Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Investor Presentation (January 2019)
52 slides from Wec Energy's investor presentation, Jan 9, 2019
Slide 1: Focused on Performance: Investor Update January 2019
Focused on Performance Investor Update: January 2019
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: Company Statistics
Company Statistics $21.9 billion market cap (1) 1.6 million electric customers 2.9 million natural gas customers 60% ownership of American Transmission Company 69,600 miles of electric distribution 48,000 miles of gas distribution $18.5 billion of rate base (2) (1) As of 12/31/2018 (2) 2017 average
Slide 4: Strategy focused on fundamentals and recognition
Our strategy is to create long-term value by focusing on the fundamentals: safety, world-class reliability, operating efficiency, financial discipline and customer care. One of the 100 Best One of America’s Corporate Citizens Best Employers Corporate Responsibility Magazine Forbes Most reliable util
Slide 5: A Decade of EPS Growth
A Decade of EPS Growth $4.00 $3.50 $3.32 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 GAAP Adjusted 2018 Guidance 4
Slide 6: Proven Track Record of Performance
Proven Track Record of Performance EPS Guidance 2017 Exceeded 2016 Exceeded 2015 Exceeded 2014 Exceeded The only regulated utility 2013 Exceeded to beat guidance every year for more than a 2012 Exceeded decade 2011 Exceeded 2010 Exceeded 2009 Exceeded 2008 Exceeded 2007 Exceeded
Slide 7: What's New?
What’s New? 6
Slide 8: Solid Dividend Growth Continues
Solid Dividend Growth Continues 5-7% 12.8% compound Annualized Dividends Per Share annual growth rate $2.36** 2010 to 2019** $2.21 $2.08 Targeting dividend $1.98 payout of 65-70% of $1.83* earnings $1.56 $1.445 Projecting dividend $1.20 growth in line with earnings growth $1.04 $0.80 2010 2011 2012
Slide 9: Infrastructure Investment: Coyote Ridge Wind Farm
Infrastructure Investment Coyote Ridge Wind Farm Currently being built by Avangrid Renewables in Brookings County, South Dakota, within MISO 39 GE wind turbines with footprint a capacity of ~97 MW Total investment: $145 million for an 80% ownership interest and substantially all of the tax benef
Slide 10: Powering Industry Leaders in Our Region
Powering Industry Leaders in Our Region Expansion State-of-the-art fulfillment center in Oak Creek Will employ 1,500 people – 50 percent more jobs than originally anticipated $200 million development that includes a four-story, 2.6 million-square-foot facility on 75 acres Expected to open in
Slide 11: Five-Year Capital Plan
Five-Year Capital Plan 10
Slide 12: Five-Year Capital Plan Continues to Support 5-7% EPS Growth
By Line of Business Five-Year Capital Plan Continues to Support 5-7% EPS Growth $16,000 $14,114 $14,000 $13,412 $1,427 $1,589 $12,000 $1,487 $911 $10,000 $8,000 $5,514 $5,869 $6,000 $4,000 $2,707 $2,780 $2,000 $2,691 $2,551 $- In millions 2018-2022 2019-2023 Generation Electric Delivery Gas Delivery
Slide 13: 2019-2023 Capital Plan
2019-2023 Capital Plan ($ in billions) Total of $14.1 billion Other Energy Infrastructure $1.1 7% Gas Distribution $5.1 36% Announced Technology Infrastructure $1.1 Projects Generation 8% $0.4 $2.5 ATC 3% 18% Investment* Electric $1.4 Distribution 10% $2.5 18% * ATC is accounted for using the equity
Slide 14: 2019-2023 Capital Plan Breakdown of Major Segments
2019–2023 Capital Plan Breakdown of Major Segments ($ in billions) Total Capital Plan of $14.1 billion Generation Gas Distribution New Renewables $1.0 SMP $1.5 New Gas 0.5 Growth 1.0 Maintenance Capital 1.0 System Renewal 1.6 Total $2.5 Required Relocation 0.6 Manlove Storage 0.4 Electric Distributi
Slide 15: Increasing Natural Gas Distribution Investment
