WEC - Earnings call transcript Q1 2019

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Operator

Good afternoon, and welcome to WEC Energy Group's Conference Call for First Quarter 2019 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 that all 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 the 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 answers. open will to analysts presentation, for questions the conference and information a of call, this with at wecenergygroup.com. conjunction detailed In financial is posted package approximately will the conclusion hours replay call. A two this after available be of And Gale Executive my Chairman of introduce is now to WEC it pleasure Klappa, Energy Group.

Gale Klappa

for everyone. today as our results us you XXXX. we of joining the for Thank quarter Good afternoon, opening review

of our like with I'd to members are introduce always, Team as here Management the me First, who today.

will Lauber, of Beth We and Chief have and our Vice President bit Bill our detail Kevin $X.XX earnings Executive you Controller, discuss in Counsel a morning, release General as Straka, Officer, Fletcher, call, XXXX Scott later the Senior from reported WEC President CEO Energy results a Peggy and our saw Kelsey, Vice Group, Scott President, news of share. Financial we this financial Investor and quarter Guc, Communications our in Corporate first Relations.

was technology the by snap during add operating economy on grip normal a than system and well driven exceptionally and January. colder weather, cold the focus strong across people our companies. our the I continuing that our of polar might vortex performed during efficiency region performance that Our

and gas Michigan in new Wisconsin, all-time dropped wind below our to natural areas January demand late in for hit As zero. records chills near XX Customer degrees service across Minnesota.

initiatives quarter, Michigan's on-time And completed it We've made a gas-fired on-budget. also Upper gas natural other number on distribution truly delivered. in during we and plants we Our counted real most the the were Peninsula new to important when networks our power put progress test. of

reduce greenhouse able in we Service units less new These for retire cost Commission Public installations plant and reliable maintaining support gas solar to here approval and farms. at With in be emissions among online, older, effective were Presque facilities will received Wisconsin, solar from our the major Wisconsin Midwest the effort And Isle. the our we efficient while two will coal-fired infrastructure. the largest to

more in that learn about just we can You generation climate reshaping this the last just report our week. published plan

in benefiting year's Wisconsin, additional our addition, this or proposed update in promising rate during rate here just the that in unemployment new jobs. are Kevin And a from first front will came Wisconsin thriving with quarter. a at during the track state's on economy you filings calendar with investments each month quarter. less provide In we're on I earlier, as moment. is regulatory X% and development an of in mentioned And

the labs. for Company construction development the and packages center for issue bid to research X For new facility example high-tech, Global operations break Foxconn the a as weeks, and sizes to facility quarter, centerpiece various in on it as will That X by of Production recently display begin our expected I flagship in is winter in Healthcare XX liquid research of to plant. fabrication planned southeastern for build end X restart I its plant And to of of to up crystal Gen panels Kabi Gen during Fresenius will after about the County. Racine campus matter Gen the well plans corner construction and plans will of that announced XXXX. state. Closer manufacturing U.S. the its perhaps a initial Phase distribution in be Milwaukee Foxconn as of the Phase produce from announced data hedges. the

private capital centers $XXX campus. vicinity projects These than hotels, in result XX-plus new of positive than the Including the Foxconn's ripple units. commitment in medical already and XX than More to We’re investment. have effect been announced more of Wisconsin. additional X,XXX projects should Foxconn more seeing investment housing million of the

the I'll Kevin, XXXX. details all to over yours. for call our Now and regulatory operations turn for calendar on Kevin our

Kevin Fletcher

our to the you, start highlighting by are employees to doing like provide Gale. and excellent I'd Thank work reliable customer service. care

our top in And Satisfaction across energy making Customer as American last initiatives. on the our placed mentioned, key stand review progress Gale where quartile WEC jurisdictions. Group I'll Company for Index in companies the Just month, we're in utilities. Energy is we our four-state

solar to Here in on portfolio track Wisconsin, of regulated our now we're utility-scale add generation assets. to

XXX Electric, Wisconsin April filed You'll the Earlier this Commission Farm will part and XXX state Wisconsin. an our XX. of Service expected we by recall approved a Badger site megawatt developed $XXX Two be developed will a of The XXX investment megawatts own application located Northeastern last year, constructed with The moth, Gas Madison by of Iowa with on project megawatts, Western May total Public along Wisconsin written to Public will a with two generation our Commission is the solar that purchase each XX subsidiary, and Wisconsin received County Hollow be million. proposal being constructed locations. Creek next in of of joint solar on at at and and in South in order Solar approximately era Service and Invenergy.

projects commercial service by to enter the these end expect of We XXXX.

Public freeze, comes Now March customer rate rates utilities. has four-year resulted filed shaping Wisconsin that after the freeze in our a lower and rate bills reliability world-class on a request On a Service The base energy we our Commission I'll to future. while maintaining a touch cleaner proposal for customer XX, filings. Wisconsin with set

introduce the I'll XXXX to We request XXXX. rates and for making discuss First, for set. electricity we customer’s

the XXXX are transmission increase natural tax steam electric an for amounts in three we collected X.X% details XXXX. charges. typical You can in our primary are savings reform, targeting two our drivers our electric additional monthly in the proposed X.X% not received. pages agreement in increased revenue, the refer XXXX. assume last sold Point the three, There in would from number from from earnings rates an two, approximately $XXX the Number since cost XXXX Nuclear kept for to over when MISO introduced was Point of of and filings. the Using energy the of we cost a Remember, Commission agreement increases. and in XXXX by period. bill customers associated gas Beach, that Beach Plant. we been one, credited introduced purchase approved to that three-year total Commission million Number And we with a packet and on the have was starting receive This

