Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Investor Presentation (December 2022)
48 slides from Wec Energy's investor presentation, Dec 7, 2022
Slide 1: Investor Update: December 2022
Investor Update: December 2022 Our “ESG” Progress Plan Update Investing in Efficiency, Sustainability and Growth Best in the U.S. in Large Customer Satisfaction ESource We Energies Named #1 Energy Company in America by Business Customers Escalent Finalist for the S&P Global Energy Award in Corporate
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: The Premier Energy Company in America's Heartland
3 The Premier Energy Company in America’s Heartland $31.3 billion market cap* 4.6 million retail customers 60% ownership of American Transmission Company $40.8 billion of assets * As of Nov. 30, 2022
Slide 4: A History of Quality Earnings Growth
4 A History of Quality Earnings Growth $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 GAAP Adjusted** 2022 Guidance * Estimated based on 2022 guidance of $4.38 to $4.40 per share. ** See Appendix for recon
Slide 5: Consistent Performance Over Time
5 Consistent Performance Over Time EPS Guidance 2021 Exceeded 2020 Exceeded 2019 Exceeded 2018 Exceeded 2017 Exceeded 2016 Exceeded 2015 Exceeded 2014 Exceeded 2013 Exceeded 2012 Exceeded 2011 Exceeded 2010 Exceeded 2009 Exceeded 2008 Exceeded 2007 Exceeded 2006 Exceede
Slide 6: Strong Dividend Growth Continues
6 In January, raised the dividend by 7.4% to a new annual rate of $2.91 per share* Strong Dividend Growth Continues *Annualized based on first quarter 2022 dividend of 72.75 cents per share Top decile dividend growth in industry** ** Reflects current and expected dividends declared in 2022
Slide 7: What's New?
7 What’s New?
Slide 8: Wisconsin Utilities Rate Review
8 Authorized Return on Equity to 9.80 percent Equity component of capital structure rises to 53 percent Earnings sharing mechanism: Final order expected before year-end December Decision Wisconsin Utilities Rate Review Treatment 9.80% – 9.95% No sharing >9.95% – 10.55% 50/50 sharing >10.55%
Slide 9: Increasing Five-Year Capital Plan by $2.4 Billion
9 $4,693 $6,440 $3,356 $3,556 $2,811 $2,673 $3,053 $3,021 $542 $529 $1,345 $1,953 $1,900 $1,928 $17,700 $20,100 2022-2026 2023-2027 Energy Infrastructure ATC* MERC/MGU Illinois WI Gas Delivery** WI Electric Delivery** WI Generation** N e w P la n F o rm e r P la n ESG Progress Plan Supports 6.5% to
Slide 10: Robust Growth in Asset Base
10 $25.0 billion $38.4 billion 2021A 2027E* Robust Growth in Asset Base *Estimated year-end average asset base Expect long-term EPS growth of 6.5% to 7.0% per year. 7.4% Growth
Slide 11: Investing in Efficiency and Sustainability Drives Growth
11 $2.7 13% $14.6 73% $2.8 14% Sustainability Renewables $7.3 Grid and Fleet Reliability $7.3 Efficiency Technology $1.2 Grid and Fleet Modernization $1.5 Growth Gas Distribution $1.1 Electric (G,T&D) $1.7 2023-2027 Capital Plan Investing in Efficiency and Sustainability Drives Growth $20.1 Billion
Slide 12: Investing $5.4 billion in Regulated Renewables
12 Solar 280 MW under construction Badger Hollow II Solar Park and Paris Solar-Battery Park Filed for approval 495 MW Planning for additional 1,135 MW Qualifies for Tax Credits (ITC or PTC) Battery 99 MW under construction (Paris Solar-Battery Park) Filed for approval 217 MW Planning
Slide 13: WEC Infrastructure Portfolio – Green and Growing
13 SD IL NE Plan to invest $1.9 Billion (2023-2027) WEC Infrastructure Portfolio – Green and Growing In-service Under development Total Project Capacity (MW) Investment (in millions) Wind Upstream 200 $307 Bishop Hill III 132 166 Coyote Ridge 97 145 Blooming Grove 250 389 Tatanka Ridge 155 240 Jayha
