WEC Energy Group, Inc.

Good afternoon, and welcome to WEC Energy Group's conference call for fourth quarter and year-end 2023 results. This call is being recorded for rebroadcast, and all participants are in a listen-only mode at this time. 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 available approximately two hours after the conclusion of this call. Before the conference call begins, please note 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, referenced earnings per share will be based on diluted earnings per share, unless otherwise noted. This call also will include non-GAAP financial information. The company has provided reconciliations to the most directly comparable gap measures in the materials posted on its website for this conference call. And now, it is my pleasure to introduce Gail Klapa, Executive Chairman of WEC Energy Group.

Well, good afternoon, everyone. Thank you for joining us today as we review our results for calendar year 2023. First, I'd like to introduce the members of our management team who are here with me today. We have Scott Lauber, 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 full-year 2023 adjusted earnings of $4.63 a share. This excludes a one-time non-cash charge of $0.41 a share. You may recall that the Illinois Commerce Commission in November announced This allowed the construction costs for the modern service centers and facilities that we built in Illinois to improve employee safety and productivity. We firmly believe that the investments were necessary and prudent, and at the appropriate time, we will appeal the decision in court. Despite the setback in Illinois, I'm pleased to report that we delivered another year of solid results on virtually every meaningful measure, from customer satisfaction to financial performance to steady execution of our capital plan. Shaw will provide you with more detail on our financial metrics for 2023 in just a few moments. Turning to other regulatory matters, the Wisconsin Commission approved our limited re-opener filings in December. New rates are now in effect for all of our Wisconsin utilities. And in Illinois, a limited re-hearing has been scheduled for a portion of our safety modernization program. As a reminder, the Illinois Commerce Commission ordered a pause in that program for at least one year. We've been systematically replacing old, leaking cast iron pipes under the streets of Chicago. This long-running project is approximately 38% complete today. We had planned to invest approximately $265 million in these safety upgrades during 2024. Given the Commission's order, we will not be carrying out the program as envisioned. We honestly do not believe that stopping the work is in the best interest of our Chicago customers, but we will have another opportunity to make our case in the coming months through this limited rehearing. In addition, the Illinois Commission will open a new docket this month to examine the future of gas across the state of Illinois. This review is expected to take at least one year to complete. Switching gears now, let's look at the investment needs of our broader enterprise. We continue to refine our ESG progress plan, our roadmap, if you will, for the period 2024 through 2028. As you'd expect, we're lowering our planned capital investment in Illinois. But the bigger picture is strong and growing, and today we're increasing our five-year plan by $300 million. What was a $23.4 billion plan, the largest in our company's history, is now a five-year plan totaling $23.7 billion. The increase is focused on two categories, electric distribution to support the strong economic growth we're seeing in Wisconsin, and WEC energy projects that are in our due diligence pipeline. That's our WEC infrastructure projects. In fact, we're in the final stage now of vetting another major project for our infrastructure portfolio, a 300 megawatt solar investment for approximately $460 million. Closing and commercial operation could take place in the second quarter of this year. We'll keep you informed. Overall, the building blocks of our updated capital plan clearly support our long-term growth rate. Growth from our five-year plan on a compound average annual basis remains in the 6.5% to 7% range. As always, we're starting with the midpoint of our 2023 guidance. However, we expect earnings for 2024 to come in at or below the current consensus estimate. The reason is simple. As we redeploy capital, at least temporarily, away from Illinois, the majority of the quality projects we're investing in will not be in service for the full year of 2024. So for this year, for 2024, we project earnings to be in the range of $4.80 to $4.90 a share. Shaw will provide you with more detail in just a moment or two. One final but important point about our capital plan. As a percentage of the total enterprise, our regulated electric business will be larger five years from now than it is today. Economic development, reliability, and decarbonization are driving that growth. We plan to continue our investment in the infrastructure segment as well. But five years from now, we expect the infrastructure segment will be only 6% of our asset base. And now turning to the regional economy, the unemployment rate in Wisconsin stands at 3.3%. That continues a long-running trend below the national average. And as we've discussed, we're seeing some really exciting developments here in the state. You've heard about Microsoft's plans in the Wisconsin Innovation Park south of Milwaukee. That investment continues to build. Microsoft has now purchased a total of 1,345 acres of property, and construction is already underway on a major data center complex. Of course, Microsoft isn't alone. In what we call the I-94 corridor, companies like Haribo and Uline are expanding their footprints as well. For example, Uline just announced plans for a third office building in Pleasant Prairie. Uline expects to complete construction by 2025, creating additional space for more than 700 workers. Uline, in case you're not familiar with the name, is the leading distributor of shipping, industrial, and packaging materials to businesses throughout North America. And just last week, Westrock, a Fortune 200 company that produces sustainable paper and packaging materials, announced plans to build a 587,000 square foot manufacturing facility on the former site of our Pleasant Prairie Power Plant. These developments highlight the strength and the potential of the Wisconsin economy and underscore the need for the investments we're outlining in our five-year ESG progress plan. And with that, I'll turn the call over to Scott for more specifics on our regulatory calendar, our capital plan, and our operational highlights.

