Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Wisconsin Energy — Investor Presentation (October 2011)
25 slides from Wec Energy's investor presentation, Oct 13, 2011
Slide 1: Wisconsin Energy Corporation
yr Wisconsin Energy (£m Corporation
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
Slide 3: Key Areas to be Covered
Key Areas to be Covered Overview of Wisconsin Energy Retail Electric and Gas Utilities Power the Future Wholesale Electric Transmission Earnings Outlook
Slide 4: Overview of Wisconsin Energy
$6.3 $2.7 $0.7 Utilities PTF Transmission Overview of Wisconsin Energy Estimated Rate Base and Power the Future Investment at 12/31/11 Retail Electric and Gas Utilities Wisconsin, Michigan, and FERC jurisdictions 48.5% to 53.5% equity for Wisconsin Electric 10.4% allowed ROE 45% to 50% equity for Wi
Slide 5: Retail Electric and Gas Utilities
Largest electric and gas company in Wisconsin 1.1 million electric customers 1.0 million natural gas customers Retail Electric and Gas Utilities
Slide 6: Regulatory Environment
Wisconsin Commissioners Michigan Commissioners Regulatory Environment Name Party Began Serving Term Ends Phil Montgomery Chairman R 03/2011 03/2017 Eric Callisto D 05/2008 03/2015 Ellen Nowak R 07/2011 03/2013 Name Party Began Serving Term Ends Orjiakor Isiogu Chairman D 08/2007 07/2013 John D. Quac
Slide 7: Rate Case Activity: Wisconsin Jurisdiction
Rate Case Activity Wisconsin Jurisdiction Filed an application with the Wisconsin Public Service Commission requesting no net increase in base rates in 2012 Authorizes the company to suspend amortization of $148M of regulatory costs in 2012 Authorizes $148M of carrying costs and depreciation on air
Slide 8: Rate Case Activity: Wisconsin Jurisdiction
Rate Case Activity Wisconsin Jurisdiction Schedule for fuel case established with decision expected by the end of 2011 or early 2012 Requests the refund of $26 million from Wisconsin Electric’s settlement of spent nuclear fuel litigation with the U.S. Department of Energy Expect to file a full rate
Slide 9: Rate Case Activity: Michigan Jurisdiction
Rate Case Activity Michigan Jurisdiction Filed rate case on July 5 Requested $14.9 million annually -- an 8.4% increase includes a DOE settlement refund of $2.7 million Expect to self-implement $7.7 million -- a 4.4% increase in January 2012 Filed for a 10.4% ROE Final rates effective July 2012
Slide 10: Electric Retail Customer Base
Small C&I 32% Residential 31% Large C&I 36% Residential 40% Small C&I 34% Large C&I 25% Wisconsin Energy Electric Retail Customer Base C&I Sector Small & Large % of 2010 Electric Sales Office 12.4% Mining 11.4% Retail 6.4% Health Care 5.7% Paper & Products 5.5% Primary Metals 5.5% Education 4.6% Foo
Slide 11: Expected Levels of Investment and Depreciation
$329 $415 $425 $412 $146 $333 $132 $10 $212 $166 $68 $71 250 260 310 320 Retail Electric and Gas Utilities Expected Levels of Investment and Depreciation $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 2010A 2011E 2012E 2013E Base Renewable Environmental Depreciation *Total depreciation expen
Slide 12: Projected Rate Base
$4.9 $5.1 $6.4 $6.7 $0.4 $0.3 $0.6 $1.0 Retail Electric and Gas Utilities Projected Rate Base Average Total Utility Rate Base $0.2 ($0.3) ($0.1) $5.5 $6.3 $6.7 $6.7 -$1 $0 $1 $2 $3 $4 $5 $6 $7 $8 2010A 2011E 2012E 2013E PPE CWIP All Other* *All other is comprised of customer advances, def. taxes, in
Slide 13: Renewable Energy Opportunity
Renewable Energy Opportunity Renewable Portfolio Standard in Wisconsin 2.27% 4.27% 8.27% 2001-03 Baseline Required Percentage for Wisconsin Electric Retail Sales *Requirements at a Wisconsin state level are 5% and 10% in 2010 and 2015 respectively. In terms of energy this is estimated to be 1.4 TWh
Slide 14: Renewable Energy Opportunity