X,XXX megawatts Service, proposal of Now seen our higher reliability XXXX, our electric as It the upgrading lines. Northern onto rate Wisconsin the facilities. Forward in solar distribution already miles of Energy ongoing modernization as includes by acquisition Wisconsin the Center system upgrades. approximately We've electric two of also the of a Wind of Public in XX result moving well in as and underground includes investment these

below higher well sheet, reviews component remain Wisconsin With Even X.X% with prior applied, the balance an a equity increases the with typical the and in other in we decisions. our would bill Service electric X.X% seeking credits these average savings and Commission's additional would the increase deals XXXX. national state current by rate slightly tax averages. are XXXX support To and strong in Public approximately consistent Wisconsin

of the expect XXXX. final new year with January the by We in effective of end orders rates

these generation this Turning new power will to of new has After Energy We've Michigan, XX. commercial Upper be Michigan investment invested on facilities. operations March stations million gas Resources approximately the begun in other will generation XX-year save covered nearly rates. retail a and solution with agreement by million Cliffs Natural is Resources half be customers in years. the $XXX the next expected covered XX This to over $XXX

quarter complete. Illinois, system program is modernization the Peoples Gas a roughly to Looking

customer continue And study we to reliability, Earlier and safety efficiency the update excellent Minnesota do companies to Resources. improve one that's Peoples we America. found easier to on and an Gas Energy care. customer As a focus in finally, month, be with national of on business energy this

The Commission X.X%. to has our As Public the Minnesota at had requested stands you the Minnesota a December. And I'll on that this of attorney from back chosen last to with general request, that, return approved turn so in up the equity may review Gale. it not our ROE remember call, take Commission Utilities

Gale Klappa

high upper guidance. and much. to we year, on of thank you to meet XXXX continues at end the remainder as look the a we're level to track Company very the of our Kevin, perform The

$X.XX rate previous share again the translates marks original end. rate. guiding That's our enjoy about I share and XXXX dividend, a that a raised the this we're our as finally of to our upper guidance. guidance January As is And our between This X.X% of a quarterly Board will Directors of $X.XX a hope cash growth reminder our X.X% of the and consecutive over dividends. X.X% shareholders higher an year reminder, a XXth to to $X.XX the the increase midpoint meeting dividend a range of share.

earnings. the of to XX% target payout of now. We're of a XX% right that continue to ratio middle We range in

And be dividend our growth expect line the Scott? with growth our in with per and year, to I the So CFO, share. results here the details in remainder first is now for quarter our outlook our trusty our of Scott on Lauber. continue will earnings

Scott Lauber

Gale. you, Thank

winter quarter earnings to XXXX. weather. by share per normal Higher quarter per of earnings the first the XXXX, than first $X.XX $X.XX Our compared increased colder share were of driven largely

$XXX.X income new of increased repairs interest for cost first and expense segment earnings emphasis focus of the XXXX income $X.X and first adoption million. this I'll quarter accounting placed morning Page the of $XXX.X for operating by operating of operating first packet taxes. decrease Additional million. was of quarter consolidated to continued Earnings a to quarter and $X.X the income million favorable comparison Adjusting also first our actually packet, on then of XXXX investment the XXXX on income on rules, other X a of control our the and earnings. million our income XXXX, their includes had operating by website income, in and compared lease impact tax capital Referring results. impact of on

income. new it Two our remains these your plan of packet, Escrow to of on X it balance by balances, We and the have impacted comparability. items Recall of had to the tax Electric our adopted no while of income, Wisconsin Page separate repairs items continues zero we reduced benefits regulatory to asset standards, of impact the offset of breakout of reporting. our end at neither year-over-year net will reference affect as apply the earnings segment transmission a accounting lease certain settlement, net Wisconsin the these our year. expectation part on growth affect agreed January, that does items at our the this for we In be

fully First, segments. related the our consolidation, presentation in differently are of were assets across the business however, XXXX treated to intercompany The in leases are eliminated the future contracts impacted. our lease power the

is between $X approximately and item of smaller an impact reclassified second had agreement, interest. million, which income a The purchase power operating

million the Starting margins. of $X.X income, Illinois, between other X of This depreciation new income these million and update volumes and by is in offset packet. state timing Peoples due repairs with Gas in a $X.X segment, increase rules. million colder adjusted on result million expense. the earnings This program. modernization operations of of costs a separate of have In due column our by $XX.X expense. Page continued drove operating weather. maintenance segments, investment in Margins the We these the our work in in a lease $X.X Wisconsin impact $X.X higher sales and million income repair, to focus adjustments the as million Operating net million. $XX system excludes fuel which partially increased in increase the driven remaining Higher an increase weather operating will By by items increased was increase million segment on tax increase we the related increase margin million to a in in $XX.X in decreased $X.X driven quarters. a was accounting benefit $XX in operating impact negative income,

in Energy down income our segment expected this Upstream was have Infrastructure now to impact a material as and $XXX,XXX, to Bishop Turning did segment. Hill not Wind Farms income. Operating operating

Note lease at segment $X.X Earnings and Other rules, loss These expense. significant at and production come and excluding an quarter investment the benefit of these Upper in by $X.X million, offset the $XX.X related operating these tax expense Corporate tax increased operating that with an compared by our net our recognized earnings of income Combining higher million increase income new were approximately our capital the new form increase first driven portion impact gains facilities associated tax and the investment. benefit operating $XX.X investment in of credits in an generation to offset $X.X plans. the of are a of million. these AFUDC to for The Other the investment segments. production to earnings from share. to million. our including then increased Transmission American Higher repairs totaled credits Michigan's partially Peninsula $X.XX per However, income changes tax gains by improved by continued as the Company as and XXXX. million, driven

