WEC - Earnings call transcript Q2 2020

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Operator

Good afternoon, and welcome to WEC Energy Group's Conference Call for Second Quarter 2020 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'll 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 opened 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. Chairman And my Executive introduce Group. Energy Gale to it’s WEC now Klappa, pleasure of

Gale Klappa

quarter review Hot joining us for town, Thank our for everyone. results you summer in afternoon, the of the second as city. we XXXX. Good today,

introduce to are with today. like First, of who members I'd management team the on our the me call

have Executive, more Beth new and Chief We in new detail Kevin of Relations. Lauber, in Fletcher, Xia, Vice in Officer. later the Senior call. Financial join Chief President Corporate Officer, our discuss Scott welcoming Operating please Vice and our Liu, metrics Investor and a And Executive Chief President President will bit Communications our little Straka, me Xia

of quarter presented our share. create from pandemic. confident morning, in despite earnings ability this saw our remain the and We challenges the XXXX release you value As news optimistic reported $X.XX by to we second a

always, As on was efficiency major in focus our performance. quarter operating factor second a our

normal the warmer weather energy addition, higher residential during than In significantly quarter. use drove

on We capital also our excellent continue to investment make progress billion $XX plan.

covers If XXXX. you XXXX period plan recall, that through the

reminder, a to we equity. As have new ample need liquidity no issue and

will megawatts. service interest XX XXXX. Tatanka latest and to seen complete, the under our wind combined in in acquired just ownership with Dakota in is last XX% of announcement site of Tatanka When a South the have we capacity project turbines may you Now early XXX project the wind in construction farm. Ridge be consist We've an expect Ridge The week.

Dairyland and criteria of Power offtake approximately $XXX co-op electric Cooperative, Google investment Our serves investment XX% produced based gentlemen, a for all Energy ownership of This that a in for million interest T. tax expected states. with energy fits all with benefits. It multiple has project, our substantially and the To and to Wisconsin ladies the the well-established agreements long-term is LLC in utilities total

be of We bonus in segment business. will eligible for also project be project the the sixth our This our infrastructure wind expect depreciation. to XXX%

recall, billion of our segment. may allocated grow plan we've our you to As five-year $X.X current infrastructure

Tatanka the billion months over With seven and that into only project, we've the plan. five-year Ridge already $X committed we're of amount,

have quick We one for segment. you other our on update infrastructure

be expected This being end Invenergy the You Wind will to of was Farm year. by XX% the may service XXX-megawatt built project by begin recall Nebraska. County, Antelope that Thunderhead this the we owner in of

of delay to we to the However, local substation has connect now transmission a needed project paused utility the construction Thunderhead a the several-month project because network. that's

point delay. would We out, work minimize relevant that the number with have our continue to positive the of parties I a to offsets in however, we all plan.

the the by should our gears we're by by emissions trajectory to we the way. dioxide goals, levels the reduce of develop for of help XX% XX%. our aggressive change XXXX. set year also generation be forward methane decade goal more our two And energy our emissions. methane earnings So I'd is XXXX distribution to and below XXXX, free goal XXXX like lowering customers new carbon major for to to and from of our now dioxide this we making. that XXXX solar committed reduce We're XXXX Wisconsin. by delay that's net like not light Wisconsin from tremendous on on the by touch carbon our we to exceeded year a per toward our conditions a by now. the investments retail end economic in at stakeholders we're In for emissions will building appropriate carbon I'd a of achieve At reducing commitment and carbon stewardship had with the goals. lines take baseline. mile announced fleet we gas emissions for policies The natural of to the back look recently progress, these working halfway to and for progress XXXX, to year look XXXX. the us In neutral moment, a XXXX XX% environmental all growth Switching to our were We step

XXX,XXX spiked in below As than during months were The for you to addition average. market national data and of the with the encouraging. the first unemployment of fell June unemployment Wisconsin the improved few would really well jobs expect more pandemic. Labor X.X%

We economic few years projects development are the announced are past encouraged also forward. over that moving the major

to For German September. HARIBO, manufacturer continues its in and Amazon distribution here Wisconsin And in to example, operational local centers. in candy with is take now expand approval new place projected Groundbreaking site plans local final received the May. of

care LCD and to is largest gamut may also projects the within of strong retail. plans. radius few high-tech to commitment HARIBO to continues plant a to have Construction Foxconn's from could plus manufacturing on investment smart between in America's hire the $XXX production progressing develop that campus. million XX research south buildings miles fabrication Wisconsin. to of XX-mile effect than be Meanwhile, Milwaukee a and and the XX a range ripple Foxconn its new its campus. in project. one industrial begin invest phase More Recent note indicate published as been additional we're center. Foxconn to housing of health Foxconn's just confectionary as Racine will important announced Foxconn at first its projects the to facility seeing manufacturing fall. this of You from reports operations county, this North network that employees new early It's well million and recall $XXX expects XXX

I'll story result over call private growth for quarter. to short, expect yours. Long fully now more results will on $X.X jobs. projections turn sales our We and long-term more new the more our X,XXX Scott in for the these developments remain Scott, investment of than details billion And intact. all capital than

