Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Investor Presentation (December 2019)
48 slides from Wec Energy's investor presentation, Dec 11, 2019
Slide 1: Focused on Performance: Investor Update December 2019
Focused on Performance Investor Update: December 2019
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: Company Statistics
Company Statistics . $28.0 billion market cap* . 1.6 million electric customers . 2.9 million natural gas customers . 60% ownership of American Transmission Company . 70,100 miles of electric distribution . 49,000 miles of gas distribution . $34.4 billion of assets . 8th largest natural gas distribu
Slide 4: Delivering reliable, affordable energy to our customers
Delivering reliable, affordable energy to our 2019 Best CEO – Electricity customers. Reducing greenhouse gas emissions. and Natural Gas Industry Building and maintaining safe, resilient Gale Klappa infrastructure. These imperatives continue to drive Business Worldwide Magazine our decision-making, a
Slide 5: A Decade of EPS Growth
A Decade of EPS Growth $4.00 $3.51 - $3.53 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 GAAP Adjusted 2019 Guidance 4
Slide 6: Proven Track Record of Performance
Proven Track Record of Performance EPS Guidance 2018 Exceeded 2017 Exceeded 2016 Exceeded The only utility to beat 2015 Exceeded guidance every year for 2014 Exceeded more than a decade 2013 Exceeded 2012 Exceeded 2011 Exceeded 2010 Exceeded 2009 Exceeded 2008 Exceeded 2007 Exc
Slide 7: What's New?
What’s New? 6
Slide 8: Solid Dividend Growth Continues
Solid Dividend Growth Continues The board of directors Annualized Dividends Per Share announced its plan to $2.53** raise the dividend by $2.36 7.2% to a new annual $2.21 rate of $2.53 per share** $2.08 $1.98 Targeting dividend $1.83* payout of 65-70% of earnings $1.56 $1.445 Projecting dividend $1.
Slide 9: Confident in Achieving Our EPS Growth Guidance
Confident in Achieving Our EPS Growth Guidance $4.00 $3.50 2019 earnings $3.00 guidance increased to $3.51-$3.53 per share. $2.50 $2.00 $1.50 $1.00 2015 2016 2017 2018 2019E 2015 Base GAAP Adjusted* *See Appendix for reconciliation of adjusted amounts to GAAP amounts (1) 6.7% annual average growth r
Slide 10: Continues to Support 5-7% EPS Growth: Increasing Five-Year Capital Plan
Continues to Support 5-7% EPS Growth Increasing Five-Year Capital Plan by $900 million $15,001 $14,114 $1,257 $1,427 $1,838 $1,436 $6,438 $5,920 $2,780 Plan New $3,091 Former Plan Former $2,551 $2,377 $ In millions 2019-2023 2020-2024 Generation Electric Delivery Gas Delivery* Energy Infrastructure*
Slide 11: 2020-2024 Capital Plan
2020-2024 Capital Plan ($ in billions) Total of $15.0 billion Gas Distribution Energy $5.7 Infrastructure** 38% $1.8 12% Technology $1.2 8% Generation $2.2 Electric ATC 15% Distribution Investment* $2.8 $1.3 18% 9% * ATC is accounted for using the equity method; this represents WEC’s portion of the
Slide 12: Greater Opportunities in Natural Gas and Energy Infrastructure
Greater Opportunities in Natural Gas and Energy Infrastructure Average Asset Base Projected Asset Base 12/31/2018 7% 12/31/2024 $19.8 billion Growth $30.2 billion Gas Distribution Gas29% Gas Distribution* Distribution* FERC 31% FERC Regulated 37% Regulated We Power Electric 15% Electric 15% We Power
Slide 13: Electric and Gas Rate Case Settlements
Electric and Gas Rate Case Settlements We Energies & Wisconsin Public Service PSCW approved rate settlements on October 31 Expect to receive final written order by end of 2019 Authorized Return on equity: Wisconsin Electric – 10.0% Wisconsin Gas – 10.2% Wisconsin Public Service – 10.0%
Slide 14: New Liquefied Natural Gas (LNG) Facilities
New Liquefied Natural Gas (LNG) Facilities Taking steps to maintain reliable and affordable service for our customers These LNG facilities provide We Energies is seeking approval for two a solution for Southeastern LNG facilities to address the need for Wisconsin to meet peak additional natural ga
Slide 15: Wisconsin Utilities Investing in Zero-Carbon Generation
Wisconsin Utilities Investing in Zero-Carbon Generation Solar generation technology has improved in efficiency, become more cost-effective and complements our summer demand curve. Wisconsin Electric, Wisconsin Public Service and Madison Gas & Electric are partnering on major solar initiatives.
