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What changed in WEC Energy Group's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of WEC Energy Group's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+668 added−633 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-23)

Top changes in WEC Energy Group's 2023 10-K

668 paragraphs added · 633 removed · 511 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

136 edited+36 added−37 removed77 unchanged
Biggest changeTable of Contents Customers Year Ended December 31 (in thousands) 2022 2021 2020 Electric customers – end of year Residential 1,471.4 1,460.4 1,455.7 Small commercial and industrial 176.9 175.8 175.8 Large commercial and industrial 0.9 0.8 0.8 Wholesale and other 1.6 1.6 3.0 Total electric customers – end of year 1,650.8 1,638.6 1,635.3 Steam customers – end of year 0.4 0.4 0.4 Electric Commercial and Industrial Retail Customers We provide electric utility service to a diversified base of customers in industries such as metals and other manufacturing, paper, governmental, food products, and health services.
Biggest changeTable of Contents Electric Commercial and Industrial Retail Customers We provide electric utility service to a diversified base of customers in industries such as metals and other manufacturing, paper, governmental, food products, and health services.
The secondary markets facilitate utilization of capacity and supply during times when the contracted capacity and supply are in excess of utility demand. The proceeds from these transactions are passed through to customers, subject to our approved GCRMs. For information on the GCRMs, see Note 1(d), Operating Revenues.
The secondary markets facilitate utilization of capacity and supply during times when the contracted capacity and supply are in excess of utility demand. The proceeds from these transactions are passed through to customers, subject to our approved GCRMs. For information on the GCRMs, see Note 1(d), Operating Revenues.
We set a target across our natural gas distribution operations to achieve net-zero methane emissions by the end of 2030. We plan to achieve our net-zero goal through an effort that includes both continuous operational improvements and equipment upgrades, as well as the use of RNG throughout our utility systems.
We set a target across our natural gas distribution operations to achieve net-zero methane emissions by the end of 2030. We plan to achieve our net-zero goal through an effort that includes both continuous operational improvements and equipment upgrades, as well as the use of RNG throughout our natural gas utility systems.
Our wholly owned subsidiaries provide or invest in regulated natural gas and electricity, and renewable energy, as well as nonregulated renewable energy. We have an approximately 60% equity interest in ATC (an electric transmission company operating in Illinois, Michigan, Minnesota, and Wisconsin). At December 31, 2022, we had six reportable segments, which are discussed below.
Our wholly owned subsidiaries provide or invest in regulated natural gas and electricity, and renewable energy, as well as nonregulated renewable energy. We have an approximately 60% equity interest in ATC (an electric transmission company operating in Illinois, Michigan, Minnesota, and Wisconsin). At December 31, 2023, we had six reportable segments, which are discussed below.
See Note 1(d), Operating Revenues, for additional information on the significant mechanisms our utilities had in place during 2022 that allowed them to recover or refund changes in prudently incurred costs from rate case-approved amounts. Our utilities file periodic requests with their respective state commission for changes in retail rates.
See Note 1(d), Operating Revenues, for additional information on the significant mechanisms our utilities had in place during 2023 that allowed them to recover or refund changes in prudently incurred costs from rate case-approved amounts. Our utilities file periodic requests with their respective state commission for changes in retail rates.
NON-UTILITY OPERATIONS Non-Utility Energy Infrastructure Segment The non-utility energy infrastructure segment includes We Power, which owns and leases generating facilities to WE; Bluewater, which owns underground natural gas storage facilities in Michigan; and WECI, which holds ownership interests in several wind generating facilities. See Item 2. Properties, for more information on our non-utility energy infrastructure facilities. W.E.
NON-UTILITY OPERATIONS Non-Utility Energy Infrastructure Segment The non-utility energy infrastructure segment includes We Power, which owns and leases generating facilities to WE; Bluewater, which owns underground natural gas storage facilities in Michigan; and WECI, which holds ownership interests in several renewable generating facilities. See Item 2. Properties, for more information on our non-utility energy infrastructure facilities. W.E.
Combined with our storage capability, management believes that the volume of gas under contract is sufficient to meet our forecasted firm peak-day and seasonal demand. Forecasted design peak-day throughput for our other states utilities is 9.7 million therms for the 2022 through 2023 heating season.
Combined with our storage capability, management believes that the volume of gas under contract is sufficient to meet our forecasted firm peak-day and seasonal demand. Forecasted design peak-day throughput for our other states utilities is 9.7 million therms for the 2023 through 2024 heating season.
In addition, as of December 31, 2022, we owned approximately 75% of ATC Holdco, a separate entity formed in December 2016 to invest in transmission-related projects outside of ATC's traditional footprint. See Note 21, Investment in Transmission Affiliates, for more information. The FERC and D.C.
In addition, as of December 31, 2023, we owned approximately 75% of ATC Holdco, a separate entity formed in December 2016 to invest in transmission-related projects outside of ATC's traditional footprint. See Note 21, Investment in Transmission Affiliates, for more information. The FERC and D.C.
We continue to upgrade our electric distribution system, including substations, transformers, and lines, to meet the demand of our customers. In 2022, our generating plants performed as expected during the warmest periods of the summer, and all power purchase commitments under firm contract were received.
We continue to upgrade our electric distribution system, including substations, transformers, and lines, to meet the demand of our customers. In 2023, our generating plants performed as expected during the warmest periods of the summer, and all power purchase commitments under firm contract were received.
The construction of the solar portion is expected to be completed in 2024. • In January 2022, WE and WPS, along with an unaffiliated utility, received PSCW approval to acquire and construct Paris, a utility-scale solar-powered electric generating facility with a battery energy storage system.
The construction is expected to be completed in 2024. • In January 2022, WE and WPS, along with an unaffiliated utility, received PSCW approval to acquire and construct Paris, a utility-scale solar-powered electric generating facility with a battery energy storage system.
Table of Contents Natural Gas Utility Operations WE, WPS, and WG are authorized to provide retail natural gas distribution service in designated territories in the state of Wisconsin, as established by indeterminate permits and boundary agreements with other utilities.
Natural Gas Utility Operations WE, WPS, and WG are authorized to provide retail natural gas distribution service in designated territories in the state of Wisconsin, as established by indeterminate permits and boundary agreements with other utilities.
Because of the significant investment necessary to construct these generating units, we constructed the plants under Wisconsin's Leased Generation Law, which allows a non-utility affiliate to construct an electric generating facility and lease it to the public utility.
Table of Contents Because of the significant investment necessary to construct these generating units, we constructed the plants under Wisconsin's Leased Generation Law, which allows a non-utility affiliate to construct an electric generating facility and lease it to the public utility.
Our Wisconsin segment natural gas utilities provide service to residential and commercial and industrial customers. In addition, our Wisconsin segment offers natural gas transportation services to our customers that elect to purchase natural gas directly from a third-party supplier. Major industries served include real estate, restaurants, governmental, food products, and metal manufacturing. See Item 7.
Our Wisconsin segment natural gas utilities provide service to residential and commercial and industrial customers. In addition, our Wisconsin segment offers natural gas transportation services to our customers that elect to purchase natural gas directly from a third-party supplier. Major industries served include real estate, food products, governmental, restaurants, and paper. See Item 7.
Michigan legislation requires all electric providers to demonstrate to the MPSC that they have adequate resources to serve the anticipated needs of their customers for a minimum of four consecutive planning years beginning in the upcoming planning year June 1, 2023, through May 31, 2024.
Michigan legislation requires all electric providers to annually demonstrate to the MPSC that they have adequate resources to serve the anticipated needs of their customers for a minimum of four consecutive planning years beginning in the upcoming planning year June 1, 2024, through May 31, 2025.
The project will be located in Kenosha County, Wisconsin and once fully constructed, WE and WPS will collectively own 180 MW of solar generation and 99 MW of battery storage of this project.
The project will be located in Kenosha County, Wisconsin and once fully constructed, WE and WPS will collectively own 180 MWs of solar generation and 99 MWs of battery storage of this project.
The table below reflects the various state commissions that regulated each of our utilities' retail rates during 2022, along with the approved ROE and capital structure for each utility during 2022.
The table below reflects the various state commissions that regulated each of our utilities' retail rates during 2023, along with the approved ROE and capital structure for each utility during 2023.
Our commitment is a core strategic competency and an integral part of our culture. As of December 31, 2022, women and racial minorities represented approximately 25% and 26%, respectively, of our workforce.
Our commitment is a core strategic competency and an integral part of our culture. As of December 31, 2023, women and racial minorities represented approximately 25% and 26%, respectively, of our workforce.
Other Sustainability Programs In August 2021, the PSCW approved pilot programs for WE and WPS to install and maintain EV charging equipment for customers at their homes or businesses. The programs provide direct benefits to customers by removing cost barriers associated with installing EV equipment.
Table of Contents Other Sustainability Programs In August 2021, the PSCW approved pilot programs for WE and WPS to install and maintain EV charging equipment for customers at their homes or businesses. The programs provide direct benefits to customers by removing cost barriers associated with installing EV equipment.
In addition, PGL and NSG offer natural gas transportation services to our customers that elect to purchase natural gas directly from a third-party supplier. Major industries served include real estate, non-profits, education, wholesale distributors, and restaurants. See Item 7.
In addition, PGL and NSG offer natural gas transportation services to our customers that elect to purchase natural gas directly from a third-party supplier. Major industries served include real estate, education, non-profits, wholesale distributors, and food manufacturing. See Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations – Factors Affecting Results, Liquidity, and Capital Resources – Competitive Markets. Environmental Goals Natural Gas Utility Operations – Wisconsin, Illinois, and Other States Segments We also continue to reduce methane emissions by improving our natural gas distribution systems.
Management's Discussion and Analysis of Financial Condition and Results of Operations – Factors Affecting Results, Liquidity, and Capital Resources – Competitive Markets. Environmental Goals Natural Gas Utility Operations – Wisconsin, Illinois, and Other States Segments We continue to reduce methane emissions by improving our natural gas distribution system.
Regulated Utility Operations In addition to the specific regulations noted above and below, our utilities are subject to various other regulations, which primarily consist of regulations, where applicable, of the EPA; the WDNR; the Illinois Department of Natural Resources; the Illinois Environmental Protection Agency; the Michigan Department of Environment, Great Lakes, and Energy; the Michigan Department of Natural Resources; the United States Army Corps of Engineers; the Minnesota Department of Natural Resources; and the Minnesota Pollution Control Agency. 2022 Form 10-K 18 WEC Energy Group, Inc.
Regulated Utility Operations In addition to the specific regulations noted above and below, our utilities are subject to various other regulations, which primarily consist of regulations, where applicable, of the EPA; the WDNR; the Illinois Department of Natural Resources; the Illinois Environmental Protection Agency; the Michigan Department of Environment, Great Lakes, and Energy; the Michigan Department of Natural Resources; the Army Corps; the Minnesota Department of Natural Resources; and the Minnesota Pollution Control Agency. 2023 Form 10-K 18 WEC Energy Group, Inc.
We already have retired more than 1,800 MW of coal-fired generation since the beginning of 2018, which included the 2019 retirement of the PIPP as well as the 2018 retirements of the Pleasant Prairie power plant, the Pulliam power plant, and the jointly-owned Edgewater Unit 4 generating units.
We already have retired more than 1,900 MWs of coal-fired generation since the beginning of 2018, which included the 2019 retirement of the PIPP as well as the 2018 retirements of the Pleasant Prairie power plant, the Pulliam power plant, and the jointly-owned Edgewater Unit 4 generating units.
During this period, our electric utilities did not require public appeals for conservation, and they did not interrupt or curtail service to non-firm customers who participate in load management programs. WPS did have economic interruption events; however, service to customers was not curtailed.
During this period, our electric utilities did not make any public appeals for conservation, and they did not interrupt or curtail service to non-firm customers who participate in load management programs. Our electric utilities did have economic interruption events; however, service to customers was not curtailed.
Power, LLC We Power, through wholly owned subsidiaries, designed and built approximately 2,500 MW of generation in Wisconsin.
Power, LLC We Power, through wholly owned subsidiaries, designed and built approximately 2,500 MWs of generation in Wisconsin.
The table below indicates our sources of electric energy supply as a percentage of sales for the three years ended December 31, as well as estimates for 2023: Estimate (1) Actual 2023 2022 2021 2020 Company-owned generation units: Coal 30.4 % 29.4 % 35.5 % 31.1 % Natural gas: Combined cycle 27.0 % 27.2 % 24.6 % 27.8 % Steam turbine 0.7 % 1.0 % 0.8 % 1.0 % Natural gas/oil peaking units 4.3 % 3.7 % 3.1 % 2.4 % Renewables (2) 5.8 % 5.8 % 4.8 % 5.3 % Total company-owned generation units 68.2 % 67.1 % 68.8 % 67.6 % Power purchase contracts: Nuclear 18.7 % 19.8 % 19.0 % 19.5 % Natural gas 2.5 % 2.2 % 1.9 % 1.9 % Renewables (2) 2.1 % 1.9 % 1.9 % 1.9 % Other — % 0.2 % 0.1 % 1.7 % Total power purchase contracts 23.3 % 24.1 % 22.9 % 25.0 % Purchased power from MISO 8.5 % 8.8 % 8.3 % 7.4 % Total purchased power 31.8 % 32.9 % 31.2 % 32.4 % Total electric utility supply 100.0 % 100.0 % 100.0 % 100.0 % (1) The values included in the estimate assume a natural gas price based on the December 2022 NYMEX.
The table below indicates our sources of electric energy supply as a percentage of sales for the three years ended December 31, as well as estimates for 2024: Estimate (1) Actual 2024 2023 2022 2021 Company-owned generation: Coal 27.7 % 29.0 % 29.4 % 35.5 % Natural gas: Combined cycle 30.8 % 28.7 % 27.2 % 24.6 % Steam turbine 0.7 % 0.9 % 1.0 % 0.8 % Natural gas/oil peaking units 6.8 % 5.5 % 3.7 % 3.1 % Renewables (2) 7.0 % 5.5 % 5.8 % 4.8 % Total company-owned generation 73.0 % 69.6 % 67.1 % 68.8 % Power purchase contracts: Nuclear 19.7 % 20.1 % 19.8 % 19.0 % Natural gas — % — % 2.2 % 1.9 % Renewables (2) 1.8 % 2.0 % 1.9 % 1.9 % Other — % 0.1 % 0.2 % 0.1 % Total power purchase contracts 21.5 % 22.2 % 24.1 % 22.9 % Purchased power from MISO 5.5 % 8.2 % 8.8 % 8.3 % Total purchased power 27.0 % 30.4 % 32.9 % 31.2 % Total electric utility supply 100.0 % 100.0 % 100.0 % 100.0 % (1) The values included in the estimate assume a natural gas price based on the December 2023 NYMEX.
This helps our electric utilities maintain compliance with renewable energy legislation. These renewable energy resources also help us maintain diversity in our generation portfolio, which effectively serves as a price hedge against future fuel costs, and will help mitigate the risk of potential unknown costs associated with any future carbon restrictions for electric generators.
These renewable energy resources also help us maintain diversity in our generation portfolio, which effectively serves as a price hedge against future fuel costs, and will help mitigate the risk of potential unknown costs associated with any future carbon restrictions for electric generators.
In 2022, we received approval from the PSCW for our RNG pilots. We have since signed our first five contracts for RNG for our natural gas distribution business, which will be transporting the output of local dairy farms onto our gas distribution system. The RNG supplied will directly replace higher-emission methane from natural gas that would have entered our pipes.
In 2022, we received approval from the PSCW for our RNG pilots. We have since signed contracts for RNG for our natural gas distribution business in Wisconsin, which will be transporting the output of local dairy farms onto our gas distribution systems. The RNG supplied will directly replace higher-emission methane from natural gas that would have entered our pipes.
Economic interruptions are declared during times in which the price of electricity in the regional market exceeds the cost of operating the company's peaking generation. During this time, interruptible customers can choose to continue using electricity at a price based on wholesale market prices or to reduce their load.
Economic interruptions are declared during times in which the price of electricity in the regional market exceeds the cost of operating the company's peaking generation. During this time, customers taking service under these interruptible programs can choose to continue using electricity at a price based on wholesale market prices or to reduce their load.
Two unaffiliated entities collectively own approximately 17%, or approximately 211 MW, of ER 1 and ER 2.
Two unaffiliated entities collectively own approximately 17%, or approximately 211 MWs, of ER 1 and ER 2.
Also, planned capital spending on our natural gas distribution facilities is concentrated in April through November. Because of these timing differences, the cash flow from customers is typically supplemented with temporary increases in short-term borrowings (from external sources) during the late summer and fall.
Also, planned capital spending on our natural gas distribution facilities is concentrated in April through November. Because of these timing differences, the cash flow from customers is typically supplemented with temporary increases in short-term borrowings (from external sources) during the late summer and fall. Short-term debt is typically reduced over the January through June period.
See Note 7, Property, Plant, and Equipment, for more information. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Corporate Developments for more information on the ESG Progress Plan. Also see Item 1A.
See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Corporate Developments for more information on the ESG Progress Plan. Also see Item 1A.
These planning reserve requirements are consistent with the MISO calculated planning reserve margin. In 2008, the PSCW established a 14.5% reserve margin requirement for long-term planning (planning years two through ten). For short-term planning (planning year one), the PSCW requires Wisconsin utilities to follow the planning reserve margin established by MISO.
These planning reserve requirements are consistent with the MISO calculated planning reserve margin. In 2008, the PSCW established a 14.5% reserve margin requirement for long-term planning (planning years two through ten). For short-term planning (planning year one), the PSCW requires Wisconsin utilities to follow the planning reserve margin established by MISO. MISO implemented seasonal requirements effective June 1, 2023.
In addition, the Pipeline and Hazardous Materials Safety Administration and the state commissions are responsible for monitoring and enforcing requirements governing our natural gas utilities' safety compliance programs for our pipelines under the United States Department of Transportation regulations.
In addition, the PHMSA and the state commissions are responsible for monitoring and enforcing requirements governing our natural gas utilities' safety compliance programs for our pipelines under the United States Department of Transportation regulations.
Customers Year Ended December 31 (in thousands) 2022 2021 2020 Customers – end of year Residential 375.4 370.1 365.7 Commercial and industrial 36.4 35.5 35.1 Transportation 19.7 23.6 24.4 Total customers 431.5 429.2 425.2 Natural Gas Supply, Pipeline Capacity and Storage We manage portfolios of natural gas supply contracts, storage services, and pipeline transportation services designed to meet varying customer use patterns.
Customers Year Ended December 31 (in thousands) 2023 2022 2021 Customers – end of year Residential 379.3 375.4 370.1 Commercial and industrial 36.8 36.4 35.5 Transportation 19.5 19.7 23.6 Total customers 435.6 431.5 429.2 Natural Gas Supply, Pipeline Capacity and Storage We manage portfolios of natural gas supply contracts, storage services, and pipeline transportation services designed to meet varying customer use patterns.
To supplement natural gas supply and manage risk, we purchase additional natural gas supply on the monthly and daily spot markets. Hedging Natural Gas Supply Prices Our Illinois utilities further reduce their supply cost volatility through the use of financial instruments, such as commodity futures, swaps, and options as part of their hedging programs.
To supplement natural gas supply and manage risk, we purchase additional natural gas supply on the monthly and daily spot markets. Hedging Natural Gas Supply Prices As part of their hedging programs, our Illinois utilities further reduce their supply cost volatility through the use of a mix of financial instruments, such as NYMEX-based natural gas options and futures contracts.
Operating Revenues For information about our operating revenues disaggregated by customer class for the years ended December 31, 2022, 2021, and 2020, see Note 4, Operating Revenues.
Operating Revenues For information about our operating revenues disaggregated by customer class for the years ended December 31, 2023, 2022, and 2021, see Note 1(d), Operating Revenues, and Note 4, Operating Revenues.
