WEC Energy Group, Inc. · NYSE:WEC
WEC Energy — Wisconsin Energy — Investor Presentation (October 2011)
25 slides from WEC Energy's investor presentation, October 2011
Slide 1: Wisconsin Energy Corporation October 2011
V- Wisconsin Energy Corporation October 2011
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: Key Areas to be Covered
Key Areas to be Covered Overview of Wisconsin Energy Retail Electric and Gas Utilities Power the Future Wholesale Electric Transmission Earnings Outlook 3
Slide 4: Overview of Wisconsin Energy
Overview of Wisconsin Energy Estimated Rate Base and Power the Future Investment at 12/31/11 Retail Electric and Gas Utilities $9.7 Billion Wisconsin, Michigan, and FERC jurisdictions $0.7 48.5% to 53.5% equity for Wisconsin $2.7 Electric $2.7 10.4% allowed ROE 45% to 50% equity for Wiscon
Slide 5: 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 5
Slide 6: 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 7: Rate Case Activity (Wisconsin)
Rate Case Activity Wisconsin Jurisdiction Filed an application with the Wisconsin Public Service Commission requesting no net increase in base rates in 2012 Authorizes the company to suspend amortization of $148M of regulatory costs in 2012 Authorizes $148M of carrying costs and depreciation o
Slide 8: Rate Case Activity (Wisconsin)
Rate Case Activity Wisconsin Jurisdiction Schedule for fuel case established with decision expected by the end of 2011 or early 2012 Requests the refund of $26 million from Wisconsin Electric’s settlement of spent nuclear fuel litigation with the U.S. Department of Energy Expect to file a full
Slide 9: Rate Case Activity (Michigan)
Rate Case Activity Michigan Jurisdiction Filed rate case on July 5 Requested $14.9 million annually -- an 8.4% increase includes a DOE settlement refund of $2.7 million Expect to self-implement $7.7 million -- a 4.4% increase in January 2012 Filed for a 10.4% ROE Final rates effective Ju
Slide 10: Electric Retail Customer Base
Wisconsin Energy Electric Retail Customer Base 2010 Retail KWh Sales Mix Other 1% % of 2010 C&I Sector Electric Large C&I Small & Large Sales Residential 31% 36% Office 12.4% Small C&I Mining 11.4% 32% Retail 6.4% Health Care 5.7% 2010 Retail Revenues Paper & Products 5.5% Other 1% Primary Metals 5.
Slide 11: Expected Levels of Investment and Depreciation
Retail Electric and Gas Utilities Expected Levels of Investment and Depreciation $1,000 $914 $900 $166 $800 Millions of Dollars $700 $687 $625 $600 $212 $333 $68 $493 $500 $132 $71 $400 $146 $10 $300 $200 $415 $425 $412 $329 310 320 250 260 $100 $0 2010A 2011E 2012E 2013E Base Renewable Environmenta
Slide 12: Projected Rate Base
Retail Electric and Gas Utilities Projected Rate Base Average Total Utility Rate Base $8 $6.7 $6.7 $7 $6.3 $0.4 $0.3 $0.2 $6 $5.5 Billions of Dollars $1.0 $5 $0.6 $4 $6.4 $6.7 $3 $4.9 $5.1 $2 $1 $0 ($0.1) ($0.3) 2010A 2011E 2012E 2013E -$1 PPE CWIP All Other* *All other is comprised of customer adva
Slide 13: Renewable Energy Opportunity
Renewable Energy Opportunity Renewable Portfolio Standard in Wisconsin 8.27%* Required Percentage for Wisconsin Electric Retail Sales 4.27%* 2.27% 2001-03 2010 2015 Baseline *Requirements at a Wisconsin state level are 5% and 10% in 2010 and 2015 respectively. In terms of energy this is estimated to
Slide 14: Renewable Energy Opportunity
Renewable Energy Opportunity Glacier Hills 162 MW Estimated investment of $361 million Expected completion December of 2011 Biomass 50MW Estimated investment of $255 million Approved by PSCW and Domtar Inc. Expected completion by the end of 2013 Wisconsin Electric has executed 16
Slide 15: Power the Future Expected Earnings
Power the Future Expected Earnings Earnings per Share Contribution Key Assumptions Consolidated Basis Oak Creek Unit 2 in service $0.67 $0.66 January 12, 2011 $0.48 Cost estimate of $2 billion for WEC’s ownership of the coal units $0.21 Free cash flow of $248 million in 2012 – after capex and
Slide 16: Wholesale Electric Transmission
Wholesale Electric Transmission Wisconsin Energy owns 26.2% of American Transmission Company (ATC) ATC is projected to contribute approximately 16 cents to our EPS this year Represents almost 8% of consolidated earnings ATC’s projected capital investment over the next ten years is $3.8 - $4.
