Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Q1 2024 Earnings Presentation
47 slides from Wec Energy's earnings presentation, May 1, 2024
Slide 1: Investing in Efficiency, Sustainability and Growth
Investing in Efficiency, Sustainability and Growth Investor Update: May 2024 1
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: The Premier Energy Company in America's Heartland
$26.1 billion market cap* 4.7 million retail customers 60% ownership of American Transmission Company $43.9 billion of assets The Premier Energy Company in America’s Heartland * As of April 30, 2024 3
Slide 4: A History of Quality Earnings Growth
A History of Quality Earnings Growth $6.00 $4.80-$4.90 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 GAAP Adjusted** 2024 Guidance * Estimated based on 2024 guidance midpoint of $4.85 per share. ** See Appendix for reconciliat
Slide 5: Consistent Performance Over Time
EPS Guidance Consistent Performance 2023 Exceeded* Over Time 2022 Exceeded 2021 Exceeded 2020 Exceeded 2019 Exceeded 2018 Exceeded 2017 Exceeded 2016 Exceeded 2015 Exceeded The only utility to beat guidance 2014 Exceeded every year for 20 years running. 2013 Exceeded 2012 Excee
Slide 6: Strong Dividend Growth Continues
Strong Dividend Growth Continues In January, raised the dividend by 7.0% to a new annual rate of $3.34 per share* Marks the 21st consecutive year of rewarding shareholders with higher dividends Top decile dividend growth in industry** Added to S&P's High Yield Dividend Aristocrats Index * An
Slide 7: What's New?
What’s New? 7
Slide 8: Wisconsin Rate Reviews
Wisconsin Rate Reviews Proposed Revenue Increases In April, Wisconsin Electric, Wisconsin Gas and Wisconsin Public Service filed applications with the state Public Service Commission Wisconsin 2025 2026 Electric Electric 6.9%* 4.6% In 2025, we’ll focus our spending and investment on 3 key priorities
Slide 9: Rate Review Summary
Rate Review Summary Wisconsin Wisconsin Public Wisconsin Electric Gas Service Electric Natural Gas Natural Gas Electric Natural Gas Current ROE 9.8% 9.8% 9.8% 9.8% 9.8% Current Equity Ratio 53.0% 53.0% 53.0% 53.0% 53.0% Proposed ROE 10.0% 10.0% 10.0% 10.0% 10.0% Proposed Equity Ratio 53.5% 53.5% 53.
Slide 10: Illinois Proceedings
Illinois Proceedings The Illinois Commerce Commission (ICC) ordered Peoples Gas to pause all spending on the Safety Modernization Program until it determines ‘the optimal method’ of pipe replacement and investment level. ICC granted the company’s request for a limited rehearing seeking to restor
Slide 11: Largest Five-Year Plan in Company History
2024-2028 Capital Plan Largest Five-Year Plan in Company History $23.7 $1.2 $3.0 $5.2 WEC Infrastructure (WECI) Electric Transmission (ATC)* $3.8 Gas Distribution** $1.0 Electric Distribution WI LNG Capacity Electric Generation $9.5 $ In billions 2024-2028 *ATC is accounted for using the equity meth
Slide 12: Robust Growth in Asset Base
Robust Growth in Expect compound Asset Base annual EPS growth of 6.5% to 7.0% 8.1% Growth $43.4 billion $29.4 billion 2023A 2028E* *Estimated year-end average asset base. 12
Slide 13: Diverse Portfolio of Businesses
Diverse Portfolio of Businesses By Business By Jurisdiction 10% 10% 7% 2% 7% 5% 2023A 48% 62% 16% 33% Electric generation and distribution WI IL MI/MN WECI ATC* Natural gas distribution LNG (distribution and generation) WECI Electric transmission* 12% 12% 6% 6% 4% 3% 2028E 52% 12% 67% 26% Based on a
