Wec Energy Group, Inc. · NYSE:WEC
Wec Energy — Wisconsin Energy — Investor Presentation (November 2011)
26 slides from Wec Energy's investor presentation, Nov 3, 2011
Slide 1: Wisconsin Energy Corporation
Wa Wisconsin Energy 74 Corporation
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 Wisconsin Energy Retail Electric and Gas Utilities Power the Future Wholesale Electric Transmission Earnings Outlook
Slide 4: Overview of Wisconsin Energy
$6.3 $2.7 Overview of Wisconsin Energy Estimated Rate Base and Power the Future Investment at 12/31/11 Retail Electric and Gas Utilities Wisconsin, Michigan, and FERC jurisdictions 48.5% to 53.5% equity for Wisconsin Electric 10.4% allowed ROE 45% to 50% equity for Wisconsin Gas 10.5% allowed ROE Po
Slide 5: Retail Electric and Gas Utilities
Largest electric and gas company in Wisconsin 1.1 million electric customers 1.0 million natural gas customers Retail Electric and Gas Utilities
Slide 6: Regulatory Environment
Wisconsin Commissioners Michigan Commissioners Regulatory Environment Name Party Began Serving Term Ends Phil Montgomery Chairman R 03/2011 03/2017 Eric Callisto D 05/2008 03/2015 Ellen Nowak R 07/2011 03/2013 Wisconsin Commission 3 Commissioners Gubernatorial appointment, Senate confirmation Chairm
Slide 7: Rate Case Activity
Rate Case Activity Wisconsin Jurisdiction Filed an application with the Wisconsin Public Service Commission requesting no net increase in base rates in 2012 Authorizes the company to suspend amortization of $148M of regulatory costs in 2012 Authorizes $148M of carrying costs and depreciation on air
Slide 8: Rate Case Activity
Rate Case Activity Wisconsin Jurisdiction Schedule for fuel case established with decision expected by the end of 2011 or early 2012 Requests the refund of $26 million from Wisconsin Electric’s settlement of spent nuclear fuel litigation with the U.S. Department of Energy Expect to file a full rate
Slide 9: Rate Case Activity
Rate Case Activity Michigan Jurisdiction Filed rate case on July 5 Requested $17.5 million annually -- an 8.4% increase Expect to self-implement $7.7 million in January 2012 If approved by the commission, this 4.4% increase could be offset by the Michigan portion of the DOE settlement This would res
Slide 10: Electric Retail Customer Base
Small C&I 32% Residential 31% Large C&I 36% Residential 40% Small C&I 34% Large C&I 25% Wisconsin Energy Electric Retail Customer Base 2010 Retail KWh Sales Mix Other 1% C&I Sector Small & Large % of 2010 Electric Sales Office 12.4% Mining 11.4% Retail 6.4% Health Care 5.7% Paper & Products 5.5% Pri
Slide 11: Expected Levels of Investment and Depreciation
$329 $415 $425 $412 $146 $333 $132 $10 $212 $166 $68 $71 250 260 310 320 Retail Electric and Gas Utilities Expected Levels of Investment and Depreciation $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 2010A 2011E 2012E 2013E Base Renewable Environmental Depreciation *Total depreciation expen
Slide 12: Projected Rate Base
$4.9 $5.1 $6.4 $6.7 $0.4 $0.3 $0.6 $1.0 Retail Electric and Gas Utilities Projected Rate Base Average Total Utility Rate Base $0.2 ($0.3) ($0.1) $5.5 $6.3 $6.7 $6.7 -$1 $0 $1 $2 $3 $4 $5 $6 $7 $8 2010A 2011E 2012E 2013E PPE CWIP All Other* *All other is comprised of customer advances, def. taxes, in
Slide 13: Renewable Energy Opportunity
Renewable Energy Opportunity Renewable Portfolio Standard in Wisconsin 2.27% 4.27% 8.27% 2001-03 Baseline Required Percentage for Wisconsin Electric Retail Sales *Requirements at a Wisconsin state level are 5% and 10% in 2010 and 2015 respectively. In terms of energy this is estimated to be 1.4 TWh
Slide 14: Renewable Energy Opportunity
Renewable Energy Opportunity Glacier Hills 162 MW Estimated investment of $361 million Expected completion December of 2011 Biomass 50MW Estimated investment of $255 million Approved by PSCW and Domtar Inc. Expected completion by the end of 2013 Wisconsin Electric has executed 165MW of renewable ene
