Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Investor Presentation (March 2022)
54 slides from Wec Energy's investor presentation, Mar 18, 2022
Slide 1: Investor Update: March 2022 – Our ESG Progress Plan
Investor Update: March 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 Internatio
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: Company Profile
3 Company Profile $28.7 billion market cap* 4.6 million retail customers 60% ownership of American Transmission Company $39.0 billion of assets * As of Feb. 28, 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 midpoint of $4.31 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: What's New?
6 What’s New?
Slide 7: Strong Dividend Growth Continues
7 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 dividends declared in 2021
Slide 8: Strong Dividend Growth Continues
8 $0.80 $1.04 $1.20 $1.445 $1.56 $1.83* $1.98 $2.08 $2.21 $2.36 $2.53 $2.71 $2.91 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E Strong Dividend Growth Continues Targeting dividend payout of 65%-70% of earnings Projecting dividend growth in line with earnings growth *Annualized ba
Slide 9: Exiting Coal
9 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 our use of coal to be immateria
Slide 10: Hydrogen Pilot Program
10 Leading a pilot program to test hydrogen as a fuel source for power generation Partnering with the Electric Power Research Institute (EPRI) Co-firing hydrogen with natural gas at one of our RICE units* One of the first hydrogen power pilot programs of its kind in the United States WEC Ene
Slide 11: Next Steps in Succession Planning
11 Scott Lauber promoted to president and CEO effective February 1, 2022 Next Steps in Succession Planning Gale Klappa will continue to serve as executive chairman until May 2024
Slide 12: ESG Progress Plan
12 ESG Progress Plan
Slide 13: ESG Progress Plan Supports 6-7% EPS Growth
13 $3,078 $4,693 $3,150 $3,356 $3,023 $2,811 $3,054 $3,053 $487 $542 $1,120 $1,345 $2,188 $1,900 $16,100 $17,700 2021-2025 2022-2026 Energy Infrastructure ATC MERC/MGU Illinois WI Gas Delivery WI Electric Delivery WI Generation N e w P la n 1 F o rm e r P la n ESG Progress Plan Supports 6-7% EPS Gro
Slide 14: Robust Growth in Asset Base
14 $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 15: Investing in Efficiency and Sustainability Drives Growth
15 $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 16: Carbon Reduction Goals – Electric Generation
16 Our ESG Progress Plan Carbon Reduction Goals – Electric Generation Reduction goals: 60% below 2005 levels by the end of 2025 80% below 2005 levels by the end of 2030 Net carbon neutral by 2050 Goals aligned with the Paris Agreement*Includes projection of potential carbon offsets by 2050 -100 -80
Slide 17: More than Doubling Renewable Generation
17 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 18: Investing in Carbon-Free Generation
18 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 19: WEC Infrastructure Portfolio – Green and Growing
19 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 20: Modernizing Our Gas-Fueled Generation Fleet
20 Modernizing Our Gas-Fueled Generation Fleet Retiring 200 MW of older, less-efficient gas generation expected Target: 2024 Building Weston RICE units* 128 MW Expected investment: $170 million Target in-service: 2023 Reciprocating Internal Combustion Engines (RICE) are modular, run on nat
Slide 21: Methane Reduction Goal
21 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 22: Regional Economy
22 Regional Economy
Slide 23: Powering Industry Leaders in our Region
23 Powering Industry Leaders in our Region
Slide 24: Wisconsin Segment Longer-Term Sales Forecast
24 Wisconsin Segment Broad Ranging 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 25: Key Takeaways for WEC Energy Group
25 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 26: Appendix
Appendix | VAie VA Energy Group
Slide 27: WEC Energy Group Business Overview
27 Electric Distribution Electric Transmission 60% ownership Electric Generation Energy Infrastructure Natural Gas Distribution
Slide 28: Commitment to ESG
28 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 2035 Targeting net-zero methane emissions from distributi
Slide 29: Electricity Supply by Fuel Type
29 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 30: Reducing Greenhouse Gas Emissions
30 Reducing Greenhouse Gas Emissions 0.78 0.45 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 31: Investment in Regulated Renewables
31 Plan to invest $3.5 Billion (2022-2026) Investment in Regulated Renewables Target Project Utility WEC Ownership** Expected WEC Investment ($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 Q1 2023 Badger Hollow II Solar
Slide 32: WEC Infrastructure Projects
32 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 33: Oak Creek PTF Units Critical to Wisconsin and Region
33 Oak Creek PTF Units Critical to Wisconsin and Region Among newest, most efficient units; in a critical location Top 5% in the country on coal plant efficiency* One of only two 1,000 MW sites in the top decile heat rate in MISO Plant equipment capable of co-firing natural gas and coal *Bas
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 Post 2030 Potential to blend Investment potential to convert existing distri
Slide 35: New 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: Robust Growth in Asset Base
38 Expect long-term EPS growth of 6-7% per year. 35% 37% 36% 35%12% 9% 12% 12% 5% 7% $25B $35B 2021A 2026E* WECI Transmission We Power Gas Distribution Electric Generation and Distribution Robust Growth in Asset Base *Estimated year-end average asset base 7% Growth
Slide 39: Utility Capital Plan Drives EPS Growth
39 998 987 858 890 960 579 665 685 711 716 649 559 596 494 513 578 591 636 645 603 120 104 107 107 104 333 343 278 208 183 $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 40: Capital Plan Projections By Company
40 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 41: Composition of Asset Base
41 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 42: Power the Future Investments
42 Power the Future Investments 1 Port Washington (Natural Gas) Oak Creek Expansion (Coal/Co-Fire Gas3) Capacity 1,090 MW 1,030 MW 2 Investment $664 million $2 billion 2 ROE 12.7% 12.7% Equity 53% 55% In Service Dates Unit 1 – July 2005 Unit 2 – May 2008 Unit 1 – February 2010 Unit 2 – January 2011
Slide 43: One of the Top Performers in Operating Efficiency
43 One of the Top Performers in Operating Efficiency $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) costs reported as
Slide 44: Focused on Efficiency
44 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 45: Balance Sheet Remains Strong
45 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 46: Balanced Sales Mix
46 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 47: Diverse Portfolio of Businesses
47 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 48: Open Regulatory Matters
48 Open Regulatory Matters Wisconsin (apps.psc.wi.gov) Estimated Key Dates Decision on Koshkonong Solar and Battery Storage (Docket: 5-BS-258 filed 4/30/2021) 2022 Decision on Weston RICE units (Docket: 5-CE-153 filed 4/16/2021) 2022 Decision on Red Barn Wind Park (Docket: 5-BS-256 filed 3/29/
Slide 49: Regulatory Environment
49 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 50: Rate-Making Parameters by Company
50 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 51: Key Rate Making Components
51 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 52: Industry Leading Total Shareholder Returns
52 Industry Leading Total Shareholder Returns* Over the past decade, WEC Energy Group has consistently delivered among the best total returns in the industry * Total return including reinvested dividends for the periods ended December 31, 2021. 0% 50% 100% 150% 200% 250% 300% One-Year Three-Year Fiv
Slide 53: Reconciliation of Reported EPS (GAAP) to Adjusted EPS (Non-GAAP)
53 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 54: Contact Information
Contact Information M. Beth Straka Senior Vice President – Investor Relations and Corporate Communications Beth.Straka@wecenergygroup.com 414-221-4639
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