Wec Energy Group, Inc. · NYSE:WEC

Wec Energy — Investor Presentation (January 2022)

54 slides from Wec Energy's investor presentation, Jan 7, 2022

1. Slide 1: Investor Update: January 2022

   Investor Update: January 2022 Our “ESG” Progress Plan 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 Best ESG Growth Strategy in the U.S. Capital Finance Internat

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: Company Profile

   3 Company Profile  $30.6 billion market cap*  4.6 million retail customers  60% ownership of American Transmission Company  $37.8 billion of assets * As of Dec. 31, 2021

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 GAAP Adjusted** 2021 Guidance 2022 Guidance * Estimated based on 2022 guidance midpoint of $4.31 per share. ** See Appe

5. Slide 5: Consistent Performance Over Time

   5 Consistent Performance Over Time EPS Guidance 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 Exceeded  2005 Exceede

6. Slide 6: What's New?

   6 What’s New?

7. Slide 7: Strong Dividend Growth Continues

   7 The board of directors announced its plan to raise the dividend by 7.4% to a new annual rate of $2.91 per share* Strong Dividend Growth Continues *The board of directors announced Dec. 2, 2021 that it is planning to raise the quarterly dividend on the company's common stock to 72.75 cents per shar

8. Slide 8: Strong Dividend Growth Continues

   8 $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 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E Strong Dividend Growth Continues Targeting dividend payout of 65%-70% of earnings Projecting dividend growth in line with earnings growth *Annualized ba

9. Slide 9: Next Steps in Succession Planning

   9 Kevin Fletcher announced his plan to retire in June 2022 Scott Lauber promoted to president and CEO effective February 1, 2022 Next Steps in Succession Planning Gale Klappa will continue to serve as executive chairman until May 2024

10. Slide 10: Exiting Coal by 2035

    10  Near-term retirements (2023-2024)  Oak Creek - Units 5-8 1,100 MW  Columbia - Units 1-2 300 MW  Enhance fuel flexibility at Oak Creek Power the Future units, pending environmental and regulatory approvals  By the end of 2030, we expect coal to provide less than 5% of our power supply  We p

11. Slide 11: ESG Progress Plan Supports 6-7% EPS Growth

    11 $3,078 $4,693 $3,150 $3,356 $3,023 $2,811 $3,054 $3,053 $487 $542 $1,120 $1,345 $2,188 $1,900 $16,100 $17,700 2021-2025 2022-2026 Energy Infrastructure ATC MERC/MGU Illinois WI Gas Delivery WI Electric Delivery WI Generation N e w P la n 1 F o rm e r P la n ESG Progress Plan Supports 6-7% EPS Gro

12. Slide 12: Robust Growth in Asset Base

    12 $25 billion $35 billion 2021E* 2026E* Robust Growth in Asset Base *Estimated year-end average asset base Expect long-term EPS growth of 6-7% per year. 7% Growth

13. Slide 13: Investing in Efficiency and Sustainability Drives Growth

    13 $2.7 15% $12.2 69% $2.8 16% Sustainability Renewables $5.4 Grid and Fleet Reliability $6.8 Efficiency Technology $1.1 Grid and Fleet Modernization $1.6 Growth Gas Distribution $1.3 Electric (G,T&D) $1.5 2022-2026 Capital Plan ($ in billions) Investing in Efficiency and Sustainability Drives Growt

14. Slide 14: Our ESG Progress Plan: Carbon Reduction Goals

    14 Our ESG Progress Plan Carbon Reduction Goals – Electric Generation Reduction goals: 60% below 2005 levels by 2025 80% below 2005 levels by the end of 2030 Net carbon neutral by 2050 Goals aligned with the Paris Agreement*Includes projection of potential carbon offsets by 2050 -100 -80 -60 -40 -20

