Release Date: May 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• WEC Energy Group Inc (WEC, Financial) reported strong first quarter 2025 earnings of $2.27 per share, a $0.30 increase compared to the first quarter of 2024.
• The company is on track to meet its 2025 earnings guidance of $5.17 to $5.27 per share, assuming normal weather conditions.
• WEC Energy Group Inc (WEC) is executing the largest five-year investment plan in its history, totaling $28 billion, aimed at economic growth and reliability.
• The company has successfully navigated past periods of uncertainty and challenges, and is actively engaged in mitigating tariff impacts through its diverse business mix and supply chain.
• WEC Energy Group Inc (WEC) has made significant progress on renewable energy projects, including the Darien solar project and two other solar projects under construction, contributing to its regulated portfolio.

Negative Points

• The company's capital plan faces a tariff exposure of approximately 2% to 3%, which could impact supply chain and project costs.
• WEC Energy Group Inc (WEC) expects its day-to-day O&M expenses to grow 8% to 10% compared to 2024, driven by vegetation management and new assets.
• The company has not yet incorporated potential investments related to the Cloverleaf data center development into its capital plan, indicating uncertainty in future capital allocation.
• Higher interest expenses have negatively impacted earnings from the Corporate and Other segment by $0.03.
• The company plans to issue a significant amount of common equity, $700 million to $800 million in 2025, which could dilute existing shareholders.

Q & A Highlights

Q: Can you provide insights on the recent MISO capacity auction results and any potential impact on your base generation CapEx, especially concerning data centers? A: Scott Lauber, President and CEO, explained that the MISO auction was tight, but they are well-positioned with plans to build new generation capacity. They are awaiting commission decisions on additional gas generation needs to support large customer loads and regional economic development. They are also exploring converting coal units to gas by 2029 to meet capacity needs.

Q: Regarding the Illinois pipeline safety modernization program, what are your thoughts on the potential size and timing of this opportunity? A: Scott Lauber mentioned that they are in the process of restarting projects and expect the program to ramp up in 2026 and 2027, reaching a full run rate by 2028. The program is expected to involve over $500 million annually, significantly higher than the previous $280 million to $300 million.

Q: How are things progressing with Microsoft's data center project in Southeast Wisconsin, and are there any concerns about potential slowdowns? A: Scott Lauber confirmed that Microsoft remains committed to the project, with no concerns about its progress. They are working on building substations and have confidence in the demand forecast for Southeastern Wisconsin. He encouraged listening to Microsoft's conference call for more insights.

Q: Can you discuss the impact of potential changes to the IRA and tax credit transferability on your plans? A: Scott Lauber and Xia Liu explained that they are actively seeking to safe harbor projects to qualify for PTCs through 2029. They have been transferring about $200 million of PTCs annually and expect limited impact if transferability is repealed. They are managing the situation actively and believe the impact would be manageable.

Q: Could you elaborate on the VLC tariff proposal in Wisconsin and its potential impact on attracting business? A: Scott Lauber stated that the VLC tariff was developed in collaboration with large customers to ensure no subsidies from other customers. It is designed to be fair and straightforward, making Wisconsin an attractive location for data center investments. The tariff provides certainty for long-term investments with a fixed return on equity.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.