WEC Energy Group, Inc. · NYSE:WEC
WEC Energy — Wisconsin Energy — Investor Presentation (November 2013)
35 slides from WEC Energy's investor presentation, November 2013
Slide 1: Wisconsin Energy Corporation November 2013
Yaa Wisconsin Energy (4M Corporation November 2013
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: Overview
Overview Retail Electric and Gas Utilities Largest electric and gas company in Wisconsin 1.1 million electric customers 1.1 million natural gas customers 3
Slide 4: Investment Thesis
Investment Thesis An “Earn and Return” Company with a Low Risk Profile Positive free cash flow Targeted EPS growth of 4%-6% Best in class dividend growth - targeting a dividend payout ratio of 65%-70% in 2017 Implies 7%-8% dividend growth annually 2015-2017 $300 million share buyback progr
Slide 5: Consistent Earnings and Dividend Growth
A Track Record of Performance Consistent Earnings and Dividend Growth Wisconsin Energy is the only company in the S&P Electric Index S&P Utilities Index Philadelphia Utility Index Dow Jones Utilities Average that has grown earnings per share and dividends per share every year since 2003 5
Slide 6: Industry Leading Total Shareholder Returns
A Track Record of Performance Industry Leading Total Shareholder Returns One Three Five Ten Year Year Year Year Wisconsin Energy 8.9% 63.0% 76.2% 285.2% S&P Utilities Index 1.3% 28.2% 1.9% 169.7% S&P Electric Index -0.5% 24.6% -4.5% 167.8% Philadelphia Utility Index -0.6% 25.3% 0.3% 166.6% Dow Jones
Slide 7: Industry Leading Dividend Growth
Where We Go From Here Industry Leading Dividend Growth Targeting dividend payout ratio of 65 - 70 percent of earnings in 2017 * Quarterly dividends 7
Slide 8: Leading Reliability and Customer Satisfaction
A Track Record of Performance Leading Reliability and Customer Satisfaction Named the most reliable utility in the Midwest Eighth time in the past 11 years During 2012, achieved highest customer satisfaction ratings in past decade … likely best ever More than 350,000 proactive customer inter
Slide 9: Power the Future Investments – Natural Gas
A Track Record of Performance Power the Future Investments – Natural Gas Meeting the Region’s Energy Needs Capacity 1,090 MW Investment $664 million ROE 12.7% Equity 53% In Service Dates Unit 1 – July 2005 Unit 2 – May 2008 Cost Per Unit of Capacity $609/kW 9
Slide 10: Power the Future Investments – Coal
A Track Record of Performance Power the Future Investments – Coal Meeting the Region’s Energy Needs Capacity 1,030 MW1 Investment $2 billion1 ROE 12.7% Equity 55% In Service Dates Unit 1 – February 2010, Unit 2 – January 2011 Cost Per Unit Approximately of Capacity $1,950/kW 1 All capacity and inves
Slide 11: Dramatic Change in Environmental Performance
A Track Record of Performance Dramatic Change in Environmental Performance From 2000 to 2013... Power plant capacity up 50% Emissions of nitrogen oxide sulfur dioxide down 80% mercury particulate matter 11
Slide 12: Strong Financial Foundation
A Track Record of Performance Strong Financial Foundation Positive Cash Flow … Project more than $500 million of free cash flow from 2013-2017 Expect free cash annually after reaching 2017 dividend target Solid credit ratings … Well Funded Pension … Moody’s S&P Fitch More than 99% funded at ye
Slide 13: Pension Funding Status
A Track Record of Performance Pension Funding Status Percentage Funded through 2012 100% Average 90% 80% 70% 60% 50% 40% Major US Utilities *Company 1 is more than 100% funded Source: Wolfe Research and company filings 13
Slide 14: Summary of our Core Business
A Track Record of Performance Summary of our Core Business Rate Base and Power the Future Investment at 12/31/12 Retail Electric and Gas Utilities $9.8 Billion Wisconsin, Michigan, and FERC jurisdictions $2.7 48.5% to 53.5% equity for Wisconsin Electric 10.4% allowed ROE 45% to 50% equity
Slide 15: Major Segment Earnings for 2011 – 2013
Where We Go From Here Major Segment Earnings for 2011 – 2013 Projecting earnings per share growth of 4-6% annually from the 2011 base 2011A 2012A 2013E Electric and Gas Utilities $1.44 $1.55 $1.60 to $1.65 Power the Future (1) $0.66 $0.69 $0.71 Wholesale Electric $0.16 $0.17 $0.18 Transmission (2) U
Slide 16: Delivering the Future
Where We Go From Here Delivering the Future From 2013 through 2017, our plan is to invest $3.2 to $3.5 billion in needed infrastructure projects that will: Renew and modernize our grid Add clean, renewable energy to our fleet Meet new environmental standards 16
Slide 17: Delivering the Future – Electric Overview
Where We Go From Here Delivering the Future – Electric Overview Between 2013 and 2017, we plan to: Rebuild 2,000 miles of electric distribution lines that are more than 50 years old Replace: 18,500 power poles 20,000 transformers Hundreds of substation components 17
Slide 18: Delivering the Future – Gas Overview