Slide 14: Exiting Coal
Exiting Coal We plan to eliminate coal as an energy source by end of 2032. 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) Weston Unit 3: 328 MW (end of 2031) Enhancing fuel flexibility (g
Slide 15: Investing $7.0 Billion in Regulated Renewables
Investing $7.0 Billion in Regulated Renewables Plan to build and own 3,800 MW – more than quadrupling our carbon-free generation. 2024-2028 Plan includes: Solar Total Battery Storage Total Wind Total Grand Total 2,700 MW 250 MW 880 MW 3,830 MW $4.7 billion $0.4 billion $1.9 billion $7.0 billion Anno
Slide 16: Modernizing Our Gas-Fueled Generation Fleet
2024-2028 Capital Plan Modernizing Our Gas-Fueled Generation Fleet Oak Creek Combustion Turbines* 1,100 MW planned Expected investment: $1.2 billion New gas lateral* To support generation at the Oak Creek campus Expected investment: $180 million Paris RICE generation* 128 MW planned Expe
Slide 17: Investing in Reliability for Our Natural Gas Network
Investing in Reliability for Our Natural Gas Network New proposed LNG storage facilities are needed to ensure gas supply for winter reliability. Oak Creek LNG facility* 2 Bcf Expected investment: $456 million Plans being developed for an additional 2 Bcf Bluff Creek LNG LNG provides a soluti
Slide 18: Future Transmission Investment
Future Transmission Investment WEC portion of ATC investment expected from 2024-2028: $3.0 billion Projected Capital Expenditures (millions) Includes $330 million $1,187 $1,148 $1,152 for MISO Tranche 1 (in 2022 dollars) $867 MISO Tranche 2 $712 $689 $691 planning underway $636 $520 $382 2024 20
Slide 19: Projected Cash Flows and Financing Plan
Projected Cash Flows and Financing Plan ($ in billions) 2024 - 2028 Common Equity $1.95 - $2.35 Incremental Debt $7.15 - $8.15 Capital Plan* $20.7 Cash from Operations $16.5 - $17.5 Dividends $6.0 - $6.2 Cash Uses Cash Sources * Excludes ATC’s capital. ATC is accounted for using the equity method. 1
Slide 20: Credit Quality – Maintaining a Healthy Balance Sheet
Credit Quality – Maintaining a Healthy Balance Sheet FFO/Debt Metrics 2024-2028 WEC Energy Group Target GAAP 15-16% FFO to Debt S&P >15% FFO to Debt Moody’s >16% CFO Pre-WC/Debt Current Issuer Credit Ratings Entity S&P Rating Moody’s Rating WEC Energy Group A- Baa1 Wisconsin Electric A- A2 Wisconsin
Slide 21: Carbon Reduction Goals – Electric Generation
Carbon Reduction Goals – Electric Generation Achieved and anticipated CO2 reductions (net mass)* Reduction goals: 0 60% below 2005 -20 levels by end of 2025 80% -40 -60 below 2005 -54% levels by end of 2030 -80 Net carbon -100 neutral 2005 2023 2025 2030 2050 by 2050 We have established aggressive c
Slide 22: Methane Reduction
Methane Reduction Achieved1 and anticipated methane emission reduction from natural gas distribution. Aligns with effort to limit warming to 1.5°C. 0% Goal: -20% -23% Net zero by end of 20302 -40% -60% Use of renewable natural gas (RNG) is expected to -80% contribute significantly to our goal. -100%
Slide 23: Regional Economy
Regional Economy 23
Slide 24: Powering Industry Leaders in Our Region
Powering Industry Leaders in Our Region 24
Slide 25: Longer-Term Sales Forecast
Wisconsin Segment Longer-Term Sales Forecast Sales Growth Forecast (weather-normalized) Year-Over-Year 2026-2028 Electric 4.5%-5.0% Gas 0.7%-1.0% 25
