Slide 1: WEC Energy Group August 2016
> WEC LSS VA Energy Group — August 2016 ee
Slide 2: Cautionary Statement Regarding Forward-Looking Information
1 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: Well Positioned for the Future
2 Well Positioned for the Future WEC Energy Group Focused on the fundamentals: World-class reliability Operating efficiency Financial discipline Exceptional customer care
Slide 4: A Compelling Value Proposition
3 Well Positioned for the Future A Compelling Value Proposition For 2016, targeting earnings per share growth of 6-8 percent Beyond 2016, earnings per share expected to grow at 5-7 percent annually More than 99 percent of earnings from regulated operations Projecting dividend growth in line
Slide 5: WEC Energy Group Company Statistics
4 Well Positioned for the Future WEC Energy Group $21 billion market cap (1) 1.6 million electric customers 2.8 million gas customers 60% ownership of ATC 70,000 miles electric distribution 44,000 miles gas distribution $17 billion of rate base (2) 99+% of earnings from regulated ope
Slide 6: Earnings Growth Drivers
5 Well Positioned for the Future Earnings Growth Drivers Plus Additional Growth Opportunities Outside ATC Traditional Footprint Clean Power Plan investment $2.7 $5.7 Year-end 2015 rate base ($ billions) $12.4 $2.8 $1.8 Utilities PTF Transmission Note: Power the Future value represents investment
Slide 7: Our Portfolio of Regulated Businesses
6 Well Positioned for the Future Our Portfolio of Regulated Businesses Electric Generation and Distribution 65% Gas Distribution 26% Electric Transmission 9% Based on 2015 regulated earnings 71% 13% 12% 4% WI FERC IL MI/MN By Jurisdiction By Business
Slide 8: Balanced Regulatory Environment: Rate-Making Parameters
7 Balanced Regulatory Environment Rate-Making Parameters By Company Utility Equity Layer(1) Allowed ROE Wisconsin Electric 48.5% - 53.5% 10.2% WPS 49.0% - 54.0% 10.0% Wisconsin Gas 47.0% - 52.0% 10.3% Peoples Gas 50.33% 9.05% North Shore Gas 50.48% 9.05% Minnesota Energy Resources 50.31% 9.35% Michi
Slide 9: Balanced Regulatory Environment: Rate Case Update
8 Balanced Regulatory Environment Rate Case Update Wisconsin No 2017 test year base rate cases Filed 2017 fuel cases July 1 Michigan MGU settlement approved by commission on Dec. 11, 2015 for rates effective January 1, 2016 Minnesota Interim rates for Minnesota Energy Resources effecti
Slide 10: Five Year Capital Projection 2016-2020 Line of Business View
9 Line of Business View Five Year Capital Projection 2016-2020 $304 $355 $277 $277 $277 $402 $482 $434 $463 $456 $843 $1,071 $837 $858 $866 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 2016 2017 2018 2019 2020 In millions Total capital spend over the five-year period of $8 - $8
Slide 11: Five Year Capital Projection 2016-2020 State View
10 State View Five Year Capital Projection 2016-2020 $304 $355 $277 $277 $277 $739 $871 $806 $856 $857 $434 $586 $398 $398 $398 $72 $96 $67 $67 $67 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 2016 2017 2018 2019 2020 In millions Depreciation at the utilities expected to averag
Slide 12: Sample Merger Driven Initiatives
11 Well Positioned for the Future Sample Merger Driven Initiatives Category Activity Staffing levels Achieving reductions in staff, vendors and contractors (e.g. functionalization of Wisconsin utilities) Information Technology Consolidating IT infrastructure Implementing enterprise-wide applic
Slide 13: American Transmission Company
12 $565 $612 $402 $339 $367 $241 $0 $100 $200 $300 $400 $500 $600 $700 2016 2017 2018 ATC WEC portion 60% Well Positioned for the Future American Transmission Company Key Assumptions ATC rate base at year end 2015: $3.1 billion Implies average $192 million effective annual (FERC) rate base growt
Slide 14: ATC Outside the Traditional Footprint
13 Well Positioned for the Future American Transmission Company – Outside the Traditional Footprint Joint venture between Duke Energy and ATC (DATC) Ownership split 50/50 between Duke and ATC WEC interest: 30% Investment opportunities: Potential expansion of California’s Path 15 transmissi
Slide 15: Power the Future Investments
14 Well Positioned for the Future Power the Future Investments Natural Gas Coal Capacity 1,090 MW 1,030 MW 1 Investment $664 million $2 billion 1 ROE 12.7% 12.7% Equity 53% 55% In Service Dates Unit 1 – July 2005 Unit 2 – May 2008 Unit 1 – February 2010 Unit 2 – January 2011 Lease Terms 25 years 30