Operating Revenues For information about our operating revenues disaggregated by customer class for the years ended December 31, 2022, 2021, and 2020, see Note 4, Operating Revenues.
Operating Revenues For information about our operating revenues disaggregated by customer class for the years ended December 31, 2023, 2022, and 2021, see Note 1(d), Operating Revenues, and Note 4, Operating Revenues.
MISO maintains operational control of ATC's transmission system, and WE, WPS, and UMERC are non-transmission owning members and customers of MISO. As of December 31, 2022, our ownership interest in ATC was approximately 60%.
ATC is also a transmission-owning member of MISO. MISO maintains operational control of ATC's transmission system, and WE, WPS, and UMERC are non-transmission owning members and customers of MISO. As of December 31, 2023, our ownership interest in ATC was approximately 60%.
In addition to its responsibilities relative to executive compensation, the Compensation Committee has oversight responsibility for reviewing organizational matters that could significantly impact us, including succession planning. The Compensation Committee reviews recruiting and development programs and priorities, receives updates on key talent, and assesses workforce diversity across the organization.
In addition to its responsibilities relative to executive compensation, the Compensation Committee has oversight responsibility for reviewing organizational matters that could significantly impact us, including succession planning. The Compensation Committee reviews recruiting and development programs and priorities, receives updates on key talent, and assesses workforce diversity across the organization. 2023 Form 10-K 22 WEC Energy Group, Inc.
Regulated Retail Rates Regulatory Commission Authorized ROE Average Common Equity Component WE – electric, natural gas, and steam (1) PSCW 10.0% 52.5% WPS – electric and natural gas (1) PSCW 10.0% 52.5% WG – natural gas (1) PSCW 10.2% 52.5% UMERC – electric (former WE customers) MPSC 10.1% 55.3% UMERC – electric (former WPS customers) MPSC 10.2% 52.94% PGL – natural gas ICC 9.05% 50.33% NSG – natural gas ICC 9.67% 51.58% MERC – natural gas MPUC 9.7% 50.9% MGU – natural gas MPSC 9.85% 51.5% (1) In accordance with their most recent rate orders, effective January 1, 2023, each of WE's, WPS's, and WG's base rates reflect a 9.80% authorized ROE and an average common equity component of 53.0%.
Regulated Retail Rates Regulatory Commission Authorized ROE Average Common Equity Component WE – Electric, natural gas, and steam PSCW 9.80% 53.0% WPS – Electric and natural gas PSCW 9.80% 53.0% WG – Natural gas PSCW 9.80% 53.0% UMERC – Electric (former WE customers) MPSC 10.1% 55.3% UMERC – Electric (former WPS customers) MPSC 10.2% 52.94% PGL – Natural gas (1) ICC 9.05% / 9.38% 50.33% / 50.79% NSG – Natural gas (2) ICC 9.67% 51.58% MERC – Natural gas (3) MPUC 9.7% 50.9% MGU – Natural gas (4) MPSC 9.85% 51.5% (1) In accordance with its most recent rate order, effective December 1, 2023, PGL's base rates reflect a 9.38% authorized ROE and an average common equity component of 50.79%.
Our other states utilities' peak daily send-out during 2022 was 7.5 million therms on January 6, 2022. Natural Gas Supply Our natural gas supply requirements are met through a combination of fixed-price purchases, index-priced purchases, contracted and owned storage, and natural gas supply call options.
Our other states utilities' peak daily send-out during 2023 was 6.8 million therms on February 3, 2023. Natural Gas Supply Our natural gas supply requirements are met through a combination of fixed-price purchases, index-priced purchases, contracted and owned storage, and natural gas supply call options.
Customers Year Ended December 31 (in thousands) 2022 2021 2020 Customers – end of year Residential 910.9 904.5 895.9 Commercial and industrial 71.1 71.5 71.4 Transportation 66.4 68.3 74.8 Total customers 1,048.4 1,044.3 1,042.1 Natural Gas Supply, Pipeline Capacity, and Storage We manage portfolios of natural gas supply contracts, storage services, and pipeline transportation services designed to meet varying customer use patterns.
Customers Year Ended December 31 (in thousands) 2023 2022 2021 Customers – end of year Residential 922.9 910.9 904.5 Commercial and industrial 71.3 71.1 71.5 Transportation 62.0 66.4 68.3 Total customers 1,056.2 1,048.4 1,044.3 Natural Gas Supply, Pipeline Capacity, and Storage We manage portfolios of natural gas supply contracts, storage services, and pipeline transportation services designed to meet varying customer use patterns.
The following table compares our utility operating revenues by regulatory jurisdiction for each of the three years ended December 31: 2022 2021 2020 (in millions) Amount Percent Amount Percent Amount Percent Electric Wisconsin $ 4,360.9 87.7 % $ 4,035.1 88.9 % $ 3,823.7 89.4 % Michigan 185.9 3.7 % 166.7 3.7 % 127.2 3.0 % FERC – Wholesale 425.0 8.6 % 336.8 7.4 % 323.1 7.6 % Total electric 4,971.8 100.0 % 4,538.6 100.0 % 4,274.0 100.0 % Natural Gas Wisconsin 1,983.0 44.1 % 1,493.8 40.5 % 1,196.2 41.2 % Illinois 1,890.9 42.0 % 1,672.8 45.3 % 1,321.9 45.5 % Minnesota 400.7 8.9 % 367.1 10.0 % 255.9 8.8 % Michigan 223.5 5.0 % 156.5 4.2 % 131.5 4.5 % Total natural gas 4,498.1 100.0 % 3,690.2 100.0 % 2,905.5 100.0 % Total utility operating revenues $ 9,469.9 $ 8,228.8 $ 7,179.5 Retail Rates The state regulatory commissions have general supervisory and regulatory powers over public utilities in their respective jurisdictions including, but not limited to, approval of retail utility rates and standards of service, mergers, affiliate transactions, location and construction of electric generating units and natural gas facilities, and certain other additions and extensions to utility facilities.
The following table compares our utility operating revenues by regulatory jurisdiction for each of the three years ended December 31: 2023 2022 2021 (in millions) Amount Percent Amount Percent Amount Percent Electric Wisconsin $ 4,548.8 90.8 % $ 4,360.9 87.7 % $ 4,035.1 88.9 % Michigan 141.4 2.8 % 185.9 3.7 % 166.7 3.7 % FERC – Wholesale 320.6 6.4 % 425.0 8.6 % 336.8 7.4 % Total electric 5,010.8 100.0 % 4,971.8 100.0 % 4,538.6 100.0 % Natural Gas Wisconsin 1,610.5 43.6 % 1,983.0 44.1 % 1,493.8 40.5 % Illinois 1,557.8 42.2 % 1,890.9 42.0 % 1,672.8 45.3 % Minnesota 348.4 9.4 % 400.7 8.9 % 367.1 10.0 % Michigan 175.3 4.8 % 223.5 5.0 % 156.5 4.2 % Total natural gas 3,692.0 100.0 % 4,498.1 100.0 % 3,690.2 100.0 % Total utility operating revenues $ 8,702.8 $ 9,469.9 $ 8,228.8 Retail Rates The state regulatory commissions have general supervisory and regulatory powers over public utilities in their respective jurisdictions including, but not limited to, approval of retail utility rates and standards of service, mergers, affiliate transactions, location and construction of electric generating units and natural gas facilities, and certain other additions and extensions to utility facilities.
Management's Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Wisconsin Segment Contribution to Net Income Attributed to Common Shareholders for information on natural gas sales volumes by customer class in Wisconsin and the Upper Peninsula of Michigan.
Management's Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Wisconsin Segment Contribution to Net Income Attributed to Common Shareholders for information on natural gas sales volumes by customer class in Wisconsin and the Upper Peninsula of Michigan. 2023 Form 10-K 10 WEC Energy Group, Inc.
Our electric utilities are authorized to provide retail electric service in designated territories in the state of Wisconsin, as established by indeterminate permits and boundary agreements with other utilities, and in certain territories in the state of Michigan pursuant to franchises granted by municipalities. Our electric utilities buy and sell wholesale electric power by participating in the MISO Energy Markets.
Our electric utilities are authorized to provide retail electric service in designated territories in the state of Wisconsin, as established by indeterminate permits and boundary agreements with other utilities, and in certain territories in the state of Michigan pursuant to franchises granted by municipalities.
WBS is a wholly owned centralized service company that provides administrative and general support services to our regulated entities. WBS also provides certain administrative and support services to our nonregulated entities. This segment also includes Wisvest, WECC, and PDL which no longer have significant operations. E.
Wispark develops and invests in real estate, primarily in southeastern Wisconsin. WBS is a wholly owned centralized service company that provides administrative and general support services to our regulated entities. WBS also provides certain administrative and support services to our nonregulated entities. This segment also includes Wisvest, WECC, and PDL which no longer have significant operations. E.
Customers Year Ended December 31 (in thousands) 2022 2021 2020 Customers – end of year Residential 1,365.5 1,353.2 1,346.9 Commercial and industrial 132.8 131.8 132.3 Transportation 3.5 3.5 3.4 Total customers 1,501.8 1,488.5 1,482.6 Natural Gas Supply, Pipeline Capacity and Storage We manage portfolios of natural gas supply contracts, storage services, and pipeline transportation services designed to meet varying customer use patterns.
Customers Year Ended December 31 (in thousands) 2023 2022 2021 Customers – end of year Residential 1,381.7 1,365.5 1,353.2 Commercial and industrial 134.8 132.8 131.8 Transportation 3.5 3.5 3.5 Total customers 1,520.0 1,501.8 1,488.5 Natural Gas Supply, Pipeline Capacity and Storage We manage portfolios of natural gas supply contracts, storage services, and pipeline transportation services designed to meet varying customer use patterns.
The project will be located in Rock and Walworth counties, Wisconsin and once fully constructed, WE and WPS will collectively own 225 MW of solar generation and 68 MW of battery storage of this project.
The project will be located in Rock and Walworth counties, Wisconsin and once fully constructed, WE and WPS will collectively own 225 MWs of solar generation.
Combined with our storage capability, management believes that the volume of natural gas under contract is sufficient to meet our forecasted firm peak-day and seasonal demand. Our Illinois utilities' forecasted design peak-day throughput is 26.0 million therms for the 2022 through 2023 heating season. Our Illinois utilities' peak daily send-out during 2022 was 19.9 million therms on December 23, 2022.
Combined with our storage capability, management believes that the volume of natural gas under contract is sufficient to meet our forecasted firm peak-day and seasonal demand. Our Illinois utilities' forecasted design peak-day throughput is 25.4 million therms for the 2023 through 2024 heating season. Our Illinois utilities' peak daily send-out during 2023 was 15.9 million therms on January 31, 2023.
Table of Contents Our average fuel and purchased power costs per MWh by fuel type, including delivery costs, were as follows for the years ended December 31: 2022 2021 2020 Coal $ 25.37 $ 21.06 $ 20.16 Natural gas combined cycle 42.11 24.55 16.24 Natural gas/oil peaking units 90.22 76.96 39.37 Biomass 78.42 86.24 130.76 Purchased power 58.78 50.88 43.50 WE and WPS purchase coal under long-term contracts, which helps with price stability.
Our average fuel and purchased power costs per MWh by fuel type, including delivery costs, were as follows for the years ended December 31: 2023 2022 2021 Coal $ 25.80 $ 25.37 $ 21.06 Natural gas combined cycle 30.41 42.11 24.55 Natural gas/oil peaking units 56.41 90.22 76.96 Biomass 87.73 78.42 86.24 Purchased power 53.90 58.78 50.88 WE and WPS purchase coal under long-term contracts, which helps with price stability.
Table of Contents Illinois Utilities Operating Statistics Operating Revenues For information about our operating revenues disaggregated by customer class for the years ended December 31, 2022, 2021, and 2020, see Note 4, Operating Revenues.
Table of Contents Operating Revenues For information about our operating revenues disaggregated by customer class for the years ended December 31, 2023, 2022, and 2021, see Note 1(d), Operating Revenues, and Note 4, Operating Revenues.
Natural Gas System Modernization Program PGL is continuing work on the SMP, a project to replace approximately 2,000 miles of Chicago's aging natural gas pipeline infrastructure that began in 2011. PGL currently recovers these costs through a surcharge on customer bills pursuant to an ICC approved QIP rider, which is in effect through 2023.
Natural Gas System Modernization Program During 2023, PGL continued work on the SMP, a project to replace approximately 2,000 miles of Chicago's aging natural gas pipeline infrastructure that began in 2011. Prior to December 1, 2023, PGL recovered these costs through a surcharge on customer bills pursuant to an ICC approved QIP rider.
We Power's share of the ERGS units and both PWGS units are being leased to WE under long-term leases (the ERGS units have 30-year leases that began on the in-service dates of the generating units and the PWGS units have 25-year leases that began on the in-service dates of the generating units).
We Power's share of the ERGS units and both PWGS units are being leased to WE under long-term leases (the ERGS units have 30-year leases that began on the in-service dates of the generating units and the PWGS units have 25-year leases that began on the in-service dates of the generating units). 2023 Form 10-K 16 WEC Energy Group, Inc.
ATC is expected to provide comparable service to all customers, including WE, WPS, and UMERC, and to support effective competition in energy markets without favoring any market participant. ATC is regulated by the FERC for all rate terms and conditions of service and is a transmission-owning member of MISO.
ATC is expected to provide comparable service to all customers, including WE, WPS, and UMERC, and to support effective competition in energy markets without favoring any market participant. ATC is regulated by the FERC for all rate terms and conditions of service and certain state regulatory commissions for routing and siting of transmission projects.
Management's Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Illinois Segment Contribution to Net Income Attributed to Common Shareholders for information on natural gas sales volumes by customer class. 2022 Form 10-K 12 WEC Energy Group, Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Illinois Segment Contribution to Net Income Attributed to Common Shareholders for information on natural gas sales volumes by customer class.
This includes managing our generation portfolio, both retirements and new resources, to ensure we do not get in a significant short position. Other Electric Regulations Our electric utilities are subject to the Federal Power Act and the corresponding regulations developed by certain federal agencies.
This includes managing the retirement of existing generation resources and the addition of new generation resources to maintain a diversified portfolio to ensure we do not have a significant short position. Other Electric Regulations Our electric utilities are subject to the Federal Power Act and the corresponding regulations developed by certain federal agencies.
We believe that having diverse capacity and storage benefits our customers. 2022 Form 10-K 14 WEC Energy Group, Inc. Table of Contents Natural gas pipeline capacity and storage and natural gas supplies under contract can be resold in secondary markets. Peak or near-peak demand generally occurs only a few times each year.
We believe that having diverse capacity and storage benefits our customers. Natural gas pipeline capacity and storage and natural gas supplies under contract can be resold in secondary markets. Peak or near-peak demand generally occurs only a few times each year.
We target storage inventory levels at approximately 40% of forecasted demand for November through March. Diversity of natural gas supply enables us to manage significant changes in demand and to optimize our overall natural gas supply and capacity costs.
We target storage inventory levels at approximately 40% of forecasted demand for November through March. Diversity of natural gas supply enables us to manage significant changes in demand and to optimize our overall natural gas supply and capacity costs. We generally inject natural gas into storage during the spring and summer months and withdraw it in the winter months.
We also use a portion of these company-owned storage and pipeline assets as a natural gas hub, which consists of providing transportation and storage services in interstate commerce to our wholesale customers.
These assets are directed primarily to serving rate-regulated retail customers and are included in our regulatory rate base. We also use a portion of these company-owned storage and pipeline assets as a natural gas hub, which consists of providing transportation and storage services in interstate commerce to our wholesale customers.
Natural Gas Supply Our natural gas supply requirements are met through a combination of fixed-price purchases, index-priced purchases, contracted and owned storage, peak-shaving facilities, and natural gas supply call options. We contract for fixed-term firm natural gas supply 2022 Form 10-K 13 WEC Energy Group, Inc. Table of Contents each year to meet the demand of firm system sales customers.
Natural Gas Supply Our natural gas supply requirements are met through a combination of fixed-price purchases, index-priced purchases, storage, peak-shaving facilities, and natural gas supply call options. We contract for fixed-term firm natural gas supply each year to meet the demand of firm system sales customers.
We contract for fixed-term firm natural gas supply each year to meet the demand of firm system sales customers. To supplement natural gas supply and manage risk, we purchase additional natural gas supply on the monthly and daily spot markets.
We contract for fixed-term firm natural gas supply each year to meet the 2023 Form 10-K 14 WEC Energy Group, Inc. Table of Contents demand of firm system sales customers. To supplement natural gas supply and manage risk, we purchase additional natural gas supply on the monthly and daily spot markets.
Management's Discussion and Analysis of Financial Condition and Results of Operations – Factors Affecting Results, Liquidity, and Capital Resources – Regulatory, Legislative, and Legal Matters – American Transmission Company Allowed Return on Equity Complaints for more information. 2022 Form 10-K 16 WEC Energy Group, Inc. Table of Contents D.
Management's Discussion and Analysis of Financial Condition and Results of Operations – Factors Affecting Results, Liquidity, and Capital Resources – Regulatory, Legislative, and Legal Matters – American Transmission Company Allowed Return on Equity Complaints for more information. D.
Our Wisconsin segment natural gas utilities' forecasted design peak-day throughput is 35.3 million therms for the 2022 through 2023 heating season. Our Wisconsin segment natural gas utilities' peak daily send-out during 2022 was 25.3 million therms on January 25, 2022.
Our Wisconsin segment natural gas utilities' forecasted design peak-day throughput is 36.7 million therms for the 2023 through 2024 heating season. Our Wisconsin segment natural gas utilities' peak daily send-out during 2023 was 22.9 million therms on January 31, 2023.
Additional small volume agreements may also be used to supplement the normal coal supply for our facilities. For additional information concerning risks related to coal supply chain disruptions, see the risk factor below. • Item 1A.
The unit trains transport the coal for electric generating facilities from mines in Wyoming and Pennsylvania. Additional small volume agreements may also be used to supplement the normal coal supply for our facilities. For additional information concerning risks related to coal supply chain disruptions, see the risk factor below. • Item 1A.
These approvals provide for 100% of the related proceeds to accrue to these companies' respective GCRMs. Illinois Segment Our Illinois segment includes the natural gas utility operations of PGL and NSG. Our customers are located in Chicago and the northern suburbs of Chicago. PGL and NSG provide service to residential and commercial and industrial customers.
Illinois Segment Our Illinois segment includes the natural gas utility operations of PGL and NSG. Our customers are located in Chicago and the northern suburbs of Chicago. PGL and NSG provide service to residential and commercial and industrial customers.
Commercial operation of Badger Hollow II is targeted for 2023. • In December 2018, WE received approval from the PSCW for the Solar Now pilot program, which is expected to add a total of 35 MW of solar generation to WE's portfolio, allowing non-profit and government entities, as well as commercial and industrial customers, to site utility owned solar arrays on their property.
The construction of the solar portion and battery storage is expected to be completed in 2024 and 2025, respectively. • In December 2018, WE received approval from the PSCW for the Solar Now pilot program, which is expected to add a total of 35 MWs of solar generation to WE's portfolio, allowing non-profit and government entities, as well as commercial and industrial customers, to site utility owned solar arrays on their property.
In 2022, retail revenues accounted for 90.4% of total electric operating revenues, wholesale revenues accounted for 3.1% of total electric operating revenues, and resale revenues accounted for 5.2% of total electric operating revenues. See Item 7.
In 2023, retail revenues accounted for 92.9% of total electric operating revenues, wholesale revenues accounted for 2.4% of total electric operating revenues, and resale revenues accounted for 3.9% of total electric operating revenues. See Item 7.
The installed capacity reserve margins for the planning year June 1, 2023 through May 31, 2024 are as follows: 15.9% summer (June – August); 25.8% fall (September – November); 41.2% winter (December – February); and 39.3% spring (March – May).
The installed capacity reserve margins for the planning year June 1, 2024 through May 31, 2025 are as follows: 16.6% summer (June – August); 26.6% fall (September – November); 41.1% winter (December – February); and 39.5% spring (March – May).
