Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ___________________


Commission File Number	Registrant; State of Incorporation; Address; and Telephone Number	IRS Employer Identification No.

001-09057	WEC ENERGY GROUP, INC.	39-1391525

(A Wisconsin Corporation)

231 West Michigan Street

P.O. Box 1331

Milwaukee, WI 53201

(414) 221-2345

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class						Trading Symbol(s)						Name of Each Exchange on Which Registered
Common Stock, $.01 Par Value						WEC						New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company		☐
		Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date (September 30, 2021):

Common Stock, $.01 Par Value, 315,434,531 shares outstanding

Table of Contents

WEC ENERGY GROUP, INC.

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended September 30, 2021

TABLE OF CONTENTS


				Page
	CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION			1
PART I.	FINANCIAL INFORMATION			4
ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)			4
	Condensed Consolidated Income Statements			4
	Condensed Consolidated Statements of Comprehensive Income			5
	Condensed Consolidated Balance Sheets			6
	Condensed Consolidated Statements of Cash Flows			7
	Condensed Consolidated Statements of Equity			8
	Notes to Condensed Consolidated Financial Statements			10
			Page
	Note 1	General Information	10
	Note 2	Acquisitions	10
	Note 3	Operating Revenues	12
	Note 4	Credit Losses	15
	Note 5	Regulatory Assets and Liabilities	18
	Note 6	Property, Plant, and Equipment	19
	Note 7	Common Equity	19
	Note 8	Short-Term Debt and Lines of Credit	20
	Note 9	Long-Term Debt	21
	Note 10	Materials, Supplies, and Inventories	21
	Note 11	Income Taxes	22
	Note 12	Fair Value Measurements	22
	Note 13	Derivative Instruments	24
	Note 14	Guarantees	26
	Note 15	Employee Benefits	27
	Note 16	Goodwill and Intangibles	27
	Note 17	Investment in Transmission Affiliates	29
	Note 18	Segment Information	30
	Note 19	Variable Interest Entities	33
	Note 20	Commitments and Contingencies	34
	Note 21	Supplemental Cash Flow Information	39
	Note 22	Regulatory Environment	39
	Note 23	New Accounting Pronouncements	45
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			46
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			82
ITEM 4.	CONTROLS AND PROCEDURES			82
PART II.	OTHER INFORMATION			83
ITEM 1.	LEGAL PROCEEDINGS			83
ITEM 1A.	RISK FACTORS			83
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			84

ITEM 6.	EXHIBITS			84
SIGNATURE				85


09/30/2021 Form 10-Q			i			WEC Energy Group, Inc.

Table of Contents

GLOSSARY OF TERMS AND ABBREVIATIONS

The abbreviations and terms set forth below are used throughout this report and have the meanings assigned to them below:


Subsidiaries and Affiliates
ATC						American Transmission Company LLC
ATC Holdco						ATC Holdco LLC

Bishop Hill III						Bishop Hill Energy III LLC
Blooming Grove						Blooming Grove Wind Energy Center LLC
Bluewater						Bluewater Natural Gas Holding, LLC
Coyote Ridge						Coyote Ridge Wind, LLC
Integrys						Integrys Holding, Inc.
Jayhawk						Jayhawk Wind, LLC
MERC						Minnesota Energy Resources Corporation
MGU						Michigan Gas Utilities Corporation
NSG						North Shore Gas Company

PGL						The Peoples Gas Light and Coke Company
Tatanka Ridge						Tatanka Ridge Wind LLC
UMERC						Upper Michigan Energy Resources Corporation

Upstream						Upstream Wind Energy LLC
WE						Wisconsin Electric Power Company
We Power						W.E. Power, LLC
WEC Energy Group						WEC Energy Group, Inc.
WECI						WEC Infrastructure LLC
WECI Wind Holding I						WEC Infrastructure Wind Holding I LLC
WG						Wisconsin Gas LLC
WEPCo Environmental Trust						WEPCo Environmental Trust Finance I, LLC
Wispark						Wispark LLC
WPS						Wisconsin Public Service Corporation

Federal and State Regulatory Agencies
DOC						United States Department of Commerce
EPA						United States Environmental Protection Agency
FERC						Federal Energy Regulatory Commission
ICC						Illinois Commerce Commission
IEPA						Illinois Environmental Protection Agency

MPSC						Michigan Public Service Commission
MPUC						Minnesota Public Utilities Commission
PSCW						Public Service Commission of Wisconsin
SEC						United States Securities and Exchange Commission
WDNR						Wisconsin Department of Natural Resources

Accounting Terms


ASU						Accounting Standards Update
FASB						Financial Accounting Standards Board
GAAP						United States Generally Accepted Accounting Principles
LIFO						Last-In, First-Out
OPEB						Other Postretirement Employee Benefits
VIE						Variable Interest Entity

Environmental Terms
ACE						Affordable Clean Energy
BATW						Bottom Ash Transport Water

BTA						Best Technology Available
CAA						Clean Air Act
CO2						Carbon Dioxide
CSAPR						Cross-State Air Pollution Rule


09/30/2021 Form 10-Q			ii			WEC Energy Group, Inc.

