to invest $5.4 Billion (2023-2027) Investment in Regulated Renewables Target Project Utility WEC Ownership1 WEC Investment ($M) WEC Capacity (MWs) In-Service Two Creeks Solar Project WPS 66.7% $130 100 Badger Hollow I Solar Park 130 100 2023 Badger Hollow II Solar Park WEPCO 151E 100 1st Hal

  35. Slide 35: WEC Infrastructure projects and offtake agreements

    35 Project Developer Investment Offtake Agreement WEC Commercial Operations Total Project Capacity Bishop Hill III Wind Energy Center Invenergy $166M for 90% ownership WPPI Energy 22 years 8/31/18 132 MW Upstream Wind Energy Center Invenergy $307M for 90% ownership Affiliate of Allianz 10 years 1/10

  36. Slide 36: Hydrogen Pilot Program

    36  Led a pilot program – first of its kind in the world - to test hydrogen as a fuel source for power generation  Partnered with the Electric Power Research Institute (EPRI)  Blended hydrogen with natural gas at one of our RICE units  Initial findings indicate that all project measures met or e

  37. Slide 37: Why Our Natural Gas Distribution Networks Matter

    37 Today and Tomorrow Why Our Natural Gas Distribution Networks Matter Our Service Area  65-78% of homes use natural gas for heating  Growth continues as customers convert to natural gas Hydrogen and RNG Opportunities  Potential to blend  Investment potential to convert existing distribution net

  38. Slide 38: New Liquefied Natural Gas (LNG) Storage Facilities

    38 New Liquefied Natural Gas (LNG) Storage Facilities LNG will provide a solution for Southeastern Wisconsin to meet peak customer demand on the coldest days of the year.  We Energies received approval for two LNG facilities to address the need for additional natural gas supply in Wisconsin  Total

  39. Slide 39: Electric delivery redesign/resilience

    39 Electric delivery redesign/resilience  Addressing aging infrastructure and system hardening  Enhancing efficiencies and reducing operating costs  Expect to spend $3.6 billion (2023- 2027) with continued investment over next decade Project Highlights Efficiency, Growth and Sustainability Progre

  40. Slide 40: Natural Gas Safety Modernization

    40 Natural Gas Safety Modernization  Increasing capacity and reliability of natural gas service in our territories Illinois  Expected replacement of 2,000 miles of piping for safety and reliability in Chicago  Project $280 million-$300 million annual average investment  Illinois law authorizes r

  41. Slide 41: Utility Capital Plan Drives EPS Growth

    41 1,340 1,207 1,236 1,418 1,239 655 716 727 727 731 605 563 506 525 474 563 663 614 590 591 113 116 105 101 94 319 424 427 397 386 $3,595 $3,689 $3,615 $3,758 $3,515 - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 2023 2024 2025 2026 2027 ATC Investment MERC/MGU Illinois WI/MI Gas Delivery**

  42. Slide 42: Capital Plan Projections By Company

    42 2023 2024 2025 Wisconsin Electric $1,504.1 $1,478.2 $1,274.6 Wisconsin Gas $251.4 $246.0 $230.9 Wisconsin Public Service $754.8 $679.9 $858.7 Upper Michigan Energy $20.4 $28.7 $81.3 Wisconsin Segment $2,530.7 $2,432.8 $2,445.5 Peoples Gas $506.3 $599.0 $540.5 North Shore Gas $50.8 $60.5 $73.5 Ill

  43. Slide 43: Composition of Asset Base

    43 Composition of Asset Base Total 2022 Average Asset Base of $26.5 Billion Note: We Power value represents investment book value. Company Asset Base - $B % of Total Wisconsin Electric $7.3 27.5% Wisconsin Gas 1.9 7.2 Wisconsin Public Service 4.2 15.9 Upper Michigan Energy Resources 0.4 1.5 Peoples

  44. Slide 44: National Leader in Operating Efficiency and Financial Discipline

    44 National Leader in Operating Efficiency and Financial Discipline $27.60 $12.60 $15.60 $16.80 $21.00 $21.60 $21.80 $23.00 $24.80 $39.20 $79.30 $0 $10 $20 $30 $40 $50 $60 $70 $80 2021 Non-Fuel O&M per MWh* Source: FERC Form 1 Reports *For all companies, excluded 1) pensions and other employee benef

  45. Slide 45: Focused on Efficiency

    45 Focused on Efficiency $1,342 $1,281 $1,234 $1,143 $1,107 $1,088 $1,082 2016 2017 2018 2019 2020 2021 2022 2023E $ I n m ill io n s *Excludes costs that have a revenue offset such as operation and maintenance costs associated with the We Power generation units, transmission expenses that are colle