Renewable Energy Opportunity Glacier Hills 162 MW Estimated investment of $361 million Expected completion December of 2011 Biomass 50MW Estimated investment of $255 million Approved by PSCW and Domtar Inc. Expected completion by the end of 2013 Wisconsin Electric has executed 165MW of renewable ene
Slide 15: Power the Future Expected Earnings
Power the Future Expected Earnings Oak Creek #2 Oak Creek #1 Port Washington #1 & #2 Key Assumptions Oak Creek Unit 2 in service January 12, 2011 Cost estimate of $2 billion for WEC’s ownership of the coal units Free cash flow of $248 million in 2012 – after capex and debt repayment at We Power leve
Slide 16: Wholesale Electric Transmission
Wholesale Electric Transmission Wisconsin Energy owns 26.2% of American Transmission Company (ATC) ATC is projected to contribute approximately 16 cents to our EPS this year Represents almost 8% of consolidated earnings ATC’s projected capital investment over the next ten years is $3.8 - $4.4 billio
Slide 17: Wholesale Electric Transmission
Wholesale Electric Transmission Non-exclusive joint venture between Duke Energy and ATC (DATC) announced in April Adds potential investment opportunities outside ATC’s current footprint Ownership is split 50/50 with Duke and ATC In September, DATC submitted the first set of proposed transmission pro
Slide 18: Wholesale Electric Transmission Expected Earnings
Wholesale Electric Transmission Expected Earnings $267 $310 $272 $70 $81 $71 ATC WEC portion (26.2%) Key Assumptions ATC projects a need for $3.8-$4.4 billion of transmission improvements in its footprint from 2011 to 2020 Implies average $35 million effective annual rate base growth for WEC from 20
Slide 19: Projected Earnings Base for 2010-2012
Projected Earnings Base for 2010 - 2010A 2011E 2012E Electric and Gas Utilities $1.34 $1.41 to $1.45 $6.7 billion rate base Power the Future (1) $0.48 $0.66 $0.67 Wholesale Electric Transmission (2) $0.15 $0.16 $0.17 Unallocated holding company debt (3) ($0.05) ($0.13) ($0.09) $1.92 $2.10 to $2.14 (
Slide 20: Forecast of Electric Sales 2011
Forecast of Electric Sales 2011 2011 Forecast vs. 2010 Actual 2011 Forecast vs. 2010 Normalized Residential -3.2% -0.4% Small C&I -1.0% 0.5% Large C&I (ex. Mines) -2.8% -2.0% Total Large C&I -2.2% -1.6% Total Retail -2.1% -0.6%
Slide 21: Financing Policy
Financing Policy Capital Structure Goals Maintain debt to capital below 55% by the end of 2013 Actual ratio was 54.1% at the end of 2010 Assumes half of hybrid securities are treated as common equity
Slide 22: Dividend / Share Repurchase
Dividend / Share Repurchase Move to a dividend payout ratio that is competitive with our peers Adopted a policy that trends to a 60% payout ratio over the period 2012 to 2015 Beginning in 2012, this policy should support annual dividend increases in the 8 to 9 percent range over the forecast period
Slide 23: Projected Growth in Earnings and Dividends
$0.68 $0.80 2009A 2010A 2011E $1.04 Projected Growth in Earnings and Dividends $1.60 2009A 2010A 2011E Earnings per Share Dividends per Share $1.92 $2.10 to $2.14
Slide 24: Potential Investment Opportunities
Potential Investment Opportunities Divestiture of energy assets by the State of Wisconsin Investment in fuel flexibility at new Oak Creek coal units Investment in aging gas and electric distribution infrastructure Renewable energy investments beyond 2016 Investment in aging generation facilities suc
Slide 25: Key Takeaways on Wisconsin Energy
Power the Future program now complete Highly visible earnings and strong cash flow Solid utility franchises with rate base growth Power the Future 2 driven by environmental upgrades, renewable energy projects and network improvements Investment in American Transmission Company provides an additional
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