Scott, all yours. Thank you, Gail. I'd like to start with some more updates on the regulatory front. First, let's review where we stand after the Wisconsin Public Service Commission's written orders this past December. The re-opener filings address recovery of capital investments for certain projects going into service in 2023 and also this year. These are renewable facilities, rice generation, and LNG reliability investments. The return on equity and the equity layer were not up for consideration as part of this proceeding. In the coming months, we plan to file new rate reviews in Wisconsin for test years 2025 and 2026. You heard from Gail on the latest developments in Illinois. The Commission has granted us a limited rehearing focused on our request to restore $134 million of safety modernization program in 2024. This mostly relates to emergency work, work that is in progress, and work driven by public entities like the City of Chicago. We expect the Commission to issue an order by June 1st. Now turning to our updated capital plan. We have identified $300 million of additional capital investment compared to the initial version of our five-year plan. I'll walk you through the changes, which are summarized for your reference in the slides we provided for today's call. Most notably, we have included several new investments in our energy infrastructure portfolio. We're continuing to take advantage of production tax credits under the Inflation Reduction Act while providing solid returns through long-term offtake agreements. We expect these projects to add approximately $800 million to our plant. And we're already on our way. Just last month, we closed on an incremental 10% ownership of the Sampson Solar Farm Now in operation in northern Texas. We now own 90% of the farm for a total investment of $280 million. And as Gail mentioned, we have another major project, solar project, in their sights. We also plan to increase investment in Wisconsin by $300 million to better support economic development and reliability in the state. Offsetting these incremental investments, you will see an $800 million decrease in our planned spending on the Illinois gas delivery system over the five-year period. This is driven by the regulatory order we received in November. Meanwhile, we're making good progress on a number of regulated projects in support of affordable, reliable, and clean energy. We continue to work toward our ambitious goal for reducing greenhouse gas emissions. At the end of 2023, we achieved a 54% reduction in carbon emissions from electric generation compared to 2005. That puts us well underway toward an 80% reduction in target by the end of 2030 as we build our portfolio of low and no carbon generation. And the progress continues. The final panels of the Badger Hollow Solar Park are now in service, completing the largest solar project in Wisconsin history. As you'll recall, our Wisconsin utilities own a total of 200 megawatts of solar capacity at Badger Hollow. The facility's first phase went online in December 2021, and the second phase wrapped up at the end of 2023. In addition, our Bluff Creek LNG storage facility is now in service. Liquified natural gas provides a solution to meet peak customer demand for heating, as well as gas supply needed for power generation. This storage will be necessary during extreme weather events like we experienced in mid-January. I'm also pleased to announce that we have been using renewable natural gas in our distribution system. This replaces a portion of the traditional natural gas we deliver to customers while contributing to our methane reduction goal. Our latest pilot project with EPRI and CNBlue Energy is also underway, and as you'll recall, This is testing a long-duration battery made with environmentally friendly materials. We look forward to sharing the results across the industry later this year. It's a strong start to the year. Our capital plan is robust and highly executable, and we continue to focus on the fundamentals of the business. With that, I'll turn things back to Gail. Scott, thank you very much.