WEC Energy (WEC) 4 Feb 222021 Q4 Earnings call transcript

Company Profile

Participants

Gale Klappa	Executive Chairman
Scott Lauber	President & Chief Executive Officer
Xia Liu	Chief Financial Officer
Shar Pourreza	Guggenheim Partners
Julien Dumoulin-Smith	Bank of America
Rich Sunderland	JP Morgan
Neil Carlson	Wells Fargo Securities
Durgesh Chopra	Evercore ISI
Michael Sullivan	Wolfe Research
Andrew Weisel	Scotiabank
Michael Lapides	Goldman Sachs
Paul Patterson	Glenrock Associates

Call transcript

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Operator

Good afternoon, and welcome to WEC Energy Group’s conference call for Fourth Quarter and Year End 2021 results. This call is being recorded for rebroadcast and all participants are in a listen-only mode at this time.

Before the conference 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 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 available will after the two replay A approximately hours made be call. Executive And is Klappa, to Energy WEC introduce pleasure it of Group. now, Gale my Chairman

Gale Klappa

XXXX. Well, our results review today, as good we afternoon, everyone. calendar Thank year you for joining us for

are here First, to who our as management the always of me I’d members with like introduce today. team

We now Executive; have Beth President Xia of Relations. our Liu, Vice and Investor Corporate Senior Lauber, Officer; Scott who’s and Communications and our Chief Chief Straka, President Financial

As which year end share. the saw we upper our of was morning, our This this reported XXXX recent most $X.XX exceeded you of full a guidance, news $X.XX from release earnings a share.

positive economic solid focus operating favorable efficiency. results our recovery in by were continued Our region, and on weather, driven our

discussed, balance we’re sheet adjustments. us also are cash strong. a flows that to I remain Our earnings with as quality and today executable earnings plan the equity. without this note fund would issuing allows reporting highly capital no we’ve And

you clean active future very Now energy. we’ve in the shaping know, as been of

of in for XXXX and some an set the Looking XXXX, all in by emissions we’re reduction a XXXX, back end carbon from generating on we targeting XX% reducing Across fleet, by most our aggressive our of XXXX emissions. goals industry carbon a the baseline. XX% reduction

by complete we And coal the plan for generation immaterial. power of from fact, our XXXX. In coal by a for will end expect year our of XXXX, use the calls be exit

focused from generation the by power carbon net for zero achieving longer on Of term, XXXX. we remain course, emissions

the needed course, announced in that its be of advances programs pilot in of solution all to first the part of week, of by States. key the economy the recognize be last we XXXX kind To end, decades a could we player, hydrogen Now, key and power hydrogen, in decarbonize a will one technology United the that ahead.

Power industry fuel of to located Electric company’s the and how hydrogen on progress to results could our gas $XX.X The the reduce with driving efficiency, year of on gears demonstrate emissions. history. Peninsula a powered Research will growth. materially now, is joining across carried plan Switching at this hydrogen plan, use one the are The focused be Upper five the in year, will out as Michigan. sustainability, test the the forward the Institute of ESG plan in We project billion largest our be newer units shared natural source carbon we’re and

let’s a now XXXX, folks, the X.X%; despite low the that’s at a deliver the highlights capacity the our over XXXX has a plan And planned The will progress the of five base regulated show available economy. saw and believe serve look regional improved very years, a we’re below the we In unemployment more the and average. rate Wisconsin’s ESG utilities nearly renewable pandemic. national of our growth prolonged data here renewable average latest than record percentage down Overall, full investment of in environmental point expect One megawatts dividend throughout We in our these growth in best recovery projects returns driving year to X% Wisconsin. summary, of next the a asset take dramatically the to customers support to industry among risk-adjusted we offer. earnings brief performance. poised at growth, is promising

company Haribo, workers operations across the manufacturing the this Wisconsin office have levels brand its now employees major returned new ahead. Milwaukee pandemic downtown Milwaukee we in to state-of-the-art sectors gummy more recruiting And its to steam tower are to Tools’ relocating has and begun month. is campus. begin bear see full new Pleasant in moving campus is Prairie. growth pre jobs economic Komatsu set at projects ahead. Importantly, development

a ABB, report example, in you’ve rising global all is of lifts boats? plans and a region. heard And the its tide the world, the Michigan makers our company, from Milwaukee luxury announced operations I’m Well, technology and phrase region. major For the finally, boat products pleased Saputo, for celebrated industrial Grand-Craft that expansions to one company, in leading Boats have most relocating to a dairy

Grand-Craft, of strength interesting you outlook call know, George the see be know, who our to of they’re for growth. shows With Day. deck and JLo, high Bottom our the profile operations among Clooney, line, below more infrastructure segment. at You utility the Robert Scott our so remain Redford, we next that, Analysts clients about up, it’ll yours. all economy, the on for over to turn long-term Scott, and regional optimistic I’ll our details

