WEC Energy Group 10-Q 2022-06-30

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 June 30, 2022

OR

☐			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 (June 30, 2022):

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 June 30, 2022

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			Disposition			11
			Note 4			Operating Revenues			12
			Note 5			Credit Losses			15
			Note 6			Regulatory Assets and Liabilities			18
			Note 7			Property, Plant, and Equipment			19
			Note 8			Common Equity			19
			Note 9			Short-Term Debt and Lines of Credit			20
			Note 10			Leases			20
			Note 11			Materials, Supplies, and Inventories			21
			Note 12			Income Taxes			22
			Note 13			Fair Value Measurements			22
			Note 14			Derivative Instruments			24
			Note 15			Guarantees			26
			Note 16			Employee Benefits			27
			Note 17			Goodwill and Intangibles			27
			Note 18			Investment in Transmission Affiliates			29
			Note 19			Segment Information			30
			Note 20			Variable Interest Entities			33
			Note 21			Commitments and Contingencies			35
			Note 22			Supplemental Cash Flow Information			39
			Note 23			Regulatory Environment			40
			Note 24			New Accounting Pronouncements			41
ITEM 2.			MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS									43
ITEM 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK									80
ITEM 4.			CONTROLS AND PROCEDURES									81
PART II.			OTHER INFORMATION									82
ITEM 1.			LEGAL PROCEEDINGS									82
ITEM 1A.			RISK FACTORS									82
ITEM 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS									83
ITEM 6.			EXHIBITS									83
SIGNATURE												84

06/30/2022 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
WEPCo Environmental Trust						WEPCo Environmental Trust Finance I, LLC
WG						Wisconsin Gas LLC
Wispark						Wispark LLC
WPS						Wisconsin Public Service Corporation
Federal and State Regulatory Agencies
CBP						United States Customs and Border Protection Agency
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
IRS						United States Internal Revenue Service
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
CASAC						Clean Air Scientific Advisory Committee

06/30/2022 Form 10-Q			ii			WEC Energy Group, Inc.

Table of Contents

CO2						Carbon Dioxide
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
WOTUS						Waters of the United States
WPDES						Wisconsin Pollutant Discharge Elimination System
Measurements
Dth						Dekatherm
MW						Megawatt
MWh						Megawatt-hour
µg/m3						Micrograms Per Cubic Meter
Other Terms and Abbreviations
2007 Junior Notes						WEC Energy Group, Inc.'s 2007 Junior Subordinated Notes Due 2067
AD/CVD						Antidumping and Countervailing Duties
AG						Attorney General
AMI						Advanced Metering Infrastructure
Badger Hollow I						Badger Hollow Solar Park I
Badger Hollow II						Badger Hollow Solar Park II
Chicago, IL-IN-WI						Chicago, Illinois, Indiana, and Wisconsin
CIP						Conservation Improvement Program
COVID-19						Coronavirus Disease – 2019
D.C. Circuit Court of Appeals						United States Court of Appeals for the District of Columbia Circuit
Darien						Darien Solar-Battery Park
EGU						Electric Generating Unit
ERGS						Elm Road Generating Station
ESG Progress Plan						WEC Energy Group's Capital Investment Plan for Efficiency, Sustainability, and Growth for 2022-2026
ETB						Environmental Trust Bond
EV						Electric Vehicle
Exchange Act						Securities Exchange Act of 1934, as amended
Executive Order 13990						Executive Order 13990 of January 20, 2021 – Protecting Public Health and the Environment and Restoring Science To Tackle the Climate Crisis
FTR						Financial Transmission Right
GCRM						Gas Cost Recovery Mechanism
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 7						Oak Creek Power Plant Unit 7
OC 8						Oak Creek Power Plant Unit 8
Paris						Paris Solar-Battery Park
PPA						Power Purchase Agreement
PSB						Public Service Building
PTC						Production Tax Credit
PWGS						Port Washington Generation Station
QIP						Qualifying Infrastructure Plant
RICE						Reciprocating Internal Combustion Engine
RNG						Renewable Natural Gas
ROE						Return on Equity

06/30/2022 Form 10-Q			iii			WEC Energy Group, Inc.