Slide 16: Industry Leading Dividend Growth
15 A Track Record of Performance Industry Leading Dividend Growth Raised the dividend by 17.3% in 2015 and 8.2% in 2016 Continuing to target dividend payout of 65-70% of earnings Dividend expected to grow in line with earnings *Annualized based on 4th quarter 2015 dividend of $0.4575 **Annuali
Slide 17: Industry Leading Total Shareholder Returns
16 A Track Record of Performance Industry Leading Total Shareholder Returns -50% 0% 50% 100% 150% 200% 250% 300% One Year Three Year Five Year Ten Year WEC S&P Utilities Index S&P Electric Index Philadelphia Utility Index Dow Jones Utilities Average Annualized returns for periods ending 12/31/15 Sou
Slide 18: Key Takeaways for WEC Energy Group
17 Poised for Growth Key Takeaways for WEC Energy Group Leading electric and natural gas utility in the Midwest The eighth largest natural gas distribution company in the nation Long-term earnings per share growth of 5-7% projected annually – driven by multi-year infrastructure projects Targ
Slide 19: Appendix
> WEC LSS VA Energy Group — Appendix ee
Slide 20: Electric and Gas Business Overview
19 Electric Distribution Electric Transmission 60% ownership Natural Gas Distribution Electric Generation
Slide 21: Strategic Rationale Transaction Overview
20 Strategic Rationale Transaction Overview WEC Energy Group formed in 2015 when Wisconsin Energy acquired Integrys in a transaction valued at $9 billion Acquisition created the leading electric and natural gas utility in the Midwest Meets or exceeds WEC’s acquisition criteria Accretive to e
Slide 22: An Earn and Return Company with a Low Risk Profile
21 An “Earn and Return” Company with a Low Risk Profile Well Positioned for the Future Diversified across four state jurisdictions and FERC Strong financial condition Top-tier record of producing shareholder value Strong, experienced management Larger transmission and gas business No require
Slide 23: Major Construction Projects: Delivering the Future
22 Major Construction Projects Delivering the Future Committed to infrastructure investment that will: Renew and modernize our delivery networks Meet new environmental standards Reduce operating costs for customers
Slide 24: Wisconsin Public Service System Modernization and Reliability Project
23 Major Construction Projects - Wisconsin Public Service System Modernization and Reliability Project $220 million of projected investment from 2014-2018 Converting more than 1,000 miles of overhead distribution power lines to underground in northern Wisconsin Adding distribution automation e
Slide 25: Peoples Gas Natural Gas System Modernization Program
24 Major Construction Projects – Peoples Gas Natural Gas System Modernization Program Extensive effort to modernize natural gas infrastructure in City of Chicago Ultimately replace 2,000 miles Plan to replace 250 miles over next three years Investment recovery under a monthly bill rider Pr
Slide 26: We Energies Twin Falls
25 Major Construction Projects – We Energies Twin Falls: Building a modern powerhouse 50% increase in capacity $60-$65 million expected investment In-service: July 2016
Slide 27: We Power Fuel Flexibility Initiative
26 Major Construction Projects – We Power Fuel flexibility initiative at our Oak Creek units $21 million projected investment for plant modifications $58 million projected investment for storage, fuel handling Significant reduction in fuel costs for our customers
Slide 28: State-of-the-Art Generation Fleet
27 Well Positioned for the Future State-of-the-Art Generation Fleet Natural gas – 3,753 megawatts Port Washington Generating Station among the lowest cost combined-cycle plants in country Coal – 5,044 megawatts Oak Creek heat rate is top 5% in country Renewables – 483 megawatts Wisconsin’s two
Slide 29: Supporting a Clean Energy Future
28 Well Positioned for the Future Supporting a Clean Energy Future Over the past decade, WEC Energy Group has implemented a multi-emission strategy to achieve greater environmental benefit for lower cost Retired older, less-efficient coal-fired generation Added two combined cycle natural gas uni
Slide 30: Reducing Emissions: Environmental Performance
