WEC Energy (WEC) Q4 2025 Earnings Call Transcript

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DATE

Thursday, February 5, 2026 at 2 p.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Scott Lauber
• Chief Financial Officer — Xia Liu
• Senior Vice President, Corporate Communications and Investor Relations — Beth Straka

TAKEAWAYS

• Adjusted EPS -- $5.27 for 2025, excluding a one-time charge of $0.46 per share due to a proposed settlement in Illinois.
• EPS Growth -- Adjusted EPS rose $0.39, or 8%, from 2024.
• Settlement Charge -- $0.46 per share non-GAAP exclusion comprises a $130 million rate base reduction and $125 million in customer credits over three years, contingent on Illinois Commerce Commission approval.
• Weather Impact -- Favorable weather contributed $0.35 to utility earnings compared to 2024.
• Rate-Based Growth -- Added $0.74 to earnings, mainly due to Wisconsin rate review and $0.12 AFUDC equity from ongoing projects.
• Retail Electric Sales (Wisconsin, Weather-Normal, excl. iron ore mine) -- Up 1.1% year over year; forecasted to grow 1.6% in 2026 led by projected 5.8% growth in large commercial and industrial driven by data center demand.
• Incremental Demand Forecast -- 500 megawatts of new Microsoft (NASDAQ:MSFT) data center load added, resulting in $1 billion additional capital and forecasted total I-94 Corridor demand rising to 2.6 gigawatts by 2030.
• Five-Year Total Projected Demand Growth -- 3.9 gigawatts across I-94 Corridor and north of Milwaukee, combining expansions from Microsoft and Vantage data centers.
• Capital Plan -- Raised to $37.5 billion over five years, reflecting the additional $1 billion for increased data center demand.
• Long-Term EPS Growth Target -- 7%-8% compound annual growth from 2026-2030, with acceleration to the upper half of the range beginning in 2028 as more projects enter service.
• Generation Investments -- $7.4 billion planned for natural gas generation and LNG storage (combustion turbines, RICE units, upgrades) between 2026 and 2030.
• Renewables Capex -- $12.6 billion over five years to add 6,500 megawatts of renewable generation, including seven projects and two battery storage facilities underway.
• Dividend Increase -- Board approved a 6.7% hike, bringing the annualized dividend to $3.81 per share; payout policy remains at 65%-70% of earnings.
• Financing Outlook -- Expect to issue $4 billion–$5 billion debt in 2026 (including $1.4 billion refinancing) and $900 million–$1.1 billion in common equity through ATM, DRIP, and employee plans.
• ATM Equity Guidance -- Any incremental capital, such as the $1 billion added for Microsoft expansion, will be funded with 50% equity content and is projected for 2029 and beyond, not affecting near-term funding.
• First Quarter Guidance -- Projected EPS of $2.27–$2.37, factoring in January weather and assuming normal conditions for the remainder of the quarter.
• Full-Year 2026 Guidance -- Annual EPS outlook reaffirmed at $5.51–$5.61, assuming normal weather conditions.
• Illinois Settlement Scope -- Proposed settlement with Illinois Attorney General to resolve 12 open dockets representing $2.3 billion in cases related to rider QIP and uncollectible riders (final commission approval pending).
• Upcoming Regulatory Milestones -- Wisconsin very large customer tariff review decision expected in May; rate case filings planned for April in Wisconsin and active in Illinois for test year 2027.

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RISKS

• The $125 million customer credit component of the Illinois settlement will be paid in cash over three years, creating "a little pressure, of course, on our FFO to debt matrix," according to Lauber.
• Higher interest expense in the corporate segment negatively affected results by $0.24 per share due to elevated debt balances and absence of 2024 debt retirement gains.

SUMMARY

WEC Energy Group (NYSE:WEC) reported reaching the top end of its 2025 adjusted earnings guidance, with key developments including significant new data center demand fueling an updated $37.5 billion five-year capital plan. Management detailed resolution steps in Illinois to clear $2.3 billion in regulatory dockets via a settlement and discussed plans to address the evolving capacity needs of major commercial customers through new tariff structures and infrastructure expansions. The company maintained its long-term 7%-8% annual EPS growth outlook and signaled continued dividend increases aligned with its stated payout policy.

• Microsoft (NASDAQ:MSFT) and Vantage data center expansions are driving forecasted electric demand increases of 3.9 gigawatts over five years, materially impacting capital allocation priorities.
• The five-year plan includes $7.4 billion earmarked for natural gas/LNG and $12.6 billion for renewable generation, demonstrating balanced investments across generation types and technologies.
• Company plans to offset incremental capital requirements by raising equity through ATM and benefit programs, ensuring maintenance of capital structure guidelines.