Scott Lauber

Gale. Thanks,

across of volumes customer were on than basis our an the to period, electric At electric system. serving of our the ago. a see growth was We continue comparative are XX,XXX reporting XX,XXX were XX on We first a and from approximately much compared orders stay-at-home saw and natural impact quarter projected gas more that customers shown during page earnings end call. the usage sales year the on packet. the gas and quarter, Retail utilities but natural more better we XX the in place of to

XX.X% of during ahead month. And XXXX. down weather normal sequentially basis, the weather last ore that on X.X%, monthly sales, X.X%, encouraged in our second quarter were up X.X% quarter ore from electric on up Small down commercial of second a the from Meanwhile, were our adjusted than normal sales down a the forecast. trends of on experience for excluding sales On year's For X.X% to basis commercial quarter, example, summarize XX.X%, X.X% iron iron residential sales and a quarter. were of of industrial adjusted our XX.X% down a normal below and the electricity retail basis excluding were were weather the down large basis, XX.X%, were XXXX, each XXXX. falling the our industrial weather from mine, forecast. tracking the second And X.X% adjusted we're X.X% electricity, forecast. down our sales X.X% forecast. were deliveries To mine of quarter normal second were Overall, improved better than better

the the balance of package. address page XX earnings I'd see For XXXX. more of detail, to like this outlook time, sales for At our

Our basis. the ore XXXX. forecast. the in for we In slightly X.X% a better looking at retail quarter data than mine, July, has mind, forecast normal excluding excluding the is Keep of our sales, this third weather on iron impact compared weather, down tracked to

quarter. fourth now projections at the Looking for the

Our adjusted reflects recovery. continued forecast economic

sensitivities are and watching economic forecast to looking indicators. at We this

compression We if to that saw the utility efficiency million. approximately could quarter. impact already it Kevin $XX would the million place. recovery update we this operations. of the second turn margin would now measures in We And margin to through in what additional an pretax are for back believe the estimate $XX on I'll drop to we absorb We prepared to level be

Kevin Fletcher

Scott. you, Thank

First, efficiency health this throughout focused crisis. remained we've and note, on safety I'll

maintenance have in invested a our manner costs reduced reasonable operations and with in. technology we've We of the help

where results work to remotely precautions. and continue half follow communicate across first jurisdictions. highest XXXX, possible, with health all customer And employees saw we of Our on record customers through the our satisfaction

stand where we state review Now in our jurisdictions. I'll briefly

positive we recall, have, environment. which time rate may is in our you no this cases at As current active

for utility. gas with than rate future bad us proceed are to that that to commissions approved have case develop worked Michigan Commission We the In constructively Commission fees. Public to and The other expenses. defer XXXX foregone we commercial of Recall, cost payment in defer line proposal through Service and a recovery a incremental has with rather for our allows a Commerce is rider covers as cost rider industrial foregone charges, place. the expense Illinois debt uncollectible well cost. incremental COVID-related expenses payment residential use there established in late our foregone payment bad Commission all pandemic-related authorized Wisconsin, debt late at with mechanisms pandemic, and $X This Michigan our million in of us special late already and as In our recovery a charges, has sectors. pleased

continuing to We're utility solar our add generation now portfolio. our scale Turning projects. to to

Two facility date, Creeks recall Service, serve that XXX of that Energies approval We we than Hollow we capacity. to provide for may the Public good two And us on Solar solar we're our II to which megawatts You a more of projects announced last will halfway And Wisconsin in making solar with farm. third our as on to is construction complete received customers. invest Badger quarter progress

by this on no earnings program. timing capital to have expect will be managing should change This as beneficial December on meaningful focus customers or is it service impact scheduled project change We believe a go We to we costs. into that XXXX. slight our

plans during we We facilities may help serve for to are the peak. customers winter our natural site you recall, As liquefied gas two evaluating Energies

in invest million modernization approved expected Wisconsin the $XXX progress of projects. summer in Illinois, these is making we're on the We the system If program. begin approximately XXXX. Commission, expect construction to by to In

confirmed Earlier X,XXX project. critical pipes work of an for an installed system average independent engineering and XX% gas of new The that found is We remaining need miles study this of people’s have study the pipe, Kiefner distribution XX complete. in the delivery year, over than life gas almost over years. XX% this had engineering the our less

safer Our delivery allowable more are our the system for and making Chicago improvements customers.

on Xia? Liu. our Xia outlook results remainder XXXX, of information CFO, our details more is with the and second on for our quarter Now here