  46. Slide 46: Credit Metrics – Healthy Balance Sheet

    46 Credit Metrics – Healthy Balance Sheet Entity S&P Rating Moody’s Rating WEC Energy Group A- Baa1 Wisconsin Electric A- A2 Wisconsin Gas A A3 Wisconsin Public Service A- A2 Peoples Gas A- A2 Issuer Credit Ratings 11.9% 14.2% 2022 Actual* 2022 Adjusted** Funds from Operations/Debt Holding Company D

  47. Slide 47: Projected Financing Plans for 2023

    47 Projected Financing Plans for 2023 1 $1,100 $900-$1,100 $600- $1,000 $0 $500 $1,000 $1,500 $2,000 $2,500 Holding Company Utilities & Energy Infrastructure (i n m ill io n s ) YTD Financing Planned Financing Existing Facilities $1.5B net liquidity (as of Dec, 2022) $3.1B Sept. 2026 2 1. Amounts an

  48. Slide 48: Balanced Sales Mix

    48 34% Large C&I by Segment Paper/Packaging 26% Foundry (SIC 33) 11% Mining/Minerals 10% Metal (SIC 34,35,37) 8% Other Manufacturing 8% Food/Agriculture 7% Medical 6% Education 4% Printing 3% Chemical 2% Office 2% Other 13% Balanced Sales Mix Large C&I 34% Residential and Farm 31% Small C&I 35% 2022

  49. Slide 49: Diverse Portfolio of Businesses

    49 Diverse Portfolio of Businesses Based on 2022 average asset base. WI 63% IL 17% MI/MN 5% WECI 5% ATC 10% By Jurisdiction By Business Electric generation and distribution 49%Natural gas distribution 36% WECI 5% Electric transmission 10% *ATC is accounted for using the equity method; this represent

  50. Slide 50: Estimated Decision Date

    50 Estimated Decision Date Wisconsin (apps.psc.wi.gov)  Commission decision on general rate review for new base rates effective 1/1/23 (Dockets: WE and WG: 5-UR-110 and WPS 6690-UR-127)   Decision on Darien Solar and Battery Storage (Docket: 5-BS-255 filed 3/16/21)   Decision on West Riverside

  51. Slide 51: Regulatory Environment

    51 Regulatory Environment Wisconsin  Governor Tony Evers (D)  Commission  Gubernatorial appointment, Senate confirmation  Chairman: Gubernatorial appointment  6-year staggered terms Illinois  Governor J.B. Pritzker (D)  Commission  Gubernatorial appointment, Senate confirmation  Chairman: G

  52. Slide 52: Rate-Making Parameters by Company

    52 Rate-Making Parameters by Company Utility Equity Layer1 Authorized ROE Wisconsin Electric 50.50%-55.50% 9.80% Wisconsin Public Service 50.50%-55.50% 9.80% Wisconsin Gas 50.50%-55.50% 9.80% Peoples Gas 50.33% 9.05% North Shore Gas 51.58% 9.67% Minnesota Energy Resources 50.90% 9.70% Michigan Gas U

  53. Slide 53: Key Rate Making Components

    53 Key Rate Making Components Area Illinois– Gas Minnesota– Gas Michigan– Electric and Gas Wisconsin– Gas Wisconsin– Electric Gas Pipeline Replacement Rider PGL MGU Bad Debt Rider ✓ Bad Debt Escrow Accounting Residential Residential Decoupling ✓ ✓ Fuel Cost Recovery 1 for 1 recovery of prudent fuel

  54. Slide 54: Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP)

    54 Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP) 2014 2015 2016 2017 Reported EPS – GAAP basis $2.59 $2.34 $ 2.96 $ 3.79 Acquisition Costs $0.06 $0.39 $ 0.01 – Integrys Earnings $(0.47) Impact of Additional Shares $0.47 Tax Benefit Related to Tax Cuts and Jobs Act of 2017 – – – $

  55. Slide 55: Ratio of FFO to Debt

    55 Ratio of FFO to Debt (in millions, except percent) Ratio of FFO to Debt 2022 Net cash provided by operating activities $2,060.7 Total debt $17,294.5 Ratio of FFO to debt 11.9% Ratio of FFO to Debt – Adjusted* 2022 Net cash provided by operating activities $2,060.7 Add: Working Capital 340.8 Net c

  56. Slide 56: Contact Information

    Contact Information M. Beth Straka Senior Vice President – Investor Relations and Corporate Communications Beth.Straka@wecenergygroup.com 414-221-4639

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