Slide 14: Modernizing Our Gas-Fueled Generation Fleet
14 Modernizing Our Gas-Fueled Generation Fleet Retiring 200 MW of older, less-efficient gas generation expected Target: 2024 Building Weston RICE units Received regulatory approval on March 31 128 MW Expected investment: $170 million Target in-service: 2023 * Filed and pending regulatory
Slide 15: Exiting Coal
15 Near-term retirements planned: Oak Creek Units 5-6: 528 MW (May 2024) Oak Creek Units 7-8: 611 MW (late in 2025) Columbia Units 1-2: 300 MW (by June 1, 2026) Enhancing fuel flexibility (gas blending) at Oak Creek Power the Future units By the end of 2030, we expect to use coal only as
Slide 16: American Transmission Company
16 $552 $532 $707 $712 $661 $643 $331 $319 $424 $427 $397 $386 2022 2023 2024 2025 2026 2027 ATC WEC portion 60% American Transmission Company 5-year (2023-2027) WEC projected capital investment: Ongoing ATC: $1.7 billion Tranche 1 (2025-2027): $0.3 billion Future ATC Opportunity ATC’s estimat
Slide 17: Hydrogen Pilot Program
17 Led a pilot program – first of its kind in the world - to test hydrogen as a fuel source for power generation Partnered with the Electric Power Research Institute (EPRI) Blended hydrogen with natural gas at one of our RICE units Initial findings indicate that all project measures met or e
Slide 18: Carbon Reduction Goals – Electric Generation
18 *Includes projection of potential carbon offsets by 2050 Carbon Reduction Goals – Electric Generation We have established ambitious greenhouse gas reduction goals for our electric generating fleet, aligned with or surpassing global emissions pathways aimed at limiting warming to 1.5°C. Reduction
Slide 19: Methane Reduction
19 Goal: Net zero by the year 2030** * Represents a decrease in the rate of methane emissions, per mile, from the natural gas distribution lines in our network from a 2011 baseline. ** This goal applies to emissions from WEC Energy Group natural gas distribution companies calculated in accordance wi
Slide 20: Regional Economy
20 Regional Economy
Slide 21: Powering Industry Leaders in our Region
21 Powering Industry Leaders in our Region
Slide 22: Wisconsin Segment Economic Growth Driving Longer-Term Sales Forecast
22 Wisconsin Segment Economic Growth Driving Longer-Term Sales Forecast 2025-2027 Electric 0.7%-1.0% Gas 0.7%-1.0% Sales Growth Forecast (weather-normalized) Year-Over-Year
Slide 23: Key Takeaways for WEC Energy Group
23 Track record of top decile performance among regulated utilities Industry leading earnings quality ESG Progress Plan drives premium EPS growth of 6.5% to 7.0% No need to issue equity through forecast period 100% of capital allocated to regulated businesses or contracted renewables Div
Slide 24: Appendix
Appendix | VAie VA Energy Group
Slide 25: Electric Distribution Electric Transmission 60% ownership Electric Generation Energy Infrastructure Natural Gas Distr…
25 Electric Distribution Electric Transmission 60% ownership Electric Generation Energy Infrastructure Natural Gas Distribution
Slide 26: Commitment to ESG
26 Reduce carbon dioxide emissions from electric generation 60% by the end of 2025 and 80% by the end of 2030 – both from a 2005 baseline. Long-term goal of net-zero carbon emissions from our generating fleet by 2050 Planned exit from coal by the end of 2035 Targeting net-zero methane emissions from
Slide 27: Electricity Supply by Fuel Type