Slide 26: Key Takeaways for WEC Energy Group
Key Takeaways for WEC Energy Group Industry leading earnings quality. Top decile dividend growth. Capital plan drives premium long-term EPS growth of 6.5% to 7.0%. 95%+ of capital allocated to regulated businesses. Aggressive environmental goals in place. By end of 2030, we expect to use
Slide 27: Appendix
Appendix WA wecC Vz Energy Group
Slide 28: Electric Generation, Distribution and Energy Infrastructure
Electric Generation Electric Distribution Natural Gas Distribution Energy Infrastructure Electric Transmission 60% ownership 28
Slide 29: Commitment to ESG
Commitment to ESG Reduce carbon dioxide emissions from electric generation 60% by end of 2025 and 80% by end of 2030 – both from a 2005 baseline. Long- Carbon Goals term goal of net-zero carbon emissions from our generating fleet by 2050 Exit from Coal Planned exit from coal by end of 2032 Methane T
Slide 30: Exiting Coal
Exiting Coal Electricity Supply by Fuel Type (megawatt-hours delivered to regulated utility customers) 73% 43% 32% 37% 34% Planned exit Net carbon 22% from coal neutral goal 21% 17% 7% 9% 3% <2% 2005 2023 2030E 2032 2050 Coal Natural Gas Nuclear Renewables 30
Slide 31: Organic Flow Battery Storage
New Clean Energy Pilot Project Organic Flow Battery Storage Leading a pilot project to test a new form of long-duration energy storage. Partnering with EPRI and CMBlu Energy This system uses a proprietary technology that incorporates environmentally friendly materials - ‘a green battery.’ Th
Slide 32: WEC Infrastructure Portfolio
WEC Infrastructure Portfolio Total Project Investment Capacity (MW) (in millions) Wind ● Upstream 200 $307 ● Bishop Hill III 132 166 SD ● Coyote Ridge 97 145 ● Blooming Grove 250 389 ● Tatanka Ridge 155 240 NE ● Jayhawk 190 282 IL ● Thunderhead 300 381 KS ● Sapphire Sky 250 442 Solar ● Samson I 250
Slide 33: PGL Safety Modernization Program (SMP)
PGL Safety Modernization Program (SMP) Historical Annual Average Spend ($ in millions) Public Improvement (Third Party Driven), Emergency Increasing capacity and $30 Work $30 reliability of natural gas service in PGL’s territory Systematic 38% complete* Neighborhood System Upgrades $160 Progra
Slide 34: Utility Capital Plan Drives EPS Growth
$22.5 Billion Projected Capital Spend From 2024-2028 Utility Capital Plan Drives EPS Growth $4,915 $5,055 5,000 $4,729 712 689 $4,216 691 4,000 520 $3,623 1,088 1,113 962 382 ATC* 1,005 3,000 681 Gas Delivery** 1,058 824 699 WI/MI Electric Delivery 344 100 WI LNG Capacity 870 2,000 384 WI/MI Generat
Slide 35: Capital Plan Projections
Capital Plan Projections ($ in millions) Company 2024 2025 2026 Wisconsin Electric $1,740.0 $2,035.7 $2,235.5 Wisconsin Gas 228.1 227.7 274.5 Wisconsin Public Service 636.4 799.5 933.4 Upper Michigan Energy 32.1 90.6 140.4 Wisconsin Segment $2,636.6 $3,153.5 $3,583.8 Peoples Gas 379.7 330.8 457.6 No
Slide 36: Composition of Asset Base
Composition of Asset Base Total 2023 Average Asset Base of $29.4 Billion Company Asset Base - $B % of Total Wisconsin Electric $8.2 27.9% Wisconsin Gas 2.1 7.1 Wisconsin Public Service 4.6 15.6 Upper Michigan Energy Resources 0.4 1.4 Peoples Gas 4.4 15.0 North Shore Gas 0.4 1.4 Minnesota Energy Reso
Slide 37: Power the Future Investments
