WEC - Earnings call transcript Q3 2018

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Operator

Good afternoon and welcome to WEC Energy Group's conference call for third quarter 2018 results. This call is being recorded for rebroadcast and all participants are in a listen-only mode at this time.

Before the conference call begins, I remind you all that statements in the presentation, other than historical facts, are forward-looking statements that involve risks and uncertainties that are subject to change at any time. Such statements are based on management's expectations at the time they are made.

In addition to the assumptions and other factors referred to in connection with the statements, factors described in WEC Energy Group's latest Form 10-K and subsequent reports filed with Securities and Exchange Commission could cause actual results to differ materially from those contemplated.

earnings share will unless referenced diluted based discussions, per earnings otherwise the per be share on During noted. After be the open will to analysts presentation, for questions-and-answers. the conference is package In detailed conjunction call, wecenergygroup.com. a with financial this information posted at of hours A of the this replay conclusion after approximately will available be two call. and And my Chairman introduce of Officer Gale to it's Executive WEC now, Klappa, pleasure Chief Energy Group.

Gale E. Klappa

quarter personnel you for we XXXX third as update. joining review quick a today Thank results. us everyone. first, afternoon, Good But our

Allen active Leverett, our our board a engineering, knowing continuity forward. since will on light resign, working month, has XX focus great in and organization years. in of customer more of going operations, with the utilities As will of most strong will report been last delighted to be Energies leave and as we me. experience and performance decision operating have to years this elected on Kevin President seven of serve his Board announced Allen's service, course, focus our We Allen medical has His who will WEC industry, suffering I'm energy Service, the privilege development, deliberations. and and October, Wisconsin has that experience will In Kevin on our the our earlier XX continue his for past on company. of Energy had experience the to financial financial Directors, With and the largest subsidiaries. he recently bring new customer-facing for to Public main provide our continue economic discipline, of and has I duty than directly Allen stroke of Fletcher of insight Kevin a as resigned and from Kevin President Group. to the his with

team seeing you For both on now in there. meetings with to of me and looking the to at who San management introduce we're Francisco are met be Kevin, will members I'd hand here like who he the forward you haven't with our those us EEI And of today.

Chief Communications Lauber, Executive our Counsel; Corporate Straka, Scott President Vice Vice Investor of General Guc, Senior Relations. have: and our We Peggy and Officer; Beth Financial President Kelsey, Controller; and Bill

as our morning, of quarter third year. quarter compared $X.XX news Now from the saw reported for to you third this share. a we release a share earnings $X.XX This last

on control was warmer-than-normal the reflecting three first, gas, the at there sector lower at in The state unemployment the growth across provide that's Our significant eight performance throughout higher for greater look quarter or also economy and a a few ahead. manufacturing principally more economic strong the take longest demand months; the in witnessed summer operations. driven in region; and heartland. are past conditions first, X% by electricity Scott minutes. with just year has our history. the cost in and state let's efficiency Wisconsin's robust and on in continued right brief focus will temperatures; been past But a of even factors: our the rate here the natural stretch I for details opportunities believe near-full employment has you

since have Harbor a defining many to Milwaukee, to Mining here plans a and have new for four eventually for invest Komatsu assembled the right building. on Wisconsin-based XX% that develop Foxconn's Foxconn which is Komatsu, $XXX just has time, corporate The groundbreaking of first and XXX housing designed progress on amount this global site, more soil have of awarded will average for official Wisconsin. be late Milwaukee. expected day mining for more the of And an wall Milwaukee's of been facility and Site that of cubic project, in passed now panels in $XX District. looking know, announced than construction Komatsu the X,XXX were impact in brings office. the excavated in months contracts begun will billion workers building yards X.X million tremendous Park. workers. here a south In the state-of-the-art example, equipment, Every manufacturing has Wisconn now a high-tech Valley Science campus. made to-date, XX heavy have as a work a agreed And all new development manufacturing companies. acres to and on been For September, about development you for leader been the of has and than Technology million in to

As years. effect to Eau plan beginning touch region. Claire the of planning the just catalytic Foxconn's plans Bay, in may for our to in Energy next, growth and and tremendous And opportunities like several some centers WEC Green investment the reach its with folks on also we see you of We're over the I'd next unfolding expand investment see Milwaukee, to know, Wisconsin Racine. Foxconn innovation is

You the XXXX capital billion of an period may was updated forecast the XXXX. for through recall years budget, which for five-year capital $XX.X our Today, includes XXXX. that share spending, five-year Transmission's our XXXX capital announcing through American we're

the at our stands new look you forward conference. plan the Our all EEI $XX.X sharing upcoming investment an the of increase billion previous with details $XX.X of five-year capital plan. plan $XXX billion, to over at million We

this big low-risk seen infrastructure say our projects, for be: reaffirming gas investment And would is have for XXXX. would The base we highly our though from natural growth our X%. we opportunities I that growth rate. Today, share. is earnings may a original of our growing the earnings segments. to plan packet and new it delivery X% bets. are That's exactly you in that updating rate that to guidance You our morning, long-term solid of with base have Overall, energy what the we expect $X.XX midpoint we're also released no executable

network the our together, non-utility per the and low our current new range. upgrades, pieces to on real put gas support projects. capital X% across-the-board progress projects capital now our So, Switching gears in all plan on generation growth infrastructure our and folks an We're our making segment. earnings rate should when you electric share

interest this late you'll farm. in acquire closed an Pending the additional two later, County, announced on of have on Commission ownership XX. in an acquisition. Energy located from we October, FERC an our early XX%. Wind an As Center. in ownership XX% we approval, by advantage a agreement we we And That's wind Energy to days Then Hill in the in We opportunity equity interest increase received will took XX% Bishop interest Regulatory recall Illinois. June, Henry Federal to III the approval August

a a consists the in wind the Upstream GE ownership Antelope Commission turbines capacity capacity XXX XXX this our by Wind an into the and megawatts. consists with core XX of investment Nebraska. developed of farm located total, As business. was XX, Upstream On is our Electric facility with This June of was of It past reminder, Center. in a May. wind turbines General approval Federal approximately placed Invenergy service megawatts. Energy a brief in update In on interest this XX% XX investment investment And WPPI $XXX current is this Energy, our wholesale Regulatory be Energy so logical County, of our wholesale wind project really power It to expected for extension we The has million. for a planned to one of now customers, with a XX-year long-term agreement project. is filed with purchase offtake

