Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Wisconsin Energy — Midwest Utility Conference April 2010
24 slides from Wec Energy's conference presentation, Apr 5, 2010
Slide 1: Wisconsin Energy Corporation Midwest Utility Conference April 2010
Wisconsin Energy Corporation Midwest Utility Conference April 2010 April 2010 April 2010 April 2010
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 the Company Forecast of Electric Sales Rate Case Activity Renewables Strategy Update on Oak Creek Construction Earnings Outlook
Slide 4: Overview of Wisconsin Energy: Retail Electric and Gas Utilities
Largest electric and gas company in Wisconsin 1.1 million electric customers 1.0 million natural gas customers Overview of Wisconsin Energy Retail Electric and Gas Utilities
Slide 5: Overview of Wisconsin Energy: Power the Future Plan
Overview of Wisconsin Energy Power the Future Plan Power the Future We Power builds, finances, and owns four new generating units Two natural gas units - now complete Two coal units - one complete and another nearing completion Leased to and operated by Wisconsin Electric under 25 and 30 year leases
Slide 6: Overview of Wisconsin Energy: Power the Future Plan
Overview of Wisconsin Energy Power the Future Plan Natural Gas Coal Capacity 1,090 MW 1 1,030 MW 1 Investment $664 million $2.0 billion ROE 12.7% 12.7% Equity 53% 55% Initial Lease Term 25 Years 30 Years Actual & Targeted In-service Dates Unit 1 - July 16, 2005 Unit 2 - May 23, 2008 Unit 1 - Februar
Slide 7: Overview of Wisconsin Energy: Wholesale Electric Transmission
Overview of Wisconsin Energy Wholesale Electric Transmission Wisconsin Energy owns 26.2% of American Transmission Company (ATC) In 2009, ATC contributed $35 million to our net income Represented 9.3% of consolidated earnings ATC's projected capital investment over the next ten years is $2.5 billion
Slide 8: Forecast of Electric Sales for 2010
Forecast of Electric Sales for 2010 2010 Forecast vs. 2009 Actual 2010 Forecast vs. 2009 Normalized Residential 4.2% - 0.2% Small C&I -2.4% - 3.0% Large C&I (ex. Mines) 2.1% 1.7% Total Large C&I 1.8% 1.6% Total Retail 1.2% - 0.4%
Slide 9: Rate Case Activity: Wisconsin Jurisdiction
Rate Case Activity Wisconsin Jurisdiction Order was received for 2010 retail rate case on December 18, 2009 Allowed returns and equity ratios ROE Equity Wisconsin Electric 10.4% 48.5% to 53.5% Wisconsin Gas 10.5% 45.0% to 50.0% Combined rate base for utilities is projected to be $5.8 billion in 2010
Slide 10: Rate Case Activity: Wisconsin Jurisdiction Fuel Case
Rate Case Activity Wisconsin Jurisdiction Electric fuel case was filed on February 19 An increase in natural gas prices as compared to the forecast was a key driver for the increase The PSCW granted interim relief effective March 25 A final review is expected later this year Any over-recovery of act
Slide 11: Rate Case Activity: Michigan Jurisdiction
Rate Case Activity Michigan Jurisdiction Electric case filed July 2, 2009 Requested $42 million increase (33%) Self implemented $12 million in February Requested return on equity and equity ratio range match Wisconsin filing Key drivers are Power the Future and transition from historical to forward
Slide 12: Renewable Energy Opportunity: Renewable Portfolio Standard
Renewable Energy Opportunity Renewable Portfolio Standard 2001-03 Baseline 2010 2015 2020 2025 0.0227 0.0427 0.0827 0.1827 0.2327 Total Renewable Energy Requirement 2010 - 1.4 TWh 2015 - 2.5 TWh 2020 - 5.5 TWh 2025 - 7.3 TWh Required Percentage of Wisconsin Retail Sales Existing Requirement Proposed
Slide 13: Renewable Energy Opportunity: Wind Projects
