Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Investor Presentation (December 2020)
46 slides from Wec Energy's investor presentation, Dec 8, 2020
Slide 1: Investor Update: December 2020
Investor Update: December 2020 Our “ESG” Progress Plan: A Road Map for Investment in Efficiency, Sustainability and Growth One of America’s Most Responsible Companies for 2020 Newsweek Best in the U.S. in Large Customer Satisfaction (Top 2 Box) JD Power We Energies named Most Reliable Utility in the
Slide 2: Cautionary Statement Regarding Forward-Looking Information
1 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: Company Statistics
2 Company Statistics $30.0 billion market cap* 1.6 million electric customers 2.9 million natural gas customers 60% ownership of American Transmission Company $35.0 billion of assets 10th largest publicly traded utility in U.S. measured by market value* * As of November 30, 2020
Slide 4: A History of Quality Earnings Growth
3 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 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 $3.99 - $4.03 GAAP Adjusted** 2020 Guidance 2021 Guidance * Estimated based on 2021 guidance midpoint of $4.01 per share ** See A
Slide 5: Consistent Performance Over Time
4 Consistent Performance Over Time EPS Guidance 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 Exceeded 2005 Exceeded 2004 Exceede
Slide 6: Strong Dividend Growth Continues
5 $0.80 $1.04 $1.20 $1.445 $1.56 $1.83* $1.98 $2.08 $2.21 $2.36 $2.53 $2.71 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E Strong Dividend Growth Continues The board of directors announced its plan to raise the dividend by 7.1% to a new annual rate of $2.71 per share** Targeting divide
Slide 7: One of the Top Performers in Operating Efficiency
6 One of the Top Performers in Operating Efficiency $14.00 $15.30 $18.30 $20.10 $20.80 $21.30 $21.50 $21.51 $23.30 $29.30 $31.20 $10 $15 $20 $25 $30 $35 2019 Non-Fuel O&M per MWh* Source: FERC Form 1 Reports *For all companies, excluded 1) pensions and other employee benefits, 2) costs reported as “
Slide 8: What's New?
7 What’s New?
Slide 9: Our ESG Progress Plan: 2021-2025 Capital Plan
8 Investing $16.1 billion for: Efficiency Sustainability Growth 2021-2025 Capital Plan Our ESG Progress Plan
Slide 10: Investing in Efficiency and Sustainability Drives Growth
9 $2.7 17% $10.4 64% $3.0 19% Sustainability Renewables $4.1 Grid and fleet reliability $6.3 Efficiency Technology $1.0 Grid and fleet modernization $1.7 Growth Gas distribution $1.6 Electric (G,T&D) $1.4 2021-2025 Capital Plan ($ in billions) Investing in Efficiency and Sustainability Drives Growth
Slide 11: Increasing Five-Year Capital Plan by $1.1 Billion
10 $2,377 $3,078 $3,091 $3,150 $2,760 $3,023 $3,198 $3,054 $480 $487 $1,257 $1,120 $1,838 $2,188 $15,001 $16,100 2020-2024 2021-2025 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 Continues to Sup
Slide 12: Robust Growth in Asset Base
11 $21.4 billion $32.2 billion 2019A 2025E* Robust Growth in Asset Base 7% Growth *Estimated year-end average asset base
Slide 13: Investing in Carbon-Free Generation
12 Currently Under Development or In-Service 200 MW solar – WPS* 100 MW solar – We Energies New Planned Clean Energy Additions 800 MW solar 100 MW wind 600 MW battery storage Allocating $1.9 Billion for Regulated Renewables Investing in Carbon-Free Generation Build and own 1,800 MW of new
Slide 14: Modernizing Our Gas-Fueled Generation Fleet
13 Reducing 100MW of Capacity Modernizing Our Gas-Fueled Generation Fleet Retiring 400 MW of older, less-efficient gas generation expected Building 100 MW of RICE generation planned Investing West Riverside Energy Center (now operational)* 200 MW - combined cycle $180 million investment ex
Slide 15: Aggressively Reducing Coal-Fueled Generation
14 4,935 MW 3,095 MW 1,700 MW 2017 2020 2025E Aggressively Reducing Coal-Fueled Generation Plant retirements have lowered costs and reduced CO2 emissions Retirements Pleasant Prairie 1,190 MW Edgewater 100 MW Pulliam 200 MW Presque Isle 350 MW Expected Future Retirements Oak Creek Units 5-8* – 1,100
Slide 16: New Carbon Reduction Goals – Electric Generation
15 Our ESG Progress Plan New Carbon Reduction Goals – Electric Generation Reduction goals: 70% below 2005 levels by 2030 Net carbon neutral by 2050 -100% -90% -80% -70% -60% -50% -40% -30% -20% -10% 2005 2019 2030 2050 Achieved and anticipated CO2 reductions (net mass)* Baseline Goals aligned with t