The purchase Our has is new which segment purchase with of a expected our price $XXX that reflected in $XXX traded in affiliate project Allianz, be And A-rated infrastructure million. plan. million, five-year is to again, XX-year price, is agreement long-term publicly company. offtake an the our an

We these close expect production two the our tax tax wind construction the in and bonus to XXXX Under original new investments farms qualify in is purchase credits on XXX% rules, after depreciation. early complete. for

higher expect We these to be investments regulated return our on than the returns.

To to unlevered The joint in Creeks Iowa May Wisconsin, locations. structure developed our XXX an your on project Public mid-teens of megawatts in capital projecting Creeks internal Plant. Hollow of Wisconsin our developed of Nuclear of to XX:XX along or by rate utility-scale the two city in will Rivers Invenergy. Badger We're refresh by also basis. at near progress application on in with Two Power above Two generation Beach memory, It returns. making purchase returns located based a the solar The Service Specifically, generation retail solar project a at southwestern Commission be being Wisconsin be the will County. filed portfolio and equity located The to XX, Gas Madison Solar quest is or on Electric, we're be Northeastern regulated on the our in return Farm NextEra. Point our will a Two we're with assets. add X% subsidiary, above Wisconsin And levered on projecting

regulatory at subsidiary for will Our site, commercial we investment approximately each with million. begin end megawatts Public an Wisconsin Pending to of the expect of operation both XXXX. approvals, with projects next spring, Service by construction XXX own $XXX

Over to also for and by in customers, our demand plan dropped peak nearly cost-effective XX%, significantly solar and a emissions. have the carbon utility-scale our making past our that dioxide few with has prices option summer curve years, with efficiency reduce increased option it fits an well

will XXXX by generation our the year goal levels zero-carbon below aggressive reduce to in by investments support XX% emissions COX Our long-term XXXX.

natural is a $XXX critical, before, said of network delivery approximately case Public Chicago in in the currently providing Energy Illinois, Minnesota project year, on a Interim that gas October modern, complete. and are is modernization word this overall with year. Turning were utility, last the with rates the now in now The case Minnesota Commission. our safe, system And hearings as reliable. million customers XX% Resources and invest I've Utilities held to a track now to about place, We're effort mid-July. approximately Gas in in filed our the program rate is Peoples

by We expect year-end. decision commission the

Next, Michigan. we'll turn to

Upper at construction the of As approval generation and essentially regulatory last the complete XX% Peninsula. and gas-fired Engineering new complete. obtained final a natural reminder, now, in October are stands for construction procurement we

bring of to one that And million as of time They're commercial our you engines, internal RICE power At cost-effective retire say a XX rate. in of Board X.XX% the We're over XXXX, units at to units, units. plan we outlook long-term results of can Directors time or dividend a a of Our And the the be coming XXX board our the Upper investing increase $X.XXXX plans supply our the for or our third And in to total budget. me, reciprocating dividend on Lauber. Upper our and Resources, assess quarter into new share. Michigan typical, Peninsula. dividend. finally, dividend owned Michigan now our the will customers them, combustion past second plant capable previous Isle. service And by XXXX about in raised January here's and reminder for up cash coal-fired Scott generating remainder on winter, electricity. provide our the Presque megawatts for of will it expect of utilities, with this These on is thereafter, That's And $XXX as details will XXXX. quarter soon with is Chief we're per power the meeting at famous an of in Energy our which Financial quarterly call Officer, we December. our

Scott J. Lauber

Thank you, Gale.

the for the XXXX the third million income strong million and of cost of My higher earnings taxes. quarter, use placed of on $X.XX packet, decrease and year-to-date of driven per Warmer income, favorable normal quarter page this share forecasts. XXXX temperatures focus in and electricity comparison by earnings X includes third XXXX, then morning effective to was segment share packet a $XXX the operating The $XXX our the per with quarter a by These website compared expense, XXXX. were interest higher Referring Our quarter of be control. of sales continued with coupled largely third our our than region consolidated summer and results beginning and XXXX. for above third than to on of growth drove quarter volumes during earnings income were XXXX the operating other million. $X.XX results quarter third will $XX income

Excluding operating million, two tax income items totaling increased $X actually million. $XX

tax second And rate item tax relates benefit As was legislation. previously discussed of first Wisconsin the federal the on calls, tax of XXXX repairs, the last the part reflects to item settlement. our the which two

to package. have asset Recall for items certain your X the part X reform, of tax less as at we million reference earnings to agreed approximately reduced currently of from transmission the we tax of growth And page on million end We to proceeding benefits benefit escrow breakout a as these apply or of the Wisconsin Wisconsin is by regarding will regulatory plan settlement, The $XXX balances. offset the of then and the expected. XXXX. that project of repairs Electric $XX that balance of be the our

tax expense. of partially expense was maintenance in million million. offset Higher increase $XX and and $X.X September driven margins. update will maintenance the in stands increase largely page operations This $XXX operating about balance Starting depreciation million of million Wisconsin approximately adjustments As increase million $XXX operation increase volumes segment shown segment, drove focus XXXX. by in the items. of in net XXXX, packet. million, income a million income, the the sales was $X and $XX.X the expense, by as in My from X $X was a increase in the reduction at The two increase with XX, nearly operating on year-end on

first as generation we staff to processes $X.X related our was portfolio. The a streamline reductions item reshape to expense continue and million

