Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Wisconsin Energy — Investor Presentation (July 2013)
37 slides from Wec Energy's investor presentation, Jul 8, 2013
Slide 1: Wisconsin Energy Corporation July 2013
Exhibit 99.1 Wa Wisconsin Energy (mm Corporation July 2013
Slide 2: Cautionary Statement Regarding Forward-Looking Information
2 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 thin
Slide 3: Overview: Retail Electric and Gas Utilities
3 Largest electric and gas company in Wisconsin 1.1 million electric customers 1.1 million natural gas customers Overview Retail Electric and Gas Utilities
Slide 4: Investment Thesis: An Earn and Return Company
4 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 - moving to a 60% dividend payout ratio in 2014 and targeting 65%-70% in 2017 Implies 7%-10% dividend growth each year $300 million sh
Slide 5: Consistent Earnings and Dividend Growth
5 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 A Track Record of Performance Consistent Earnings and Dividend Growth
Slide 6: Industry Leading Total Shareholder Returns
6 A Track Record of Performance Industry Leading Total Shareholder Returns One Year Three Year Five Year Ten 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 Jon
Slide 7: Leading Reliability and Customer Satisfaction
7 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 int
Slide 8: Power the Future Investments – Natural Gas Capacity
8 A Track Record of Performance Power the Future Investments – Natural Gas 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 Meeting the Region’s Energy Needs
Slide 9: Power the Future Investments – Coal
9 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 investment amounts reflect WEC ownership only. Demonstrated capacity for the coal units is 1,057 MW – v
Slide 10: Dramatic Change in Environmental Performance
10 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
Slide 11: State of the Art Emission Controls
11 A Track Record of Performance State of the Art Emission Controls
Slide 12: Strong Financial Foundation
12 A Track Record of Performance Strong Financial Foundation Moody’s S&P Fitch WEC A3 A- A- WE A2 A- A WG A2 A- A- Well Funded Pension … More than 99% funded at year end 2012 More than $330 million in contributions in 2011 and 2012 Solid credit ratings … Positive Cash Flow … Project more than
Slide 13: Pension Funding Status
13 A Track Record of Performance Pension Funding Status Percentage Funded through 2012 40% 50% 60% 70% 80% 90% 100% Major US Utilities Average *Company 1 is more than 100% funded Source: Wolfe Research and company filings
Slide 14: Summary of our Core Business
14 A Track Record of Performance Summary of our Core Business Retail Electric and Gas Utilities 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 ROE Power the Future 53% to 55%
Slide 15: Major Segment Earnings for 2011 – 2013
15 Where We Go From Here Major Segment Earnings for 2011 – 2013 2011A 2012A 2013E Electric and Gas Utilities $1.44 $1.55 $1.55 to $1.65 Power the Future (1) $0.66 $0.69 $0.71 Wholesale Electric Transmission (2) $0.16 $0.17 $0.18 Unallocated holding company debt (3) ($0.08) ($0.06) ($0.06) $2.18 $2.3
Slide 16: Delivering the Future
16 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
Slide 17: Delivering the Future – Electric Overview
17 Between now 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 Where We Go From Here Delivering the Future – Electric Overview
Slide 18: Delivering the Future – Gas Overview
18 Between now 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 Where We Go From Here Delivering the Future – Gas Overview
Slide 19: Western Wisconsin Gas Expansion
19 Where We Go From Here Western Wisconsin Gas Expansion Additional natural gas capacity needed to address reliability and to meet growth in customer demand Demand driven in part by propane conversion and frac sand mining Seeking approval from the Wisconsin Commission Expected initial invest
Slide 20: Renewable Energy Investments