Slide 15: Power the Future: Expected Earnings
Power the Future Expected Earnings Oak Creek #2 Oak Creek #1 Port Washington #1 & #2 Key Assumptions Oak Creek Unit 2 in service January 12, 2011 Cost estimate of $2 billion for WEC’s ownership of the coal units Free cash flow of $248 million in 2012 – after capex and debt repayment at We Power leve
Slide 16: Wholesale Electric Transmission
Wholesale Electric Transmission Wisconsin Energy owns 26.2% of American Transmission Company (ATC) ATC is projected to contribute approximately 16 cents to our EPS this year Represents almost 8% of consolidated earnings ATC’s projected capital investment over the next ten years is $3.8 - $4.4 billio
Slide 17: Wholesale Electric Transmission
Wholesale Electric Transmission Non-exclusive joint venture between Duke Energy and ATC (DATC) announced in April Adds potential investment opportunities outside ATC’s current footprint Ownership is split 50/50 between Duke and ATC In September, DATC submitted the first set of proposed transmission
Slide 18: Wholesale Electric Transmission Expected Earnings
Wholesale Electric Transmission Expected Earnings $267 $310 $272 $70 $81 $71 ATC WEC portion (26.2%) Key Assumptions ATC projects a need for $3.8-$4.4 billion of transmission improvements in its footprint from 2011 to 2020 Implies average $35 million effective annual rate base growth for WEC from 20
Slide 19: Projected Earnings Base for 2010-2012
Projected Earnings Base for 2010 - 2010A 2011E 2012E Electric and Gas Utilities $1.34 $1.44 to $1.47 $6.7 billion rate base Power the Future (1) $0.48 $0.66 $0.67 Wholesale Electric Transmission (2) $0.15 $0.16 $0.17 Unallocated holding company debt (3) ($0.05) ($0.13) ($0.09) $1.92 $2.13 to $2.16 (
Slide 20: Forecast of Electric Sales 2011
Forecast of Electric Sales 2011 2011 Forecast vs. 2010 Actual 2011 Forecast vs. 2010 Normalized Residential -3.2% -0.4% Small C&I -1.0% 0.5% Large C&I (ex. Mines) -2.8% -2.0% Total Large C&I -2.2% -1.6% Total Retail -2.1% -0.6%
Slide 21: Financing Policy
Financing Policy Capital Structure Goals Maintain debt to capital below 55% by the end of 2013 Actual ratio was 54.1% at the end of 2010 Assumes half of hybrid securities are treated as common equity
Slide 22: Dividend / Share Repurchase
Dividend / Share Repurchase Move to a dividend payout ratio that is competitive with our peers Adopted a policy that trends to a 60% payout ratio over the period 2012 to 2015 Management will recommend a dividend increase in the range of 13% to 15% to the Board for 2012 In 2013 and beyond, this polic
Slide 23: Dividend / Share Repurchase
Dividend / Share Repurchase To maintain appropriate financial strength and provide value to our investors, we plan to: Implement a share repurchase plan – through the end of 2013 – that calls for us to buy back up to $300 million of Wisconsin Energy common stock through open market purchases or priv
Slide 24: Projected Growth in Earnings and Dividends
$0.68 $0.80 2009A 2010A 2011E $1.04 Projected Growth in Earnings and Dividends $1.60 2009A 2010A 2011E Earnings per Share Dividends per Share $1.92 $2.13 to $2.16
Slide 25: Potential Investment Opportunities
Potential Investment Opportunities Divestiture of energy assets by the State of Wisconsin Investment in fuel flexibility at new Oak Creek coal units Investment in aging gas and electric distribution infrastructure Renewable energy investments beyond 2016 Investment in aging generation facilities suc
Slide 26: Key Takeaways on Wisconsin Energy
Power the Future program now complete Highly visible earnings and strong cash flow Solid utility franchises with rate base growth Power the Future 2 driven by environmental upgrades, renewable energy projects and network improvements Investment in American Transmission Company provides an additional
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