$XX related performance adjustments. net replace investment driven place of our streets iron mechanism Second, have Wisconsin Program. Modernization In to Peoples tax increased Illinois, Chicago. to in increase our every System at income year-to-date. earnings in Gas two approximately of the we operating our in one a Recall we accrued that sharing practically strong is program result cast This million $XXX,XXX was was by of in primarily of this The pipes X,XXX continued miles the necessary utilities.

timing largely in states Excluding quarter. of the to at tax other million the $X impact expenses loss increased the reform, due of operating our segment

to Turning impacts $XXX,XXX, at due infrastructure operating this non-utility segment of reform, income increased our Power investments additional mostly segment, our the Future excluding tax plants. by energy to in the

Transmission loss changes and Bishop this two Bluewater of compared of contains at in tax third million XX, I our the American items Center. Earnings quarter segment corporate reminder, Holding, year. at these also operation Energy Wind was segment The totaled XXXX million, million. discussed, $XX.X Company XXXX. Hill and of from Gas operation increased month quarter a $X.X decrease III our June Natural third the increased at one operating operating the and of income acquired to which $XXX,XXX last other As to Combining excluding a in the as $X investment on

driven income component in by to tax expense. maintenance This of increased and by of was $X.X $X.X these continued the the our from impact $X.X Excluding million in capital reform, investment. Other our equity quarter-over-quarter. due decrease were increased earnings Historically, operations cost benefit pension net reflected million the million and component non-service largely plans. non-service cost plans

required a accounting income years. in reclassified However, other new rule both it be to to

slightly Our primarily investments interest $X.X increased higher capital expense interest by quarter-over-quarter, driven net million and continued rates.

$XXX consolidated million. by Our taxes decreased income

tax previously of lower reform expense flow-through was As impact by the discussed, of and driven tax tax the repairs.

effective our XX% this expect will rate between We income year. be tax and XX%

line we be end quarter, repairs, related generally expect the rate last XX%. in provided we taxpayer last by Excluding the a quarter with and with expect tax XX% XXXX. tax are the between These to we be Consistent to on cash call. of the would the benefits effective expectations

increase the net decline Looking earnings, earnings at of flow by our XXXX. the plan million months Higher by first activities to provided as as contributed Recall in in the statement X contribution cash the made the in well operating that million capital, cash provided increased we XXXX. page $XXX on pension to $XXX working nine activities. operating during package, of cash

same as billion totaled months to period increase capital capital we in XXXX, $XXX our during of execute Our compared continue the first expenditures approximately nine XXXX plan. a million to $X.X the

end at at decrease from ratio of the the third debt-to-capital end the a XXXX. was quarter, XX.X% XX.X% the of adjusted Our

common to We programs. Group of XXX(k) the treat other XXXX using We're plans, as our subordinated Energy any for WEC to half continue equity. required notes cash satisfy shares and options

of Going $XXX XX%. to period to nine We XX% compared issue be to we X.XX% level to last were XXXX, in the the forward, of in continue shares over paid common first increase increase do we during dividend the first FFO-to-debt million Higher any an and expect of dividends by of not months expect in XXXX. $XX.X months the additional range dividends same the the nine million year. to driven

retail we electric continue of the September, XX,XXX quarter Natural Natural deliveries increased XX,XXX our on excludes end X.X%. across up more were XX the natural Wisconsin a versus of basis, sales, weather-normalized same electric the utilities approximately electric system. excluding quarter to volumes Retail in were power customer used for of retail the electricity, of in to a of our At X.X% gas they were for weather-normalized generation. gas package. and were and volumes basis. serving Overall, time first mine, the are a on Weather-normalized XXXX. XXXX. grew Moving ago. months natural ore third year X.X% a page up see deliveries growth on than customers earnings deliveries our gas and more gas by natural above and XX, gas This on X% deliveries basis gas Wisconsin the for comparative iron shown expectations the nine did

now earnings Turning to our forecasts.

We of our a earnings guidance are reaffirming share. $X.XX XXXX

reminder, year. projection normal this an always, as to our looking plan, which back the things I'll Wisconsin efficiently many seeing and subject remainder of should business. forward support a earnings for I'm our sharing details to the of our sharing you Gale. turn at are that, utilities EEI With continue to of mechanism. the to assumes capital As weather ability grow to And

Gale E. Klappa

delivering focused our for the We're our call. and the portion much. now for very still you thank customers ready we're Scott, question-and-answer Operator, we're and stockholders. value standing conference on of

Operator

questions. your take we Now, will

Julien from America. with Dumoulin-Smith comes question first Your of Bank

open. line Your is

Gale E. Klappa

are how Julien, you? Hi

Julien Dumoulin-Smith

afternoon. Hey Congratulations. good, good

Gale E. Klappa

sir. Thank you,

Julien Dumoulin-Smith

as add congrats my there Kevin well. Absolutely. I should to

the that, more articulated hear specifically plan addressed you here. So this, the love returns little I a on I'd to know already. profile with bit CapEx perhaps

Just have And as the you're could is you Or sort you've that comment, that know you then one consistent to and ROE above understand pretty far the at have if already time? that as – already utility project least that that committed best as you've that that change delineated thus returns? identified? investments within pretty at at I of portion curious named CapEx you also criteria that or consistent already XX-XX you over it's that, is far. employing the you've what got infrastructure of energy

Gale E. Klappa

good very Thank Yeah, questions, Julien. you.