Table of Contents We have a local union presence that spans Wisconsin, Illinois, Minnesota, and Michigan. We believe we have very good overall relations with our workforce. In order to attract and retain talent, we provide competitive wages and benefits to our employees based on their performance, role, location, and market data.
We believe we have very good overall relations with our workforce. In order to attract and retain talent, we provide competitive wages and benefits to our employees based on their performance, role, location, and market data.
We own 7,736 MW of generation capacity, including wholly owned and jointly owned facilities. We Power's generating units are also included in the generation capacity. Our facilities include coal-fired plants, natural gas-fired plants, and renewable generation. Certain of our natural gas-fired generation units have the ability to burn oil if natural gas is not available due to delivery constraints.
We Power's generating units are also included in the generation capacity. Our facilities include natural gas-fired plants, coal-fired plants, and renewable generation. Certain of our natural gas-fired generation units have the ability to burn oil if natural gas is not available due to delivery constraints. For more information about our facilities, see Item 2. Properties.
In December 2018, WE received approval from the PSCW for the DRER pilot program, a program for large commercial and industrial customers who wish to access renewable resources that WE would operate, adding up to 150 MW of renewables to WE's portfolio.
In December 2018, WE received approval from the PSCW for the DRER pilot program, a program designed to allow large commercial and industrial customers to access renewable resources that WE would operate.
For 2023, 100% of our total projected coal requirements of 8.7 million tons are contracted under fixed-price contracts. See Note 24, Commitments and Contingencies, for more information on amounts of coal purchases and coal deliveries under contract. The annual tonnage amounts contracted for the next three years are as follows.
See Note 24, Commitments and Contingencies, for more information on amounts of coal purchases and coal deliveries under contract. The annual tonnage amounts contracted for the next three years are as follows.
Electric Utility Operations For the periods presented in this Annual Report on Form 10-K, our electric utility operations included operations of WE, WPS, and UMERC. • WE generates and distributes electric energy to customers located in southeastern Wisconsin (including the metropolitan Milwaukee area), east central Wisconsin, and northern Wisconsin.
Electric Utility Operations Our electric utility operations include the operations of WE, WPS, and UMERC. • WE generates and distributes electric energy to customers located in southeastern Wisconsin (including the metropolitan Milwaukee area), east central Wisconsin, and northern Wisconsin. • WPS generates and distributes electric energy to customers located in northeastern and central Wisconsin. 2023 Form 10-K 4 WEC Energy Group, Inc.
Coal and associated transportation services are exposed to volatility in pricing due to changing domestic and world-wide demand for coal and diesel fuel. To moderate this volatility risk, WE and WPS have PSCW approval for a hedging program. This program allows them to hedge up to 75% of their potential risks related to rail transportation fuel surcharge exposure.
Coal and associated transportation services are exposed to volatility in pricing due to changing domestic and world-wide demand for coal and diesel fuel. To mitigate against this volatility risk, WE and WPS have PSCW approval for a hedging program.
Our power purchase commitments with unaffiliated parties consist of 1,133 MW per year for 2023 through 2027, which exclude planning capacity purchases. Each of these amounts include 1,033 MW per year related to a long-term PPA for electricity generated by Point Beach.
Excluding planning capacity purchases, our power purchase commitments with unaffiliated parties consist of 1,133 MWs per year for 2024 through 2028. This amount includes 1,033 MWs per year related to a long-term PPA for electricity generated by Point Beach.
Electric Generation and Supply Mix Our electric supply strategy is to provide our customers with energy from plants using a diverse fuel mix that is expected to balance a stable, reliable, and affordable supply of electricity with environmental stewardship.
Electric Generation and Supply Mix Our electric supply strategy is to provide our customers with energy from a diverse generation portfolio that is expected to balance a stable, reliable, and affordable supply of electricity with environmental stewardship. Through our participation in the MISO Energy Markets, we supply a significant amount of electricity to our customers from generation that we own.
Seasonality The electricity produced and revenues generated by our wind generating facilities depend heavily on wind conditions, which are variable. Operating results for wind generating facilities vary significantly from period to period depending on the wind conditions during the periods in question. Historically, wind production has been greater in the first and fourth quarters.
See Note 2, Acquisitions, for more information on certain of these renewable generating facilities. Seasonality The electricity produced and revenues generated by our wind generating facilities depend heavily on wind conditions, which are variable. Operating results for wind generating facilities vary significantly from period to period depending on the wind conditions during the periods in question.
(2) Includes hydroelectric, biomass, solar, and wind generation. 2022 Form 10-K 6 WEC Energy Group, Inc. Table of Contents Electric Generation Facilities Our generation portfolio is a mix of energy resources having different operating characteristics and fuel sources designed to balance providing energy that is stable, reliable, and affordable with environmental stewardship.
(2) Includes hydroelectric, biomass, solar, and wind generation. Electric Generation Facilities Our generation portfolio is a mix of energy resources having different operating characteristics and fuel sources designed to balance providing energy that is stable, reliable, and affordable with environmental stewardship. We own 8,337 MWs of generation capacity, including wholly owned and jointly owned facilities.
Name Ownership Interest Commercial Operation Bishop Hill III 90.0 % August 2018 Upstream 90.0 % January 2019 Coyote Ridge 80.0 % December 2019 Blooming Grove 90.0 % December 2020 Tatanka Ridge 85.0 % January 2021 Jayhawk 90.0 % December 2021 Thunderhead 90.0 % November 2022 Bishop Hill III, Coyote Ridge, Blooming Grove, Tatanka Ridge, Jayhawk, and Thunderhead have offtake agreements with creditworthy counterparties for the sale of all of the energy they produce over periods ranging from 10 to 22 years following commercial operation.
Bishop Hill III, Coyote Ridge, Blooming Grove, Tatanka Ridge, Jayhawk, Thunderhead, Samson I, and Sapphire Sky have offtake agreements with creditworthy counterparties for the sale of all of the energy they produce over periods ranging from 10 to 22 years following commercial operation.
Major industries served include education, wholesale distributors, non-profits, metals manufacturing, and real estate. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Other States Segment Contribution to Net Income Attributed to Common Shareholders for information on natural gas sales volumes by customer class for this segment.
Management's Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Other States Segment Contribution to Net Income Attributed to Common Shareholders for information on natural gas sales volumes by customer class.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor example, if there is an increase in frequency and severity of weather conditions, the disruptions to our sites may become more frequent and severe. For the majority of our non-utility renewable energy operations, we have entered into long-term PPAs with a small number of customers to purchase the energy produced by our facilities.
Biggest changeWe have entered into long-term PPAs for the majority of our non-utility renewable energy operations with a small number of customers where their payment is based on the energy produced, and in some cases the REC value created, by our facilities.
These permits, approvals, authorizations, certificates, and licenses may be revoked or modified by the agencies that granted them if facts develop that differ significantly from the facts assumed when they were issued. In addition, discharge permits and other approvals and licenses are often granted for a term that is less than the expected life of the associated facility.
These permits, approvals, authorizations, certificates, and licenses may be revoked or modified by the agencies that granted them if facts develop that differ significantly from the facts assumed when they were issued. In addition, permits and other approvals and licenses are often granted for a term that is less than the expected life of the associated facility.
To the extent that delays occur, costs become unrecoverable, tax credits are lost or lose value, or we (or third parties with whom we invest and/or partner) otherwise become unable to effectively manage and complete our (or their) capital projects, our results of operations, cash flows, and financial condition may be adversely affected.
To the extent that delays occur, costs become unrecoverable, tax credits are lost or lose value, or we or third parties with whom we invest and/or partner otherwise become unable to effectively manage and complete capital projects, our results of operations, cash flows, and financial condition may be adversely affected.
Public health crises, including epidemics and pandemics, and any related government responses could also impair our and our subsidiaries' ability to develop, construct, and operate facilities. Risks include extended disruptions to supply chains and inflation, resulting in increased costs for labor, materials, and services, which could adversely impact our ability to implement our corporate strategy.
Public health crises, including epidemics and pandemics, and any related government responses could also impair our ability to develop, construct, and operate facilities. Risks include extended disruptions to supply chains and inflation, resulting in increased costs for labor, materials, and services, which could adversely impact our ability to implement our corporate strategy.
We or any of our subsidiaries could experience a downgrade in ratings if the rating agencies determine that our level of business or financial risk, or that of any of our utilities or the utility industry, has deteriorated. Changes in rating methodologies by the rating agencies could also have a negative impact on credit ratings.
We could experience a downgrade in ratings if the rating agencies determine that our level of business or financial risk, or that of any of our utilities or the utility industry, has deteriorated. Changes in rating methodologies by the rating agencies could also have a negative impact on credit ratings.
An extreme weather event could also cause the cost of gas purchased for our natural gas utility customers and for the use of fuel at our generation facilities to be temporarily driven significantly higher than our normal winter weather expectations.
Additionally, an extreme weather event could also cause the cost of natural gas purchased for our natural gas utility customers and for the use of fuel at our generation facilities to be temporarily driven significantly higher than our normal winter weather expectations.
A significant disruption to interstate pipelines capacity or reduction in natural gas supply due to events including, but not limited to, operational failures or disruptions, hurricanes, tornadoes, floods, freeze off of natural gas wells, terrorist or physical attacks, cyberattacks, other acts of war, or legislative or regulatory actions or requirements, including remediation related to integrity inspections or regulations and laws enacted to address climate change, could reduce the normal interstate supply of natural gas and thereby significantly disrupt our operations and/or reduce earnings.
A significant disruption to interstate pipelines capacity or reduction in natural gas supply due to events including, but not limited to, operational failures or disruptions, hurricanes, tornadoes, floods, freeze-off of natural gas wells, terrorist or physical attacks, cyberattacks, other acts of war, or legislative or regulatory actions or requirements, including remediation related to integrity inspections or regulations and laws enacted to address climate change or other environmental matters, could reduce the normal interstate supply of natural gas and thereby significantly disrupt our operations and/or reduce earnings.
Such changes include, among other things, increasing the federal corporate income tax rate, disallowing use of certain tax benefits and carryforwards, limiting interest deductions, and altering the expensing of capital expenditures.
Such changes include, among other things, increasing the federal corporate income tax rate, disallowing or limiting the use of certain tax benefits and carryforwards, limiting interest deductions, and altering the expensing of capital expenditures.
If these technologies become more cost competitive and achieve economies of scale, our market share could be eroded, and the value of our generating facilities and natural gas distribution systems could be reduced.
If these technologies become cost competitive and achieve economies of scale, our market share could be eroded, and the value of our generating facilities and natural gas distribution systems could be reduced.
Moreover, prices of equipment, materials, and other resources have increased recently as a result of these supply chain disruptions and may continue to increase in the future, as a result of inflation.
Moreover, prices of equipment, materials, and other resources have increased as a result of these supply chain disruptions and may continue to increase in the future, as a result of inflation.
Any downgrade by the rating agencies could: • Increase borrowing costs under certain existing credit facilities; • Require the payment of higher interest rates in future financings and possibly reduce the pool of creditors; • Decrease funding sources by limiting our or our subsidiaries' access to the commercial paper market; • Limit the availability of adequate credit support for our subsidiaries' operations; and • Trigger collateral requirements in various contracts.
Any downgrade by the rating agencies could: • Increase borrowing costs under certain existing credit facilities; • Require the payment of higher interest rates in future financings and possibly reduce the pool of creditors; • Decrease funding sources by limiting our access to the commercial paper market; • Limit the availability of adequate credit support for our operations; and • Trigger collateral requirements in various contracts.
Public health crises, including epidemics and pandemics, and any related government responses may adversely impact the economy and financial markets and could have a variety of adverse impacts on us and our subsidiaries, including a decrease in revenues; increased bad debt expense; increases in past due accounts receivable balances; and access to the capital markets at unreasonable terms or rates.
Public health crises, including epidemics and pandemics, and any related government responses may adversely impact the economy and financial markets and could have a variety of adverse impacts on us, including a decrease in revenues; increased bad debt expense; increases in past due accounts receivable balances; and access to the capital markets at unreasonable terms or rates.
This price difference, known as basis risk, can be significant at times. We attempt to mitigate basis risk where possible, but hedging instruments are often not economically feasible or available in the quantities that we require. Basis risk cannot be entirely eliminated and can adversely affect our financial condition and results of operations.
This price disparity, known as basis risk, can be significant at times. We attempt to mitigate basis risk where possible, but hedging instruments are often not economically feasible or available in the quantities that we require. Basis risk cannot be entirely eliminated and can adversely affect our financial condition and results of operations.
Despite the implementation of security measures, all assets and systems are potentially vulnerable to disability, failures, or unauthorized access due to physical or cyber security intrusions caused by human error, vendor bugs, terrorist or other physical attacks (including potential attacks on our substations and other electric distribution equipment), acts of war, or other malicious acts.
Despite the implementation of security measures, all assets and systems are potentially vulnerable to disability, failures, or unauthorized access due to physical or cybersecurity intrusions caused by human error, vendor bugs, terrorist or other physical attacks (including potential attacks on our substations and other electric distribution equipment), acts of war, or other malicious acts.
Table of Contents If we are unable to recover costs of complying with regulations or other associated costs in customer rates in a timely manner, or if we are unable to obtain, renew, or comply with these governmental permits, approvals, authorizations, certificates, or licenses, our results of operations and financial condition could be materially and adversely affected.
If we are unable to recover costs of complying with regulations or other associated costs in customer rates in a timely manner, or if we are unable to obtain, renew, or comply with these governmental permits, approvals, authorizations, certificates, or licenses, our results of operations and financial condition could be materially and adversely affected.
We also believe we will be in a position to eliminate coal as an energy source by the end of 2035. We continue to monitor the financial and operational feasibility of taking more aggressive action to further reduce GHG emissions in order to limit future global temperature increases.
We also believe we will be in a position to eliminate coal as an energy source by the end of 2032. We continue to monitor the financial and operational feasibility of taking more aggressive action to further reduce GHG emissions in order to limit future global temperature increases.
Failure to eliminate or manage the constraints in the supply chain may eventually impact the availability of items that are necessary to support normal operations as well as materials that are required to implement our corporate strategy for continued infrastructure growth, including our renewable energy projects.
Failure to eliminate or manage the constraints in the supply chain may eventually impact the availability of items that are necessary to support normal operations as well as materials that are required to implement our corporate strategy for continued utility and infrastructure growth, including our renewable energy projects.
At December 31, 2022, our goodwill was $3,052.8 million. Other long-lived assets, including intangible assets, are evaluated for impairment on an annual basis or whenever events or circumstances occur that indicate that an asset's carrying value may not be recoverable.
At December 31, 2023, our goodwill was $3,052.8 million. Other long-lived assets, including intangible assets, are evaluated for impairment on an annual basis or whenever events or circumstances occur that indicate that an asset's carrying value may not be recoverable.
Decreases in the retail prices of electricity supplied by traditional utilities or other clean energy sources in the areas where our non-utility renewable energy facilities are located could harm our ability to offer competitive pricing and could harm our ability to sign PPAs with customers.
Decreases in the retail prices of electricity supplied by traditional utilities or the pricing of other clean energy sources in the regions where our non-utility renewable energy facilities are located could harm our ability to offer competitive pricing and to sign PPAs with customers.
Provisions of the Wisconsin Utility Holding Company Act limit our ability to invest in non-utility businesses and could deter takeover attempts by a potential purchaser of our common stock that would be willing to pay a premium for our common stock.
Table of Contents Provisions of the Wisconsin Utility Holding Company Act limit our ability to invest in non-utility businesses and could deter takeover attempts by a potential purchaser of our common stock that would be willing to pay a premium for our common stock.
We believe we have obtained the necessary permits, approvals, authorizations, certificates, and licenses for our existing operations, have complied in all material respects with all of their associated terms, and that our businesses are conducted in accordance with applicable laws.
Table of Contents We believe we have obtained the necessary permits, approvals, authorizations, certificates, and licenses for our existing operations, have complied in all material respects with all of their associated terms, and that our businesses are conducted in accordance with applicable laws.
Table of Contents Volatility in the securities markets, interest rates, changes in assumptions, market conditions, and other factors may impact the performance of our benefit plan holdings and other investment funds. We have significant obligations related to pension and OPEB plans.
Volatility in the securities markets, interest rates, changes in assumptions, market conditions, and other factors may impact the performance of our benefit plan holdings and other investment funds. We have significant obligations related to pension and OPEB plans.
Successful cyber security intrusions, including those targeting the electronic control systems used at our generating facilities and electric and natural gas transmission, distribution, and storage systems, could disrupt our operations and result in loss of service to customers. Attacks may come through ransomware, software updates or patches, or firmware that hackers can manipulate.
Successful cybersecurity intrusions, including those targeting the electronic control systems used at our generating facilities and electric and natural gas transmission, distribution, and storage systems, could disrupt our operations and result in loss of service to customers. Attacks may come through ransomware, software updates or patches, or firmware that hackers can manipulate.
Table of Contents Advances in technology, and legislation or regulations supporting such technology, could make our electric generating facilities less competitive and may impact the demand for natural gas. Advances in new technologies that produce or store power or reduce power consumption are ongoing and include renewable energy technologies, customer-oriented generation, energy storage devices, and energy efficiency technologies.
Advances in technology, and legislation or regulations supporting such technology, could make our electric generating facilities less competitive and may impact the demand for natural gas. Advances in new technologies that produce or store power or reduce power consumption are ongoing and include renewable energy technologies, customer-oriented generation, energy storage devices, and energy efficiency technologies.
Table of Contents In the event we are not able to recover all of our environmental expenditures and related costs from our customers in the future, our results of operations and financial condition could be adversely affected.
In the event we are not able to recover all of our environmental expenditures and related costs from our customers in the future, our results of operations and financial condition could be adversely affected.
Litigation over environmental issues and claims of various types, including property damage, personal injury, common law nuisance, and citizen enforcement of environmental laws and regulations, occurs frequently throughout the United States.
Table of Contents Litigation over environmental issues and claims of various types, including property damage, personal injury, common law nuisance, and citizen enforcement of environmental laws and regulations, occurs frequently throughout the United States.
We operate in an industry that requires the use of sophisticated information technology systems and network infrastructure, which control an interconnected system of generation, distribution, and transmission systems shared with third parties.
We operate in an industry that requires the use of sophisticated information technology systems and network infrastructure, which in turn control an interconnected network of generation, distribution, and transmission systems shared with third parties.
We are subject to significant state, local, and federal governmental regulations, including regulations by the various utility commissions in the states where we serve customers. These regulations significantly influence our operating environment, may affect our ability to recover costs from utility customers, and cause us to incur substantial compliance and other costs.
We are subject to significant state, local, and federal governmental regulations, including regulations by the various utility commissions in the states where we serve customers. These regulations significantly influence our operating environment, may affect our ability to recover costs from utility customers, affect our ability to implement our corporate strategy, and cause us to incur substantial compliance and other costs.
Several of these rules are being challenged or reviewed by agencies under the Biden Administration's Executive Order 13990, which creates additional uncertainty. As a result of these challenges and reviews, existing environmental laws and regulations may be revised or new laws or regulations may be adopted at the federal, state, or local level.
Several of these rules were challenged or reviewed by agencies under the Biden Administration's Executive Order 13990, which creates additional uncertainty. As a result of these challenges and reviews, existing environmental laws and regulations may be revised or new laws or regulations may be adopted at the federal, state, or local level.
In addition, our operations could be adversely affected and our facilities placed at greater risk of damage should changes in global climate produce, among other possible conditions, unusual variations in temperature and weather patterns, which could result in more intense, frequent and extreme weather events, such as wind storms, floods, tornadoes, snow and ice storms, or abnormal levels of precipitation.
