Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Non-Deal Roadshow (March 2019)
53 slides from Wec Energy's roadshow presentation, Mar 6, 2019
Slide 1: Focused on Performance: Investor Update Europe 2019
Focused on Performance Investor Update: Europe 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 $24.1 billion market cap (1) 1.6 million electric customers 2.9 million natural gas customers 60% ownership of American Transmission Company 70,100 miles of electric distribution 49,000 miles of gas distribution $19.8 billion of asset base (2) (1) As of 2/28/2019 (2) 2018 average
Slide 4: Our strategy is to create long-term value by focusing on the fundamentals
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 Best Employers Corporate Citizens For Diversity for 2019 Forbes Corporate Responsibility Maga
Slide 5: A Decade of EPS Growth
A Decade of EPS Growth $4.00 $3.50 $3.34 $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 4
Slide 6: Proven Track Record of Performance
Proven Track Record of Performance EPS Guidance 2018 Exceeded 2017 Exceeded 2016 Exceeded The only utility to beat 2015 Exceeded 2014 Exceeded guidance every year for more than a decade 2013 Exceeded 2012 Exceeded 2011 Exceeded 2010 Exceeded 2009 Exceeded 2008 Exceeded 2007 E
Slide 7: Det iie ttt
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Slide 8: Office of the Chair
Office of the Chair “Working together as a team, we will leverage the strengths of each individual as we write the next chapter of the company’s growth, development and service to our customers.” Gale Klappa Executive Chairman - Gale Klappa, Executive Chairman WEC Energy Group Rick Kuester Kevin Fle
Slide 9: 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 2018 2015 Base GAAP Adjusted* *See Appendix for reconciliation of adjusted amounts to GAAP amounts (1) 7.1% annual average growth rate calculated from 2015 base of $2.72 per share and 2018 earning
Slide 10: Solid Dividend Growth Continues
Solid Dividend Growth Continues In January, raised the dividend by 6.8% to a Annualized Dividends Per Share new annual rate of $2.36** $2.36 per share $2.21 $2.08 Targeting dividend $1.98 payout of 65-70% of $1.83* earnings $1.56 $1.445 Projecting dividend growth in line with $1.20 earnings growth $
Slide 11: 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 2018 2030 2050 10
Slide 12: 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 13: Five-Year Capital Plan
Five-Year Capital Plan 12
Slide 14: 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 $- In millions 2018-2022 2019-2023 Generation Electric Delivery Gas Delivery
Slide 15: 2019-2023 Capital Plan
2019-2023 Capital Plan ($ 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% $2.5 18% * ATC is accounted for using the equity
Slide 16: 2019–2023 Capital Plan Breakdown of Major Segments
2019–2023 Capital Plan Breakdown of Major Segments ($ 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 17: Increasing Natural Gas Distribution Investment
Increasing Natural Gas Distribution Investment Average Asset Base Estimated Asset Base 12/31/2018 7% 12/31/2023 $19.8 billion Growth $27.8 billion Bluewater Gas Gas Gas Storage Distribution Bluewater Distribution 1% Gas29% Gas Storage 35%Gas Distribution 1% Distribution FERC 30% FERC 35% Regulated R
Slide 18: 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 19: Generation Reshaping
Generation Reshaping 18
Slide 20: 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 21: Coal-Fueled Generation Retirements Reducing Greenhouse Gas Emissions
Coal-Fueled Generation Retirements Reducing Greenhouse Gas Emissions Apr. Pleasant Prairie 1,190 MW Sept. Edgewater 100 MW 4,935 Oct. Pulliam 200 MW MW Presque Isle 350 MW 3,095 MW 2017 2018 2019 2020 20
Slide 22: Regional Economy
Regional Economy 21
Slide 23: 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 24: Powering Industry Leaders in Our Region Expansion
Powering Industry Leaders in Our Region Expansion State-of-the-art fulfillment center in Oak Creek, WI featuring robotics to pick, pack and ship items to customers $200 million development that includes a four-story, 2.6 million-square-foot facility on 75 acres Expected to open in first quarte
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 Y WEC Energy Group
Slide 29: Business Segments 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: Upstream Wind Energy Center
Infrastructure Investment Upstream Wind Energy Center Built by Invenergy and located 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 regulated
Slide 34: 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 35: 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 36: 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 37: By Line of Business: Capital Plan Drives 5% to 7% EPS Growth
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 38: By State: Robust Capital Projection
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 39: American Transmission Company
American Transmission Company WEC portion of investment from 2019-2023: $1.4 billion Key Assumptions Projected Capital Expenditures (millions) ATC’s 2018 average rate base: (Inside Traditional Footprint) $3.7 billion $470 Implies WEC’s average rate $441 base growth of $115 million $410 ROE cur
Slide 40: Diverse Portfolio of Regulated Businesses
Diverse Portfolio of Regulated Businesses By Business By Jurisdiction MI/MN 3% Gas Distribution IL 32% 15% FERC Regulated FERC 14% WI 14% 68% Electric Generation and Distribution 54% Based on 2018 average asset base. Excludes Non-Regulated Wind Infrastructure 39
Slide 41: Composition of Asset Base
Composition of Asset Base Total 2018 Average Asset Base of $19.8 billion Company Asset Base - $B % of Total Wisconsin Electric $6.3 31.8% Wisconsin Gas 1.4 7.1 Wisconsin Public Service 3.1 15.7 Upper Michigan Energy Resources 0.2 1.0 Peoples Gas 2.6 13.1 North Shore Gas 0.3 1.5 Minnesota Energy Reso
Slide 42: Balanced Sales Mix
Balanced Sales Mix 2018 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% 35% 35% Other Manufacturing 8% Metal (SIC 34,35,37) 7% Medical 5% Residential Office 4% plus Farm Education 4% 30% Printing 3% Chemic
Slide 43: 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: S&P Global
Slide 44: 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) 2019 2020 2021 2022 2023 In millions Hold Co WEPCO WPS PGL 43
Slide 45: No Equity Issuances Anticipated
No Equity Issuances Anticipated Balance Sheet Remains Strong Funds from Operations/Debt Holding Company Debt 22% to Total Debt 21% 30% 20% 29% 25% 18% 20% 16-18% 16% Goal of 30% 15% or Less 14% 10% 12% 5% 10% 0% 2018 2019-2023E 2018 2019-2023E 44
Slide 46: 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 47: 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 46
Slide 48: 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 49: Regulatory and Open Docket Update
Regulatory and Open Docket Update Estimated Key Dates Wisconsin (apps.psc.wi.gov) . Decision on renewable energy pilot programs (Docket: 6630-TE-102) . Decision on new solar generation projects (Docket: 5-BS-228) Q1 2019 . Plan to file a general rate case for new base rates effective Jan. 1, 2020
Slide 50: 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 51: 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 52: 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 53: 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