First the and let I up we've say that, that really criteria in of back return of this the view company of we're as over is. that infrastructure sign XX a strong the using, introduced me all, months terms whole segment last how

the I tax As in does we're we're appetite able in to industry in – a to good seeing you one of assets just seeing believe, particular take be the the of a of few finance have and backdrop not that projects equity we growth, that to into because companies look has to industry we're know, the that our we're issue very, and the the that very actually would segment. at able very discerning terms bring

IRRs of looking So projects. returns, ROEs projects, projects the long above of the we really rate an part all how at course at And see at the return I cash about the for of when life integral return over an these retail and average these we're short, do of are our talk certainly story or projects. look we

when at and after projects look of Center XX% we returns And across County, we to III, Bluewater is Gas Energy your added already interest, at And that's, this cases, first this, last you life now year, Bishop complete bring remember ownership many construction Wind So the Natural interest, on Nebraska. year storage somewhat early of Antelope years, questions. terms at then underway, in XX% average also but that have of the onboard committed looking we are ownership we're asset. booked closed contractually In the Hill year, on basically the at in assets. next the we're we consistent Upstream one then answering in higher the hope, the the returns I

year, next So about coming at if that you five at. projects Upstream we way segment years on-stream is next number pipeline amount a one in-house, of XX% to is of the we're And for already looking will. the in in look have essence, it the with

that Julien. I be which at. will good fruition, of robust have projects disciplined. of we're to come not I that Some do look and do a going something meet Rest think very we not risk are pipeline will helps, our changes criteria. a we our assured, taking to but we that materially going profile return we're to does And something not hope that

Julien Dumoulin-Smith

just just Just and are now and don't you all Excellent. a precise you respect about the mean as pin down Absolutely. clarification, timing you timeline quick think how to thinking here it? a And with succession about but you here follow-up, it to if will? the

Gale E. Klappa

CEO For succession?

Julien Dumoulin-Smith

Yeah.

clear. we've got that Just to make sure

Gale E. Klappa

for Okay. Sure. the not at a have Well, we CEO additional level. set any change timetable

while. I me ask Julien, to you'll think, have to for questions So around a quite

Julien Dumoulin-Smith

Excellent.

Thank it I'll Okay, you. leave there.

Gale E. Klappa

Very you, good. Thank Julien.

Operator

Your next Evercore. question comes from Greg Gordon with

is line open. Your

Scott J. Lauber

morning. Good

Gale E. Klappa

Good morning, Greg. Yeah.

Scott J. Lauber

are How Greg? doing, you

Greg Gordon

good. I'm

Before questions, any you do for I questions ask the me have any you Jets? about

Gale E. Klappa

do, kind I for but those we'll of later. save

Greg Gordon

Great.

Gale E. Klappa

X-X. are way, the my Bucks By

Greg Gordon

They New do is That sure. now. look is right York's good. Basketball forte not for

got a I've questions. couple So

The that is but at that I know and the love to observations exactly are about out after site, quarter activity about this they quarter your asked there. just there a going what I the I'd question there's be some of call, continues another by. on has lot so know build Foxconn gone you first I second to

the level I they're that demand from of of to Now, level region. that investment chain a the level the at high of committed comes a big will economic from site a the to creation, know be a invest to what both for energy pull ultimately job follow-on you driver investment for but serve level supply have for and and

point, growth comes then going electricity waiting need that wondering what business, that in to the you're the in from you're visibility increase terms invest to can CapEx of was I'm support it demonstrably so wasn't the what that core budget, at in substantial, economic so while of we to given a And this that? get for the sense

Gale E. Klappa

a them let Greg, time. all, take questions Good me at one and

seeing five-year through an First let see gas capital you the changes in to natural are because, plan try our me in segments of the What in And the that previous capital natural terms developed. of again, all plan $XXX the that in gas we about expect growth XXXX terms we area all, segment to across XXXX. customer spend board increase that compared for the Foxconn of delivery of clarify to basically demand. is of in includes our million is being

footprint. So when serve business. in regulated remains our look at The you spending, somewhat increase a and decrease as episodic opportunities by that clearly the reliably very there, slight project by offset know, And is on of was growth Transmission delivery two large our and completing in the off bit the business in transmission some focus the natural coming of regulated capital you to gas that we projects customers a project. segment the transmission. they're inside American is need the And

really So downturn the budget the is very piece just projects. here Company two of we're large the in reflecting seeing completion of Transmission American the capital

that piece about, On XX% only projected next the years. infrastructure talk the spending energy it's for capital we five of our

that understands. So make I want sure just to everyone

business growth still great investments Our the we the growth natural need is clearly service. focus gas segment. But to do delivery particularly and customer we maintain the the in on in reliability regulated see and

The as that changes We've that so completing seeing material seeing. and the projected entire have for demand people have stages technical their made been effect number their they every itself, for they are week. in XXX final of electricity design really place. still our campus, folks to of that and refine in Foxconn on their meet literally for demand they far Now with the we're that's had megawatts, a designs a about months of no

a And engineering fact, state. Foxconn seen contribution to of million a to lot progress to Madison. be the University on the the of think I at Chairman frankly campus there's we've the Wisconsin hit ago are and that now, some you, few $XXX a the weeks just articles pieces, right absolute tremendous and school just on So across with at honest going committed in

be, few that the campus full everything of hospitals, we're can It's terms been So $XXX it. additional capital going in end ahead there's And within Foxconn amazing catalytic million tell. effect, they I hotels, really just see speed there's announced non-related by business a announced parks. are immediate of catalytic where of investment at been complexes, from area, the effect the medical in is the to think already parties, already mentioned, the and of we to front miles I