Excluding primarily driven net the our lease interest expense slightly and by capital investment our $XX.X interest continued new accounting, of the impact million, increased rates. higher

tax net our tax wind recent was generation production Our repairs addition the decreased million. related consolidated facilities, items. driven income smaller expense, by tax to This in of acquisitions Upstream Bishop Hill and Wind tax credits to various of $XX.X

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

XXXX. taxpayer and XXXX At repairs, benefits we this our expect XX%. to be a in expect partial rate tax Excluding the tax we between of effective time, XX% to be

our not operating of the $XXX reform. expenditures for by higher packet. due had quarter and Total and reform investment decreased of to million. a XXXX. from $XXX the reflects levels refunds XXXX, increase begun capital weather working the focus utility colder Net by million The capital $XXX infrastructure customers Looking tax in to cash to asset were This decrease first first X the provided flow earnings refunding and now acquisitions at cash was energy Page on million we In our driven related yet business. customers. of activities quarter statement amongst tax the XXXX, regulated

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

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

we over the reflects forward, in period common was which that any XXXX, level effective of expect million first not annualized additional quarter. increase made same the dividends the in first million do the an $XX Going issue to shares. quarter We increase during XXXX, in $XXX.X the in dividend of

Turning now to sales.

across on in the customers XXXX, weather Wisconsin retail shown We gas used gas compared weather on continue At quarter iron X% the approximately electric of electric a system. the deliveries serving were basis volume gas up were more of XXXX. to deliveries ore XX,XXX normal by of grew and X.X% from of increased power natural quarter deliveries sales our and X.X%. on This end the natural in were Page excluding basis. electricity Natural our the growth see gas normal Net customer utilities a Wisconsin quarter versus comparative first excludes to deliveries and first our earnings basis, the for X.X% mine, are XX of XX,XXX first generation. a Retail year-ago. gas more XXXX retail Overall down a of on packet.

earnings Finally, a on guidance. quick reminder

the normal an our top the of reaffirming year. expectation per the $X.XX remainder guidance This are We earnings reaching $X.XX of of share end with to of assumes for range. the rather

per in account, $X.XX share, from second weather, our at earned $X.XX the last the into quarter we per looking we included the In I'll Now be the of weather XXXX to share. quarter which turn expect weather second range Gale. guidance takes taking the to into weather April the and second for $X.XX year, assumes back account quarter. quarter. $X.XX approximately the earnings to This for rest that, With normal things of

Gale Klappa

and our those rumble. on ready Boston, we let in are stockholders. to customers value our know, Milwaukee a note, for brief thank Scott, of Overall, just I much. on the are focused listening track for delivering very you just side and you to Bucks want from And you

the up And portion fear the it operator, for of ready now to call. folks. question-and-answer the we're So beer open

Operator

Thank you.

from your with Greg ISI. will Gordon we your first take Instructions] And question Evercore questions. comes [Operator Now,

is open. line Your

Gale Klappa

today? Roll, Rock Greg, you are how and

Gregory Gordon

after I'll to… Gale. tell you need okay, tomorrow draft, We the

Gale Klappa

All right.

Gregory Gordon

at off And a it the I'll Scott contribution and this of this I expense, do Just offline? investment few doesn't know net questions. you not, net increased if handy, can have look the take what but take offline if gains and other you was when income, hand overall the

Gale Klappa

Scott?

Scott Lauber

$XX in that is expenses investment offset about of the remember ballpark segments. $XX investment are up was really are think those gains gains probably million, million I operating the the but to

So of are required the a just there, reporting there but to really down information by operating we’re above. the segments it's how – kind reported it's really that to offset

Kevin Fletcher

in point really have different to Greg, together pieces the look to get at Scott's Yes, good really two you picture… the a

Gregory Gordon

That's why Yes. asked. I

Kevin Fletcher

Okay, terrific. Thank your you, today? Greg. What mind else was on

Gregory Gordon

much the expected I into what's you guess that's agreement impacting repairs flowing my and on how and the that tax trajectory way the the through, second thing to the asset regulatory taking mind was reduced look account have like? you're balance

Kevin Fletcher

in and, the which in Scott one, big us over more balance, well. we're and We've escrow zero. as on considerably that was – transmission $XXX than the to fill million. expecting be can the half Well, it But cut

balance the escrow by In it's a the story. XXXX, remaining great terms end of of

Gregory Gordon

And then what sort then? happens once that's of at agreement zero, does the complete or

Kevin Fletcher

all rate Well, decided in that X of case with will new January rates XXXX. of the effective be

Gregory Gordon

are changes that Are great incremental I read forgive case, looking That's significant try the key your looking existing there capital generation to the are – rate of some don't of haven't you're surface? of a thoroughly, Great. other if there plants, answer. because new portfolio you're coal asking in then know achieve. some or And terms incremental I big the what me retirement to second but that drivers deployment things level of any for in the Perfect. answer it of underneath and in the what

Scott Lauber

Public Wind is then of the be the would that really Wisconsin sizable covered big Public for pretty the mentioned. of think investment, Service. driver in Energy Kevin in a be would his of other case rate during Center rate prepared your drivers acquisition prepared would all be Kevin might solar Solar a the portion of our our Service is part that case rate new at projects to Projects. the question, included investment Couple Two two a rate that part in the remarks. first Greg, That's Forward Electric in that in things the in we projects. And Wisconsin the two case Creeks the renewable be responsive the Badger rate Hollow that three Kevin of of the One I ask case, remarks, covered Wisconsin the

Kevin Fletcher

is renewable distribution would overhead rate underground, of And the our the mentioned be project, a where other looking that well. I to thousand which couple grounding we that our add, miles of to SMRP I one Gale, we'll into under put base project as

Scott Lauber

the I'll addition, equity highlighted layer higher low it and cases. X% we in And just balance done sheet for that In they've support our That's there. better. about other

Gale Klappa

Right.