INDUSTRY GLOSSARY

• AFUDC: Allowance for Funds Used During Construction; a regulatory accounting practice allowing utilities to capitalize financing costs for assets under construction.
• QIP: Qualified Infrastructure Plant; a rider mechanism in Illinois for recovery of gas utility infrastructure investments outside of base rates.
• RICE: Reciprocating Internal Combustion Engine; a generation technology used in modern natural gas facilities for flexible power generation.
• ATM: At-the-Market equity offering program, allowing issuers to sell shares over time at prevailing market prices.
• DRIP: Dividend Reinvestment Plan; an equity issuance mechanism letting shareholders reinvest dividends into additional company shares.
• VLC Tariff: Very Large Customer Tariff; a proposed rate structure specifically for high-volume utility customers, such as hyperscale data centers.
• PPA: Power Purchase Agreement; a contract between a power producer and buyer specifying electricity delivery and pricing terms.

Full Conference Call Transcript

Scott Lauber: Good afternoon, everyone. And thank you for joining us today as we review our results for the calendar year 2025. Here with me are Xia Liu, our chief financial officer, and Beth Straka, senior vice president corporate communications and investor relations. As you saw from our news release this morning, we reported full year 2025 adjusted earnings of $5.27 a share. This excludes a one-time charge of 46¢ per share related to a proposed settlement in Illinois. We expect the settlement will fully resolve all open reconciliation dockets on rider QIP spending from 2017 to the rider sunset in 2023. It will also resolve all open reconciliations of the uncollectible rider for the period 2019 through 2023.

I'll provide more details on this in a few minutes. Across the company, I'm pleased to report that we delivered another year of solid results in virtually every meaningful measure. From customer satisfaction to financial performance to steady execution of our capital plan. In just a few minutes, Shaw will provide more details on our financial results and outlook. But first, let me highlight the strong economic growth in our region that's driving our robust capital plan. There have been many exciting announcements and developments in our state. Microsoft is making good progress on its large data center complex, with more than 2,000 acres purchased to date.

We have energy flowing to the site, and the first phase of the project is expected to go online this year. Just last week, Microsoft received approval from local officials to expand the campus further with 15 additional data center buildings. Based on our updated plan, we are adding 500 megawatts of customer demand to the forecast. This is resulting in an estimated $1 billion of additional incremental capital to our capital plan. This brings our forecasted demand in the I-94 Corridor up to 2.6 gigawatts through 2030. Microsoft continues to be a great partner to work with.

In a January statement, referred to as its community-first AI infrastructure plan, Microsoft pledged to be a good neighbor where it's building data centers. This includes paying its share for electricity, minimizing water use, creating jobs, adding to the tax base, and investing in the community. And to the north, we have another great partner. You'll recall that Vantage data centers has signed on to develop facilities for Oracle and OpenAI on approximately 1,900 acres. In December, Vantage broke ground on the initial phase of the project, which is planned for 670 acres. Vantage has stated that it expects to invest $15 billion to complete this phase in 2028. The first facility could come online late next year.

We currently have 1.3 gigawatts of demand for this Vantage site in our forecast over the next five years, and looking to the future, this site has the potential to reach 3.5 gigawatts of demand over time. We are seeing an increase in local investment by other large businesses as well. For example, south of Milwaukee, Foxconn has announced new plans to renovate and expand its Racine County campus. With a focus on manufacturing data center components, Foxconn expects to invest more than a half billion dollars in this expansion and add more than 1,300 jobs at the site. In addition, Rockwell Automation plans in November to build a new manufacturing site in southeastern Wisconsin.

The facility is expected to span more than a million square feet, and Rockwell announced this site could potentially become the company's largest manufacturing campus globally. And Uline, the leading North American distributor of shipping, industrial, and packaging materials, completed yet another large land purchase to further expand its business operations in Southeast Wisconsin. In summary, with the expansion of Microsoft, we are now projecting 2.6 gigawatts of growth in the I-94 Corridor and 1.3 gigawatts to the north of Milwaukee, for a total of 3.9 gigawatts of electric demand growth in our five-year plan. And to meet our region's growing energy needs, we are focused on executing our updated $37.5 billion capital plan over the next five years.