Slide 16: "Delivering" the Future Project Highlights
“Delivering” the Future Project Highlights Electric Redesign/ Resilience Natural Gas System Technology Enhancements Modernization Program • Major investments planned to • Advanced metering program address aging infrastructure • Extensive effort to modernize uses integrated system of smart • Expect t
Slide 17: Infrastructure Portfolio Investments
Infrastructure Portfolio Investments Expected to provide returns that are higher than those in our regulated business 8%+ unlevered internal rate of return Expected to qualify for 100% bonus depreciation and production tax credits Project Investment Offtake Agreement Capacity Upstream Wind Aff
Slide 18: Environmental, Social and Governance Performance
Environmental, Social and Governance Performance 17
Slide 19: Balancing reliability and customer cost with environmental stewardship
Balancing reliability and customer cost with environmental stewardship Reshaping our generation includes: Resulting in: Retiring older fossil-fueled generating units – Reduced costs to customers already more than 1,800 MW since 2017 Maintenance of fuel diversity Building state-of-the-art nat
Slide 20: Methane Reduction Goal
Methane Reduction Goal 0% Reduction Goal:* -10% -20% 30% by the year 2030 -30% from a 2011 baseline -40% 2011 2018 2030 *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 from a 2011 baseline. 19
Slide 21: Environmental, Social & Governance Focus
Environmental, Social & Governance Focus Reduce carbon dioxide emissions by approximately 40% below Carbon Goal 2005 levels by 2030 and 80% below 2005 levels by 2050 Methane Reduce the rate of methane emissions by 30% per mile from a Reduction Goal 2011 baseline by 2030 15.1 million Amount of combus
Slide 22: Regional Economy
Regional Economy 21
Slide 23: Powering Industry Leaders in our Region
Powering Industry Leaders in our Region 22
Slide 24: Wisconsin Segment Longer-Term Sales Forecast
Wisconsin Segment Longer-Term Sales Forecast Benefits from Regional Economic Growth Year-over-Year 2022 - 2024 Sales Growth Forecast Electric 1.2% - 1.5% (weather-normalized) Gas 1.2% - 1.5% 23
Slide 25: Key Takeaways for WEC Energy Group
Key Takeaways for WEC Energy Group Track record of exceptional performance Portfolio of premium businesses Investment opportunities support 5-7 percent EPS growth with minimal impact on base rates 100 percent of capital allocated to regulated businesses or contracted renewables/gas storage
Slide 26: Appendix
Appendix Y WEC Energy Group
Slide 27: Office of the Chair
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 customers.” Gale Klappa Executive Chairman - Gale Klappa, Executive Chairman WEC Energy Group Rick Kuester Kevin Fle
Slide 28: Business segments overview
Electric Generation Electric Distribution Natural Gas Distribution Energy Infrastructure Electric Transmission 60% ownership 27
Slide 29: Infrastructure Investment: Thunderhead Wind Energy Center
Infrastructure Investment Thunderhead Wind Energy Center 108 GE wind turbines with a capacity of ~300MW Under development by Invenergy and located in Antelope and Wheeler Counties, Nebraska Total investment: $338 million for an 80% ownership interest Expected returns are higher than those in o
Slide 30: Infrastructure Investment: Coyote Ridge Wind Farm
Infrastructure Investment Coyote Ridge Wind Farm Currently being built by Avangrid Renewables in 39 GE wind turbines with Brookings County, South Dakota, within MISO a capacity of ~97 MW footprint Total investment: $145 million for an 80% ownership interest and substantially all of the tax benef
Slide 31: Infrastructure Investment: Upstream Wind Energy Center
Infrastructure Investment Upstream Wind Energy Center Built by Invenergy and located in Antelope County, Nebraska 81 GE wind turbines with Total investment: $276 million a capacity of ~200 MW for an 80% ownership interest Expected to provide returns that are higher than those in our regulated
Slide 32: Infrastructure Investment: Bishop Hill III Wind Energy Center
Infrastructure Investment Bishop Hill III Wind Energy Center Developed by Invenergy and placed into service in May 2018 Located in Henry County, Illinois 53 GE wind turbines with a capacity of ~132 MW Total investment: $166 million for a 90% ownership interest Expected to provide returns tha
Slide 33: Power the Future Investments
Power the Future Investments Natural Gas Coal Capacity 1,090 MW 1,030 MW1 Investment $664 million $2 billion1 ROE 12.7% 12.7% Equity 53% 55% In Service Dates Unit 1 – July 2005 Unit 1 – February 2010 Unit 2 – May 2008 Unit 2 – January 2011 Lease Terms 25 years 30 years Cost Per Unit of Capacity $609
