WEC Energy Group, Inc. · NYSE:WEC
WEC Energy — Wisconsin Energy — Investor Presentation (August 2012)
29 slides from WEC Energy's investor presentation, August 2012
Slide 1: Wisconsin Energy Corporation – August 2012
Wisconsin Energy Corporation V- August 2012
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: Retail Electric and Gas Utilities
Retail Electric and Gas Utilities Largest electric and gas company in Wisconsin 1.1 million electric customers 1.0 million natural gas customers 3
Slide 4: Investment Thesis
Investment Thesis Solid Growth with a Low Risk Profile Wisconsin Energy is positioned to deliver strong earnings and dividend growth with a lower than average risk profile Targeted EPS growth of 4 - 6% Double digit dividend growth - moving to a 60% dividend payout ratio in 2014 Proven manageme
Slide 5: A Track Record of Performance
A Track Record of Performance Consistent Earnings and Dividends Growth Wisconsin Energy is the only company in the indices below that has grown earnings per share and dividends per share every year since 2003 S&P Utilities Index S&P Electric Index Philadelphia Utility Index Dow Jones Utili
Slide 6: Earnings Base for 2011 – 2013
Earnings Base for 2011 – 2013 Major Segment Contributions 2011A 2012E 2013E Electric and Gas Utilities $1.44 $1.50 to $1.54 $6.8 billion rate base Power the Future (1) $0.66 $0.67 $0.68 Wholesale Electric Transmission (2) $0.16 $0.17 $0.18 Unallocated holding company debt (3) ($0.08) ($0.06) ($0.05)
Slide 7: Forecast of Electric Sales
Forecast of Electric Sales 2012 vs. 2011 Actual and Normalized 2012 Forecast vs. 2012 Forecast vs. 2011 Actual 2011 Normalized Residential -1.1% 0.0% Small C&I 0.9% 0.6% Large C&I (ex. Mines) -2.3% -2.4% Total Large C&I -7.1% -7.2% Total Retail -0.8% -2.4% 7
Slide 8: Dividend Growth
Dividend Growth Accelerating Dividend Payout The directors raised the quarterly dividend in January to 30 cents a share – equivalent to an annual rate of $1.20 a share 15.4 percent increase over the 2011 amount Our policy is to move to a dividend payout ratio that is competitive with our peers
Slide 9: Share Repurchases
Share Repurchases $100 Million Repurchased thru June 2012 To maintain appropriate financial strength and provide value to our investors, we are implementing a share repurchase plan Buy back up to $300 million of Wisconsin Energy common stock through open market purchases or privately negotiated
Slide 10: Expected Levels of Investment and Depreciation
Retail Electric and Gas Utilities Expected Levels of Investment and Depreciation $1,000 $900 $800 $792 Millions of Dollars $131 $705 $700 $678 $71 $43 $625 $600 $24 $39 $161 $260 $500 $400 $300 $611 $586 $473 $200 $401 $330 $355 $260 $305 $100 $0 2011A 2012E 2013E 2014E Base Renewable Environmental
Slide 11: Base Utility Investment
Base Utility Investment Expected Investment from 2012 through 2016 Rebuild 2,500 miles of electric distribution lines that are more than 50 years old Strengthen our electric distribution network by replacing: 28,000 power poles 28,000 transformers Hundreds of substation components Streng
Slide 12: Wisconsin Jurisdiction Rate Case Activity
Wisconsin Jurisdiction Rate Case Activity Filed rate case on March 23, 2012, for a net customer bill increase of 3.6% in 2013 and an additional bill increase of 3.6% in 2014 -- after applying expected proceeds from a renewable energy tax grant Non-fuel rate increase prior to credits: 6.2% or $17
Slide 13: Wisconsin Jurisdiction Rate Case Schedule
Wisconsin Jurisdiction Rate Case Activity Rate Case schedule has been set as follows: Audit Complete 6/29 Direct Testimony 9/07 Rebuttal Testimony 9/20 Hearing 9/26 – 9/27 Reply Brief 10/29 Briefing Memo Issued 10/30 At the pre-hearing conference, PSCW staff stated that it does not intend to pur
Slide 14: Michigan Jurisdiction Rate Case Activity
Michigan Jurisdiction Rate Case Activity Final order issued on June 26, 2012 Rates were effective on June 27, 2012 Commission approved a base rate increase of $9.2 million Return on equity of 10.1% Renewables also recovered through Act 295 surcharge and fuel recovery clause The rate incr
Slide 15: Wolverine Joint Venture
