Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Investor Presentation (April 2021)
51 slides from Wec Energy's investor presentation, Apr 14, 2021
Slide 1: Investor Update: April 2021
Investor Update: April 2021 Our “ESG” Progress Plan: Investing in Efficiency, Sustainability and Growth Best in the U.S. in Large Customer Satisfaction (Top 2 Box) JD Power We Energies named Most Reliable Utility in the Midwest PA Consulting Finalist for the S&P Global Energy Award in Corporate Soci
Slide 2: Cautionary Statement Regarding Forward-Looking Information
1 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: Company Profile
2 Company Profile $29.5 billion market cap* 4.6 million retail customers 60% ownership of American Transmission Company $37.0 billion of assets * As of March 31, 2021
Slide 4: A History of Quality Earnings Growth
3 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 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 $3.99 - $4.03 GAAP Adjusted** 2021 Guidance * Estimated based on 2021 guidance midpoint of $4.01 per share ** See Appendix for re
Slide 5: Consistent Performance Over Time
4 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
Slide 6: Strong Dividend Growth Continues
5 $0.80 $1.04 $1.20 $1.445 $1.56 $1.83* $1.98 $2.08 $2.21 $2.36 $2.53 $2.71 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E Strong Dividend Growth Continues In January, raised the dividend by 7.1% to a new annual rate of $2.71 per share Targeting dividend payout of 65-70% of earnings Pr
Slide 7: What's New?
6 What’s New?
Slide 8: Electric and Gas Rate Case "Stay-Out"
7 Electric and Gas Rate Case “Stay-Out” We Energies & Wisconsin Public Service Filed with the Public Service Commission of Wisconsin on March 30 One year “stay-out” Maintain current authorized return on equity: Wisconsin Electric – 10.0% Wisconsin Gas – 10.2% Wisconsin Public Service – 1
Slide 9: Recent Initiatives - Investments in Regulated Renewables
8 Recent Initiatives - Seeking Wisconsin Commission Approval Investments in Regulated Renewables Paris Solar-Battery Park Expected investment: $383M for 90% of the project (solar: $245M / batteries: $138M) Total project: 200MW of solar generation and 110MW of battery storage Planned in-servi
Slide 10: WEC Infrastructure Investment: Jayhawk Wind Farm
9 WEC Infrastructure Investment Jayhawk Wind Farm 70 wind turbines with a capacity of ~190MW Expected total investment: $302 million 90% ownership interest and substantially all of the tax benefits Under development by Apex Clean Energy and will be co-owned and operated by Invenergy Located
Slide 11: ESG Progress Plan
10 ESG Progress Plan
Slide 12: Our ESG Progress Plan: Investing $16.1 billion
11 Investing $16.1 billion for: Efficiency Sustainability Growth 2021-2025 Capital Plan Our ESG Progress Plan
Slide 13: Investing in Efficiency, Sustainability and Growth
12 $2.7 17% $10.4 64% $3.0 19% Sustainability Renewables $4.1 Grid and fleet reliability $6.3 Efficiency Technology $1.0 Grid and fleet modernization $1.7 Growth Gas distribution $1.6 Electric (G,T&D) $1.4 2021-2025 Capital Plan ($ in billions) Investing in Efficiency, Sustainability and Growth $16.