Table of Contents


ELG						Steam Electric Effluent Limitation Guidelines
FGD						Flue Gas Desulfurization
GHG						Greenhouse Gas
GMZ						Groundwater Management Zone

NAAQS						National Ambient Air Quality Standards
NOV						Notice of Violation
NOx						Nitrogen Oxide


VN						Violation Notice



Measurements
Dth						Dekatherm
MW						Megawatt
MWh						Megawatt-hour

Other Terms and Abbreviations
2007 Junior Notes						WEC Energy Group, Inc.'s 2007 Junior Subordinated Notes Due 2067
2013 Junior Notes						Integrys Holding, Inc.'s 6.00% Junior Notes due August 1, 2073
AG						Attorney General
AMI						Advanced Metering Infrastructure
Badger Hollow I						Badger Hollow Solar Park I
Badger Hollow II						Badger Hollow Solar Park II
CDC						Centers for Disease Control and Prevention
CIP						Conservation Improvement Program
COVID-19						Coronavirus Disease – 2019
Crane Creek						Crane Creek Wind Park
D.C. Circuit Court of Appeals						United States Court of Appeals for the District of Columbia Circuit
Executive Order 13990						Executive Order 13990 of January 20, 2021 – Protecting Public Health and the Environment and Restoring Science To Tackle the Climate Crisis
ERGS						Elm Road Generating Station
ESG Progress Plan						WEC Energy Group's Capital Investment Plan for Efficiency, Sustainability, and Growth
ETB						Environmental Trust Bond
EV						Electric Vehicle
Exchange Act						Securities Exchange Act of 1934, as amended
FTR						Financial Transmission Right
GCRM						Gas Cost Recovery Mechanism
GUIC						Gas Utility Infrastructure Cost
ITC						Investment Tax Credit
LIBOR						London Interbank Offered Rate
LNG						Liquefied Natural Gas
MISO						Midcontinent Independent System Operator, Inc.

OCPP						Oak Creek Power Plant
OC 5						Oak Creek Power Plant Unit 5

OC 7						Oak Creek Power Plant Unit 7
OC 8						Oak Creek Power Plant Unit 8

PPA						Power Purchase Agreement
PSB						Public Service Building
PTC						Production Tax Credit
QIP						Qualifying Infrastructure Plant
ROE						Return on Equity
Sapphire Sky						Sapphire Sky Wind Energy LLC
SMP						Natural Gas System Modernization Program

SPC						COVID-19 Special Purpose Charge
SSR						System Support Resource
Supreme Court						United States Supreme Court
Tax Legislation						Tax Cuts and Jobs Act of 2017
Thunderhead						Thunderhead Wind Energy LLC


09/30/2021 Form 10-Q			iii			WEC Energy Group, Inc.

Table of Contents


TPTFA						Third-Party Transaction Fee Adjustment

Two Creeks						Two Creeks Solar Park


WHO						World Health Organization


09/30/2021 Form 10-Q			iv			WEC Energy Group, Inc.

Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

In this report, we make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. These statements are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. Readers are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements may be identified by reference to a future period or periods or by the use of terms such as "anticipates," "believes," "could," "estimates," "expects," "forecasts," "goals," "guidance," "intends," "may," "objectives," "plans," "possible," "potential," "projects," "seeks," "should," "targets," "will," or variations of these terms.

Forward-looking statements include, among other things, statements concerning management's expectations and projections regarding earnings, completion of capital projects, sales and customer growth, rate actions and related filings with regulatory authorities, environmental and other regulations, including associated compliance costs, legal proceedings, dividend payout ratios, effective tax rates, pension and OPEB plans, fuel costs, sources of electric energy supply, coal and natural gas deliveries, remediation costs, climate-related matters, our ESG Progress Plan, liquidity and capital resources, and other matters.

Forward-looking statements are subject to a number of risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in the statements. These risks and uncertainties include those described in risk factors as set forth in our 2020 Annual Report on Form 10-K, and those identified below:

Factors affecting utility operations such as catastrophic weather-related damage, environmental incidents, unplanned facility outages and repairs and maintenance, and electric transmission or natural gas pipeline system constraints;
Factors affecting the demand for electricity and natural gas, including political or regulatory developments, varying, adverse, or unusually severe weather conditions, changes in economic conditions, customer growth and declines, commodity prices, energy conservation efforts, and continued adoption of distributed generation by customers;
The timing, resolution, and impact of rate cases and negotiations, including recovery of deferred and current costs and the ability to earn a reasonable return on investment, and other regulatory decisions impacting our regulated operations;
The impact of health pandemics, including the COVID-19 pandemic, on our business functions, financial condition, liquidity, and results of operations;
The impact of recent and future federal, state, and local legislative and/or regulatory changes, including changes in rate-setting policies or procedures, deregulation and restructuring of the electric and/or natural gas utility industries, transmission or distribution system operation, the approval process for new construction, reliability standards, pipeline integrity and safety standards, allocation of energy assistance, energy efficiency mandates, and tax laws, including those that affect our ability to use PTCs and ITCs;
Federal and state legislative and regulatory changes relating to the environment, including climate change and other environmental regulations impacting generation facilities and renewable energy standards, the enforcement of these laws and regulations, changes in the interpretation of regulations or permit conditions by regulatory agencies, and the recovery of associated remediation and compliance costs;
The ability to obtain and retain customers, including wholesale customers, due to increased competition in our electric and natural gas markets from retail choice and alternative electric suppliers, and continued industry consolidation;
The timely completion of capital projects within budgets and the ability to recover the related costs through rates;
Supply chain disruptions, including any that may occur as a result of the DOC's impending decision on whether to impose new tariffs on solar panels and cells imported from several Southeastern Asian countries;
Factors affecting the implementation of our CO2 emission and/or methane emission reduction goals, and opportunities and actions related to those goals, including related regulatory decisions, the cost of materials, supplies, and labor, technology advances, and the feasibility of competing generation projects;


09/30/2021 Form 10-Q			1			WEC Energy Group, Inc.

Table of Contents

The financial and operational feasibility of taking more aggressive action to further reduce GHG emissions in order to limit future global temperature increases;
The risks associated with inflation and changing commodity prices, including natural gas and electricity;
The availability and cost of sources of natural gas and other fossil fuels, purchased power, materials needed to operate environmental controls at our electric generating facilities, or water supply due to high demand, shortages, transportation problems, nonperformance by electric energy or natural gas suppliers under existing power purchase or natural gas supply contracts, or other developments;
Changes in credit ratings, interest rates, and our ability to access the capital markets, caused by volatility in the global credit markets, our capitalization structure, and market perceptions of the utility industry, us, or any of our subsidiaries;
Changes in the method of determining LIBOR or the replacement of LIBOR with an alternative reference rate;
Costs and effects of litigation, administrative proceedings, investigations, settlements, claims, and inquiries;
The direct or indirect effect on our business resulting from terrorist attacks and cyber security intrusions, as well as the threat of such incidents, including the failure to maintain the security of personally identifiable information, the associated costs to protect our utility assets, technology systems, and personal information, and the costs to notify affected persons to mitigate their information security concerns and to comply with state notification laws;
Restrictions imposed by various financing arrangements and regulatory requirements on the ability of our subsidiaries to transfer funds to us in the form of cash dividends, loans or advances, that could prevent us from paying our common stock dividends, taxes, and other expenses, and meeting our debt obligations;
The risk of financial loss, including increases in bad debt expense, associated with the inability of our customers, counterparties, and affiliates to meet their obligations;
Changes in the creditworthiness of the counterparties with whom we have contractual arrangements, including participants in the energy trading markets and fuel suppliers and transporters;
The financial performance of ATC and its corresponding contribution to our earnings;
The investment performance of our employee benefit plan assets, as well as unanticipated changes in related actuarial assumptions, which could impact future funding requirements;
Factors affecting the employee workforce, including loss of key personnel, internal restructuring, work stoppages, and collective bargaining agreements and negotiations with union employees;
Advances in technology, and related legislation or regulation supporting the use of that technology, that result in competitive disadvantages and create the potential for impairment of existing assets;
Risks related to our non-utility renewable energy facilities, including unfavorable weather, the ability to replace expiring long-term PPAs under acceptable terms, and the availability of reliable interconnection and electricity grids;
The risk associated with the values of goodwill and other intangible assets and their possible impairment;
Potential business strategies to acquire and dispose of assets or businesses, which cannot be assured to be completed timely or within budgets, and legislative or regulatory restrictions or caps on non-utility acquisitions, investments or projects, including the State of Wisconsin's public utility holding company law;
The timing and outcome of any audits, disputes, and other proceedings related to taxes;
The ability to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act, while both continuing to integrate and consolidate our enterprise systems;


09/30/2021 Form 10-Q			2			WEC Energy Group, Inc.

Table of Contents

The effect of accounting pronouncements issued periodically by standard-setting bodies; and
Other considerations disclosed elsewhere herein and in other reports we file with the SEC or in other publicly disseminated written documents.

Except as may be required by law, we expressly disclaim any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.


09/30/2021 Form 10-Q			3			WEC Energy Group, Inc.

Table of Contents

PART I. FINANCIAL INFORMATION

Next: Item 1. FINANCIAL STATEMENTS