Scott Lauber

Gale. Thank you,

covering Looking by start back, progress we made developments XXXX. significant some I’ll in Wisconsin. in

in As progress plan. our ESG customers. is Badger that of progress our X fleet our Gale report to to pleased I providing mentioned, Hollow Solar transition project continuing we’re am now generation our to on make energy the

of Southwest we You’ll Wisconsin. XXX in own megawatts this recall project that

Badger the constraints. We three expect expect This ongoing a in we in of delay of on date supply an not due construction X. have made a chain also in We service progress change in months, factors costs. the do quarter approximately XXXX. the Hollow construction of material first Currently, to

of has approved storage Public Construction has we gas Commission the and in to in into plan the part our bring southeastern started facilities addition, plans In service mid-XXXX. two and to the build natural late XXXX state. facilities the Service liquefied

and is of we help during RNG be tapping renewable natural flowing southwestern signed contract our from XXXX million of first goal this will wind planning for directly state. XX% gas also each We Commission been higher Gain distribution Red gas expect We’ll represents year would reliability business. output our This our emission Barn, a large distribution the one have the methane dairy recently network winters. Wisconsin-based natural The gas have replace development that our for reduction. supplied farms. this of end alone our our one of project or for RNG to customers part $XXX And pipes. to in save ensure coldest local into The of Wisconsin’s approved time gas our approximately of The to of farm the the methane company US year. entered over contract

is We of expect filed our just million to XX utility provide it cycle Commission approximately natural invest credits. this production a Alliant it’ll two of tax for combined When If complete, to $XXX past gas capacity. in option West Wisconsin Monday, public acquire project megawatts would from with to West And owned approved, the $XX by Riverside with of potential XXX plant capacity an portion approximately the service approval million. Riverside for first megawatts Public Energy. renewable That’s for WPS application exercises. the and Service Energy Wisconsin we qualify Center. a this acquire for

the transaction We in second of close expect quarter to the XXXX.

a we Wisconsin expect to Utilities for forward, Looking rate file review by May.

at We other this time. rate have no planned cases

the for that, this and total Thunderhead to projects, Jayhawk as our projects segment, $XXX now Farm of XXXX plan. come We The in the these two began the the invest billion turn things XXX we six megawatts in to service segment by Sky Kansas to a and Overall, this And next remain back you’ll And ahead Including second quarter, $X.X infrastructure more end online in this have in megawatt infrastructure Turning five located than brought capacity. the Wind to of Wind plan we we with project. Farm online over approximately million our Sapphire we year. segment. December. expect representing of Gale. recall, years in of invested I’ll

Gale Klappa

so much. Thanks Scott.

We’re confident can deliver our that earnings guidance for we XXXX.

our raised of reward year as will increase from believe share represents of Directors, at with X.X%. guidance the the for consecutive our $X.XX also range rank last midpoint We’re by XXth dividends. of X.X% And may that This We Board you our dividend seen $X.XX will a of know, The the of to our marks this our share. its the quarterly guiding, midpoint year. shareholders that growth decile cash you company January in announcement a have higher top $X.XX in a industry. meeting original

We I our range right of we to ratio the to growth continue with will payout earnings, XX% middle are of share. so dividend the earnings line that to per growth in a our continue in of target expect be now, XX% in

up, our and Next results Xia quarter first financial will our provide more Xia? with detail on guidance. you

Xia Liu

Thanks, Gale.

Turning now to earnings.

result $X.XX XXXX Our $X.XX XXXX. X.X% compared to of per or share increased

with Our utility our XX. through XXXX. earnings grew Starting our we results compared package operations, on XXXX of significant to includes a earnings $X.XX the drivers. by I’ll page comparison walk

mostly weather colder First, by weather XXXX. driven added to compared conditions $X.XX, winter

as late electric the in continued economic earnings. This payment reflected other charges. and recovery as $X.XX a stronger sales increase of resumption well drove weather normalized Second,

commercial deliveries gas generation. used continued mine highlights XXXX. of Small gas weather-normalized some sales, excluding retail and rebound electricity, in compared up were were were electric you service to in X.X% on iron for and ore the give XXXX Let me XXXX Natural the saw Overall, from industrial industrial in Wisconsin up economic sales. ore flat, retail a large territory. X.X%. excluding and commercial were relatively X.X% delivery mine excluding up sales our our We iron power

a This ATC of all from rate Earnings in operations. items. expense, offset energy XXXX our of credit and Overall, full net our and was This Blooming the higher tax we improvement. impact $X.XX day-to-day wrote added in segment additional $X.XX fourth lower from investment by off of Farms. $X.XX impairment and partially Company favorable other XXXX. offset Grove mostly $X.XX XXXX investment of relief capital in service at American XXXX than related the goodwill drove to and factors, Ridge Wind costs fuel of to decrease project. the investment factors infrastructure $X.XX and amortization earnings an year-over-year. a Lastly, O&M improved and quarter from benefited capital were per outside Earnings additional that investment from the a $X.XX $X.XX utility These on two we booked an Tatanka Transmission contributed year-over-year The positive by territory. share reduction quarter production depreciation the substantially was more and that earnings on

favorable we tax performance some In Finally, the the contributed in share. $X.XX other other our to infrastructure and fund an variance on segment. from and we and Lower per items. investment $X.XX rabbi devoted development. by earnings interest summary, Also clean $X.XX expense improvement saw technology in remaining gain energy year-over-year. to improved our trust The recognized we corporate a XXXX related positive and $X.XX improved