So we the for asking upper are in an end. increase

as as hope We the range but looking equity And layer have equity you prior again, been we're said, now of commission the for cases in here layer, this state. itself. a has that bit increase approved, Scott Greg. a know helps, in the in approved has an the for I

Gregory Gordon

It Take care. you does. much. very Thank

Gale Klappa

You're welcome.

Operator

Pourreza question comes Partners. Shahriar Guggenheim with from next Your

Your line is open.

Gale Klappa

are Hi, today? how Shahriar,

Shahriar Pourreza

it's Hey, guys. not Yes, yet. Friday

Gale Klappa

Okay.

Shahriar Pourreza

of for So, revise we of seeing around updated potentially state headlines the sort of could in the are looking contracts. you just and Foxconn. sort Governor little But maybe the bit Gale around noise the thanks the about to a touch the terms

the think of very just it situation. contract especially, be legislature, with close is you're this? the think difficult we – should to got legislatively for a I your obviously sort baby How changes you've to this hiring the this noise? but business the reopen plan and about Governor this How would is highlights Republican-controlled is Gale, you

Gale Klappa

Three your appreciate directly I question. Well, answer it. great question, observations Shahriar. to

for and time have we decade a government. the almost Wisconsin all, divided of first First now in

a look is have we of in prepared small to fair demand. just so Scott as and up divided they of will a and can been creating year the their characterize the additional standing political only mentioned last as the moving I been of one amount in now we headlines, had – accomplish normal there would of by my data all a and in of a rhetoric of put know discussions significant decade. and what's of we in would demand Interestingly to you XX,XXX the think economic we're If think And want and ripple newspaper that have last significant, campus is overly suggestion in conservative the rhetoric, haven't from precisely our used projections. So don't ignore terms effect effect, divided I our remarks, finer and It's But Foxconn as if over including jobs. planned you what government. very had of any you of amount far year. the ground. of five-year the of in political recall, major And addition a longer-term you a on surpassed development as course point a What Foxconn the on back center. much expect, our I additional climate to we already for the still the clearly far very ripple ramp during of additional projects. until the kind forth I next of in fifth plan over the months as government – jobs projections happening projection seeing define what our it, It forward. be XX enough, Phase to I that

goes So of talk as my Shahriar. let's kind really political that a you I on what's ground. is helps, steady the on happening lot view focus of hope

Shahriar Pourreza

addressing it's investors. I because you topic it bit appreciate And with doesn't. that then a a No, I been little know

secondarily appreciate these that. then we a just could know is hit you opportunities enough Scott you shifting to trustee loaded about being be current Gale, incremental sort in of more sort modeling sort if to highlighted projects? said you've that dozen Are be about think position should seeing tax about you are cash wind similar to plan these it your to to XX% projects for that very billion. opportunities It's And spending you've end think deal fruition, how as But of guys should of some a $X just of going that is by bucket would your hit tax – or the of under growth? more we I XXXX. So we're Dakota highlighted post I front this, question evaluation South this infrastructure just, are than position And you've with Google. of then

Gale Klappa

Well, Shahriar, projects right saw we still have pipeline months on have you amount, wouldn't of surprise now, of We the fair were can great announcement. – to question. still a it me another doing six in a that robust over imagine diligence the major four as you least if next

here plenty mentioned XXXX. Scott in So remarks. cash still would We a have nothing did Right in we now, of as opportunity taxpayer partial be and his prepared else. we

push Another XXXX. announcement would out into us

So that that in and segment optimistic continuing on you that segment we to very Infrastructure filling five-year plan, about basically are bucket that see it. I'm work in our

Shahriar Pourreza

Greg's it. better guys. draft, with That's New Got great. Team. And I'll York comments but echo Thanks around the

Kevin Fletcher

Shahriar. you, Thank

Operator

Michael from with Suisse. comes Your Credit question next Weinstein

open. Your line is

Scott Lauber

are today? how Afternoon Michael, doing you

Michael Weinstein

understood credits, All doing going on will – tax How operating understood. service income line throughout new persistent the quarters credit that next affect increase million the you will just the line. flat tax of be in that income new And future with over to the the wanted net the year, that that notice right? the the $XX businesses should projects the and year. confirm projects But right, much year-over-year kind good. infrastructure contribute aren't for to wind the that's Hey, from operating

Gale Klappa

credits. you pretty got production view more be it's look give the tax to much ask in the will from line you this largely earnings where much detail. got to the My flowing pretty would at are Scott and and ignore to ignore income instance operating We

Scott Lauber

Yes, right. that's exactly

said $X.XX I the wins the he credits, it. looked So production to like when at about added tax it

production few required forecast, previous Now get that's $X.XX just accounting spreading our key about items and relates that I rate, but there's is tax will here settlement we that the tax items assuming got that of the the net by some in other that think we a for planned GAAP that's quarterly normal wind. expect to line in the

Michael Weinstein

it's lot it And wind are been or I Right. affected that also we for of all affected all projects the output, hearing tax in bad credit pretty the a year mean is how this just general or driven? about at affected any a

Gale Klappa

it I though and tax have I going when Upstream and were quarter, Wind first mean second production pretty credits, detail, to is a Kevin level we and looked very at So pleased. wind the came looked we Overall, would at of say service of had we income and was budget. credits we the quarter themselves. are Bishop quarter great the the upstream these the when results the I in – of whole very we not it and to close January? affect the it in all tax and obviously have was Well, Rick the during remember we in that service Farm Scott, looked because from for first will Scott your think quarter week of of Kuester week in third January, or Hill service for portion of