Slide 14: Robust Growth in Asset Base
13 $22.8 billion $32.2 billion 2020A 2025E* Robust Growth in Asset Base 7% Growth *Estimated year-end average asset base
Slide 15: Investing in Carbon-Free Generation
14 Currently Under Development or In-Service 200 MW solar – WPS* 100 MW solar – We Energies New Planned Clean Energy Additions 800 MW solar 100 MW wind 600 MW battery storage Allocating $1.9 Billion for Regulated Renewables Investing in Carbon-Free Generation Build and own 1,800 MW of new
Slide 16: Modernizing Our Gas-Fueled Generation Fleet
15 Reducing 100MW of Capacity Modernizing Our Gas-Fueled Generation Fleet Retiring 400 MW of older, less-efficient gas generation expected Building 100 MW of RICE generation planned Investing West Riverside Energy Center (now operational)* 200 MW - combined cycle $180 million investment ex
Slide 17: Aggressively Reducing Coal-Fueled Generation
16 4,935 MW 3,095 MW 1,700 MW 2017 2020 2025E Aggressively Reducing Coal-Fueled Generation Plant retirements have lowered costs and reduced CO2 emissions Retirements Pleasant Prairie 1,190 MW Edgewater 100 MW Pulliam 200 MW Presque Isle 350 MW Expected Future Retirements Oak Creek Units 5-8* – 1,100
Slide 18: Carbon Reduction Goals – Electric Generation
17 Our ESG Progress Plan Carbon Reduction Goals – Electric Generation Reduction goals: 70% below 2005 levels by 2030 Net carbon neutral by 2050 Goals aligned with the Paris Climate Accord *Includes projection of potential carbon offsets by 2050 Our capital investment plan aligns with and fully suppo
Slide 19: Reducing Greenhouse Gas Emissions
18 Reducing Greenhouse Gas Emissions 0.78 0.42 0.36 0.25 0** 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 2005 2020 2025E 2030E 2050E Greenhouse gas intensity* (metric tons CO2e/MWh) *Includes owned electric generation, purchased power and WEC Infrastructure. The environmental attributes of the WECI renewa
Slide 20: Methane Reduction Goal
19 -40% -30% -20% -10% 0% 2011 2020 2030 Reduction Goal:* 30% by the year 2030 from a 2011 baseline Our ESG Progress Plan Methane Reduction Goal *This goal represents a decrease in the rate of methane emissions from the natural gas distribution lines in our network of 30% per mile by the year 2030 f
Slide 21: 2021-2025 Infrastructure Portfolio
20 SD IL NE Allocating $2.2 Billion 2021-2025 Infrastructure Portfolio In-service Under development In-Service 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 Total 834 $1,247 Under Development Capa
Slide 22: Regional Economy
21 Regional Economy
Slide 23: Powering Industry Leaders in our Region
22 Powering Industry Leaders in our Region
Slide 24: Wisconsin Segment Sales Forecast 2022-2025
23 Wisconsin Segment Broad Ranging Growth Driving Longer-Term Sales Forecast 2022 - 2025 Electric 1.0% - 1.3% Gas 1.0% - 1.3% Sales Growth Forecast (weather-normalized) Year-over-Year
Slide 25: Key Takeaways for WEC Energy Group
24 ESG Progress Plan supports 5-7% EPS growth with minimal impact on customer rates 100% of capital allocated to regulated businesses or contracted renewables Dividend growth projected to be in line with earnings growth No need to issue additional equity through forecast period Strong and
Slide 26: Appendix
Appendix WwW, VA Energy Group
Slide 27: Business Overview
26 Electric Distribution Electric Transmission 60% ownership Electric Generation Energy Infrastructure Natural Gas Distribution
Slide 28: Office of the Chair
27 Kevin Fletcher President and CEO Scott Lauber Senior Executive Vice President and Chief Operating Officer Office of the Chair “Working together as a team, we will leverage the strengths of each individual as we write the next chapter of the company’s growth, development and service to our custome
Slide 29: Carbon Goals and ESG Focus
28 Met and exceeded our 2030 target. Set new goals to reduce carbon dioxide emissions from electric generation by 70% below 2005 levels by 2030 and to be net carbon neutral by 2050. Reduce the rate of methane emissions by 30% per mile from a 2011 baseline by 2030 Amount of combustion products for be
Slide 30: Why Our Natural Gas Distribution Networks Matter
29 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
Slide 31: Wisconsin Utilities Carbon-Free Generation Under Development
30 Wisconsin Utilities Carbon-Free Generation Currently Under Development Project Utility Location Investment Capacity* Timing Two Creeks Solar Project WPS Two Rivers, WI $130M 100MW In Service: November, 2020 Badger Hollow I Solar Park WPS Iowa County, WI $130M 100MW Targeted in-service: Summer 202