Table of Contents In addition, our operations could be adversely affected and our facilities placed at greater risk of damage should changes in global climate produce, among other possible conditions, unusual variations in temperature and weather patterns, which could result in more intense, frequent and extreme weather events, such as wind storms including derecho events, floods, tornadoes, snow and ice storms, or abnormal levels of precipitation.
Table of Contents Risks Related to the Operation of Our Business Public health crises, including epidemics and pandemics, could adversely affect our business functions, financial condition, liquidity, and results of operations.
Risks Related to the Operation of Our Business Public health crises, including epidemics and pandemics, could adversely affect our business functions, financial condition, liquidity, and results of operations.
The cost of natural gas has increased, and may continue to increase because of disruptions in the supply of natural gas due to a curtailment in production or distribution, international market conditions, the demand for natural gas, and the availability of shale gas and potential regulations and/or other government action affecting its accessibility.
The cost of natural gas may increase because of disruptions in the supply of natural gas due to a curtailment in production or distribution, international market conditions, the demand for natural gas, and the availability of shale gas and potential regulations and/or other government action affecting its accessibility.
We are also uncertain as to how credit rating agencies, capital markets, the FERC, or state public utility commissions will treat any future changes to federal or state tax legislation. These impacts could subject us or any of our subsidiaries to credit rating downgrades.
We are also uncertain as to how credit rating agencies, capital markets, the FERC, or state public utility commissions will treat any future changes to federal or state tax legislation. These impacts could subject us to credit rating downgrades.
Our electric utilities are subject to mandatory reliability and critical infrastructure protection standards established by the North American Electric Reliability Corporation and enforced by the FERC. The critical infrastructure protection standards focus on controlling access to critical physical and cyber security assets. Compliance with the mandatory reliability standards could subject our electric utilities to higher operating costs.
Our electric utilities are subject to mandatory reliability and critical infrastructure protection standards established by the North American Electric Reliability Corporation and enforced by the FERC. The critical infrastructure protection standards focus on controlling access to critical physical and cybersecurity assets. Compliance with the mandatory reliability standards could subject our electric utilities to higher operating costs.
Table of Contents If we are unable to obtain our coal requirements under our coal supply and transportation contracts, we may be required to purchase coal at higher prices or we may be forced to reduce generation at our coal-fired units, which could lead to increased fuel costs.
If we are unable to obtain our coal requirements under our coal supply and transportation contracts, we may be required to purchase coal at higher prices or we may be forced to reduce generation at our coal-fired units, which could lead to increased fuel costs.
Potential breakdown or failure may occur due to severe weather (i.e., storms, tornadoes, floods, droughts, etc.); catastrophic events (i.e., fires, earthquakes, and explosions); public health crises, including epidemics and pandemics; significant changes in water levels in waterways; fuel supply or transportation disruptions; accidents; employee labor disputes; construction delays or cost overruns; shortages of or delays in obtaining equipment, material, and/or labor; performance below expected levels; operating limitations that may be imposed by environmental or other regulatory requirements; terrorist or other physical attacks; or cyber security intrusions.
Potential breakdown or failure may occur due to severe weather (i.e., storms, tornadoes, floods, droughts, etc.); catastrophic events (i.e., fires, earthquakes, and explosions); public health crises, including epidemics and pandemics; significant changes in water levels in waterways; fuel supply or transportation disruptions; accidents; employee labor disputes; construction delays or cost overruns; delays in the replacement of aging infrastructure; shortages of or delays in obtaining equipment, material, and/or labor; performance below expected levels; operating limitations that may be imposed by environmental or other regulatory requirements; terrorist or other physical attacks; or cybersecurity intrusions.
We cannot predict the effect that development of alternative energy sources or new technology may have on our natural gas operations, including whether subsidies of alternative energy sources by local, state, and federal governments might be expanded, or what impact this might have on the supply of or the demand for natural gas.
Table of Contents In addition, we cannot predict the effect that development of alternative energy sources or new technology may have on our natural gas operations, including whether subsidies of alternative energy sources by local, state, and federal governments might be expanded, or what impact this might have on the supply of or the demand for natural gas.
As members of these RTOs, we are also subject to certain additional risks, including the allocation among existing members, of losses caused by unreimbursed defaults of other participants in these markets and resolution of complaint cases that may seek refunds of revenues previously earned by members of these markets.
As members of these RTOs, we are also subject to certain additional risks, including the allocation of losses among existing members caused by unreimbursed defaults of other participants in these markets and resolution of complaint cases seeking refunds of revenues previously earned by members of these markets.
Our operations are subject to risks beyond our control, including but not limited to, cyber security intrusions, terrorist or other physical attacks, acts of war, or unauthorized access to personally identifiable information.
Our operations are subject to risks beyond our control, including but not limited to, cybersecurity intrusions, terrorist or other physical attacks, acts of war, or unauthorized access to personally identifiable information.
Table of Contents Our corporate strategy may be impacted by policy and legal, technology, market, and reputational risks and opportunities that are associated with the transition to lower GHG emissions.
Our corporate strategy may be impacted by policy and legal, technology, market, and reputational risks and opportunities that are associated with the transition to lower GHG emissions.
The imposition of additional taxes, tariffs, or other assessments related to renewable energy projects as well as any reductions or eliminations of tax credits or other governmental incentives that promote renewable energy generating facilities may limit our ability to make further investments in renewable energy generating facilities or reduce the returns on our existing investments.
The imposition of additional taxes, tariffs, or other assessments related to renewable energy projects or the equipment necessary to generate or deliver it, as well as any reductions or eliminations of tax credits or other governmental incentives that promote renewable energy generating facilities, may limit our ability to make further investments in renewable energy generating facilities or reduce the returns on our existing investments.
Our non-utility renewable energy facilities are exposed to risks through participation in the market and transmission structures in various regional power markets. Our ability to acquire new non-utility renewable energy facilities or generate revenue from existing facilities depends on having interconnection arrangements with transmission providers and a reliable electricity grid.
Our non-utility renewable energy facilities are exposed to risks through participation in various regional power markets. Our ability to acquire new non-utility renewable energy facilities or generate revenue from existing facilities depends on having interconnection arrangements with transmission providers and power markets along with a reliable grid.
We have set goals to achieve reductions in carbon emissions from our electric generation fleet by 60% by the end of 2025 and by 80% by the end of 2030, both from a 2005 baseline. Over the longer term, the target for our generation fleet is net-zero CO 2 emissions by 2050.
We have set goals to achieve reductions in carbon emissions from our electric generation fleet by 60% by the end of 2025 and by 80% by the end of 2030, both from a 2005 baseline. Over the longer term, the target for our generation fleet is to be net carbon neutral by 2050.
We face risks related to our non-utility renewable energy facilities that could impact our return on investment or have a negative impact on our financial condition or results of operations. The production of wind energy depends heavily on suitable wind conditions, which are variable.
We face risks related to our non-utility renewable energy facilities that could impact our return on investment or have a negative impact on our financial condition or results of operations. The production of energy from wind and solar sites depends heavily on suitable weather conditions, which are variable.
Future local, statewide, or nationwide actions like these to regulate GHG emissions could increase the price of natural gas, restrict the use of natural gas, cause us to accelerate the replacement and/or updating of our natural gas delivery systems, and adversely affect our ability to operate our natural gas facilities.
Future local, statewide, or nationwide actions like these to regulate GHG emissions could increase the price of natural gas, reduce the demand for natural gas, cause us to accelerate the replacement and/or updating of our natural gas delivery systems, and adversely affect our ability to operate our natural gas facilities.
For some of our PPAs, the net amount paid by our PPA counterparties is impacted by wholesale prices at a market hub location different than the location of our wind farms. Systemic shortfalls and disruptions in transmission capacity can cause congestion between the two locations, which along with other factors, can increase price disparity.
For some of our PPAs, the net amount paid by our PPA counterparties is impacted by wholesale prices at a market hub location different from the location of our renewable site. Systemic shortfalls and disruptions in transmission capacity can cause congestion between the two locations, which along with other factors, can cause price disparity between the market hub and site.
We currently cannot predict the impact of these and other developments or the effect of changes in levels of wholesale supply and demand, which are driven by factors beyond our control. 2022 Form 10-K 36 WEC Energy Group, Inc.
We currently 2023 Form 10-K 37 WEC Energy Group, Inc. Table of Contents cannot predict the impact of these and other developments or the effect of changes in levels of wholesale supply and demand, which are driven by factors beyond our control.
Changes in commodity prices could result in: • Higher working capital requirements, particularly related to natural gas inventory, accounts receivable, and cash collateral postings; • Reduced profitability to the extent that lower revenues, increased bad debt, and higher interest expense are not recovered through rates; • Higher rates charged to our customers, which could impact our competitive position; • Reduced demand for energy, which could impact revenues and operating expenses; and • Shutting down of generation facilities if the cost of generation exceeds the market price for electricity.
Changes in commodity prices could result in: • Higher working capital requirements, particularly related to natural gas inventory, accounts receivable, and cash collateral postings; • Reduced profitability to the extent that lower revenues, increased bad debt, and higher interest expense are not recovered through rates; • Higher rates charged to our customers, which could impact our competitive position; • Reduced demand for energy, which could impact revenues and operating expenses; • Reduced growth prospects from renewable energy projects related to lower cost alternative energy sources and a limited number of purchasers of electricity; and • Shutting down of generation facilities if the cost of generation exceeds the market price for electricity.
Due to the potential for the imposition of stricter standards and greater regulation in the future, the possibility that other potentially responsible parties may not be willing or financially able to contribute to cleanup costs, a change in conditions or the discovery of additional contamination, our remediation costs could increase, and the timing of our capital and/or operating expenditures in the future may accelerate or could vary from the amounts currently accrued.
Due to the potential for the imposition of stricter standards and greater regulation in the future, the possibility that other potentially responsible parties may not be willing or financially able to contribute to cleanup costs, a change in conditions or the discovery of additional contamination, our remediation costs could increase, and the timing of our capital and/or operating expenditures in the future may accelerate or could vary from the amounts currently accrued. 2023 Form 10-K 25 WEC Energy Group, Inc.
Any of these events could lead to substantial financial losses including increased maintenance costs, unanticipated capital expenditures, or a reduction of revenues related to our non-utility renewable energy facilities. The cost of storm restoration efforts may also not be fully recoverable through the regulatory process. 2022 Form 10-K 29 WEC Energy Group, Inc.
Any of these events could lead to substantial financial losses including increased maintenance costs, unanticipated capital expenditures, or a reduction of revenues related to our non-utility renewable energy facilities. The cost of storm restoration efforts may also not be fully recoverable through the regulatory process.
Further, increased costs recovered through rates could contribute to reduced demand for electricity and natural gas, which could adversely affect our results of operations, cash flows, and financial condition. Our operations, capital expenditures, and financial results may be affected by the impact of greenhouse gas legislation, regulation, and emission reduction goals.
Further, increased costs recovered through rates could contribute to reduced demand for electricity and natural gas, which could adversely affect our results of operations, cash flows, and financial condition. Our operations, capital expenditures, and financial results may be affected by the impact of greenhouse gas legislation, regulation, and emission reduction goals. There is significant attention to issues concerning climate change.
A significant increase in the price of natural gas may increase rates for our natural gas customers, which could reduce natural gas demand. The adoption of electrification initiatives and/or mandates could result in a further reduction in natural gas demand and revenue, as well as an increase in electrical demand and increased investment costs for existing or new electrical systems.
A significant increase in the price of natural gas may increase rates for our natural gas customers, which could also reduce natural gas demand and revenues. The adoption of electrification initiatives and/or mandates could also result in an increase in electrical demand and increased investment costs for existing or new electrical systems.
The EPA also finalized regulations under the Clean Water Act that govern cooling water intake structures at our power plants, revised the effluent guidelines for steam electric generating plants, and along with the United States Army Corps of Engineers, released a final rule revising the definition of WOTUS that may impact projects requiring federal permits.
For example, the EPA finalized regulations under the CWA that govern cooling water intake structures at our power plants, revised again the effluent guidelines for steam electric generating plants, and along with the Army Corps, released a final rule revising the definition of WOTUS that may impact projects requiring federal permits.
The costs of repairing damage to our facilities, operational disruptions, protecting personally identifiable information, and notifying impacted persons, as well as related legal claims, may also not be recoverable in rates, may exceed the insurance limits on our insurance policies, or, in some cases, may not be covered by insurance. 2022 Form 10-K 31 WEC Energy Group, Inc.
The costs of repairing damage to our facilities, operational disruptions, protecting personally identifiable information, and notifying impacted persons, as well as related legal claims, may also not be recoverable in rates, may exceed the insurance limits on our insurance policies, or, in some cases, may not be covered by insurance.
Although initial agreements are often ten years or more, in the future we may not be able to replace expiring PPAs related to our non-utility renewable energy facilities with contracts on acceptable 2022 Form 10-K 32 WEC Energy Group, Inc. Table of Contents terms, including at prices that support operation of the facility on a profitable basis.
Although initial agreements are often ten years or more, in the future we may not be able to replace expiring PPAs related to our non-utility renewable energy facilities with contracts on acceptable terms, including at prices that support operation of the facility on a profitable basis.
If any of these risks or uncertainties limit our access to the credit and capital markets or significantly increase our cost of capital, it could limit our ability to implement, or increase the costs of implementing, our business plan, which, in turn, could materially and adversely affect our results of operations, cash flows, and financial condition, and could limit our ability to sustain our current common stock dividend level. 2022 Form 10-K 34 WEC Energy Group, Inc.
Table of Contents If any of these risks or uncertainties limit our access to the credit and capital markets or significantly increase our cost of capital, it could limit our ability to implement, or increase the costs of implementing, our business plan, which, in turn, could materially and adversely affect our results of operations, cash flows, and financial condition, and could limit our ability to sustain our current common stock dividend level.
These efforts could impact how we operate our electric generating units and natural gas facilities and lead to increased competition and regulation, all of which could have a material adverse effect on our operations and financial condition. 2022 Form 10-K 26 WEC Energy Group, Inc.
These efforts could impact how we operate our electric generating units and natural gas facilities and lead to increased competition and regulation, all of which could have a material adverse effect on our operations and financial condition.
We base our decisions about which sites to acquire and operate in part on the findings of long-term wind and other meteorological data and studies conducted in the proposed area, which measure the wind’s speed and prevailing direction and seasonal variations. Actual conditions at these sites, however, may not conform to the measured data in these studies.
We base our decisions about which sites to acquire and operate in part on the findings of studies of long-term meteorological data in the proposed area, which includes wind speed and prevailing direction or solar irradiance and seasonal variations of each. Actual conditions at these sites, however, may not conform to the results of these studies.
If we are unable to successfully attract and retain an appropriately qualified workforce, our results of operations could be adversely affected. 2022 Form 10-K 33 WEC Energy Group, Inc. Table of Contents Our counterparties may fail to meet their obligations, including obligations under power purchase, natural gas supply, natural gas pipeline capacity, and transportation agreements.
If we are unable to successfully attract and retain an appropriately qualified workforce, our results of operations could be adversely affected. Our counterparties may fail to meet their obligations, including obligations under power purchase, natural gas supply, natural gas pipeline capacity, and transportation agreements.
The incurrence of a material environmental liability or a material judgment in any action for personal injury or property damage related to environmental matters could have a material adverse effect on our results of operations and financial condition. 2022 Form 10-K 25 WEC Energy Group, Inc.
The incurrence of a material environmental liability or a material judgment in any action for personal injury or property damage related to environmental matters could have a material adverse effect on our results of operations and financial condition.
There is also a risk that advances in technology will continue to reduce the costs of these alternative methods of producing power to a level that is competitive with that of central station and utility-scale renewable power production.
There is also a risk that advances in technology will continue to reduce the costs of these alternative methods of producing power to a level that is competitive with that of central station and utility-scale renewable power production. 2023 Form 10-K 32 WEC Energy Group, Inc.
Supplier financial hardship is a result of decreased demand for coal due to increased natural gas and renewable energy generation, the impact of environmental regulations, and environmental concerns related to coal-fired generation. 2022 Form 10-K 35 WEC Energy Group, Inc.
Supplier financial hardship is a result of decreased demand for coal due to increased natural gas and renewable energy generation, the impact of environmental regulations, and environmental concerns related to coal-fired generation.
Table of Contents Changes in tax legislation, IRS audits, or our inability to use certain tax benefits and carryforwards, may adversely affect our financial condition, results of operations, and cash flows, as well as our or our subsidiaries’ credit ratings.
Changes in tax legislation, IRS audits, or our inability to use certain tax benefits and carryforwards, may adversely affect our financial condition, results of operations, and cash flows, as well as our credit ratings. Tax legislation and regulations can adversely affect, among other things, our financial condition, results of operations, cash flows, liquidity, and credit ratings.
Although the finding in the first petition was limited to the specific facts and circumstances of the lease presented in that petition, similar findings or a broader policy position could adversely impact our business operations.
Although the finding was limited to the specific facts and circumstances of the lease presented in that petition and is being appealed, similar findings or a broader policy position could have a material adverse impact on our business operations.
However, our ability to obtain rate adjustments in the future is dependent upon regulatory action, and there is no assurance that our regulators will consider all of our costs to have been prudently incurred. In addition, our rate proceedings may not always result in rates that fully recover our costs or provide for a reasonable ROE.
There is no assurance that our regulators will consider all of our costs to have been prudently incurred. In addition, our rate proceedings may not always result in rates that fully recover our costs or provide for a reasonable ROE.
Our or our subsidiaries' access to the credit and capital markets could be limited, or our or our subsidiaries' cost of capital significantly increased, due to any of the following risks and uncertainties: • A rating downgrade; • Failure to comply with debt covenants; • An economic downturn or uncertainty; • Prevailing market conditions and rules; • Concerns over foreign economic conditions; • Changes in tax policy; • Changes in investment criteria of institutional investors or banks, including any policies that would limit or restrict funding for companies with fossil fuel-related investments; • War or the threat of war; • The overall health and view of the utility and financial institution industries; and • The replacement of LIBOR with SOFR or other alternative reference rate.
Our access to the credit and capital markets could be limited, or our cost of capital significantly increased, due to any of the following risks and uncertainties: • A rating downgrade; • Failure to comply with debt covenants; • An economic downturn or uncertainty; • Prevailing market conditions and rules; • Political tensions, including civil unrest and election volatility; • Concerns over foreign economic conditions; • Changes in tax policy; • Changes in investment criteria of institutional investors or banks, including any policies that would limit or restrict funding for companies with fossil fuel-related investments; • War or the threat of war; and • The overall health and view of the utility and financial institution industries. 2023 Form 10-K 35 WEC Energy Group, Inc.
If our electric utilities are found to be in noncompliance with the mandatory reliability standards, they could be subject to sanctions, including substantial monetary penalties, or damage to our reputation.
If our electric utilities are found to be in noncompliance with the mandatory reliability standards, they could be subject to sanctions, including substantial monetary penalties, or damage to our reputation. 2023 Form 10-K 27 WEC Energy Group, Inc.
Although our utilities have regulatory mechanisms in place for recovering all prudently incurred natural gas costs, regulatory commissions could disallow recovery or order the refund of any costs determined to be imprudent.
Although our utilities have regulatory mechanisms in place for recovering all prudently incurred natural gas costs, our regulators could disallow recovery or order the refund of any costs determined to be imprudent. 2023 Form 10-K 29 WEC Energy Group, Inc.
Interest rates may increase in the future, which may affect our results of operations and the ability of our regulated subsidiaries to earn their approved rates of return. Rising interest rates may also impair our ability to cost-effectively finance capital expenditures and to refinance maturing debt.
Continued elevation of, or further increases in, interest rates may adversely affect our results of operations and the ability of our regulated subsidiaries to earn their approved rates of return. High interest rates may also impair our ability to cost-effectively finance capital expenditures and to refinance maturing debt.
A successful physical or cyber security intrusion may occur despite our security measures or those that we require our vendors to take, which include compliance with reliability standards and critical infrastructure protection standards.
