Wec Energy Group, Inc. · NYSE:WEC

Wec Energy — Q3 2023 Earnings Presentation

55 slides from Wec Energy's earnings presentation, Oct 31, 2023

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

    Investing in Efficiency, Sustainability and Growth Investor Update: November 2023 1

  2. 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

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

    $25.7 billion market cap* 4.6 million retail customers 60% ownership of American Transmission Company $43.4 billion of assets The Premier Energy Company in America’s Heartland * As of October 31, 2023 3

  4. Slide 4: A History of Quality Earnings Growth

    A History of Quality Earnings Growth $5.00 $4.58-$4.62 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 GAAP Adjusted** 2023 Guidance * Estimated based on 2023 guidance midpoint of $4.60 per share. ** See Appe

  5. Slide 5: Consistent Performance Over Time

    EPS Guidance Consistent Performance 2022 Exceeded  Over Time 2021 Exceeded  2020 Exceeded  2019 Exceeded  2018 Exceeded  2017 Exceeded  2016 Exceeded  2015 Exceeded  2014 Exceeded  The only utility to beat guidance 2013 Exceeded  every year for 19 years running. 2012 Exceeded  2011 Exceed

  6. Slide 6: Strong Dividend Growth Continues

    Strong Dividend Growth Continues  In January, raised the dividend by 7.2% to a new annual rate of $3.12 per share*  Top decile dividend growth in industry**  Marks the 20th consecutive year of rewarding shareholders with higher dividends  Named one of Morningstar’s 10 Best Dividend Stocks*** *An

  7. Slide 7: What's New?

    What’s New? 7

  8. Slide 8: A Range of Investment Opportunities

    2024-2028 Capital Plan A Range of Investment Opportunities Driven by:  Solid economic growth in Wisconsin  New transmission assets to ensure reliability  MISO's seasonal capacity rules  Continued hardening of our distribution networks 8

  9. Slide 9: Capital Plan – Key Drivers

    2024-2028 Capital Plan Capital Plan – Key Drivers Identified $3.3 billion of additional investments compared to previous five-year plan.  Regulated renewables – $1.4 billion increase  Natural gas generation – $1.3 billion increase  LNG capacity – $800 million increase  Transmission investments –

  10. Slide 10: Increasing Five-Year Capital Plan by $3.3 Billion

    2024-2028 Capital Plan Increasing Five-Year Capital Plan by $3.3 Billion $23.4 $0.4 $3.0 $20.1 $1.9 $2.0 $6.0 Energy Infrastructure Former plan New plan ATC* $6.0 $3.7 Gas Delivery** WI/MI Electric Delivery $1.0 WI LNG Capacity $3.6 WI/MI Generation $0.2 $9.3 $6.4 $ In billions 2023-2027 2024-2028 *

  11. Slide 11: Robust Growth in Asset Base

    Robust Growth in Expect compound Asset Base annual EPS growth of 6.5% to 7.0% 8.1% Growth $43.3 billion $29.4 billion 2023E* 2028E* *Estimated year-end average asset base. 11

  12. Slide 12: Business Portfolio Growing in Electric Transmission and Generation

    Business Portfolio Growing in Electric Transmission and Generation 2023E* 2028E* Electric Electric transmission** transmission** 10% 12% WECI WECI 7% 4% Electric Electric generation generation and and distribution Natural gas distribution 48% distribution 52% Natural gas 32% distribution 35% * Based

  13. Slide 13: Exiting Coal

    Exiting Coal 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)  Enh

  14. Slide 14: Investing $6.8 Billion in Regulated Renewables

    Investing $6.8 Billion in Regulated Renewables Plan to build and own 3,800 MW – more than quadrupling our carbon-free generation. 2024-2028 Plan includes: Solar Total Battery Storage Total Wind Total Grand Total 2,700 MW 250 MW 880 MW 3,830 MW $4.5 billion $0.4 billion $1.9 billion $6.8 billion Anno

  15. Slide 15: Modernizing Our Gas-Fueled Generation Fleet

    2024-2028 Capital Plan Modernizing Our Gas-Fueled Generation Fleet West Riverside Energy Center Combined-Cycle  Additional 100 MW option*  Expected investment: $100 million  Target: 2024 Combustion Turbines  1,125 MW planned  Expected investment: $1.2 billion RICE generation Weston Rice 132 MW

  16. Slide 16: Investing in Our Natural Gas Reliability and Capacity

    2024-2028 Capital Plan Investing in Our Natural Gas Reliability and Capacity  New proposed LNG storage facilities are needed to ensure gas supply for winter reliability.  Expected investment: $860 million  4 Bcf planned  LNG storage facilities under construction address the need to support our n

