WEC Energy Group, Inc. · NYSE:WEC
WEC Energy — Wisconsin Energy — Investor Presentation (November 2014)
29 slides from WEC Energy's investor presentation, November 2014
Slide 1: Wisconsin Energy Corporation November 2014 Appendix
Wisconsin Energy Corporation Vz November 2014 Appendix
Slide 2: Industry Leading Dividend Growth
A Track Record of Performance Industry Leading Dividend Growth $1.56 $1.45 $1.20 $1.04 $0.80 $0.68 $0.50 $0.54 $0.44 $0.46 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E Targeting dividend payout ratio of 65 - 70 percent of earnings in 2017 2
Slide 3: Power the Future Investments – Natural Gas
A Track Record of Performance Power the Future Investments – Natural Gas Meeting the Region’s Energy Needs 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 3
Slide 4: Power the Future Investments – Coal
A Track Record of Performance Power the Future Investments – Coal Meeting the Region’s Energy Needs 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 inves
Slide 5: Strong Financial Foundation
A Track Record of Performance Strong Financial Foundation Positive Cash Flow … Project $500 million of free cash flow from 2014-2018 Expect to generate free cash flow each year after reaching target dividend payout ratio in 2017 Solid credit ratings … Well-Funded Pension … Moody’s S&P Fitch Ov
Slide 6: Major Segment Earnings for 2012 – 2014
Where We Go From Here Major Segment Earnings for 2012 – 2014 Projecting earnings per share growth of 4-6% annually from the 2011 base 2012A 2013A 2014E(4) Electric and Gas Utilities $1.55 $1.67 $1.74 to $1.78 Power the Future (1) $0.69 $0.72 $0.73 Wholesale Electric $0.17 $0.18 $0.19 Transmission (2
Slide 7: Five-Year Capital Investment in our Retail Utilities
Where We Go From Here Five-Year Capital Investment in our Retail Utilities (Projected Investment, In millions) $900 $800 $778 $700 $668 $668 $617 $607 83 330 $588 $600 188 194 200 $500 189 188 $400 224 208 $300 220 211 214 227 $200 409 426 359 388 329 173 342 157 108 84 137 125 $100 83 82 96 97 48 6
Slide 8: Ten-Year Capital Projection 2014 - 2023
Where We Go From Here Ten-Year Capital Projection 2014 - 2023 $6.5 to $7.1 billion investment in our core business Power the Future: Plus Additional Growth Opportunities $0.2B $2.7 ATC – Traditional Footprint $3.3 to $3.9 billion WEC Ownership 26.2% DATC – Outside ATC Traditional Footprint R
Slide 9: Western Wisconsin Gas Expansion
Where We Go From Here Western Wisconsin Gas Expansion Additional natural gas distribution Sand Plants – Wisconsin capacity needed to address reliability and to meet growth in customer demand Frac sand mining - increase from 10 to 115 licensed sand mining operations since 2010 Propane conversio
Slide 10: Renewable Energy Investments
Where We Go From Here Renewable Energy Investments Biomass plant completed 50MW Investment of $269 million Commercial operation began in November of 2013 Renewable fleet in place Glacier Hills Wind Park (162 MW, in service since 2011) Blue Sky Green Field Wind Park (145 MW, in service
Slide 11: Valley Power Plant
Where We Go From Here Valley Power Plant Converting Valley from coal to natural gas Unit 1 conversion underway Targeting completion of project in late 2015 Follows construction of a gas pipeline upgrade (now in service) Projected conversion cost for Valley: $65 to $70 million 11
Slide 12: Twin Falls Hydroelectric Powerhouse
Where We Go From Here Twin Falls Hydroelectric Powerhouse Building a new powerhouse at Twin Falls as existing powerhouse is in need of repair Construction began in the fall of 2013 with scheduled completion in 2016 Expected cost: $60 to $65 million 12
Slide 13: Oak Creek Plant Projects
Where We Go From Here Oak Creek Plant Projects Goal: enable our Oak Creek expansion units to burn both Powder River Basin (PRB) and bituminous coal To Date: have achieved sustained operation on 20% PRB coal blend In July, asked the Wisconsin Commission to approve $21 million of additional capi
Slide 14: Wisconsin Rate Case Summary
Where We Go From Here Wisconsin Rate Case Summary Wisconsin has biennial rate cycle Two year forward looking test years Apply in 2014 for 2015 and 2016 rates Settlement for ROE, capital structure, and base rate changes reached in May Wisconsin Electric ROE of 10.2%, Wisconsin Gas ROE of 10
Slide 15: Presque Isle Power Plant
Where We Go From Here Presque Isle Power Plant Entered into ‘System Support Resource’ (SSR) agreement with MISO in January 2014 for payments to support operation of Presque Isle power plant Several recent FERC orders may impact the SSR payments Allocation of costs across MISO Re-examination