Retail Electric and Gas Utilities Wolverine Joint Venture We’re exploring a joint venture with Wolverine Power Cooperative at the Presque Isle Power Plant Wolverine would fund the cost of environmental upgrades and become a part owner of the plant Wisconsin Electric would continue to operate t
Slide 16: Renewable Energy: Summary of New Investments
Renewable Energy Summary of New Investments Montfort Wind Energy Center 30 MW Executed a purchase agreement with FPL Energy American Wind, LLC a subsidiary of NextEra Energy, Inc. Projected purchase price of $27 million Expect Wisconsin Commission approval and financial closing of the sale
Slide 17: Power the Future Investments
Power the Future Investments A Key Investment in the Energy Future of Wisconsin Natural Gas Coal Capacity 1,090 MW 1,030 MW 1 Investment $664 million $2.0 billion ROE 12.7% 12.7% Equity 53% 55% Initial Lease Term 25 Years 30 Years In-service Dates Unit 1 – July 16, 2005 Unit 1 – February 2, 2010 Uni
Slide 18: Power the Future: Accelerated Depreciation
Power the Future Oak Creek Expansion – Accelerated Depreciation In December 2011, the Internal Revenue Service confirmed that accelerated depreciation can be applied to our expansion units at the Oak Creek site We expect to see a $285 million cash timing benefit by the end of 2014 In total, we
Slide 19: Wholesale Electric Transmission: ATC Expected Growth
Wholesale Electric Transmission ATC Expected Growth Projected Capital Expenditures Key Assumptions (Millions of Dollars) ATC rate base at year end 2012 is projected to be about $2.7 billion ATC projects a need for $3.8-$4.4 billion of transmission improvements in its footprint from 2011 to 2020
Slide 20: Potential Investment Opportunities
Potential Investment Opportunities Multiple Options Being Evaluated Additional investment in fuel blending at new Oak Creek coal units Additional investment in aging gas and electric distribution infrastructure Further investment in aging generation facilities such as hydro rebuilds Investme
Slide 21: Key Takeaways on Wisconsin Energy
Key Takeaways on Wisconsin Energy Solid Growth with a Low Risk Profile Power the Future program now complete Highly visible earnings and strong cash flow Well managed utility franchises with rate base growth Investment in American Transmission Company provides an additional regulated growth
Slide 22: Appendix
Appendix
Slide 23: Overview of Wisconsin Energy
Overview of Wisconsin Energy Estimated Rate Base and Power the Future Investment at 12/31/12 Retail Electric and Gas Utilities $10.0 Billion Wisconsin, Michigan, and FERC jurisdictions 48.5% to 53.5% equity for Wisconsin $2.7 Electric 10.4% allowed ROE 45% to 50% equity for Wisconsin Gas
Slide 24: Retail Electric and Gas Utilities: Projected Rate Base
Retail Electric and Gas Utilities Projected Rate Base *All other is comprised of customer advances, def. taxes, inventory and implied working capital. 24
Slide 25: Retail Electric and Gas Utilities: Expected Levels of Investment
Retail Electric and Gas Utilities Expected Levels of Investment 25
Slide 26: Wholesale Electric Transmission: DATC
Wholesale Electric Transmission DATC Non-exclusive joint venture between Duke Energy and ATC (DATC) announced in April 2011 Adds potential investment opportunities outside ATC’s current footprint Ownership is split 50/50 between Duke and ATC DATC has proposed transmission projects to MISO’s
Slide 27: Regulatory Environment
Regulatory Environment Wisconsin Commission Michigan Commission 3 Commissioners 3 Commissioners Gubernatorial appointment, Gubernatorial appointment, Senate confirmation Senate confirmation Chairman: Gubernatorial Chairman: Gubernatorial appointment appointment Terms Terms 6 ye
Slide 28: Electric Retail Customer Base
Wisconsin Energy Electric Retail Customer Base % of 2011 C&I Sector Electric Small & Large C&I Sales Office 12.2% Mining 11.9% Retail 6.1% Primary Metals 5.9% Health Care 5.5% Paper & Products 5.5% Food 4.7% Education 4.7% 28
Slide 29: Financing Policy
Financing Policy Capital Structure Goals Maintain our current credit ratings Debt/Capital Ratio as of 12/31/2011 Actual ratio was 57.1% Adjusted ratio was 54.4% Adjusted assumes half of $500 million of hybrid securities are treated as common equity S&P re-affirmed prior year ratings an
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