While Wisconsin winters freeze Lake Superior, Wisconsin Energy warms the interiors of Wisconsin homes and businesses. The company's utilities provide electricity to more than 1.1 million customers and natural gas to almost 1.1 million customers in eastern and northern Wisconsin and Michigan's Upper Peninsula. It also serves more than 445 steam customers in downtown Milwaukee. Wisconsin Energy has about 6,020 MW of generating capacity, primarily from coal-fired and nuclear-powered plants. The company's primary utility subsidiaries, Wisconsin Gas and Wisconsin Electric, operate together as We Energies. Non-utility operations include power generation leasing and real estate development.
Wisconsin Energy provides electric and natural gas service to customers in areas of Wisconsin and the Upper Peninsula of Michigan.
The company operates a utility energy segment and a non-utility energy segment. Its primary subsidiaries are Wisconsin Electric, and Wisconsin Gas, and W.E. Power, LLC (We Power). Utilities Wisconsin Electric and Wisconsin Gas operate together under the trade name of "We Energies." The company’s non-utility energy segment, We Power, designs, builds, owns, and leases four Wisconsin Electric generation plants constructed as part of its Power the Future strategy.
In addition, Wisconsin Energy other non-utility operations include Wispark and Bostco, which develop and invest in real estate projects primarily in southeastern Wisconsin.
The company has about 270 generating plants (including coal, natural gas fired and renewable), 21,511 pole-miles of overhead distribution lines and 24,086 miles of underground distribution cable, as well as about 350 distribution substations and 291,000 line transformers. Its gas distribution system includes 20,967 miles of distribution and transmission mains connected at 181 gate stations to the pipeline transmission systems of ANR Pipeline Company, Guardian Pipeline L.L.C., Natural Gas Pipeline Company of America, Northern Natural Pipeline Company, Great Lakes Gas Transmission Company, Viking Gas Transmission, and Michigan Consolidated Gas Company.
Sales and Marketing
Wisconsin Energy provides electric utility service to a range of customers in such industries as paper, foundry, food products and machinery production, as well as to large retail chains. Prior to September 2013, its largest retail electric customers were two iron ore mines located in the Upper Peninsula of Michigan. The combined electric energy sales to the two mines accounted for 4% of its total electric utility energy sales during 2013.
During 2013, it sold wholesale electric power to two Regional Transmission Organizations (RTOs), five rural cooperatives, and four municipal joint action agencies located in the states of Wisconsin and Michigan. Wholesale sales accounted for 9% of Wisconsin Energy total electric operating revenues during 2013.
Wisconsin Energy's revenues increased by 6% in 2013 due to increased revenues from Electric and Gas utility operations and from Non-Utility operations.
Its electric utility operating revenues increased due to customer growth, higher Wisconsin net retail pricing related to Section 1603 Renewable Energy Treasury Grant, and increased wholesale sales into the MISO Energy Markets as a result of increased generating capacity.
Gas utility operating revenues grew thanks to an increase in customers as a result of colder winter weather, partially offset by lower gas rates.
The non-utility energy segment's revenues grew thanks to the final approved construction costs for the Oak Creek expansion as part of the 2013 Wisconsin Rate Case.
Residential sales decreased by 2.1%, primarily due to the weather. Sales to its large commercial/industrial customers decreased by 10.7% primarily because of a decrease in sales to two iron ore mines in Michigan.
Wisconsin Energy's net income increased in 2013, due to higher revenues and increased income related to a Treasury Grant associated with a recently completed biomass plant. It was also partially due to an increase in its effective tax rate as the result of reduced domestic production activities deductions.
Cash provided by operating activities increased in 2013, primarily because of lower contributions to its qualified benefit plans and higher non-cash charges to earnings. During 2013, it made no contributions to its qualified benefit plans, compared to contributions of $100 million during 2012. In addition, it had higher net income, depreciation expense, and amortization expense. Included in the higher amortization expense was an increase in the amortization of regulatory items. Partially offsetting these items was an increase in accounts receivable and accrued revenues because of colder winter weather and a Treasury Grant.
While Wisconsin Energy has seen a upward trend in revenues since 2009, it saw dip in 2012 due to reduced sales into the MISO Energy Markets, and reduced sales to commercial/industrial customers due to the planned outage at one of the iron ore mines in Michigan and the conversion to self-generation of two other large customers. In respect to this, its cash flow from operations and net income has been increasing with a same pace since 2009.
The company has three primary investment opportunities and earnings streams: its regulated utility business; its minority investment in ATC; and its generation plants within its non-utility energy segment. Its Power the Future strategy was designed to address Wisconsin Electric's electric supply needs by increasing the electric generating capacity in Wisconsin while allowing the company to maintain a diversified fuel mix, by including both new coal-fired plants and natural-gas fired plants.
Wisconsin Energy's strategy is to invest in new gas, coal, and green energy plants, and upgrade existing plants and its distribution system, while selling non-core assets. To meet clean energy regulations, Wisconsin Energy has been shifting the mix of its energy portfolio towards greener supply sources. However, in 2013 Wisconsin Energy's coal plants still accounted for the bulk of its generating capacity, and the company faces significant costs in order to comply with environmental regulations and remediation compliance standards going forward, even as its shifts to more efficient and greener power operations. (In 2012 We Energies announced plans to convert the fuel source for the Valley Power Plant from coal to natural gas).
The company planned to invest about $711 million in 2014, mainly for upgrading its electric and gas distribution systems.
In 2013, We Energies placed the biomass-fueled power plant on the site of Domtar Corporation's Rothschild, Wisconsin into commercial operation. That year We Energies and Wolverine Power Cooperative decided to end their joint venture at the Presque Isle Power Plant.
To raise cash, in 2012 Wisconsin Electric Power sold its 25% stake in Edgewater Generating Station Unit 5 to Wisconsin Power and Light for $38 million.
Mergers and Acquisitions
Ina major move, in 2014 Wisconsin Energy announced plans to acquire rival Integrys in a transaction valued at $9.1 billion. Upon completion of the transaction, the combined company will be named WEC Energy Group, Inc., and will own 60% of ATC. The combined company is planned to serve more than 4.3 million total gas and electric customers across Wisconsin, Illinois, Michigan and Minnesota, and operate nearly 71,000 miles of electric distribution lines and more than 44,000 miles of gas transmission and distribution lines.
In 2011 the company completed the extensive emission-control system retrofitting and upgrade of its 615 MW coal-fired Oak Creek Power Plant Unit 2. (The upgrade of Unit 1 was completed in 2010).
Wisconsin Energy sold a number of assets in 2009 and 2010 in order to pay down debt and focus on its core businesses. It sold its water utility to the City of Mequon, Wisconsin for $14.5 million, and power utility to Edison Sault to Cloverland Electric Cooperative $61.5 million.
The company was founded in 1981 and became a diversified holding company in 1986.