WEC Energy Group managed a 2-cent earnings per share improvement in the second quarter over last year, with several factors offsetting the COVID-19 pandemic’s economic consequences.
The Wisconsin utility recorded net income of $241.6 million ($0.76/share) compared to $235.7 million ($0.74/share) in the same period in 2019.
“Despite the negative margin impact in this year’s second quarter related to the pandemic, we were still able to achieve quarter-over-quarter earnings-per-share growth,” WEC CFO Xia Liu said during an Aug. 4 earnings call. She said “significantly warmer-than-normal weather,” an increase in the return on equity for WEC’s American Transmission Co. and execution of the utility’s five-year capital spending plan helped blunt the impacts of lower energy demand.
“We remain optimistic and confident in our ability to create value despite the challenges presented by the pandemic,” Executive Chairman Gale Klappa said.
WEC said it has about 11,000 more electric and 27,000 more natural gas customers compared to a year ago. The utility serves 4.5 million customers in Wisconsin, Illinois, Michigan and Minnesota. Compared to the second quarter of 2019, residential electricity sales were up 17.1%, small commercial industrial electric sales were down 8.6% and large commercial and industrial sales were down 12.9%.
WEC predicts continued economic recovery through the end of the year; however, COO Scott Lauber said the company has a plan in place if recovery proves more sluggish.
“We are prepared if the level of recovery would drop back to what we saw in the second quarter. We estimate that the additional impact to the pre-tax margin would be approximately $10 million to $15 million. We believe we could absorb this margin compression through efficiency measures already in place,” he said.
Lauber also said that the Wisconsin Public Service Commission’s April decision to allow utilities to track and defer uncollectible expenses and pandemic-related costs helps the company’s bottom line.
Klappa said WEC’s $15 billion capital investment plan from 2020 through 2024 remains unchanged.
“We have ample liquidity and no need to issue new equity,” he told investors.
Klappa said WEC’s announcement late last month that it will pay $235 million to acquire an 85% ownership interest in the 155-MW Tatanka Ridge wind farm in South Dakota is part of the capital plan.
However, he reported that construction at the 300-MW Thunderhead Wind Farm in Nebraska hit a snag that will likely delay it “several months” beyond its 2020 year-end in service date. WEC will have a 90% stake in the project.
“We now project a several-month delay because the local utility has paused construction of a substation that’s needed to connect the Thunderhead project to the transmission network. We continue to work with all the relevant parties to minimize the delay,” Klappa said.
CEO Kevin Fletcher said WEC still has designs on more utility-scale solar generation. He said work continues on two solar projects totaling 200 MW for Wisconsin Public Service.
In addition, subsidiary We Energies will still invest — along with Madison Gas and Electric — in construction of the delayed $194.9 million Badger Hollow II solar farm, which is now expected to be in service by the end of 2022.