A successful physical or cybersecurity intrusion may occur despite our security measures or those we require of our vendors, including compliance with reliability and critical infrastructure protection standards.
Fluctuating commodity prices could negatively impact our electric and natural gas utility operations. Our operating and liquidity requirements are impacted by changes in the forward and current market prices of natural gas, coal, electricity, renewable energy credits, and ancillary services.
Fluctuating commodity prices could negatively impact our operations. Our operating and liquidity requirements are impacted by changes in the forward and current market prices of natural gas, coal, electricity, renewable energy credits, and ancillary services. Our electric utilities burn natural gas in several of their electric generation plants and as a supplemental fuel at several coal-fired plants.
Failure to hire and obtain replacement employees, including the ability to transfer significant internal historical knowledge and expertise to the new employees, may adversely affect our ability to manage and operate our business.
Table of Contents lengthy time period associated with skill development. Failure to hire and obtain replacement employees, including the ability to transfer significant internal historical knowledge and expertise to the new employees, may adversely affect our ability to manage and operate our business.
The QIP rider provides PGL with recovery of, and a return on, qualifying natural gas infrastructure investments that are placed in service between regulatory rate reviews. Infrastructure investments under the QIP rider earn a return at the applicable weighted average cost of capital. This rider is subject to an annual reconciliation whereby costs are reviewed for accuracy and prudency.
Prior to its expiration, the QIP rider provided PGL with recovery of, and a return on, qualifying natural gas infrastructure investments that are placed in service between regulatory rate reviews. This rider continues to be subject to an annual reconciliation whereby costs are reviewed for accuracy and prudency.
If wind conditions are unfavorable or below our estimates, our electricity production, and therefore our revenues and PTCs earned from our non-utility renewable energy facilities, may be substantially below our expectations.
Wind conditions or solar irradiance that is unfavorable or below our estimates can cause electricity production, and therefore revenues and PTCs earned from non-utility renewable energy facilities, to be substantially below our expectations.
If our assets or systems were to fail, be physically damaged, or be breached, and were not recovered in a timely manner, we may be unable to perform critical business functions, and data, including sensitive information, could be compromised.
If our assets or systems were to fail, be physically damaged, or be breached, and were not recovered in a timely manner, we may be unable to perform critical business functions, and data, including sensitive information, could be compromised. Cybersecurity attacks, including attacks targeting utility systems and other critical infrastructure may increase during periods of heightened or escalating geopolitical tensions.
Events such as an aging workforce without appropriate replacements, the mismatch of skill sets to future needs, or the unavailability of contract resources may lead to operating challenges or increased costs. These operating challenges include lack of resources, loss of knowledge, and a lengthy time period associated with skill development.
Events such as an aging workforce without appropriate replacements, the mismatch of skill sets to future needs, or the unavailability of contract resources may lead to operating challenges or increased costs. These operating challenges include lack of resources, loss of knowledge, and a 2023 Form 10-K 34 WEC Energy Group, Inc.
There can be no assurance that all costs incurred under the QIP rider during the open reconciliation years, which include 2016 through 2022, will be deemed recoverable by the ICC. In addition, the QIP rider will sunset after December 2023, and PGL will not seek an extension.
There can be no assurance that all costs incurred under the QIP rider during the open reconciliation years, which include 2016 through 2023, will be deemed recoverable by the ICC.
This regulatory lag, as well as the risk of costs being deemed unrecoverable during the review process, could have a material adverse impact on PGL’s, and correspondingly our, results of operations, financial position, and liquidity.
Regulatory lag, as well as the risk of costs being deemed unrecoverable during the review of the outstanding reconciliations, could have a material adverse impact on PGL’s, and correspondingly our, results of operations, financial position, and liquidity. 2023 Form 10-K 24 WEC Energy Group, Inc.
Coal deliveries may occasionally be restricted because of rail congestion and maintenance, derailments, weather, public health crises, including epidemics and pandemics, and supplier financial hardship.
Coal deliveries may occasionally be restricted because of rail congestion and maintenance, derailments, weather, 2023 Form 10-K 36 WEC Energy Group, Inc. Table of Contents public health crises, including epidemics and pandemics, and supplier financial hardship.
This legislation also incentivizes modernization of the electric distribution grid to, among other things, accommodate two-way flows of electricity and increase the grid's capacity to interconnect to these distributed generation technologies.
Federal and state regulations and other efforts designed to promote and expand the use of distributed generation technologies also incentivize modernization of the electric distribution grid to, among other things, accommodate two-way flows of electricity and increase the grid's capacity to interconnect to these distributed generation technologies.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeMihm Baraga, MI Natural Gas 3 57 Paris Union Grove, WI Natural Gas/Oil 4 359 PWGS Port Washington, WI Natural Gas 2 1,228 (4) Pulliam Green Bay, WI Natural Gas/Oil 1 81 VAPP Milwaukee, WI Natural Gas 2 267 West Marinette Marinette, WI Natural Gas/Oil 3 147 Weston Rothschild, WI Natural Gas/Oil 3 65 Total natural gas-fired plants 38 3,717 (5) Renewables Hydro plants (30 in number) WI and MI Hydro 81 97 (6) (7) Rothschild Biomass Plant Rothschild, WI Biomass 1 46 (8) Badger Hollow I WI Solar 41 100 (2) Two Creeks WI Solar 48 100 (2) Wind sites (5 in number) WI and IA Wind 350 498 (2) Total renewables 521 841 Total system 569 7,736 (1) Capacity for our electric generation facilities, other than wind and solar generating facilities, is based on rated capacity, which is the net power output under average operating conditions with equipment in an average state of repair as of a given month in a given year.
Biggest changeTable of Contents (1) Capacity for our electric generation facilities, other than wind and solar generating facilities, is based on rated capacity, which is the net power output under average operating conditions with equipment in an average state of repair as of a given month in a given year.
Values are primarily based on the net dependable expected capacity ratings for summer 2023 established by tests and may change slightly from year to year. The summer period is the most relevant for capacity planning purposes. This is a result of continually reaching demand peaks in the summer months, primarily due to air conditioning demand.
Values are primarily based on the net dependable expected capacity ratings for summer 2024 established by tests and may change slightly from year to year. The summer period is the most relevant for capacity planning purposes. This is a result of continually reaching demand peaks in the summer months, primarily due to air conditioning demand.
(8) WE has a biomass power plant that uses wood waste and wood shavings to produce electric power as well as steam to support the paper mill's operations. Fuel for the power plant is supplied by both the paper mill and through contracts with biomass suppliers.
(6) WE has a biomass power plant that uses wood waste and wood shavings to produce electric power as well as steam to support the paper mill's operations. Fuel for the power plant is supplied by both the paper mill and through contracts with biomass suppliers.
Steam Facilities As of December 31, 2022, the steam system supplied by the VAPP consisted of approximately 40 miles of both high pressure and low pressure steam piping, approximately four miles of walkable tunnels, and other pressure regulating equipment.
Steam Facilities As of December 31, 2023, the steam system supplied by the VAPP consisted of approximately 40 miles of both high pressure and low pressure steam piping, approximately four miles of walkable tunnels, and other pressure regulating equipment.
(6) All of our hydroelectric facilities follow FERC guidelines and/or regulations. (7) WRPC owns and operates the Castle Rock and Petenwell units. WPS holds a 50.0% ownership interest in WRPC and is entitled to 50.0% of the total capacity at Castle Rock and Petenwell. WPS's share of capacity for Castle Rock and Petenwell is 7.0 MW and 10.3 MW, respectively.
(4) All of our hydroelectric facilities follow FERC guidelines and/or regulations. (5) WRPC owns and operates the Castle Rock and Petenwell units. WPS holds a 50.0% ownership interest in WRPC and is entitled to 50.0% of the total capacity at Castle Rock and Petenwell. WPS's share of capacity for Castle Rock and Petenwell is 7.0 MWs and 10.3 MWs, respectively.
Our natural gas distribution and gas storage systems included distribution mains and transmission mains connected to the pipeline transmission systems of Alliance Pipeline, ANR Pipeline Company, Centra Pipelines, Consumers Energy, DTE Gas Company, Enbridge Gas Inc., Great Lakes Transmission Company, Guardian Pipeline L.L.C., Interstate Power and Light Company, Kinder Morgan Illinois Pipeline, Midwestern Gas Pipeline Company, Natural Gas Pipeline Company of America, Nicor Gas, Northern Border Pipeline Company, Northern Natural Gas Company, Northwest Gas of Cottonwood County, LLC, Northwestern Energy, Panhandle Gas 2022 Form 10-K 39 WEC Energy Group, Inc.
Our natural gas distribution and gas storage systems included distribution mains and transmission mains connected to the pipeline transmission systems of Alliance Pipeline, ANR Pipeline Company, Centra Pipelines, Consumers Energy, DTE Gas Company, Enbridge Gas Inc., Great Lakes Transmission Company, Guardian Pipeline L.L.C., Interstate Power and Light Company, Kinder Morgan Illinois Pipeline, Midwestern Gas Pipeline Company, Natural Gas Pipeline Company of America, Nicor Gas, Northern Border Pipeline Company, Northern Natural Gas Company, Northwest Gas of Cottonwood County, LLC, Northwestern Energy, Panhandle Gas Transmission, SEMCO, Trunkline Gas Pipeline, Vector Pipeline Company, and Viking Gas Transmission.
Table of Contents Transmission, SEMCO, Trunkline Gas Pipeline, Vector Pipeline Company, and Viking Gas Transmission. Our LNG storage plants convert and store, in liquefied form, natural gas received during periods of low consumption. We also own office buildings, natural gas regulating and metering stations, and major service centers, including garage and warehouse facilities, in certain communities we serve.
Our LNG storage plants convert and store, in liquefied form, natural gas received during periods of low consumption. We also own office buildings, natural gas regulating and metering stations, and major service centers, including garage and warehouse facilities, in certain communities we serve.
Where distribution lines and services and natural gas distribution mains and services occupy private property, we have in some, but not all instances, obtained consents, permits, or easements for these installations from the apparent owners or those in possession of those properties, generally without an examination of ownership records or title.
Table of Contents services occupy private property, we have in some, but not all instances, obtained consents, permits, or easements for these installations from the apparent owners or those in possession of those properties, generally without an examination of ownership records or title.
Natural Gas Facilities At December 31, 2022, our natural gas properties were located in Illinois, Wisconsin, Minnesota, and Michigan, and consisted of the following: • Approximately 52,000 miles of natural gas distribution mains, • Approximately 1,100 miles of natural gas transmission mains, • Approximately 2.4 million natural gas lateral services, • Approximately 500 natural gas distribution and transmission gate stations, • Approximately 68.2 Bcf of working gas capacities in underground natural gas storage fields: ◦ Bluewater, 26.5 Bcf of fields located in southeastern Michigan, ◦ Manlove, a 38.8 Bcf field located in central Illinois, ◦ Partello, a 2.9 Bcf field located in southern Michigan, • A 2.0 Bcf LNG plant located in central Illinois, • A peak-shaving facility that can store the equivalent of approximately 80 MDth in liquefied petroleum gas located in Illinois, • Peak propane air systems providing approximately 2,960 Dth per day, and • LNG storage plants, located in Wisconsin, with a total send-out capability of 73,600 Dth per day.
Natural Gas Facilities At December 31, 2023, our natural gas properties were located in Illinois, Wisconsin, Minnesota, and Michigan, and consisted of the following: • Approximately 46,400 miles of natural gas distribution mains, • Approximately 1,700 miles of natural gas transmission mains, • Approximately 2.4 million natural gas lateral services, • Approximately 490 natural gas distribution and transmission gate stations, • Approximately 69.3 Bcf of working gas capacities in underground natural gas storage fields: ◦ Bluewater, 27.6 Bcf of fields located in southeastern Michigan, ◦ Manlove, a 38.8 Bcf field located in central Illinois, ◦ Partello, a 2.9 Bcf field located in southern Michigan, • A 2.0 Bcf LNG plant located in central Illinois, • A 1.0 Bcf LNG plant located in southern Wisconsin, • A peak-shaving facility that can store the equivalent of approximately 80 MDth in liquefied petroleum gas located in Illinois, and • LNG storage plants, located in Wisconsin, with a total send-out capability of 173,600 Dth per day.
Capacity for wind generating facilities is based on nameplate capacity, which is the amount of energy a turbine should produce at optimal wind speeds. Capacity for solar generating facilities is based on nameplate capacity, which is the maximum output that a generator should produce at continuous full power.
Capacity for wind generating facilities is based on nameplate capacity, which is the amount of energy a turbine should produce at optimal wind speeds. Capacity for solar generating facilities is based on nameplate capacity, which is the maximum output that a generator should produce at continuous full power. (2) Our subsidiaries jointly own these facilities with various other unaffiliated entities.
We Power owns and leases generating facilities to WE. We Power's share of the ERGS units and both PWGS units are being leased to WE under long-term leases. Bluewater provides natural gas storage and hub services primarily to WE, WPS, and WG, and also provides these same services to several unaffiliated companies.
We Power owns and leases generating facilities to WE. We Power's share of the ERGS units and both PWGS units are being leased to WE under long-term leases. Bluewater provides natural gas storage and hub services primarily to WE, WPS, and WG. WECI has ownership interests in eight wind generating facilities and one solar generating facility.
The following table summarizes information on WECI's wind generating facilities as of December 31, 2022: Name Location Number of Generating Units Nameplate Capacity In MW (1) Wind generating facilities Bishop Hill III Henry County, Illinois 53 132.1 Upstream Antelope County, Nebraska 81 202.5 Coyote Ridge Brookings County, South Dakota 39 96.7 Blooming Grove McLean County, Illinois 94 250.0 Tatanka Ridge Deuel County, South Dakota 56 155.0 Jayhawk Bourbon and Crawford Counties, Kansas 70 197.4 Thunderhead Antelope and Wheeler Counties, Nebraska 108 300.0 Total wind generating facilities 501 1,333.7 (1) Nameplate capacity is the amount of energy a turbine should produce at optimal wind speeds.
The following table summarizes information on WECI's renewable generating facilities as of December 31, 2023: Name Location Ownership Percentage (%) (1) Number of Generating Units Nameplate Capacity In MW (2) Renewable generating facilities Thunderhead Antelope and Wheeler Counties, Nebraska 90 % 108 299.3 Blooming Grove McLean County, Illinois 90 % 94 260.9 Sapphire Sky McLean County, Illinois 90 % 64 251.0 Samson I Lamar, Franklin, Hopkins and Red River Counties, Texas 80 % (3) 340 250.0 Upstream Antelope County, Nebraska 90 % 81 202.5 Jayhawk Bourbon and Crawford Counties, Kansas 90 % 70 197.4 Tatanka Ridge Deuel County, South Dakota 85 % 56 154.8 Bishop Hill III Henry County, Illinois 90 % 53 132.1 Coyote Ridge Brookings County, South Dakota 80 % 39 97.4 Total renewable generating facilities 905 1,845.4 (1) Invenergy Wind LLC operates these renewable facilities.
REGULATED Electric Facilities The following table summarizes information on our electric generation facilities, including owned and jointly owned facilities, as of December 31, 2022: Name Location Fuel Number of Generating Units Capacity In MW (1) Coal-fired plants Columbia Portage, WI Coal 2 311 (2) ERGS Oak Creek, WI Coal 2 1,061 (3) (4) OCPP Oak Creek, WI Coal 4 1,086 Weston Rothschild, WI Coal 2 720 (2) Total coal-fired plants 10 3,178 Natural gas-fired plants Concord Watertown, WI Natural Gas/Oil 4 366 De Pere Energy Center De Pere, WI Natural Gas/Oil 1 165 Fox Energy Center Wrightstown, WI Natural Gas 3 577 Germantown Germantown, WI Natural Gas/Oil 5 273 F.
REGULATED Electric Facilities The following table summarizes information on our electric generation facilities, including owned and jointly owned facilities, as of December 31, 2023: Name Location Fuel Number of Generating Units Capacity In MW (1) Natural gas-fired plants PWGS Port Washington, WI Natural Gas 2 1,217 (3) Fox Energy Center Wrightstown, WI Natural Gas 3 581 Concord Watertown, WI Natural Gas/Oil 4 365 Paris Union Grove, WI Natural Gas/Oil 4 361 VAPP Milwaukee, WI Natural Gas 2 275 Germantown Germantown, WI Natural Gas/Oil 5 263 Whitewater Whitewater, WI Natural Gas/Oil 1 243 De Pere Energy Center De Pere, WI Natural Gas/Oil 1 166 West Marinette Marinette, WI Natural Gas 3 158 Weston Rothschild, WI Natural Gas 7 130 F.
WECI has ownership interests in seven wind generating facilities. For more information on recent and pending wind facility acquisitions, see Note 2, Acquisitions.
For more information on recent and pending renewable facility acquisitions, see Note 2, Acquisitions.
The plant also has the ability to burn natural gas if wood waste and wood shavings are not available. As of December 31, 2022, we operated approximately 35,600 miles of overhead distribution lines and approximately 36,100 miles of underground distribution cable, as well as approximately 430 electric distribution substations and approximately 514,800 line transformers.
As of December 31, 2023, we operated approximately 35,500 miles of overhead distribution lines and approximately 36,500 miles of underground distribution cable, as well as approximately 430 electric distribution substations and approximately 523,700 line transformers.
(2) Certain of these facilities are jointly owned by WPS and various other utilities. The capacity indicated for each of these units is equal to WPS's portion of total plant capacity based on its percent of ownership. 2022 Form 10-K 38 WEC Energy Group, Inc.
The capacity indicated for each of these units is equal to our subsidiaries' portion of total plant capacity based on its percent of ownership. See Note 8, Jointly Owned Utility Facilities, for more information on our ownership interests. (3) These facilities are part of the Company's non-utility energy infrastructure segment. See B. Non-Utility Energy Infrastructure Segment below.
D. Kuester Negaunee, MI Natural Gas 7 132 A. J.
D. Kuester Negaunee, MI Natural Gas 7 128 West Riverside Beloit, WI Natural Gas 2 85 (2) Pulliam Green Bay, WI Natural Gas 1 82 A. J.
Removed
Table of Contents • Wisconsin Power and Light Company, an unaffiliated utility, operates the Columbia units. WPS holds a 27.5% ownership interest in Columbia. • WPS operates the Weston 4 facility and holds a 70.0% ownership interest in this facility.
Added
Mihm Baraga, MI Natural Gas 3 55 Total natural gas-fired plants 45 4,109 Coal-fired plants OCPP Oak Creek, WI Coal 4 1,103 (7) ERGS Oak Creek, WI Coal 2 1,082 (2) (3) Weston Rothschild, WI Coal 2 713 (2) (7) Columbia Portage, WI Coal 2 312 (2) (7) Total coal-fired plants 10 3,210 Wind facilities Glacier Hills Wind Park Cambria, WI Wind 90 162 Blue Sky Green Field Wind Park Fond du Lac, WI Wind 88 145 Crane Creek Wind Farm Howard County, IA Wind 66 99 Red Barn Grant County, WI Wind 28 82 (2) Forward Wind Fond du Lac County, WI Wind 86 62 (2) Montfort Wind Energy Center Montfort, WI Wind 20 30 Total wind facilities 378 580 Solar facilities Two Creeks Manitowoc County, WI Solar 48 100 (2) Badger Hollow I Iowa County, WI Solar 41 100 (2) Badger Hollow II Iowa County, WI Solar 40 100 (2) Total solar facilities 129 300 Other renewable facilities Hydro plants (30 in number) WI and MI Hydro 80 92 (4) (5) Rothschild Biomass Plant Rothschild, WI Biomass 1 46 (6) Total other renewable facilities 81 138 Total electric generation facilities 643 8,337 2023 Form 10-K 41 WEC Energy Group, Inc.
Removed
Dairyland Power Cooperative, an unaffiliated energy cooperative, holds the remaining 30.0% interest. • Badger Hollow I is jointly owned by WPS and Madison Gas and Electric Company, an unaffiliated utility.