20 Where We Go From Here Renewable Energy Investments Biomass Plant 50MW Projected investment of approximately $260 million Approved by Wisconsin Commission and Domtar Inc. Targeting completion by the end of 2013 Montfort Wind Energy Center 30MW Purchased from a subsidiary of NextEra
Slide 21: Valley Power Plant
21 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 regulatory approvals Where We Go From Here Vall
Slide 22: Twin Falls Hydroelectric Powerhouse
22 In 2012 announced plans to build a new powerhouse at Twin Falls Existing powerhouse is in need of repair Seeking regulatory approvals in 2013 Expect to begin construction in fall of 2013 with completion in 2016 Expected cost: $60 to $65 million Where We Go From Here Twin Falls Hydroelec
Slide 23: Wolverine Joint Venture at Presque Isle Power Plant
23 Where We Go From Here Wolverine Joint Venture at Presque Isle Power Plant Signed joint venture agreement with Wolverine Power Cooperative for environmental upgrades at the Presque Isle Power Plant Wolverine will invest $130-$140 million for sulphur dioxide and NOx controls In return, Wolver
Slide 24: Growth at American Transmission Company
24 Where We Go From Here Growth at American Transmission Company Key Assumptions ATC rate base at year end 2013 is projected to be about $2.8 billion ATC projects a need for $3.9-$4.8 billion of transmission improvements in its footprint from 2012 to 2021 Implies average $43 million effective
Slide 25: Multiple Opportunities Being Evaluated
25 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 America
Slide 26: Industry Leading Dividend Growth
26 Where We Go From Here Industry Leading Dividend Growth The board of directors raised the quarterly dividend in January to 34 cents a share – equivalent to an annual rate of $1.36 a share 13.3 percent increase over the 2012 amount We’re targeting a 60 percent payout ratio in 2014 Supports
Slide 27: Financial Flexibility for Share Repurchases
27 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 more than 50 percent complete at the end of March 2013 Repurchased 4.93
Slide 28: Key Takeaways on Wisconsin Energy
28 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 Have received final regulatory approvals and rate treatment is in place Well managed utility franchises with rate base
Slide 29: Appendix
Appendix
Slide 30: Wisconsin Jurisdiction Rate Case Summary
30 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
Slide 31: Reconciliation of 2013 O&M to 2012
31 Where We Go From Here Reconciliation of 2013 O&M to 2012 Reinstatement of amortization holiday adds $148 million to O&M for 2013 However, the 2013 Wisconsin rate order includes several offsets to O&M: Extension of recovery period for certain regulatory assets Significant reduction of escr
Slide 32: Projected Rate Base
32 Where We Go From Here Projected Rate Base *All other is comprised of customer advances, def. taxes, inventory and implied working capital.
Slide 33: Strong capital investment in the retail utility
33 Where We Go From Here Strong capital investment in the retail utility $137 $141 $151 $163 $225 $251 $245 $253 $172 $192 $193 $325 $163 $72 $305 $325 $345 $360 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 2012A 2013E 2014E 2015E M ill io ns o f D ol la rs Generation Delivery - Electric D
Slide 34: Duke Energy and ATC Joint Venture (DATC)
34 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 Transmission Expansion Pl
Slide 35: Forecast of Electric Sales
35 Where We Go From Here Forecast of Electric Sales 2013 Forecast vs. 2012 Actual 2013 Forecast vs. 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%
Slide 36: Electric Retail Customer Base
36 A Track Record of Performance Electric Retail Customer Base C&I Sector Small & Large % of 2012 Electric C&I Sales Office 12.1% Mining 11.1% Retail 6.4% Primary Metals 6.0% Health Care 5.7% Food 5.0% Paper & Products 4.7% Education 4.6%
Slide 37: Regulatory Environment
37 Regulatory Environment Wisconsin Commissioners Name Party Began Serving Term Ends Phil Montgomery Chairman R 03/2011 03/2017 Eric Callisto D 05/2008 03/2015 Ellen Nowak R 07/2011 03/2019 Wisconsin Commission 3 Commissioners Gubernatorial appointment, Senate confirmation Chairman: Gubernat