  17. Slide 17: Growing Transmission Investment

    Growing Transmission Investment WEC portion of ATC investment expected from 2024-2028: $3.0 billion Projected Capital Expenditures (millions)  Tranche 1 in 2022 $1,187 $1,148 $1,152 dollars:  ATC: $900 million $867  WEC portion: $540 million $689 $712 $691 $636  $330 million $547 $520 in this pl

  18. Slide 18: Projected Cash Flows and Financing Plan

    Projected Cash Flows and Financing Plan ($ in billions) 2024 - 2028 Common Equity $1.8 - $2.2 Incremental Debt $7.0 - $8.0 Capital Plan* $20.4 Cash from Operations $16.5 - $17.5 Dividends $6.0 - $6.2 Cash Uses Cash Sources * Excludes ATC’s capital. ATC is accounted for using the equity method. 18

  19. Slide 19: Credit Quality – Maintaining a Healthy Balance Sheet

    Credit Quality – Maintaining a Healthy Balance Sheet FFO/Debt Metrics 2024-2028 WEC Energy Group Target GAAP 15-16% FFO to Debt S&P >15% FFO to Debt Moody’s >16% CFO Pre-WC/Debt Current Issuer Credit Ratings Entity S&P Rating Moody’s Rating WEC Energy Group A- Baa1 Wisconsin Electric A- A2 Wisconsin

  20. Slide 20: Wisconsin Utilities — Rate Review

    Wisconsin Utilities — Rate Review Scope for 2024 Limited Reopener Proposed Base Revenue Increases for 2024  Addresses the recovery of new renewable Wisconsin Electric facilities, RICE generation and LNG Electric* 1.3% $45.0M reliability investments that achieve Natural Gas 4.5% $23.9M commercial op

  21. Slide 21: Illinois Rate Review

    Illinois Rate Review  Peoples Gas is not seeking an extension of the automatic bill adjustment rider QIP.  With natural gas prices expected to decline this year and next year, we project customer bills to stay largely flat as new rates take effect in 2024.  Chicago home heating bills are below ot

  22. Slide 22: Carbon Reduction Goals – Electric Generation

    Carbon Reduction Goals – Electric Generation Achieved and anticipated CO2 reductions (net mass)* Reduction goals: 0 60% below 2005 -20 levels by end of 2025 80% -40 -60 -49% below 2005 levels by end of 2030 -80 Net carbon -100 neutral 2005 2022 2025 2030 2050 by 2050 We have established aggressive c

  23. Slide 23: Methane Reduction

    Methane Reduction Achieved* and anticipated methane emission reduction from natural gas distribution. Aligns with effort to limit warming to 1.5°C. 0% Goal: -22% -20% Net zero -40% by end of 2030** -60% -80% Use of renewable natural gas (RNG) is expected to contribute significantly to -100% 2011 202

  24. Slide 24: Organic Flow Battery Storage

    New Clean Energy Pilot Project Organic Flow Battery Storage  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.’  Th

  25. Slide 25: Regional Economy

    Regional Economy 25

  26. Slide 26: Powering Industry Leaders in Our Region

    Powering Industry Leaders in Our Region 26

  27. Slide 27: Longer-Term Sales Forecast

    Wisconsin Segment Longer-Term Sales Forecast Sales Growth Forecast (weather-normalized) Year-Over-Year 2026-2028 Electric 4.5%-5.0% Gas 0.7%-1.0% 27

  28. Slide 28: Key Takeaways for WEC Energy Group

    Key Takeaways for WEC Energy Group  Track record of top decile performance among regulated utilities.  Industry leading earnings quality.  Capital plan drives premium EPS growth of 6.5% to 7.0%.  98%+ of capital allocated to regulated businesses.  Dividend growth projected to be in line with ea

  29. Slide 29: Appendix

    Appendix Wa weEc V/A Energy Group

  30. Slide 30: Electric Generation, Electric Distribution, Energy Infrastructure

    Electric Generation Electric Distribution Natural Gas Distribution Energy Infrastructure Electric Transmission 60% ownership 30

  31. Slide 31: Inflation Reduction Act

    Inflation Reduction Act Customer Benefit and Investment Opportunity  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 monetiz

  32. Slide 32: Commitment to ESG

    Commitment to ESG Reduce carbon dioxide emissions from electric generation 60% by end of 2025 and 80% by end of 2030 – both from a 2005 baseline. Long- Carbon Goals term goal of net-zero carbon emissions from our generating fleet by 2050 Exit from Coal Planned exit from coal by end of 2032 Methane T