We are projecting long-term earnings per share growth of 7% to 8% a year on a compound annual basis between 2026 and 2030. This is based on the midpoint of our 2025 adjusted guidance. We expect that growth to accelerate to the upper half of the range starting in 2028 as we put more projects into service. Our electric utilities need to maintain a reliable, balanced generation mix. Between 2026 and 2030, we expect to invest a total of $7.4 billion in modern, efficient, natural gas generation and LNG storage. This includes combustion turbines, rice units, and upgrades to existing facilities. We have a strong labor force lined up to bring our projects online.

At our Oak Creek site, construction on our new five-unit 1,100 megawatt combustion turbine project is well underway. We also broke ground on a large two BCF LNG facility and our seven-unit Paris Rice generation site in the fourth quarter. In renewables, over the next five years, we expect to invest $12.6 billion to add 6,500 megawatts to our generation fleet. We currently have seven renewable generation projects and two battery storage facilities under construction, including two solar facilities expected to come online later this year. Overall, we have a lot of confidence in our ability to execute on our capital plan and continue our growth trajectory.

Turning to regulatory matters, I have a few updates on current and upcoming rate reviews. First, let's update you on our Wisconsin and our proposed very large customer tariff. As we discussed before, this tariff is designed to meet the needs of our various large load customers while protecting all of our other customers and investors. The proposed tariff remains with the Public Service Commission for review. Staff and intervenor testimony was submitted in January. A commission order is expected in early May for customers to take service under the tariff in June. In April, we plan to file rate reviews in Wisconsin for forward-looking test years 2027 and 2028. We are currently pulling that filing together.

And in Illinois, as I mentioned earlier, Peoples Gas and North Shore Gas reached agreements on the terms of a proposed settlement with the Illinois attorney general. That, if approved by the Illinois Commerce Commission, would resolve all issues related to 12 pending cases. These cases represent approximately $2.3 billion of open dockets and include the rider QIP reconciliation from 2017 to 2023, in the uncollectible rider cases 2019 through 2023. The proposed settlement terms call for a $130 million rate base reduction, which would be prospective with new rates in the pending Peoples Gas case. In addition, customers would receive a $125 million over three years.

This settlement is subject to commission approval we anticipate requesting in the coming weeks. In early January, we filed a rate request in Illinois for test year 2027. A key driver of this request is to support the PIPE retirement program in Chicago. As you'll recall, the company ordered all cast iron and ductile iron pipe under 36 inches in diameter to be retired by 2034. We expect the commission's review of our filing to last eleven months with new rates starting 01/01/2027. Of course, we'll keep you updated on any future developments. Next up, Shaul will provide you with more details on our financials.

Xia Liu: Thanks, Scott. Turning now to earnings. Our 2025 adjusted earnings were $5.27 per share. An increase of $0.39 per share over 2024 adjusted earnings. Now let's take a closer look at our year-over-year variances. Our earnings package includes a comparison of adjusted full-year results on Page 17. I'll walk through the significant drivers. Starting with our utility operations, adjusted earnings were $0.63 higher in 2025 compared to 2024. Weather positively impacted utility earnings by approximately $0.35 relative to last year. Compared to normal conditions, we estimate that weather had a 10¢ favorable impact in 2025 compared to a 25¢ unfavorable impact in 2024. Rate-based growth contributed $0.74 more to earnings.

This was largely driven by the Wisconsin rate review outcomes that were effective on 01/01/2025. It also includes 12¢ of incremental AFUDC equity from projects under construction. These positive drivers were partially offset by 46¢ from higher depreciation and amortization expense, day-to-day O&M, as well as tax and other items. Now before I discuss earnings comparisons at the other segments, let me briefly comment on our weather-normal electric sales. For 2025, retail electric deliveries in Wisconsin excluding the iron ore mine, increased 1.1% year over year. We were slightly ahead of our forecast in every segment. For 2026, we are projecting weather-normal retail electric sales in Wisconsin to grow 1.6% from 2025 levels.

I'll note that we expect a large commercial and industrial segment to grow 5.8%, fueled by our forecasted data center load. Now back to our earnings comparison. Regarding our investment in American Transmission Company, earnings increased 2¢ compared to 2024 driven by a $0.06 increase from continued capital investment to meet demand growth and maintain reliability partially offset by a one-time gain we recognized in 2024. And at our energy infrastructure segment, earnings increased 10¢ in 2025 from higher production tax credits associated with the acquisition of additional solar generation projects in late 2024 and early 2025. Finally, you'll see a 24¢ variance at our corporate and other segment.