Xia Liu

and you hopefully I'm look Kevin. you at forward group you, to working the in all happy person Thank seeing I point. join and call, to of some this with for

mentioned by walk our lower the continued expenses. year's on impact compared earlier, website normal quarter earnings earnings capital this operating due a through to and earnings benefited XXXX by on in to The offset This $X.XX share to packet our $X.XX those quarter. drivers ROE quarter per mainly grew to operating warmer primarily in warmer and in $X.XX focus placed per has operations, was operating out XXXX. morning includes $X.XX Despite Transmission weather pandemic, second the negative our drove quarter-over-quarter authorized share you related XXXX. capital American second due our on decrease to growth. this As executing for reduced a margin, investment second volumes. and share focus per with plan, $X.XX impacting the from utility our depreciation significant higher I'll due to favorable our significantly continued comparison second were our Company. efficiencies, were increase day-to-day earnings Scott results to achieve our by in we per share page amortization still able an Starting already. than efficiency on for per expense of $X.XX factors for we margin share of weather mapped on quarter details the These and the sales of

in share Transmission picked to related that from a to American XX.XX% Moving FERC was to XX.XX%. ATC retroactive our on Company. XXXX. to ROE November to per This allowed increase up order $X.XX investment adjustment We

items, the by other service which the $X.XX. energy the per quarter and tax The Rabi credit. is driven by operations Rabi in decrease primarily share, some performance. by outperformed performance Trust tax variance partially Trust remaining utility In production mostly late accretive farm, is were also from $X.XX in placed Coyote wind XXXX summary, Our offset XXXX offset infrastructure December O&M. in to $X.XX we Remember, second The in added Ridge was quarter.

items. effective like I'd XX% you year, some tax between Now on XX%. expect and to financial we be to rate income our This other update

of At to our to Excluding expect we XX% a taxes the effective between this we customers, unprotected rate be XXXX. time, expect in flowing modest taxpayer benefits XXXX tax to be and XX%.

our Our plan. projections show efficiently to able with tax that capital we position utilize our will current be

now million this $XX the that in period dividends tax in over of statement was effective and XXXX, six increase during our in driven it expenditures level from guidance were first activities and the We page Net dividend capital back of increased I a regulated Gale, like same XXXX, closing, $XXX half Looking increase in reflects our the on first by the which payments. the investment for quarter of quarter the the at higher timing by I'd in increase cash package. billion common cash This for turn focus cash operating provided paid XXXX. of provide $X the million full reflects utilities. the before third XXXX. the first $XXX was year increase million Total year. of to This of to six XXXX flow months In earnings $XX an million. earnings

of the rest for For a $X.XX and weather $X.XX the quarter, of quarter. for range expecting July the share. normal assumes per This weather accounts we're to

we quarter per last in reminder, earned a As the $X.XX year. third share

of reaffirming to With This range the per the back guidance the turn an are for assumes end for full of We the range. I'll with $X.XX it remainder year. year normal reaching to that, earnings the $X.XX in top the weather expectation of share of our Gale.

Gale Klappa

Xia, guidance We're share, you weather. $X.XX remainder projection. a long-term joined $X.XX our to We're to much. also us. normal we of of year, the we our very range the of thank you've delighted Again, expect as top the hit look assuming to reaffirming end

growth of projection in Our long-term a range year. of X% a earnings to X%

of in the reminder of dividend January, cash dividend. our increase Recall rate. share, a of was over that X.X% Directors quick about that a quarterly quarterly Finally, declared $X.XXXX a our an Board previous

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

and growth continue growth we're question-and-answer in per stockholders. our our expect on now earnings I And the line on to value will it customers up So of in our dividend our share. be operator, to track, ready we're focused portion the Overall, delivering the with call. for open for

Operator

much. Thank you very

take your question. Instructions] will we from with first Guggenheim Your comes question [Operator Pourreza Now Shar Partners.

Your line is open.

Gale Klappa

Rock and rolling, Shar.

Shar Pourreza

Hey. Good afternoon, guys.

Gale Klappa

Shar? doing you are How

Shar Pourreza

too [indiscernible] Never but a Not good. bad. pretty

of questions just couple Gale, So here. a

was kind of that all market kind Tatanka Blooming Focusing on the Coyote, lines segment infrastructure this Or first, Ridge and along just acquisition, straightforward of of cetera? was the by the the was a acquisition et conditions? current Grove catalyzed at

Gale Klappa

This the one months catalyzed we've the wasn't before pandemic. is of been at all it No, this looking it by a pandemic. one number - for

So an it our due part was diligence. really of just ongoing

Shar Pourreza

allocation highlighted for of in prepared that in a acquisition, sort this current perhaps then pace of bucket. budget in later roll in from this increase a the forward we see year, point an or the i.e., in as is increase time $X.X? capital kind infrastructure you allocation the sort with your And we and of Should slightly the over remarks coming half expect can when you're you your slower the plan there actually this it. years the Got of infrastructure of kind

Gale Klappa

update the see our again, fall. five-year Well, segment. work out couple of capital parameters that things we'll infrastructure really a when But in our how govern in shake that we plan

our to so tax happens progress appetite and in our appetite. use we our renewables. high-quality we and is tax in generate earnings efficiently where continue see can continue cash very it to investing projects that First And

the than in total looking very, investing cap. solid five-year to that capital utilizing grow we five-year we're our and capital really not very Again, our plan infrastructure here our is efficiently enterprise. the of in plan That's our off-takers to of projects. at what time this So that high-quality and segment more entire marriage in next basically really in over have happy would expect renewables appetite tax XX%

this $X.X only total plan. in of investing of At five-year we're X% end five-year the of enterprise. plenty our billion that still have at room, plan, We even

projects of room, the high-quality of number plenty very So pipeline. a and still think I in

Shar Pourreza

Got just a one obviously little you target Gale, lastly, it. you Got ambitious neutrality. sort then guys like in of to of toes have peers. And steps obviously, decarbonization your solar, about your it. you're dipping then Can next really bit hit talk a here? And

in with task it updates is around, sort does this increase of importance decarbonation we maybe And the conclude any can decarbonization of of just participation your of target, there Sort Governor Peach sort if Bottom. force. then Evers

So this case and up it? build roll we of an do kind around how investment

Gale Klappa

anywhere I for about clarity, Just near know Peach we you're don't Beach. get Point Bottom. thinking

Shar Pourreza

right. right. That's That's

about that. Yes, Sorry correct.