Michael Weinstein

normal for of instead question versus any of normal. year-over-year? versus Okay. And the last me one Can impact kind you just provide weather is

Gale Klappa

be weather best very not in and probably at good. you techniques mean, quarter million they're this really are I is a just misleading. normalization we've very can The me industry say just heard good times. not really looking Mike, got it's one our the but

in had. but just one most that closed. actually couple talking good So our Kevin don't down, I one was I'm about our we Well, of schools, a think just and about I sure about don't do. think normalization ago, folks I vortex frankly days many polar few as were side not I minutes as this think retail numbers. believe commercial weather businesses the the fact, just is impact of work

huge fact, we would normalization not so gas, of mean, So I in I can't did possibly spike overly that extreme in the and worried, and weather in see that. closure kind factor obviously, I'm expect

up are well We stayed weather in residential of home. normal electricity everybody usage

of So any about think concerned of to time at still I one effort. long to don’t if kind from have, know a period Kevin, I have overly you've quarter and normalization got add weather our I I look to that. results wouldn't normal any you very get be to

Kevin Fletcher

with and so. anything not add what really agree would I to you exactly said

Scott Lauber

So but Wisconsin you Illinois weather quarter there's I effect the Minnesota. was has probably helped It's to weather Wisconsin, that just Michigan general think us by look it's decoupling it to and the really – $X.XX. decoupling probably has that about weather $X.XX $X.XX because $X.XX when in at between pure

Gale Klappa

some please you the look system held not. we thing I very perform. our mean with pleased The about was other I'm how some up at I'm is zero for delivered, below mean, when I our did some Windchill company conservation the degrees really when shortages And of XX happy states the and it most of with

Kevin Fletcher

I well, in that. say to Very that neighboring the to well, thing Yes, effectively. same going our through system just at our employees a not only weathered you the extremely look for to proud states We that conservation request was if vortex as was very of but our standpoint. did that polar

Michael Weinstein

Great. very Thank much. you

Gale Klappa

Mike. Thanks

Operator

Bank Lynch. from question comes Julien Dumoulin next of Merrill America with Your

Your is open. line

Julien Dumoulin

Hi. Good afternoon, everyone.

Gale Klappa

How are doing, Julien?

Julien Dumoulin

you. thank excellent, Good,

some in consider first prospects obviously are capital effort given legislation we pretty new the that through here case are other something do be pickup but it key kind about think given curious how the we would slightly this considerations important inaugural settlement for we together. move proud a when variables just the and What you to this of of you as Clearly aware be of think half? talked different already and to any at on tricky, use items. are to the should you've other this about What a the the point. getting the about the thread, your peers perhaps So little bit nuances in state,

Gale Klappa

question, good Well, Julien.

now. normal early numbers, this, me their the there Let the just are be discussions in very on responses going I until etcetera. we right the process imagine in of our garden any meaningful clarifying data data normal its say staff just their variety, now numbers, terms would settlement our right completes we're questions of audit and can through after verifying

productive staff the hope into will audit of four, And on they I it's Obviously, the just this early in three, the others imagine requests after did you and itself, tell. any say other stage case we have, now. way but through terms the Julien we months we're going with discussions early process is game as per process, meaningful parties wouldn't schedule right when too the maybe be just settlements until or at in So data will fairly productive again, still what tell. the to the something settlement the complete, normal discussions with early to normal were simply in of five but too is

Julien Dumoulin

And understood. politics I to of back right, can bit you your explain back All know for going around. sort bit, the and moving come it. on. between a and forth expectations to little the back state forth what then legislature is and sort would intriguing a courts Got of little and of and is

understand As best you it?

Gale Klappa

Sure. Well, soon like obviously, the would surrounding we I would just possible. all Governor's issues resolved as to the say appointments be as this,

this Court Supreme the will best the has guesstimate quarter. Wisconsin the and up the taken on already Wisconsin resolve are now Supreme established schedule a standpoint Wisconsin whether the the is here I'm has of or relatively thing Court encouraging stay the in second Court from its near guessing but future. not briefing a case merits the just and is hearing the up early taking case, they appropriate, and Supreme quarter, in third is not that think I my

to So has and I scheduled pretty good expeditiously, Supreme Julien. taking Court seriously a think now move jurisdiction they've and news. that's this in it Wisconsin they're forward this set

Julien Dumoulin

And could to puts back, theory there depending back is that would be outcome in the actually rule that extra in the be your outcome effective immediately. clear about on an this,

Gale Klappa

up. could There certainly Yes. be are

Julien Dumoulin

all leave much. you there. Thank Well, I will very excellent. Okay, it

Gale Klappa

Julien. Appreciate you, your Thank time.

Operator

from comes Goldman Lapides with Michael Sachs. question next Your

line Your open. is

Michael Lapides

guys. Hi, Hi, Gale.

Gale Klappa

Hey, Michael.

Michael Lapides

Yes, sir.