  33. Slide 33: Exiting Coal

    Exiting Coal Electricity Supply by Fuel Type (megawatt-hours delivered to regulated utility customers) 73% 43% 38% 32% 34% Planned exit Net carbon 22% from coal neutral goal 21% 17% 7% 8% 3% <2% 2005 2022 2030E 2032 2050 Coal Natural Gas Nuclear Renewables 33

  34. Slide 34: Reducing Greenhouse Gas Emissions

    Reducing Greenhouse Gas Emissions Greenhouse gas intensity* (metric tons CO2/MWh) 0.78 0.43 0.33 0.16 0** 2005 2022 2025E 2030E 2050E *Includes owned electric generation, purchased power and WEC Infrastructure (WECI). The environmental attributes of the WECI renewable facilities are or may be the pr

  35. Slide 35: WEC Infrastructure Portfolio

    WEC Infrastructure Portfolio Total Project Investment Capacity (MW) (in millions) Wind SD ● Upstream 200 $307 ● Bishop Hill III 132 166 ● Coyote Ridge 97 145 NE IL ● Blooming Grove 250 389 ● Tatanka Ridge 155 240 KS ● Jayhawk 190 282 ● Thunderhead 300 381 ● Sapphire Sky 250 442 Solar TX ● Samson I 2

  36. Slide 36: Infrastructure Investment Summary

    Infrastructure Investment Summary WEC Total Commercial Project Project Developer Investment Offtake Agreement Operations Capacity Bishop Hill III Wind $166M for WPPI Energy Invenergy 8/31/18 132 MW Energy Center 90% ownership 22 years Upstream Wind $307M for Affiliate of Allianz Invenergy 1/10/19 20

  37. Slide 37: Why Our Natural Gas Distribution Networks Matter

    Today and Tomorrow Why Our Natural Gas Distribution Networks Matter -46° Our Service Area -26°  65%-78% of homes use natural gas for heating -26°  Growth continues as customers convert to natural gas Hydrogen and RNG Opportunities -23°  Potential to blend  Investment potential to convert existin

  38. Slide 38: Efficiency, Sustainability and Growth Progress

    Taking Steps to Maintain Reliable and Affordable Service for Our Customers Efficiency, Sustainability and Growth Progress Electric delivery redesign/resilience  Addressing aging infrastructure and system hardening  Enhancing efficiencies and reducing operating costs  Expect to spend $3.7 billion

  39. Slide 39: Efficiency, Sustainability and Growth Progress

    Taking Steps to Maintain Reliable and Affordable Service for Our Customers Efficiency, Sustainability and Growth Progress 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 safe

  40. Slide 40: Utility Capital Plan Drives EPS Growth

    $23.0 Billion Projected Capital Spend From 2024-2028 Utility Capital Plan Drives EPS Growth $5,287 $4,896 $4,911 5,000 712 $4,250 689 691 4,000 $3,691 520 1,265 1,176 1,113 382 $3,134 ATC* 1,214 3,000 311 737 Gas Delivery** 1,220 729 730 WI/MI Electric Delivery 1,027 344 100 WI LNG Capacity 790 384

  41. Slide 41: Capital Plan Projections

    Capital Plan Projections ($ in millions) Company 2023 2024 2025 Wisconsin Electric $1,240.3 $1,661.6 $1,877.4 Wisconsin Gas 232.5 228.1 227.7 Wisconsin Public Service 652.7 620.7 783.8 Upper Michigan Energy 16.5 32.1 90.6 Wisconsin Segment $2,142.0 $2,542.5 $2,979.5 Peoples Gas 468.0 541.7 539.2 Nor

  42. Slide 42: Composition of Asset Base

    Composition of Asset Base Total 2022 Average Asset Base of $26.5 Billion Company Asset Base - $B % of Total Wisconsin Electric $7.3 27.5% Wisconsin Gas 1.9 7.2 Wisconsin Public Service 4.2 15.9 Upper Michigan Energy Resources 0.4 1.5 Peoples Gas 4.1 15.5 North Shore Gas 0.4 1.5 Minnesota Energy Reso

  43. Slide 43: Diverse Portfolio of Businesses

    Diverse Portfolio of Businesses By Business By Jurisdiction Electric transmission* 10% WECI WECI 5% 5% ATC* MI/MN 10% 5% Electric generation and IL distribution 17% WI Natural gas 49% 63% distribution 36% Based on 2022 average asset base. *ATC is accounted for using the equity method; this represent