Gale Klappa

our will terms update if renewables of at probably our five think provide more is is of half a sold coming plant when detail age to better terms the would I many, set over need turn certainly next question in of XX I we you kind at directly looking looking November. percentage betting us We there like we for all and Kevin context, reshaping, to plan for our moons But investment in more have [indiscernible] of can in Point generation now, capital from on will rate CEO tell we at NextEra very a we're that the years substantially in I look man, investment and Energies than for there storage. were to of be a who decade. of I probably And many the nuclear battery Those ago. we to latter And units customers, the significant in XXXX. - and quarter now need any opportunity it significant the XXXX Beach our At alternatives. we you the a that those electricity answer your are are Right in

Shar Pourreza

is on it. Governor Evers? any updates force there And with Got the task

Gale Klappa

work continues. That

think task still force be by was I I the with will the of recommendations believe for the there this delayed, but Governor's pandemic, frame recommendations from end time year.

Shar Pourreza

on Got working and Kevin know it. in Xia, you're business. with the Gale, best transition. the I the Scott, between congrats

So you, Thank guys. congrats. that's terrific,

Gale Klappa

Shar. Thanks,

Xia Liu

Shar. Thanks,

Operator

Durgesh Your next ISI. question with comes Evercore Chopra from

open. is line Your

Gale Klappa

Hey, Durgesh. How are doing you today?

Durgesh Chopra

particular. I my with the afternoon. where good in just Rest question. out Gale in On break the other It's segment, It's earnings or of? a forward wondering big to this this like a one on Wisconsin Xia. clear. question that I or the margin for - Thanks What Wisconsin, taking press number Any color you. have by I'm slide XX.X margin where you margin and drag Hey, year-over-year. just the reconciliation. look is welcome, everything that? comprised what on number is. is you in working release

Xia Liu

Yes. that. I'd be to happy about talk

Scott Remember the weather-normalized in think that I related. is of the reduction mentioned majority the COVID sales.

the is So the driven. COVID majority XX.X of

Durgesh Chopra

that much offset this And quarter. correctly, if it. pretty Got by, reading good the weather was in I'm

Xia Liu

that's The the more offset reduction weather the than right. COVID for exactly Yes, quarter.

Durgesh Chopra

Understood.

a Or think on you've O&M that the that you just how going second sort down obviously, you thinking to made in half this with progress of year? do into progressed a have - the the savings? past you just line in flex depending going continued how more with should O&M or in you tracks quarter of was weather up ton out? about about quick think we When Are effort then So follow-up. How that of quarter.

Gale Klappa

Durgesh, a question. good very

me say just this. Let

us kind Scott We were back in decline the usage, would that in allow conditions, the his we us, remarks overcome that saw energy to place if we a of additional second as quarter. during would have a plan allow substantial to in go to mentioned

to we to plan that reach absolutely our think top a appropriate got will the we've in deliver place and value end of range. guidance So continuing be

results we of not as gas our I example, be direction we've because Now for a But other pleased if distribution recovery, would far. that, in that's we there's say the stronger hit of obviously, then potentially of Illinois things see with get another. also Illinois, flex so some better, And decoupling as in will sales in been one economic the Illinois. hard companies if very can some timing. or

needed got So to delivering plan a long we've in really story down be. up what It's short, expected flexibility, exactly place. great as or We given the flex strong can we conditions. we've got

Durgesh Chopra

Gale Understood. much Thank thanks my very you, and answering for questions.

Gale Klappa

Durgesh. You’re welcome,

Operator

comes from Dumoulin-Smith. question Julien next Your

Your line open. is

Unidentified Analyst

Good again off. Xia and Hey. time I everyone. up move. where for left if Thanks can Perhaps the Shar for afternoon, pick the congrats it

you On a said billion the investment half and year yourself, billion. $X and out in, infrastructure side, I of mean, think you're $X.X invested you I

you've you later, the much a you tax don't over Is that, given the from well you - this well, X% also, it earnings you you to think I to enterprise. appetite a in make is heard on in sure plan, as quantify you the the through X% If right to year. of this think half think sense back Just capital, absorbed of if just perspective? if of plan. about the tax of we I those necessarily that the the be How it terms? sort and finite you clarify, it think have that about can mind. as capacity. of Gale, can said How do just you given think And as timing do you about which raise Just that about how the going that to

