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    WEC Energy Group Inc (WEC)

    Business Description

    WEC Energy Group, Inc. is a diversified holding company that operates through its subsidiaries in both regulated and nonregulated sectors. The company primarily provides regulated natural gas and electricity services and invests in renewable energy, with a significant presence in the electric and natural gas utility sectors across Wisconsin, Michigan, Illinois, and Minnesota . WEC Energy Group's operations are divided into six reportable segments, focusing on electric utility operations in Wisconsin and the Upper Peninsula of Michigan, and natural gas utility operations in Wisconsin, Illinois, Minnesota, and Michigan .

    1. Electric Utility Operations - Conducts electric energy generation and distribution through subsidiaries such as Wisconsin Electric Power Company (WE), Wisconsin Public Service Corporation (WPS), and Upper Michigan Energy Resources Corporation (UMERC) in Wisconsin and Michigan.
      • Wisconsin Electric Power Company (WE) - Provides electric services in Wisconsin.
      • Wisconsin Public Service Corporation (WPS) - Supplies electric energy in Wisconsin.
      • Upper Michigan Energy Resources Corporation (UMERC) - Distributes electric energy in the Upper Peninsula of Michigan.
    2. Natural Gas Utility Operations - Offers natural gas services in Wisconsin, Illinois, Minnesota, and Michigan.
    3. American Transmission Company (ATC) - Holds a 60% equity interest in ATC, which operates electric transmission facilities across multiple states.

    Q2 2024 Summary

    Initial Price$81.96April 1, 2024
    Final Price$77.69July 1, 2024
    Price Change$-4.27
    % Change-5.21%

    What went well

    • WEC Energy Group remains confident in offsetting the 6-month delay of the Delilah I Solar Project and has reaffirmed its annual earnings guidance of $4.80 to $4.90 per share, focusing on O&M management and cost controls.
    • Anticipated increased capital expenditures in 2024-2026, driven by projects supporting economic development, including Microsoft opportunities and additional renewables, indicating strong growth potential.
    • Significant opportunities in transmission investments through American Transmission Company (ATC), with MISO Tranche 2 projects expected to be larger than Tranche 1, potentially increasing capital spending and earnings growth.

    What went wrong

    • Regulatory uncertainties and challenges in Illinois could negatively impact WEC's investment plans and earnings growth. The Illinois Commerce Commission approved only $28.5 million out of the requested $145 million for the Safety Modernization program, and WEC has appealed this decision. Additionally, they removed $800 million from their 5-year capital plan due to regulatory issues, and future spending in Illinois may decrease further.
    • Delays in project timelines, such as the 6-month delay of the Delilah I Solar project, could impact WEC's earnings and growth prospects. Although the company plans to offset the downside and reaffirmed their guidance, such delays pose risks to project completion and returns.
    • Potential regulatory pushback in Wisconsin on preconstruction costs may affect project costs and timelines. The Wisconsin PSC denied WEC's request for AFUDC on preconstruction costs for certain projects, and while WEC plans to ask for reconsideration, this could indicate potential regulatory hurdles impacting project economics.

    Q&A Summary

    1. Microsoft Opportunity
      Q: How will Microsoft's expansion impact your plans?
      A: WEC is collaborating with Microsoft, which announced spending $3.3 billion through 2024–2026 on their initial 315 acres purchase. Microsoft subsequently bought an additional 1,030 acres last fall and another 173 acres recently. WEC's current plans only include the energy and capacity needs for the first 315 acres, but they are developing their next 5-year plan to incorporate these expansions.

    2. Illinois SMP CapEx
      Q: What's included in the plan for Illinois Safety Modernization Program?
      A: WEC's current plan includes $100–$120 million per year for the safety program. They previously removed about $800 million from the plan and are refreshing it to reflect the commission's recent approval of only $28.5 million out of $145 million requested , potentially reducing spending over the next five years.

    3. Transmission Opportunities
      Q: How do you view transmission opportunities with MISO Tranche 2?
      A: Tranche 2 is expected to be larger than Tranche 1, offering proportionately larger opportunities for American Transmission Company. Spending likely won't occur until 2030+. Current drivers for ATC include regional economic development and renewable integration, which are impacting capital plans more immediately.

    4. Delilah I Solar Project Delay
      Q: What caused the Delilah I delay, and can it be offset?
      A: A 6-month delay occurred due to a hail event during construction, causing damage being repaired. WEC is confident in offsetting the downside through O&M management, financing costs, and taxes, reaffirming annual guidance of $4.80 to $4.90. They anticipate project completion by year-end, barring further events.

    5. O&M Cost Savings
      Q: How is O&M outlook improving despite earlier expectations?
      A: Projected O&M expense increase is now 2–3%, down from earlier estimates of 3–5% and originally 6–7%. Savings stem from lower benefit costs, optimizing contractor versus internal labor, and efficiency improvements. These are both onetime initiatives and sustainable efficiencies.