29 Reducing Emissions Environmental Performance 0% 20% 40% 60% 80% 100% 120% 140% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 SO2 (88% reduction) NOx (81% reduction) Mercury (84% reduction) P e rce n ta g e o f Re m a ini n g E m iss io n s P e rce n ta g e o f Re
Slide 31: Planning for Carbon Regulations
30 Planning for Carbon Regulations 0% 20% 40% 60% 80% 100% 120% 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 P erce n ta g e C omp a red t o 2 0 0 0 L e v el s CO2 rate - lbs/mwh 23% Reduction in Carbon Intensity 0% 1
Slide 32: EPA's Clean Power Plan
31 EPA’s Clean Power Plan Plan calls for Wisconsin to reduce CO2 emissions by 41% Approximately two-thirds of the reductions must be achieved by 2022 Stay by U.S. Supreme Court introduces delay and additional uncertainty
Slide 33: Ten Year Capital Projection 2016-2025
32 Line of Business View Ten Year Capital Projection 2016-2025 $304 $355 $277 $277 $277 $277 $277 $277 $277 $277 $402 $482 $434 $463 $456 $456 $456 $396 $396 $396 $843 $1,071 $837 $858 $866 $861 $861 $839 $839 $839 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 2016 2017 2018 2019
Slide 34: Strong Financial Condition: Utility Credit Ratings
33 0 20 40 60 80 100 120 AA - A A- BBB+ BBB BBB- Below Investment Grade A Track Record of Performance Strong Financial Condition Number of Issuers *Source: Standard & Poor’s Financial Services LLC (April 2016) Utilities Electric and Gas Utilities Credit Ratings Distribution* Utility Rating Wisconsin
Slide 35: Balanced Sales Mix
34 Paper 21% Mining/Minerals 13% Foundry (SIC 33) 11% Other Manufacturing 9% Food/Agriculture 8% Metal (SIC 34,35,37) 7% Medical 5% Office 5% Education 4% Chemical 4% Printing 3% Other 10% 37% Large C&I by Segment Wisconsin Retail Deliveries Balanced Sales Mix Large C&I 37% Residential and Farm 28%
Slide 36: Composition of Rate Base
35 35.5% 16.5% 16.2% 10.6% 6.6% 1.4% 1.2% 1.2% 10.8% Wisconsin Electric Power the Future Wisconsin Public Service Corporation Peoples Gas Wisconsin Gas Minnesota Energy Resources North Shore Gas Michigan Gas Utilities ATC Composition of Rate Base Total 2015 Rate Base of $17.0 billion
Slide 37: Key Rate Making Components
36 Key Rate Making Components Area PGL NSG MERC MGU Wisconsin – Electric Wisconsin – Gas Michigan Gas Pipeline Replacement Rider X Bad Debt Rider X X Bad Debt Escrow Accounting WE WG Decoupling X X X Fuel Cost Recovery 1 for 1 recovery of prudent fuel costs +/- 2% band 1 for 1 recovery of prudent fu
Slide 38: Regulatory Environment: Wisconsin and Michigan
37 Regulatory Environment Wisconsin Governor Scott Walker (R) Commission Gubernatorial appointment, Senate confirmation Chairman: Gubernatorial appointment 6-year staggered terms Michigan Governor Rick Snyder (R) Commission Gubernatorial appointment, Senate confirmation Chairman: G
Slide 39: Regulatory Environment: Illinois and Minnesota
38 Regulatory Environment Illinois Governor Bruce Rauner (R) Commission Gubernatorial appointment, Senate confirmation Chairman: Gubernatorial appointment 5-year staggered terms Minnesota Governor Mark Dayton (D) Commission Gubernatorial appointment, Senate confirmation Chairman: G
Slide 40: Regulatory Environment: FERC
39 Regulatory Environment FERC Presidential appointment, Senate confirmation 5-year term FERC Commissioners Name Party Began Serving Term Ends Norman Bay Chair D 08/2014 06/2018 Cheryl LaFleur D 07/2014 06/2019 Tony Clark R 06/2012 06/2016 Colette Honorable D 01/2015 06/2017 Open
Slide 41: Key Provisions in Merger Approval
40 Key Provisions in Merger Approval • Earnings cap at Wisconsin Electric and Wisconsin Gas • Joint Resource Plan for capacity needs of Wisconsin Electric and Wisconsin Public Service Wisconsin • 2-year requirement for minimum level of jobs • 2-year base rate freeze • 3-year capital commitment • Fol
Slide 42: Precedent Transactions
41 Precedent Transactions Announce Date Closing Date Target Acquiror 1-Day Premium FY1 P/E FY2 P/E Transaction Value ($mm) Equity Value ($mm) Price/Book Enterprise Value/ Rate Base 2/9/16 Pending EDE AQN.CN 50%(1) 22.4x 21.1x $2,366 $1,489 1.9x 1.49x 2/9/16 Pending ITC FTS.CN 33%(1) 21.6x 20.0x $11,
Slide 43: Contact Information
42 Contact Information M. Beth Straka Senior Vice President – Investor Relations and Corporate Communications Beth.Straka@wecenergygroup.com 414-221-4639 Colleen Henderson Manager – Investor Relations Colleen.Henderson@wecenergygroup.com 414-221-2592