Wec Energy Group, Inc. · NYSE:WEC

Wec Energy — Investor Presentation (March 2024)

53 slides from Wec Energy's investor presentation, Mar 26, 2024

1. Slide 1: Investing in Efficiency, Sustainability and Growth

   1 Investing in Efficiency, Sustainability and Growth Investor Update: March 2024

2. 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

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

   3 The Premier Energy Company in America’s Heartland * As of February 29, 2024 $24.8 billion market cap* 4.7 million retail customers 60% ownership of American Transmission Company $43.9 billion of assets

4. Slide 4: A History of Quality Earnings Growth

   4 A History of Quality Earnings Growth $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 GAAP Adjusted** 2024 Guidance * Estimated based on 2024 guidance midpoint of $4.85 per share. ** See Appendix for reconciliation of adj

5. Slide 5: EPS Guidance Exceeded: Consistent Performance Over Time

   5 EPS Guidance 2023 Exceeded*  2022 Exceeded  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

6. Slide 6: Strong Dividend Growth Continues

   6  In January, raised the dividend by 7.0% to a new annual rate of $3.34 per share*  Marks the 21st consecutive year of rewarding shareholders with higher dividends  Top decile dividend growth in industry**  Added to S&P's High Yield Dividend Aristocrats Index Strong Dividend Growth Continues *

7. Slide 7: What's New?

   7 What’s New?

8. Slide 8: Earnings Guidance Update

   8  Affirmed 2024 earnings guidance of $4.80 to $4.90 per share*  In light of one of the warmest winters in history, first-quarter earnings guidance lowered to a range of $1.89 to $1.91 per share  Previous first-quarter earnings guidance was $1.96 to $2.00 per share  First-quarter 2023 earnings w

9. Slide 9: 2024-2028 Capital Plan

   9 $9.3 $9.5 $1.0 $1.0 $3.7 $3.8 $6.0 $5.2 $3.0 $3.0 $0.4 $1.2 $23.4 $23.7 2024-2028 2024-2028 Energy Infrastructure ATC* Gas Delivery** WI/MI Electric Delivery WI LNG Capacity WI/MI Generation U p d a te d p la n N o v e m b e r 2 0 2 3 p la n $ In billions *ATC is accounted for using the equity met

10. Slide 10: Capital Plan – Key Drivers

    10 Capital Plan – Key Drivers  Illinois gas delivery: - $800 million  Energy infrastructure: + $800 million  Regulated renewables: + $200 million  Electric delivery: + $100 million 2024-2028 Capital Plan

11. Slide 11: Illinois Proceedings

    11  The Illinois Commerce Commission (ICC) ordered Peoples Gas to pause all spending on the Safety Modernization Program until it determines ‘the optimal method’ of pipe replacement and investment level.  ICC granted the company’s request for a limited rehearing seeking to restore $145 million of

12. Slide 12: Robust Growth in Asset Base

    12 $29.4 billion $43.4 billion 2023A 2028E* Robust Growth in Asset Base *Estimated year-end average asset base. Expect compound annual EPS growth of 6.5% to 7.0% 8.1% Growth

13. Slide 13: Business Portfolio Growing in Electric Transmission and Generation

    13 Business Portfolio Growing in Electric Transmission and Generation 2028E*2023A Electric generation and distribution 48% Natural gas distribution 35% WECI 7% Electric transmission** 10% ** ATC is accounted for using the equity method; this represents WEC Energy Group’s portion of the asset base. E

14. Slide 14: Exiting Coal

    14 We now plan to eliminate coal as an energy source three years earlier - by end of 2032.  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)  Weston Unit 3: 328 MW (end of 2031)  Enhancing fue

15. Slide 15: Regulated renewable generation projects 2024-2028 plan

    15 Target Project Utility WEC Ownership WEC Investment ($M) WEC Capacity (MW) In-Service Badger Hollow II Solar Park WEPCO 66.7%1 172E 100 S: 2024/B: 2025 Paris Solar-Battery Park WEPCO and WPS 90%1 542E 279 2024 Darien Solar Park2 405E 225 2026 Koshkonong Solar Park2 486E 270 2026 High Noon Solar P

16. Slide 16: Modernizing Our Gas-Fueled Generation Fleet

    16 Modern, efficient natural gas generation will serve as a critical resource in our energy transformation. Modernizing Our Gas-Fueled Generation Fleet West Riverside Energy Center Combined-Cycle  Additional 100 MW option  Expected investment: $100 million  Received approval from the Wisconsin Co

17. Slide 17: Investing in Reliability for Our Natural Gas Network

    17 Investing in Reliability for Our Natural Gas Network  New proposed LNG storage facilities are needed to ensure gas supply for winter reliability.  Expected investment: $860 million  4 Bcf planned  Bluff Creek and Ixonia LNG facilities completed  Investment: ~$410 million  2 Bcf  In-service