27 Electricity Supply by Fuel Type (megawatt-hours delivered to regulated utility customers) 73% 39% 7% 33% 32% 17% 21% 24% 3% 7% 39% 2005 2021 2030E 2035 2050 Coal Natural Gas Nuclear Renewables Exiting Coal <5% Net carbon neutral goal Planned exit from coal
Slide 28: Reducing Greenhouse Gas Emissions
28 Reducing Greenhouse Gas Emissions 0.78 0.48 0.33 0.16 0** 2005 2021 2025E 2030E 2050E Greenhouse gas intensity* (metric tons CO2/MWh) *Includes owned electric generation, purchased power and WEC Infrastructure (WECI). The environmental attributes of the WECI renewable facilities are or may be the
Slide 29: Investment in Regulated Renewables
29 Plan to invest $5.4 Billion (2023-2027) Investment in Regulated Renewables Target Project Utility WEC Ownership1 Expected WEC Investment ($M) WEC Capacity (MWs) In-Service Two Creeks Solar Project WPS 66.7% $130 100 Badger Hollow I Solar Park 130 100 1st Half 2023 Badger Hollow II Solar Park WEPC
Slide 30: WEC Infrastructure wind projects
30 Project Developer Investment Offtake Agreement WEC Commercial Operations Total Project Capacity Bishop Hill III Wind Energy Center Invenergy $166M for 90% ownership WPPI Energy 22 years 8/31/18 132 MW Upstream Wind Energy Center Invenergy $307M for 90% ownership Affiliate of Allianz 10 years 1/10
Slide 31: Why Our Natural Gas Distribution Networks Matter
31 Today and Tomorrow Why Our Natural Gas Distribution Networks Matter Our Service Area 65-78% of homes use natural gas for heating Growth continues as customers convert to natural gas Hydrogen and RNG Opportunities Potential to blend Investment potential to convert existing distribution net
Slide 32: New Liquefied Natural Gas (LNG) Storage Facilities
32 New Liquefied Natural Gas (LNG) Storage Facilities LNG will provide a solution for Southeastern Wisconsin to meet peak customer demand on the coldest days of the year. We Energies received approval for two LNG facilities to address the need for additional natural gas supply in Wisconsin Total
Slide 33: Electric delivery redesign/resilience
33 Electric delivery redesign/resilience Addressing aging infrastructure and system hardening Enhancing efficiencies and reducing operating costs Expect to spend $3.6 billion (2023- 2027) with continued investment over next decade Project Highlights Efficiency, Growth and Sustainability Progre
Slide 34: Natural Gas Safety Modernization
34 Natural Gas Safety Modernization Increasing capacity and reliability of natural gas service in our territories Illinois Expected replacement of 2,000 miles of piping for safety and reliability in Chicago Project $280 million-$300 million annual average investment Illinois law authorizes r
Slide 35: Utility Capital Plan Drives EPS Growth
35 907 1,340 1,207 1,236 1,418 1,239 545 655 716 727 727 731 573 605 563 506 525 474 518 563 663 614 590 591 102 113 116 105 101 94 331 319 424 427 397 386 $2,976 $3,595 $3,689 $3,615 $3,758 $3,515 - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 2022 2023 2024 2025 2026 2027 ATC Investment MER
Slide 36: Capital Plan Projections by Company
36 2022 2023 2024 Wisconsin Electric $1,108.5 $1,504.1 $1,478.2 Wisconsin Gas $262.2 $251.4 $246.0 Wisconsin Public Service $517.3 $754.8 $679.9 Upper Michigan Energy $22.3 $20.4 $28.7 Wisconsin Segment $1,910.3 $2,530.7 $2,432.8 Peoples Gas $474.0 $506.3 $599.0 North Shore Gas $38.7 $50.8 $60.5 Ill
Slide 37: Composition of Asset Base
37 Composition of Asset Base Total 2021 Average Asset Base of $25.0 Billion Note: We Power value represents investment book value. Company Asset Base - $B % of Total Wisconsin Electric $6.8 27.2% Wisconsin Gas 1.7 6.8 Wisconsin Public Service 4.0 16.0 Upper Michigan Energy Resources 0.4 1.6 Peoples