Slide 16: Stand Alone Service Territory
Service Territory and Economy Stand Alone Service Territory Largest electric and gas company in Wisconsin 1.1 million electric customers 1.1 million natural gas customers 16
Slide 17: Electric Retail Customer Base
Service Territory and Economy Electric Retail Customer Base 2013 Retail KWh Sales Mix* Other 1% C&I Sector % of 2013 Largest Electric Large C&I 30% Segments* C&I Sales Residential 33% Office 13.5% Small C&I Retail 7.0% 36% Primary Metals 6.6% Health Care 6.3% 2013 Retail Revenues* Food 5.7% Other Ed
Slide 18: Forecast of Electric Sales
Service Territory and Economy Forecast of Electric Sales* 2014 Forecast vs. 2014 Forecast vs. 2013 Actual 2013 Normalized Residential -0.6% 0.4% Small C&I -0.4% 0.3% Large C&I (ex. Mines) 1.0% 0.9% Total Retail w/o Mines 0.0% 0.5% *Delivered Volumes 18
Slide 19: Forecast of Electric Sales
Service Territory and Economy Forecast of Electric Sales* 2014 Forecast vs. 2014 Forecast vs. 2013 Actual 2013 Normalized Residential -0.6% 0.4% Small C&I -0.6% 0.1% Large C&I (ex. Mines) -0.7% -0.8% Total Retail w/o Mines -0.6% -0.1% *Supply and Distribution Volumes 19
Slide 20: Combined Company Operating Company View
Service Territory and Economy Combined Company Operating Company View Minnesota Wisconsin Green Bay Milwaukee Michigan Wisconsin Energy Corp. Chicago Michigan Gas Utilities Corporation Illinois Minnesota Energy Resources Corporation North Shore Gas Company The Peoples Gas Light and Coke Company Wisc
Slide 21: Regulatory Environment
Service Territory and Economy Regulatory Environment Wisconsin Commission Michigan Commission 3 Commissioners 3 Commissioners Gubernatorial appointment, Gubernatorial appointment, Senate confirmation Senate confirmation Chairman: Gubernatorial Chairman: Gubernatorial appointment appo
Slide 22: Regulatory Environment
Service Territory and Economy Regulatory Environment Illinois Commission Minnesota Commission 5 Commissioners 5 Commissioners Gubernatorial appointment, Gubernatorial appointment, Senate confirmation Senate confirmation Chairman: Gubernatorial Chairman: Gubernatorial appointment appo
Slide 23: Pro Forma Company Size Relative To Peers
Financial Summary Pro Forma Company Size Relative To Peers Publicly Traded Electric and Gas Utilities - Market Value (in $ billions) $51.8 #14 $21.9 $20.1 $18.8 #20 $16.6 $15.9 $15.0 $14.8 $14.6 $14.5 $13.9 $12.1 $11.1 #34 $10.7 $10.6 $9.7 $5.3 $4.9 $4.8 $4.2 PF WEC WEC TEG U.S. Gas Customers (in th
Slide 24: WEC Rate Base Investment – end of 2013
Financial Summary WEC Rate Base Investment – end of 2013 $10.0 Billion Jurisdictional Mix Retail Electric and Gas Utilities $0.7 3% Wisconsin, Michigan, and FERC 10% jurisdictions $2.7 Growth driven by annual average capital spend of $700 million per year, primarily by electric and gas infrast
Slide 25: Pro Forma Rate Base Investment – end of 2015
Financial Summary Pro Forma Rate Base Investment – end of 2015 $16.7 Billion Jurisdictional Mix 4% Retail Electric and Gas Utilities $1.8 Wisconsin, Illinois, Michigan, Minnesota, and 13% FERC jurisdictions $2.8 Growth driven by average annual capital 14% spend of $1.4 billion per year, e.g.
Slide 26: Dividend Parity – Illustrative Example
Financial Summary Dividend Parity – Illustrative Example (based on current annual dividends per share) Per Share DIVIDEND EXCHANGE RATIO Wisconsin Energy 10 trading day average closing price at effective merger close date (1) $46.89 x Stock consideration exchange ratio 1.128x = Value of stock consid
Slide 27: Integrys Energy Group Company Structure
Integrys Overview Integrys Energy Group Company Structure 27
Slide 28: Integrys Regulated Utilities – Regulatory Rate Base and Return on Equity
Integrys Overview Integrys Regulated Utilities – Regulatory Rate Base and Return on Equity PGL NSG MERC MGU WPS Natural Gas Natural Gas Natural Gas Natural Gas Natural Gas Electric Retail last authorized, IL/MN Rate base/investment ($ millions) 1,495 201 190 Allowed ROE 9.28% 9.28% 9.70% Authorized
Slide 29: Integrys Energy Services (IES) Sale
Integrys Overview Integrys Energy Services (IES) Sale IES Overview Provides retail gas and electric marketing across 22 states in the northeastern quadrant of the U.S. and Washington, D.C. Sales of $2 billion in 2013 Exelon’s Constellation business unit acquired IES in November, 2014 Value
Wisconsin Energy — Investor Presentation (November 2014) on 6ix