Wec Energy Group, Inc. · NYSE:WEC

Wec Energy — Q4 2023 Earnings Presentation

52 slides from Wec Energy's earnings presentation, Feb 1, 2024

  1. Slide 1: Investing in Efficiency, Sustainability and Growth

    Investing in Efficiency, Sustainability and Growth Investor Update: February 2024 1

  2. 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

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

    $25.5 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 January 31, 2024 3

  4. 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

  5. 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

  6. 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

  7. Slide 7: What's New?

    What’s New? 7

  8. Slide 8: 2024-2028 Capital Plan

    2024-2028 Capital Plan Increasing Five-Year Capital Plan by $300 Million $23.7 $23.4 $0.4 $1.2 $3.0 $3.0 November 2023 plan $6.0 Updated plan $5.2 Energy Infrastructure ATC* $3.7 $3.8 Gas Delivery** WI/MI Electric Delivery $1.0 $1.0 WI LNG Capacity WI/MI Generation $9.3 $9.5 $ In billions 2024-2028

  9. Slide 9: Capital Plan – Key Drivers

    2024-2028 Capital Plan Capital Plan – Key Drivers  Illinois gas delivery: - $800 million  Energy infrastructure: + $800 million  Regulated renewables: + $200 million  Electric delivery: + $100 million 9

  10. Slide 10: Illinois Proceedings

    Illinois Proceedings  The Illinois Commerce Commission ordered Peoples Gas (PGL) to pause all spending on the Safety Modernization Program until it determines ‘the optimal method’ of pipe replacement and investment level.  ICC granted PGL’s request for a limited rehearing seeking to restore $145 m

  11. Slide 11: 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. 11

  12. Slide 12: Business Portfolio Growing in Electric Transmission and Generation

    Business Portfolio Growing in Electric Transmission and Generation 2023A 2028E* Electric Electric transmission** transmission** 10% 12% WECI 7% WECI 6% Electric Electric generation generation and and distribution distribution 48% Natural gas Natural gas distribution 52% distribution 30% 35% * Based

  13. Slide 13: Exiting Coal

    Exiting Coal We now plan to eliminate coal as an energy source three years earlier - 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)  Enh

  14. Slide 14: 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

  15. Slide 15: Modernizing Our Gas-Fueled Generation Fleet

    2024-2028 Capital Plan Modernizing Our Gas-Fueled Generation Fleet West Riverside Energy Center Combined-Cycle  Additional 100 MW option*  Expected investment: $100 million  Target: 2024 Oak Creek Combustion Turbines  1,125 MW planned  Expected investment: $1.2 billion Paris RICE generation Wes

  16. Slide 16: 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.  Expected investment: $860 million  4 Bcf planned  LNG storage facilities address the need to support our natural gas distribution networks.  Expecte

  17. Slide 17: 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 Plan (in 2022 dollars) $867  MISO Tranche 2 $712 $689 $691 planning underway $636 $520 $382 20

  18. Slide 18: 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

  19. Slide 19: 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

  20. Slide 20: 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

  21. Slide 21: 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: -23% Net zero 3 -20% by end of 20302 -40% -60% Use of renewable natural gas (RNG) is expected to -80% contribute significantly to our goal. -10

  22. Slide 22: 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

  23. Slide 23: Regional Economy

    Regional Economy 23

  24. Slide 24: Powering Industry Leaders in Our Region

    Powering Industry Leaders in Our Region 24

  25. 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

  26. 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

  27. Slide 27: Appendix

    Appendix WA wecC Vz Energy Group

  28. Slide 28: Electric Generation, Distribution and Energy Infrastructure

    Electric Generation Electric Distribution Natural Gas Distribution Energy Infrastructure Electric Transmission 60% ownership 28

  29. Slide 29: Inflation Reduction Act

    Inflation Reduction Act Customer Benefit and Investment Opportunity  Extension of production tax credits (PTC) and investment tax credits (ITC).  PTC option for solar projects.  ITC for stand-alone electric storage projects.  Tax credit “transferability” to provide additional options for monetiz

