Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Wisconsin Energy — Investor Presentation (April 2012)
29 slides from Wec Energy's investor presentation, Apr 4, 2012
Slide 1: Wisconsin Energy Corporation April 2012
Yau Wisconsin Energy (4M Corporation April 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: 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 3
Slide 4: Investment Thesis
Investment Thesis Solid Growth with a Low 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 tea
Slide 5: A Track Record of Performance
A Track Record of Performance Consistent Annual Earnings and Dividends Growth Wisconsin Energy is the onlycompany in the indices below that has grown earnings per share and dividends per share every year since 2003 S&P Utilities Index S&P Electric Index Philadelphia Utility Index Dow Jones Utilities
Slide 6: 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 (3) ($0.08) ($0.0
Slide 7: 2012 Q1 Update
2012 Q1 Update Reaffirming annual guidance In our 8-K filing on March 29: We re-affirmed our 2012 annual earnings guidance of $2.24 - $2.29 per share We lowered our Q1 earnings guidance to 72 - 73 cents from 75 – 78 cents per share 2011-2012 winter was the warmest in more than 100 years Q1 2011 earn
Slide 8: 2012 Q1 Update
2012 Q1 Update Reaffirming annual guidance Despite the warmest winter in more than 100 years, we have reaffirmed our 2012 annual earnings guidance Key drivers for the remainder of the year: Fuel recoveries Interest savings (timing of long-term debt issuances) Cost control 8
Slide 9: 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% 9
Slide 10: 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 11: 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 12: 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 $24 $39 $600 $260 $161 $500 $400 $300 $611 $586 $473 $200 $401 $330 $355 $260 $305 $100 $0 2011A 2012E 2013E 2014E Base Renewable Environmental Depreciation *Total
Slide 13: Rate Case Activity: Wisconsin Jurisdiction
Rate Case Activity Wisconsin Jurisdiction Filed rate case on March 23, 2012, for a net customer bill increase of 3.6% in 2013 and an additional bill increase of 3.6% in 2014 -- after applying the expected proceeds from a renewable energy tax grant Non-fuel rate increase prior to credits: 6.2% or $17
Slide 14: Rate Case Activity: Michigan Jurisdiction
Rate Case Activity Michigan Jurisdiction Filed rate case on July 5, 2011 Requested $17.5 million annually -- a 9.9% increase Increase of $7.7 million took effect in January 2012 The commission approved a self-implementation of $5.7 million (3.2% increase) offset by the Michigan portion of the DOE se
Slide 15: 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 16: Renewable Energy: Summary of New Investments
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 17: Power the Future Investments
Power the Future Investments PTF Plants Represent a Key Investment in the Energy Future of Wisconsin Natural Gas Coal 1 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 –
Slide 18: Power the Future: Oak Creek Expansion – Accelerated Depreciation
Power the Future Oak Creek Expansion –Accelerated Depreciation In December 2011, 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 19: 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 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 Low 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 opportun
Slide 22: Appendix
Appendix
Slide 23: 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 jurisdictions 48.5% to 53.5% equity for Wisconsin Electric 10.4% allowed ROE 45% to 50% equity for Wisconsin Gas 10.5% allowed RO
Slide 24: 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. 24
Slide 25: 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 26: 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 27: Political Environment
Political Environment During the summer of 2011, nine Senators were recalled Seven retained their seats (4 GOP, 3 DEM) Two GOP Senators were defeated The WI State Senate is 16 GOP and 16 DEM The Government Accountability Board (GAB) has received six recall petitions filed on January 17, 2012 Governo
Slide 28: 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% 28
Slide 29: 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 54.4% Adjusted assumes half of $500 million of hybrid securities are treated as common equity 29
Wisconsin Energy — Investor Presentation (April 2012) on 6ix