The operator of WEC Energy Group's conference call welcomes participants and provides information about the call, including a replay and the availability of financial information on the company's website. The operator also cautions that statements made during the call are forward-looking and may be subject to change. Executive Chairman Gale Klappa introduces the management team and they review the company's first quarter 2024 earnings, which were reported as $1.97 per share.

The company remains focused on financial discipline, operating efficiency, and customer satisfaction despite experiencing the warmest winter in Wisconsin history. They are confident in delivering strong results in line with their guidance for 2024. The company has also announced a five-year investment plan of $23.7 billion for efficiency, sustainability, and growth, with recent investments in solar energy projects in Texas and Illinois. These investments will total $560 million for the Infrastructure segment this year.

The company is reallocating $800 million from their operations in Illinois over the next five years, and their new projects meet strict financial criteria. The company's capital plan supports their long-term earnings growth rate, and the regional economy in Wisconsin is showing strong signs of growth, with a record low unemployment rate and new economic activity in the I-94 corridor. Companies such as Sanmina Corporation, Eli Lilly, and Microsoft are investing in the region, with Microsoft planning to discuss further investments in Wisconsin in the near future.

Gale and Scott provide an update on the current state of prospects looking to expand or locate in the Milwaukee 7 region. Scott then discusses the company's regulatory calendar, capital plan, and operational highlights. He mentions that they have filed new rate reviews for 2025 and 2026 in Wisconsin, focusing on improving reliability, supporting economic growth, and complying with environmental regulations. They have also submitted filings for new natural gas generation projects and a storage facility at the Oak Creek power plant site.

The company plans to build a facility to store 2 billion cubic feet of liquefied natural gas and add 128 megawatts of generation using reciprocating internal combustion engines. They expect to invest $280 million in the project and earn AFUDC during the construction period. There are also smaller rate reviews in progress for their Michigan utilities. In Illinois, there are three dockets the company is actively engaged in, including a limited rehearing and two longer-term reviews. The company is also making progress on a number of regulated projects to support affordable, reliable, and clean energy. The Arizona LNG storage facility is now in service.

The Wisconsin Commission has approved the purchase of 100 megawatts of additional capacity at West Riverside Energy Center, with an expected investment of $100 million in the second quarter. The company is also on track to retire Unit 5 and 6 of its Oak Creek power plant, supporting its goals to reduce greenhouse gas emissions. The Board of Directors also raised the quarterly cash dividend by 7%, marking the 21st consecutive year of increased dividends for shareholders. Xia Liu provides more details on the financial results for the quarter, with earnings of $1.97 per share, a $0.36 increase from the previous year. Weather had a negative impact of $0.07.

The milder weather in the first quarter of 2024, along with higher depreciation and amortization, interest expense, and O&M expense, were offset by positive variances such as the timing of fuel expense and rate base growth. The shift in earnings due to rate design changes at Peoples Gas is a significant driver for the quarter. Weather-normal gas and electric deliveries were relatively flat, but residential and small commercial and industrial segments are ahead of forecast. Earnings at the Energy Infrastructure segment increased due to higher production tax credits, while earnings at the Corporate and Other segment rose primarily due to timing of tax. The company is reaffirming its 2024 earnings guidance.

The company is implementing initiatives to offset the mild weather impact in the first quarter. They expect their day-to-day O&M to be 3-5% higher in 2024 compared to 2023, with the majority of the reduction coming in the second half of the year. They are expecting a lower range for the second quarter, but overall, they expect to be ahead of the first quarter of 2023. The CEO, Gale Klappa, thanks the analysts for their support and announces that going forward, the CFO and COO will be leading the analyst calls. The first question is from Guggenheim Partners, with Shar not present.

The speaker discusses the company's current equity plan and the possibility of adding more equity in the future. They also mention the uncertainty of settlements in Wisconsin rate cases and the potential for changes due to new commissioners in office.

Steve Fleishman asked Gale Klappa about the upcoming Microsoft announcement and if there will be any expansion of their build-out. He also asked if WEC Energy Group is the sole supplier of electricity for Microsoft.