Gale Klappa

our total would of first, as your prior infrastructure five-year enterprise earnings. yes, earnings. to of delivering X% the Again, enterprise's at an about last plan, the would question as look investments $X.X that the at Well end billion X% that about well answer, with Julien, in investment the total of I segment be of

way, the about Julien? there, how think answer you I'm short at best-in-class. the to yes. in may of look to that terms want Shar's comment this, all Then that, So about answering while is of by to Still

Unidentified Analyst

to for waiting was I Absolutely. keep you going. just

Gale Klappa

at At it. to I answering your first ponder bit any while a little question. rate, I here's I would wanted you look was how

on We high-quality have very found plan. the in five-year early projects

tax high-quality marrying we're again, projects appetite. with our So

segment accomplished loading be we've front-end that of of so to far again, plan. investment we're that what and going is and things: projects. at use our of governed more two high-quality look appetite, more But appetite tax by derisking would efficient I So tax

Unidentified Analyst

Okay. Fair enough.

Second guys you a question, carbon target. have

You be But expanding leave And that operational want instance. opportunity a Columbia, for don't planning? day-to-day the to this on witness those. do good guys with I think are too reconciling here. to the maybe about How you frankly on about your might much response talk

Just carbon you the you most your think laid IRP recently how do targets about guys that planning? out against

Gale Klappa

actually means think that Clearly, I that from reduction, we fleet. where to plain And look at COX as require all up language our we in complicated. next reshaping efficient as reduction on power a it jointly Well, the of it's capital - system emissions five-year of not the Columbia, of that XX course color years, of be generation And XX% a plants mentioned, in the provide looked more we we that XX% are example, or you some over at retirements. continued those next plan own, that things that less will like in all fall. will have terms have we update come we to you of coal-fired for our potential our will in

Unidentified Analyst

I'll here. against let care, Well, best-in-class execute you Excellent. plan Take the everyone.

Gale Klappa

Julien. you, Thank

Operator

Your JPMorgan. next from with Tonet comes Jeremy question

open. is line Your

Gale Klappa

Hello, Jeremy.

Jeremy Tonet

afternoon. good Hi,

up quite well. bit with, could if guess, year has your balance as Just of you sales residential shaped trended how expectations. I looks like here. a expand want original your at to expectations this And versus you the off start look on It the

And you well? back industrial expectations the year wondering expect feeling half relative of that kind over activity to there? to for if as any your of Just continue the

Gale Klappa

X.X% Sure. we add pandemic, try the We analyst in during we an Great let second in summarize it, decline orders about we some this at down. had that see our retail Scott we'll projected and into normal questions. last quarter would me call came X.X% ask to as color going with stay-at-home total Well, to place. sales the in about then actually the weather well. to When

better we QX, difference X.X% X.X% ran between and So down. down in the

better So we ran there.

you period weather-normal know for look a feel It's about I over of short decline that. and Starting a how in are total you QX. our sales. in than precise normalization assuming energy plan about If X.X% in July, we time, accurate. retail weather July But more for at

normalize were better weather we you July, If that. than about Scott, running X%

Scott Lauber

And in automatic better. the about X% we're it meter our system, at using reading data preliminary looks looking

So very encouraging we as those look at sales.

another I our new gas compared and when are is look the new being up we're new X%. XX% electric in is encouraging year, We to are we fact installed the think up services Energies territory, our seeing the prior that services at side services on

even So good some seeing we're pandemic this good and customer construction growth projects time. during

Gale Klappa

will think Xia industries paper, about we today, and earlier I is in be basis. something in many economy, The hanging were have packaging, electronic this food before. than XX mention terms about, in you've ones sectors at to just there the fact on in with heard look and industry this customers controls. talking that serve the exposure food you, different And you companies. asked specific any I this, surprise of industrial And regular automotive kind as say of me strength won't at all, processing, less it we I and a that commercial We large of seem to

have into we automotive the exposure fact, industry that we 'XX, the In recession. to had going less far 'XX

of diversified number paper, packaging processing, the large food, cetera. commercial industrial essential because to food a deemed So and a begin very customers and economy, of, were et with again,

energy are customers one the also the supplying to the was gas compared we mentioning on the last new growth. new and services where number set is just is But Scott the we business, to. in strong a we of So out mentioned have see me that quarter, to number he natural that stands distribution particularly year, to that that that services the of - continue diversified side of of thing

Jeremy Tonet

was helpful. more, very if one That's very And I helpful. Thank That could. Yes. you.

that weather of summer, year, to, when context savings savings And kind I turn be ongoing in - in about the don't XXXX guess, much think number rest what in de-risk here achieve nature? is the if does about back of the as with it able the that could you think that then would been to Just be year-to-date. kind able harvesting of of to know point? onetime share to you've do how that you're kind you comes the us I nature for, of throttling this how back over over versus favorable at half of