Slide 17: Wholesale Electric Transmission
Wholesale Electric Transmission Non-exclusive joint venture between Duke Energy and ATC (DATC) announced in April Adds potential investment opportunities outside ATC’s current footprint Ownership is split 50/50 with Duke and ATC In September, DATC submitted the first set of proposed transmis
Slide 18: Wholesale Electric Transmission Expected Earnings
Wholesale Electric Transmission Expected Earnings Projected Capital Expenditures Key Assumptions (Millions of Dollars) ATC projects a need for $3.8-$4.4 $310 billion of transmission improvements $272 in its footprint from 2011 to 2020 $267 Implies average $35 million effective annual rate base g
Slide 19: Projected Earnings Base for 2010 - 2012
Projected Earnings Base for 2010 - 2012 2010A 2011E 2012E Electric and Gas Utilities $1.34 $1.41 to $1.45 $6.7 billion rate base Power the Future (1) $0.48 $0.66 $0.67 Wholesale Electric Transmission (2) $0.15 $0.16 $0.17 Unallocated holding company debt(3) ($0.05) ($0.13) ($0.09) $1.92 $2.10 to $2.
Slide 20: Forecast of Electric Sales 2011
Forecast of Electric Sales 2011 2011 Forecast vs. 2011 Forecast vs. 2010 Actual 2010 Normalized Residential -3.2% -0.4% Small C&I -1.0% 0.5% Large C&I (ex. Mines) -2.8% -2.0% Total Large C&I -2.2% -1.6% Total Retail -2.1% -0.6% 20
Slide 21: Financing Policy
Financing Policy Capital Structure Goals Maintain debt to capital below 55% by the end of 2013 Actual ratio was 54.1% at the end of 2010 Assumes half of hybrid securities are treated as common equity 21
Slide 22: Dividend / Share Repurchase
Dividend / Share Repurchase Move to a dividend payout ratio that is competitive with our peers Adopted a policy that trends to a 60% payout ratio over the period 2012 to 2015 Beginning in 2012, this policy should support annual dividend increases in the 8 to 9 percent range over the forecast p
Slide 23: Projected Growth in Earnings and Dividends
Projected Growth in Earnings and Dividends Earnings per Share Dividends per Share $2.10 to $1.04 $2.14 $1.92 $1.60 $0.80 $0.68 2009A 2010A 2011E 2009A 2010A 2011E 23
Slide 24: Potential Investment Opportunities
Potential Investment Opportunities Divestiture of energy assets by the State of Wisconsin Investment in fuel flexibility at new Oak Creek coal units Investment in aging gas and electric distribution infrastructure Renewable energy investments beyond 2016 Investment in aging generation faci
Slide 25: Key Takeaways on Wisconsin Energy
Key Takeaways on Wisconsin Energy Power the Future program now complete Highly visible earnings and strong cash flow Solid utility franchises with rate base growth Power the Future 2 driven by environmental upgrades, renewable energy projects and network improvements Investment in American
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