Where We Go From Here Delivering the Future – Gas Overview Between 2013 and 2017, we also plan to: Replace: 1,250 miles of fiberglass, plastic and steel gas mains 83,000 individual gas distribution lines 233,000 meter sets 18
Slide 19: Western Wisconsin Gas Expansion
Where We Go From Here Western Wisconsin Gas Expansion Additional natural gas distribution Sand Plants – Wisconsin capacity needed to address reliability and to meet growth in customer demand Propane conversion - eight municipalities have passed franchise resolutions to receive natural gas servic
Slide 20: Renewable Energy Investments
Where We Go From Here Renewable Energy Investments Biomass Plant 50MW Investment of approximately $269 million Approved by Wisconsin Commission and Domtar Inc. On schedule for completion by the end of 2013 Montfort Wind Energy Center 30MW Purchased from a subsidiary of NextEra Energy
Slide 21: Valley Power Plant
Where We Go From Here Valley Power Plant In 2012 announced plans to convert Valley from coal to natural gas Targeting completion of the conversion for late 2015 or early 2016 Follows completion of a $26 million gas pipeline upgrade with expected completion in 2014 Currently seeking regulator
Slide 22: Twin Falls Hydroelectric Powerhouse
Where We Go From Here Twin Falls Hydroelectric Powerhouse In 2012 announced plans to build a new powerhouse at Twin Falls Existing powerhouse is in need of repair All major permits have been obtained Construction began in the fall of 2013 with scheduled completion in 2016 Expected cost: $6
Slide 23: Michigan Retail Choice
Where We Go From Here Michigan Retail Choice Two iron ore mines in Michigan’s Upper Peninsula switched to an alternate energy supplier effective September 1 No impact on our 2013 earnings guidance Pursuing multiple steps for 2014 MISO informed us that we cannot suspend operations at our Pres
Slide 24: Growth at American Transmission Company
Where We Go From Here Growth at American Transmission Company ATC projects a need for $3.0-$3.6 billion of transmission investments in its footprint from 2013-2022 ATC’s prior plan called for $3.9-$4.8 billion of in- footprint investments from 2012-2021 Excludes potential transmission projects
Slide 25: Multiple Opportunities Being Evaluated
Where We Go From Here Multiple Opportunities Being Evaluated Additional capital for fuel blending at the Oak Creek Expansion units Divestiture of energy assets by the State of Wisconsin New transmission projects outside of Wisconsin and Michigan through our 26.2 percent ownership of American T
Slide 26: Industry Leading Dividend Growth
Where We Go From Here Industry Leading Dividend Growth The board of directors raised the quarterly dividend in July to 38.25 cents a share – equivalent to an annual rate of $1.53 a share This represents a 12.5% increase over the previous quarterly rate Accelerates our dividend action that was
Slide 27: Financial Flexibility for Share Repurchases
Where We Go From Here Financial Flexibility for Share Repurchases The board of directors has authorized management to purchase up to $300 million of Wisconsin Energy common stock through end of 2013 Buyback program was nearly 85 percent complete at the end of September 2013 Repurchased 7.12 mi
Slide 28: Key Takeaways on Wisconsin Energy
Key Takeaways on Wisconsin Energy An “Earn and Return” Company with a Low Risk Profile Power the Future program now complete Highly visible earnings and strong cash flow Final regulatory approvals in place Well managed utility franchises with rate base growth Investment in American Transmi
Slide 29: Appendix
Appendix
Slide 30: Wisconsin Jurisdiction Rate Case Summary
Where We Go From Here Wisconsin Jurisdiction Rate Case Summary Public Service Commission of Wisconsin (PSCW) authorized 2.6% increase in net customer bills in 2013 and 2014 (after applying expected proceeds from a renewable energy tax grant) Non-fuel rate increase prior to credits: 4.8% or $13
Slide 31: Projected Rate Base
Where We Go From Here Projected Rate Base *All other is comprised of customer advances, def. taxes, inventory and implied working capital. 31
Slide 32: Strong capital investment in the retail utility
Where We Go From Here Strong capital investment in the retail utility $1,000 Expected investment of $3.2 - $3.5 billion from 2013-2017 $900 $800 $741 Millions of Dollars $697 $700 $656 $600 $163 $72 $589 $325 $500 $192 $193 $172 $400 $300 $253 $251 $245 $225 $200 $360 $305 $325 $345 $100 $163 $137 $
Slide 33: DATC
Where We Go From Here 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 DATC has proposed transmission projects for MISO’s Midwest T
Slide 34: Forecast of Electric Sales
Where We Go From Here Forecast of Electric Sales 2013 Forecast vs. 2013 Forecast vs. 2012 Actual 2012 Normalized Residential -2.3% 0.1% Small C&I 0.2% 0.3% Large C&I (ex. Mines) -0.9% 0.2% Total Large C&I -3.2% -2.4% Total Retail -1.8% -0.7% Based on our customer demand for distribution services 34
Slide 35: 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 ye
Wisconsin Energy — Investor Presentation (November 2013) on 6ix