Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Investor Presentation (December 2020)
46 slides from Wec Energy's investor presentation, December 2020
Slide 1: Investor Update: December 2020 – Our ESG Progress Plan
Investor Update: December 2020 Our “ESG” Progress Plan: A Road Map for Investment in Efficiency, Sustainability and Growth One of America’s Finalist for the S&P Global Best in the U.S. in We Energies named Most Responsible Energy Award in Corporate Large Customer Most Reliable Utility Companies for
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 $30.0 billion market cap* 1.6 million electric customers 2.9 million natural gas customers 60% ownership of American Transmission Company $35.0 billion of assets 10th largest publicly traded utility in U.S. measured by market value* * As of November 30, 2020 2
Slide 4: A History of Quality Earnings Growth
A History of Quality Earnings Growth $4.50 $3.99 - $4.03 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 GAAP Adjusted** 2020 Guidance 2021 Guidance * Estimated based on 2021 guidance midpoint of $4.01 per share ** See App
Slide 5: Consistent Performance Over Time
Consistent Performance Over Time EPS Guidance 2019 Exceeded 2018 Exceeded 2017 Exceeded 2016 Exceeded The only utility to beat guidance every year for 2015 Exceeded 16 years running 2014 Exceeded 2013 Exceeded 2012 Exceeded 2011 Exceeded 2010 Exceeded 2009 Exceeded 2008 Exceede
Slide 6: Strong Dividend Growth Continues
Strong Dividend Growth Continues Annualized Dividends Per Share The board of directors $2.71 ** announced its plan to $2.53 raise the dividend by $2.36 7.1% to a new annual $2.21 rate of $2.71 per share** $2.08 $1.98 $1.83* Targeting dividend payout of 65-70% of $1.56 earnings $1.445 $1.20 Projectin
Slide 7: One of the Top Performers in Operating Efficiency
One of the Top Performers in Operating Efficiency $35 2019 Non-Fuel O&M per MWh* $31.20 $30 $29.30 $25 $23.30 $21.30 $21.50 $21.51 $20.80 $20.10 $20 $18.30 AVERAGE $15.30 $15 $14.00 WEC $10 The top 10 vertically integrated electric utilities by market cap Source: FERC Form 1 Reports *For all compani
Slide 8: What's New?
What’s New? 7
Slide 9: Our ESG Progress Plan: Investing $16.1 billion
2021-2025 Capital Plan Our ESG Progress Plan Investing $16.1 billion for: Efficiency Sustainability Growth 8
Slide 10: Investing in Efficiency and Sustainability Drives Growth
2021-2025 Capital Plan ($ in billions) Investing in Efficiency and Sustainability Drives Growth Growth Sustainability Gas distribution $1.6 $3.0 Renewables $4.1 19% Electric (G,T&D) $1.4 Grid and fleet reliability $6.3 $16.1 billion Planned $10.4 Investment $2.7 64% 17% Efficiency Technology $1.0 Gr
Slide 11: ESG Progress Plan Continues to Support 5-7% EPS Growth
ESG Progress Plan Continues to Support 5-7% EPS Growth Increasing Five-Year Capital Plan by $1.1 Billion $16,100 $15,001 $2,188 $1,838 $1,120 Former Plan $1,257 $487 Energy Infrastructure New Plan $480 ATC* $3,054 MERC/MGU $3,198 Illinois $3,023 WI Gas Delivery** $2,760 WI Electric Delivery** WI Gen
Slide 12: Robust Growth in Asset Base
Robust Growth in Asset Base 7% Growth $32.2 billion $21.4 billion 2019A 2025E* *Estimated year-end average asset base 11
Slide 13: Investing in Carbon-Free Generation
Allocating $1.9 Billion for Regulated Renewables Investing in Carbon-Free Generation Build and own 1,800 MW of new solar, wind, and battery storage 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
Slide 14: Modernizing Our Gas-Fueled Generation Fleet
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 Reciprocating Internal Combusti
Slide 15: Aggressively Reducing Coal-Fueled Generation
Aggressively Reducing Coal-Fueled Generation Plant retirements have lowered costs and reduced CO2 emissions Retirements Pleasant Prairie 1,190 MW Expected Future 4,935 Edgewater Retirements MW 100 MW Oak Creek Pulliam 3,095 Units 5-8* – 200 MW MW 1,100MW 300MW to be 1,700 Presque Isle 350 MW determi