Gale Klappa

Michael, benefit, for Kevin's between the Beat? could you and difference explain Miz

Michael Lapides

Miz in fans of third for going to or they're Beat the what the fourth the fans is SEC what we year. Alabama going all title is happens on we weekend the November all when line. when think gain, do are think do of to about every What about Auburn us,

Gale Klappa

Thanks. I I that am got time, yours take to analogy. but

Michael Lapides

three or emerge? an could an potentially see five you you well save Is to opportunity quickly. guys, Is costs years the having you if and renewable of for your for but money and where fleet? there in opportunity only in the coal as would. not retire generation? happened power next easy as in so given the rest biggest the both so I looking question for would figured Is to future you're you units gas the incremental and coal generation an there, units, natural the with that as and there I impact a have fleet, customers at what's real environmental potential when gas which units

Gale Klappa

question, them Even Tech that probably over these might keep a five the running. have on capital that short review to retire the additional there a certainly, I answer mean, units basis. opportunity look to answer, But coal that ongoing at we an the grant our looked Georgia costs, think fleet is Well, Kevin additional years at to our we We units. I put into potential be next Michael. entire wouldn't

potential I already, a think the answer is, We've Kevin. lot done yes.

Kevin Fletcher

you that is the retired looking Gale want on by any just bay work to the now mentioned. assuming And and certainly have that and same I analysis, as we've evaluation we made specific based that at we you not megawatts continue did decisions to talk we we've look to done stay that technology change, way if ones that would it, evident continues at and continue Well, things look as was about. it criteria what deal, XXXX, in at since the right but our will we're XXX done to the out going do

Gale Klappa

already we – goal question, emissions remember the to by your will by XXXX. set reducing are I Michael, a carbon of And we year XX% say

we've accomplished we show to perusing to us time, might may I goal on XXXX Michael. get that by seeing to you are of kind as XX% be XXXX. the And what now XX% an as by reduction and set helpful that end based work think longer-term think of that of then that you published year we what a the that report just just if goal we're early the that we we our climate We hit might thinking have and you reduction, the progress, seen to pathways various

Scott Lauber

Our are advance that help XX% us needed technologies report to to shows options goal. to reach different and that

Michael Lapides

factors other a does like they unlike honestly was how that some through that the just utilization through the and that's the of coal the asset some bit through. is types, seen I easy retirements that at a additions bit others, versions business to because economics you tipping the think kind this clearly the does if you and a is of it used report a rise, tend different and if change trying to would circular It it I coal when is gas little lot a heavy point report question state was thinking through And reference. going like a output little what No, of one to and and taken because be significantly those state work uses That's weigh I of the ways to. hit keep way will of a meaning of that will asked fuel factors. and don't about or it actually capacity of and running the plant. but make about to where still be that a on just renewables a that I've capacity to of, one cost generation and of it rates it's just continues adding better understand easy myself and point fixed coal

Gale Klappa

Right, and useful. along those one of might that the lines, Michael, be thought

You polar example experienced great to are five a of but is in even late and ago, in economics January very they different the are what years correct, you have have we still than were vortex the this.

can MISO things amazing system In the keep the January, in of In have minus to are a down. to It did that the that mentioned, it turbines to XX. that data, on It wind. shut have lights the megawatts You have designs you not wind of near on the the day one coldest down. because was towers was X,XXX at is on. wind minus the such to the still because in to XX, wasn't some us wind Midwest operate. shut steel of I The remember dispatch backbone have of morning cases chills based wasn't units

just in improve So complex – a Scott is essential. the it continuing having is this others, is to environmental a is balanced performance from and of learned I subject the your Kevin idea and have that lessons and while complicated just portfolio, Kevin,

Kevin Fletcher

have to I I'd ago, number at as minute retired correct a and X,XXX. believe of spoke been like cold XXX units us certainly to – megawatts Gale I as But the as

you're times summary conditions for consistent the approach and have exactly right that our your because have the the but and have I So misspoke there, at little Gale customers. to balanced first we to have we reliable for have all energy

Michael Lapides

Thank it. Got guys. you, Much appreciated.

Gale Klappa

Michael. You're welcome. you, Thank

Operator

question next Praful with Citigroup. Your from comes Mehta

is open. Your line

Gale Klappa

are Praful. you? Hi, How

Praful Mehta

so you you all input and the color far. Thank really much. so for all Q&A. Good appreciate thank and It's the

Gale Klappa

welcome. You're

Praful Mehta

how guess that and you help are out previous as I in that and years? and seven maybe laid kind think wanted ripple clearly, with that but the wanted that what range kind kind as kind the you of of year, what the five even should to effects well, longer-term? growth of the the going to in pushes about I addressed a profile lot that you and thought kind about. this, think of upper hitting pulls of brought touch some we you seeing You about would the on out going questions How at of So point more of on this us you're originally end to hit triangulate up, but you get in could than fit you've forward what clearly

Gale Klappa

and add and Kevin, question, I feel think to Scott your free good thoughts well. as please Well,

that mind for ask Wisconsin Commission our are the the we think in front two first of rate things have companies. very largest obviously to I come a two modest

rate case forward. an of have impact will obviously that going outcome So the

that We and place are that will we sharing place get have of very rate stay that above we or return. benefit if optimistic remember about in earn an it. mechanism, allowed I customers secondly, suspect earnings And such then in

range. think X% probably to growth X% a might about So our continuing for think our advice best now, be Scott, I

Kevin Fletcher

up ROEs will transmission be closely assets item as other watching where the and absolutely our for transmission Yes, investment. the in – end

Gale Klappa

good point. Very

had ROE of transmission appropriate number If many be ROE of Regulatory is forward front question and past, I have I hope for Praful, five been, almost been time we projections, well. should the deciding of and the the a of around investments, has There it them you has remember, for cases will in band future Commission our think in still as the Energy but really tell. going years in case these conservative what

Praful Mehta

of ROE, in the based just on is higher think to or Gotcha. between, ask should case X% depending helpful. based on the about X%? how of ask what And into equity how then very is the the that X% we it in outcome somewhere base to on terms the the the That's X% and itself around is kind fit

