Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Investor Presentation (January 2023)
50 slides from Wec Energy's investor presentation, Jan 11, 2023
Slide 1: Investor Update: January 2023
Investor Update: January 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
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
Slide 3: The Premier Energy Company in America's Heartland
3 The Premier Energy Company in America’s Heartland $29.6 billion market cap* 4.6 million retail customers 60% ownership of American Transmission Company $40.8 billion of assets * As of Dec. 31, 2022
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** 2022 Guidance 2023 Guidance * Estimated based on 2023 guidance midpoint of $4.60 per share. ** See
Slide 5: Consistent Performance Over Time
5 Consistent Performance Over Time EPS Guidance 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 Exceeded 2006 Exceede
Slide 6: Strong Dividend Growth Continues
6 The board of directors announced its plan to raise 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 dividends declared in 2022 *The board of directors announced Dec. 13, 2022 that it is planning to r
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
Slide 8: What's New?
8 What’s New?
Slide 9: Wisconsin Utilities - Rate Review Treatment
9 Authorized Return on Equity to 9.80 percent Equity component of capital structure rises to 53 percent Earnings sharing mechanism: December Final Order Wisconsin Utilities - Rate Review Treatment 9.80% – 9.95% No sharing >9.95% – 10.55% 50/50 sharing >10.55% 100% customer
Slide 10: Illinois Rate Reviews
10 In January, Peoples Gas and North Shore Gas filed applications with the Illinois Commerce Commission: • Peoples Gas will not seek an extension of the automatic bill adjustment rider – known as QIP. • With natural gas prices expected to decline this year and next year, we project customer bills to
Slide 11: Increasing Five-Year Capital Plan by $2.4 Billion
11 $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
Slide 12: Robust Growth in Asset Base
12 $25.0 billion $38.4 billion 2021A 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. 7.4% Growth
Slide 13: Investing $5.4 Billion in Regulated Renewables
13 Solar 505 MW under construction 270 MW filed for approval Planning for additional 1,135 MW Qualifies for Production Tax Credits Battery 167 MW received regulatory approval 149 MW filed for approval Planning for additional 400 MW Qualifies for Investment Tax Credits Wind 82 MW re
Slide 14: WEC Infrastructure Portfolio – Green and Growing
14 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 155 240 Jayha
Slide 15: Modernizing Our Gas-Fueled Generation Fleet
15 Modernizing Our Gas-Fueled Generation Fleet Retiring 200 MW of older, less-efficient gas generation expected Target: 2024 Building Weston RICE units Received regulatory approval on March 31 128 MW Expected investment: $170 million Target in-service: 2023 * Filed and pending regulatory
Slide 16: Exiting Coal
16 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
Slide 17: American Transmission Company
17 $552 $532 $707 $712 $661 $643 $331 $319 $424 $427 $397 $386 2022 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 estimat
Slide 18: Hydrogen Pilot Program
18 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
Slide 19: Carbon Reduction Goals – Electric Generation
19 *Includes projection of potential carbon offsets by 2050 Carbon Reduction Goals – Electric Generation We have established ambitious greenhouse gas reduction goals for our electric generating fleet, aligned with or surpassing global emissions pathways aimed at limiting warming to 1.5°C. Reduction
Slide 20: Methane Reduction
20 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
Slide 21: Regional Economy
21 Regional Economy
Slide 22: Powering Industry Leaders in our Region
22 Powering Industry Leaders in our Region
Slide 23: Wisconsin Segment Longer-Term Sales Forecast
23 Wisconsin Segment Economic Growth Driving Longer-Term Sales Forecast 2025-2027 Electric 0.7%-1.0% Gas 0.7%-1.0% Sales Growth Forecast (weather-normalized) Year-Over-Year
Slide 24: Key Takeaways for WEC Energy Group
24 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
Slide 25: Appendix
Appendix | VAie VA Energy Group
Slide 26: Business Overview
26 Electric Distribution Electric Transmission 60% ownership Electric Generation Energy Infrastructure Natural Gas Distribution
