WEC Energy Group (NYSE:WEC) has reported earnings of $1 per share for the third quarter of 2023 and reaffirmed its earnings guidance for the year. The company also announced a new five-year ESG progress plan, which includes a $23.4 billion capital investment, marking a 16% increase from the previous plan. This plan will focus on renewables, transmission, natural gas generation, and LNG storage.
Key takeaways from the call:
- WEC Energy Group aims to reduce CO2 emissions from its power generation fleet by 80% by 2030 and plans to exit coal three years earlier than initially planned.
- The company reported negative variances from amortization and interest expenses, but these were offset by rate base growth, timing of fuel expenses, and lower operational and maintenance costs.
- There was a decrease in retail electric deliveries to large commercial and industrial customers but an increase in residential and small commercial and industrial customers.
- The company expects to raise $100 million to $200 million in common equity in 2024 and $1.8 billion to $2.2 billion over the next five years.
- The Infrastructure segment is expected to reduce spending as capital is reallocated to the regulated business.
- The company sees opportunities for growth in the regulated business, particularly driven by Microsoft (NASDAQ:MSFT) and other economic growth.
- The Power of the Future initiative allows for the transition from coal to natural gas without regulatory approval and earns a higher return on investment.
- The company is in discussions regarding the timeline for the current CEO's role, with an announcement expected soon.
During the call, CEO Gale Klappa confirmed that the company is in the process of transitioning their coal-fired units to natural gas at their Oak Creek site. Klappa also mentioned that the company does not require any additional regulatory approval for the transition and that investments in natural gas conversion would earn a higher return on equity (ROE).
In terms of financials, CFO Xia Liu stated that they expect to use or sell between $1.6 billion to $1.8 billion in tax credits over the next five years. Klappa also mentioned that their balance sheet metrics are getting stronger and they will be issuing equity to support their growth plan.
The company aims to achieve an 80% reduction in CO2 emissions by the end of 2030. They are considering carbon capture as an expensive option for coal. The new Oak Creek units are critical for maintaining electricity supply in Wisconsin and the Midwest. In terms of rate changes for customers, there are no significant changes planned for Illinois, with flat customer bills expected for the coming winter. In Wisconsin, inflation-related rate increases are anticipated.
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