This was driven by higher interest expense resulting from higher debt balances, gains recorded in 2024 from early debt retirement, and a few other items. In terms of common equity, consistent with our plan, we issued approximately $800 million in 2025. Overall, we grew our EPS by 39¢ per share or 8% year over year on an adjusted basis. Next, let's look at our earnings guidance. For the first quarter this year, we project to earn in the range of $2.27 per share to $2.37 per share. This forecast takes into account January weather and assumes normal weather for the rest of the quarter.

And for the full year 2026, we're reaffirming our annual guidance of $5.51 to $5.61 per share. Of course, this assumes normal weather for the rest of the year. Finally, some comments on financing. In 2026, we expect debt funding to be in the range of $4 billion to $5 billion. This includes refinancing for $1.4 billion of senior notes that mature this year. And consistent with previous disclosures, we plan to issue between $900 million and $1.1 billion of common equity this year via our ATM program as well as the dividend reinvestment and employee benefit plan. As we have mentioned before, we expect any incremental capital will be funded with 50% equity content.

This applies to the incremental $1 billion of investment that Scott mentioned a few minutes ago. We don't expect it to impact our funding plans for the near term as the spending is projected to be in 2029 and beyond. With that, I'll turn it back to Scott.

Scott Lauber: Thank you, Shaul. As you may have seen, our board at its January meeting increased the dividend by 6.7% to an annualized $3.81 per share. This will mark the twenty-third consecutive year that our shareholders will be rewarded with higher dividends. The increase is consistent with our policy of paying out 65% to 70% of our earnings in dividends. Before I open up for Q&A, I want to summarize some of the highlights of the call. We hit the top end of the 2025 earnings guidance on an adjusted basis.

We reached an agreement with the Illinois attorney general on the terms of a proposed settlement that would allow us to put 12 historical reconciliation dockets behind us so we can now focus on the future. Economic growth is driving another 500 megawatts of forecasted demand for a total of 3.9 gigawatt increase in our five-year plan. This growth is adding $1 billion to our five-year capital plan, which is now at $37.5 billion. All of these developments give us even more confidence in our 7% to 8% long-term EPS compound annual growth rate with acceleration to the upper half of the range starting in 2028.

Overall, we're on track and focused on providing value for our customers and our stockholders. Operator, we are now ready for the question and answer portion of the call.

Operator: Now we will take your questions. The question and answer session will be conducted electronically. To ask a question, please press the star key followed by the digit one on your phone. If you are using a speakerphone, turn off your mute function to allow your signal to reach our equipment. We will take as many questions as time permits. Once again, press star, and then one on your phone, to ask a question. Your first question comes from the line of Julien Dumoulin-Smith with Jefferies. Your line is now open. Please go ahead.

Julien Dumoulin-Smith: Hey. Good afternoon, team. Nicely done. Gotta say a bevy of updates here today. No doubt, nonetheless. I wanted to follow-up on the commentary you guys started with at the top of the call on Microsoft here. Can you elaborate a little bit more about the 500 megawatts that you're putting in here now? I mean, to what extent is there even more beyond that? Every time you give us some, we're gonna ask about the next phase. But, also, as it pertains to the CapEx, right, you talk about a billion dollars of additional CapEx. To what extent is that 500 mill the 500 megawatts or the billion dollars stretch beyond technically the five-year period as well?

And what do you know about the further ramp there too?

Scott Lauber: Sure, Julian. Thanks for the question. And when you look at it, Microsoft has been working on that first 1,364 acres. And now and we've always talked that, you know, the growth that we have has been started in that main spot. And now they're starting to add to the north of Highway 11 locally. That's a project north. So that's where we added the 500. I think as you as we continue and when you listen to the Microsoft conference call, someone asked about the Wisconsin development, and they talked about that as a multiyear delivery. So I think there's gonna be a lot to come as we start thinking about 2031 in the future also.

And remember, there's still more land that they are looking to purchase. And haven't developed yet. So I think there's a lot of opportunities here.

Julien Dumoulin-Smith: Yeah. Do you wanna expand on that? I mean, it seems that the other parcel here might even be bigger than the first one. Can you just elaborate a little bit about what we understand in sort of the multistage? I get maybe at times folks are shy to talk about the full extent of the opportunity. But still, you know, obviously, phase one has been so large, 500 megawatts. Do we have any other further clues about just how big and how fast this could go? Sorry to press you so much on it, but it's tantalizing.