    6. CapEx and Equity Needs
      Q: How will higher CapEx impact equity needs?
      A: Incremental CapEx will be financed consistent with utility capital structures. WEC will align equity needs with capital spending, supporting long-term growth opportunities.

    7. PSC's AFUDC Denial
      Q: Any implications from PSC's denial of AFUDC on preconstruction costs?
      A: WEC doesn't see significant implications. They plan to request reconsideration and refile with additional information , emphasizing customer value in early orders for cost savings and delivery timing.

    8. CapEx Allocation amid Illinois Uncertainty
      Q: When might you reallocate capital back to Illinois?
      A: With the SMP decision expected in Q1 2025, WEC will be conservative in Illinois capital plans. They focus on opportunities outside Illinois until there's more clarity.

    9. Point Beach PPA Negotiations
      Q: Any updates on Point Beach PPA with NextEra?
      A: WEC is in productive discussions with NextEra regarding the Point Beach PPA but has nothing definitive to report.

    10. Illinois Gas Appeal Timing
      Q: When is the Illinois gas appeal resolution expected?
      A: WEC anticipates the appellate court decision may take 1–2 years.

    Key Metrics

    View all financials →
    Revenue by Segment - in Millions of USDFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    Utility Operations2,846.01,779.91,912.92,1648,702.82,629.41,716.01,816.6
    - Wisconsin1,996.31,424.51,622.01,583.16,625.91,778.81,368.21,590.0
    - Illinois599.7273.5243.3441.31,557.8666.0276.8173.6
    - Other States250.081.947.6139.6519.1184.671.053.0
    Non-Utility Energy Infrastructure42.150.044.553.5190.1170.956.046.9
    Corporate and Other0.00.10.0-0.1000
    Reconciling Eliminations0.0---0-120.1-119.6-116.2
    Electric Transmission----0--0
    Electric Utility1,203.81,178.51,457.8--1,185.31,148.51,422.2
    Natural Gas Utility1,607.1576.8436.8--1,363.7534.0380.1
    Other Non-Utility47.1-----60.351.2
    Other Operating Revenues-20.062.8--75.728.69.2
    We Power--------
    Total Revenue2,888.11,830.01,957.42,217.58,893.02,680.21,772.01,863.5
    Revenue by Geography - in Millions of USDFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    Wisconsin1,996.31,424.51,622.01,583.16,625.91,778.81,368.21,590.0
    Illinois599.7273.5243.3441.31,557.8666.0276.8173.6
    Other States250.081.947.6139.6519.1184.671.053.0
    Total Utility Operations2,846.01,779.91,912.92,1648,702.8--1,816.6
    Electric Transmission--------
    Non-Utility Energy Infrastructure-169.044.5-666.5--46.9
    Corporate and Other-0.10.0-0.1--0.0
    Reconciling Eliminations--119.00.0--476.4---
    Total Revenue2,888.11,830.01,957.42,217.58,893.02,680.21,772.01,863.5
    KPIs - MetricFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    Retirement of MWs-1,9001,9001,900-2,5002,5002,500
    Planned Retirement of MWs1,5001,5001,5001,800-1,8001,2001,200
    Natural Gas Sales Volumes (Million Therms)1,201.2549.6373.2--1,133.8515.2383.6
    Heating Degree Days2,83375832--2,70163128
    Capacity Acquisition in West Riverside-100100--100100100
    Natural Gas Fired Combustion Turbines--1,1251,125-1,1001,1001,100
    Natural Gas-Fired RICE Units128128130130-130128128
    LNG Facility Storage Capacity (Bcf)-211-222
    Electric Sales Volumes (Thousand MWh)10,453.810,029.612,647.3--10,517.110,375.011,985.7