The Looking to on higher now mostly cash at natural working by million. the operating by requirements, X, related earnings capital offset Page flow decreased in $XXX than increase was prices. provided more activities cash statement gas net cash

billion $X.X this a in XXXX. collection working the capital to we Thunderhead Wind in XXXX, spring, of and date primarily to As acquisitions normal practices Total expect the throughout compared in-service capital year. decrease we due were Farm. represents expenditures million This to timing resume $XXX of asset improve the

activities, to company Turning interest we over from financing opportunistically X.X%. during rate the now refinanced average fourth debt reduced of million the holding quarter. $XXX notes these This of to X.X%

to quality. We the contribution credit commitment Adjusting and year-over-year voluntary continue in increase strong of in FFO-to-debt pension capital, XX.X% to for was the demonstrate our our impact XXXX. working

sales let’s earnings. Finally, and look for at our guidance

in growth we’re sales year. normalized year after a businesses, this continued gas weather natural both For electric in very X.X% our expecting strong growth and Wisconsin,

we for per of quarter. first forecast earnings Gale the back In share we are guidance, weather $X.XX the that, of year, in I’ll turn rest to terms XXXX reaffirming of share. $X.XX of the to earned first in Gale. $X.XX XXXX With year share. to quarter share XXXX, range $X.XX per per be last This to full project We earnings it as normal $X.XX annual quarter. for guidance assumes our the per the stated, And

Gale Klappa

much. the for for thank it call. Xia, Operator, we’re track question-and-answer of open so now providing and you on Overall, ready and our the portion focused our customers on to we’re stockholders. value up

Operator

[Operator from the first comes Guggenheim Instructions] of Partners. Your of question Pourreza Shar line

Gale Klappa

doing Rock’n’roll Shar, today? how are you

Shar Pourreza

are you doing, How Gale? All good.

Gale Klappa

We’re good.

We’re good. Yeah.

Shar Pourreza

Excellent.

seems it Gale, a eliminate legislation. any press topic a thoughts end a was noisy. Monday. of sort efforts the are little in it obviously getting this point I again perennial at to bit but scheduled of piece know on so what traction on just, like are this it’s of It’s thoughts like expire, QIP seems your There mean, here? yet with to So Illinois, conference I potential

level will be high Just great.

Gale Klappa

Shar. Thanks question. the Terrific, for

legislation in has introduced years. nothing new. been this late the bills any the really a First each of for in five expect bill five significant is Each happened very of for year the years. all, what similar as We session in past piece introduced, just exactly don’t year last movement the years been that past have five

return law, allows basically are is under earning the by to go. got expire end begin a piping would a law QIP into at is into rider put after to that scheduled say ways put that You new we and so the XXXX, service, off correct to this. current on rider I us of

have We people most continue I and to had things. understand to try some two significant think in to helping educate success

a cost of remaining hire study, have they continue First have year’s distribution it as us needed the what’s years. looking way it called to work concluded life customers the in a secondly, firm in almost And less of Commerce XX most and under actually more program. more two-thirds, for the to very pipes year, than consulting the asked us [indiscernible], effective that QIP rider than upgrade useful they Chicago an than basically independent pipe a authorized all, with did and Chicago Commission works of which the gas is a way at needed XX% last Illinois

So be the work has done. to

it effective doing possible, not concerned cost We’re any term most legislation. way the near about

Shar Pourreza

over bit versus, a of I perfect. segment, last longer Okay, guess, your time, then it shifting acquisition to maybe Sapphire And cadence. infrastructure been your like seems it’s prior the Sky, like a since just

supply a pushed Just seeing there policy, curious, symptom particular out or some great. of opportunities just ahead of anything bit be lot Just sort there of chain, a fewer projects is thoughts federal this competition clarity? is, getting is would you maybe a Are maybe little returns? in of

Gale Klappa

Shar. I’m happy questions, that answer to No,

Xia as way we’re of Scott, mentioned all, ahead and of plan. First

Shar Pourreza

Right. Right.