Gale Klappa

think the outcome. see I we just have to the that honest Well, to answer is

We see is comfortable additional have the commission of to with making. investments, type what us

to investments rate the planning I the like is think that the for a number tied But significant of solid. our asked very amount of capital solar plan is a example. make we're to farms

the been Ragu case to of to us So see is I – kind believe your reasonable you're kind with reliability all returns outcome and it's if of will to any to continue we able we've that continue of delivering. to delivering costumed rate the the the continue customers that costumed a it's in of there. will deliver to be but And like kind

Kevin Fletcher

Service for now, should to that very straightforward we to we perspective, move the Public both and forward. so for Wisconsin just as we request okay prepared that a my remarks Gale add from introduced be then from

Gale Klappa

your I you. Thank think so answers that Hope Praful. too, Kevin. question,

Praful Mehta

kind at or just this in I of think side, just quite or that growth, do organic the are hear don't that quietening corporate for that reduce on we the and the like And the M&A the something more M&A broadly in focused more conversations of that just is just there about thing, around well does, as there around more down a been conversation It M&A lot the it's just level team M&A has industry, seen general a you appreciate has on of stories something, Is you've final one quite that. it? a companies strong clearly terms yourselves. is

Gale Klappa

with I you to be say, perspective, give Well, my candid you. I can only would

a months. last in You or haven't movement seen M&A of XX XX the in lot

I the because make and significant of have acquisitions. sheets balance many part the in to to had issue equity don't think companies

Number two, get and acquisition with by On accretive the applied acquisitions review that's to getting one, in Number mean are we that we in about but first of are balance kind simply be make closing. going industry to it continue my other believe to earnings lot as we that largely probably bigger that that would all we've have we after full a balance three mind due per and share bigger. our diligence as year acquisition very very in could sheet, threefold. credit calendar would after potential well sheet, better any hand, because the simply familiar apply the to criteria strong neutral, trash we would that any the you our to not want – of a to we we're have of to

growth organic we the would wouldn't we thirdly, And take we small as growth our balance we deal take downgrade downgrade, be to would a rate want right acquire maybe at strong full category the would for notch a So would then of organic rush that anything own as one sheet, we the no. least rate.

something for criteria apply actually I you criteria. doing something was those those you those and shareholders. first if do customers criteria, your that those think there and three not But all, criteria, much do met I we be meets apply and your if three will think both you if rigorously of then

Praful Mehta

thoughtful very appreciate the that. Thank and for and discipline That's M&A. the you the around diligence

Gale Klappa

than You're more welcome.

Operator

Your from Associates. Paul with next question comes Glenrock Patterson

is open. line Your

Gale Klappa

Hi, Paul. today? are you How

Paul Patterson

you All right, how doing?

Gale Klappa

Good fine. and

Paul Patterson

sense they on handicapped the you they you Supreme might guys expect willing follow-up quick on act do And any how guys how Court guys a if rule? actually you just to might on – PSC have you So issue. Julien’s to Court – to question Supreme when are the as to have proceeding,

Gale Klappa

Court Well, set schedule. recently with and They speed to case sense final is up will have a particular they indicate no, My in I'm but case. it's is Supreme the they have this in any get act decision guessing the insight us make have, act manner. timeframe normally briefing the timely as decision. a enough would a a we early but might into second as I Supreme a for a of quarter being without again hearing said a that right urgency this not And they and a They the the which now took the we make that say But in important think a Supreme decision, I stepped then set as Court will up how to with they don't asked to case. is have when quickly would here took final sense decision. particular quarter, third just Court encouraging

Paul Patterson

And what lot to is – then Okay. is building you still in happens again know you the what? meantime, entered the or

Gale Klappa

been asked return not this all our my until to To resolved. of knowledge, is office she has to

Paul Patterson

I think mean should about do guess you about there but what the any – clearly to Okay. pretty I week, much it's think about And authority guess – obviously say the over just then that you of thoughts I territory the don't Chicago general would direct we that. City that? How surpassed service they planned I any Illinois, in or this mean, just with infrastructure the resolution, about voicing people's, I concern have some respect Council people.

Gale Klappa

Council were to did Then City the was of resolution. facts the had they which groups hearing, simply during and It this about took program. things, an place of talk in yesterday, not and mic appeared the of the I of present labor number period pass other open we importance this – testified first all, the of behind but think There maybe program. couple the the testimony it compelling Sure, a Council. Committee was City – wrong word, open significant a opportunity

but those is the overly program responded But a important I is from this to is with safety articles a standpoint and concerned. think been that have the to cranes message number we about compelling use mean that's just efficiency I in cranes. well So we've what There it of are think I is. as fake very word piece I not beginning day. the to carry how And and news, here you know, hate in

concerned And quickly possibly usual. are we it's we're and as not So as we as overly effectively doing business as this can.

Paul Patterson

Okay, much. so great. Thanks appreciate I it.

Gale Klappa

You're welcome.

Operator

from And Murti Avon comes Capital. your Vedula last question with

open. Your line is

Gale Klappa

Vedula. Greetings,

Vedula Murti

Gale, how are you? Hi

Gale Klappa

We good. How you are doing?

Vedula Murti

Thank I'm you. doing fine.

Gale Klappa

Good.