    Executive Team

    NamePositionStart DateShort Bio
    Scott J. LauberPresident and Chief Executive OfficerFebruary 1, 2022Scott J. Lauber has been serving as the President and CEO of WEC Energy Group since February 1, 2022. He joined the company in 1990 and has held various positions in financial planning, management, accounting, and internal controls .
    Xia LiuExecutive Vice President and Chief Financial OfficerJune 2020Xia Liu has been serving as the Executive Vice President and CFO of WEC Energy Group since June 2020. She was previously a Senior Advisor at CenterPoint Energy, Inc. and held executive roles at Georgia Power Company .
    Gale E. KlappaExecutive Chairman (transitioning to Non-Executive Chairman)February 2019Gale E. Klappa has been a director of WEC Energy Group since 2003 and has served as Executive Chairman since February 2019. He will transition to Non-Executive Chairman following the 2024 annual meeting of stockholders .
    Margaret C. KelseyExecutive Vice President, General Counsel, and Corporate SecretaryJanuary 2018Margaret C. Kelsey has been serving in her current roles at WEC Energy Group since January 2018. She was an Executive Vice President from September 2017 to January 2018 .
    Robert M. GarvinExecutive Vice President - External AffairsJune 2015Robert M. Garvin has been serving as the Executive Vice President - External Affairs at WEC Energy Group since June 2015 and at WEC Business Services since January 2019 .
    William MastorisExecutive Vice President – Customer Service and OperationsDecember 2021William Mastoris has been the Executive Vice President – Customer Service and Operations at WEC Energy Group since December 2021. He was previously Vice President – Supply Chain and Fleet .
    Molly A. MulroyExecutive Vice President and Chief Administrative OfficerAugust 2021Molly A. Mulroy has been serving as the Executive Vice President and Chief Administrative Officer at WEC Business Services since August 2021. She was previously Vice President and Chief Information Officer .
    Anthony L. ReeseVice President and TreasurerOctober 2019Anthony L. Reese has been serving as the Vice President and Treasurer at WEC Energy Group since October 2019. He was previously the Controller for PGL in Illinois .
    Mary Beth StrakaSenior Vice President - Corporate Communications and Investor RelationsJune 2015Mary Beth Straka has been serving as the Senior Vice President - Corporate Communications and Investor Relations at WEC Energy Group since June 2015 .
    Michael HooperPresident Wisconsin UtilitiesApril 1, 2024Michael Hooper serves as the President of Wisconsin Utilities at WEC Energy Group. He is listed as an officer in a Form 3 filing dated April 1, 2024 .
    Warner BaxterDirectorJanuary 1, 2025Warner Baxter was elected to the Board of Directors of WEC Energy Group, effective January 1, 2025. He has over 28 years of experience at Ameren Corp., where he served as executive chairman until November 2023 .
    John LangeDirectorJanuary 1, 2025John Lange was elected to the Board of Directors of WEC Energy Group, effective January 1, 2025. He has over 28 years of experience in investment banking, retiring as the global head of the Energy and Industrials Groups for Barclays PLC in April 2024 .

    Questions to Ask Management

    1. With the six-month delay of the Delilah I solar project , how do you plan to mitigate the financial impact, and can you provide specific details on the measures you're taking to offset this downside?

    2. Regarding your ongoing discussions with NextEra about a new Point Beach PPA , what are the key obstacles preventing an agreement, and what risks do you foresee if a new PPA is not in place by year-end?

    3. The Public Service Commission's denial of your request for AFUDC on preconstruction costs , how does this decision impact your capital allocation strategy, and what steps are you taking to address the commission's concerns?

    4. With MISO Tranche 2 expected to be larger than Tranche 1 and significant transmission opportunities through ATC , how are you adjusting your capital expenditure plans to capture this growth, and what are the implications for your balance sheet and potential equity needs?

    5. Considering the appeal of the Illinois Commerce Commission's decision on the Safety Modernization program might take one to two years , how will this prolonged legal process affect your operational plans in Illinois, and what contingencies are in place if the appeal is unsuccessful?

    Past Guidance

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Full Year 2024 Earnings Guidance: $4.80 to $4.90 per share, assuming normal weather for the rest of the year .
      2. Third Quarter 2024 Earnings Guidance: $0.68 to $0.70 per share .
      3. Common Equity Issuance: Up to $200 million for 2024; approximately $500 million per year post-2024 .
      4. Dividend Payout Ratio: 65% to 70% of earnings .
      5. Long-term Earnings Growth Rate: 6.5% to 7% on a compound average annual basis .
      6. Capital Plan: 5-year investment plan totaling $23.7 billion .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: Q2 2024 and FY 2024
    • Guidance:
      1. Full Year 2024 Earnings Guidance: $4.80 to $4.90 per share, assuming normal weather for the rest of the year .
      2. Second Quarter 2024 Earnings Guidance: $0.60 to $0.64 per share .
      3. Long-term Earnings Growth Rate: 6.5% to 7% on a compound average annual basis .
      4. Dividend Policy: 65% to 70% of earnings in dividends .

    Q4 2023 Earnings Call

    • Issued Period: Q4 2023
    • Guided Period: FY 2024
    • Guidance:
      1. Earnings Per Share (EPS) for 2024: $4.80 to $4.90 per share .
      2. First Quarter 2024 EPS: $1.96 to $2.00 per share .
      3. Capital Plan: $1.95 billion to $2.35 billion of common equity over the next 5 years; $100 million to $200 million for 2024 .
      4. Operations and Maintenance (O&M) Expense: 6% to 7% higher than the previous year .
      5. Sales Projections for 2024: Flat electric sales year-over-year and 0.8% growth in gas sales year-over-year .

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: N/A
    • Guidance: The documents do not contain information about the Q3 2024 earnings call for WEC. Therefore, I cannot provide the guidance metrics from that specific call.