Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Investor Presentation (June 2022)
51 slides from Wec Energy's investor presentation, Jun 15, 2022
Slide 1: Investor Update: June 2022
Investor Update: June 2022 Our “ESG” Progress Plan 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 Best ESG Growth Strategy in the U.S. Capital Finance Internation
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 $33.1 billion market cap* 4.6 million retail customers 60% ownership of American Transmission Company $39.0 billion of assets * As of May 31, 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 $4.34 to $4.38 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 1st 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: Transmission Planning – Future One
8 Transmission Planning – Future One Estimated investment opportunity in Tranche 1 is approximately $800 million (2022 dollars). Investments in these long-dated projects are expected in the last few years of this decade.
Slide 9: Wisconsin Rate Review Proposals
9 Wisconsin Rate Review Proposals In April, Wisconsin Electric, Wisconsin Gas and Wisconsin Public Service filed applications with the state Public Service Commission • Only the second time in eight years We Energies has asked for a base rate increase • Only the third time in eight years WPS has ask
Slide 10: Rate Review Summary
10 Wisconsin Electric Wisconsin Gas Wisconsin Public Service Electric Natural Gas Natural Gas Electric Natural Gas Current ROE 10.0% 10.0% 10.2% 10.0% 10.0% Current Equity Ratio 52.5% 52.5% 52.5% 52.5% 52.5% Proposed ROE 10.0% 10.0% 10.2% 10.0% 10.0% Proposed Equity Ratio 53.0% 53.0% 53.0% 53.0% 53.
Slide 11: Recent Project Approvals Advancing Our ESG Progress Plan
11 Recent Project Approvals Advancing Our ESG Progress Plan Approved Investment1 Paris Solar-Battery Park $390 million LNG Storage Facilities $370 million Weston RICE Units2 $170 million Red Barn Wind Park $140 million Effluent Limit Compliance for Oak Creek Expansion Plant $90 million Since we anno
Slide 12: Exiting Coal
12 Near-term retirements planned (2023-2024) Oak Creek Units 5-8: 1,100 MW Columbia Units 1-2: 300 MW Enhancing fuel flexibility (gas blending) at Oak Creek Power the Future units, pending environmental and regulatory approvals By the end of 2030, we expect to use coal only as a backup fue
Slide 13: Hydrogen Pilot Program
13 Leading a pilot program to test hydrogen as a fuel source for power generation Partnering with the Electric Power Research Institute (EPRI) Blending hydrogen with natural gas at one of our RICE units One of the first hydrogen pilot programs of its kind in the United States WEC Energy Grou
Slide 14: ESG Progress Plan
14 ESG Progress Plan
Slide 15: Robust Growth in Asset Base
15 $25 billion $35 billion 2021A 2026E* Robust Growth in Asset Base *Estimated year-end average asset base Expect long-term EPS growth of 6-7% per year. 7% Growth
Slide 16: Investing in Efficiency and Sustainability Drives Growth
16 $2.7 15% $12.2 69% $2.8 16% Sustainability Renewables $5.4 Grid and Fleet Reliability $6.8 Efficiency Technology $1.1 Grid and Fleet Modernization $1.6 Growth Gas Distribution $1.3 Electric (G,T&D) $1.5 2022-2026 Capital Plan ($ in billions) Investing in Efficiency and Sustainability Drives Growt
Slide 17: Carbon Reduction Goals – Electric Generation
17 *Includes projection of potential carbon offsets by 2050 Carbon Reduction Goals – Electric Generation Goals aligned with the Paris Agreement to limit global warming to 1.5 degrees C
Slide 18: More than Doubling Renewable Generation
18 More than Doubling Renewable Generation 0 1,000 2,000 3,000 4,000 5,000 2021A 2026E Electricity Supply by Renewable Source Hydro Biomass Battery Solar Wind Wind - WECI N a m e p la te c a p a c it y ( M W ) Includes owned electric generation and announced WEC Infrastructure (WECI) projects
Slide 19: Investing in Carbon-Free Generation
19 Solar and Battery Storage 100 MW currently under construction (Badger Hollow II Solar Park) 279 MW received regulatory approval on March 17th (Paris Solar-Battery Park) Solar: Filed for approval 495 MW Planning for additional 700 MW Qualifies for Investment Tax Credits (ITC) Battery
Slide 20: WEC Infrastructure Portfolio – Green and Growing
20 SD IL NE Plan to invest $1.9 Billion (2022-2026) WEC Infrastructure Portfolio – Green and Growing In-service Under development Total Project Capacity (MW) Investment (in millions) Upstream 200 $307 Bishop Hill III 132 166 Coyote Ridge 97 145 Blooming Grove 250 389 Tatanka Ridge 155 240 Jayhawk 19
Slide 21: Modernizing Our Gas-Fueled Generation Fleet
21 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 31st 128 MW Expected investment: $170 million Target in-service: 2023 * Filed and pending regulato
Slide 22: Methane Reduction Goal
22 Reduction goal: Net zero by the year 2030** Our ESG Progress Plan Methane Reduction Goal *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 g
Slide 23: Regional Economy
23 Regional Economy
Slide 24: Powering Industry Leaders in our Region
24 Powering Industry Leaders in our Region