Scott Lauber: Yeah. I understand completely, and we're very excited about the development here. What they're doing here in Wisconsin. No, I do not wanna get out ahead of Microsoft and their plans. All I can really say is, you know, they're starting to do LAN at about 570 acres, and that's about where we put that 500 megawatts. There's more land. You know? That's just the start of that development when you think about the amount of megawatts people are now putting on land. And then I think there's at least another couple hundred or so that they haven't developed, and they're looking for more land as we've talked to the paper.

They have been very transparent here in Southeastern Wisconsin on their plan. So more to come, but and I don't wanna get ahead of Microsoft by any means, so just very positive as we see their development grow.

Julien Dumoulin-Smith: Awesome. And then just to bring up another subject real quickly on Point Beach. How are the negotiations progressing at what point do you need to make a decision about the 500 megawatts there for replacement power or what have you? For the 2030 piece.

Scott Lauber: Yeah. Great question. And when we look at it, you know, those contracts end in 2030. And then the second one is in 2033, I think, at the beginning of 2033. So we have time. You know? We're still in communications with NextEra on the plant. We're gonna factor all that in and what we need, which I only can see as potentially upside in our plan, in our fall update. So we're going through our planning process like we do every summer looking at, you know, how did the winter, you know, these colds fell, how did the system perform? What do we look at in the future for additional growth? Adding another year onto our sales forecast.

And then, of course, factoring in this Point Beach PPA if we need to replace it with some other generation. You know, I see that as potential upside in the plan, but we'll factor that into the fall.

Julien Dumoulin-Smith: Awesome. Nicely done, guys. We'll talk to you soon. Take care.

Scott Lauber: Sounds good. Thank you.

Operator: Your next question comes from the line of Shar Pourreza with Wells Fargo. Please go ahead.

Alex: Hey. Good afternoon, everyone. It's actually Alex on for Shar. Thanks.

Scott Lauber: Absolutely, Alex.

Alex: So, obviously, you're seeing a lot of growth on the data center front. So, you've highlighted Microsoft and the Vantage project. But can you maybe talk a little bit more, I mean, to the extent that you can, are you seeing additional interest from other hyperscaler customers? And if I could just add on, you know, there's been local opposition around data centers in other parts of the state. But can you just talk about your strategy and overall confidence level around attracting customers despite some of these headwinds we've seen recently? Thanks.

Scott Lauber: Sure. Sure. And you have seen a little noise around the state. I think you're seeing a couple of things now, and I'm very confident that other people are looking for opportunities in Wisconsin, and we have a lot of discussions. And even Microsoft has talked about even being more transparent, so I think everyone understands they need to be more transparent, working more with the communities, being much more proactive than they were two years ago. So I think that's all positive developments here. I think also our very large tariff that protects all our other customers, the hyperscalers understand it and like the fact that they can really point to something very transparent in protecting other customers.

So, you know, we don't have a tendency to talk about a pipeline because we want to just talk about what's actually announced and developed, but there's other opportunities, and we're in multiple discussions.

Alex: Got it then. That's helpful. And then just sort of, you know, looking at the five-year outlook you have out there. So 26%, 27%, you're at that 6.5% to 7% growth. Obviously, you're seeing a lot of growth. Is this just timing as to when data centers start coming online? Just want to get a sense of what could be holding you back from growing at that seven percent eight the first half of the plan? Is there anything you see out there that could potentially move the needle? Thanks.

Scott Lauber: Yeah. Yeah. That's a great question. And, you know, we're six to half to seven this year. And we're consistent with what we talked about seven to eight in '27, and then in the eight range after that, it really just mirrors our capital plan. And everyone's doing a great job getting projects identified and getting things staged. It takes a while for all those capital to get ramped up. But we're right on time. And in fact, we've even ramped up maybe even a little faster than we anticipated here in a couple of projects, which is good to see. Too early to do anything, move anything. But really positive, and it really just mirrors our capital plan.

But adding this extra billion, which is, as Shaw said, probably in twenty-nine, thirty time frame, just really is gonna strengthen the long-term outlook for our capital plan.

Alex: Great. Thanks for the color. I'll leave it there.

Scott Lauber: Thank you.

Operator: Your next question comes from the line of Nicholas Campanella with Barclays. Please go ahead.

Nicholas Campanella: Hey. Good afternoon, everyone. Hope everyone's well. Thanks for taking my questions.

Scott Lauber: Absolutely. Good afternoon, you too.