Slide 16: New Carbon Reduction Goals – Electric Generation
Our ESG Progress Plan New Carbon Reduction Goals – Electric Generation Achieved and anticipated CO2 reductions (net mass)* Baseline Reduction goals: -10% -20% -30% Targeting a 55% reduction 70% below 2005 by 2025 levels by 2030 -40% -50% Net carbon -60% neutral -70% by 2050 -80% -90% Goals aligned w
Slide 17: Reducing Greenhouse Gas Emissions
Reducing Greenhouse Gas Emissions Greenhouse gas intensity* (metric tons CO2e/MWh) 0.9 0.8 0.78 0.7 0.6 0.53 0.5 0.4 0.36 0.3 0.25 0.2 0.1 0** 0 2005 2019 2025E 2030E 2050E *Includes owned electric generation, purchased power and WEC Infrastructure **Includes projection of potential carbon offsets b
Slide 18: Methane Reduction Goal
Our ESG Progress Plan Methane Reduction Goal More than halfway 0% toward our Reduction Goal:* goal -10% -20% % by the year 2030 -30% from a 2011 baseline -40% 2011 2019 2030 *This goal represents a decrease in the rate of methane emissions from the natural gas distribution lines in our network of 30
Slide 19: Infrastructure Portfolio
Allocating $2.2 Billion 2021-2025 Infrastructure Portfolio ND In-Service Capacity Investment (MW) (in millions) Upstream 200 $307 SD Bishop Hill III 132 $166 Coyote Ridge 97 $145 Blooming Grove 250 $389 NE Total 679 $1,007 IL Under Development Capacity Investment Tatanka Ridge 155 $235 Thunderhead*
Slide 20: Regional Economy
Regional Economy 19
Slide 21: Powering Industry Leaders in our Region
Powering Industry Leaders in our Region 20
Slide 22: Broad Ranging Growth Driving Longer-Term Sales Forecast
Wisconsin Segment Broad Ranging Growth Driving Longer-Term Sales Forecast Year-over-Year 2022 - 2025 Sales Growth Forecast Electric 1.0% - 1.3% (weather-normalized) Gas 1.0% - 1.3% 21
Slide 23: Key Takeaways for WEC Energy Group
Key Takeaways for WEC Energy Group Track record of exceptional performance 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
Slide 24: Appendix
Appendix VATE Vz Energy Group
Slide 25: Electric Generation, Distribution, Natural Gas, Energy Infrastructure
Electric Generation Electric Distribution Natural Gas Distribution Energy Infrastructure Electric Transmission 60% ownership 24
Slide 26: 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 Scott Lauber Kevin Fletcher Xia Liu Senior Executive Vice President an
Slide 27: Environmental, Social & Governance Focus
Environmental, Social & Governance Focus Met and exceeded our 2030 target in 2019. Set new goals to reduce Carbon Goals carbon dioxide emissions from electric generation by 70% below 2005 levels by 2030 and to be net carbon neutral by 2050. Methane Reduce the rate of methane emissions by 30% per mil
Slide 28: Carbon-Free Generation Currently Under Development
Wisconsin Utilities Carbon-Free Generation Currently Under Development 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
Slide 29: Since 2010, Lithium-Ion Battery Prices Have Fallen Over 80%
Since 2010, Lithium-Ion Battery Prices Have Fallen Over 80% Battery pack price (real 2019 $/kWh) $1,183 80%+ $917 $721 $663 $588 $381 $293 $219 $180 $156 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: BloombergNEF 28
Slide 30: New Liquefied Natural Gas (LNG) Facilities
New Liquefied Natural Gas (LNG) Facilities Taking steps to maintain reliable and affordable service for our customers LNG provides a solution We Energies is seeking approval for two for Southeastern LNG facilities to address the need for Wisconsin to meet peak additional natural gas supply in Wisc
Slide 31: Efficiency, Growth and Sustainability Progress