Gale Klappa

into the construction, Jayhawk early at is we Sky, announced under bit late a Sapphire Sapphire last expect which So came budget. Sky to service I year commercial on and operation begin robust have paucity this particularly at. there’s year, the anything a projects, year. looking we’re this pipeline we a don’t have as of that end plan not of in We for because

some have to ahead pipeline slowing the this federal of but see in projects of We very look, we continuing We a we selective have you so tax of we’re uncertainty plan year’s some credits effort over anything down will because as ahead think plan. far but be, here. I didn’t of way maybe robust you here, plan. things know, we’re continue and can specific

Shar Pourreza

is? Just it. just it. And me goodwill real that’s what align is the impairment Got ATC driver Got question, modeling one Holdco quick the that slideshow? in

Gale Klappa

California, years venture Yeah, detail. that and an service outside ATC of you Duke Xia I’m let the happy and to. investment It’s joint area ago, in will give of made the the

Xia Liu

jointly normal that Yeah, that the basically, in we own acquired performed they’re a write back majority we that XXXX assessment on of to goodwill. for us the project decided down transmission project. -- the prudent goodwill We and and it’s

we booking XXXX. So fourth quarter trade it’s non-cash that a in did the

Shar Pourreza

audience. “no it. prepared understood Thanks, adjustments” I your appreciate guys. Got by hopefully And in Perfect. the comment it. remarks guys. Gale, was the it. well Thanks, Appreciate

Gale Klappa

Shar. you, Thank

Shar Pourreza

Bye.

Operator

from of of a America. comes Dumoulin-Smith Your next question line Bank of Julien

Gale Klappa

Good afternoon, Julien.

Julien Dumoulin-Smith

And ‘XX current ‘XX go like last mean, question that little have stay to guys. you’re obviously afternoon. spans just you Thanks CapEx away I there’s to the you program here clarify the lapsing Hey, program, were that Appreciate Illinois spend on that when the people’s a would that here, in to bit it. here. saying say which time -- if number that Hey, ballpark intact? hey. the would for the over of

Gale Klappa

mean, is most I think reliability. for that first -- of the Well, and happen answer needed what safety your direct question would I is all, work

would the annual assuming if renewed again, uses periods. Commission So or test revert of you cases. either there rate recall, to, legislation in the by we XXXX the rider forward-looking Illinois, continue would that basically, post end was we And

and range, of upon got is year. continue depending to XXX the year million the the investment works in So, either XXX million way a to that

Julien Dumoulin-Smith

developments Got it. last the And side Excellent, transmission the thank pivoting here, you. then the just on just obviously, week. course Cardinal-Hickory, in

share Just anything you how terms options just of recovery, the given federal are thinking CapEx preserve, you timing, could about wildlife routes, alternate in there?

Gale Klappa

happy and some US by by there with permits Cardinal-Hickory, by the who have is Service issued challenging Sure, Public might Service, for activity those Wisconsin Service Fish Wildlife courts the in an and Iowa group Public were the Commission. that the following Commission, environmental not been to the

been over mile have Wisconsin, of XXX working more the into this multiple Madison area. than then Iowa built, there line So its allow to coming to would out Southwestern permits and be that way

So XXXX, state part, southwestern permits has been that’s so first essentially part Iowa be ATC the in Dairyland will a American this owned sensitive Driftless an being little for discussed no where the first the the ATC more mile section is questioned of the that in Cooperative. And again, Power these line. Company, essentially, that than line challenged underway, long line. how called projects environmentally permits you XXX Area. the this and in is and take, has of to by It’s was Transmission in question show owned, the of the it’s Wisconsin. southwestern portion. ITC, are envisioned the and The The section portion of portion, construction partially project partially one of

how story see the belief reiterated and court. works the see We’ll important that short, Midwest day, in Wisconsin the the line of for of approval reiterated But Wisconsin. we’ll moving is all and into out in that works At long was end part needed. So line an how renewable Commission the appropriate the out their court. all of this need the has energy this and across

of in day, this, So positive helps, out that what hope I’m I bit but confident will happens the delayed, courts. Julien. maybe at of the a the something come see end we’ll

Julien Dumoulin-Smith

hope and guys good No, see to Thank and I’ll soon. absolutely. guys. luck leave of best it color. again, there Well, It’s you you

Gale Klappa

Julien. Thanks, good. Sounds

Julien Dumoulin-Smith

Sure.

Operator

Your a of Tonet of next comes Jeremy line Morgan. from JP question

Gale Klappa

Jeremy. Greetings,

Rich Sunderland

on hear Sunderland Rich Can me? actually Jeremy. for it’s you Hi,

Gale Klappa

Jeremy? you can. done I with What have

Rich Sunderland

me is for sorry happy I’m is today. it to but miss time Jeremy

may around starting Just expectation growth for the be XXXX. load

recovery the baked drivers curious You’re maybe for about the think there conservatism in ‘XX how on there in outlook. and is really key XXXX, how much from you realized pandemic the

Gale Klappa

to of let coming in I handle in XXXX. least for details. will I Scott numbers we’re -- as going small see at C&I recovery those though, reminder, coming say continued the you. a and we by Scott, XXXX off the strong on particularly, and Xia of We’re segment. that off very a we’re to impressed top He was this, just related growth

Scott Lauber

You’re exactly Gale. right,

our Xia it and exactly residential, with at commercial large back go The forecasts in we to XXXX, positive small we when hit and right fact, what in and on surprise were I look In happened on. commercial. compared was

