Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Wisconsin Energy — Investor Presentation (February 2012)
26 slides from Wec Energy's investor presentation, Feb 9, 2012
Slide 1: Wisconsin Energy Corporation, February 2012
Yau Wisconsin Energy (4M Corporation February 2012
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: Key Areas to be Covered
Key Areas to be Covered Overview of Wisconsin Energy Retail Electric and Gas Utilities Power the Future Wholesale Electric Transmission Earnings Outlook Appendix 3
Slide 4: Investment Thesis
Investment Thesis Solid Growth with a Lower Risk Profile Wisconsin Energy is positioned to deliver strong earnings and dividend growth with a lower than average risk profile Targeted EPS growth of 4 - 6% Double digit dividend growth - moving to a 60% dividend payout ratio in 2014 Proven management t
Slide 5: Retail Electric and Gas Utilities
Retail Electric and Gas Utilities Largest electric and gas company in Wisconsin 1.1 million electric customers 1.0 million natural gas customers 5
Slide 6: Overview of Wisconsin Energy
Overview of Wisconsin Energy Estimated Rate Base and Power the Future Investment at 12/31/12 Retail Electric and Gas Utilities $10.0 Billion Wisconsin, Michigan, and FERC $0.7 jurisdictions 48.5% to 53.5% equity for Wisconsin Electric $2.7 10.4% allowed ROE 45% to 50% equity for Wisconsin Gas 10.5%
Slide 7: Retail Electric and Gas Utilities: Expected Levels of Investment and Depreciation
Retail Electric and Gas Utilities Expected Levels of Investment and Depreciation $1,000 $900 $800 $792 $131 $705 $700 $678 $71 $43 $625 $600 $24 $39 $260 $161 $500 $400 $300 $611 $586 $473 $200 $401 $330 $355 $305 $260 $100 $0 2011A 2012E 2013E 2014E Base Renewable Environmental Depreciation *Total
Slide 8: Retail Electric and Gas Utilities: Projected Rate Base
Retail Electric and Gas Utilities Projected Rate Base *All other is comprised of customer advances, def. taxes, inventory and implied working capital. 8
Slide 9: Rate Case Activity: Wisconsin Jurisdiction
Rate Case Activity Wisconsin Jurisdiction Expect to file a full rate case proceeding in spring of 2012 for rates effective in 2013 Key drivers: Reinstatement of Regulatory Amortizations Air quality controls at Oak Creek Glacier Hills Wind Park Biomass Plant Finalization of Power the Future costs 9
Slide 10: Rate Case Activity: Michigan Jurisdiction
Rate Case Activity Michigan Jurisdiction Filed rate case on July 5 Requested $17.5 million annually -- a 9.9% increase Total increase of $7.7 million in January 2012 The commission approved a self-implementation of $5.7 million (3.2% increase) offset by the Michigan portion of the DOE settlement Res
Slide 11: Wolverine Joint Venture
Retail Electric and Gas Utilities Wolverine Joint Venture In January, we announced that a joint venture with Wolverine Power Cooperative at the Presque Isle Power Plant is being explored Wolverine would fund the cost of environmental upgrades and become a part owner of the plant WEC would continue t
Slide 12: Renewable Energy
Renewable Energy Summary of New Investments Glacier Hills 162 MW Final investment is expected to be below the PSCW approved amount of $364 million Completed in December of 2011 Biomass 50MW Estimated investment of $245-$255 million Approved by PSCW and Domtar Inc. Expected completion by the end of 2
Slide 13: Power the Future: Oak Creek Expansion Accelerated Depreciation
Power the Future Oak Creek Expansion –Accelerated Depreciation In late December, the Internal Revenue Service confirmed that accelerated depreciation can be applied to our recently completed expansion units at the Oak Creek site We expect to see a $285 million cash timing benefit by the end of 2014
Slide 14: Wholesale Electric Transmission: ATC Expected Growth
