Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Wisconsin Energy — Investor Presentation (May 2012)
30 slides from Wec Energy's investor presentation, May 2012
Slide 1: May Update 2012
V- Wisconsin Energy Corporation May Update 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 manageme
Slide 5: A Track Record of Performance
A Track Record of Performance Consistent Annual Earnings and Dividends Growth Wisconsin Energy is the only company 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 Jone
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: 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% 7
Slide 8: 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
Slide 9: Share Repurchases
Share Repurchases $100 Million Repurchased thru March 2012 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
Slide 10: Expected Levels of Investment and Depreciation
Retail Electric and Gas Utilities Expected Levels of Investment and Depreciation $1,000 $900 $800 $792 Millions of Dollars $131 $705 $700 $678 $71 $43 $625 $600 $24 $39 $161 $260 $500 $400 $300 $611 $586 $473 $200 $401 $330 $355 $260 $305 $100 $0 2011A 2012E 2013E 2014E Base Renewable Environmental
Slide 11: Base Utility Investment
Base Utility Investment Expected Base Investment from 2012 to 2016 Rebuild 2,500 miles of electric distribution lines that are more than 50 years old Strengthen our electric distribution network by replacing: 28,000 power poles 28,000 transformers Hundreds of substation components Streng
Slide 12: Rate Case Activity
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 expected proceeds from a renewable energy tax grant Non-fuel rate increase prior to credits: 6.2% or $17
Slide 13: Rate Case Activity
Rate Case Activity Wisconsin Jurisdiction Pre-Hearing Conference on May 21 Rate Case schedule was set as follows: Audit Complete 6/29 Direct Testimony 9/07 Rebuttal Testimony 9/20 Hearing 9/26 – 9/27 Reply Brief 10/29 Briefing Memo Issued 10/30 PSCW staff stated that it does not intend to pursue
Slide 14: Rate Case Activity
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 th
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 cont
Slide 16: Renewable Energy
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 completi
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 Capacity 1,090 MW 1,030 MW 1 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
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
Slide 19: Wholesale Electric Transmission
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
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 h
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
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 $2.7 Electric 10.4% allowed ROE 45% to 50% equity for Wisconsin Gas
Slide 24: Retail Electric and Gas Utilities
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: Retail Electric and Gas Utilities
Retail Electric and Gas Utilities Expected Levels of Investment 25
Slide 26: Wholesale Electric Transmission
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 prop
Slide 27: 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
Slide 28: 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, 20
Slide 29: Wisconsin Energy
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% 29
Slide 30: 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 30