Slide 25: Wisconsin Segment Economic Growth Driving Longer-Term Sales Forecast
25 Wisconsin Segment Economic Growth Driving Longer-Term Sales Forecast 2024-2026 Electric 0.7%-1.0% Gas 0.7%-1.0% Sales Growth Forecast (weather-normalized) Year-Over-Year
Slide 26: Key Takeaways for WEC Energy Group
26 Track record of top decile performance among regulated utilities Industry leading earnings quality ESG Progress Plan drives premium EPS growth of 6-7% No need to issue equity through forecast period 100% of capital allocated to regulated businesses or contracted renewables Dividend gr
Slide 27: Appendix
Appendix WA wec VA Energy Group
Slide 28: Electric Distribution Electric Transmission 60% ownership Electric Generation Energy Infrastructure Natural Gas Distr…
28 Electric Distribution Electric Transmission 60% ownership Electric Generation Energy Infrastructure Natural Gas Distribution
Slide 29: Commitment to ESG
29 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 30: Electricity Supply by Fuel Type
30 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 31: Reducing Greenhouse Gas Emissions
31 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 32: Investment in Regulated Renewables
32 Plan to invest $3.5 Billion (2022-2026) Investment in Regulated Renewables Target Project Utility WEC Ownership2 Expected WEC Investment ($M) WEC Capacity (MWs) In Service Two Creeks Solar Project WPS 66.7% $130 100 In Service Badger Hollow I Solar Park WPS 130 100 1st Half 2023 Badger Hollow II
Slide 33: WEC Infrastructure Projects
33 Project Developer Location Investment Offtake Agreement WEC Commercial Operations Total Project Capacity Bishop Hill III Wind Energy Center Invenergy Henry County, IL $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
Slide 34: Why Our Natural Gas Distribution Networks Matter
34 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 35: New Liquefied Natural Gas (LNG) Storage Facilities
35 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. Taking Steps to Maintain Reliable and Affordable Service for Our Customers We Energies received approval for two LNG facilities
Slide 36: Electric Delivery Redesign / Resilience
36 Electric delivery redesign / resilience Addressing aging infrastructure and system hardening Enhancing efficiencies and reducing operating costs Expect to spend $3.4 billion (2022-2026) with continued investment over next decade Project Highlights Efficiency, Growth and Sustainability Progr
Slide 37: Natural Gas Safety Modernization
37 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 38: Utility Capital Plan Drives EPS Growth
38 998 987 858 890 960 579 665 685 711 716 649 559 596 494 513 578 591 636 645 603 120 104 107 107 104 333 343 278 208 183 $3,257 $3,249 $3,160 $3,055 $3,079 - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 2022 2023 2024 2025 2026 ATC Investment MERC/MGU Illinois WI Gas Delivery WI Electric Delivery
Slide 39: Capital Plan Projections by Company
39 2022 2023 2024 Wisconsin Electric $1,204.2 $1,360.2 $1,173.9 Wisconsin Gas $280.5 $233.6 $263.4 Wisconsin Public Service $627.2 $537.3 $621.6 Upper Michigan Energy $19.8 $16.9 $55.2 Wisconsin Segment $2,131.7 $2,148.0 $2,114.1 Peoples Gas $521.1 $538.0 $580.4 North Shore Gas $52.0 $48.8 $54.6 Ill
Slide 40: Composition of Asset Base
40 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 41: National Leader in Operating Efficiency and Financial Discipline
41 National Leader in Operating Efficiency and Financial Discipline $13.20 $16.20 $18.50 $18.80 $20.80 $21.10 $21.90 $22.00 $23.00 $23.20 $33.40 $10 $15 $20 $25 $30 $35 2020 Non-Fuel O&M per MWh* Source: FERC Form 1 Reports *For all companies, excluded 1) pensions and other employee benefits, 2) cos
Slide 42: Focused on Efficiency
42 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 43: Balance Sheet Remains Strong
43 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 44: Balanced Sales Mix
44 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 45: Diverse Portfolio of Businesses
45 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 46: Regulatory Matters
46 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-109 and WPS 6690-UR-126) Q4 2022 Decision on Koshkonong Solar and Battery Storage (Docket: 5-BS-258 filed 4/30/
Slide 47: Regulatory Environment
47 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 48: Rate-Making Parameters by Company
48 Rate-Making Parameters by Company Utility Equity Layer1 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 51.58% 9.67% Minnesota Energy Resources 50.9% 9.7% Michigan Gas Utilities
Slide 49: Key Rate Making Components
49 Key Rate Making Components Area Illinois– Gas Minnesota– Gas Michigan– Electric & 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 co
Slide 50: Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP)
50 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 51: Contact Information
Contact Information M. Beth Straka Senior Vice President – Investor Relations and Corporate Communications Beth.Straka@wecenergygroup.com 414-221-4639