So, we forecast was retail our we growth, original less came in X.X% almost a -- in mine. about at X.X came at

growth small return large people a expand bit. we as continuing So, down coming in more can then to see to commercial there as to very sector. commercial residential to a people you’re the growth back starting that and work, X% saw. again, large it, once that And to grow go and that will happy we expect have at you work commercial, then to we little in in residential look continue, and with And XXXX, more start almost

so good we’re at of really, good good really call, as lot Gale here about that in growth seeing look So on can comes the plan, growth growth you a too. a lot and talked of you economic longer-term our economic see,

Rich Sunderland

your and Thanks, do And color long-term target about entire think appreciate to in blending this new of you then program the Michigan, the pilot context how for fleet? the program pivoting what’s maybe this there. in

Gale Klappa

permit. to newer And I believe, of in all put everyone, context the undertake the our program of hydrogen pilot the Peninsula it’s speaking, to Upper that at units, one we’re that just You’re Michigan really and going a units. of for RICE modular well RICE of It’s in by not mean, facilities fueled does technology, require being right state-of-the-art really now. project gas will, you these water I is technology are advanced pilot the generation that’s designed a if been power proven, project. natural

I the We XX% industry. remarks, Research in analyze be then will natural with up actually the natural mentioned hydrogen, and the XXXX. in project gas mix a as and, the across of will fourth this will to We results in hydrogen the actually Institute the prepared the test gas Electric with Power will burn be field quarter results shared in XX%

a We’re will in that optimistic kind that decarbonizing the this pilot the first could major particular unit that US program with demonstrate its in are be technology RICE technology, the economy. player forward hydrogen, of going the

Rich Sunderland

today. Great. Thank you for the time

Gale Klappa

welcome. You’re

Operator

Fargo from Wells of question next Your of the mind Carlson Neil comes Securities.

Gale Klappa

Greetings, Neil.

Neil Carlson

Hello. everybody. Hi,

Gale Klappa

snow you ice? are? are Neil, getting you or Where

Neil Carlson

lot a driveway of it I I’m my getting so I’m We’re wife about right this. good am neighbors, the and and now, wining. my feeling pretty all and shoveling watching son

Gale Klappa

from wife, said, dog. I you a it just text got your

Neil Carlson

anymore. do Yeah, bad back. can’t I things

just anyway, a solar. question on So the

Hollow, gets there’s chain what the next you if I’m at about supply right given to now, any to any XXXX megawatts all So issues, a bit plan, the I time? curious you’ve obviously, costs other solar reason over out more if additional, over we the few you’re But this it seeing that a you’re think, concerned flipped bit, quite from got point, Badger -- or little relates understandable etc. – as plan be the to timing, years. look And it do as in

Gale Klappa

great question, Neil. Yeah,

think thoughts? have the is road, contract, Scott, significant we’re Down with issues timing. what your and no what under we answer short of perhaps for and some seeing XXXX I the

Scott Lauber

as prices watching, there. prices look at go the steel still also we’re definitely natural economics also, are up, solar Yeah, I the and for gas as infrastructure panels. the the prices, road, mean, you down But, those

very rise to not closely, plan. that it’s don’t imagine, as I’m some -- we I going So change expect you costs it we’re but the and monitoring will can of think your

Gale Klappa

agree one economy to with Scott. And, I in other the abating decarbonize not is any shape, way, the or Neil, point, form. Okay, drive

we go as the continue we and both see down investments those as needed So, to road. expected,

Neil Carlson

you. Thank Perfect.

Gale Klappa

Thank you, Neil.

Operator

question from Evercore next the ISI. of Chopra Durgesh line comes of Your

Gale Klappa

How you are doing? Durgesh. Greetings,

Durgesh Chopra

was elaborate I’m sort And of my sorry. doing I’m then That’s then question, assuming this on you’re for also. for XXXX? $X.XX, not you gain modeling modeling the anything I’m is well. question, Thank doing… gain? multi-part you asking. that? the question a just a on can quarter energy just I’m taking what clean that Thanks Xia, And for fund,

Xia Liu

I anything The, up on in develop we of okay. That’s financial gain that then the $X.XX whole picked the penny year. don’t games quarter, like But market direction fourth to $X.XX investment if games, continues second quarter, when in if point we booked end the the but the we we right so we be point I the similar for like plan, quarter like up think, the of another count we happy we’ll build call, this. forward. book And more to right don’t to to and try mentioned the -- those expectations second any having in on those going

Gale Klappa

to be we’d right, Sounds delighted gains. book more

these think as to them this the hit, investment. of particular one them a will, very it appropriate I investing revalue from some our was technology, in investment one that -- don’t. if of very, This perfectly you the well clean know, with in fund new funding and hit with the is was some valuation, you revaluation, and of funds, of round

