ITEM 8.01 OTHER EVENTS
On September 29, 2022, Wisconsin Electric Power Company ("WE"), Wisconsin Gas
LLC ("WG"), and Wisconsin Public Service Corporation ("WPS"), utility
subsidiaries of WEC Energy Group, Inc. (each a "WEC Utility", and together, the
"WEC Utilities"), entered into settlement agreements (the "Settlement
Agreements") with Citizens Utility Board of Wisconsin ("CUB"), Wisconsin
Industrial Energy Group ("WIEG"), and several other environmental, labor and
customer organizations (collectively with CUB, WIEG and the WEC Utilities, the
"Parties"), in order to resolve most issues in each company's rate case
currently before the Public Service Commission of Wisconsin ("PSCW"). WE, WG and
WPS filed applications with the PSCW for regulatory review seeking to adjust
retail customer rates for electricity, natural gas, and steam service in April
2022, and updated these rate requests in July 2022.
Pursuant to the terms of the Settlement Agreements, which are subject to PSCW
review and approval, the Parties have agreed to an aggregate base rate increase
across all the WEC Utilities of $507.2 million (8.7%) for 2023, which includes
the following:
•A rate increase of $257.9 million for WE's retail electric customers, and a
rate increase of $53.3 million for its natural gas customers.
•A rate increase of $57.1 million for WG's natural gas customers.
•A rate increase of $104.3 million for WPS' retail electric customers, and a
rate increase of $31.3 million for its natural gas customers.
The Settlement Agreements include an earnings sharing mechanism, which is the
same as the mechanism currently in place for the WEC Utilities, under which, if
a WEC Utility earns above its authorized return on equity ("ROE"): (i) the WEC
Utility will retain 100.0% of earnings for the first 15 basis points above the
authorized ROE; (ii) 50.0% of the next 60 basis points will be required to be
refunded to ratepayers; and (iii) 100.0% of any remaining excess earnings will
be required to be refunded to ratepayers.
Other items the Parties agreed to as part of the Settlement Agreements include:
•A common equity component of 53.0% for each of WE, WG and WPS.
•WE will seek a financing order from the PSCW to securitize $100.0 million of
the remaining book value of environmental controls installed on the older units
at the Oak Creek Power Plant by 2024, plus the costs associated with the
securitization.
•Upon retirement of the older units at the Oak Creek Power Plant, WE will
request PSCW approval to extend and levelize the recovery of the remaining
un-securitized book value of those units over a 25-year period.
•WE and WPS will not propose any changes on their real-time pricing rates for
large commercial and industrial electric customers through the end of 2024.
•WE and WPS will lower monthly residential and small commercial electric
customer fixed charges by $1.00 and $2.00, respectively, from currently
authorized rates.
•WE and WPS agreed to propose an additional voluntary renewable energy pilot for
commercial and industrial customers.
•WE and WPS made commitments related to certain low income assistance programs
and agreed to collectively contribute $4.0 million to the Keep Wisconsin Warm
Fund.
The Parties agreed that the authorized ROE for each WEC Utility and the
allocation of electric and gas revenue among customer classes will be decided by
the PSCW. WE and WPS requested an authorized ROE of 10.0% and WG requested an
authorized ROE of 10.2%; the PSCW's Staff has recommended an authorized ROE of
9.8% for all three WEC Utilities.
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Forward-Looking Statements
Certain statements contained in this Current Report on Form 8-K are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
statements are based upon management's current expectations and are subject to
risks and uncertainties that could cause actual results to differ materially
from those contemplated in the statements. Readers are cautioned not to place
undue reliance on these statements. Forward-looking statements include, among
other things, statements concerning management's expectations and projections
regarding regulatory actions and decisions, rate filings and contributions to
low income assistance programs. The following factors, in addition to those
discussed in each of WEC Energy Group, Inc.'s, WE's, and WPS' Annual Report on
Form 10-K for the year ended December 31, 2021 and in subsequent reports filed
with the Securities and Exchange Commission, could cause actual results to
differ materially from those contemplated in any forward-looking statements: the
possibility that the PSCW's order will differ from the terms of the Settlement
Agreements; the timing, resolution and impact of rate cases and other regulatory
decisions; general economic conditions, including business and competitive
conditions in WEC Energy Group's service territories; WEC Energy Group's ability
to continue to successfully integrate the operations of its subsidiaries;
availability of generating facilities and/or distribution systems; unanticipated
changes in fuel and purchased power costs; key personnel changes; varying,
adverse or unusually severe weather conditions; continued industry restructuring
and consolidation; continued advances in, and adoption of, new technologies that
produce power or reduce power consumption; energy and environmental conservation
efforts; WEC Energy Group's ability to successfully acquire and/or dispose of
assets and to execute on its capital plan; cyber-security threats and data
security breaches; construction risks; equity and bond market fluctuations;
changes in WEC Energy Group's and its subsidiaries' ability to access the
capital markets; changes in tax legislation or WEC Energy Group's and its
subsidiaries' ability to use certain tax benefits and carryforwards; federal,
state, and local legislative and regulatory changes, including changes to
environmental standards, the enforcement of these laws and regulations and
change in the interpretation of regulations by regulatory agencies; supply chain
disruptions; inflation; political and geopolitical developments, including
impacts on the global economy, supply chain and fuel prices, generally, from the
ongoing conflict between Russia and Ukraine; the impact from new developments
relating to the COVID-19 pandemic or any future health pandemics; current and
future litigation and regulatory investigations, proceedings or inquiries;
changes in accounting standards and the ability of WEC Energy Group or its
subsidiaries to obtain additional generating capacity at competitive prices.
Except as may be required by law, WEC Energy Group, WE and WPS expressly
disclaim any obligation to publicly update or revise any forward-looking
information.
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