WEC Energy Group, Inc.

Good afternoon and welcome to WEC Energy Group's conference call for third quarter 2022 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 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. During the discussions, reference earnings per share will be based on diluted earnings per share unless otherwise noted. After the presentation, the conference will be open to analysts for questions and answers. In conjunction with this call, A package of detailed financial information is posted at wecenergygroup.com. A replay will be made available approximately two hours after the conclusion of this call. And now it's my pleasure to introduce Gail Klapa, Executive Chairman of WEC Energy Group. Please go ahead.

Thank you and good afternoon, everyone, and thank you for joining us today as we review our results for the third quarter of 2022. First, I'd like to introduce the members of our management team who are here with me. We have Scott Lomber, our president and chief executive, Shalu, our chief financial officer, and Beth Straka, senior vice president of corporate communications and investor relations. Now, as you saw from our news release this morning, we reported third quarter 2022 earnings of 96 cents a share. Three major factors shaped another solid quarter. Strong performance from our infrastructure segment, an uptick from our ownership in American Transmission Company, plus a warm close to the summer in September. Of course, our balance sheet and cash flows remain strong and stable. And now we'll switch gears and provide you with some background on the Wisconsin rate settlements that we announced in October. As you recall, we filed rate reviews earlier this year with the Public Service Commission of Wisconsin for all our Wisconsin utilities. After the commission staff completed its analysis, We reached agreements with multiple parties, including the Citizens Utility Board and the Wisconsin Industrial Energy Group. In fact, more parties supported these settlements than any other settlement we've reached over the years. Scott will provide you with more detail on the terms in just a moment, but I would simply say that we view this as a very positive step forward. The process, it's now on the home stretch, and we look forward to the Commission's review, which we expect in December. Our other big news for the day is the rollout of our ESG progress plan for the period 2023 through 2027. As you may have seen from our announcement this morning, we expect to invest $20.1 billion with an ongoing focus on efficiency, sustainability, and growth. This is the largest capital plan in our history, an increase of $2.4 billion. That's more than 13.5% above our previous five-year plan. Now, as we look forward, I would describe our growth trajectory as long and strong. In fact, our plan will now support compound earnings growth of six and a half to seven percent a year over the next five years without any need to issue equity. And as you've come to expect from us, this projected earnings growth will be of very high quality. Highlights of the plan include a significant increase in renewable energy projects for our regulated utilities. from roughly 2,400 megawatts of capacity in our previous plan to nearly 3,300 megawatts in this plan. And as we continue to decarbonize our system, it's important to point out that passage of the Inflation Reduction Act is a real, true game changer for customer affordability. We now project long-term customer savings of nearly $2 billion from our investment in renewables in this five-year plan. That's nearly double what we projected just a year ago. We've also dedicated more capital to hardening our networks, our electric distribution networks, so that we can deliver high level of reliability for our customers. And we've included in the new ESG progress plan an increase in transmission investment. Two major factors are driving this growth. Renewable projects that require transmission and the long-range planning process being conducted by MISO, the Midwest Grid Operator. Add it all up, shake it all around, and we have what I really believe is a premium growth plan. The projects that are driving our growth are low risk and highly executable. They're paving the way for greater sustainability, paving the way for an energy future that's affordable, reliable, and clean. And now before I turn it over to Scott, I'd like to cover a significant development in our infrastructure segment. Just yesterday, you may have seen the news that we will acquire an 80% interest in the Maple Flats Solar Energy Center. That's a 250 megawatt project being developed by Invenergy in South Central Illinois. We plan to invest approximately $360 million for 80% ownership of the project. Maple Flats has an offtake agreement with a Fortune 100 company for the sale of all the energy it will produce. And under the Inflation Reduction Act, Maple Flats will qualify for production tax credits. The project, of course, meets all our financial criteria and will further diversify the renewable assets in the infrastructure segment of our business. And finally, a brief look at the regional economy. Wisconsin added 14,400 private sector jobs in September, and the unemployment rate in the state stands at 3.2%. That's well below the national average. We continue to see major investments from growing companies in our region. And a wide range of developments is in the pipeline, so I would just say watch this space. And with that, I'll turn the call over to Scott for more information on our regulatory developments, our operations, and our infrastructure segment. Scott, all yours. Thank you, Gail.

I'd like to start by reviewing where we stand on the regulatory front. First, let's get back to the details in the rate review. Pending commission approval, the partial settlement agreements would bring several other changes beyond the base rates. We've agreed to a common equity component of 53% for each of our Wisconsin utilities, consistent with our initial request. The settlement calls for the continuation of the revenue sharing mechanism that has been in place this year. The agreement also addresses the future cost recovery of the older units of our Oak Creek Power Plan. First, we've agreed to securitize $100 million of the book value of the plant's environmental controls. Second, after retirement, we would propose to levelize, over 25 years, recovery of the remaining book value, which is approximately $400 million. We agreed with the settling parties that the Commission should determine the return on equity for each utility, along with the allocation of revenue among customer classes. We expect a commission review by mid-December. In addition, today we filed a rate review at one of our smaller utilities, Minnesota Energy Resources. We are seeking an overall bill increase of 7.9%, primarily driven by capital investments. We expect interim rates will go into effect January 1st. Meanwhile, we're making good progress on a number of regulatory capital projects. In Wisconsin, work continues on our new reciprocating internal combustion engines, or as we call them, RICE units, as well as our liquefied natural gas storage facilities. As we've discussed, these projects are needed to support the reliability of our electric and natural gas systems. And our red barn wind development continues to move forward in southwestern Wisconsin. We now expect to come online early next year. With an investment of $160 million, this project will provide about 80 megawatts of renewable energy to our system. Work continues on the Badger Hollow 2 solar facility and the Paris Solar Battery Park. We still expect these projects to go into service next year with the battery storage anticipated in 2024. Of course, we'll keep you updated on any future developments. We're continuing to make strides in support of a low and no carbon generation. Just last month, we completed our pilot project, blending hydrogen and natural gas at one of our modern rice units in Michigan's Upper Peninsula. This is a first in the world test of its kind using this technology. As you'll recall, we partnered with the Electric Power Research Institute to lead this research. The project mixed hydrogen and natural gas in a 25 to 75% blend. We are still evaluating the data. However, our initial findings indicate that all project measures met or exceeded our expectations. The units performed very well and efficiently. As expected, nitrogen oxide emissions increased. Our equipment was able to take these emissions out. And of course, carbon dioxide emissions were reduced. Our research will help demonstrate the feasibility of this approach for potential generation on a larger scale in the future. We look forward to sharing the full results with our industry and the public early next year. And as we've discussed, we've been able and working on to bring high quality renewable natural gas to our customers. Just last month, we signed our fourth RNG contract contributing to our goal of net zero methane emissions. We plan to have RNG flow in our system by early next year. Outsider utilities, we continue making good progress on projects in our WEC infrastructure segment. I'm pleased to report we've completed the acquisition of the Thunderhead wind farm and expect it to enter commercial operations later this year. And we expect Sapphire Skywind to go into service early next year. Together, the two projects represent approximately $800 million of investment. And as Gail noted, we're excited to add our first solar project to this segment with Maple Flats. And with that, I'll turn it back to Gail.