Slide 38: National Leader in Operating Efficiency and Financial Discipline
38 National Leader in Operating Efficiency and Financial Discipline $27.60 $12.60 $15.60 $16.80 $21.00 $21.60 $21.80 $23.00 $24.80 $39.20 $79.30 $0 $10 $20 $30 $40 $50 $60 $70 $80 2021 Non-Fuel O&M per MWh* Source: FERC Form 1 Reports *For all companies, excluded 1) pensions and other employee benef
Slide 39: Focused on Efficiency
39 Focused on Efficiency $1,342 $1,281 $1,234 $1,143 $1,107 $1,088 2016 2017 2018 2019 2020 2021 2022E 4.5% $ I n m ill io n s *Excludes costs that have a revenue offset such as operation and maintenance costs associated with the We Power generation units, transmission expenses that are collected in
Slide 40: Balance Sheet Remains Strong
40 Balance Sheet Remains Strong Entity S&P Rating Moody’s Rating WEC Energy Group A- Baa1 Wisconsin Electric A- A2 Wisconsin Gas A A3 Wisconsin Public Service A- A2 Peoples Gas A- A2 Issuer Credit Ratings WEC Energy Group Target S&P FFO to Debt >15% Moody’s CFO Pre-WC/Debt >16% Holding Company Debt
Slide 41: Balanced Sales Mix
41 34% Large C&I by Segment Paper/Packaging 26% Mining/Minerals 11% Foundry (SIC 33) 9% Metal (SIC 34,35,37) 8% Other Manufacturing 8% Food/Agriculture 7% Medical 7% Education 4% Printing 3% Chemical 2% Office 2% Other 13% Balanced Sales Mix Large C&I 34% Residential and Farm 31% Small C&I 35% 2021
Slide 42: Diverse Portfolio of Businesses
42 Diverse Portfolio of Businesses Based on 2021 average asset base. WI 63% IL 17% MI/MN 5% WECI 5% ATC 10% By Jurisdiction By Business Electric generation and distribution 49%Natural gas distribution 36% WECI 5% Electric transmission 10% *ATC is accounted for using the equity method; this represent
Slide 43: Regulatory Matters
43 Regulatory Matters Wisconsin (apps.psc.wi.gov) Estimated Decision Date Commission decision on general rate review for new base rates effective Jan. 1, 2023 (Dockets: WE and WG: 5-UR-110 and WPS 6690-UR-127) Decision on Whitewater Acquisition (Docket: 5-BS-264 filed 12/21/2021) Decision
Slide 44: Regulatory Environment
44 Regulatory Environment Wisconsin Governor Tony Evers (D) Commission Gubernatorial appointment, Senate confirmation Chairman: Gubernatorial appointment 6-year staggered terms Illinois Governor J.B. Pritzker (D) Commission Gubernatorial appointment, Senate confirmation Chairman: G
Slide 45: Rate-Making Parameters by Company
45 Rate-Making Parameters by Company Utility Equity Layer1 Authorized ROE Wisconsin Electric2 50.50%-55.50% 9.80% Wisconsin Public Service2 50.50%-55.50% 9.80% Wisconsin Gas2 50.50%-55.50% 9.80% Peoples Gas 50.33% 9.05% North Shore Gas 51.58% 9.67% Minnesota Energy Resources 50.90% 9.70% Michigan Ga
Slide 46: Key Rate Making Components
46 Key Rate Making Components Area Illinois– Gas Minnesota– Gas Michigan– Electric and Gas Wisconsin– Gas Wisconsin– Electric Gas Pipeline Replacement Rider PGL MGU Bad Debt Rider ✓ Bad Debt Escrow Accounting Residential Residential Decoupling ✓ ✓ Fuel Cost Recovery 1 for 1 recovery of prudent fuel
Slide 47: Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP)
47 Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP) 2014 2015 2016 2017 Reported EPS – GAAP basis $2.59 $2.34 $ 2.96 $ 3.79 Acquisition Costs $0.06 $0.39 $ 0.01 – Integrys Earnings $(0.47) Impact of Additional Shares $0.47 Tax Benefit Related to Tax Cuts and Jobs Act of 2017 – – – $
Slide 48: Contact Information
Contact Information M. Beth Straka Senior Vice President – Investor Relations and Corporate Communications Beth.Straka@wecenergygroup.com 414-221-4639
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