Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Wisconsin Energy — Investor Presentation (May 2011)
23 slides from Wec Energy's investor presentation, May 9, 2011
Slide 1: Wisconsin Energy Corporation May 2011
Yau Wisconsin Energy (iM Corporation May 2011
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 All per share values reflect two-for-one share split effective March 1, 2011
Slide 4: Overview of Wisconsin Energy
Overview of Wisconsin Energy Estimated Rate Base and Power the Future Investment at 12/31/11 Retail Electric and Gas Utilities Wisconsin, Michigan, and FERC jurisdictions 48.5% to 53.5% equity for Wisconsin Electric 10.4% allowed ROE 45% to 50% equity for Wisconsin Gas 10.5% allowed ROE Power the Fu
Slide 5: Retail Electric and Gas Utilities
Largest electric and gas company in Wisconsin 1.1 million electric customers 1.0 million natural gas customers Retail Electric and Gas Utilities
Slide 6: Regulatory Environment
Regulatory Environment Wisconsin Commissioners Wisconsin Commissioners Wisconsin Commissioners Wisconsin Commissioners Name Party Began Serving Term Ends Phil Montgomery Chairman R 03/2011 03/2017 Lauren Azar D 03/2007 03/2013 Eric Callisto D 05/2008 03/2015 Michigan Commissioners Michigan Commissio
Slide 7: Electric Fuel Cost Recovery
Electric Fuel Cost Recovery Wisconsin Jurisdiction Limited reopening of fuel rates for 2011 filed on September 3, 2010 Wisconsin jurisdictional increase of $25.4 million Final order effective April 29, 2011 New fuel rules have been adopted by the PSCW In effect for fuel cost plans approved by the PS
Slide 8: Rate Case Activity
Rate Case Activity Wisconsin and Michigan Jurisdiction Wisconsin Jurisdiction Expect to file cases in the Wisconsin Jurisdiction for our electric, gas and steam utilities in the 2nd quarter of 2011 Michigan Jurisdiction We expect to file a new case this summer to have new rates effective in 2012
Slide 9: Wisconsin Energy Electric Retail Customer Base
Wisconsin Energy Electric Retail Customer Base Large C&I Small C&I Residential Other 2010 Retail KWh Sales Mix 0.36 0.32 0.31 0.01 C&I Sector Small & Large % of 2010 Electric Sales Office 12.4% Mining 11.4% Retail 6.4% Health Care 5.7% Paper & Products 5.5% Primary Metals 5.5% Education 4.6% Food &
Slide 10: Expected Levels of Investment and Depreciation
Retail Electric and Gas Utilities Expected Levels of Investment and Depreciation 2010A 2011E 2012E 2013E Base 329 415 425 412 Renewable 146 333 132 10 Environmental 212 166 68 71 Depreciation 250 260 310 320 *Total depreciation expense was $250 million in 2010, and is expected to be $260, $310 and $
Slide 11: Projected Rate Base
Retail Electric and Gas Utilities Projected Rate Base 2010A 2011E 2012E 2013E PPE 4.9 5.1 6.4 6.7 CWIP 0.6 1 0.4 0.3 All Other* 0 0.2 -0.1 -0.3 5.5 6.3 6.7 6.7 *All other is comprised of customer advances, def. taxes, inventory and implied working capital.
Slide 12: Renewable Energy Opportunity: Renewable Portfolio Standard
Renewable Energy Opportunity Renewable Portfolio Standard in Wisconsin 2001-03 Baseline 2010 2015 0.0227 0.0427 0.0827 Required Percentage for Wisconsin Electric Retail Sales *Requirements at a Wisconsin state level are 5% and 10% in 2010 and 2015 respectively. In terms of energy this is estimated t
Slide 13: Renewable Energy Opportunity: Glacier Hills and Biomass
Renewable Energy Opportunity Glacier Hills 162 MW Estimated investment of $367 million Expected completion December of 2011 Biomass Filed application for a 50MW project with PSCW on March 15, 2010 Estimated investment of $255 million All local permits have been obtained Expected completion by the en
Slide 14: Power the Future Plan
Power the Future Plan Natural Gas Coal Capacity 1,090 MW 1 1,030 MW 1 Investment $664 million $2.0 billion ROE 12.7% 12.7% Equity 53% 55% Initial Lease Term 25 Years 30 Years Actual & Targeted In-service Dates Unit 1 - July 16, 2005 Unit 2 - May 23, 2008 Unit 1 - February 2, 2010 Unit 2 - January 12
Slide 15: Power the Future Expected Earnings
Power the Future Expected Earnings 2009 2010 2011 2012 Port Washington #1 & #2 32 32 32 32 Oak Creek #1 10 62 70 70 Oak Creek #2 0 31 33 Key Assumptions Oak Creek Unit 2 in service January 12, 2011 Cost estimate of $2 billion for WEC's ownership of the coal units Free cash flow of $225 million in 20
Slide 16: Wholesale Electric Transmission
Wholesale Electric Transmission Wisconsin Energy owns 26.2% of American Transmission Company (ATC) ATC is projected to contribute approximately 16 cents to our EPS this year Represents almost 8% of consolidated earnings ATC's projected capital investment over the next ten years is $3.4 billion ATC r
Slide 17: Wholesale Electric Transmission Expected Earnings
Wholesale Electric Transmission Expected Earnings 2011E 2012E 2013E ATC 252 271 252 WEC portion (26.2%) 66 71 66 Key Assumptions In its latest 10-year assessment ATC projects a need for $3.4 billion of transmission improvements in its footprint from 2010 to 2019 Implies average $30 million effective
Slide 18: Projected Earnings Base for 2010 - 2012
Projected Earnings Base for 2010 - 2012 2010A 2011E 2012E Electric and Gas Utilities $1.34 $1.36 to $1.41 $6.7 billion rate base Power the Future (1) $0.48 $0.66 $0.67 Wholesale Electric Transmission (2) $0.15 $0.16 $0.17 Unallocated holding company debt(3) ($0.05) ($0.13) ($0.09) $1.92 $2.05 to $2.
Slide 19: Forecast of Electric Sales 2011
Forecast of Electric Sales 2011 2011 Forecast vs. 2010 Actual 2011 Forecast vs. 2010 Normalized Residential -3.2% -0.4% Small C&I -1.0% 0.5% Large C&I (ex. Mines) -2.8% -2.0% Total Large C&I -2.2% -1.6% Total Retail -2.1% -0.6% *First quarter 2011 sales were better than plan -- driven by colder wint
Slide 20: Financing Policy
Financing Policy Capital Structure Goals Maintain debt to capital below 55% by the end of 2013 Actual ratio was 54.1% at the end of 2010 Assumes half of hybrid securities are treated as common equity
Slide 21: Dividend / Share Repurchase
Dividend / Share Repurchase Move to a dividend payout ratio that is competitive with our peers Adopted a policy that trends to a 60% payout ratio over the period 2012 to 2015 Beginning in 2012, this policy should support annual dividend increases in the 8 to 9 percent range over the forecast period
Slide 22: Projected Growth in Earnings and Dividends
2009A 2010A 2011E 0.675 0.8 1.04 $1.04 Projected Growth in Earnings and Dividends 2009A 2010A 2011E 1.6 1.92 2.05 Earnings per Share Dividends per Share $1.92 $2.05 to $2.10
Slide 23: Key Takeaways on Wisconsin Energy
Power the Future program now complete Highly visible earnings and strong cash flow Solid utility franchises with rate base growth Power the Future 2 driven by environmental upgrades, renewable energy projects and network improvements Investment in American Transmission Company provides an additional