Slide 17: Reducing Greenhouse Gas Emissions
16 Reducing Greenhouse Gas Emissions 0.78 0.53 0.36 0.25 0** 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 2005 2019 2025E 2030E 2050E Greenhouse gas intensity* (metric tons CO2e/MWh) *Includes owned electric generation, purchased power and WEC Infrastructure **Includes projection of potential carbon offset
Slide 18: Methane Reduction Goal
17 -40% -30% -20% -10% 0% 2011 2019 2030 Reduction Goal:* 30% by the year 2030 from a 2011 baseline Our ESG Progress Plan Methane Reduction Goal *This goal represents a decrease in the rate of methane emissions from the natural gas distribution lines in our network of 30% per mile by the year 2030 f
Slide 19: Infrastructure Portfolio
18 SD IL ND NE Allocating $2.2 Billion 2021-2025 Infrastructure Portfolio In-service Under development In-Service Capacity (MW) Investment (in millions) Upstream 200 $307 Bishop Hill III 132 $166 Coyote Ridge 97 $145 Blooming Grove 250 $389 Total 679 $1,007 Under Development Capacity Investment Tata
Slide 20: Regional Economy
19 Regional Economy
Slide 21: Powering Industry Leaders in our Region
20 Powering Industry Leaders in our Region
Slide 22: Wisconsin Segment Sales Forecast 2022-2025
21 Wisconsin Segment Broad Ranging Growth Driving Longer-Term Sales Forecast 2022 - 2025 Electric 1.0% - 1.3% Gas 1.0% - 1.3% Sales Growth Forecast (weather-normalized) Year-over-Year
Slide 23: Key Takeaways for WEC Energy Group
22 Track record of exceptional performance ESG Progress Plan supports 5-7% EPS growth with minimal impact on customer rates 100% of capital allocated to regulated businesses or contracted renewables Dividend growth projected to be in line with earnings growth No need to issue additional eq
Slide 24: Appendix
Appendix WEC Energy Group
Slide 25: Business Segments Overview
24 Electric Distribution Electric Transmission 60% ownership Electric Generation Energy Infrastructure Natural Gas Distribution
Slide 26: Management Team
25 Kevin Fletcher President and CEO Scott Lauber Senior Executive Vice President and Chief Operating Officer Office of the Chair “Working together as a team, we will leverage the strengths of each individual as we write the next chapter of the company’s growth, development and service to our custome
Slide 27: Environmental, Social & Governance Focus
26 Met and exceeded our 2030 target in 2019. Set new goals to reduce carbon dioxide emissions from electric generation by 70% below 2005 levels by 2030 and to be net carbon neutral by 2050. Reduce the rate of methane emissions by 30% per mile from a 2011 baseline by 2030 Amount of combustion product
Slide 28: Wisconsin Utilities Carbon-Free Generation Under Development
27 Wisconsin Utilities Carbon-Free Generation Currently Under Development Project Utility Location Investment Capacity* Timing Two Creeks Solar Project WPS Two Rivers, WI $130M 100MW In Service: November, 2020 Badger Hollow I Solar Park WPS Iowa County, WI $130M 100MW Targeted in-service: April, 202
Slide 29: Lithium-Ion Battery Prices Have Fallen
28 Since 2010, Lithium-Ion Battery Prices Have Fallen Over 80% $1,183 $917 $721 $663 $588 $381 $293 $219 $180 $156 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Battery pack price (real 2019 $/kWh) 80%+ Source: BloombergNEF
Slide 30: New Liquefied Natural Gas (LNG) Facilities
29 New Liquefied Natural Gas (LNG) Facilities LNG provides a solution for Southeastern Wisconsin to meet peak customer demand on the coldest days of the year Taking steps to maintain reliable and affordable service for our customers We Energies is seeking approval for two LNG facilities to address
Slide 31: Efficiency, Growth and Sustainability Progress
30 Efficiency, Growth and Sustainability Progress Electric Delivery Redesign / Resilience • Addressing aging infrastructure • Enhancing efficiencies and reducing operating costs • Expect to spend $2.9 billion (2021-2025) Natural Gas System Modernization Illinois • Expected replacement of 2,000 miles
Slide 32: Energy Infrastructure Wind Projects
31 Project Developer Location Investment Offtake Agreement WEC Commercial Operations Capacity Bishop Hill III Wind Energy Center Invenergy Henry County, Illinois $166M for 90% ownership WPPI Energy 22-years 80% on 8/31/18 Incremental 10% on 12/5/18 ~132MW Upstream Wind Energy Center Invenergy Antelo