  44. Slide 44: Power the Future Investments

    Power the Future Investments 1 Port Washington Oak Creek Expansion (Natural Gas) (Coal/Co-Fire Gas3) 2 Capacity 1,090 MW 1,030 MW 2 Investment $664 million $2 billion ROE 12.7% 12.7% Equity 53% 55% Unit 1 – July 2005 Unit 1 – February 2010 In Service Dates Unit 2 – May 2008 Unit 2 – January 2011 Lea

  45. Slide 45: National Leader in Operating Efficiency and Financial Discipline

    National Leader in Operating Efficiency and Financial Discipline $80 2022 Non-Fuel O&M per MWh* $77.20 $70 $60 $50 $39.20 $40 $30 $28.10 $26.80 $24.30 $24.90 $20.40 $22.20 AVERAGE $17.90 $20 $15.40 $12.30 WEC $10 $0 The top 10 vertically integrated electric utilities by 12/31/2022 market cap Source:

  46. Slide 46: Focused on Efficiency

    Focused on Efficiency Day-to-Day O&M Expense* $1,342 $1,281 $1,234 $ In millions $1,143 $1,107 $1,088 $1,082 2-3% 2016 2017 2018 2019 2020 2021 2022 2023E *Excludes costs that have a revenue offset such as operation and maintenance costs associated with the We Power generation units, transmission ex

  47. Slide 47: Financing Plans for 2023

    Financing Plans for 2023 1 YTD Financing Planned Financing 3 Existing Facilities $2,500 $1.9B net liquidity (as of Oct. 31, 2023) $2,000 $1,500 (in millions) $2,050 $3.1B $1,000 $500 $100-$150 $0.2B $0 2 Holding Company Utilities & Energy Infrastructure $3.3B total 1. Amounts and timing are subject

  48. Slide 48: Projected Financing Plans for 2024

    Projected Financing Plans for 2024 1 4 $2,500 Existing Facilities $1.9B net liquidity $2,000 (as of Oct. 31, 2023) $1,500 (in millions) $1,900- $3.1B $1,000 $2,300 $500 $700-$1,200 $100-$200 $0 2 $0.2B Holding Company Utilities & Energy Equity Issuance Infrastructure 3 $3.3B total 1. Amounts and tim

  49. Slide 49: Balanced Sales Mix

    Balanced Sales Mix 2022 Retail MWh Deliveries Mix* 34% Large C&I by Segment Paper/Packaging 26% Foundry (SIC 33) 11% Mining/Minerals 10% Small C&I Large C&I Metal (SIC 34,35,37) 8% 35% 34% Other Manufacturing 8% Food/Agriculture 7% Medical 6% Residential Education 4% and Farm Printing 3% 31% Chemica

  50. Slide 50: Regulatory Matters

    Regulatory Matters Estimated Decision Date Wisconsin (apps.psc.wi.gov)  Commission decision on limited re-opener for new base rates effective 1/1/24 Q4 2023 (Dockets: WE and WG: 5-UR-110 and WPS 6690-UR-127) Illinois (icc.illinois.gov)  Decision on general rate review for new base rates effective

  51. Slide 51: Regulatory Environment

    Regulatory Environment Wisconsin Illinois  Governor Tony Evers (D)  Governor J.B. Pritzker (D)  Commission  Commission  Gubernatorial appointment,  Gubernatorial appointment, Senate confirmation Senate confirmation  Chairman: Gubernatorial appointment  Chairman: Gubernatorial appointment  6

  52. Slide 52: Rate-Making Parameters by Company

    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 50.33% 9.05% North Shore Gas 51.58% 9.67% Minnesota Energy Resources 53.00% 9.65% Michigan Gas Util

  53. Slide 53: Key Rate-Making Components

    Key Rate-Making Components Illinois– Minnesota– Michigan– Wisconsin– Wisconsin– Area Gas Gas Electric and Gas Gas Electric Gas Pipeline Replacement Rider PGL1 MGU Bad Debt Rider ✓ Bad Debt Escrow Accounting Residential Residential Decoupling ✓ ✓ Fuel Cost Recovery 1 for 1 recovery of prudent fuel co

  54. Slide 54: Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP)

    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 – – – $ (0.

  55. Slide 55: Contact Information

    Contact Information M. Beth Straka Senior Vice President – Investor Relations and Corporate Communications Beth.Straka@wecenergygroup.com 414-221-4639 Amanda Brockman Investor Relations Analyst Amanda.brockman@wecenergygroup.com 920-433-2966 55

WEC Energy Group — Q3 2023 Earnings Presentation on 6ix