  30. Slide 30: 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

  31. Slide 31: 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 31

  32. Slide 32: Reducing Greenhouse Gas Emissions

    Reducing Greenhouse Gas Emissions Greenhouse gas intensity* (metric tons CO2/MWh) 0.78 0.41 0.33 0.16 0** 2005 2023 2025E 2030E 2050E *Includes owned electric generation, purchased power and WEC Infrastructure (WECI). The environmental attributes of the WECI renewable facilities are or may be the pr

  33. Slide 33: 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

  34. Slide 34: Infrastructure Investment Summary

    Infrastructure Investment Summary WEC Total Commercial Project Project Developer Investment Offtake Agreement Operations Capacity Bishop Hill III Wind $166M for WPPI Energy Invenergy 8/31/18 132 MW Energy Center 90% ownership 22 years Upstream Wind $307M for Affiliate of Allianz Invenergy 1/10/19 20

  35. Slide 35: Why Our Natural Gas Distribution Networks Matter

    Today and Tomorrow Why Our Natural Gas Distribution Networks Matter -46° Our Service Area -26°  65%-78% of homes use natural gas for heating -26°  Growth continues as customers convert to natural gas Hydrogen and RNG Opportunities -23°  Potential to blend  Investment potential to convert existin

  36. Slide 36: 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

  37. Slide 37: Progress on Efficiency, Sustainability and Growth

    Taking Steps to Maintain Reliable and Affordable Service for Our Customers Progress on Efficiency, Sustainability and Growth Electric delivery redesign/resilience  Addressing aging infrastructure and system hardening  Enhancing efficiencies and reducing operating costs  Expect to spend $3.8 billi

  38. Slide 38: 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

  39. Slide 39: 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

  40. Slide 40: 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

  41. Slide 41: Diverse Portfolio of Businesses

    Diverse Portfolio of Businesses By Business By Jurisdiction Electric transmission* 10% WECI WECI 7% 7% ATC* 10% MI/MN 5% Electric generation and distribution WI IL 48% 62% 16% Natural gas distribution 35% Based on 2023 average asset base. *ATC is accounted for using the equity method; this represent

  42. Slide 42: 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

  43. Slide 43: 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:

  44. Slide 44: Focused on Efficiency

    Focused on Efficiency Day-to-Day O&M Expense* $1,342 $1,281 $1,234 $1,159 $ In millions $1,143 $1,107 $1,088 $1,082 $1,088 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, t

  45. Slide 45: Projected Financing Plans for 2024

    Projected Financing Plans for 2024 1 4 $2,500 Existing Facilities $1.4B net liquidity $2,000 (as of January 31, 2024) $1,500 $2,100- (in millions) $2,500 $3.1B $1,000 $1,200- $1,500 $500 $100-$200 $0 2 $0.2B Holding Company Utilities & Energy Equity Issuance Infrastructure 3 $3.3B total 1. Amounts a

  46. Slide 46: 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%

  47. Slide 47: Regulatory Matters

    Regulatory Matters Estimated Decision Date Wisconsin (apps.psc.wi.gov)  Decision on High Noon Solar and Battery Storage (Docket: 5-BS-276 Filed 2/1/24) 2024 Illinois (icc.illinois.gov)  Decision on limited rate review rehearing (Docket: PGL: 23-0069 Granted 1/4/24) 6/2024  Decision on 2016 Rider

  48. Slide 48: Regulatory Environment

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

  49. Slide 49: 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

  50. Slide 50: 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 +

  51. Slide 51: 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

  52. Slide 52: Contact Information

    Contact Information M. Beth Straka Senior Vice President – Investor Relations and Corporate Communications Beth.Straka@wecenergygroup.com 414-221-4639 52

WEC Energy Group — Q4 2023 Earnings Presentation on 6ix