15. Slide 15: Increasing Renewable Generation

    15 Increasing Renewable Generation 0 1,000 2,000 3,000 4,000 5,000 2020A 2026E Electricity Supply by Renewable Source Hydro Biomass Battery Solar Wind Wind - WECI N a m e p la te c a p a c it y ( M W ) Includes owned electric generation and announced WEC Infrastructure (WECI) projects

16. Slide 16: Investing in Carbon-Free Generation

    16 Solar  We Energies – 100 MW currently under construction (Badger Hollow II)  Filed for approval 675 MW  Additional 700 MW  Qualifies for Investment Tax Credit (ITC) Wind  WPS – 82 MW currently under construction (Red Barn)  Qualifies for Production Tax Credit (PTC) Battery storage  Filed f

17. Slide 17: WEC Infrastructure Portfolio – Green and Growing

    17 SD IL NE Plan to invest $1.9 Billion (2022-2026) WEC Infrastructure Portfolio – Green and Growing In-service Under development Total Project Capacity (MW) Investment (in millions) Upstream 200 $307 Bishop Hill III 132 166 Coyote Ridge 97 145 Blooming Grove 250 389 Tatanka Ridge 155 240 Jayhawk 19

18. Slide 18: Modernizing Our Gas-Fueled Generation Fleet

    18 Modernizing Our Gas-Fueled Generation Fleet Retiring  200 MW of older, less-efficient gas generation expected Building Weston RICE units*  128 MW  Expected investment: $170 million  Targeted in-service: 2023 Reciprocating Internal Combustion Engines (RICE) are modular, run on natural gas and

19. Slide 19: Our ESG Progress Plan: Methane Reduction Goal

    19 Reduction goal: Net zero by the year 2030** Our ESG Progress Plan Methane Reduction Goal *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 g

20. Slide 20: Regional Economy

    20 Regional Economy

21. Slide 21: Powering Industry Leaders in our Region

    21 Powering Industry Leaders in our Region

22. Slide 22: Wisconsin Segment Longer-Term Sales Forecast

    22 Wisconsin Segment Broad Ranging Growth Driving Longer-Term Sales Forecast 2024-2026 Electric 0.7%-1.0% Gas 0.7%-1.0% Sales Growth Forecast (weather-normalized) Year-Over-Year

23. Slide 23: Key Takeaways for WEC Energy Group

    23  Track record of top decile performance among regulated utilities  Industry leading earnings quality  ESG Progress Plan drives premium EPS growth of 6-7%  No need to issue equity through forecast period  100% of capital allocated to regulated businesses or contracted renewables  Dividend gr

24. Slide 24: Appendix

    Appendix | VA V/A Energy Group

25. Slide 25: Electric Distribution Electric Transmission 60% ownership Electric Generation Energy Infrastructure Natural Gas Distr…

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

26. Slide 26: Environmental, Social & Governance Focus

    26 Reduce carbon dioxide emissions from electric generation 60% by 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 2035 Targeting net-zero methane emissions from distribution by the e

27. Slide 27: Electricity Supply by Fuel Type

    27 Electricity Supply by Fuel Type (megawatt-hours delivered to regulated utility customers) 73% 36% 7% 36% 32% 17% 22% 24% 3% 6% 39% 2005 2020 2030E 2035 2050 Coal Natural Gas Nuclear Renewables Exiting Coal <5% Net carbon neutral goal Planned exit from coal

28. Slide 28: Reducing Greenhouse Gas Emissions

    28 Reducing Greenhouse Gas Emissions 0.78 0.42 0.33 0.16 0** 2005 2020 2025E 2030E 2050E Greenhouse gas intensity* (metric tons CO2e/MWh) *Includes owned electric generation, purchased power and WEC Infrastructure (WECI). The environmental attributes of the WECI renewable facilities are or may be th

29. Slide 29: Investment in Regulated Renewables

    29 Plan to invest $3.5 Billion (2022-2026) Investment in Regulated Renewables Target Project Utility WEC Ownership** Expected WEC Investment ($M) WEC Capacity (MWs) In Service Two Creeks Solar Project WPS 66.7% $130 100 In Service Badger Hollow I Solar Park WPS 130 100 Q4 2022 Badger Hollow II Solar