Slide 27: Inflation Reduction Act Customer Benefit and Investment Opportunity
27 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
Slide 28: Commitment to ESG
28 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
Slide 29: Electricity Supply by Fuel Type
29 Electricity Supply by Fuel Type (megawatt-hours delivered to regulated utility customers) 73% 39% 7% 33% 32% 17% 21% 24% 3% 7% 39% 2005 2021 2030E 2035 2050 Coal Natural Gas Nuclear Renewables Exiting Coal <5% Net carbon neutral goal Planned exit from coal
Slide 30: Reducing Greenhouse Gas Emissions
30 Reducing Greenhouse Gas Emissions 0.78 0.48 0.33 0.16 0** 2005 2021 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
Slide 31: Investment in Regulated Renewables
31 Plan to invest $5.4 Billion (2023-2027) Investment in Regulated Renewables Target Project Utility WEC Ownership1 Expected WEC Investment ($M) WEC Capacity (MWs) In-Service Two Creeks Solar Project WPS 66.7% $130 100 Badger Hollow I Solar Park 130 100 1st Half 2023 Badger Hollow II Solar Park WEPC
Slide 32: WEC Infrastructure projects and offtake agreements
32 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
Slide 33: Why Our Natural Gas Distribution Networks Matter
33 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
Slide 34: New Liquefied Natural Gas Storage Facilities
34 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
Slide 35: Electric Delivery Redesign/Resilience
35 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
Slide 36: Natural Gas Safety Modernization
36 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
Slide 37: Utility Capital Plan Drives EPS Growth
37 907 1,340 1,207 1,236 1,418 1,239 545 655 716 727 727 731 573 605 563 506 525 474 518 563 663 614 590 591 102 113 116 105 101 94 331 319 424 427 397 386 $2,976 $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 2022 2023 2024 2025 2026 2027 ATC Investment MER
Slide 38: Capital Plan Projections By Company
38 2022 2023 2024 Wisconsin Electric $1,108.5 $1,504.1 $1,478.2 Wisconsin Gas $262.2 $251.4 $246.0 Wisconsin Public Service $517.3 $754.8 $679.9 Upper Michigan Energy $22.3 $20.4 $28.7 Wisconsin Segment $1,910.3 $2,530.7 $2,432.8 Peoples Gas $474.0 $506.3 $599.0 North Shore Gas $38.7 $50.8 $60.5 Ill
Slide 39: Composition of Asset Base
39 Composition of Asset Base Total 2021 Average Asset Base of $25.0 Billion Note: We Power value represents investment book value. Company Asset Base - $B % of Total Wisconsin Electric $6.8 27.2% Wisconsin Gas 1.7 6.8 Wisconsin Public Service 4.0 16.0 Upper Michigan Energy Resources 0.4 1.6 Peoples
Slide 40: National Leader in Operating Efficiency and Financial Discipline
40 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
Slide 41: Focused on Efficiency
41 Focused on Efficiency $1,342 $1,281 $1,234 $1,143 $1,107 $1,088 2016 2017 2018 2019 2020 2021 2022E 4.5% $ 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 collected in
Slide 42: Balance Sheet Remains Strong
42 Balance Sheet Remains Strong 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 WEC Energy Group Target S&P FFO to Debt >15% Moody’s CFO Pre-WC/Debt >16% Holding Company Debt
Slide 43: Balanced Sales Mix
43 34% Large C&I by Segment Paper/Packaging 26% Mining/Minerals 11% Foundry (SIC 33) 9% Metal (SIC 34,35,37) 8% Other Manufacturing 8% Food/Agriculture 7% Medical 7% 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% 2021
Slide 44: Diverse Portfolio of Businesses
44 Diverse Portfolio of Businesses Based on 2021 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
Slide 45: Estimated Decision Dates
45 Estimated Decision Date Wisconsin (apps.psc.wi.gov) Commission decision on general rate review for new base rates effective 1/1/2023 (Dockets: WE and WG: 5-UR-110 and WPS 6690-UR-127) Decision on Whitewater Acquisition (Docket: 5-BS-264 filed 12/21/2021) Decision on Darien Solar and Bat
Slide 46: Regulatory Environment
46 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
Slide 47: Rate-Making Parameters by Company
47 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
Slide 48: Key Rate Making Components
48 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
Slide 49: Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP)
49 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 – – – $
Slide 50: 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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