Slide 32: New LNG Storage Facilities
31 New Liquefied Natural Gas (LNG) Storage Facilities LNG provides 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 is seeking approval for two LNG facilities to
Slide 33: Efficiency, Growth and Sustainability Progress
32 Efficiency, Growth and Sustainability Progress Electric Delivery Redesign / Resilience • Addressing aging infrastructure • Enhancing efficiencies and reducing operating costs • Expect to spend $2.9 billion (2021-2025) Natural Gas System Modernization Illinois • Expected replacement of 2,000 miles
Slide 34: WEC Infrastructure Projects
33 Project Developer Location Investment Offtake Agreement WEC Commercial Operations 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 Antelope Cou
Slide 35: Low-Risk Capital Plan Drives 5% to 7% EPS Growth
34 $555 $767 $900 $506 $350 $578 $571 $664 $685 $652 $695 $619 $542 $585 $582 $578 $584 $662 $614 $616 $99 $107 $93 $96 $92 $258 $289 $253 $176 $144 $688 $375 $375 $375 $375 $3,451 $3,312 $3,489 $3,037 $2,811 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2021 2022 2023 2024 2025 Energy Infrastru
Slide 36: Capital Plan Projections by Company
35 2021 2022 2023 Wisconsin Electric $933.5 $1,032.0 $1,375.3 Wisconsin Gas $234.4 $256.2 $234.4 Wisconsin Public Service $578.8 $537.6 $443.8 Upper Michigan Energy Corp $16.7 $18.8 $16.7 Wisconsin Segment $1,763.4 $1,844.6 $2,070.2 Peoples Gas $509.5 $517.2 $598.6 North Shore Gas $64.4 $64.6 $62.3
Slide 37: Composition of Asset Base
36 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 G
Slide 38: Power the Future Investments
37 Power the Future Investments 1 Natural Gas Coal 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 Lease Terms 25 years 30 years Cost Per Unit of Capaci
Slide 39: One of the Top Performers in Operating Efficiency
38 One of the Top Performers in Operating Efficiency $14.00 $15.30 $18.30 $20.10 $20.80 $21.30 $21.50 $21.51 $23.30 $29.30 $31.20 $10 $15 $20 $25 $30 $35 2019 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
Slide 40: Focused on Efficiency
39 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
Slide 41: Balance Sheet Remains Strong
40 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**
Slide 42: Balanced Sales Mix
41 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 plus Farm 32% Small C&I 35% 2020
Slide 43: Diverse Portfolio of Businesses
42 Diverse Portfolio of Businesses Based on 2020 average asset base. WI 64% FERC Regulated - Electric 13% IL 16% MI/MN 5% FERC Contractual (WECI) 2% By Jurisdiction By Business Electric Generation and Distribution 51% Gas Distribution 34% FERC Regulated - Electric 13% FERC Contractual (WECI) 2%
Slide 44: Open Regulatory Matters
43 Estimated Key Dates Wisconsin (apps.psc.wi.gov) Decision on 2022 Rate Case “Stay Out” Decision on Red Barn Wind Park (Docket 5-BS-256 filed 3/29/2021) Decision on Darien Solar and Battery Storage (Docket 5-BS-256 filed 3/16/2021) Decision on Paris Solar and Battery Storage (Docket 5-BS-25
Slide 45: Regulatory Environment
44 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 46: Rate-Making Parameters by Company
45 Rate-Making Parameters by Company Utility Equity Layer (1) 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 50.48% 9.05% Minnesota Energy Resources 50.9% 9.7% Michigan Gas Utilit
Slide 47: Key Rate Making Components
46 Key Rate Making Components Area Illinois– Gas Minnesota– Gas Michigan– Electric & Gas Wisconsin– Gas Wisconsin– Electric Gas Pipeline Replacement Rider PGL Bad Debt Rider ✓ Bad Debt Escrow Accounting Residential Residential Decoupling ✓ ✓ Fuel Cost Recovery 1 for 1 recovery of prudent fuel costs
Slide 48: Industry Leading Total Shareholder Returns
47 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-Year
Slide 49: Contact Information
Contact Information M. Beth Straka Senior Vice President – Investor Relations and Corporate Communications Beth.Straka@wecenergygroup.com 414-221-4639 Ashley Knutson Investor Relations Analyst Ashley.Knutson@wecenergygroup.com 414-221-3339
Slide 50: 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 $2.34 $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 – – – $
Slide 51: Ratio of FFO to Debt
50 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
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