Table of Contents

S&P						Standard & Poor's
Sapphire Sky						Sapphire Sky Wind Energy LLC
SMP						Safety Modernization Program
SPP						Southwest Power Pool, Inc.
Supreme Court						United States Supreme Court
Tax Legislation						Tax Cuts and Jobs Act of 2017
TCR						Transmission Congestion Right
Thunderhead						Thunderhead Wind Energy LLC
TPTFA						Third-Party Transaction Fee Adjustment
Two Creeks						Two Creeks Solar Park
UFLPA						Uyghur Forced Labor Prevention Act
West Riverside						West Riverside Energy Center
Whitewater						Whitewater Cogeneration Facility
WRO						Withhold Release Order

06/30/2022 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 2021 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, including those caused by climate change, 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 federal, state, and local legislative and/or regulatory changes, including changes in rate-setting policies or procedures, the expiration and non-renewal of the QIP rider, 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, state, and local 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;

• The risk of delays and shortages, and increased costs of equipment, materials, or other resources that are critical to our business operations and corporate strategy, as a result of supply chain disruptions (including disruptions from rail congestion), inflation, and other factors;

• The impact of health pandemics, including any new developments relating to the COVID-19 pandemic, on our business functions, financial condition, liquidity, and results of operations;

• 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, the feasibility of competing generation projects, and our ability to execute our capital plan;

06/30/2022 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;

• Any impacts on the global economy, supply chains and fuel prices, generally, from the ongoing conflict between Russia and Ukraine and related sanctions;

• 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, other intangible assets, long-lived assets, and equity method investments, 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;

06/30/2022 Form 10-Q			2			WEC Energy Group, Inc.

Table of Contents

• The timing and outcome of any audits, disputes, and other proceedings related to taxes;

• 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.

06/30/2022 Form 10-Q			3			WEC Energy Group, Inc.

Table of Contents

PART I. FINANCIAL INFORMATION

WEC ENERGY GROUP, INC.

CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited)						Three Months Ended												Six Months Ended
			June 30												June 30
(in millions, except per share amounts)						2022						2021						2022						2021
Operating revenues						$	2,127.9					$	1,676.2					$	5,036.0					$	4,367.6
Operating expenses
Cost of sales						935.0						525.9						2,318.4						1,791.5
Other operation and maintenance						449.0						463.8						903.4						943.7
Depreciation and amortization						279.6						266.2						557.7						527.6
Property and revenue taxes						56.1						51.5						116.9						106.7
Total operating expenses						1,719.7						1,307.4						3,896.4						3,369.5
Operating income						408.2						368.8						1,139.6						998.1
Equity in earnings of transmission affiliates						43.0						41.3						84.7						83.9
Other income, net						19.8						39.7						59.4						72.5
Interest expense						119.8						120.0						237.4						239.5
Other expense						(57.0)						(39.0)						(93.3)						(83.1)
Income before income taxes						351.2						329.8						1,046.3						915.0
Income tax expense						63.4						54.1						190.5						129.0
Net income						287.8						275.7						855.8						786.0
Preferred stock dividends of subsidiary						0.3						0.3						0.6						0.6
Net (income) loss attributed to noncontrolling interests						—						0.6						(1.8)						0.7
Net income attributed to common shareholders						$	287.5					$	276.0					$	853.4					$	786.1
Earnings per share
Basic						$	0.91					$	0.88					$	2.71					$	2.49
Diluted						$	0.91					$	0.87					$	2.70					$	2.49
Weighted average common shares outstanding
Basic						315.4						315.4						315.4						315.4
Diluted						316.2						316.3						316.2						316.3

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

06/30/2022 Form 10-Q			4			WEC Energy Group, Inc.

Table of Contents

WEC ENERGY GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)						Three Months Ended												Six Months Ended
			June 30												June 30
(in millions)						2022						2021						2022						2021
Net income						$	287.8					$	275.7					$	855.8					$	786.0
Other comprehensive income (loss), net of tax
Derivatives accounted for as cash flow hedges
Reclassification of realized net derivative (gain) loss to net income, net of tax						—						1.0						(0.1)						2.0
Defined benefit plans
Amortization of pension and OPEB costs included in net periodic benefit cost, net of tax						—						0.1						0.1						0.2
Other comprehensive income, net of tax						—						1.1						—						2.2
Comprehensive income						287.8						276.8						855.8						788.2
Preferred stock dividends of subsidiary						0.3						0.3						0.6						0.6
Comprehensive (income) loss attributed to noncontrolling interests						—						0.6						(1.8)						0.7
Comprehensive income attributed to common shareholders						$	287.5					$	277.1					$	853.4					$	788.3

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

06/30/2022 Form 10-Q			5			WEC Energy Group, Inc.