Nicholas Campanella: Yeah. Absolutely. Good to get all the updates. Just wanted to ask on regulatory. Just now that we kinda have, you know, all the testimonies out there on the VLC, you know, how do you feel about the potential to kinda settle this if that's important at all and if the window is open to do so? And then I'm also just wondering the timing on the GRC filing, if that's still on track for midway through this year?

Scott Lauber: Sure. Great question. And the very large customer tariff, I see that going the entire period that the commission makes a decision. And one of the items that we wanna make sure we have when everyone talks about affordability and data center causing rate increases, this tariff is one of the best or the best out there, we think, to make sure that data centers pay their fair share. We want true transparency. And we wanna go through the entire audit process and get all those questions out there. So remember, we filed it. In conjunction and Microsoft Advantage have supported the tariff. And now we're just going through a very thorough vetting process.

And I don't have any concerns going through the entire process. But once again, the goal of this is to make sure the customers pay their fair share and to make sure everyone understands how it's working so we have true transparency on our largest customers. And then on the rate case filing, we're on track. Filing in April, we're still in the process of pulling the numbers together but you know, on track to get that filing out there.

Nicholas Campanella: Hey. Great. Thanks for that. And then just maybe really quick on the financing, just I know that there was a comment around the $1 billion ATM for twenty-six. Just any thoughts on further derisking the plan past that? Or could there be any downside to this number if you guys were to lean on some additional hybrids there is capacity?

Xia Liu: Yeah. Absolutely. We are all over that. So we have very limited hybrid financing so far. We had a $600 million issuance last year. So we have significant capacity for hybrid, but this $900 to $1,100 million I talked about, is for common equity financing. And as I said, we're relying on an ATM, so we fully expect to get that executed throughout the year.

Nicholas Campanella: Thank you.

Scott Lauber: Thank you.

Operator: Your next question comes from the line of Carly Davenport with Goldman Sachs. Please go ahead.

Carly Davenport: Hey. Good afternoon. Thanks so much for taking the questions. Maybe to start, just you talk a bit about how you're thinking about potential election rhetoric around affordability just in the face of filing a rate case in Wisconsin in the next couple of months and just how that might inform your filing or the rate case process?

Scott Lauber: Sure. And you know, across the country, you're hearing affordability. And in Wisconsin here, as you mentioned, you know, we do have a governor's race. It's a pretty open race. Our governor Eagles is not running again. So there are several Democrats who have thrown their hat in the ring. We're really early in the process. There's several issues that they're bringing up. You know, in addition to affordability and property tax, taxes. They're also looking at health care, child care, education. So there's a lot of topics that are being floated around. But we're definitely aware of affordability.

And, you know, we continue to, you know, we're pulling our numbers together but we are doing a lot to try to keep our rates as low as having a lot of initiatives to keep costs low. And in fact, as we closed the books this last year, in Wisconsin Electric, when you look at the performance of our plants, and the fuel cost, we were able to be in a positive fuel recovery. And because of the warmer weather, we got into a positive position on their sharing mechanism at Wisconsin Electric. The result is approximately $55 million that we'll be able to give back to.

So we think about affordability every day, but that's how we're kinda factoring stuff in.

Carly Davenport: That's great. Thank you so much for the color there. And then follow-up maybe just on Illinois. I know you're still early stages on the PR. But I guess, are there any near-term milestones we should be watching there to gauge progress and also gauge the support from the commission for those investments?

Scott Lauber: Sure. Great question, and you are exactly right. We are in the early stages this year. I think we're looking at retiring approximately 35 miles, and that's ramping up every year until we get to what we think is a run rate in 2028. We are, you know, this settlement is a big step forward as in we stopped looking backwards, and now we're looking forward. The early indications will be, I mean, we're working on the projects that soon start to kick off with field work. We've done a little bit last year laying out the plans.

But, really, in this test year, we'll have forward-looking capital plans that the commission will also have a look at and we're working very closely now that the safety monitor is on staff and has been hired and laying out our plans of what we're doing and how we're reporting to the safety monitor. So I think the indication is gonna be probably the first one is what happens in our rate case filing that we just filed which is really forward-looking for 2027 and how we prioritize the projects.

Carly Davenport: Got it. Great. Thanks so much for the updates.

Scott Lauber: Thank you.

Operator: Your next question comes from the line of Michael Sullivan with Wolfe Research. Please go ahead.

Michael Sullivan: Hey. Good afternoon. I'll just pick up on the last line of questions sticking with Illinois. Any chance you can settle these rate cases? And then also as it relates to the riders you just settled on, I mean, it seems like the bill credits and rate base reduction creates a little bit of a headwind. So just how you're thinking about offsetting that?