Durgesh Chopra

on you color. execution talked and a of peers ‘XX. your thank that interested your today and progress be in capital And call Awesome, about, sort your for maybe, actually just then your to for plan want just

some of their concerns newer that peers mentioned some put Your projects and out. to chain supply

seeing CapEx you you versus and do are targeted plan? any wondering, actually of how in pressures those Just XXXX do your

Gale Klappa

that And was we about X XXX called of service. that had farm, view his really construction continue pandemic Hollow large to months the the more large to in in was COVID got continue we people solar we state very XXXX, a the a time. at crew had the pandemic, In construction good deep field supply Scott helped ask and not we the to we make. and that chain. to would a bring have as Badger apace, thought several than got in was delayed point impact delayed. idea. really where one from The it you At will middle was the were solar outside and it decision was that to That that well. give from the It’s in now I a from Well, point

at So we significant now all delay, that’s behind but to no agreed Scott, delay a schedule cost us. and

Scott Lauber

major correct. get we no at our ordering that’s other of have that XXXX, make we we this year, about time it, then a in was just worked three And the here practice year a item only And so. cost lead everything to a prepared time. of for in and a our And some the else month delay chain for supply years for line. our X, Badger long exactly No, vendors half everything are we’ve sure a with time whereas several some materials mentioned but we remarks, now, at these projects significant what see to right Hollow had

Durgesh Chopra

Thank appreciate the guys. time. Excellent. you Much

Gale Klappa

You’re Durgesh. Take you, welcome. Thank care.

Operator

line Sullivan Wolfe Your next of of question comes from a Research. Michael

Gale Klappa

department? Michael, IT your how’s

Michael Sullivan

Fantastic. yes. Oh,

Gale Klappa

might You rating, change reiterate of kind no your in right, Michael?

Michael Sullivan

of number maybe what guidance. ‘XX in what XXXX just, Yeah. you’re He Yeah, embedding give savings O&M the was and could for a sense question clean if you first us sure. got to the go. Yeah for

Gale Klappa

do front to it Happy in and got of right has her. Xia Xia?

Xia Liu

ended down the with X.X%, year-over-year XXXX for XXXX. year full we So to compared

– in your And you X% earlier of that had part question. second and was the guided we X% So we’re what range. right in a year to

Michael Sullivan

Yeah. What in ‘XX? are assuming

Xia Liu

we XXXX, XXXX. flat X% for to guide from Yeah, reduction

Michael Sullivan

Okay, great.

Gale Klappa

you to I’m place about really recognize I’m have but we really, light inflation we what the in this, we’re plan in sure general Michael, very performance, deliver in Xia discussing. the And strong of sorry, think is the economy, that’s pleased

Michael Sullivan

Got it.

to RTO you adder. at curious things on relates might go it issue pending think if the the give any you as And Okay. latest FERC with where just thoughts could

Gale Klappa

RTO something is survive. replaced known, perhaps guess, guessing I’m it by and own is else, this an the probably own rider, but a but incentive that My to view guess, my just be RTO history, as won’t mechanism. we’ve type rider probably is

point, However, not our forecast rider RTO continuation important of very the in have all XXXX for at earnings. the we assumed

Michael Sullivan

go it just came one like XX.X%, one. around target? forward XX% looks Should -- where the -- little kind down a of a FFO-to-debt be and I sorry, It about stabilizing Okay. last that That’s Thanks think, out that, great. year-over-year. ticked metric it think may as as bit we

Gale Klappa

Xia, your view?

Xia Liu

S&P, of XXXX. Yeah, measured to that’s we that gas in to largely remarks, so also this natural is contribution by and capital attributed made change is recover. as voluntary And the said XX% year-over-year pension and target in by a right Moody’s XX% higher the neighborhood we we driven and working really prices, that prepared the then to in I so dip expect

range So think overall, we’re right target the I to debt. FFO in for

Michael Sullivan

very Thank Great. you much.

Gale Klappa

Michael. you, care. Thank Take

Operator

question Andrew Weisel line from Scotiabank. of comes next Your the of

Gale Klappa

Andrew. afternoon, Good

Andrew Weisel

on Wisconsin just upcoming want them thanks of Hey, question. ones. to for Most rate have answered. I been follow case. Two little the my a bit quick taking up

you First is to potential great keep conversation unchanged. feel a you want strategically often? or extend you see if customer bills, every if or time be with so any another regulators a you’ve done mean do to like wondering stay agreement have it’s the to the and for out yet managing greedy, to do don’t you I job just intervenors, rates stakeout

Gale Klappa

in we first it’s you It’s a great time and of we’ve are to think of the two second units are four as believe unanimously, you of question, of fired our XXXX, and Oak and our four at all, units announced XXXXs if Andrew retirement older of coal the in the Creek we’ve two XXXX. first These those Number I that parts moving in recall, the reset, of the retirement four will. vintage thinking announced site. and

been a I all commission the review just intervenors, time So there’ll for cost staff, a just there time looking every thorough that. -- be we think it’s forward it’s that rate so again, really really believe long step I And to Scott? savings of to and the we’re we retirement and reset. case to back take out there’ll and have there, be think