Slide 33: Low-Risk Capital Plan Drives 5% to 7% EPS Growth
32 $332 $555 $767 $900 $506 $350 $639 $578 $571 $664 $685 $652 $480 $695 $619 $542 $585 $582 $712 $578 $584 $662 $614 $616 $156 $99 $107 $93 $96 $92 $208 $258 $289 $253 $176 $144 $655 $588 $400 $400 $400 $400 $3,182 $3,351 $3,337 $3,514 $3,062 $2,836 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500
Slide 34: Capital Plan Projections by Company
33 2020 2021 2022 2023 Wisconsin Electric $678.2 $933.5 $1,032.0 $1,375.3 Wisconsin Gas $169.9 $234.4 $256.2 $234.4 Wisconsin Public Service $534.1 $578.8 $537.6 $443.8 Upper Michigan Energy Corp $17.6 $16.7 $18.8 $16.7 Wisconsin Segment $1,399.8 $1,763.4 $1,844.6 $2,070.2 Peoples Gas $650.1 $509.5
Slide 35: Composition of Asset Base
34 Composition of Asset Base Total 2019 Average Asset Base of $21.4 billion Note: We Power value represents investment book value Company Asset Base - $B % of Total Wisconsin Electric $6.3 29.4% Wisconsin Gas 1.5 7.0 Wisconsin Public Service 3.4 15.9 Upper Michigan Energy Resources 0.4 1.9 Peoples G
Slide 36: Power the Future Investments
35 Power the Future Investments 1 Natural Gas Coal Capacity 1,090 MW 1,030 MW 2 Investment $664 million $2 billion 2 ROE 12.7% 12.7% Equity 53% 55% In Service Dates Unit 1 – July 2005 Unit 2 – May 2008 Unit 1 – February 2010 Unit 2 – January 2011 Lease Terms 25 years 30 years Cost Per Unit of Capaci
Slide 37: Focused on Efficiency
36 Focused on Efficiency $1,342 $1,281 $1,234 $1,143 2016 2017 2018 2019 2020E 4.5% $ In millions *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 rates, regulatory amortizati
Slide 38: Balance Sheet Remains Strong
37 Balance Sheet Remains Strong 0 25 50 75 100 125 150 AA - A A- BBB+ BBB BBB- Below Investment Grade Utilities Utility Rating Wisconsin Electric A- Wisconsin Gas A Wisconsin Public Service A- Peoples Gas A- Electric and Gas Utilities Credit Ratings Distribution* *Source: S&P Global Ratings (January
Slide 39: Balanced Sales Mix
38 35% Large C&I by Segment Paper 23% Foundry (SIC 33) 11% Mining/Minerals 11% Food/Agriculture 9% Other Manufacturing 8% Metal (SIC 34,35,37) 7% Medical 5% Education 4% Chemical 4% Printing 3% Office 2% Other 13% Balanced Sales Mix Large C&I 35% Residential plus Farm 30% Small C&I 35% 2019 Retail M
Slide 40: Diverse Portfolio of Regulated Businesses
39 Diverse Portfolio of Regulated Businesses Electric Generation and Distribution 53% Gas Distribution 33% FERC Regulated 14% Based on 2019 average asset base. Excludes wind investments in our Energy Infrastructure segment WI 65% FERC 14% IL 16% MI/MN 5% By Jurisdiction By Business
Slide 41: Regulatory Environment
40 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 42: Rate-Making Parameters by Company
41 Rate-Making Parameters by Company Utility Equity Layer (1) Authorized ROE Wisconsin Electric 50.0%-55.0% 10.0% Wisconsin Public Service 50.0%-55.0% 10.0% Wisconsin Gas 50.0%-55.0% 10.2% Peoples Gas 50.33% 9.05% North Shore Gas 50.48% 9.05% Minnesota Energy Resources 50.9% 9.7% Michigan Gas Utilit
Slide 43: Key Rate Making Components
42 Key Rate Making Components Area Illinois– Gas Minnesota– Gas Michigan– Electric & Gas Wisconsin– Gas Wisconsin– Electric Gas Pipeline Replacement Rider PGL Bad Debt Rider ✓ Bad Debt Escrow Accounting Residential Residential Decoupling ✓ ✓ Fuel Cost Recovery 1 for 1 recovery of prudent fuel costs
Slide 44: Industry Leading Total Shareholder Returns
43 Industry Leading Total Shareholder Returns* Over the past decade, WEC Energy Group has consistently delivered among the best total returns in the industry * Total return including reinvested dividends for the periods ended December 31, 2019 0% 50% 100% 150% 200% 250% 300% 350% 400% One-Year Three
Slide 45: Contact Information
Contact Information M. Beth Straka Senior Vice President – Investor Relations and Corporate Communications Beth.Straka@wecenergygroup.com 414-221-4639 Ashley Knutson Investor Relations Analyst Ashley.Knutson@wecenergygroup.com 414-221-3339
Slide 46: Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP)
45 Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP) 2014 2015 2016 2017 Reported EPS – GAAP basis $2.34 $2.59 $ 2.96 $ 3.79 Acquisition Costs $0.39 $0.06 $ 0.01 – Integrys Earnings $(0.47) Impact of Additional Shares $0.47 Tax benefit related to Tax Cuts and Jobs Act of 2017 – – – $
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