So summation Gen again, everything are. a what we tell, to what a hasn't of that either in can that's their effect Gen they're call they instead And catalytic my a of though where electricity facility X that even changed we fact has we the design bit, building XX.X fabrication changed the we're see. seeing we're that or demand terms for of their seeing expected from

be something outside Foxconn that promises the all study. And it This a delivers government XX billion expect we about XX:X years it on was the credits. just an with econometric tax we activity a credits, we would tax $XX to, if new made state all state, study, billion, economic me Let for We did was a the put one expect number and earns of this did over next not to would has of state return which the the it. firm. $XX of

So that's my Greg. summation, helps. hope I that

Greg Gordon

That's hop That's off thank It really good. does, there. thanks. you. thorough, all I'll

Gale E. Klappa

welcome. You're

Operator

Suisse. Your from Weinstein next Michael Credit with question comes

open. is Your line

Gale E. Klappa

doing? Good Credit doing? afternoon, LLC you How Hi Securities how Suisse (USA) are Michael Michael. you are guys. Gale, Hey, - Weinstein

Gale E. Klappa

returns limit if make apparent similar you – very Glad returns or to that good. might business, - it. regulated might to XX% energy risk LLC that Credit Weinstein it Securities is to XX%? (USA) the the way? want that to on to Is force Hey, We're hear limit some Suisse in there why it not any are infrastructure Michael limit desirable you to it

Gale E. Klappa

you risk we to understanding limiting I'm Weinstein that thinking that's right? the before, I like No. returns in that only looking Securities your if see XX% it to referring Suisse what of I'm projects... XX% at put danger? were (USA) the earnings, is LLC Again, we're Michael, XX%, there any question, might Michael - Credit think

Gale E. Klappa

was Weinstein that? limitations for limit years. returns No, the Securities I - Why any our Okay. five (USA) next of to no. meant it of have it What kind the plan spending Credit Michael why And Suisse on capital same the XX% of having utility? it's LLC if

Gale E. Klappa

you, are increased opportunity retail with seeing directly capital our honest be regulated in we also opportunities significant business seeing we're enough that there. To

Foxconn if And service question potentially is also also some the going needs that community of then just that that to Or the this secondary be, do next that site, to that estimate follow-up of same in balance the saw something to the point in want spending But that Is will? combination Weinstein the surrounding tip also the opportunity, that it opportunity to part keep If reasonable beginning or extra it. primary is because segment certainly five also a would Got Michael good – is our to both? gas us for Credit some at to said again you is we here. of limits that huge for iceberg, and above the $XXX this some So think itself? just really of years, in seeing very is of needs? you. LLC is Foxconn tied to that's the the Or Suisse we I service also spending a And a alluded $XXX incredible be you we're the directly XX% in community that put will (USA) reasonable million million beginning stages huge. - we Securities growing capital core. opportunities you

Gale E. Klappa

represents the the to million that with economic for filed need we clear, million growth Michael, filed $XXX that to of the we're $XXX just that gas the think we've for approval, accommodate projects approval to be Commission the distribution additional actually going investment we region. the in

the at area, the Michael So projecting we're both will, that that's if that million the - moment, to in us don't see grow you in LLC right it's area natural separate If have economic But about Weinstein Foxconn cover and see. Foxconn's (USA) to several much. Credit plus, investment, gas that segment gas you additional growth accommodate delivery Got initial of the so thank distribution will gas even starting think years. Could we very Because faster? next Securities I $XXX $XXX investment simply beyond we enough delivery for growth infrastructure projects. additional million in Suisse you, natural now two we're terms what growth yes.

Gale E. Klappa

Thank you, Michael.

Operator

comes next Your with Citigroup. from Praful Mehta question

open. is line Your

Praful Mehta

so Thanks much. Hi guys.

Gale E. Klappa

How doing? are you

Praful Mehta

perspective? thanks perspective? How quite about good. an though actually and If interesting Well, think a Hi, going around for big Foxconn that catalytic was growth my cycle? that kind question. it it is guess point utility sounds a down X% out, through frame like X% your from you opportunity it effect that opportunity Or we the the more think clearly build How should forward. keep and do increasing from about the but should forward? taking as a from opportunity we plays going I growth the pressure the maintaining helping of

Gale E. Klappa

Milwaukee we're development that or question Tool is Milwaukee. Great I the think which built all to latter. the distribution in economic my there's candy company has Electric years expansions. right major of no and question Wisconsin. expanded that I the it's major expanding had two There's first in mentioned is Southeastern Amazon a and has of mind project center Komatsu that's ago seeing. huge harbor a district I distribution center. the in HARIBO, couple mean, a all, coming

all – really a for investment of infrastructure the So and all to is infrastructure, growth. opportunity that need that we make to that regulated support

you'll runway mind I And our That's out natural our detail and stronger rate. range a projected electricity giving and X% sales raised the gas to keep definitely in our see as or sales in both about we've rate growth growth roll X% see to of in longer for think pressure hour at bit. you'll with also question X% EEI, down. that middle even plans we my kilowatt it. No more to basically an of helping the is rate us low

Praful Mehta

investment, the both the helpful the then the sheet be this unregulated must the on regulated credit. opportunity and you. Got and guess balance factor That's Thanks. given constraining that And I have color. around all I side, secondly, you mean

clearly you understand terms should And factor of perspective? can this taxpayer. in I you to a the in bit in as of become Should How or credit so come getting by just cash XXXX pressure point cash the metrics a XXXX, think some opportunity? be guess a would we at about little about that, perspective taxpayer a you're so to constraining that holdco of as we credit context debt think much how from a push

