WEC Energy Group, Inc. (WEC) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Strong Regional Economy: The unemployment rate in Wisconsin is at 2.9%, below the national average. Significant investments from companies like WestRock and Microsoft in the region highlight economic strength and potential.

• Capital Investment Plan: WEC Energy Group is executing its largest five-year investment plan, totaling $23.7 billion, focusing on efficiency, sustainability, and growth. This includes major projects like the West Riverside Energy Center expansion and investments in renewable energy.

• Earnings and Guidance: Reported Q2 2024 earnings of $0.67 per share, with full-year guidance reaffirmed at $4.80 to $4.90 per share, assuming normal weather conditions.

• Regulatory Progress: Filed new rate reviews in Wisconsin for 2025 and 2026, focusing on reliability, economic growth, and transition to renewables and natural gas. Decisions expected by the end of the year.

• Infrastructure Developments: Progress on projects like the Delilah I solar project and Maple Flats solar project, despite some delays, showcases commitment to expanding renewable energy portfolio.

Pessimistic Highlights

• Earnings Decrease: Q2 2024 earnings decreased by $0.25 quarter-over-quarter, although they exceeded guidance.

• Operational and Maintenance Costs: Anticipated to be 2% to 3% higher compared to 2023, reflecting increased costs in storm response and other operational areas.

• Regulatory Challenges in Illinois: Faced a partial denial in a request to restore funding for a safety modernization program, with only $28.5 million granted out of a requested $145 million.

Company Outlook

• Earnings Guidance Reaffirmed: For 2024, earnings guidance remains at $4.80 to $4.90 per share, with a focus on managing operational and maintenance costs and financing.

• Capital Plan and Equity Issuance: Continues to support a long-term earnings growth rate of 6.5% to 7%, with up to $200 million in common equity issuance for 2024 and approximately $500 million expected per year post-2024.

• Regulatory Decisions Awaited: Decisions on rate reviews and major project filings in Wisconsin and Illinois are expected by the end of the year, which could impact future rates and investment opportunities.

Q & A Highlights

• Q: Can you update on the Microsoft land acquisition and its impact on your plan? (Shar Pourreza, Guggenheim Partners)

  A: Current plans include only the initial 315 acres purchased by Microsoft. Additional land acquisitions by Microsoft will be considered in future planning. (Scott Lauber)

• Q: What are the offsets for the Delilah I solar project delay? (Shar Pourreza, Guggenheim Partners)

  A: The delay is accounted for in the annual guidance, with focus on O&M management and financing costs to offset the downside. (Xia Liu)

• Q: Can you discuss the opportunities in the infrastructure segment, especially with data centers? (Julien Dumoulin-Smith, Jefferies)

  A: Working with Microsoft on energy and capacity needs, with filings for renewable projects expected soon. Investments in generation, renewables, and transmission are planned. (Scott Lauber and Xia Liu)

• Q: How do you view the commission's denial of AFUDC on pre-construction costs? (Julien Dumoulin-Smith, Jefferies)

  A: The decision is not seen as indicative of broader regulatory trends. Plans to request reconsideration with additional information. (Scott Lauber)

• Q: What's the status of the Point Beach PPA discussions with NextEra? (Shar Pourreza, Guggenheim Partners)

  A: Productive conversations are ongoing, but no updates to report at this time. (Scott Lauber)

• Q: What's the timeline for the Illinois Gas Appeal decision? (Paul Patterson, Glenrock Associates)

  A: A decision from the appellate court could take a year or two. (Scott Lauber)