Scott Lauber: Sure. And it's really early to even think about settlements on the Illinois case yet, so we'll see where we get as we get through the audit. And the staff audit and intervener. So a little bit too early on all of that. When you think about the settlement we just had in Illinois and you look at that really look at it the overall picture. That's why we reaffirmed our long-term growth rate of that seven to 8% with or seven to 8% growth with the upper end of the range in 2028 and beyond. I mean, we factored all that in as we looked at that.

And as you heard on the call, we just add another billion dollars of growth. And remember, that growth is really driven by the hyperscalers, which are paying their share of the electricity cost, so it doesn't have a burden on our other customers' rate. So, you know, we were able to offset it. Very quickly here, but a good spot to move forward in Illinois.

Michael Sullivan: Okay. Great. Then maybe I'll just go there in terms of what the Microsoft ramp could do. They're paying their fair share. Is it possible they actually could lower rates for customers and maybe any sense of size you could give us on the upcoming Wisconsin rate case?

Scott Lauber: Yeah. Sure. I mean, you think about it. They're paying their fair share which includes corporate allocations and other common costs. Which eventually and I think you're gonna see more of this as that bill gets bigger, of course, the more corporate allocations you have, the less burden it is on all other customers. So it's hard to really quantify that until we start seeing actual real stuff go into service. Remember, their first site is just starting to go into service. And a lot of that capital spending is in the later part of the plan. But long term, it's incrementally good for customers.

Michael Sullivan: Okay. Great. Thank you.

Scott Lauber: Thank you.

Operator: Your next question comes from the line of Stephen D’Ambrisi with RBC Capital Markets. Please go ahead.

Stephen D’Ambrisi: Hi, Scott. Hi, Shah. Thanks very much for taking my question.

Scott Lauber: Absolutely.

Stephen D’Ambrisi: I just had a quick one. You know, congratulations on increasing the Microsoft load. But I really wanted to follow on to Julian's Point Beach question and just quickly understand, you know, to the extent you do move forward with replacing the Point Beach PPA with generation, do you have interconnect generation interconnect agreements? Or slots in the MISO queue, or can you participate in the ARRIS process? I think there's a rolling window where you can cycle in, and I just wasn't sure if you already had any slots or were looking to potentially add some or if that's a place that we could watch to see potential activity on your end. Thanks.

Scott Lauber: Yeah. That's a good question. And we work alongside with a very good developer of energy as we develop our plans to make sure we have, you know, renewables, batteries, you know, natural gas generation. And, you know, I feel very confident in talking to our generation team, not to give you too many details here that we can replace that power as we look at 2030, and '33. We're gonna look, of course, at what's economic for our customers. So we're gonna really balance the economics of our customers and what makes sense as we look at Point Beach and we look at capital investments, what's overall best for our customers.

Operator: Your next question comes from the line of Andrew Weisel with Scotiabank. Please go ahead.

Andrew Weisel: Hey. Good afternoon, everybody.

Scott Lauber: Hey, Andrew.

Andrew Weisel: First, just a quick one. The gap charge you took related to Illinois, is there a cash component to that, or might there be one going forward?

Scott Lauber: Sure. There's two components, and the total is that 46¢ as you saw on that adjustment. The one component is a $130 million rate-based component that is forward-looking and perspective. It'll be factored in the final rate order. That's what we're anticipating will happen. And then there's a $125 million of cash credits that go back to customers over the next three years. It's approximately $50 million in that first year, and then the last two years are split evenly for the remaining 75. So that's it'll be a little cash. It'll be a little pressure, of course, on our FFO to debt matrix, but good to get these old cases behind us.

Andrew Weisel: Got it. Thank you. Next, I'm hoping you can clarify a little the interplay between the VLC tariff and the general rate case. I've been getting enough questions. I think there's some confusion. Firstly, can you preview when you file in April, just round numbers, what kind of rate impact should we expect for the general customers now that the data center customers are being separated?

Scott Lauber: Sure. And we're pulling those numbers together, so I really there's a lot of stuff that has to happen and look at it. But we do keep affordability in our mind as we pull this case together. But just to give you a little color on how we're looking at, you the total company will be provided on what our total expenses, capital spending, and then we'll have separated just like we do for our wholesale customers, separated these very large customers, the wholesale customers, and then what's remaining for our general rate case. So it'll be very once again, very transparent on all the assets that the very large customers are paying for in total.