30. Slide 30: WEC Infrastructure Project Details

    30 Project Developer Location Investment Offtake Agreement WEC Commercial Operations Total Project Capacity Bishop Hill III Wind Energy Center Invenergy Henry County, IL $166M for 90% ownership WPPI Energy 22 years 80% on 8/31/18 Incremental 10% on 12/5/18 132MW Upstream Wind Energy Center Invenergy

31. Slide 31: Oak Creek PTF Units Critical to Wisconsin and Region

    31 Oak Creek PTF Units Critical to Wisconsin and Region  Among newest, most efficient units; in a critical location  Top 5% in the country on coal plant efficiency*  One of only two 1,000 MW sites in the top decile heat rate in MISO  Plant equipment capable of co-firing natural gas and coal *Bas

32. Slide 32: Why Our Natural Gas Distribution Networks Matter

    32 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 Opportunities Post 2030  Potential to blend  Investment potential to convert existing distribution n

33. Slide 33: New Liquefied Natural Gas (LNG) Storage Facilities

    33 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. Taking Steps to Maintain Reliable and Affordable Service for Our Customers  We Energies received approval for two LNG facilities

34. Slide 34: Electric Delivery Redesign / Resilience

    34 Electric delivery redesign / resilience  Addressing aging infrastructure and system hardening  Enhancing efficiencies and reducing operating costs  Expect to spend $3.4 billion (2022-2026) with continued investment over next decade Project Highlights Efficiency, Growth and Sustainability Progr

35. Slide 35: Natural Gas System Modernization

    35 Natural Gas System 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

36. Slide 36: Robust Growth in Asset Base

    36 Expect long-term EPS growth of 6-7% per year. 35% 37% 35% 35%12% 9% 13% 12% 5% 7% $25B $35B 2021E* 2026E* WECI Transmission We Power Gas Distribution Electric Generation and Distribution Robust Growth in Asset Base *Estimated year-end average asset base 7% Growth

37. Slide 37: Utility Capital Plan Drives EPS Growth

    37 342 998 987 858 890 960 571 579 665 685 711 716 589 649 559 596 494 513 536 578 591 636 645 603 105 120 104 107 107 104 262 333 343 278 208 183 $2,405 $3,257 $3,249 $3,160 $3,055 $3,079 - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 2021 2022 2023 2024 2025 2026 ATC Investment MERC/MGU Illinois

38. Slide 38: Capital Plan Projections by Company

    38 2021 2022 2023 Wisconsin Electric $841.9 $1,204.2 $1,360.2 Wisconsin Gas $182.5 $280.5 $233.6 Wisconsin Public Service $396.1 $627.2 $537.3 Upper Michigan Energy $16.0 $19.8 $16.9 Wisconsin Segment $1,436.5 $2,131.7 $2,148.0 Peoples Gas $492.8 $521.1 $538.0 North Shore Gas $38.6 $52.0 $48.8 Illin

39. Slide 39: Composition of Asset Base

    39 Composition of Asset Base Total 2020 Average Asset Base of $22.8 Billion Note: We Power value represents investment book value. Company Asset Base - $B % of Total Wisconsin Electric $6.5 28.5% Wisconsin Gas 1.6 7.0 Wisconsin Public Service 3.7 16.2 Upper Michigan Energy Resources 0.4 1.8 Peoples

40. Slide 40: Power the Future Investments

    40 Power the Future Investments 1 Port Washington (Natural Gas) Oak Creek Expansion (Coal/Co-Fire Gas3) Capacity 1,090 MW 1,030 MW 2 Investment $664 million $2 billion 2 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