18. Slide 18: Future Transmission Investment

    18 $636 $867 $1,148 $1,187 $1,152 $382 $520 $689 $712 $691 2024 2025 2026 2027 2028 ATC WEC portion 60%  Includes $330 million for MISO Tranche 1 (in 2022 dollars)  MISO Tranche 2 planning underway WEC portion of ATC investment expected from 2024-2028: $3.0 billion Future Transmission Investment P

19. Slide 19: Projected Cash Flows and Financing Plan

    19 Projected Cash Flows and Financing Plan ($ in billions) Cash from Operations $16.5 - $17.5 Incremental Debt $7.15 - $8.15 Dividends $6.0 - $6.2 Capital Plan* $20.7 Cash Uses Cash Sources Common Equity $1.95 - $2.35 * Excludes ATC’s capital. ATC is accounted for using the equity method. 2024 - 202

20. Slide 20: Credit Quality – Maintaining a Healthy Balance Sheet

    20 Credit Quality – Maintaining a Healthy Balance Sheet Current Issuer Credit Ratings 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 FFO/Debt Metrics 2024-2028 WEC Energy Group Target GAAP FFO to

21. Slide 21: Carbon Reduction Goals – Electric Generation

    21 *Includes projection of potential carbon offsets by 2050. Carbon Reduction Goals – Electric Generation We have established aggressive carbon reduction goals for our electric generating fleet, aligned with or surpassing global emissions pathways aimed at limiting warming to 1.5°C. Reduction goals:

22. Slide 22: Methane Reduction

    22 1. Represents a decrease in the rate of methane emissions across our system from a 2011 baseline. 2. This goal applies to emissions from WEC Energy Group natural gas distribution companies calculated in accordance with EPA’s 40 Code of Federal Regulations Part 98, Subpart W reporting rule. 3. Man

23. Slide 23: Organic Flow Battery Storage New Clean Energy Pilot Project

    23  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 project will test battery system performance, including

24. Slide 24: Regional Economy

    e Regional Economy ose

25. Slide 25: Powering Industry Leaders in Our Region

    25 Powering Industry Leaders in Our Region

26. Slide 26: Longer-Term Sales Forecast

    26 Longer-Term Sales Forecast Wisconsin Segment Year-Over-Year 2026-2028 Electric 4.5%-5.0% Gas 0.7%-1.0% Sales Growth Forecast (weather-normalized)

27. Slide 27: Key Takeaways for WEC Energy Group

    27  Industry leading earnings quality.  Top decile dividend growth.  Capital plan drives premium long-term EPS growth of 6.5% to 7.0%.  95%+ of capital allocated to regulated businesses.  Aggressive environmental goals in place.  By end of 2030, we expect to use coal only as a backup fuel.  E

28. Slide 28: Appendix

    Appendix Wa wec VA Energy Group

29. Slide 29: Business Segments Overview

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

30. Slide 30: Inflation Reduction Act Customer Benefit and Investment Opportunity

    30  Extension of production tax credits (PTC) and investment tax credits (ITC).  PTC option for solar projects.  ITC for stand-alone electric storage projects.  Tax credit “transferability” to provide additional options for monetization.  Credit positive.  At WEC, no material impact expected f

31. Slide 31: Commitment to ESG

    31 Reduce carbon dioxide emissions from electric generation 60% by end of 2025 and 80% by 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 end of 2032 Targeting net-zero methane emissions from distributi

32. Slide 32: Electricity Supply by Fuel Type

    32 Electricity Supply by Fuel Type (megawatt-hours delivered to regulated utility customers) 73% 32% 7% 37% 43% 17% 22% 21% 3% 9% 34% 2005 2023 2030E 2032 2050 Coal Natural Gas Nuclear Renewables Exiting Coal <2% Net carbon neutral goal Planned exit from coal

33. Slide 33: Reducing Greenhouse Gas Emissions

    33 Reducing Greenhouse Gas Emissions 0.78 0.41 0.33 0.16 0** 2005 2023 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

34. Slide 34: WEC Infrastructure Portfolio

    34 SD IL NE 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 ● Jayhawk 190 282 ● Thunderhead 300 381 ● Sapphire Sky 250 442 Solar ● Samson I 250

35. Slide 35: WEC Infrastructure project details and offtake agreements

    35 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

36. Slide 36: Why Our Natural Gas Distribution Networks Matter

    36 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 ne

37. Slide 37: PGL Safety Modernization Program (SMP)

    37 PGL Safety Modernization Program (SMP)  Increasing capacity and reliability of natural gas service in PGL’s territory  38% complete*  Program paused while under ICC review Systematic Neighborhood Upgrades $160 System Improvement / Reliability $60 Public Improvement (Third Party Driven), $30 Em

38. Slide 38: Taking Steps to Maintain Reliable and Affordable Service

    38 Progress on Efficiency, Sustainability and Growth Electric delivery redesign/resilience  Addressing aging infrastructure and system hardening  Enhancing efficiencies and reducing operating costs  Expect to spend $3.8 billion (2024-2028) with continued investment over next decade Taking Steps t

