Earnings call transcript of WEC Energy for the second quarter of 2025
Headline: Company's Five-Year Capital Plan Unveiled, Focusing on Low-Risk Projects and Data Center Growth
On Wednesday, July 30, 2025, the company held a conference call to discuss its latest developments. The main focus was the $28 billion five-year capital plan, which prioritises low-risk, highly executable projects.
The plan includes several significant investments. Approved in May 2025 was the construction and investment in 1,100 MW simple cycle combustion turbines at Oak Creek, costing $1.2 billion, as well as a 128 MW RICE generation near Paris station for $300 million. A 2 BCF LNG storage facility, expected to be completed by 2027, is also part of the plan, with an estimated cost of $456 million.
The Paris Solar Battery Park's battery storage, with a capacity of 110 MW, entered service in June 2025. The company, WEC, holds a 90% ownership stake in this project.
The five-year plan is also influenced by the data center load growth from large-scale projects from Microsoft and Vantage Data Centers. The five-year demand forecast along the I-94 Corridor is 1.8 GW, with Vantage's site potentially reaching 3.5 GW of demand over time, not yet included in the current five-year plan.
The company is working on recovering losses from storm damage at Texas solar facilities. Regarding the storm's impact on earnings, there was a decrease of 3¢ in 2025 compared to 2024.
The Very Large Customer (VLC) tariff, still under regulatory review, aims to ensure that costs associated with large data center expansions are not borne by residential or typical business ratepayers. The tariff remains under review by the Public Service Commission (PSC) in Wisconsin.
Management expects annual electric sales growth of 4.5%-5% for 2027 through 2029. The annualized dividend is $3.57 per share, with a targeted payout ratio of 65%-70% of earnings.
The Illinois Pipe Replacement Program, which involves retiring approximately 1,100 miles of older pipe by 2035, is also part of the plan. Run rate capital needs are expected to reach over $500 million annually by 2028.
The company continues to target a 6.5% to 7% compound annual EPS growth rate over the long term. O&M expense is expected to grow 8% to 10% for the full year compared to actual O&M in 2024.
The CEO, Scott Lauber, mentioned that the Oak Creek coal units 6 and 7 have been extended through 2026 due to regional capacity needs, with minimal expected additional capital expenditure. The 5-year capital plan will be updated in the fall and will include the remainder of the American Transmission Company's tranche one, as well as tranche two.
The Point Beach PPA and Port Washington Unit 1, which expire in July 2030, will be assessed and contemplated in the upcoming CapEx update. The equity funding strategy, expecting 50% equity content for incremental capital, will be detailed further in fall 2025 following capital plan updates.
Regulatory clarity is pending on both the VLC tariff aimed at attracting data center investment and on safe harboring of renewables under evolving federal rules.
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Participants in the conference call included Scott Lauber (CEO), Xia Liu (CFO), and Beth Schroka (Senior Vice President, Corporate Communications and Investor Relations).
- The company's five-year capital plan includes investments beyond data center growth, with notable ones being the construction of 1,100 MW simple cycle combustion turbines at Oak Creek for $1.2 billion, and a 128 MW RICE generation near Paris station for $300 million, in the energy industry.
- The Paris Solar Battery Park, a significant $456 million investment in renewable energy, entered service in June 2025, with WEC holding a 90% ownership stake.
- The five-year plan of the company, WEC, also focuses on the growth in the finance sector, with management expecting annual electric sales growth of 4.5%-5% for 2027 through 2029, and prioritizing projects with low-risk and high executability, driving the company's overall business growth.