41. Slide 41: One of the Top Performers in Operating Efficiency

    41 One of the Top Performers in Operating Efficiency $13.20 $16.20 $18.50 $18.80 $20.80 $21.10 $21.90 $22.00 $23.00 $23.20 $33.40 $10 $15 $20 $25 $30 $35 2020 Non-Fuel O&M per MWh* Source: FERC Form 1 Reports *For all companies, excluded 1) pensions and other employee benefits, 2) costs reported as

42. Slide 42: Focused on Efficiency

    42 Focused on Efficiency $1,342 $1,281 $1,234 $1,143 $1,107 2016 2017 2018 2019 2020 2021E 4.5% $ In millions *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 rates, regulator

43. Slide 43: Industry Leading Earnings Quality

    43 Annual EPS Adjustments as a Percentage of GAAP Earnings Note: Percent changes are in absolute values. 847.3% Industry Leading Earnings Quality 10.3% 20.5% 82.3% 107.6% 108.3% 117.9% 223.2% 0% 50% 100% 150% 200% 250% WEC 2018 2019 2020 The 10 largest vertically integrated utilities* No EPS adjustm

44. Slide 44: Balance Sheet Remains Strong

    44 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 15.4% 16.9% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 18.0% 2020 Actual* 2020 Adjusted**

45. Slide 45: Balanced Sales Mix

    45 33% Large C&I by Segment Paper/Packaging 27% Foundry (SIC 33) 10% Mining/Minerals 9% Food/Agriculture 9% Other Manufacturing 8% Metal (SIC 34,35,37) 7% Medical 6% Education 3% Chemical 4% Printing 3% Office 2% Other 12% Balanced Sales Mix Large C&I 33% Residential and Farm 32% Small C&I 35% 2020

46. Slide 46: Diverse Portfolio of Businesses

    46 Diverse Portfolio of Businesses Based on 2020 average asset base. WI 66% ATC 11% IL 16% MI/MN 5% WECI 2% By Jurisdiction By Business Electric generation and distribution 51% Natural gas distribution 34% FERC Regulated 13% WECI 2% *ATC is accounted for using the equity method; this represents WEC’

47. Slide 47: Open Regulatory Matters

    47 Open Regulatory Matters Wisconsin (apps.psc.wi.gov) Estimated Key Dates  Decision on Koshkonong Solar and Battery Storage (Docket: 5-BS-258 filed 4/30/2021) 2022  Decision on Weston RICE units (Docket: 5-CE-153 filed 4/16/2021) 2022  Decision on Red Barn Wind Park (Docket: 5-BS-256 filed 3/29/

48. Slide 48: Regulatory Environment

    48 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

49. Slide 49: Rate-Making Parameters by Company

    49 Rate-Making Parameters by Company Utility Equity Layer1 Authorized ROE Wisconsin Electric 50.0%-55.0% 10.0% Wisconsin Public Service 50.0%-55.0% 10.0% Wisconsin Gas 50.0%-55.0% 10.2% Peoples Gas 50.33% 9.05% North Shore Gas 51.58% 9.67% Minnesota Energy Resources 50.9% 9.7% Michigan Gas Utilities

50. Slide 50: Key Rate Making Components

    50 Key Rate Making Components Area Illinois– Gas Minnesota– Gas Michigan– Electric & 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 co

51. Slide 51: Industry Leading Total Shareholder Returns

    51 Industry Leading Total Shareholder Returns* Over the past decade, WEC Energy Group has consistently delivered among the best total returns in the industry * Total return including reinvested dividends for the periods ended December 31, 2020. 0% 50% 100% 150% 200% 250% 300% 350% One-Year Three-Yea

52. Slide 52: Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP)

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

53. Slide 53: Ratio of FFO to Debt

    53 Ratio of FFO to Debt (in millions, except percent) Ratio of FFO to Debt 2020 Net cash provided by operating activities $2,196.0 Total debt $14,290.8 Ratio of FFO to debt 15.4% Ratio of FFO to Debt – Adjusted 2020 Net cash provided by operating activities $2,196.0 Add: Employer contributions to qu

54. Slide 54: 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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