39. Slide 39: Utility Capital Plan Drives EPS Growth

    39 Utility Capital Plan Drives EPS Growth $22.5 Billion Projected Capital Spend From 2024-2028 1,382 1,711 1,905 2,230 2,277 26 110 384 344 100 775 870 824 681 699 1,058 1,005 1,113 1,088 962 382 520 689 712 691 $3,623 $4,216 $4,915 $5,055 $4,729 - 1,000 2,000 3,000 4,000 5,000 2024 2025 2026 2027 2

40. Slide 40: Capital Plan Projections

    40 Company 2024 2025 2026 Wisconsin Electric $1,740.0 $2,035.7 $2,235.5 Wisconsin Gas 228.1 227.7 274.5 Wisconsin Public Service 636.4 799.5 933.4 Upper Michigan Energy 32.1 90.6 140.4 Wisconsin Segment $2,636.6 $3,153.5 $3,583.8 Peoples Gas 379.7 330.8 457.6 North Shore Gas 49.2 61.7 43.7 Illinois

41. Slide 41: Composition of Asset Base

    41 Composition of Asset Base Total 2023 Average Asset Base of $29.4 Billion Note: We Power value represents investment book value. Company Asset Base - $B % of Total Wisconsin Electric $8.2 27.9% Wisconsin Gas 2.1 7.1 Wisconsin Public Service 4.6 15.6 Upper Michigan Energy Resources 0.4 1.4 Peoples

42. Slide 42: Diverse Portfolio of Businesses

    42 Diverse Portfolio of Businesses Based on 2023 average asset base. WI 62% IL 16% MI/MN 5% WECI 7% ATC* 10% By Jurisdiction By Business Electric generation and distribution 48% Natural gas distribution 35% WECI 7% Electric transmission* 10% *ATC is accounted for using the equity method; this repres

43. Slide 43: Power the Future Investments

    43 Power the Future Investments 1 Port Washington (Natural Gas) Oak Creek Expansion (Coal/Co-Fire Gas3) 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

44. Slide 44: National Leader in Operating Efficiency and Financial Discipline

    44 National Leader in Operating Efficiency and Financial Discipline $28.10 $12.30 $15.40 $17.90 $20.40 $22.20 $24.30 $24.90 $26.80 $39.20 $77.20 $0 $10 $20 $30 $40 $50 $60 $70 $80 2022 Non-Fuel O&M per MWh* Source: FERC Form 1 Reports *For all companies, excluded 1) pensions and other employee benef

45. Slide 45: Focused on Efficiency

    45 Focused on Efficiency $1,342 $1,281 $1,234 $1,143 $1,107 $1,088 $1,082 $1,088 $1,159 2016 2017 2018 2019 2020 2021 2022 2023 2024E $ 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 expe

46. Slide 46: Projected Financing Plans for 2024

    46 Projected Financing Plans for 2024 1 $2,100- $2,500 $100-$200 $0 $500 $1,000 $1,500 $2,000 $2,500 Holding Company Utilities & Energy Infrastructure Equity Issuance (i n m ill io n s ) $1,200- $1,500 2 1. Amounts and timing are subject to material change based upon numerous factors, including mark

47. Slide 47: Balanced and Diverse Sales Mix

    47 33% Large C&I by Segment Paper/Packaging 24% Mining/Minerals 11% Foundry (SIC 33) 10% Other Manufacturing 8% Metal (SIC 34,35,37) 7% Food/Agriculture 6% Medical 6% Education 4% Printing 2% Chemical 2% Office 2% Other 17% Balanced and Diverse Sales Mix Large C&I 33% Residential and Farm 31% Small

48. Slide 48: Regulatory Matters

    48 Estimated Decision Date Wisconsin (apps.psc.wi.gov)  Decision on High Noon Solar and Battery Storage (Docket: 5-BS-276 filed 2/1/24) 2024 Illinois (icc.illinois.gov)  Decision on limited rate review rehearing (Docket: PGL: 23-0069 granted 1/4/24) 6/2024  Decision on 2016 Rider QIP Reconciliati

49. Slide 49: Regulatory Environment

    49 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

50. Slide 50: Rate-Making Parameters by Company

    50 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 50.79% 9.38% North Shore Gas 52.58% 9.38% Minnesota Energy Resources 53.00% 9.65% Michigan Gas U

51. Slide 51: Key Rate-Making Components

    51 Key Rate-Making Components Area Illinois– Gas Minnesota– Gas Michigan– Electric and Gas Wisconsin– Gas Wisconsin– Electric Gas Pipeline Replacement Rider MGU Bad Debt Rider ✓ Bad Debt Escrow Accounting Residential Residential Decoupling ✓ ✓ Fuel Cost Recovery 1 for 1 recovery of prudent fuel cost

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

    52 Reconciliation of EPS (GAAP) to Adjusted EPS (Non-GAAP) 2014 2015 2016 2017 2023 EPS – GAAP basis $2.59 $2.34 $ 2.96 $ 3.79 $4.22 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 (0.65) Illinois Disal

53. Slide 53: Contact Information

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

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