Increasing Natural Gas Distribution Investment Average Asset Base Estimated Asset Base 12/31/2017 7% 12/31/2023 $18.5 billion Growth $27.8 billion Bluewater Gas Gas Gas Storage Distribution Bluewater Distribution 1% Gas Gas Storage 35%Gas 29% Distribution Distribution 1% FERC FERC 35% Regulated Regu
Slide 16: Our Capital Plan in Context
Our Capital Plan in Context Capital plan extends the runway for 5 to 7 percent growth from our core business well into the future Electric sales growth expected to accelerate in later part of five-year plan Electric distribution capital expected to grow in next iteration of five-year capital pla
Slide 17: Confident in Achieving Our EPS Growth Guidance
Confident in Achieving Our EPS Growth Guidance $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 2015 2016 2017 2018E 2015 Base GAAP Adjusted* *See Appendix for reconciliation of adjusted amounts to GAAP amounts (1) 6.9% growth rate calculated from 2015 base of $2.72 per share and increased 2018 earnings gu
Slide 18: Generation Reshaping
Generation Reshaping 17
Slide 19: Reshaping our Generation Fleet for a Clean, Reliable Future
Reshaping our Generation Fleet for a Clean, Reliable Future Balancing reliability and customer cost with environmental stewardship We have set aggressive Taken as a whole, changes to our generation goals to reduce carbon fleet should reduce costs to customers, preserve dioxide emissions by fuel dive
Slide 20: Achieving Our Carbon Goal
Achieving Our Carbon Goal Reduction Goals: Achieved and anticipated CO2 reductions (mass) 0% 40 % -10% below 2005 levels by 2030 -20% -30% 8 0% -40% below 2005 levels by 2050 -50% -60% -70% -80% 2005 2017 2030 2050 Milestone years 19
Slide 21: Coal-Fueled Generation Reducing Greenhouse Gas Emissions
Coal-Fueled Generation Reducing Greenhouse Gas Emissions 4,935 Apr. Pleasant Prairie 1,190 MW MW Sept. Edgewater 100 MW Oct. Pulliam 200 MW 3,095 Presque Isle 350 MW MW 2017 2018 2019 2020 20
Slide 22: Investing in Zero-Carbon Generation
Investing in Zero-Carbon Generation Wisconsin Public Service and Madison Gas & Electric Solar generation are seeking PSCW approval to partner on two major technology has improved solar projects: in efficiency, become Badger Hollow Solar Farm more cost-effective and complements our Located in Iow
Slide 23: Regional Economy
Regional Economy 22
Slide 24: Foxconn in Wisconsin
Foxconn in Wisconsin Expected capital investment by Foxconn of Foxconn announced $10 billion dollars July 26, 2017, Wisconsin’s largest Goal of creating 13,000 jobs, and an estimated economic development 22,000 indirect jobs created throughout Wisconsin project and largest Largest greenfield i
Slide 25: Powering Industry Leaders in our Region
Powering Industry Leaders in our Region 24
Slide 26: Wisconsin Segment Sales Forecast Benefits from Regional Economic Growth
Wisconsin Segment Sales Forecast Benefits from Regional Economic Growth Year-over-Year 2019 – 2021 2022 - 2023 Annual Sales Electric Flat – 0.5% 1.2% - 1.5% Growth Forecast (weather-normalized) Gas 0.5% – 1% 1.2% - 1.5% 25
Slide 27: Key Takeaways for WEC Energy Group
Key Takeaways for WEC Energy Group Track record of exceptional performance Portfolio of premium businesses Investment opportunities support 5-7 percent EPS growth with minimal impact on base rates 100 percent of capital allocated to regulated businesses or contracted renewables/gas storage
Slide 28: Appendix
Appendix Wa WEC liam nergy Group
Slide 29: Business lines overview
Electric Distribution Natural Gas Distribution Electric Generation Non-Utility Energy Infrastructure Electric Transmission 60% ownership 28
Slide 30: "Delivering" the Future Project Highlights
