Wec Energy Group, Inc. · NYSE:WEC

Wec Energy — Q2 2023 Earnings Presentation

54 slides from Wec Energy's earnings presentation, Aug 1, 2023

  1. Slide 1: Investor Update: August 2023

    Investor Update: August 2023 Our “ESG” Progress Plan Update Investing in Efficiency, Sustainability and Growth We Energies Named #1 Best in the U.S. Finalist for the S&P Global Energy Company in America in Large Customer Energy Award in Corporate by Business Customers Satisfaction Social Responsibil

  2. 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

  3. Slide 3: The Premier Energy Company in America's Heartland

    The Premier Energy Company in America’s Heartland  $28.3 billion market cap*  4.6 million retail customers  60% ownership of American Transmission Company  $43.0 billion of assets * As of July 31, 2023 3

  4. Slide 4: A History of Quality Earnings Growth

    A History of Quality Earnings Growth $5.00 $4.58-$4.62 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 GAAP Adjusted** 2023 Guidance * Estimated based on 2023 guidance midpoint of $4.60 per share. ** See Appe

  5. Slide 5: Consistent Performance Over Time

    Consistent Performance Over Time EPS Guidance 2022 Exceeded  2021 Exceeded  2020 Exceeded  2019 Exceeded  The only utility to beat 2018 Exceeded  guidance every year for 2017 Exceeded  19 years running. 2016 Exceeded  2015 Exceeded  2014 Exceeded  2013 Exceeded  2012 Exceeded  2011 Exceed

  6. Slide 6: Strong Dividend Growth Continues

    Strong Dividend Growth Continues  In January, raised the dividend by 7.2% to a new annual rate of $3.12 per share*  Top decile dividend growth in industry**  Marks the 20th consecutive year of rewarding shareholders with higher dividends *Annualized based on 1st quarter 2023 dividend of 78 cents

  7. Slide 7: What's New?

    What’s New? 7

  8. Slide 8: Second Quarter Update

    On track for the year Second Quarter Update  Second quarter earnings of 92 cents  8 cents higher than consensus  Reaffirmed EPS growth of 6.5% to 7.0%  Major Microsoft investment in region moving full speed ahead  Developing updated 5-year capital plan  If growth in demand for capacity and ene

  9. Slide 9: Wisconsin Utilities - Rate Review

    Wisconsin Utilities - Rate Review Proposed Base Revenue Scope for 2024 Limited Re-Opener Increases Wisconsin 2024  Addresses the recovery of new renewable Electric Electric* 1.3% $45.0M facilities, RICE generation and LNG reliability Natural Gas 4.5% $23.9M investments that achieve commercial opera

  10. Slide 10: Advancing our renewable/reliability goals

    Advancing our renewable/reliability goals The Wisconsin Commission has approved more than $1 billion of capital investment since early December Project Approved Investment1 Darien Solar-Battery Park $400 million West Riverside Energy Center First Option $102 million Koshkonong Solar-Battery Park $58

  11. Slide 11: Illinois Rate Reviews

    Illinois Rate Reviews  Peoples Gas will not seek an extension of the automatic bill adjustment rider QIP.  With natural gas prices expected to decline this year and next year, we project customer bills to stay largely flat as new rates take effect in 2024.  Chicago home heating bills are below ot

  12. Slide 12: Organic Flow Battery Storage

    New Clean Energy Pilot Project Organic Flow Battery Storage  Leading a pilot project to test a new form of long-duration energy storage  Partnering with EPRI and CMBlu Energy  This system uses a proprietary technology that incorporates environmentally friendly materials - ‘a green battery.’  The

  13. Slide 13: ESG Progress Plan Supports 6.5% to 7.0% EPS Growth

    2023-2027 Capital Plan ($ in billions) ESG Progress Plan Supports 6.5% to 7.0% EPS Growth $20.1 $1.9 $2.0 $0.5 Energy Infrastructure $3.0 ATC* $2.7 MERC/MGU Illinois $3.6 WI Gas Delivery** WI Electric Delivery** $6.4 WI Generation** 2023-2027 *ATC is accounted for using the equity method; this repre

  14. Slide 14: Robust Growth in Asset Base

    Robust Growth in Expect long-term Asset Base EPS growth of 6.5% to 7.0% per year. 7.7% Growth $38.4 billion $26.5 billion 2022A 2027E* *Estimated year-end average asset base 14