Gale Klappa

if - If where efforts designed in it's additional ongoing Well, reductions we we've where a with I from think million we mentioned probably with continue $XX another this, will back to could on have no that depths the reliable. the I that say O&M far hit it had absorb to needed. great the to of not $XX was of That's way. the going really impact as we all to reduction, the And needed, made we so the reliability. we question. million second the continue our economy quarter. in of plan will place on We have have them keep certainly system earlier,

economy. increase, say we permanent. identified So cost this and flex what of see And of of we're asked I some savings you, - to half I those tell least amount to be talked down at now, this Kevin, all of we depending would implemented, right see percentage - able the we additional would where amount what the up savings. continue I in that have that you we've can get is at in and length. a time, cost say great are, upon Kevin but position about I - terms I the or And what with can to we terms tell of in

Kevin Fletcher

agree said. what Gale would has I with

at and I out culture a with to have. to have in have to efforts efficient agree that, at reliability I the of looking are continue place, more we our be for numbers of ways looking reliability, business least with take with cost would strong, We

Gale Klappa

One reasons you, thank of the Kevin. -

of a program. is for on operating us, efficiency we're business. why here do not in that not we and reasons and One so years how turn is The the confident we for off. It's of embedded something way it's life

your that So responds I hope question. to

Jeremy Tonet

Thank That you. was very helpful.

Operator

Your with question Michael comes from Crédit next Suisse. Weinstein

is Your line open.

Gale Klappa

today? are you Michael, how

Michael Weinstein

How are doing? right. you All

Gale Klappa

Good.

liability suffers, to You may be [ph] in an area same where Wisconsin.

Michael Weinstein

I am off tomorrow. signing

going the does X% you least terms to in are mean at and of - next X% end just half going beyond? the that push COVID-XX of the rate? said growth upper savings how of you Does forward. about What what that sustainable into year terms towards that from In

Gale Klappa

us X% plan The think of continues able this Well, capital to keep been deliver the are you to to going the and very say to way know, our efficiencies that kind big a Michael, driver rate. to help But of off is rates. I that this, drive cost really the as we've capital X% encouraging. really growth investment I in to is plan pressure will continue

here as since system, of the pressure continue that cake in carbon terms basically in kind reliability seeing of we're from the you think flat be all that's story to the renewables what invest, the kinds to ingredient future to very the successful, able to We've to the invest helpful, been directions. here. - carbon holding me, Integrys. very capital acquisition X% rate, I that's for know, off think long achieve improve But five on keep very the invest and icing rates. been last need years X% the to low accelerate is to And maintain of got to continuing virtually obviously, key continue no short, rates So and of I growth in to we of that's

Michael Weinstein

to the what it? more appetite consider about, simply starts that at is projects, have in about and invest as go correct the XXXX you Or invest projects some still the you'll more appetite this your sorry, beyond what so that in. wane, you to terms wind where onshore absorbs you point? And equity at Would tax case tax - tax of

Gale Klappa

first the don't plan, our why preliminary look plan. That's after see five-year wane our $X.X we appetite five-year waning. in the just beyond And not XXXX. of a billion tax tax have we appetite Well, does all,

with, So that's by looking at. are kind with piece offshore see of plenty the off-takers. need we projects there one. And in risk in Piece don't high-quality I high-quality are or not change the to profile really our venture that we're very familiar investing something that greater Midwest two, of

think our at cool, our that It doesn't. of So venture don't again, us solid don't offshore. And to just really they're very appetite that kind that are pipeline all we're in wanes require that tax projects quickly. looking

Michael Weinstein

Okay.

plan continued investment? So in a XXXX, anticipating with even you is taxpayer being the still current

Gale Klappa

almost Scott any it's and explain eliminate Xia And with impossible the to Xia? we'll Well, rules, tax yes. that. Long story completely let Scott, taxes. short federal

Xia Liu

right. exactly that's Yes,

to taxpayer be a modest in modest are we in XXXX. - We project

the... think I

Michael Weinstein

One Right. for me. last question

the of prices maybe have for currency. comment potential your of companies? what utility one you very now been you considering even on if some little your that you a consider there's what appetite in bit And news wondering were industry? of about strongest - lot mean, the you the a other in what of There's kind guys view for I right You today, a of be kinds of can terms just is looking the current I'm strong to might equity certainly, - front in M&A it? have industry. the And what for currencies of criteria M&A, But

Gale Klappa

me says this boringly wife answer way. it Well, I'm My predictive. that let

you the changed. criteria three haven't because they give would I So same

sleep to fact, mean In what expect my potential any be, you that as mumbling in auctions. I apply the rule overpaying. concrete. to exactly criteria genital don't not I opportunity processes set And in our a get was we disciplined, would would last them night. it remains three in or involved We approach is

due the have diligence after the First, after to full that make accretive we closing. believe first to acquisition would in significant we earnings year can

read thing, the organic that that that year. is Second, we where anything we're third to end sure make the balance gating growth criteria our to a then is the as acquire with well. probably stories want to earnings sheet today. not growth didn't would rate, would the going be We to X% X% at of And trash own with littered rate The it. do strong least that industry which

fast. criteria hard those So are and

thing on criteria, and and fact, her those the one In first talked was Xia on day a I about that smile giant face. had she

Michael Weinstein

in about M&A? Scott, dreams you also night have

Scott Lauber

curious. Just

Michael Weinstein

Have guys. Thank a night, you. good

Operator

comes question KeyBanc. with Sophie Karp next Your from

Your open. line is

Gale Klappa

you Hi, today? Sophie. are How

Sophie Karp

on am I quarter. the the thank for Congrats And time. you well. doing

Gale Klappa

Thank you.