So that's kinda how it's gonna be broken out. Of course, you know, how the bills and stuff are set up and all the costs will be allocated that are directly assigned or allocated to those very large customers. So we're in process of laying out how that will look right now. But that's the concepts.

Andrew Weisel: Okay. Fair enough. And then, you know, going one step further over the longer term beyond twenty-seven and twenty-eight test period that will be addressed, how should we think about kind of this idea if data center activity exceeds expectations, would that help the rest of the customers by lowering their rates, or just leave them unimpacted? In other words, is the idea that data centers are completely independent, or is the idea that the excess data center activity should help the rest of the customers?

Scott Lauber: In general, as you look at it, and it takes several years, but a lot of corporate allocations are allocated on total rate base and cost. So as you can imagine, even like we went through the acquisition of Vetegra, we are able to spread common cost across a bigger footprint. Having data centers will have significant rate base. I think in our five-year plan, we're looking at that rate base, you know, the 14 to 15% of our earnings. So a significant part of that. So core corporate allocations will get spread across a larger rate base, and you're gonna see more of that as those assets continue to build.

But that's, you know, more of it's gonna be in service in that twenty-eight, twenty-nine, thirty time frame.

Andrew Weisel: Okay. Very good. One last one just on timing. My understanding is the VLC ruling should come pretty much around the same time as you're filing for the general rate case. Is it important that the first one concludes before the second one begins, or do you view them as independent tracks?

Scott Lauber: No. You know, we're pulling it together, assuming the filing that we have on the table right now and we'll be too independent because we'd have to file most likely at, like you said, about the same time or maybe even a little before that final decision is made on the rate on the VLCs.

Andrew Weisel: Okay. Great. Thank you so much.

Scott Lauber: Thank you.

Operator: Your next question comes from the line of Paul Fremont with Ladenburg. Please go ahead.

Paul Fremont: Hey. Thank you very much, and congratulations. First question, is the Microsoft announcement, should we think of that as the replacement for the canceled Caledonia project? Or are they still looking to do something to replace that?

Scott Lauber: So a great question that thanks, Paul. When you look at it, they had already purchased this land before that Caledonia, they're looking for additional land beyond the Caledonia. So they're still looking for additional land. To replace what they decided to pull out or move away from in Caledonia.

Paul Fremont: Right. And then, my next question has to do with sort of the pricing of Point Beach terminates around a $120 per megawatt hour. I would think that new build would be a savings over sort of the last years of the contract pricing? So why should we not assume that you would opt for new build versus recontracting?

Scott Lauber: I think you're gluing it together. A pretty good assumption there that there's price are pretty high, and if those prices, you know, they think they should be that high, a new build think about affordability, probably makes sense. But we gotta run that analysis yet, and more to come, but I do think there's upside here.

Paul Fremont: Okay. And maybe last sort of a quick follow-up to that. Are there retired coal plant sites that could be sort of used as for new build?

Scott Lauber: No. You know, right now, actually, the coal plant that we retired multiple years ago that's actually an economic development use that site. So already developed some of those sites for other economic development. But we're looking at other locations and opportunities really gotta think of it now as where is the natural gas line for those gas, and how do you get that capacity in? So more to come, but we have spots in mind.

Paul Fremont: Great. Thank you so much.

Scott Lauber: Thank you.

Operator: Your last question comes from the line of Paul Patterson with Glenrock Associates. Please go ahead.

Paul Patterson: Hey. Good afternoon.

Scott Lauber: Hey, Paul.

Paul Patterson: Just have a quick few housekeeping items. Just whether the residential number looks like you're planning a going down in 2026. Not by much, but just in general, is that because of energy efficiency, or is there something else we should be thinking about?

Xia Liu: We always try to be a little conservative in the forecast. So the base assumption is we do see good customer growth, but there's a little bit of decline in use per customers. Overall, it's a slight reduction, but we try to be conservative in the forecast.

Paul Patterson: Okay. And then just in terms of the impairment on the Illinois thing, see the $130 million, I think, in the income statement. Called out. The other $75 million just from a geography, you know, AA income statement geography, where does that show up?

Xia Liu: Yeah. The other amount goes through revenues for some accounting reasons.

Paul Patterson: Okay. Fair enough. Thank you so much.

Scott Lauber: Yep. Absolutely. Alright. That concludes our conference call for today. Thank you for participating. If you have any more questions, please feel free to contact Best Raca at (414) 221-4639.

Operator: Thank you. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

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