Scott Lauber

I straightforward very going approved in the made, a capital then of at investments at that’s a the when investments, to all you for what’s and rate majority other I already of case. even capital, base. little decarbonizing great or additions our when you add reliability environment. capital the and of reliability over now, capital mean, be rate about and that services the been or XX% this new XX% almost or you And right look we’ve look It’s been them, at commission approved think, has

going straightforward here of cases, pretty So, couple the to the months. in us be you numbers it’s as together rate final pull next a see

Andrew Weisel

what ahead not qualitatively? any level to directionally do might give of to kind And of able Okay. that, are but or of you get high to guess it rates, us

Gale Klappa

Stay tuned.

we’ll Yeah. is May a filing conversation the you advance certainly good X, due together, in everything of that. so by pulling with have We’re

Scott Lauber

And I is think is, the do other thing this cases. place to forward-looking two-year remember rate where a you

of So two plants of capital years, to over come projects going see mentioned, two lot Gale are retirement it’s like spending, our in over those that capital and you years. the just a

will filing it do multi-year so So we’ll that factor we here. be a into,

Gale Klappa

as case, straightforward terms expect about to dramatic is Very O&M. a We higher It of being anything in case wouldn’t it. though. have of not

about this and will for already approved of capital, a which case decarbonization. much for reliability Scott As have said, is needed capital been

Andrew Weisel

And case? Is good. a to it follow just upcoming this base Very up. performance quick in too talk rate about early making

Gale Klappa

Yeah. glad you And asked. I’m

initiatives be going be going expect -- thought place it’s impact have looking just from in thoroughly very informational you to the an clear I for changes of deliberate, worth that those of who the looking and That force, Wisconsin rate might to a Governor’s have hearing through But quite Commission the review. concept to it’s task as hearing change, place. performance-based about any our state did in of at would putting work that any process on upcoming what of rates the the of at looking think in it, more I hearing, about informational not climate making. put in rate year’s is decarbonisation, than out the at closely, For followed came have not perhaps

Andrew Weisel

helpful. very Thank Okay, you.

Gale Klappa

a your the before question, he your By to brother Will performance, one says, know rock but Aaron nobody’s and the the important [indiscernible] us just most from next go way, Rodgers text caller, got given and Bay bucks welcome. for asking The in we be answer Green of the I still year? back I with don’t to roll. is is and that next You’re

Operator

Sachs. Goldman question next of Your Michael from comes Lapides

Michael Lapides

taking Thanks leave at and questions my now. for Moran guys. home my props I’ll Hey, for John

Gale Klappa

There you go.

Michael Lapides

plus then I think pretty quick, if of me all, growth. X.X% a years, go abnormal so. kind go down we’re that if it’s And percentage over four Weather coming -- kind lasted to out even years yeah, gas to Wisconsin your And elevated, X.X% of Really led Can demand, just why demand little a then then year, five bit X% night. thinking kind the re-ramping us years? in from I of the kind of now back normalized years. COVID, York to November back And last range point look was now around down last years first can about you talk I and you’re I of to or ago gas of just couple what in to nice actually coming for night up. Real X.X%. forecasting New you’ll three back forecast that the this of meaning kind deck, about three, about at off slide but several trajectory, that several as

Gale Klappa

both and normal growth take will gas piece year at is, demand during I not looked question, first data I and shot pops the Scott the XXXX? past the that And out the Why Michael. see data, think from pandemic. of it really weather effect that. Good did the this as in question at we a The the is and we happened? answer Yeah. easy what during And

huge If of you closed the think pandemic, just premises the customer small the it’s customers, base most pandemic. and segment impacted about industrial our for commercial of swaths of during were those many dramatically

heated that normal -- not think stores of they to the weren’t that think so restaurants weren’t cooking, completely closed the And were about and the level.

growth we for the see growth. clearly, customer seeing a natural still impact strong gas. But And still tempered going think we’re Scott, customer we’re in growth So to of pandemic trajectory. the demand the

Scott Lauber

it, And we’re products growth, when conservation strong a X.X%, looking little And continue continue will right. can and exactly factoring higher, X.X%. stay we that’s look imagine become Yeah, to you maybe at at that will efficient. about we’re customer in bit prices

X.X% still So the assuming that X.X% in X%. be to looking future at we’re will forward,

pandemic didn’t the weaker, remember, the just the Gale’s when little so in we year weren’t March, in And growth. XXXX a of pandemic, good pandemic timing started months to also the the so of that pandemic. about have because was a -- point, reflected that’s So, last why previous two year there’s

Xia Liu

that, add of just would forecast that we last Michael, came pretty top I year. our much Yeah, on

we happen came out So last we we what it guided so exactly thought would year. that way,