Wholesale Electric Transmission ATC Expected Growth Projected Capital Expenditures Key Assumptions (Millions of Dollars) ATC rate base at year end 2012 is projected to be about $2.7 billion ATC projects a need for $3.8-$4.4 billion of transmission improvements in its footprint from 2011 to 2020 Impl
Slide 15: Wholesale Electric Transmission: DATC
Wholesale Electric Transmission DATC Non-exclusive joint venture between Duke Energy and ATC (DATC) announced in April 2011 Adds potential investment opportunities outside ATC’s current footprint Ownership is split 50/50 between Duke and ATC In September, DATC submitted the first set of proposed tra
Slide 16: Projected Earnings Base for 2011 – 2013
Projected Earnings Base for 2011 – 2013 Major Segment Contributions 2011A 2012E 2013E Electric and Gas Utilities $1.44 $1.46 to $1.51 $6.8 billion rate base Power the Future (1) $0.66 $0.67 $0.68 Wholesale Electric Transmission (2) $0.16 $0.17 $0.18 Unallocated holding company debt ($0.08) ($0.06) (
Slide 17: Forecast of Electric Sales
Forecast of Electric Sales 2012 vs. 2011 Actual and Normalized 2012 Forecast vs. 2012 Forecast vs. 2011 Actual 2011 Normalized Residential -1.1% 0.0% Small C&I 0.9% 0.6% Large C&I (ex. Mines) -2.3% -2.4% Total Large C&I -7.1% -7.2% Total Retail -0.8% -2.4% 17
Slide 18: Dividend Growth
Dividend Growth Accelerating Dividend Payout The directors raised the quarterly dividend in January to 30 cents a share – equivalent to an annual rate of $1.20 a share 15.4 percent increase over the 2011 amount Our policy is to move to a dividend payout ratio that is competitive with our peers Trend
Slide 19: Share Repurchases
Share Repurchases $100 Million Repurchased in 2011 To maintain appropriate financial strength and provide value to our investors, we are implementing a share repurchase plan Buy back up to $300 million of Wisconsin Energy common stock through open market purchases or privately negotiated transaction
Slide 20: Potential Investment Opportunities
Potential Investment Opportunities Multiple Options Being Evaluated Investment in fuel blending at new Oak Creek coal units Additional investment in aging gas and electric distribution infrastructure Renewable energy investments beyond 2016 Investment in aging generation facilities such as hydro reb
Slide 21: Key Takeaways on Wisconsin Energy
Key Takeaways on Wisconsin Energy Solid Growth with a Lower Risk Profile Power the Future program now complete Highly visible earnings and strong cash flow Well managed utility franchises with rate base growth Investment in American Transmission Company provides an additional regulated growth opport
Slide 22: Appendix
Appendix
Slide 23: Regulatory Environment
Regulatory Environment Wisconsin Commission Michigan Commission 3 Commissioners 3 Commissioners Gubernatorial appointment, Gubernatorial appointment, Senate confirmation Senate confirmation Chairman: Gubernatorial Chairman: Gubernatorial appointment appointment Terms Terms 6 year—staggered terms 6 y
Slide 24: Power the Future Investments
Power the Future Investments 1 Natural Gas Coal Capacity 1,090 MW 1,030 MW Investment $664 million $2.0 billion ROE 12.7% 12.7% Equity 53% 55% Initial Lease Term 25 Years 30 Years In-service Dates Unit 1 – July 16, 2005 Unit 1 – February 2, 2010 Unit 2 – May 23, 2008 Unit 2 – January 12, 2011 1All c
Slide 25: Electric Retail Customer Base
Wisconsin Energy Electric Retail Customer Base % of 2011 C&I Sector Electric Small & Large C&I Sales Office 12.2% Mining 11.9% Retail 6.1% Primary Metals 5.9% Health Care 5.5% Paper & Products 5.5% Food 4.7% Education 4.7% 25
Slide 26: Financing Policy
Financing Policy Capital Structure Goals Maintain our current credit ratings Debt/Capital Ratio as of 12/31/2011 Actual ratio was 57.1% Adjusted ratio was 54.1% Adjusted assumes half of $500 million of hybrid securities are treated as common equity 26
Wisconsin Energy — Investor Presentation (February 2012) on 6ix