Renewable Energy Opportunity Wind Projects Blue Sky Green Field Completed May 2008 145 MW, $295 million investment Glacier Hills PSCW approval received January 22 160 MW, $367 million investment Wisconsin Electric has executed 75 MW of short term Power Purchase Agreements
Slide 14: Renewable Energy Opportunity: Biomass and Solar Projects
Renewable Energy Opportunity Biomass and Solar Projects Biomass Filed application for a 50MW project with PSCW on March 15 Estimated investment of $255 million with a target in- service date of 2013 Decision expected by year end 12.5 MW of solar Expected investment of $85 to $90 million Targeting 20
Slide 15: Update on Oak Creek Expansion
Update on Oak Creek Expansion Oak Creek Unit 1 now in service Oak Creek Unit 2 Bechtel is targeting in-service for the end of August Guaranteed in-service date is November 28 Bechtel had sought $517 million plus schedule relief of seven months for Unit 1 and four months for Unit 2 All claims in arbi
Slide 16: Projected Earnings Base in 2011
Projected Earnings Base in 2011 Electric and Gas Utilities $2.61 Power the Future - - Includes allocation of approximately $375 million of 6.25% rate holding company debt $1.33 Wholesale Electric Transmission - - 26.2% Investment in ATC $0.33 Unallocated holding company debt ($0.27) $4.00
Slide 17: Projected Capital Expenditures
Projected Capital Expenditures 2007 2008 2009 2010E 2011E 2012E Utility 539 606 550 805 1000 804 We Power/Other 671 530 268 146 18 31 1210 1136 818 951 1018 835
Slide 18: Retail Electric and Gas Utilities Expected Earnings
Retail Electric and Gas Utilities Expected Earnings Key Assumptions Retail rate base of $5.3 billion in 2009 Expected to grow to $5.8 billion in 2010 and $6.7 billion in 2011 Utilities are projected to contribute at least $2.61 per share to EPS in 2011 Glacier Hills project assumed to cost $367 mill
Slide 19: Power the Future Expected Earnings
Power the Future Expected Earnings 2009 2010 2011 Port Washington #1 & #2 32 32 32 Oak Creek #1 10 62 70 Oak Creek #2 10 31 Key Assumptions Oak Creek #2 in service end of August 2010 - one month change results in +/- 2 cents per share in 2010 Cost estimate of $2 billion for WEC's ownership of the co
Slide 20: Wholesale Electric Transmission Expected Earnings
Wholesale Electric Transmission Expected Earnings 2010E 2011E ATC 220 273 WEC portion (26.2%) 58 72 Key Assumptions ATC expected to average $250 million annual capital expenditures over the next ten years Implies average $30 million effective annual rate base growth for WEC Expect a $0.33 contributi
Slide 21: Financing and Dividend Policy
Financing and Dividend Policy Capital Structure Goals Reach and maintain 55% debt to capital by the end of 2013 Assumes half of hybrid securities are treated as common equity Current Dividend Policy Target a dividend payout ratio of 40-45 percent of earnings this year as well as 2011 Target 45-50 pe
Slide 22: Earnings Guidance for 2010
Earnings Guidance for 2010 Guidance for the full year remains at $3.65 to $3.75 per share As we discussed on our February 2 earnings conference call ... First quarter 2010 earnings are expected to be well below earnings in the first quarter of 2009 Key drivers first quarter of 2010 vs. first quarter
Slide 23: Projected Growth in Earnings and Dividends
2009 2010 2011 1.35 1.6 1.8 $1.60 to $1.80 Projected Growth in Earnings and Dividends 2009 2010 2011 3.2 3.65 4 Earnings per Share Dividends per Share $3.65 to $3.75
Slide 24: Key Takeaways on Wisconsin Energy
Solid utility franchises with strong projected growth in rate base Power the Future program almost complete - highly visible earnings and strong cash flow Investment in American Transmission Company provides an additional regulated growth opportunity Positioned to deliver among the best risk-adjuste
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