Gale E. Klappa

expect Well, and say give did we I'll well. Scott we mean, his absent would for start I any would view on you I very and that other then tax say as I'm ask become next going to have this, able But we cash again, we taxpayer projects would to profile. don't our that be appetite take to projects some risk infrastructure good to the year. change a

to sheet, see huge at But our see – maintain need going a rating, point. going as balance to don't I going them we're we particularly FFO I the maintain metrics So be. we're this maintain to where to are we a credit that deterrent don't strong

Scott J. Lauber

to right we're year. you're this no, in years. FFO end in bonus is and of project on our perhaps opportunities, other help XXX% XX% at will the depreciation another take at And that No, as correct, or exactly the XX% Gale. running fact That you FFO-to-debt even line, you high two in look

to our on comfortable be XX% we're we in plan. XX%, out opportunities just to So we'd want how the capital and that realistic roll

Praful Mehta

Got you. Thanks, Scott.

XX%. even see of you or XX% it end to the don't XXXX any to coming So at that XX% that XX% down pressure in staying to lower

Gale E. Klappa

time. at this Not No.

Scott J. Lauber

at not No, time. this No.

Praful Mehta

Much guys. so Great. right. much. All Thanks appreciated,

Gale E. Klappa

Thank question. you for your

Operator

Lapides Michael from Sachs. comes question with Goldman next Your

Your line is open.

Michael Lapides

question. my for Hey, taking Gale. Thanks

Gale E. Klappa

You're welcome Michael.

Michael Lapides

below one last year-to-date, That's decent guidance the for and you've for done actually then housekeeping in your fourth small $X.XX which or have $X.XX-ish the year, I that the is, chunk. so quarter EPS a by look item year fourth implies I $X.XX quarter. if at

the was or get Just unusual quarter? in curious is is nature might fourth one that fourth the Or that that this quarter benefit just fourth something that something not in there year else there in last quarter? was happening in fundamental or time was a abnormal you

Gale E. Klappa

you I – sharing anything return. details year. earnings with that Michael. this. utilities above short, allowed question, strong performance retail think mechanism in you Good rate has give And some our the have we and story this on I'll But remember the our Wisconsin And ask been place Scott long at very of to

the essence, be fourth quarter outperformance subject earnings of per not earnings So, bottom any in would and we have this to year flow report. therefore basically that sharing the line in share would through our to

So, earnings this Scott? where where you into have we were account to were last we and sharing year. year take with

Scott J. Lauber

exactly That's it. Yeah.

And of fourth earnings we're weather, gained between not and $X So near that were we band about XX-XX million. Gale the now. top quarter, that fuel into $X.XX about and sharing year's of going into And into to we sharing. started last just get mechanism said, like

doesn't So exist. for the additional $X.XX opportunity

Michael Lapides

Got it.

record, years... to sound for One go a Okay. read you broken other back the transcripts I'm going and last like and thing, can two half

Gale E. Klappa

were I at sleep questions? to and know go Michael get You when night, can't I back where the

Michael Lapides

conservative it's growth the to as also that time every have numbers to higher? well? on they conservative, on gas the Well, years three side, clearly they for would rebase you half, question fact and because happen on the electric And thoughts maybe have almost your same two, demand are side been make what any the two

Gale E. Klappa

details think we of to almost I when little projections bit. the We growth. forward, were X.X% all plan a our flat see capital rebased going and our demand electric X% have basically you projecting Well,

the of expectation our in then of is up we're we're light hair to growth well. rebasing think natural just opportunity Scott a almost gas I electric adding as demand for expectation growth X% that terms seeing. also of And annual in

Scott J. Lauber

last this and across-the-board And seeing correct. class that every we're That's natural year gas.

– but gas appliances So replaced, they're stable becoming residential is efficient. get prices good I just more as don't customer still having growth

other new a at continue that So, customers. grow to I just year-over-year residential seeing have hard time than same pace

Michael Lapides

you. Scott. Gale, Thank guys. Much it appreciated, Got

Gale E. Klappa

See You're welcome, soon. you Michael.

Operator

Deutsche question with next from Jonathan comes Bank. Your Arnold

line open. Your is

Gale E. Klappa

Hi, Jonathan.

Jonathan Philip Arnold

guys. Hi,

Gale E. Klappa

a Jonathan, mom for to I've in meaning been Jonathan. doing England? ask, your question Hey, you, how's

Jonathan Philip Arnold

Oh, fine. how deported She they go see we haven't yet, me yeah. Thank you. is we'll with Gale, but that.

Gale E. Klappa

Well, it. good electricity getting from company she's my I former take still

Jonathan Philip Arnold

Yes, indeed.

capital the we transmission. just XX% graphic plan about the the the save that Are number. excluding might for before, for something EEI, on you'd I infrastructure Or So showed is on was us rather of mean, billion? now plan you the capital basis? but X% talking be it this the $XX.X when same gave XX% energy XX% you

Gale E. Klappa

XX% $XX.X It's of the billion. No.