“Delivering” the Future Project Highlights Electric Resilience Electric Redesign Technology Enhancements • Installing 2,200 miles of • Major investments planned to • Advanced metering program underground circuits to replace address aging infrastructure that uses integrated system of troublesome over
Slide 31: Peoples Gas Natural Gas System Modernization Program
Peoples Gas Natural Gas System Modernization Program Extensive effort to modernize natural gas infrastructure in city of Chicago Ultimately replace 2,000 miles of piping Approximately 26% complete* Investment recovery under a monthly rider Project $280-$300 million average annual investment
Slide 32: New Generation in Upper Peninsula
New Generation in Upper Peninsula Provides a long-term generation solution for electric ~180 MW of clean, natural reliability in Upper Peninsula gas-fired generation from Estimated $266 million ($277 million including AFUDC) Reciprocating Internal investment to be made by Michigan utility – UMER
Slide 33: Infrastructure Investment: Bishop Hill III Wind Energy Center
Infrastructure Investment Bishop Hill III Wind Energy Center Developed by Invenergy and placed into service in May 2018 Located in Henry County, Illinois 53 GE wind turbines with a capacity of ~132 MW Total investment: $166 million for a 90% ownership interest Expected to provide returns tha
Slide 34: Infrastructure Investment: Upstream Wind Energy Center
Infrastructure Investment Upstream Wind Energy Center Currently being built by Invenergy in Antelope County, Nebraska 81 GE wind turbines with Total investment: $276 million a capacity of ~200 MW for an 80% ownership interest Expected to provide returns that are higher than those in our regula
Slide 35: Power the Future Investments
Power the Future Investments Natural Gas Coal Capacity 1,090 MW 1,030 MW1 Investment $664 million $2 billion1 ROE 12.7% 12.7% Equity 53% 55% In Service Dates Unit 1 – July 2005 Unit 1 – February 2010 Unit 2 – May 2008 Unit 2 – January 2011 Lease Terms 25 years 30 years Cost Per Unit of Capacity $609
Slide 36: Capital Plan Drives 5% to 7% EPS Growth by Line of Business
By Line of Business Capital Plan Drives 5% to 7% EPS Growth $3,500 $3,192 $2,987 $265 $3,000 $2,882 $282 $396 $371 $2,577 $2,476 $2,500 $382 $205 $329 $180 $102 $402 $2,000 ATC Investment $1,375 $1,146 Energy Infrastructure $1,388 $997 $1,500 Gas Delivery $963 Electric Delivery Generation* $1,000 $5
Slide 37: Robust Capital Projection By State
By State Robust Capital Projection $3,500 $3,192 $2,987 $3,000 $265 $2,882 $282 $396 $371 $2,577 $2,476 $2,500 $382 $136 $205 $329 $180 $157 $106 $102 $93 $402 ATC Investment $2,000 $687 Energy Infrastructure $603 $90 $769 $525 MERC/MGU $1,500 $504 Illinois WI/MI Delivery $1,150 $1,007 $882 $1,000 W
Slide 38: American Transmission Company
American Transmission Company WEC portion of investment from 2019-2023: $1.4 billion Key Assumptions Projected Capital Expenditures (millions) ATC’s 2017 average rate base: (Inside Traditional Footprint) $3.5 billion $470 Implies WEC’s average rate $441 base growth of $115 million $410 ROE cur
Slide 39: Diverse Portfolio of Regulated Businesses
Diverse Portfolio of Regulated Businesses By Business By Jurisdiction MI/MN 3% Gas Distribution IL 29% 13% FERC Regulated 15% FERC 15% WI 69% Electric Generation and Distribution 56% Based on 2017 average rate base 38
Slide 40: Composition of Rate Base
Composition of Rate Base Total 2017 Rate Base of $18.5 billion Wisconsin Electric Power the Future Wisconsin Public Service Corporation UMERC Wisconsin Gas North Shore Gas 33.5% 15.7% Peoples Gas Minnesota Energy Resources 15.7% Michigan Gas Utilities ATC 0.5% 11.4% Bluewater 7.0% 0.5% 11.9% 1.1% 1.
