Overview of Wisconsin Electric Power Company’s Financial Performance

Wisconsin Electric Power Company (WE) is a wholly-owned subsidiary of WEC Energy Group that provides electricity and natural gas to retail customers in Wisconsin. In the first quarter of 2025, WE reported strong financial results, with earnings of $196.1 million, up from $134.0 million in the same period in 2024.

Revenue and Profit Trends

WE’s utility segment saw a significant increase in both gross margin (GAAP) and utility margin (non-GAAP) in the first quarter of 2025 compared to the same period in 2024. Gross margin increased by $79.9 million, while utility margin increased by $92.9 million.

The key drivers of this improvement were:

1. Rate Increase: A $65.6 million increase in margins due to a rate order approved by the Public Service Commission of Wisconsin (PSCW), effective January 1, 2025.

2. Higher Sales Volumes: A $28.3 million increase in margins related to higher retail sales volumes, driven by colder winter weather in the first quarter of 2025 compared to the same period in 2024.

The smaller increase in gross margin compared to utility margin was due to higher depreciation and amortization expenses, as well as increased transmission costs.

Strengths and Weaknesses

Strengths:

• Execution of WEC Energy Group’s capital plan, which includes the retirement of older, fossil-fueled generation and investment in zero-carbon-emitting renewables and efficient natural gas-fired generation.
• Continued focus on improving reliability through investments in the electric and natural gas distribution systems.
• Commitment to reducing carbon and methane emissions, with goals to achieve significant reductions by 2030 and net-zero by 2050.
• Strong financial discipline, including a focus on maintaining a stable capital structure and credit ratings.

Weaknesses:

• Exposure to regulatory and legal challenges, such as the ongoing litigation surrounding the EPA’s Effluent Limitation Guidelines (ELG) rule.
• Potential impact of supply chain disruptions and inflation on the cost and timing of capital projects.
• Uncertainty around the future of coal-fired generation and the ability to comply with evolving environmental regulations.

Outlook and Future Prospects

WE’s financial performance is expected to remain strong, driven by the execution of WEC Energy Group’s capital plan and the continued focus on operational efficiency, reliability, and environmental stewardship.

Key initiatives and projects that will shape WE’s future include:

• Retirement of approximately 1,200 MW of additional coal-fired generation by the end of 2031, with a goal to eliminate coal as an energy source by the end of 2032.
• Investment of approximately $9.1 billion from 2025-2029 in regulated renewable energy projects, including 2,900 MW of utility-scale solar, 900 MW of wind, and 565 MW of battery storage.
• Construction of new natural gas-fired generation, including 1,100 MW of combustion turbines at the Oak Creek Power Plant site and additional RICE (Reciprocating Internal Combustion Engine) units.
• Continued upgrades to the electric and natural gas distribution systems to enhance reliability and system hardening.
• Efforts to reduce methane emissions from the natural gas distribution system, with a goal of achieving net-zero methane emissions by the end of 2030.

While WE faces some regulatory and legal challenges, the company’s strong financial position, commitment to sustainability, and focus on operational excellence position it well to navigate the evolving energy landscape and deliver value to its customers and shareholders.