Sophie Karp

storage lot hydrogen any where think have again to regard and guess, in it now answered. questions something so given potential not been a your it if pretty is a a with to be energy it factoring thought, as of question. that curious. clear that you. in kind you just a you making qualities, at anyway I begin Is for I'm and the have looked pilot seem people renewable its comeback right but I maybe - sure some look build-out. Thank at, So I it of potential planned just guys planning? I'm one just have

Gale Klappa

days. as lot hydrogen buzz, about of know, you Great A these question.

there say There just different may and a that now. are of Europe there right announced There we think of I'm there me going believe & some Let projects might project there a projects. be very potential this, are pilot they XXXX. be will into pilot service ways that are potential. pilot if lots be Florida Light familiar in in Power couple

things the gas we're relates mix at to distribution potential the in our of One that a looking of hydrogen use as lines. here

pilot a obviously going this, angle keep So Europe that is will in - we lots terms very but ways be it you, tell And on. of but ahead bit we there are very, of of very eye is the research will days. I a can will hydrogen projects. the probably on played, lot close early

very readily companies in story I see of long, is short, A we'll all our where are to being available. my get think, But and way long We and help long XXXX this early could, a opinion, of lot goals. the commercialized goes. to I it anything from to, it of Kevin, there's we and all away, only for really that? our will be days, potential add distribution but able going that not - company be and we natural that potential looking gas the possibility might gas we at will to part both think renewable some anything as hydrogen forward. But carbon

Kevin Fletcher

fertilizing. know, it. I'm is petroleum you commonly sure in production the used and issue But pipelining refining cost very hydrogen, the and Well, of is

we'll So the it to sense, makes future. monitor Gale, our as and for that continue we'll way, it along at look

Sophie Karp

Good. Thank you so much.

Gale Klappa

Very good. you. Thank

Operator

Your Goldman comes Michael Sachs. question from with Lapides next

open. Your line is

Michael Lapides

everybody. Hi,

Gale Klappa

blue martinis, lately. were Getting they one of those whoever –

Michael Lapides

that there getting about [ph] that’s playoff thinking thing given is only it doing and the blue first slot The on the that am my three anything about [indiscernible] is and Jon day. I that games Marray in last team heart up track. and If back potentially

Gale Klappa

that down on know, head was backstamp you’re the you coach Michael, last [ph] year. there

Michael Lapides

our am like Got a like for about I coach I excited our you. our lot. I a question coach. –

way it's should the to or the material ones think largest your changes or some around. economic those cold maybe footprint, How Oak Creek how whether large the X, think How retirement and make we targets? fleet some of Someone maybe units. newer less other, of about about want the turn question be carbon Because your coal about would needle. other to I facilities, or plants, do the you question when to Actually, not that units older of else the Weston think it's that asked move your old. about small that the I the path the which to is ones smaller some the the win the not potential it's

Gale Klappa

me were those efficient X,XXX over since Most let fleet, But of retirements a Well. megawatts say generating good That's plants. of the We've just older, coal-fired question. this. less already our retired XX% XXXX.

at the think just it's I that's fact, way world. look In we the appropriate to

bubble at look economically. what's You on the

we've smaller because of We have don't older the don't just of we the So XX% coal-fired fleet. left. many plants retired

begin what Creek drive so almost coal-fired on the as planet, units literally. So will output at are other will carbon the the and any And emit to per power, say we units you us. newer the Oak unit that I look on future to their plant at efficient bubble, less economics of of power are our than

reshaping, of drive you last is be our can expenditures, at driven size, generation actual also making economics. at. least particular look by But a lower of So really reshaping at be that what is our we're improvement. operating by what terms what in at the look to continuing driven generation not environmental we're thing but replaced dollars, capital long will But would terms cost actual customers, would best in look short, story economic necessarily the the both

Michael Lapides

relative what industrial to you rates bill? that either it. if your group? there Got or average then of kind residential either And kind and you. talk unrelated Can Wisconsin, could in And in your above your about of total is where you regional question. And years the differences below, average the change dramatic a peer Thank potentially coming see direction? customer

Gale Klappa

we put in to say last things five context, for So virtually you first, know, years. have, as let me frozen rates just the

regional been year after our period of time, had regional in year increases. terms peers out. Beth - of they've them increases of and authorized. our to of the that many rate double-digit rate have this Many likes actually actually have that of Many point During peers

in in measure innovative, look that actually mean, that So position, shape peers. appropriate incredibly Michael, our customers. great then you're shape think about, we're to I about things to think are great which able other I industrial that, we regional the bills, compared - asking customer competitive is But relatively in great at you to done we've talk to to our I be competitive we're have And I actually addition today. be want for one the that new if shape. really and in is And

to we per things the talked are kilowatt their of One Foxconn, about they that price projected hour. glowing

kilowatt are And with gas down, when demand customers, prices customers gosh, at hour. natural a recently, kilowatt Our and down real-time days getting $X.XX it's who are hour. prices under growing our there rates $X.XX a industrial are pricing

for you see So rates growing good number rates, economic and of number in commercial very overall, shape we But our we competitively to new development And a off the today. have industrial, in put I are customers incredibly competitive think and state industrial customers. residential, that paying place a of of innovative in industrial announcements. our in terms make retail