Added
The plant also has the ability to burn natural gas if wood waste and wood shavings are not available.
Removed
WPS holds a 66.7% ownership interest in this facility and Madison Gas and Electric Company owns the remaining 33.3%. • Two Creeks is jointly owned by WPS and Madison Gas and Electric Company.
Added
(7) We expect to retire approximately 1,800 MWs of additional fossil-fueled generation by the end of 2031, which includes the planned retirement in 2024-2025 of OCPP Units 5-8, the planned retirement by June 2026 of jointly-owned Columbia Units 1-2, and the planned retirement in 2031 of Weston Unit 3.
Removed
WPS holds a 66.7% ownership interest in this facility and Madison Gas and Electric Company owns the remaining 33.3%. • Forward Wind is jointly owned by WPS along with Wisconsin Power and Light Company and Madison Gas and Electric Company, two unaffiliated utilities.
Added
Where distribution lines and services and natural gas distribution mains and 2023 Form 10-K 42 WEC Energy Group, Inc.
Removed
WPS holds a 44.6% ownership interest in this facility and the unaffiliated utilities collectively own the remaining 55.4%. (3) This facility is jointly owned by We Power and two other unaffiliated entities. Our share of capacity is equal to We Power's ownership interest of 83.34%. (4) These facilities are part of the Company's non-utility energy infrastructure segment. See B.
Added
(2) Nameplate capacity is the amount of energy a source should produce under optimal conditions, such as optimal wind speeds or solar irradiance. (3) In January 2024, WECI acquired an additional 10% ownership interest in Samson I. 2023 Form 10-K 43 WEC Energy Group, Inc. Table of Contents
Removed
Non-Utility Energy Infrastructure Segment below. (5) Effective January 1, 2023, WE and WPS completed the acquisition of Whitewater, a commercially operational 236.5 MW dual fueled (natural gas and low sulfur fuel oil) combined cycle electrical generation facility in Whitewater, Wisconsin. See Note 15, Leases, for more information. The capacity for Whitewater is not included in this table.
Removed
In February 2023, WECI completed the acquisition of a 90% ownership interest in Sapphire Sky, a commercially operational 250 MW wind generating facility in McLean County, Illinois.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe plaintiffs allege that WEC Energy Group, members of its Board of Directors, and others breached their fiduciary duties with respect to the operation and oversight of the Employee Retirement Saving Plan (the “Plan”) in violation of the Employee Retirement Income Security Act of 1974, as amended.
Biggest changeThe plaintiffs allege that WEC Energy Group and others breached their fiduciary duties with respect to the operation and oversight of the Employee Retirement Saving Plan (the “Plan”) in violation of the Employee Retirement Income Security Act of 1974, as amended. The class is alleged to be participants in the Plan from May 10, 2016 through the date of judgment.
The class is alleged to be participants in the Plan from May 10, 2016 through the date of judgment. The complaint seeks injunctive relief, damages, interest, costs, and attorneys' fees. The Company is vigorously defending against the allegations made in this lawsuit and intends to continue to do so.
The complaint seeks injunctive relief, damages, interest, costs, and attorneys' fees. The Company is vigorously defending against the allegations made in this lawsuit and intends to continue to do so.
Although the results of these additional legal proceedings cannot be predicted with certainty, management believes, after consultation with legal counsel, that the ultimate resolution of these proceedings will not have a material impact on our financial statements. 2022 Form 10-K 40 WEC Energy Group, Inc.
Although the results of these additional legal proceedings cannot be predicted with certainty, management believes, after consultation with legal counsel, that the ultimate resolution of these proceedings will not have a material impact on our financial statements. Employee Retirement Savings Plan Matter In May 2022, a putative class action, Munt, et al. v.
Table of Contents Employee Retirement Savings Plan Matter In May 2022, a putative class action, Munt, et al. v. WEC Energy Group, Inc., et al., was filed in the United States District Court for the Eastern District of Wisconsin - Milwaukee Division.
WEC Energy Group, Inc., et al., was filed in the United States District Court for the Eastern District of Wisconsin - Milwaukee Division.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeExecutive Vice President, Chief Financial Officer and Treasurer from October 2018 to February 2019. Executive Vice President and Chief Financial Officer from April 2016 to October 2018. Director since February 1, 2022. • WE — Chairman of the Board and Chief Executive Officer since February 1, 2022. President since January 1, 2022.
Biggest changeDirector since February 1, 2022. • WE — Chairman of the Board and Chief Executive Officer since February 1, 2022. President since January 1, 2022. Executive Vice President from June 2020 to December 31, 2021. Executive Vice President and Chief Financial Officer from October 2019 to June 2020.
There are no family relationships among these officers, nor is there any agreement or understanding between any officer and any other person pursuant to which the officer was selected. Joshua M. Erickson . Age 50. • WEC Business Services (a centralized service company of WEC Energy Group) – Vice President and Deputy General Counsel since August 2021.
There are no family relationships among these officers, nor is there any agreement or understanding between any officer and any other person pursuant to which the officer was selected. Joshua M. Erickson . Age 51. • WEC Business Services (a centralized service company of WEC Energy Group) – Vice President and Deputy General Counsel since August 2021.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 2022 Form 10-K 41 WEC Energy Group, Inc. Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The names, ages, and positions of our executive officers are listed below along with their business experience during the past five years. All officers are appointed until their resignation, death, or removal pursuant to our Bylaws.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 2023 Form 10-K 44 WEC Energy Group, Inc. Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The names, ages, and positions of our executive officers are listed below along with their business experience during the past five years. All officers are appointed until their resignation, death, or removal pursuant to our Bylaws.
Age 41. • WEC Energy Group — Vice President and Treasurer since October 2019. • WE — Vice President and Treasurer since October 2019. • PGL – Controller - Illinois from September 2015 to September 2019. Mary Beth Straka. Age 58. • WEC Energy Group — Senior Vice President - Corporate Communications and Investor Relations since June 2015.
Age 42. • WEC Energy Group — Vice President and Treasurer since October 2019. • WE — Vice President and Treasurer since October 2019. • PGL – Controller - Illinois from September 2015 to September 2019. Mary Beth Straka. Age 59. • WEC Energy Group — Senior Vice President - Corporate Communications and Investor Relations since June 2015.
Certain executive officers also hold officer and/or director positions at WEC Energy Group's other significant subsidiaries. 2022 Form 10-K 43 WEC Energy Group, Inc. Table of Contents PART II
Certain executive officers also hold officer and/or director positions at WEC Energy Group's other significant subsidiaries. 2023 Form 10-K 46 WEC Energy Group, Inc. Table of Contents PART II
Age 47. • WEC Business Services (a centralized service company of WEC Energy Group) – Executive Vice President and Chief Administrative Officer since August 2021. Vice President and Chief Information Officer from January 2019 through July 2021. Director since November 2021. • WE – Vice President and Chief Information Officer from June 2015 through December 2018. Anthony L. Reese.
Age 48. • WEC Business Services (a centralized service company of WEC Energy Group) – Executive Vice President and Chief Administrative Officer since August 2021. Vice President and Chief Information Officer from January 2019 through July 2021. Director since November 2021. Anthony L. Reese.
CenterPoint Energy, Inc. is a public utility holding company whose operating subsidiaries provide electric and natural gas service to customers in parts of the South and Midwest. 2022 Form 10-K 42 WEC Energy Group, Inc. Table of Contents • Georgia Power Company — Executive Vice President, Chief Financial Officer and Treasurer from October 2017 to April 2019.
CenterPoint Energy, Inc. is a public utility holding company whose operating subsidiaries provide electric and natural gas service to customers in parts of the South and Midwest. • Georgia Power Company — Executive Vice President, Chief Financial Officer and Treasurer from October 2017 to April 2019.
Age 53. • WEC Energy Group — Executive Vice President and Chief Financial Officer since June 2020. • WE — Executive Vice President and Chief Financial Officer since June 2020. Director since June 2020. • CenterPoint Energy, Inc. — Senior Advisor from April 2020 to May 2020. Executive Vice President and Chief Financial Officer from April 2019 to April 2020.
Director since June 2020. • CenterPoint Energy, Inc. — Senior Advisor from April 2020 to May 2020. Executive Vice President and Chief Financial Officer from April 2019 to April 2020.
Director since November 2021. • WE – Executive Vice President – Customer Service and Operations since December 2021. Vice President – Supply Chain and Fleet from June 2015 through December 2018. Director since November 2021. Molly A. Mulroy.
Vice President – Supply Chain and Fleet from January 2019 through November 2021. Director since November 2021. • WE – Executive Vice President – Customer Service and Operations since December 2021. Director since November 2021. Molly A. Mulroy.
Executive Vice President from September 2017 to January 2018. • WE — Executive Vice President, Corporate Secretary and General Counsel since January 2018. Director since January 2018. Gale E. Klappa. Age 72. • WEC Energy Group — Executive Chairman since February 2019.
Age 59. • WEC Energy Group — Executive Vice President, Corporate Secretary and General Counsel since January 2018. • WE — Executive Vice President, Corporate Secretary and General Counsel since January 2018. Director since January 2018. Gale E. Klappa. Age 73. • WEC Energy Group — Executive Chairman since February 2019.
Age 53. • WEC Energy Group — Controller since October 2015. Vice President since June 2015. • WE — Vice President and Controller since October 2015. Assistant Corporate Secretary since January 2020. Margaret C. Kelsey. Age 58. • WEC Energy Group — Executive Vice President, Corporate Secretary and General Counsel since January 2018.
Age 54. • WEC Energy Group — Controller since October 2015. Vice President since June 2015. • WE — Vice President and Controller since October 2015. Assistant Corporate Secretary since January 2020. Margaret C. Kelsey.
Executive Vice President from June 2020 to December 31, 2021. Executive Vice President and Chief Financial Officer from October 2019 to June 2020, and from April 2016 to October 2018. Executive Vice President, Chief Financial Officer and Treasurer from October 2018 to October 2019. Director since April 2016. Xia Liu.
Executive Vice President, Chief Financial Officer and Treasurer from October 2018 to October 2019. Director since April 2016. Xia Liu. Age 54. • WEC Energy Group — Executive Vice President and Chief Financial Officer since June 2020. • WE — Executive Vice President and Chief Financial Officer since June 2020.
Georgia Power Company is a utility subsidiary of The Southern Company that provides electric service to customers throughout Georgia. William Mastoris. Age 59. • WEC Business Services (a centralized service company of WEC Energy Group) – Executive Vice President – Customer Service and Operations since December 2021. Vice President – Supply Chain and Fleet from January 2019 through November 2021.
Georgia Power Company is a utility subsidiary of The Southern Company that provides electric service to customers throughout Georgia. 2023 Form 10-K 45 WEC Energy Group, Inc. Table of Contents William Mastoris. Age 60. • WEC Business Services (a centralized service company of WEC Energy Group) – Executive Vice President – Customer Service and Operations since December 2021.
Age 56. • WEC Energy Group — Executive Vice President - External Affairs since June 2015. • WEC Business Services (a centralized service company of WEC Energy Group) – Executive Vice President - External Affairs since January 2019. • WE — Executive Vice President - External Affairs from June 2015 through December 2018. William J. Guc.
Director-Legal Services – Corporate and Finance from June 2015 through July 2021. Robert M. Garvin. Age 57. • WEC Energy Group — Executive Vice President - External Affairs since June 2015. • WEC Business Services (a centralized service company of WEC Energy Group) – Executive Vice President - External Affairs since January 2019. William J. Guc.
Age 57. • WEC Business Services (a centralized service company of WEC Energy Group) — Executive Vice President - WEC Infrastructure since January 2019. Executive Vice President from November 2018 to January 2019. • WE — Senior Vice President - Wholesale Energy and Fuels from June 2015 to November 2018. Scott J. Lauber.
Age 58. • WEC Business Services (a centralized service company of WEC Energy Group) — Executive Vice President - WEC Infrastructure since January 2019. Scott J. Lauber. Age 58. • WEC Energy Group — President and Chief Executive Officer since February 1, 2022. Senior Executive Vice President and Chief Operating Officer from June 2020 to January 31, 2022.
Age 57. • WEC Energy Group — President and Chief Executive Officer since February 1, 2022. Senior Executive Vice President and Chief Operating Officer from June 2020 to January 31, 2022. Senior Executive Vice President and Chief Financial Officer from October 2019 to June 2020. Senior Executive Vice President, Chief Financial Officer and Treasurer from February 2019 to October 2019.
Senior Executive Vice President and Chief Financial Officer from October 2019 to June 2020. Senior Executive Vice President, Chief Financial Officer and Treasurer from February 2019 to October 2019. Executive Vice President, Chief Financial Officer and Treasurer from October 2018 to February 2019.
Removed
Director-Legal Services – Corporate and Finance from June 2015 through July 2021. Robert M. Garvin.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Number of Common Shareholders As of December 31, 2022, based upon the number of WEC Energy Group shareholder accounts (including accounts in our stock purchase and dividend reinvestment plan), we had approximately 37,000 registered shareholders.
Biggest changeITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Number of Common Shareholders As of January 31, 2024, based upon the number of WEC Energy Group shareholder accounts (including accounts in our stock purchase and dividend reinvestment plan), we had approximately 36,000 registered shareholders.
Common Stock Listing and Trading Our common stock is listed on the New York Stock Exchange under the ticker symbol "WEC." Common Stock Dividends of WEC Energy Group We review our dividend policy on a regular basis.
Common Stock Listing and Trading Our common stock is listed on the New York Stock Exchange under the ticker symbol "WEC." Common Stock Dividends of WEC Energy Group, Inc. We review our dividend policy on a regular basis.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

227 edited+82 added−67 removed127 unchanged
Biggest changeYear Ended December 31 (in millions) 2022 2021 B (W) Natural gas revenues $ 1,890.9 $ 1,672.8 $ 218.1 Cost of natural gas sold 792.5 628.4 (164.1) Total natural gas margins 1,098.4 1,044.4 54.0 Other operation and maintenance 459.2 433.5 (25.7) Depreciation and amortization 230.9 218.1 (12.8) Property and revenue taxes 38.6 31.2 (7.4) Operating income 369.7 361.6 8.1 Other income, net 14.1 7.3 6.8 Interest expense 73.8 66.6 (7.2) Income before income taxes 310.0 302.3 7.7 Income tax expense 83.1 79.3 (3.8) Net income attributed to common shareholders $ 226.9 $ 223.0 $ 3.9 2022 Form 10-K 54 WEC Energy Group, Inc.
Biggest changeYear Ended December 31 (in millions) 2023 2022 B (W) Natural gas revenues $ 1,557.8 $ 1,890.9 $ (333.1) Cost of natural gas sold 443.0 792.5 349.5 Total natural gas margins 1,114.8 1,098.4 16.4 Other operation and maintenance 397.9 459.2 61.3 Impairment related to ICC disallowances 178.9 — (178.9) Depreciation and amortization 237.3 230.9 (6.4) Property and revenue taxes 29.9 38.6 8.7 Operating income 270.8 369.7 (98.9) Other income, net 6.7 14.1 (7.4) Interest expense 88.9 73.8 (15.1) Income before income taxes 188.6 310.0 (121.4) Income tax expense 48.6 83.1 34.5 Net income attributed to common shareholders $ 140.0 $ 226.9 $ (86.9) The following table shows a breakdown of other operation and maintenance: Year Ended December 31 (in millions) 2023 2022 B (W) Operation and maintenance not included in the line items below $ 303.4 $ 319.4 $ 16.0 Riders (1) 94.3 127.2 32.9 Regulatory amortizations (1) 0.2 (2.4) (2.6) Other — 15.0 15.0 Total other operation and maintenance $ 397.9 $ 459.2 $ 61.3 (1) These riders and regulatory amortizations are substantially offset in margins and therefore do not have a significant impact on net income. 2023 Form 10-K 57 WEC Energy Group, Inc.
These settlements were subject to a FERC complaint, so we were not able to recognize them as revenue until the FERC issued an order denying that complaint in 2022. • A $13.4 million positive impact from a sharing arrangement with one of our Blooming Grove customers resulting from strong energy prices.
These settlements were subject to a FERC complaint, so we were not able to recognize them as revenue until the FERC issued an order denying that complaint in 2022. • A $13.4 million positive revenue impact in 2022 from a sharing arrangement with one of our Blooming Grove customers resulting from strong energy prices.
These upgrades include addressing our aging infrastructure and system hardening and the AMI program. AMI is an integrated system of smart meters, communication networks, and data management systems that enable two-way communication between utilities and customers. We are committed to investing in solar, wind, battery storage, and clean natural gas-fired generation.
These upgrades include addressing our aging infrastructure, system hardening, and the AMI program. AMI is an integrated system of smart meters, communication networks, and data management systems that enable two-way communication between utilities and customers. We are committed to investing in solar, wind, battery storage, and clean natural gas-fired generation.
In addition to our energy-related purchase obligations, we have commitments for other costs incurred in the normal course of business, including costs related to information technology services, meter reading services, maintenance and other service agreements for certain generating facilities, and various engineering agreements. Our estimated future cash requirements related to these purchase obligations are reflected below.
In addition to our energy-related purchase obligations, we have commitments for other costs incurred in the normal course of business, including costs related to information technology services, meter reading services, maintenance and other service agreements for certain generating facilities, and various engineering agreements. Our estimated future cash requirements related to these purchase obligations, excluding energy-related obligations, are reflected below.
Circuit Court of Appeals vacated the FERC’s previous orders and remanded the issue of determining an appropriate base ROE for MISO transmission owners back to the FERC for additional proceedings. As of December 31, 2022, the FERC had not provided a ruling in response to the August 2022 Decision issued by the D.C.
Circuit Court of Appeals vacated the FERC’s previous orders and remanded the issue of determining an appropriate base ROE for MISO transmission owners back to the FERC for additional proceedings. As of December 31, 2023, the FERC had not provided a ruling in response to the August 2022 Decision issued by the D.C.
We plan to achieve our net-zero goal through an effort that includes both continuous operational improvements and equipment upgrades, as well as the use of renewable natural gas (RNG) throughout our utility systems. In 2022, we received approval from the PSCW for our RNG pilots.
We plan to achieve our net-zero goal through an effort that includes both continuous operational improvements and equipment upgrades, as well as the use of RNG throughout our natural gas utility systems. In 2022, we received approval from the PSCW for our RNG pilots.
The amount, type, and timing of any financings in 2023, as well as in subsequent years, will be contingent on investment opportunities and our cash requirements and will depend upon prevailing market conditions, regulatory approvals for certain subsidiaries, and other factors. Our regulated utilities plan to maintain capital structures consistent with those approved by their respective regulators.
The amount, type, and timing of any financings in 2024, as well as in subsequent years, will be contingent on investment opportunities and our cash requirements and will depend upon prevailing market conditions, regulatory approvals for certain subsidiaries, and other factors. Our regulated utilities plan to maintain capital structures consistent with those approved by their respective regulators.
Petitions Before PSCW Regarding Third-Party Financed Distributed Energy Resources In May 2022, two petitions were filed with the PSCW requesting a declaratory ruling that the owner of a third-party financed DER is not a "public utility" as defined under Wisconsin law and, therefore, is not subject to the PSCW’s jurisdiction under any statute or rule regulating public utilities.
Table of Contents Petitions Before PSCW Regarding Third-Party Financed Distributed Energy Resources In May 2022, two petitions were filed with the PSCW requesting a declaratory ruling that the owner of a third-party financed DER is not a "public utility" as defined under Wisconsin law and, therefore, is not subject to the PSCW’s jurisdiction under any statute or rule regulating public utilities.
A summary of actual weather information in our utilities' service territories during 2022 and 2021, as measured by degree days, can be found in Results of Operations. Interest Rates We are exposed to interest rate risk resulting from our short-term and long-term borrowings and projected near-term debt financing needs.