Michael Lapides

if I showed been Got of up at it. And $X.XX if extinguishment like, years just following I roughly out XXXX would look kind in have debt backed each higher then the question, of the a and costs both XXXX, that actually year. earnings, number,

lot I think to a you don’t like stick be that and you companies that XXXX number, I that consider happen fact I respect or something the and in earnings non-recurring But the it, XXXX; of there. about isn’t going So, kind back if when of things that wrong GAAP. is in probably out may with

Are and the Holdco growth be have costs. probably debt you implies thinking ‘XX base about point or not I the parts, like going to it So lower other would higher. of the moving the incur the tranches kind there starting the that, look, similar been I’m point are ‘XX but at other other because actually higher the ‘XX ‘XX and -- bit just little hey, Am a I’m re-financings actually I’ll they’re at into considering? looking starting and have Or would right? saying, meaning rate point, is starting just

Gale Klappa

am answer about Xia Mike question the I to going the Holdco to ask debt.

broadly. a Let more me if bit little I can respond, though,

given that know, a do high of moving question, that. their way I companies we But growth don’t because our glad in asking you’re pieces any there Of And, a are really year. some shows I’m our a cash it basically way shows number flows, and rate, quality earnings in growth to course, differentiator up industry as in like you up adjust it in the us. think the the adjust fact I things we for I that’s a our dividend do to of and higher growth. don’t rate, things think like I mean,

growth off reporting, don’t hit quality we’re you and adjustments just and respond. And nickel little and real to soapbox dime with what get high we’re Xia reporting GAAP. my so death, there I And a here is mean, that, and and What to I’ll we with let rate.

Xia Liu

adjust to of readjust Michael, earnings. just Gale’s what and point, pick trying see wouldn’t focused whatever stronger see we weather, you’re I that to If very much one because out favorable the on quality we’re item take we than happen remain have we tax forecasted. in development. about recovery we favorable of economic If the just the some year, also opportunistic advantage debt resolution and to will in XXXX, we originally refinancing

I to we course the just and of so that’s So wouldn’t it at one throughout what I adjust year, think item take out all. normal do out manage the

Michael Lapides

appreciated. much guys you Thank it. Got

Gale Klappa

care Take of Michael.

Operator

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

Gale Klappa

Paul, last Did you you? name? changed your

Paul Patterson

No. That’s called misunderstanding.

that should we $X.XX think for the taxes, little So death, want dime asked ups here. about XXXX? and is nickel to been should answered, a about just and to Is into have follow unusual but there but something into there lot that of my going how of XXXX? The a how going just you -- and questions sort that don’t we or think I guys sort of quick any

Gale Klappa

thoughts? your Xia,

Xia Liu

Yeah.

So, no, nothing unusual there.

the I credit, brought projects that driven additional tax As that said online. by production we largely in the prepared the remarks was

we section and end wouldn’t this of couple the it $X.XX online, I the we expect increase. one $X.XX expect the warn expect of in another for versus one year, middle you coming per do you more from $X.XX of on other another, that year, know a timeline year, I another So so to projects only pickups the is be depending could we the else, skewed quarter and because the quarter, thing would everything but the

Paul Patterson

just or maybe, but just curious. it it’s a tiny little looks Okay. the bit impairment, like looks And I a I penny I about mean, something -- goodwill then me. just with know was to

I’m kind what to particular any think transmission revaluation. the project and led test say, in guys order just had I have of a near test? sort Was what like you But nickel did am sort what that? of guys -- the changed anymore. sort doesn’t You I that but don’t of California, you I’m wondering. caused of -- to a and it in diming anything made just as to curious guys, there apply know, just you of event goodwill or Again hey, it’s that the

Gale Klappa

to we really and was case we It problem. ROE a No, FERC basically order FERC look. no that Xia? another took got

Xia Liu

look just that, the assumptions assumptions, around the recent written believe that year-over-year us abnormal, do at goodwill, the off. so looking just it’s that be course. you’re -- But evaluation, the if one opportunities, all of including impairment, and expenditure we we it We change to we at forward-looking Nothing Gale led goodwill should Yeah, do the ROE, assessment goodwill normal most capital just for at the year. for mentioned every look the drivers ATC. the

Paul Patterson

basically had something because I should understand been ROE is about that’s you But it how guys think Right. -- because it? lower Do else? guys correctly you is or impaired we lower awarded, it goodwill, saw that a the

Xia Liu

is it nothing unusual. capital is it expenditure No, opportunities,

we the terminal flows look written So that just at which to the off. should and and conclusion apply led different cash net the goodwill be assumptions, value the

Paul Patterson

Okay.

much. it. I Okay. appreciate so thanks Well,

Gale Klappa

You’re more have than questions. Happy your welcome. to

Gale Klappa

have you appreciate I line feel long right. your we’ve for you for All all everybody. think questions, Well, call Take our participating Thanks, Beth free so to in so worn care other now. contact questions so much We XXX-XXX-XXXX. conference out, Straka, and today. thanks if direct her any

Operator

today’s in conference call. thank Again, you participating for

now disconnect. may You

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