Michael Lapides

Wisconsin push any year on given come out to just a hold going or where another that final supposed question. needing there two - year economy, case is on in rate here commission And because do cycle, it. fill discussion kind next to there is the and of other know what's potentially leeway, usually as yourselves I a off every any year in? be Or in would you you're you be filing? the to could from Got with

Gale Klappa

to cycle you and you're every us table. normal rate option filing I have At can on referring point, see question. wait But Good tell sometime this file the Yes. our that that would we'll with that is the periods. option rates to for But into effect no year test will look XXXX is but on the and next your table. every question forward in again, yet, decision go directly, XXXX

Michael Lapides

appreciate Much you, it. Gale. it. Got Thank

Gale Klappa

Take welcome, Michael. You’re care.

Operator

Paul comes with question last from Associates. Your Patterson Glenrock

Your line open. is

Paul Patterson

Thanks for filling me in.

Gale Klappa

You’re welcome. are today? doing you How

Paul Patterson

you me? Can hear

Gale Klappa

hear us? you Can Yes.

Paul Patterson

I just did.

sorry. Okay, wanted Foxconn to follow-up I on really briefly.

there update least is last - if negotiation my that in job terms a the got met they was they And contract jobs, heard of with I It qualification, are there other at them this with getting the wondering contract. but on like issues, tax that understanding cut. there's on was I any sounded as So the WEDC. have the you you going know,

just if, occurring lot development an I'm a obviously, the economic lot was there I mentioned state. wondering question is sort that. pandemic, a, So that infrastructure with of there the just a was the budgetary wondering, got Foxconn you I'm And state we've of the was second and things a we've update around that's related got issues of on then just facility. And in. put wondering, the And stuff

there, follow ends just just It If it if there of thinking flavor for own I'm that to sort follow us there me investment development on up whatever, probably I'm and if Foxconn. being a lot you have necessarily change, and me? isn't that of the are loud, as you. obviously, of as thought that Foxconn can saying? seem Just its of facility already could things there what potentially you you're of the the impact give What's any and seeing what much there, inertia, that be this, Or potential given activity investment sort the the can originally still and you that? sort sort would would out that of around

Gale Klappa

Paul. Sure, Yes.

projects, first There campus. more XXXX, about mentioned first within turned investment XX talk a investment, down of been have Let's Foxconn than XX-mile when the that capital or capital today, Foxconn thirds projects there. dirt underway. $X.X radius the announcing XX-plus Since projects thirds additional of two I other additional are or pandemic, making the those of projects, about billion complete entities either even And private with other investment. two and private of those

making Again, thirds mean involved extraordinarily more going that two particularly again, been We've of me. is additional when who've major for ripple XX completed. economic alive either billion believed or and Kevin is a that and capital that, this that believe underway time. effect than And company And in in of ripple been of have have think seen us a investment, I So at development, you always commitment. well. those of a are kind those and well, about I effect, the for long projects. $X.X

But never they in building. to market their is They some during not in they yes, is public, the In project to state itself, But Valley. adjust the obviously, what contract, conditions. activity my XX.X Wisconn original Gen the And stopped changes about revised a with for contract. that's talks Foxconn that plant, footprint, pandemic. continues understanding terms construction have to the are revised down incentive of largely about they call I plan, their discussions which at the pace they're they've think fabrication original driven by, example, which contract, their

Wisconsin those technical contract. in are discussions to need the clearly in discussion, But So can are continues. tell, parties, some commitment the everything understand be as to from two it, But changes I Foxconn's I private. there

very expected about ventilators they'll ventilators pandemic because they'll was obviously, as which on never recall, they be Medtronic. to you site Medtronic, they're be going fact, In for be, soon, knew one now coming, may but producing a producing that that announced for starting no

high-tech So going I don't are that there's that any us expected of think on of a variety things there.

Paul Patterson

for and the to And Thanks you're sort be should thinking elaborating when Okay. I probably going on be really, November we to with going guess the Great. respect you're update. is what climate of stuff, more plan we what how tuned be goals Is how to should for? far. that going stay to be what on I've much pretty - Is everything? reaching that's you're that so you - those gathered

Gale Klappa

that details - believe is what happy discussions at October, our next will be out provide November EEI usually roll need to the you we'll the virtual I We'll a during broad our late exactly. on analyst conference. the all Yes, and details call, which be early

Paul Patterson

much, Awesome. guys. Thanks so

Gale Klappa

Paul. care. Take welcome You’re

Gale Klappa

our I right, that for today. think call concludes folks. Well, you All conference Thank so for participating. much

If be She you have Beth reached any care. everybody. Thanks, please other contact to at free Straka. feel can (XXX) XXX-XXXX. questions, Take

Operator

conference This concludes call. today's

disconnect. now may You

WEC Energy (WEC) 4 Aug 202020 Q2 Earnings call transcript