*[Table o

Showing the first 8K of 210K characters. Open the full section

CORPORATE DEVELOPMENTS

The following discussion should be read in conjunction with the accompanying unaudited financial statements and related notes and our 2021 Annual Report on Form 10-K.

Introduction

We are a diversified holding company with natural gas and electric utility operations (serving customers in Wisconsin, Illinois, Michigan, and Minnesota), an approximately 60% equity ownership interest in American Transmission Company LLC (ATC) (a for-profit electric transmission company regulated by the Federal Energy Regulatory Commission and certain state regulatory commissions), and non-utility energy infrastructure operations through W.E. Power, LLC (which owns generation assets in Wisconsin), Bluewater Natural Gas Holding, LLC (which owns underground natural gas storage facilities in Michigan), and WEC Infrastructure LLC (WECI), which holds ownership interests in several wind generating facilities.

Corporate Strategy

Our goal is to continue to build and sustain long-term value for our shareholders and customers by focusing on the fundamentals of our business: environmental stewardship; reliability; operating efficiency; financial discipline; exceptional customer care; and safety. Our capital investment plan for efficiency, sustainability and growth, referred to as our ESG Progress Plan, provides a roadmap for us to achieve this goal. It is an aggressive plan to cut emissions, maintain superior reliability, deliver significant savings for customers, and grow our investment in the future of energy.

Throughout our strategic planning process, we take into account important developments, risks and opportunities, including new technologies, customer preferences and affordability, energy resiliency efforts, and sustainability. We published the results of a priority sustainability issue assessment in 2020, identifying the issues that are most important to our company and its stakeholders over the short and long terms. Our risk and priority assessments have formed our direction as a company.

Creating a Sustainable Future

Our ESG Progress Plan includes the retirement of older, fossil-fueled generation, to be replaced with zero-carbon-emitting renewables and clean natural gas-fired generation. 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 (CO2) emissions from our electric generation.

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. Over the longer term, the target for our generation fleet is net-zero CO2 emissions by 2050.

As part of our path toward these goals, we are exploring co-firing with natural gas at our ERGS coal-fired units. 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.

We already have retired more than 1,800 megawatts (MW) of coal-fired generation since the beginning of 2018, which included the 2019 retirement of the Presque Isle power plant 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. Through our ESG Progress Plan, we expect to retire approximately 1,600 MW of additional fossil-fueled generation by the end of 2026, which includes the planned retirement in 2024-2025 of Oak Creek Power Plant Units 5-8 and the planned retirement in 2026 of jointly-owned Columbia Units 1-2. See Note 23, Regulatory Environment, for information on the delay of these planned retirements.

06/30/2022 Form 10-Q			43			WEC Energy Group, Inc.

Table of Contents

In addition to retiring these older, fossil-fueled plants, we expect to invest approximately $3.5 billion from 2022-2026 in regulated renewable energy in Wisconsin. 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:

• 1,400 MW of utility-scale solar;

• 800 MW of battery storage; and

• 100 MW of wind.

We also plan on investing in a combination of clean, natural gas-fired generation, including:

• 100 MW of reciprocating internal combustion engine (RICE) natural gas-fueled generation;

• the planned purchase of up to 200 MW of capacity in the West Riverside Energy Center — a combined-cycle natural gas plant recently completed by Alliant Energy in Wisconsin; and

• the planned purchase of the Whitewater Cogeneration Facility, a natural gas-fired combined-cycle electric generating facility with a capacity of 236.5 MW.

The new investments discussed above are in addition to the renewable projects currently underway. For more details, see Liquidity and Capital Resources – Cash Requirements – Significant Capital Projects.

In addition, we are investing in 300 MW of utility-scale solar within our Wisconsin segment. Wisconsin Public Service Corporation (WPS) partnered with an unaffiliated utility to construct two solar projects now in service in Wisconsin: Two Creeks Solar Park (Two Creeks) and Badger Hollow Solar Park I (Badger Hollow I). WPS owns 100 MW of Two Creeks and 100 MW of Badger Hollow I for a total of 200 MW. Wisconsin Electric Power Company (WE) has partnered with an unaffiliated utility to construct Badger Hollow Solar Park II, which is expected to enter commercial operation in the first half of 2023. Once constructed, WE will own 100 MW of this project.

In December 2018, WE received approval from the PSCW for two renewable energy pilot programs. The Solar Now pilot is expected to add a total of 35 MW of solar generation to WE's portfolio, allowing non-profit and governmental entities, as well as commercial and industrial customers, to site utility owned solar arrays on their property. Under this program, WE has energized 23 Solar Now projects and currently has another three under construction, together totaling more than 29 MW. The second program, the Dedicated Renewable Energy Resource pilot, would allow large commercial and industrial customers to access renewable resources that WE would operate, adding up to 150 MW of renewables to WE's portfolio, and helping these larger customers meet their sustainability and renewable energy goals.