Power the Future Investments 1 Port Washington Oak Creek Expansion (Natural Gas) (Coal/Co-Fire Gas3) 1,090 MW 1,030 MW 2 Capacity $664 million $2 billion 2 Investment ROE 12.7% 12.7% Equity 53% 55% Unit 1 – July 2005 Unit 1 – February 2010 In Service Dates Unit 2 – May 2008 Unit 2 – January 2011 Lea
Slide 38: National Leader in Operating Efficiency and Financial Discipline
National Leader in Operating Efficiency and Financial Discipline $80 2022 Non-Fuel O&M per MWh* $77.20 $70 $60 $50 $39.20 $40 $30 $28.10 $26.80 $24.30 $24.90 $20.40 $22.20 AVERAGE $17.90 $20 $15.40 $12.30 WEC $10 $0 The top 10 vertically integrated electric utilities by 12/31/2022 market cap Source:
Slide 39: Focused on Efficiency
Focused on Efficiency Day-to-Day O&M Expense* $1,342 $1,281 $1,234 $ In millions $1,143 $1,107 $1,088 $1,082 $1,088 3-5% 2016 2017 2018 2019 2020 2021 2022 2023 2024E *Excludes costs that have a revenue offset such as operation and maintenance costs associated with the We Power generation units, tra
Slide 40: Projected Financing Plans for 2024
Projected Financing Plans for 2024 1 4 $2,500 Existing Facilities $1.0B net liquidity $2,000 (as of April 30, 2024) $1,500 $2,100- (in millions) $2,500 $3.1B $1,000 $1,500- $1,800 $500 $100-$200 $0 2 $0.2B Holding Company Utilities & Energy Equity Issuance Infrastructure 3 $3.3B total 1. Amounts and
Slide 41: Balanced and Diverse Sales Mix
Balanced and Diverse Sales Mix 2023 Retail MWh Deliveries Mix* 33% Large C&I by Segment Paper/Packaging 24% Mining/Minerals 11% Foundry (SIC 33) 10% Small C&I Large C&I Other Manufacturing 8% 36% 33% Metal (SIC 34,35,37) 7% Food/Agriculture 6% Medical 6% Residential Education 4% and Farm Printing 2%
Slide 42: Regulatory Matters
Regulatory Matters Estimated Decision Date Wisconsin (apps.psc.wi.gov) Commission decision on general rate review for new base rates effective Q4 2024 Jan. 1, 2025 (Dockets: WE and WG: 5-UR-111 and WPS: 6690-UR-128) Decision on High Noon Solar and Battery Storage (Docket: 5-BS-276 filed 2/1/24)
Slide 43: Regulatory Environment
Regulatory Environment Wisconsin Illinois Governor Tony Evers (D) Governor J.B. Pritzker (D) Term ends January 2027 Term ends January 2027 Commission Commission Gubernatorial appointment, Gubernatorial appointment, Senate confirmation Senate confirmation Chairman: Gubernatorial app
Slide 44: Rate-Making Parameters by Company
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 50.79% 9.38% North Shore Gas 52.58% 9.38% Minnesota Energy Resources 53.00% 9.65% Michigan Gas Util
Slide 45: Key Rate-Making Components
Key Rate-Making Components Illinois– Minnesota– Michigan– Wisconsin– Wisconsin– Area Gas Gas Electric and Gas Gas Electric Gas Pipeline Replacement Rider MGU Bad Debt Rider ✓ Bad Debt Escrow Accounting Residential Residential Decoupling ✓ ✓ Fuel Cost Recovery 1 for 1 recovery of prudent fuel costs +
Slide 46: Reconciliation of EPS (GAAP) to Adjusted EPS (Non-GAAP)
Reconciliation of EPS (GAAP) to Adjusted EPS (Non-GAAP) 2014 2015 2016 2017 2023 EPS – GAAP basis $2.59 $2.34 $ 2.96 $ 3.79 $4.22 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 (0.65) 2017 Illinois Disallow
Slide 47: Contact Information
Contact Information M. Beth Straka Senior Vice President – Investor Relations and Corporate Communications Beth.Straka@wecenergygroup.com 414-221-4639 Ashley Pless Investor Relations Analyst Ashley.Pless@wecenergygroup.com 414-221-4088 47