Vedula Murti

X think I annual the A few mentioned, things, in of – million income XQ. changes the year? I'm about that? $X.XX I up times $XX.X just of you've quarter-over-quarter if when end to and something the your tax we wind million $XX.X wondering were Page within this that What at $XX.X at I'm the variance of being just you know would don't end $X.XX, doubt take guidance like can to annualized line, or were look on guess taking the we credits favorable the packet. particularly are on the the by expense earnings that

Gale Klappa

asking be Vedula. you could, question, we wouldn't If the

Vedula Murti

exactly. Yes,

Kevin Fletcher

this relate actual it's this already of our had The unique piece over tax as line, pretty call that some into production that that wind other some into $X.X first to I line unique $X.XX, The rules it various of lot There's all guidance a and other a in items to pull million. quarter. factored through had relates it, that factored which verification our quarter little accounting it a true of we for was little items basically guidance. miscellaneous

forward. take is quarter that The going and $X by that. can credit So production about to that $X anticipate you tax true multiply we million a

Vedula Murti

opposed… missed quarter million to I $X as a part, very last the million $X

Gale Klappa

for All credits wins. the production tax infrastructure our

Kevin Fletcher

Yes.

Vedula Murti

this XQ benefits. that same same $X.XX XQ rate some if I look line want terms to such make of I of the run generally the table $X.XX in about and and item the under to line for with range in that type thinking is XQ, the What speaking that if at sure, properly the purchases, item? the

Scott Lauber

rate at the effective XX.X% still XX.X%. comfortable. still I look is we're are we tax way is, comfortable with to to guess that overall our And

to if it’s you repairs be my that you to in models, your think exclude the XX% I the in would put XX%. prepared remarks, best, tax

look those that's way at I good still to it, think best as the probably our because forecast. are

Gale Klappa

of ins point to line. and Scott's a There's lot in that outs

tax for Scott were our I be expect your think the right. shoes, effective If rate to is say, – I the I year. would what So in we model we

Vedula Murti

somewhat that this concentrated opposed But was fair is and to quarter in elevated as normal? it say particular to

Scott Lauber

elevated. tax the Yes, in think don't was it’s somewhat of it there. I I think I have straight front in me, rate

rate tax came our in So about XX.X%.

to factored than it’s again, this all little higher, but a going higher it's it be quarter. So little and is particularly

is think, we key unique accounting tax the the I rate. this look is So and overall at

Vedula Murti

Okay.

In terms like been the of the or I something that. five-year as capital energy pile that’s always infrastructure X% maybe plan, or recall, like

Gale Klappa

think XX% our plan. I in it’s five-year

Vedula Murti

Okay. us year be time pro having plan CapEx that's end to Clearly and looking at. reasonable it to some a the rata you're currently running next either other you're for prospects is of update time, that ahead within now some when in run expect between that then? up in menu will alluded and elevated not number at or the five-year rate way point on Why to you you

Gale Klappa

of as but I of all of to mentioned need robust – opportunity, number Well, of couple have factors pretty pipeline we a tax other appetite. at look a our including first things, also we

cases win. picking being particular for best all business behind very solid them, the we're really cherry think and So we only the projects have that off-takers really solid very

So a the there that investment The essentially take we what of we best number are look a might at. appetite, tax projects, opportunities have. other factors here

we think going we're So fill I I'm assume can projects. We're the high very success our that necessarily because that just I capital way we're optimistic with projects, but up portion At some doors that ahead had off here. of same schedule. the wouldn't, early blow of about plan our first we've time, rate, quality wouldn't to pleased that I yes

Vedula Murti

obviously the then, the status of was terms it on the initiated regards Okay. asked of then Paul one pre think period press remind first Peoples the how your on I ownership partially and about is ownership some maybe the where when that. for is that update And last regarding going And activity? audit where in audit me you thing – I next review? with Can that's concluded guess year to and partially gets and of the your us I current Gas think

Gale Klappa

reconciliation I under that out the fact is Sure. year, of partial current year just in that terms the the of half audit audit which point But that's the There would what way you're in and review the referring the we reconciliation year. after second basically to XXXX this a end the program for every and owner were audit works.

can program will expect so year year. every was there its is It happens oversight managed just we over So in the prior exercise is how commission still proper the that administrative recommending the outstanding from judge modest proposed of and again that XXXX change we weren't the the first of proposed law for in law a amount resolution very the that half now that the administrative company year.

you normal, it's annual that's I of when But an make there works. we've annual improvements program have company own already audit. didn't didn't an to the can the for to as the be how appropriate we expect audit So an And certainly some think made. opportunity just we

Vedula Murti

XX audit where full-year of So owned the where – the will commence that full-year you first audit. upon for completion the current Correct? it,

Gale Klappa

suspect I I yet but suspect. right. as been that right, schedule set, That's

Vedula Murti

hey Okay, for the good And thank you luck much. very okay. bucks,

Gale Klappa

thank bucks, Go you Vedula.

Vedula Murti

you. All right, thank

Gale Klappa

a for All you call today. that for much participating. so blast. our concludes right, It's always Thank folks, conference

our If questions Beth contact Thanks you or information free direct line have everybody. XXX-XXX-XXXX. Good to any more Straka, bye.

Operator

call. This conference today's concludes

You now disconnect. may

Gale Klappa	Executive Chairman
Kevin Fletcher	President, Chief Executive Officer
Scott Lauber	Senior Executive Vice President, Chief Financial Officer, Treasurer
William Guc	Controller
Peggy Kelsey	Executive Vice President and General Counsel
Beth Straka	Senior Vice President, Corporate Communications and Investor Relations
Gregory Gordon	Evercore ISI
Shahriar Pourreza	Guggenheim Partners
Michael Weinstein	Credit Suisse
Julien Dumoulin	Bank of America Merrill Lynch
Michael Lapides	Goldman Sachs
Praful Mehta	Citigroup
Paul Patterson	Glenrock Associates
Vedula Murti	Avon Capital

WEC Energy (WEC) 25 Apr 192019 Q1 Earnings call transcript