Project Highlights Efficiency, Growth and Sustainability Progress Electric Delivery Natural Gas System Technology Redesign / Resilience Modernization Enhancements • Addressing aging Illinois • Implementing advanced infrastructure • Expected replacement of 2,000 metering miles of piping for safety an
Slide 32: Wind Infrastructure Investment Summary
Wind Infrastructure Investment Summary WEC Commercial Project Developer Location Investment Offtake Agreement Operations Capacity Bishop Hill III 80% on 8/31/18 Henry County, $166M for WPPI Energy Wind Energy Invenergy Incremental ~132MW Illinois 90% ownership 22-years Center 10% on 12/5/18 Antelope
Slide 33: Low-Risk Capital Plan Drives 5% to 7% EPS Growth
$16.1 billion projected capital spend from 2021-2025 Low-Risk Capital Plan Drives 5% to 7% EPS Growth $3,514 $3,500 $3,351 $3,337 $3,182 $400 $3,062 $400 $3,000 $588 $2,836 $253 $655 $93 $400 $289 $258 $107 $176 $400 $2,500 $99 $662 $96 Energy Infrastructure $208 $144 $156 $584 $92 ATC Investment 1
Slide 34: Capital Plan Projections by Company
By Company Capital Plan Projections ($ in millions) 2020 2021 2022 2023 Wisconsin Electric $678.2 $933.5 $1,032.0 $1,375.3 Wisconsin Gas $169.9 $234.4 $256.2 $234.4 Wisconsin Public Service $534.1 $578.8 $537.6 $443.8 Upper Michigan Energy Corp $17.6 $16.7 $18.8 $16.7 Wisconsin Segment $1,399.8 $1,7
Slide 35: Composition of Asset Base
Composition of Asset Base Total 2019 Average Asset Base of $21.4 billion Company Asset Base - $B % of Total Wisconsin Electric $6.3 29.4% Wisconsin Gas 1.5 7.0 Wisconsin Public Service 3.4 15.9 Upper Michigan Energy Resources 0.4 1.9 Peoples Gas 3.0 14.0 North Shore Gas 0.3 1.4 Minnesota Energy Reso
Slide 36: Power the Future Investments
Power the Future Investments 1 Natural Gas Coal 2 Capacity 1,090 MW 1,030 MW 2 Investment $664 million $2 billion 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
Slide 37: Focused on Efficiency
Focused on Efficiency Reducing Day-to-Day O&M Expense* $1,342 $1,281 $1,234 4.5% 3.7% $1,143 7.4% $ In millions 2016 2017 2018 2019 2020E *Excludes costs that have a revenue offset such as operation and maintenance costs associated with the We Power generation units, transmission expenses that are c
Slide 38: Balance Sheet Remains Strong
Balance Sheet Remains Strong Funds from Operations/Debt Holding Company Debt to Total Debt 19.0% 30% 18.0% 18.5% 17.0% 28% 16-18% 25% 16.0% Goal of 15.0% 30% or 20% Less 14.0% 13.0% 12.0% 15% 11.0% 10.0% 10% 2019 2020-2025E 2019 2020-2025E Electric and Gas Utilities Credit Ratings Distribution* Util
Slide 39: Balanced Sales Mix
Balanced Sales Mix 2019 Retail MWh Deliveries Mix* 35% Large C&I by Segment Paper 23% Foundry (SIC 33) 11% Mining/Minerals 11% Small C&I Large C&I Food/Agriculture 9% 35% 35% Other Manufacturing 8% Metal (SIC 34,35,37) 7% Medical 5% Residential Education 4% plus Farm Chemical 4% 30% Printing 3% Offi
Slide 40: Diverse Portfolio of Regulated Businesses
Diverse Portfolio of Regulated Businesses By Business By Jurisdiction MI/MN 5% Gas Distribution 33% IL 16% FERC Regulated 14% FERC WI 14% 65% Electric Generation and Distribution 53% Based on 2019 average asset base. Excludes wind investments in our Energy Infrastructure segment 39
Slide 41: 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 42: Rate-Making Parameters by Company
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 Utilities
Slide 43: 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 Residential Residential Decoupling ✓ ✓ Fuel Cost Recovery 1 for 1 recovery of prudent fuel costs +/-
Slide 44: 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 S&P Utilities 200% Philadelphia Utility S&P Electric 150% 100% 50% 0% One-Year Three-Yea
Slide 45: 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 46: Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP)
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 – – – $ (0.65) Act of 2
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