A summary of actual weather information in our utilities' service territories during 2023 and 2022, as measured by degree days, can be found in Results of Operations. Interest Rates We are exposed to interest rate risk resulting from our short-term and long-term borrowings and projected near-term debt financing needs.
The underlying assumptions and estimates used in the impairment tests were made as of a point in time. Subsequent changes in these assumptions and estimates could change the results of the tests. For all of our reporting units that carried a goodwill balance at July 1, 2022, the fair value exceeded its carrying value by over 50%.
The underlying assumptions and estimates used in the impairment tests were made as of a point in time. Subsequent changes in these assumptions and estimates could change the results of the tests. For all of our reporting units that carried a goodwill balance at July 1, 2023, the fair value exceeded its carrying value by over 50%.
On December 1, 2022, the PSCW granted one petitioner’s request for a declaratory ruling, finding that the owner of the third-party financed DER at issue in the petitioner’s brief is not a public utility under Wisconsin law. The ruling was limited to the specific facts and circumstances of the lease presented in that petition.
In December 2022, the PSCW granted one petitioner’s request for a declaratory ruling, finding that the owner of the third-party financed DER at issue in the petitioner’s brief is not a public utility under Wisconsin law. The ruling was limited to the specific facts and circumstances of the lease presented in that petition.
Table of Contents For the market approach, we used a higher weighting for the guideline public company method than the guideline merged and acquired company method due to a low number of mergers and acquisitions in recent years. The guideline public company method uses financial metrics from similar publicly traded companies to determine fair value.
For the market approach, we used a higher weighting for the guideline public company method than the guideline merged and acquired company method due to a low number of mergers and acquisitions in recent years. The guideline public company method uses financial metrics from similar publicly traded companies to determine fair value.
At December 31, 2022, we were in compliance with all such covenants related to outstanding short-term and long-term debt. We expect to be in compliance with all such debt covenants for the foreseeable future. See Note 13, Short-Term Debt and Lines of Credit, Note 14, Long-Term Debt, and Note 11, Common Equity, for more information.
At December 31, 2023, we were in compliance with all such covenants related to outstanding short-term and long-term debt. We expect to be in compliance with all such debt covenants for the foreseeable future. See Note 13, Short-Term Debt and Lines of Credit, Note 14, Long-Term Debt, and Note 11, Common Equity, for more information.
Significant Capital Projects We have several capital projects that will require significant capital expenditures over the next three years and beyond. All projected capital requirements are subject to periodic review and may vary significantly from estimates, depending on a number of factors.
Table of Contents Significant Capital Projects We have several capital projects that will require significant capital expenditures over the next three years and beyond. All projected capital requirements are subject to periodic review and may vary significantly from estimates, depending on a number of factors.
See Note 20, Employee Benefits, for our expected contributions in 2023 and our expected pension and OPEB payments for the next 10 years. We expect the majority of these future pension and OPEB payments to be paid from our outside trusts. See Sources of Cash–Investments in Outside Trusts below for more information.
See Note 20, Employee Benefits, for our expected contributions in 2024 and our expected pension and OPEB payments for the next 10 years. We expect the majority of these future pension and OPEB payments to be paid from our outside trusts. See Sources of Cash–Investments in Outside Trusts below for more information.
See Note 6, Regulatory Assets and Liabilities, for more information on our regulatory assets and liabilities. Goodwill We completed our annual goodwill impairment tests for all of our reporting units that carried a goodwill balance as of July 1, 2022. No impairments were recorded as a result of these tests.
See Note 6, Regulatory Assets and Liabilities, for more information on our regulatory assets and liabilities. Goodwill We completed our annual goodwill impairment tests for all of our reporting units that carried a goodwill balance as of July 1, 2023. No impairments were recorded as a result of these tests.
If WE had a sub-investment grade credit rating at December 31, 2022, it could have been required to post $100 million of additional collateral or other assurances pursuant to the terms of a PPA.
If WE had a sub-investment grade credit rating at December 31, 2023, it could have been required to post $100 million of additional collateral or other assurances pursuant to the terms of a PPA.
The following discussion and analysis of our Liquidity and Capital Resources includes comparisons of our cash flows for the year ended December 31, 2022 with the year ended December 31, 2021. For a similar discussion that compares our cash flows for the year ended December 31, 2021 with the year ended December 31, 2020, see Item 7.
The following discussion and analysis of our Liquidity and Capital Resources includes comparisons of our cash flows for the year ended December 31, 2023 with the year ended December 31, 2022. For a similar discussion that compares our cash flows for the year ended December 31, 2022 with the year ended December 31, 2021, see Item 7.
As of December 31, 2022, these trusts had investments of approximately $3.5 billion, consisting of fixed income and equity securities, that are subject to the volatility of the stock market and interest rates.
As of December 31, 2023, these trusts had investments of approximately $3.5 billion, consisting of fixed income and equity securities, that are subject to the volatility of the stock market and interest rates.
RESULTS OF OPERATIONS The following discussion and analysis of our Results of Operations includes comparisons of our results for the year ended December 31, 2022 with the year ended December 31, 2021. For a similar discussion that compares our results for the year ended December 31, 2021 with the year ended December 31, 2020, see Item 7.
RESULTS OF OPERATIONS The following discussion and analysis of our Results of Operations includes comparisons of our results for the year ended December 31, 2023 with the year ended December 31, 2022. For a similar discussion that compares our results for the year ended December 31, 2022 with the year ended December 31, 2021, see Item 7.
Credit Rating Risk Cash collateral postings and prepayments made with external parties, including postings related to exchange-traded contracts, and cash collateral posted by external parties were immaterial as of December 31, 2022.
Credit Rating Risk Cash collateral postings and prepayments made with external parties, including postings related to exchange-traded contracts, and cash collateral posted by external parties were immaterial as of December 31, 2023.
We are currently unable to predict the impact, if any, of potential future industry restructuring on our results of operations or financial position. 2022 Form 10-K 69 WEC Energy Group, Inc. Table of Contents Illinois Absent extraordinary circumstances, potential competitors are not allowed to construct competing natural gas distribution systems in the service territories for PGL and NSG.
We are currently unable to predict the impact, if any, of potential future industry restructuring on our results of operations or financial position. 2023 Form 10-K 72 WEC Energy Group, Inc. Table of Contents Illinois Absent extraordinary circumstances, potential competitors are not allowed to construct competing natural gas distribution systems in the service territories for PGL and NSG.
By the end of 2030, we expect to use coal as a backup fuel only, and we believe we will be in a position to eliminate coal as an energy source by the end of 2035.
By the end of 2030, we expect to use coal as a backup fuel only, and we believe we will be in a position to eliminate coal as an energy source by the end of 2032.
The project will be located in Kenosha County, Wisconsin and once fully constructed, WE and WPS will collectively own 180 MW of solar generation and 99 MW of battery storage of this project.
The project will be located in Kenosha County, Wisconsin and once fully constructed, WE and WPS will collectively own 180 MWs of solar generation and 99 MWs of battery storage of this project.
We have moved all utilities to a common platform for all customer-facing self-service options. Using common systems and processes reduces costs, provides greater flexibility and enhances the consistent delivery of exceptional service to customers. 2022 Form 10-K 47 WEC Energy Group, Inc. Table of Contents Safety Safety is one of our core values and a critical component of our culture.
We have moved all utilities to a common platform for all customer-facing self-service options. Using common systems and processes reduces costs, provides greater flexibility and enhances the consistent delivery of exceptional service to customers. 2023 Form 10-K 50 WEC Energy Group, Inc. Table of Contents Safety Safety is one of our core values and a critical component of our culture.
Table of Contents Market Risks and Other Significant Risks We are exposed to market and other significant risks as a result of the nature of our businesses and the environments in which those businesses operate.
Market Risks and Other Significant Risks We are exposed to market and other significant risks as a result of the nature of our businesses and the environments in which those businesses operate.
See Factors Affecting Results, Liquidity, and Capital Resources – Regulatory, Legislative, and Legal Matters – United States Department of Commerce Complaints and Factors Affecting Results, Liquidity, and Capital Resources – Regulatory, Legislative, and Legal Matters – Uyghur Forced Labor Prevention Act for information on the potential impacts to our solar projects as a result of the DOC investigation and CBP actions related to solar panels, respectively.
See Factors Affecting Results, Liquidity, and Capital Resources – Regulatory, Legislative, and Legal Matters – United States Department of Commerce Complaint and Factors Affecting Results, Liquidity, and Capital Resources – Regulatory, Legislative, and Legal Matters – Uyghur Forced Labor Prevention Act for information on the potential impacts to our solar projects as a result of the DOC ruling and CBP actions related to solar panels, respectively.
Regulators can impose liabilities on a prospective basis for amounts previously collected from customers and for amounts that are expected to be refunded to customers. We record these items as regulatory liabilities. See Note 6, Regulatory Assets and Liabilities, for more information on our regulatory assets and liabilities. 2022 Form 10-K 70 WEC Energy Group, Inc.
Regulators can impose liabilities on a prospective basis for amounts previously collected from customers and for amounts that are expected to be refunded to customers. We record these items as regulatory liabilities. See Note 6, Regulatory Assets and Liabilities, for more information on our regulatory assets and liabilities. 2023 Form 10-K 73 WEC Energy Group, Inc.
Economic Conditions We have electric and natural gas utility operations that serve customers in Wisconsin, Illinois, Minnesota, and Michigan. As such, we are exposed to market risks in the regional Midwest economy.
Table of Contents Economic Conditions We have electric and natural gas utility operations that serve customers in Wisconsin, Illinois, Minnesota, and Michigan. As such, we are exposed to market risks in the regional Midwest economy.
Operating Efficiency We continually look for ways to optimize the operating efficiency of our company and will continue to do so under the ESG Progress Plan. For example, we are making progress on our Advanced Metering Infrastructure program, replacing aging meter-reading equipment on both our network and customer property.
Operating Efficiency We continually look for ways to optimize the operating efficiency of our company and will continue to do so under the ESG Progress Plan. For example, we are making progress on our AMI program, replacing aging meter-reading equipment on both our network and customer property.
Since the majority of PGL and NSG customers use natural gas for heating, net income attributed to common shareholders is sensitive to weather and is generally higher during the winter months.
Since the majority of PGL and NSG customers use natural gas for heating, net income attributed to common shareholders at the Illinois segment is sensitive to weather and is generally higher during the winter months.
(2) Normal degree days are based on a 20-year moving average of monthly temperatures from the Green Bay, Wisconsin weather station. (3) Normal degree days are based on a 20-year moving average of monthly temperatures from the Iron Mountain, Michigan weather station. 2022 Form 10-K 51 WEC Energy Group, Inc.
(2) Normal degree days are based on a 20-year moving average of monthly temperatures from the Green Bay, Wisconsin weather station. (3) Normal degree days are based on a 20-year moving average of monthly temperatures from the Iron Mountain, Michigan weather station. 2023 Form 10-K 54 WEC Energy Group, Inc.
Table of Contents for the remediation of manufactured gas plant sites, and liabilities related to the accounting treatment for uncertainty in income taxes. For additional information on these liabilities, see Note 9, Asset Retirement Obligations, Note 24, Commitments and Contingencies, and Note 16, Income Taxes, respectively.
These liabilities include AROs, liabilities for the remediation of manufactured gas plant sites, and liabilities related to the accounting treatment for uncertainty in income taxes. For additional information on these liabilities, see Note 9, Asset Retirement Obligations, Note 24, Commitments and Contingencies, and Note 16, Income Taxes, respectively.
We do not expect this to have an impact on our liquidity as we currently believe that our cash and cash equivalents, our available capacity of $1,454.2 million under existing revolving credit facilities, cash generated from ongoing operations, and access to the capital markets are adequate to meet our short-term and long-term cash requirements.
We do not expect this to have an impact on our liquidity as we currently believe that our cash and cash equivalents, our available capacity under existing revolving credit facilities, cash generated from ongoing operations, and access to the capital markets are adequate to meet our short-term and long-term cash requirements.
During 2022 and 2021, $516.7 million and $503.6 million, respectively, of costs were billed to our electric utilities by transmission providers. During 2022, WE and WPS amortized $81.0 million of the regulatory liabilities associated with their transmission escrows to offset certain 2022 revenue deficiencies, as approved by the PSCW in order to forego filing for 2022 base rate increases.
During 2023 and 2022, $520.4 million and $516.7 million, respectively, of costs were billed to our electric utilities by transmission providers. During 2022, WE and WPS amortized $81.0 million of the regulatory liabilities associated with their transmission escrows to offset certain 2022 revenue deficiencies, as approved by the PSCW in order to forego filing for 2022 base rate increases.
Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources in Part II of our 2021 Annual Report on Form 10-K, which was filed with the SEC on February 24, 2022.
Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources in Part II of our 2022 Annual Report on Form 10-K, which was filed with the SEC on February 23, 2023.
See Note 1(k), Asset Impairment, for our policy on accounting for abandonments. Performing an impairment evaluation involves a significant degree of estimation and judgment by management in areas such as identifying circumstances that indicate an impairment may exist, identifying and grouping affected assets, and developing the undiscounted future cash flows.
See Note 1(k), Asset Impairment, for our policy on accounting for abandonments and recently completed plant subject to disallowance. Performing an impairment evaluation involves a significant degree of estimation and judgment by management in areas such as identifying circumstances that indicate an impairment may exist, identifying and grouping affected assets, and developing the undiscounted future cash flows.
Infrastructure Investment and Jobs Act In November 2021, President Biden signed into law the Infrastructure Investment and Jobs Act, which provides for approximately $1.2 trillion of federal spending over the next five years, including approximately $85 billion for investments in power, utilities, and renewables infrastructure across the United States.
Infrastructure Investment and Jobs Act In November 2021, President Biden signed into law the Infrastructure Investment and Jobs Act, which provides for approximately $1.2 trillion of federal spending over a five year period, including approximately $85 billion for investments in power, utilities, and renewables infrastructure across the United States.
Sources of Cash Liquidity We anticipate meeting our short-term and long-term cash requirements to operate our businesses and implement our corporate strategy through internal generation of cash from operations and access to the capital markets, which allows us to obtain external short-term borrowings, including commercial paper and term loans, and intermediate or long-term debt securities.
Table of Contents Sources of Cash Liquidity We anticipate meeting our short-term and long-term cash requirements to operate our businesses and implement our corporate strategy through internal generation of cash from operations and access to the capital markets, which allows us to obtain external short-term borrowings, including commercial paper and term loans, and intermediate or long-term debt securities, as well as other types of securities.
During 2022 and 2021, $121.7 million and $113.1 million, respectively, of costs were billed to or incurred by WE related to the We Power generation units, with the difference in costs billed or incurred and expenses recognized, either deferred or deducted from the regulatory asset. (4) Represents operation and maintenance associated with the earnings mechanisms we have in place.
During 2023 and 2022, $124.5 million and $121.7 million, respectively, of costs were billed to or incurred by WE related to the We Power generation units, with the difference in costs billed or incurred and expenses recognized, either deferred or deducted from the regulatory asset. (4) Represents operation and maintenance associated with the earnings mechanisms we have in place.
When taken together, the retirements and new investments should better balance our supply with our demand, while maintaining reliable, affordable energy for our customers. The retirements will contribute to meeting our goals to reduce carbon dioxide (CO 2 ) emissions from our electric generation.
The retirements will contribute to meeting our goals to reduce CO 2 emissions from our electric generation. When taken together, the retirements and new investments in renewables and clean generation should better balance our supply with our demand, while maintaining reliable, affordable energy for our customers.
Management's Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations in Part II of our 2021 Annual Report on Form 10-K, which was filed with the SEC on February 24, 2022.
Management's Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations in Part II of our 2022 Annual Report on Form 10-K, which was filed with the SEC on February 23, 2023.
In May 2021, we announced goals to achieve reductions in carbon emissions from our electric generation fleet by 60% by the end of 2025 and by 80% by the end of 2030, both from a 2005 baseline. We expect to achieve these goals by making operating refinements, retiring less efficient generating units, and executing our capital plan.
We have announced goals to achieve reductions in carbon emissions from our electric generation fleet by 60% by the end of 2025 and by 80% by the end of 2030, both from a 2005 baseline. We expect to achieve these goals by continuing to make operating refinements, retiring less efficient generating units, and executing our capital plan.
The amounts of securities authorized by the appropriate regulatory authorities, as well as the securities registered under the 1933 Act, are closely monitored and appropriate filings are made to ensure flexibility in the capital markets. At December 31, 2022, our current liabilities exceeded our current assets by $1,423.3 million.
The amounts of securities authorized by the appropriate regulatory authorities, as well as the securities registered under the 1933 Act, are closely monitored and appropriate filings are made to ensure flexibility in the capital markets. At December 31, 2023, our current liabilities exceeded our current assets by $2,319.1 million.
Energy demand for the unbilled period or changes in rate mix due to fluctuations in usage patterns of customer classes could impact the accuracy of the unbilled revenue estimate. Total unbilled utility revenues were $663.1 million and $531.7 million as of December 31, 2022 and 2021, respectively.
Energy demand for the unbilled period or changes in rate mix due to fluctuations in usage patterns of customer classes could impact the accuracy of the unbilled revenue estimate. Total unbilled utility revenues were $473.9 million and $663.1 million as of December 31, 2023 and 2022, respectively.
The following table shows operating income by segment for our utility operations during years ended December 31, 2022 and 2021: Year Ended December 31 (in millions) 2022 2021 Wisconsin $ 1,463.1 $ 1,309.3 Illinois 369.7 361.6 Other states 64.2 52.4 Each applicable segment discussion below includes a table that provides the calculation of electric margins and natural gas margins, as applicable, along with a reconciliation to the most directly comparable GAAP measure, operating income. 2022 Form 10-K 49 WEC Energy Group, Inc.
The following table shows operating income by segment for our utility operations during years ended December 31, 2023 and 2022: Year Ended December 31 (in millions) 2023 2022 Wisconsin $ 1,553.3 $ 1,463.1 Illinois 270.8 369.7 Other states 79.7 64.2 Each applicable segment discussion below includes a table that provides the calculation of electric margins and natural gas margins, as applicable, along with a reconciliation to the most directly comparable GAAP measure, operating income. 2023 Form 10-K 52 WEC Energy Group, Inc.
We have since signed our first five contracts for RNG for our natural gas distribution business, which will be transporting the output of local dairy farms onto our gas distribution system. The RNG supplied will directly replace higher-emission methane from natural gas that would have entered our pipes.
We have since signed contracts for RNG for our natural gas distribution business in Wisconsin, which will be transporting the output of local dairy farms onto our gas distribution systems. The RNG supplied will directly replace higher-emission methane from natural gas that would have entered our pipes.
If this approach were to change, it could lead to a greater level of competition amongst utilities to obtain customers. MERC offers both natural gas transportation service and interruptible natural gas sales to enable customers to better manage their energy costs.
If this approach were to change, it could lead to a greater level of competition amongst utilities to obtain customers and potentially adversely impact our results of operations. MERC offers both natural gas transportation service and interruptible natural gas sales to enable customers to better manage their energy costs.
See the discussion of electric utility margins below for more information related to recovery of fuel and purchased power costs and the remaining drivers of the changes in electric revenues. Electric Utility Margins Electric utility margins at the Wisconsin segment increased $40.0 million during 2022, compared with 2021.
See the discussion of electric utility margins below for more information related to the recovery of fuel and purchased power costs and the remaining drivers of the changes in electric revenues. Electric Utility Margins Electric utility margins at the Wisconsin segment increased $304.5 million during 2023, compared with 2022.
Based on the variable rate debt outstanding at December 31, 2022 and 2021, a hypothetical increase in market interest rates of one percentage point would have increased annual interest expense by $21.4 million and $24.0 million in 2022 and 2021, respectively.
Based on the variable rate debt outstanding at December 31, 2023 and 2022, a hypothetical increase in market interest rates of one percentage point would have increased annual interest expense by $25.2 million and $21.4 million in 2023 and 2022, respectively.