Slide 41: Balanced Sales Mix
Balanced Sales Mix 2017 Retail MWh Deliveries Mix* 35% Large C&I by Segment Paper 24% Foundry (SIC 33) 11% Mining/Minerals 10% Small C&I Large C&I Food/Agriculture 9% 36% 35% Other Manufacturing 8% Metal (SIC 34,35,37) 7% Medical 5% Residential Office 4% plus Farm Education 4% 29% Printing 3% Chemic
Slide 42: Strong Financial Condition
Strong Financial Condition Electric and Gas Utilities Credit Ratings Distribution* Utilities Number of Utility Rating Issuers 140 Wisconsin Electric A- 120 100 Wisconsin Gas A 80 60 Wisconsin Public Service A- 40 20 Peoples Gas A- 0 AA - A A- BBB+ BBB BBB- Below Investment Grade *Source: Standard &
Slide 43: Manageable Levels of Refinancing
Manageable Levels of Refinancing $1,500 Long-Term Debt Maturities $1,300 $1,100 $900 $700 $500 No debt maturities in $300 2022 or 2023 $100 $(100) 2018 2019 2020 2021 2022 2023 In millions Hold Co WEPCO WPS PGL 42
Slide 44: No Equity Issuances Anticipated
No Equity Issuances Anticipated Balance Sheet Remains Strong Funds from Operations/Debt Holding Company Debt 20% to Total Debt 19% 30% 19% 18% 29% 25% 17% 16-18% 16% 20% 15% Goal of 30% 15% 14% or Less 13% 10% 12% 5% 11% 10% 0% 2017 2018-2023E 2017 2018-2023E 43
Slide 45: Rate-Making Parameters by Company
Rate-Making Parameters by Company Utility Equity Layer (1) Authorized ROE Wisconsin Electric 48.5%-53.5% 10.2% Wisconsin Public Service 49.0%-54.0% 10.0% Wisconsin Gas 47.0%-52.0% 10.3% Peoples Gas 50.33% 9.05% North Shore Gas 50.48% 9.05% Minnesota Energy Resources 50.9% 9.7% Michigan Gas Utilities
Slide 46: Electric Residential Bills below National Average
Electric Residential Bills below National Average National Average Wisconsin Electric Wisconsin Public Service $1,299 $1,300 $1,304 $1,281 $1,264 $1,226 $1,200 $1,187 $1,190 $1,172 $955 $949 $959 $952 $930 2013 2014 2015 2016 2017 Source: SNL data for average annual residential bills 45
Slide 47: Key Rate Making Components
Key Rate Making Components Michigan– Illinois – Minnesota – Electric & Wisconsin – Wisconsin – Area Gas Gas Gas Gas Electric Gas Pipeline Replacement PGL Rider Bad Debt Rider ✓ Bad Debt Escrow Accounting WE / WG WE Decoupling ✓ ✓ Fuel Cost Recovery 1 for 1 recovery of prudent fuel costs +/- 2% band
Slide 48: Regulatory and Open Docket Update
Regulatory and Open Docket Update Estimated Key Dates Wisconsin (apps.psc.wi.gov) . Received approval on Forward Wind Center . Decision on renewable energy pilot programs (Docket: 6630-TE-102) . Decision on new solar generation projects (Docket: 5-BS-228) Q1 2019 Illinois (icc.illinois.gov) .
Slide 49: Regulatory Environment
Regulatory Environment Wisconsin Illinois Governor Tony Evers (D) Governor J.B. Pritzker (D) Commission Commission Gubernatorial appointment, Gubernatorial appointment, Senate Senate confirmation confirmation Chairman: Gubernatorial appointment Chairman: Gubernatorial appointment 6
Slide 50: Industry Leading Total Shareholder Returns
Industry Leading Total Shareholder Returns* Over the past decade, WEC Energy Group has consistently delivered among the best total returns in the industry 400% 350% 300% WEC Energy Group 250% Dow Jones Utilities 200% S&P Utilities Philadelphia Utility 150% S&P Electric 100% 50% 0% One-Year Three-Yea
Slide 51: Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP)
Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP) 2017 2016 Reported EPS – GAAP basis $ 3.79 $ 2.96 Tax benefit related to Tax Cuts and Jobs Act of 2017 $ (0.65) – Acquisition Costs – $ 0.01 Adjusted EPS – Non-GAAP basis* $ 3.14 $ 2.97 * WEC Energy Group has provided adjusted earnings
Slide 52: Contact Information
Contact Information M. Beth Straka Senior Vice President – Investor Relations and Corporate Communications Beth.Straka@wecenergygroup.com 414-221-4639 Ashley Knutson Investor Relations Analyst Ashley.Knutson@wecenergygroup.com 414-221-3339
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