Jonathan Philip Arnold

any some it My back, Okay, point. you And had said you you you great. what expect booking were then like for that XX.XX% think Thank just something was migrate to at transmission, I on to that. But looking XX.XX%. of ROE point level, related projection X% earnings, FERC migration sort at is model? what you the then do comments the if happening? have out on your question on this see you And machinations this that in of of

Gale E. Klappa

on booking our the you're correct allowed the Jonathan, because today, We're still counts. earnings Well, rate from Company. return of both American XX.XX% on that's Transmission

has the been the on are asking a know, of the of current all the whether As begun complaints U.S. around the return "in of As not." Federal over from you from know you reasonableness Energy there have FERC transmission Commission customers country at or Regulatory zone to not number some allowed pending action. rates or take

combines looking has year. guess just FERC the their docket quarter And And they Utilities, they would the rate, days, the out would that's them Northeastern the XX.X%. when to Scott. go our on XX from laid began XX.X% for the it's just from docket all first and to which of Energy I indication first period. methodology, growth half down, conservative believe four two of comment would a we first after or think any metrics I end come the metric ago, is because the Midwestern they that first XX.X% so might the action Federal I us December, came single still is new complaints going will X% to embedded close that. expect some probably Commission that of But I X% in of puts And take now then next XX-day there's right in on assuming that be are estimate our we That weeks be you been Northeastern in at where the to a as will. have to if States, The complaint clarity proposed United while Again, the using a a comment get opposed Regulatory that different past. before

Scott J. Lauber

correct. That's

to it XX.X%, XX part we down adder we that assuming the being it yet, of haven't for plan final we're the MISO. determination a made includes So go will basis when our think five-year of goes for but which point

Jonathan Philip Arnold

range. clarity. just for And on you the is see the type reasonably where plan explicit on end, gave – higher back with or that plan intended you or just within start that see way lower, earnings linear out more you visibility you possible a Okay, that as the of the great. then some this any Do it pretty Thank and throughout guidance less you migrate – at to have was level? trajectory,

Gale E. Klappa

plan. intended was throughout linear the be pretty really much to It

Jonathan Philip Arnold

all great. Thank Okay, I Gale. That's you, have.

Gale E. Klappa

You're welcome, Jonathan.

Operator

KeyBanc. question comes Ridzon next from with Paul Your

open. line Your is

Paul T. Ridzon

How are Gale? you,

Gale E. Klappa

We're good. Paul? are How you,

Paul T. Ridzon

Good.

lines If at the Just question, equity? CapEx a by for that won't you're budget constrained equity, the you that of of all along could previous the is issue to XX% that infrastructure your you statement issue bigger? being segment, willing the make

Gale E. Klappa

in terms again, equity, we could that bring wanted the are If issue I very, segment. we this bigger, But being to we assume. very want projects it we to disciplined into make of

looking up think XX% XX% for capital our at. and So we segment next it five reason of basically of expected projects the that's the the over Energy we this we're on Infrastructure years already with of is spend at done, the number the – ended particular quality I reason about landed the

I that and terms our change we want I what in very risk-averse can to in-house. kind amount think risk we're disciplined to going of we think of about we're since and not is bring being here, very spend profile, the projects

our type So think, it Scott, it's any by constrained by our return more than financial really approach, criteria by is, disciplined of I constraint.

Scott J. Lauber

than equity. came, more opportunities X% room do we'd to even X% issuing If any have No. without to that

more in the returns. not make opportunities our to achieve the expectations the we're realistic financial, of to sure it's So it's

Paul T. Ridzon

And helpful. reserving that's are you, you the then ROEs, on FERC just the against XX.XX%? all Thank at

Scott J. Lauber

is the that that and complaint final exist we're period XX.XX% the waiting results is the does that open yet, not. No, on. that level. complaint reserved hear XX.X% are at that's we open is that But to There period one

Gale E. Klappa

the the XX.X% for basically the – period on rules, return. then is XX.X% basically the And allowed FERC this

Scott J. Lauber

XX.XX%. The

Gale E. Klappa

I'm allowed sorry return. the is XX.XX%, the yes,

to that don't have this a one the period we than do basically period. that any allowed So XX.XX% take because we other the Scott real think there's for complaint is talked challenge reserve, ability return on the about where

Scott J. Lauber

Correct.

Paul T. Ridzon

thank you. Okay,

Gale E. Klappa

You're welcome.

Operator

comes question with of Ciciarelli Richard next Bank from Your America.

Your line is open.

Gale E. Klappa

well. Richard, not Richard are is afternoon, you? Good how

Julien Dumoulin-Smith

think again. it's here Can me? hear you Julien I Hey,

Gale E. Klappa

Julien. Hi,

Julien Dumoulin-Smith

guidance base Sorry, sneaking might for a earlier You quickly. quickly? transcript $X.XX. for the on have to real than said in Just you I this Can clarify guidance? like the introduced earnings of different meant real here XXXX earnings it looks you year just might midpoint have the at XXXX $X.XX

Gale E. Klappa

Right.

Julien Dumoulin-Smith

The At correct? midpoint the right? that $X.XX, that new is base, is of

Gale E. Klappa

correct. is That exactly

Julien Dumoulin-Smith

Okay. I Thank you. to just wanted that clarify for the transcript.

Gale E. Klappa

welcome You're Julien.

one masquerading think of are your as and analysts. trick-or-treating you I

Operator

Your next Capital. Vedula Murti with question Avon comes from

line Your is open.

Gale E. Klappa

today? Vedula. Hi, you How are

Vedula Murti

well, Gale. your doing Hey, year. I'm good luck to Brewers next

Gale E. Klappa

Yeah. Hey, my Bucks are X-X.