Slide 34: Capital Plan Drives 5% to 7% EPS Growth
$15.0 billion projected capital spend from 2020-2024 Capital Plan Drives 5% to 7% EPS Growth $3,500 $3,355 $286 $2,971 $3,006 $3,055 $3,000 $212 $305 $2,850 $280 $375 $2,735 $255 $338 $113 $199 $2,500 $356 $365 $375 $118 $87 $385 ATC Investment $140 $625 $81 $81 Energy Infrastructure $2,000 $587 $78
Slide 35: By Company Capital Plan Projections
By Company Capital Plan Projections 2019 2020 2021 2022 Wisconsin Electric $633.9 $701.9 $1,189.5 $926.7 Wisconsin Gas 194.3 184.8 267.7 268.2 Wisconsin Public Service 550.6 579.3 405.1 409.1 Upper Michigan Energy Corp 39.2 16.0 18.8 26.5 Wisconsin Segment 1,418.0 1,482.0 1,881.1 1,630.5 Peoples Gas
Slide 36: Diverse Portfolio of Regulated Businesses
Diverse Portfolio of Regulated Businesses By Business By Jurisdiction MI/MN 3% Gas Distribution IL 32% 15% FERC Regulated FERC 14% WI 14% 68% Electric Generation and Distribution 54% Based on 2018 average asset base. Excludes Non-Regulated Wind Infrastructure 35
Slide 37: Composition of Asset Base
Composition of Asset Base Total 2018 Average Asset Base of $19.8 billion Company Asset Base - $B % of Total Wisconsin Electric $6.3 31.8% Wisconsin Gas 1.4 7.1 Wisconsin Public Service 3.1 15.7 Upper Michigan Energy Resources 0.2 1.0 Peoples Gas 2.6 13.1 North Shore Gas 0.3 1.5 Minnesota Energy Reso
Slide 38: Balanced Sales Mix
Balanced Sales Mix 2018 Retail MWh Deliveries Mix* 35% Large C&I by Segment Paper 24% Foundry (SIC 33) 11% Mining/Minerals 10% Small C&I Large C&I Food/Agriculture 9% 35% 35% Other Manufacturing 8% Metal (SIC 34,35,37) 7% Medical 5% Residential Office 4% plus Farm Education 4% 30% Printing 3% Chemic
Slide 39: Balance Sheet Remains Strong
Balance Sheet Remains Strong Funds from Operations/Debt Holding Company Debt to Total Debt 22% 30% 20% 21% 29% 25% 18% Goal of 16-18% 30% or 16% 20% Less 14% 15% 12% 10% 10% 2018 2019-2024E 2018 2019-2024E Electric and Gas Utilities Credit Ratings Distribution* Utilities Utility Rating 140 120 Wisco
Slide 40: Rate-Making Parameters by Company
Rate-Making Parameters by Company Utility Equity Layer (1) Authorized ROE Wisconsin Electric (2) 50.0%-55.0% 10.0% Wisconsin Public Service (2) 50.0%-55.0% 10.0% Wisconsin Gas (2) 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 G
Slide 41: Foxconn in Wisconsin
Foxconn in Wisconsin Expected capital investment by Foxconn of Foxconn announced $10 billion dollars July 26, 2017, Wisconsin’s largest Goal of creating 13,000 jobs, and an estimated economic development 22,000 indirect jobs created throughout Wisconsin project and largest Largest greenfield i
Slide 42: Powering Industry Leaders in Our Region: Expansion
Powering Industry Leaders in Our Region Expansion State-of-the-art fulfillment center in Oak Creek, WI featuring robotics to pick, pack and ship items to customers $200 million development that includes a four-story, 2.6 million-square-foot facility on 75 acres Expected to open in first quarte
Slide 43: Electric Residential Bills below National Average
Electric Residential Bills below National Average National Average Wisconsin Electric $1,353 $1,264 $1,200 $1,205 2013 2018 Source: SNL data for average annual residential bills 42
Slide 44: Key Rate Making Components
Key Rate Making Components Michigan– Illinois – Minnesota – Electric & Wisconsin – Wisconsin – Area Gas Gas Gas Gas Electric Gas Pipeline Replacement PGL Rider Bad Debt Rider ✓ Bad Debt Escrow Accounting WE / WG WE Decoupling ✓ ✓ Fuel Cost Recovery 1 for 1 recovery of prudent fuel costs +/- 2% band
Slide 45: Regulatory Environment
Regulatory Environment Wisconsin Illinois Governor Tony Evers (D) Governor J.B. Pritzker (D) Commission Commission Gubernatorial appointment, Gubernatorial appointment, Senate Senate confirmation confirmation Chairman: Gubernatorial appointment Chairman: Gubernatorial appointment 6
Slide 46: Industry Leading Total Shareholder Returns
Industry Leading Total Shareholder Returns* Over the past decade, WEC Energy Group has consistently delivered among the best total returns in the industry 400% 350% 300% WEC Energy Group 250% Dow Jones Utilities 200% S&P Utilities Philadelphia Utility 150% S&P Electric 100% 50% 0% One-Year Three-Yea
Slide 47: 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 48: Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP)
Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP) 2017 2016 Reported EPS – GAAP basis $ 3.79 $ 2.96 Tax benefit related to Tax Cuts and Jobs Act of 2017 $ (0.65) – Acquisition Costs – $ 0.01 Adjusted EPS – Non-GAAP basis* $ 3.14 $ 2.97 * WEC Energy Group has provided adjusted earnings
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