WE's and WPS's combined share of the cost of this project is estimated to be approximately $390 million, with construction of the solar portion expected to be completed in 2023. • WE and WPS, along with an unaffiliated utility, received PSCW approval to acquire and construct Darien, a utility-scale solar-powered electric generating facility with a battery energy storage system.
WE's and WPS's combined share of the cost of this project is estimated to be approximately $542 million, with construction of the solar portion and battery storage expected to be completed in 2024 and 2025, respectively. • WE and WPS, along with an unaffiliated utility, received PSCW approval to acquire and construct Darien, a utility-scale solar-powered electric generating facility.
Table of Contents Natural Gas Revenues Natural gas revenues increased $99.5 million during 2022, compared with 2021. Because prudently incurred natural gas costs are passed through to our customers in current rates, the changes are offset by comparable changes in revenues. The average per-unit cost of natural gas sold increased approximately 4.0% during 2022, compared with 2021.
Table of Contents Natural Gas Revenues Natural gas revenues decreased $99.4 million during 2023, compared with 2022. Because prudently incurred natural gas costs are passed through to our customers in current rates, the changes are offset by comparable changes in revenues. The average per-unit cost of natural gas sold decreased approximately 17% during 2023, compared with 2022.
These trusts invest in debt and equity securities. Changes in the market prices of these assets can affect future pension and OPEB expenses. Additionally, future contributions can also be affected by the investment returns on trust fund assets.
Changes in the market prices of these assets can affect future pension and OPEB expenses. Additionally, future contributions can also be affected by the investment returns on trust fund assets.
We expect to spend approximately $3.6 billion from 2023 to 2027 on reliability related projects with continued investment over the next decade. For more details, see Liquidity and Capital Resources – Cash Requirements – Significant Capital Projects.
We expect to spend approximately $3.8 billion from 2024 to 2028 on reliability related projects with continued investment over the next decade. For more details, see Liquidity and Capital Resources – Cash Requirements – Significant Capital Projects.
Table of Contents Electric Revenues Electric revenues increased $433.2 million during 2022, compared with 2021. To the extent that changes in fuel and purchased power costs are passed through to customers, the changes are offset by comparable changes in revenues.
Table of Contents Electric Revenues Electric revenues increased $39.0 million during 2023, compared with 2022. To the extent that changes in fuel and purchased power costs are passed through to customers, the changes are offset by comparable changes in revenues.
We consult with our investment advisors on an annual basis to help us forecast expected long-term returns on plan assets by reviewing actual historical returns and calculating expected total trust returns using the weighted-average of long-term market returns for each of the major target asset categories utilized in the funds.
We consult with our investment advisors on an annual basis to help us forecast expected long-term returns on plan assets by reviewing actual historical returns and calculating expected total trust returns using the weighted-average of long-term market returns for each of the major target asset categories utilized in the funds. 2023 Form 10-K 79 WEC Energy Group, Inc.
See Note 7, Property, Plant, and Equipment, for more information related to these planned power plant retirements. In addition to retiring these older, fossil-fueled plants, we expect to invest approximately $5.4 billion from 2023-2027 in regulated renewable energy in Wisconsin.
See Note 7, Property, Plant, and Equipment, for more information related to planned power plant retirements. In addition to retiring these older, fossil-fueled plants, we expect to invest approximately $7.0 billion from 2024-2028 in regulated renewable energy in Wisconsin.
The IRA also implements a 15% corporate alternative minimum tax and a 1% excise tax on stock repurchases. Although significant regulatory guidance is expected on the tax provisions in the IRA, we currently believe the provisions on alternative minimum tax and stock repurchases will not have a material impact on us.
Although significant regulatory guidance is expected on the tax provisions in the IRA, we currently believe the provisions on alternative minimum tax and stock repurchases will not have a material impact on us.
Natural Gas Revenues Natural gas revenues increased $218.1 million during 2022, compared with 2021. Because prudently incurred natural gas costs are passed through to our customers in current rates, the changes are offset by comparable changes in revenues. The average per-unit cost of natural gas sold increased approximately 14% during 2022, compared with 2021.
Natural Gas Revenues Natural gas revenues decreased $333.1 million during 2023, compared with 2022. Because prudently incurred natural gas costs are passed through to our customers in current rates, the changes are offset by comparable changes in revenues. The average per-unit cost of natural gas sold decreased approximately 35% during 2023, compared with 2022.
Table of Contents Other Operating Expenses (includes other operation and maintenance, depreciation and amortization, and property and revenue taxes) Other operating expenses at the Wisconsin segment decreased $44.4 million during 2022, compared with 2021.
Table of Contents Other Operating Expenses (includes other operation and maintenance, depreciation and amortization, and property and revenue taxes) Other operating expenses at the Wisconsin segment increased $273.4 million during 2023, compared with 2022.
Regulation for more information on these mechanisms. Higher commodity costs can increase our working capital requirements, result in higher gross receipts taxes, and lead to increased energy efficiency investments by our customers to reduce utility usage and/or fuel substitution.
Regulation for more information on these mechanisms. Higher commodity costs can increase our working capital requirements, result in higher gross receipts taxes, and lead to increased energy efficiency investments by our customers to reduce utility usage and/or fuel substitution. Higher commodity costs combined 2023 Form 10-K 78 WEC Energy Group, Inc.
Weather Our utilities' rates are based upon estimated normal temperatures. Our electric utility margins are unfavorably sensitive to below normal temperatures during the summer cooling season and, to some extent, to above normal temperatures during the winter heating season. Our natural gas utility margins are unfavorably sensitive to above normal temperatures during the winter heating season.
Our electric utility margins are unfavorably sensitive to below normal temperatures during the summer cooling season and, to some extent, to above normal temperatures during the winter heating season. Our natural gas utility margins are unfavorably sensitive to above normal temperatures during the winter heating season.
Actuarial Assumption (in millions, except percentages) Percentage-Point Change in Assumption Impact on Projected Benefit Obligation Impact on 2022 Pension Cost Discount rate (0.5) $ 114.5 $ 17.8 Discount rate 0.5 (101.6) (11.1) Rate of return on plan assets (0.5) N/A 14.8 Rate of return on plan assets 0.5 N/A (14.8) The following table shows how a given change in certain actuarial assumptions would impact the accumulated OPEB obligation and the reported net periodic OPEB cost (including amounts capitalized to our balance sheets).
Actuarial Assumption (in millions, except percentages) Percentage-Point Change in Assumption Impact on Projected Benefit Obligation Impact on 2023 Pension Cost Discount rate (0.5) $ 114.7 $ 5.3 Discount rate 0.5 (106.9) (10.2) Rate of return on plan assets (0.5) N/A 14.1 Rate of return on plan assets 0.5 N/A (14.1) The following table shows how a given change in certain actuarial assumptions would impact the accumulated OPEB obligation and the reported net periodic OPEB cost (including amounts capitalized to our balance sheets).
The remaining drivers of changes in natural gas revenues are described in the discussion of margins below. Natural Gas Utility Margins Natural gas utility margins at the Illinois segment, net of the $15.1 million impact of the riders referenced in the table above, increased $38.9 million during 2022, compared with 2021.
The remaining drivers of changes in natural gas revenues are described in the discussion of margins below. Natural Gas Utility Margins Natural gas utility margins at the Illinois segment, net of the $32.9 million impact of the riders referenced in the table above, increased $49.3 million during 2023, compared with 2022.
Actuarial Assumption (in millions, except percentages) Percentage-Point Change in Assumption Impact on Postretirement Benefit Obligation Impact on 2022 Postretirement Benefit Cost Discount rate (0.5) $ 19.2 $ 2.6 Discount rate 0.5 (17.2) (2.6) Health care cost trend rate (0.5) (10.4) (3.8) Health care cost trend rate 0.5 11.6 4.3 Rate of return on plan assets (0.5) N/A 4.9 Rate of return on plan assets 0.5 N/A (4.9) The discount rates are selected based on hypothetical bond portfolios consisting of noncallable, high-quality corporate bonds across the full maturity spectrum.
Actuarial Assumption (in millions, except percentages) Percentage-Point Change in Assumption Impact on Postretirement Benefit Obligation Impact on 2023 Postretirement Benefit Cost Discount rate (0.5) $ 22.5 $ 2.2 Discount rate 0.5 (21.4) (1.9) Health care cost trend rate (0.5) (12.4) (2.6) Health care cost trend rate 0.5 13.9 2.9 Rate of return on plan assets (0.5) N/A 4.1 Rate of return on plan assets 0.5 N/A (4.1) The discount rates are selected based on hypothetical bond portfolios consisting of noncallable, high-quality corporate bonds across the full maturity spectrum.
For additional information, see Note 20, Employee Benefits. 2022 Form 10-K 67 WEC Energy Group, Inc.
For additional information, see Note 20, Employee Benefits. 2023 Form 10-K 70 WEC Energy Group, Inc.
We expect our 2023 annual effective tax rate to be between 13.0% and 14.0%. Our effective tax rate calculations are revised every quarter based on the best available year-end tax assumptions, adjusted in the following year after returns are filed.
We expect our 2024 annual effective tax rate to be between 11.5% and 12.5%. Our effective tax rate calculations are revised every quarter based on the best available year-end tax assumptions, adjusted in the following year after returns are filed.
See Note 7, Property, Plant, and Equipment, for more information on our generating units probable of being retired. See Note 6, Regulatory Assets and Liabilities, and Note 26, Regulatory Environment, for more information on our retired generating units, including various approvals we received from the FERC and the PSCW.
See Note 6, Regulatory Assets and Liabilities, and Note 26, Regulatory Environment, for more information on our retired generating units, including various approvals we received from the FERC and the PSCW.
As interest rates rise, the calculated fair values will decrease. The discount rate is based on the weighted-average cost of capital for each reporting unit, taking into account both the after-tax cost of debt and cost of equity. The terminal year ROE for each utility is driven by its current allowed ROE.
The discount rate is based on the weighted-average cost of capital for each reporting unit, taking into account both the after-tax cost of debt and cost of equity. The terminal year ROE for each utility is driven by its current allowed ROE.
In January 2022, ATC completed providing WE, WPS, and UMERC with the net refunds related to the transmission costs they paid during the period covered by the first complaint. The refunds were applied to WE's and WPS's PSCW-approved escrow accounting for transmission expense. 2022 Form 10-K 73 WEC Energy Group, Inc. Table of Contents • Opinion Issued by the D.C.
In January 2022, ATC completed providing WE, WPS, and UMERC with the net refunds related to the transmission costs they paid during the period covered by the first complaint. The refunds were applied to WE's and WPS's PSCW-approved escrow accounting for transmission expense. • Opinion Issued by the D.C.
Other Income, Net Other income, net at the Illinois segment increased $6.8 million during 2022, compared with 2021, driven by higher net credits from the non-service components of our net periodic pension and OPEB costs. See Note 20, Employee Benefits, for more information on our benefit costs.
Other Income, Net Other income, net at the Illinois segment decreased $7.4 million during 2023, compared with 2022, driven by lower net credits from the non-service components of our net periodic pension and OPEB costs. See Note 20, Employee Benefits, for more information on our benefit costs.
For additional information concerning risks related to inflation and supply chain disruptions, see the three risk factors below. • Item 1A. Risk Factors – Risks Related to the Operation of Our Business – Our operations and corporate strategy may be adversely affected by supply chain disruptions and inflation. • Item 1A.
Risk Factors – Risks Related to the Operation of Our Business – Our operations and corporate strategy may be adversely affected by supply chain disruptions and inflation. • Item 1A.
In 2022, also includes $21.6 million of amortization related to a certain portion of WPS's regulatory liability associated with its 2020 earnings sharing mechanism to offset certain 2022 revenue deficiencies, as approved by the PSCW in order to forego filing for 2022 base rate increases. See Note 26, Regulatory Environment, for more information.
In 2022, this amount was reduced by the $21.6 million amortization of certain regulatory liability balances associated with WPS's 2020 earnings sharing mechanism to offset certain 2022 revenue deficiencies, as approved by the PSCW in order to forego filing for 2022 base rate increases. See Note 26, Regulatory Environment, for more information.
Year Ended December 31 (in millions) 2022 2021 B (W) Natural gas revenues $ 618.5 $ 519.0 $ 99.5 Cost of natural gas sold 391.6 319.3 (72.3) Total natural gas margins 226.9 199.7 27.2 Other operation and maintenance 98.5 90.4 (8.1) Depreciation and amortization 40.9 38.1 (2.8) Property and revenue taxes 23.3 18.8 (4.5) Operating income 64.2 52.4 11.8 Other income, net 2.5 1.1 1.4 Interest expense 13.9 6.2 (7.7) Income before income taxes 52.8 47.3 5.5 Income tax expense 13.1 11.5 (1.6) Net income attributed to common shareholders $ 39.7 $ 35.8 $ 3.9 The following table shows a breakdown of other operation and maintenance: Year Ended December 31 (in millions) 2022 2021 B (W) Operation and maintenance not included in line items below $ 77.8 $ 70.5 $ (7.3) Regulatory amortizations and other pass through expenses (1) 20.7 19.8 (0.9) Other — 0.1 0.1 Total other operation and maintenance $ 98.5 $ 90.4 $ (8.1) (1) Regulatory amortizations and other pass through expenses are substantially offset in margins and therefore do not have a significant impact on net income.
Year Ended December 31 (in millions) 2023 2022 B (W) Natural gas revenues $ 519.1 $ 618.5 $ (99.4) Cost of natural gas sold 277.2 391.6 114.4 Total natural gas margins 241.9 226.9 15.0 Other operation and maintenance 94.5 98.5 4.0 Depreciation and amortization 43.3 40.9 (2.4) Property and revenue taxes 24.4 23.3 (1.1) Operating income 79.7 64.2 15.5 Other income, net 0.6 2.5 (1.9) Interest expense 15.9 13.9 (2.0) Income before income taxes 64.4 52.8 11.6 Income tax expense 16.3 13.1 (3.2) Net income attributed to common shareholders $ 48.1 $ 39.7 $ 8.4 The following table shows a breakdown of other operation and maintenance: Year Ended December 31 (in millions) 2023 2022 B (W) Operation and maintenance not included in line item below $ 72.6 $ 77.8 $ 5.2 Regulatory amortizations and other pass through expenses (1) 21.9 20.7 (1.2) Total other operation and maintenance $ 94.5 $ 98.5 $ 4.0 (1) Regulatory amortizations and other pass through expenses are substantially offset in margins and therefore do not have a significant impact on net income.
However, a Notice of Proposed Rulemaking was issued by the FERC on April 15, 2021 2022 Form 10-K 72 WEC Energy Group, Inc. Table of Contents proposing to limit the 50 basis point increase in ROE to only be available to transmission utilities initially joining a transmission organization for the first three years of membership.
However, a Notice of Proposed Rulemaking was issued by the FERC on April 15, 2021, proposing to limit the 50 basis point increase in ROE to only be available to transmission utilities initially joining a transmission organization for the first three years of membership.
Therefore, ATC recorded a liability on its financials for these potential refunds, which reduced our equity earnings from ATC by $18.6 million during the third quarter of 2022. The liability recorded by ATC is based on a 9.88% base ROE for the first complaint period.
Therefore, ATC recorded a liability on its financials for these potential refunds, which reduced our equity earnings from ATC by $18.6 million during the third quarter of 2022. The liability recorded by ATC is based on a 9.88% base 2023 Form 10-K 77 WEC Energy Group, Inc. Table of Contents ROE for the first complaint period.
Management regularly assesses whether these regulatory assets and liabilities are probable of future recovery or refund by considering factors such as changes in the regulatory environment, earnings from our electric and natural gas utility operations, rate orders issued by our regulators, historical decisions by our regulators regarding regulatory assets and liabilities, and the status of any pending or potential deregulation legislation.
Table of Contents refund by considering factors such as changes in the regulatory environment, earnings from our electric and natural gas utility operations, rate orders issued by our regulators, historical decisions by our regulators regarding regulatory assets and liabilities, and the status of any pending or potential deregulation legislation.
For all of our reporting units, the fair values calculated in step one of the test were greater than their carrying values. The fair values for the reporting units were calculated using a combination of the income approach and the market approach.
For all of our reporting units, the fair values calculated in step one of the test were greater than their carrying values. The fair values for the reporting units were calculated using a combination of the income approach and the market approach. For the income approach, we used internal forecasts to project cash flows.
Our plan is to replace a portion of the retired capacity by building and owning zero-carbon-emitting renewable generation facilities that are anticipated to include the following new investments: • 1,900 MW of utility-scale solar; • 700 MW of battery storage; and 2022 Form 10-K 45 WEC Energy Group, Inc. Table of Contents • 700 MW of wind.
Our plan is to replace a portion of the retired capacity by building and owning zero-carbon-emitting renewable generation facilities that are anticipated to include the following new investments: • 2,700 MWs of utility-scale solar; • 880 MWs of wind; and • 250 MWs of battery storage. 2023 Form 10-K 48 WEC Energy Group, Inc.
Table of Contents Capitalization Structure The following table shows our capitalization structure as of December 31, 2022 and 2021, as well as an adjusted capitalization structure that we believe is consistent with how a majority of the rating agencies currently view our 2007 Junior Notes: 2022 2021 (in millions) Actual Adjusted Actual Adjusted Common shareholders' equity $ 11,376.9 $ 11,626.9 $ 10,913.2 $ 11,163.2 Preferred stock of subsidiary 30.4 30.4 30.4 30.4 Long-term debt (including current portion) 15,647.4 15,397.4 13,693.1 13,443.1 Short-term debt 1,647.1 1,647.1 1,897.0 1,897.0 Total capitalization $ 28,701.8 $ 28,701.8 $ 26,533.7 $ 26,533.7 Total debt $ 17,294.5 $ 17,044.5 $ 15,590.1 $ 15,340.1 Ratio of debt to total capitalization 60.3 % 59.4 % 58.8 % 57.8 % Included in long-term debt on our balance sheets as of December 31, 2022 and 2021, is $500.0 million principal amount of the 2007 Junior Notes.
Table of Contents Capitalization Structure The following table shows our capitalization structure as of December 31, 2023 and 2022, as well as an adjusted capitalization structure that we believe is consistent with how a majority of the rating agencies currently view our 2007 Junior Notes: 2023 2022 (in millions) Actual Adjusted Actual Adjusted Common shareholders' equity $ 11,724.2 $ 11,974.2 $ 11,376.9 $ 11,626.9 Preferred stock of subsidiary 30.4 30.4 30.4 30.4 Long-term debt (including current portion) 16,777.0 16,527.0 15,647.4 15,397.4 Short-term debt 2,020.9 2,020.9 1,647.1 1,647.1 Total capitalization $ 30,552.5 $ 30,552.5 $ 28,701.8 $ 28,701.8 Total debt $ 18,797.9 $ 18,547.9 $ 17,294.5 $ 17,044.5 Ratio of debt to total capitalization 61.5 % 60.7 % 60.3 % 59.4 % Included in long-term debt on our balance sheets as of December 31, 2023 and 2022, is $500.0 million principal amount of the 2007 Junior Notes.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeManagement's Discussion and Analysis of Financial Condition and Results of Operations – Factors Affecting Results, Liquidity, and Capital Resources – Market Risks and Other Significant Risks, as well as Note 1(r), Fair Value Measurements , Note 1(s), Derivative Instruments, and Note 19, Guarantees, for information concerning potential market risks to which we are exposed. 2022 Form 10-K 80 WEC Energy Group, Inc.
Biggest changeManagement's Discussion and Analysis of Financial Condition and Results of Operations – Factors Affecting Results, Liquidity, and Capital Resources – Market Risks and Other Significant Risks, as well as Note 1(r), Fair Value Measurements, Note 1(s), Derivative Instruments, and Note 19, Guarantees, for information concerning potential market risks to which we are exposed. 2023 Form 10-K 83 WEC Energy Group, Inc.

Other WEC 10-K year-over-year comparisons