WEC Energy Group Inc. saw improved results in the fourth quarter of 2016, mainly because of its acquisition of Integrys Energy Group Inc. in June 2015, according to company President and CEO Allen Leverett.
Speaking on WEC Energy's earnings call Feb. 1, Leverett announced several developments, which he called positive, including the company's recent filing with Michigan regulators to build two new power plants to meet generation needs in the Upper Peninsula of the state.
Subsidiary Upper Michigan Energy Resources Corporation., or UMERC, on Jan. 30 applied for a certificate of necessity with the Michigan Public Service Commission for the construction of two new natural gas-fired facilities with a total capacity of about 183 MW.
If approved, construction of the two plants will begin in late 2017 or early 2018 and commissioning is slated for 2019.
UMERC is WEC Energy's newly formed utility that provides electricity and natural gas to the former service territories of Wisconsin Electric Power Co. and Wisconsin Public Service Corp. in Michigan's Upper Peninsula.
WEC Energy has proposed a roughly $275 million investment to build the plants, according to Leverett. "This will provide a reliable, cost-effective, long-term generation solution for our customers in the Upper Peninsula," he said.
The new generation will also help the company retire its coal-fired Presque Isle plant in Marquette County, Mich., which it plans to do by 2020, pending approval from the Midcontinent ISO. The move to retire the plant should result in significant savings in operations and maintenance expenses as well as reduced carbon emissions, Leverett said.
Also, Leverett said that on Jan. 20, WEC Energy entered into an agreement with Plains All American Pipeline LP to acquire Bluewater Gas Storage, which includes working gas storage capacity of 26 Bcf and interconnections to the Chicago and Dawn, Ontario, hubs for $230 million. Leverett said the facility in St. Clair County, Mich., can provide one-third of the storage needs of WEC's three natural gas distribution utilities in Wisconsin. Bluewater will enter into long-term service agreements with each of the three utilities, and WEC Energy will ask Wisconsin regulators to confirm those agreements as reasonable, Leverett said.
WEC Energy's five-year capital forecast was updated to $9.7 billion from the company's last five-year plan, which came in at $9.2 billion, according to Leverett. He added the higher estimate includes natural gas storage and the two natural gas power plants planned for Michigan's Upper Peninsula.
However, Leverett noted that the figures "do not include our share of projected capital investments at ATC [American Transmission Co. LLC], which is $1.4 billion for investments inside the traditional ATC footprint and approximately $300 million in projected capital outside the footprint."
WEC Energy also expects to have "another quiet year" when it comes to rate cases, according to Leverett.
WEC Energy on Feb. 1 reported 2016 fourth-quarter adjusted net income of $194.4 million, or 61 cents per share, compared to $197.8 million, or 62 cents per share, a year ago. The results surpass the S&P Capital IQ consensus normalized estimate by a cent.
Operating revenues for the fourth quarter of 2016 also increased to $1.96 billion from $1.85 billion in the same quarter in 2015, while operating income fell year over year by $18.5 million to $361.7 million in fourth-quarter 2016. On a GAAP basis, WEC Energy booked fourth-quarter 2016 net income of $194.4 million, or 61 cents per share, compared with $179.3 million, or 57 cents per share, in the prior year.
The company said its utilities added 35,000 customers year over year.