  15. Slide 15: Investing $5.4 billion in Regulated Renewables

    2023-2027 Capital Plan Investing $5.4 billion in Regulated Renewables Plan to build and own nearly 3,300 MW – quadrupling our carbon-free generation Solar  505 MW under construction  270 MW received regulatory approval  Planning for additional 1,135 MW  Qualifies for Production Tax Credits Batte

  16. Slide 16: WEC Infrastructure Portfolio – Green and Growing

    Plan to invest $1.9 Billion (2023-2027) WEC Infrastructure Portfolio – Green and Growing Total Project Investment Capacity (MW) (in millions) Wind ● Upstream 200 $307 SD ● Bishop Hill III 132 166 ● Coyote Ridge 97 145 ● Blooming Grove 250 389 NE ● Tatanka Ridge 155 240 IL ● Jayhawk 190 282 KS ● Thun

  17. Slide 17: Modernizing Our Gas-Fueled Generation Fleet

    Modernizing Our Gas-Fueled Generation Fleet Retiring Investing  Weston 2 West Riverside Energy Center combined-cycle  74 MW First Option: 100 MW  Retired: Feb. 2023  Investment: $95 million  Weston 31 and 32  Transaction closed Jun. 1, 2023  69 MW Additional 100 MW option*  Retired: Jul. 202

  18. Slide 18: Exiting Coal

    Exiting Coal  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 co

  19. Slide 19: American Transmission Company

    American Transmission Company WEC portion of investment from 2023-2027: $2.0 billion 5-year (2023-2027) WEC Projected Capital Expenditures (millions) projected capital investment: $707 $712  Ongoing ATC: $1.7 billion $661 $643 $532  Includes $0.3B from Tranche 1 $424 $427 $397 $386 $319 Future ATC

  20. Slide 20: Carbon Reduction Goals – Electric Generation

    Carbon Reduction Goals – Electric Generation Reduction goals: Achieved and anticipated CO2 reductions (net mass)* 0 60% below 2005 -20 levels by the end of 2025 80% -40 -60 -49% below 2005 levels by the end of 2030 -80 Net carbon -100 neutral 2005 2022 2025 2030 2050 by 2050 We have established aggr

  21. Slide 21: Methane Reduction

    Our ESG Progress Plan Methane Reduction Achieved* and anticipated methane emission reduction from natural gas distribution. Aligns with the effort to limit warming to 1.5°C. 0% Goal: Net zero -22% -20% -40% by the end of 2030** -60% -80% Use of Renewable Natural Gas (RNG) is expected to contribute s

  22. Slide 22: Regional Economy

    Regional Economy 22

  23. Slide 23: Powering Industry Leaders in our Region

    Powering Industry Leaders in our Region 23

  24. Slide 24: Longer-Term Sales Forecast

    Wisconsin Segment Longer-Term Sales Forecast Year-Over-Year 2025-2027 Sales Growth Forecast Electric 0.7%-1.0% (weather-normalized) Gas 0.7%-1.0% 24

  25. Slide 25: Key Takeaways for WEC Energy Group

    Key Takeaways for WEC Energy Group  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 for the $20.1 billion capital plan  100% of capital allocated to regulate

  26. Slide 26: Appendix

    Appendix Wa WeEC WA Energy Group

  27. Slide 27: Electric Generation, Distribution and Energy Infrastructure

    Electric Generation Electric Distribution Natural Gas Distribution Energy Infrastructure Electric Transmission 60% ownership 27

  28. Slide 28: Inflation Reduction Act

    Inflation Reduction Act Customer Benefit and Investment Opportunity  Extension of Production Tax Credits (PTC) and Investment Tax Credits (ITC)  PTC option for solar projects  Potential opportunities at WEC infrastructure segment  ITC for stand-alone electric storage projects  Tax Credit “trans

  29. Slide 29: Commitment to ESG

    Commitment to ESG 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. Carbon Goals Long-term goal of net-zero carbon emissions from our generating fleet by 2050 Exit from Coal Planned exit from coal by the end of 203

  30. Slide 30: Exiting Coal

    Exiting Coal Electricity Supply by Fuel Type (megawatt-hours delivered to regulated utility customers) 73% 38% 39% 32% 32% Planned exit Net carbon 22% 24% from coal neutral goal 17% <5% 7% 8% 3% 2005 2022 2030E 2035 2050 Coal Natural Gas Nuclear Renewables 30