In this paragraph, Gale Klappa is answering a question about how the company is ensuring that they are making the right investments and margins to serve Microsoft's energy needs in Wisconsin. He confirms that they will be the supplier for all of Microsoft's energy needs at their site in the Wisconsin Technology Park and mentions that Microsoft has acquired additional acreage in the park. He also states that the company is in weekly discussions with Microsoft to plan for their future development and expects to hear more from them in the coming weeks. Finally, he confirms that the company's current five-year capital plan includes the necessary generation to serve the first 315 acres of development and that they are in ongoing discussions with Microsoft to plan for the rest of the development.

The company has added 1,400 megawatts of dispatchable capacity to their capital plan based on current economic growth in the area. There is hope for a reasonable decision from the commission in Illinois, despite some pushback from labor. A decision is expected by the end of May or early June. Safety and reliability are important factors in the decision.

Gale Klappa and Steve Fleishman discuss the practicality of keeping the system safe, and Neil Kalton asks about the reserve margins and new generation requirements. Gale Klappa mentions that the five-year plan takes them to a balanced reserve margin, meeting capacity requirements and being accredited by MISO. Scott will give his perspective on the matter.

Gale Klappa and Scott Lauber discuss the potential impact of economic development and projects on the need for more generation capacity. They mention a new update coming in the fall and Durgesh Chopra asks about concerns regarding the pace of data center deployment and the time it takes to get approvals.

The availability of equipment, regulatory approval, and site selection are the three main factors that will contribute to the successful implementation of power generation for the Foxconn and Microsoft technology park. Orders for key equipment have already been placed and the process for regulatory approval is underway. The site selection at the Oak Creek site is also advantageous as there is already a power generation campus in place.

In the paragraph, the speaker responds to a question about the addition of 1,100 megawatts of combustion turbines and discusses the potential for settlement in a limited rehearing in Illinois. They also mention the impact of weather on electric sales and mention that Xia has details on large industrial activity in the first quarter.

The speaker makes two points. First, the weather has been mild and the sales numbers may not be accurate due to weather normalization techniques. Second, there has been an uptick in annual energy sales projections starting in 2026. The speaker expects this number to increase even more in the fall when the plan is updated. In terms of Q1, there was a slight underperformance in LC&I sales, mainly due to two customers in the primary metal and paper sectors. However, if these customers are excluded, LC&I sales would have been higher compared to last year. The speaker is not worried about the overall trend in LC&I sales.

During a conference call, Carly Davenport asks Gale Klappa about the impact of new EPA rules on gas capacity additions and capital needs. Klappa responds that the rules will not have a significant impact and praises the company's generation and environmental planning team for anticipating the rules. Scott Lauber confirms that their five-year plan aligns with the new EPA rules. Anthony Crowdell then asks about the allocation of costs if a large data center moves in and eats up the reserve margin. Klappa clarifies that the data center will pay their fair share and the rest of the jurisdiction will not bear the cost of building up the reserve margin.

The company is working on a specific rate for certain customers that will include components for generation capacity, distribution investment, and energy pass-through. This rate is similar to what is being done for other large industrial customers and will not eat into reserve margins. The projected kilowatt hour sales growth in 2026 will also help spread costs over a broader customer base. There has been some pushback from labor groups in Illinois.

The speaker is discussing the future of gas in Illinois and states that the current process is in the "scoping phase" where they are gathering input from stakeholders. This phase is expected to last until mid-summer, and after that, it will take at least a year for the investigation and policy development to be completed. The Illinois Commerce Commission (ICC) is ensuring that all voices are heard in this process.

The company is taking a comprehensive approach to the scoping process, with multiple stakeholders involved. One environmental group mentioned the need for a long transition and the continued use of natural gas. The company's current investment in the business is not significantly impacted by this process. They are also considering the potential use of enhanced grid enhancement technologies, with the first application possibly being in transmission. The company already has a lot of technology in place, such as automation, that has proven effective during storms. They believe technology will continue to improve and bring benefits, particularly in transmission.

Gale Klappa discusses the evolution of the company and improvements in dynamic line ratings. There is ongoing research and development to enhance reliability and stability. The call concludes with congratulations and contact information for further questions.

This summary was generated with AI and may contain some inaccuracies.