WEC Energy(WEC) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported first quarter 2025 earnings of $2.27 per share, reflecting a$0.30 increase compared to the first quarter of 2024 [3][15] - The earnings guidance for 2025 is reaffirmed at $5.17 to$5.27 per share, assuming normal weather conditions for the remainder of the year [4][20] - The long-term compound annual growth rate (CAGR) target is maintained at 6.5% to 7% [4][20] Business Line Data and Key Metrics Changes - Utility operations earnings increased by $0.28 compared to the first quarter of 2024, driven by weather impacts and rate-based growth [15][16] - Earnings from the Energy Infrastructure segment increased by$0.05, largely due to higher production tax credits [18] - Earnings from the Corporate and Other segment decreased by $0.03, primarily due to higher interest expenses [19] Market Data and Key Metrics Changes - Wisconsin's unemployment rate stands at 3.2$28 billion capital investment plan aimed at economic growth and reliability [7] - A new Very Large Customer (VLC) tariff proposal has been filed to accommodate economic growth and attract data center investments [11][12] - The company is actively working on transitioning its generation assets to gas and renewables to meet future capacity needs [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the economic development in Southeastern Wisconsin, particularly with significant projects like Microsoft's data center [5][39] - The company is monitoring the impacts of tariffs on its supply chain and capital plan, estimating a 2% to 3% exposure overall [7][8] - Management remains optimistic about continued growth in the region and the company's future prospects [22] Other Important Information - The company has no active rate cases currently and is preparing for future rate proceedings related to its capital investments [14] - The company is closely monitoring developments related to the Inflation Reduction Act and is actively seeking to safe harbor projects in its capital plan [9][49] Q&A Session Summary Question: Thoughts on recent MISO capacity auction results and CapEx for data centers - Management noted a tight auction and is working to ensure enough capacity to meet demand, with plans for additional gas generation [26][27] Question: Pipeline safety modernization program in Illinois and CapEx opportunities - Management indicated a ramp-up in spending expected in 2026 and 2027, with a projected annual spending of over $500 million [33][36] Question: Update on Microsoft and its data center development - Management confirmed ongoing positive discussions with Microsoft, with confidence in the demand forecast for Southeastern Wisconsin [39] Question: Impact of equity issuance on market uncertainty and cash needs - Management acknowledged that stock price, cash needs, and market conditions all play a role in equity issuance plans [40][41] Question: Potential impacts of the IRA and tax credit transferability - Management expressed that while the phase-out of IRA benefits could occur, the impact on existing projects would be limited [46][50] Question: Insights on the VLC tariff and its competitiveness - Management emphasized the fair and balanced nature of the VLC tariff, designed to attract large customers without subsidizing costs for others [56][57] Question: Drivers behind strong residential electric load growth - Management attributed the growth to normalization after an unusually warm previous year, with good customer connections contributing [63][65] Question: Cloverleaf project and generation needs - Management indicated that the Cloverleaf project could support up to 3.5 gigawatts of load, with a mix of gas and renewables expected [66][68]