  31. Slide 31: Reducing Greenhouse Gas Emissions

    Reducing Greenhouse Gas Emissions Greenhouse gas intensity* (metric tons CO2/MWh) 0.78 0.43 0.33 0.16 0** 2005 2022 2025E 2030E 2050E *Includes owned electric generation, purchased power and WEC Infrastructure (WECI). The environmental attributes of the WECI renewable facilities are or may be the pr

  32. Slide 32: Investment in Regulated Renewables

    Plan to invest $5.4 Billion (2023-2027) Investment in Regulated Renewables WEC WEC WEC Investment Target Project Utility Capacity Ownership1 ($M) (MWs) Two Creeks Solar Project $130 100 In-Service WPS Badger Hollow I Solar Park 130 100 66.7% 2023 / Badger Hollow II Solar Park WEPCO 172E 100 Early 20

  33. Slide 33: Infrastructure Investment Summary

    Infrastructure Investment Summary WEC Total Commercial Project Project Developer Investment Offtake Agreement Operations Capacity Bishop Hill III Wind $166M for WPPI Energy Invenergy 8/31/18 132 MW Energy Center 90% ownership 22 years Upstream Wind $307M for Affiliate of Allianz Invenergy 1/10/19 20

  34. Slide 34: Hydrogen Pilot Program

    Hydrogen Pilot Program  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 proje

  35. Slide 35: Why Our Natural Gas Distribution Networks Matter

    Today and Tomorrow Why Our Natural Gas Distribution Networks Matter -46° Our Service Area -26°  65-78% of homes use natural gas for heating -26°  Growth continues as customers convert to natural gas Hydrogen and RNG Opportunities -23°  Potential to blend  Investment potential to convert existing

  36. Slide 36: New Liquefied Natural Gas (LNG) Storage Facilities

    New Liquefied Natural Gas (LNG) Storage Facilities Taking Steps to Maintain Reliable and Affordable Service for Our Customers  We Energies received approval for two LNG facilities to address the need for additional natural gas supply in Wisconsin  Total expected investment: $370 million  Construc

  37. Slide 37: Efficiency, Growth and Sustainability Progress

    Project Highlights Efficiency, Growth and Sustainability Progress Taking Steps to Maintain Reliable and Affordable Service for Our Customers Electric delivery redesign/resilience  Addressing aging infrastructure and system hardening  Enhancing efficiencies and reducing operating costs  Expect to

  38. Slide 38: Efficiency, Growth and Sustainability Progress

    Project Highlights Efficiency, Growth and Sustainability Progress Taking Steps to Maintain Reliable and Affordable Service for Our Customers Natural Gas Safety Modernization  Increasing capacity and reliability of natural gas service in our territories Illinois  Expected replacement of 2,000 miles

  39. Slide 39: Utility Capital Plan Drives EPS Growth

    $18.2 billion projected capital spend from 2023-2027 Utility Capital Plan Drives EPS Growth 4,500 4,000 $3,758 $3,595 $3,689 $3,615 $3,515 3,500 397 319 424 427 101 386 113 116 105 94 3,000 590 563 663 ATC Investment 614 591 MERC/MGU 2,500 525 605 Illinois 563 506 474 2,000 WI/MI Gas Delivery** 727

  40. Slide 40: Capital Plan Projections

    By Company Capital Plan Projections ($ in millions) 2023 2024 2025 Wisconsin Electric $1,504.1 $1,478.2 $1,274.6 Wisconsin Gas $251.4 $246.0 $230.9 Wisconsin Public Service $754.8 $679.9 $858.7 Upper Michigan Energy $20.4 $28.7 $81.3 Wisconsin Segment $2,530.7 $2,432.8 $2,445.5 Peoples Gas $506.3 $5

  41. Slide 41: Composition of Asset Base

    Composition of Asset Base Total 2022 Average Asset Base of $26.5 Billion Company Asset Base - $B % of Total Wisconsin Electric $7.3 27.5% Wisconsin Gas 1.9 7.2 Wisconsin Public Service 4.2 15.9 Upper Michigan Energy Resources 0.4 1.5 Peoples Gas 4.1 15.5 North Shore Gas 0.4 1.5 Minnesota Energy Reso

  42. Slide 42: National Leader in Operating Efficiency and Financial Discipline

    National Leader in Operating Efficiency and Financial Discipline $80 2021 Non-Fuel O&M per MWh* $79.30 $70 $60 $50 $39.20 $40 $30 $27.60 $23.00 $24.80 $21.00 $21.60 $21.80 AVERAGE $20 $15.60 $16.80 $12.60 WEC $10 $0 The top 10 vertically integrated electric utilities by 12/31/2021 market cap Source:

  43. Slide 43: Focused on Efficiency

    Focused on Efficiency Day-to-Day O&M Expense* $1,342 $1,281 $1,234 $ In millions $1,143 $1,107 $1,088 $1,082 2-3% 2016 2017 2018 2019 2020 2021 2022 2023E *Excludes costs that have a revenue offset such as operation and maintenance costs associated with the We Power generation units, transmission ex

  44. Slide 44: Credit Metrics – Healthy Balance Sheet

    Credit Metrics – Healthy Balance Sheet Funds from Operations/Debt Target WEC Energy Group 2023-2027 14.2% GAAP 15-16% FFO to Debt S&P >15% 11.9% FFO to Debt Moody’s >16% CFO Pre-WC/Debt 2022 Actual* 2022 Adjusted** Issuer Credit Ratings Holding Company Debt to Total Debt S&P Moody’s Entity 30.0% Rat

  45. Slide 45: Projected Financing Plans for 2023

    Projected Financing Plans for 2023 1 YTD Financing Planned Financing Existing $2,500 Facilities $2,000 $2.0B net liquidity $600-$800 (as of Jun. 30, 2023) $1,500 (in millions) $3.1B $1,450 $1,000 Sept. 2026 $600- $500 $1,000 $0 Holding Company 2 Utilities & Energy Infrastructure 3 1. Amounts and tim

  46. Slide 46: Balanced Sales Mix

    Balanced Sales Mix 2022 Retail MWh Deliveries Mix* 34% Large C&I by Segment Paper/Packaging 26% Foundry (SIC 33) 11% Mining/Minerals 10% Small C&I Large C&I Metal (SIC 34,35,37) 8% 35% 34% Other Manufacturing 8% Food/Agriculture 7% Medical 6% Residential Education 4% and Farm Printing 3% 31% Chemica

  47. Slide 47: Diverse Portfolio of Businesses

    Diverse Portfolio of Businesses By Business By Jurisdiction Electric transmission* 10% WECI WECI 5% 5% ATC* MI/MN 10% 5% Electric generation and IL distribution 17% WI Natural gas 49% 63% distribution 36% Based on 2022 average asset base. *ATC is accounted for using the equity method; this represent

  48. Slide 48: Regulatory Matters

    Regulatory Matters Estimated Decision Date Wisconsin (apps.psc.wi.gov)  Commission decision on limited re-opener for new base rates effective 1/1/24 Q4 2023 (Dockets: WE and WG: 5-UR-110 and WPS 6690-UR-127) Illinois (icc.illinois.gov)  Decision on general rate review for new base rates effective

  49. Slide 49: Regulatory Environment

    Regulatory Environment Wisconsin Illinois  Governor Tony Evers (D)  Governor J.B. Pritzker (D)  Commission  Commission  Gubernatorial appointment,  Gubernatorial appointment, Senate confirmation Senate confirmation  Chairman: Gubernatorial appointment  Chairman: Gubernatorial appointment  6

  50. Slide 50: Rate-Making Parameters by Company

    Rate-Making Parameters by Company Utility Equity Layer1 Authorized ROE Wisconsin Electric 50.50%-55.50% 9.80% Wisconsin Public Service 50.50%-55.50% 9.80% Wisconsin Gas 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 Gas Util

  51. Slide 51: Key Rate Making Components

    Key Rate Making Components Illinois– Minnesota– Michigan– Wisconsin– Wisconsin– Area Gas Gas Electric and Gas Gas 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 cos

  52. Slide 52: Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP)

    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 – – – $ (0.

  53. Slide 53: Ratio of FFO to Debt

    Ratio of FFO to Debt (in millions, except percent) Ratio of FFO to Debt 2022 Net cash provided by operating activities $2,060.7 Total debt $17,294.5 Ratio of FFO to debt 11.9% Ratio of FFO to Debt – Adjusted* 2022 Net cash provided by operating activities $2,060.7 Add: Working Capital 340.8 Net cash

  54. Slide 54: Contact Information

    Contact Information M. Beth Straka Senior Vice President – Investor Relations and Corporate Communications Beth.Straka@wecenergygroup.com 414-221-4639

WEC Energy Group — Q2 2023 Earnings Presentation on 6ix