Vedula Murti

politics timing with that, Greg of it should about of to lots we was to its in its whether whatever. something a that fact lag we look there's to to. what noise maybe or of is what want may we've thought you investment some what And or people be about question or forward term find and capital around posturing had asked really attention there But within obviously, originally? some of to, Okay, give Foxconn. My pay it about lot some whatever what out and or terms use all more mostly to scale relating either of believe in heard

Gale E. Klappa

ahead. speed full is Foxconn is seeing we're Everything

that on Foxconn now and additional would it slowdown appears decided want governor to I were would a and package probably overturn there have do they're not in of to ahead. some whether to factor be some are what that campus, elected relook he given construction find plan. If the would there way that at whether they candidate that's mean the have investments been we they've progress place on a the actually speed look in state would that not the doing to the Now if the announced, some gubernatorial to you be Democratic making, right the now incentive be want he by full right to happen or that for is across Foxconn terms in for he here But Foxconn. or were discussions election legislation

Vedula Murti

you. the appreciate clarification. I Okay, Thank

Gale E. Klappa

You're welcome.

Operator

question comes with Levi ExodusPoint. next Your from Andrew

open. Your is line

Andrew Stuart Levi

are How Gale. you? Hey,

Gale E. Klappa

How Hey, you Andy. I'm are doing? great.

Andrew Stuart Levi

I'm doing well.

Julien's to last question make Just back to just sure.

So picked you wasn't Bloomberg I midpoint, comment, your guess when as $X.XX your up transcript first obviously guidance. made which the the

So off correct? of is that you're growing $X.XX,

Gale E. Klappa

That we'll is to and for Bloomberg is correct. That have sue correct fake news.

Andrew Stuart Levi

Okay. to make I wanted just sure.

you very Okay. much. Thank

Gale E. Klappa

You're welcome Andy.

Operator

Your with comes Patterson of from Associates. Paul last Glenrock question the line

Your line open. is

Paul Patterson

guys. afternoon, Good

Gale E. Klappa

shaking? Hi, Paul. What's

Paul Patterson

just you sort infrastructure about was I back wanted on What much. of projects. Not to the ask

do of high CapEx, as mentioned on the bit be if I'm terms is You could you look looking you little what at side give wondering time, the when over of of a follow returns you're the And in might how that just the return. trajectory at initially more profile this sort to me? earnings we the flavor

Gale E. Klappa

with the our to And of of we we of our hand retail that in kind and about rates over announced, have or the time kind which time Sure. have above useful slightly of would we the the again, projects life return. expect projects criteria we talked over over is the project returns meet at

Paul Patterson

you frontend Right. is, made loaded. of But that, might be it sound I guess what wondering is like some I'm it

seeing like later of is, distributed? it of some on wondering as the so be over wanted that I'm be be in sense we average might sounds what follow get me? and that's much boost I would frontend so to that of how versus years Do time you what to years? a but be, might How And more a early might loaded, it it I understand

Gale E. Klappa

Right.

Let in are gas me heavy some a storage detail. or wind Particularly let we're the or for about Scott? have or projects The in Scott influence many of credit solar the then really early wind, give renewables. very and cases that I'll years. type you talking frame tax you you some either with

Scott J. Lauber

Yeah.

we've the the a tax depreciation. side, good the points because the along had returns specifically, credits by years, in XX% wind production with So, of in projects so that XX first couple the on returns XX-year north that percentage bonus are are so two far first cash period of of

make it average. on a credits when production years So it's you XX have higher really tax the little really that that first

Paul Patterson

Okay.

looking to interrupt we're don't Go to really sorry, ahead. So you. – mean going I be

Gale E. Klappa

to going I it also to actually because our was problem. it's to calculation. No not debt FFO of the returns, say or believe cash helpful

Paul Patterson

sure. Okay,

good of be So, talking going having XX-year benefits versus is of just basically to okay a where EPS. no talking concept, won't so – a – we're be returns having upfront the like like PTC you're more time period to so you'll there are kind big where be... This the timeframe higher you we're

Gale E. Klappa

Right. Right.

Paul Patterson

Okay.

ROE you to mentioned generation make something the if wasn't ATC the completely the ATC sure that. and you're with could Just the what's there's – CapEx, wanted returns cases I did in it decrease about is, about just that other clear I profile has off you're the just terms Or ROE, seeing in And fall a about this. what with at I driving the of the that in and if what apologize then have have question that you anything have in the do to bit CapEx clarify to so a seeing? you? and little in on change But ATC electric do and

Gale E. Klappa

very ROE Nothing the rolling And transmission do the in whatsoever just large to projects and a two project projects, construction new transmission ATC extensions very our from is fact with to they're completing year. that these with large do cases. off Everything two footprint.

but slightly it with change So high year, a we a have to nothing do potential has comparing the year in ROE. lower to

Paul Patterson

my of most answered. questions were Okay,

So thanks so much.

Gale E. Klappa

more welcome. You're than

Gale E. Klappa

for joining so for concludes Thanks call Well, conference today. our believe I us. much that

Beth Thanks Coast. the on feel everybody. West additional have call XXX-XXX-XXXX. you at If any questions Straka free to See you

Operator

you This concludes Thank all call. conference today's for joining.

now may disconnect. You

Gale E. Klappa	WEC Energy Group, Inc.
Scott J. Lauber	WEC Energy Group, Inc.
Julien Dumoulin-Smith	Bank of America Merrill Lynch
Greg Gordon	Evercore ISI
Michael Weinstein	Credit Suisse Securities (NYSE:USA) LLC
Praful Mehta	Citigroup Global Markets, Inc.
Michael Lapides	Goldman Sachs & Co. LLC
Jonathan Philip Arnold	Deutsche Bank Securities, Inc.
Paul T. Ridzon	KeyBanc Capital Markets, Inc.
Vedula Murti	Avon Capital
Andrew Stuart Levi	ExodusPoint Capital Management LP
Paul Patterson	Glenrock Associates LLC

WEC Energy (WEC) 31 Oct 182018 Q3 Earnings call transcript