In August 2021, the PSCW approved pilot programs for WE and WPS to install and maintain electric vehicle (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 October 2021, subject to the receipt of any necessary regulatory approvals, we pledged to expand the EV charging network within the service territories of our electric utilities. In doing so, we joined a coalition of utility companies in a unified effort to make EV charging convenient and widely available throughout the Midwest. The coalition we joined is planning to help build and grow EV charging corridors, enabling the general public to safely and efficiently charge their vehicles.

We also continue to reduce methane emissions by improving our natural gas distribution system. 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 renewable na

Showing the first 8K of 178K characters. Open the full section

There have been no material changes related to market risk from the disclosures presented in our 2021 Annual Report on Form 10-K. In addition to the Form 10-K disclosures, see Management's Discussion and Analysis of Financial Condition and Results of Operations – Factors Affecting Results, Liquidity, and Capital Resources – COVID-19 Pandemic and Market Risks and Other Significant Risks in Item 2 of Part I of this report, as well as Note 13, Fair Value Measurements, Note 14, Derivative Instruments, and Note 15, Guarantees, in this report for information concerning our market risk exposures.

06/30/2022 Form 10-Q			80			WEC Energy Group, Inc.

Table of Contents

Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon such evaluation, our principal executive officer and principal financial officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective: (i) in recording, processing, summarizing, and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act; and (ii) to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the second quarter of 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

06/30/2022 Form 10-Q			81			WEC Energy Group, Inc.

Table of Contents

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The following should be read in conjunction with Item 3. Legal Proceedings in Part I of our 2021 Annual Report on Form 10-K. See Note 21, Commitments and Contingencies, and Note 23, Regulatory Environment, in this report for additional information on material legal proceedings and matters related to us and our subsidiaries.

In addition to those legal proceedings discussed in Note 21, Commitments and Contingencies, Note 23, Regulatory Environment, and below, we are currently, and from time to time, subject to claims and suits arising in the ordinary course of business. 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. WEC Energy Group, Inc., et al., was filed in the United States District Court for the Eastern District of Wisconsin - Milwaukee Division. The 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. 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 intends to vigorously defend against the allegations made in this lawsuit. Management is currently not in a position to assess the probability of an adverse outcome or reasonably estimate the amount of any potential loss at this time with respect to this lawsuit.

Environmental Matters

Manlove Field Matter

In September 2017, the Illinois Department of Natural Resources, Office of Oil and Gas Resource Management, issued a VN to PGL related to a leak of natural gas from a well located at the PGL Manlove Gas Storage Field in December 2016. PGL quickly shut down and permanently plugged the well to contain the leak after it was discovered. The leak resulted in the migration of natural gas from the well to the Mahomet Aquifer located in central Illinois and impacted residential freshwater wells. PGL has been working with residents potentially impacted by the natural gas leak and the Illinois state agencies, to investigate and remediate the impacts of the natural gas leak to the Mahomet Aquifer. In October 2017, the Illinois AG filed a complaint against PGL alleging certain violations of the Illinois Environmental Protection Act and the Oil and Gas Act. PGL entered into an Agreed Interim Order with the State of Illinois in October 2017 and a First Amended Agreed Interim Order in September 2019 whereby PGL agreed, among other things, to continue actions it was already undertaking proactively, including the submittal of a GMZ application to the IEPA. A supplemental filing was sent to the IEPA in December 2019. In September 2020, the IEPA sent PGL a letter conditionally approving the GMZ application. PGL has taken steps to implement the requirements of the approved GMZ project.

In addition, in December 2017, the IEPA issued a VN to PGL alleging the same violations as the AG. Lastly, in January 2018, the IEPA issued a VN alleging certain violations of Illinois air emission rules arising from the construction and operation of flaring equipment at the leak site. Both of the IEPA VN matters have been referred to the AG for enforcement.

PGL and the AG agreed to the terms of a final consent order, which was entered by the court in June 2022. PGL has agreed to pay an aggregate of $575,000, including a civil penalty of $175,000. The consent order also requires PGL to complete the GMZ and to continue to provide methane detection devices, bottled water and gas/water separators to affected homeowners, as defined in the final consent order, until certain conditions are satisfied.

There were no material changes from the risk factors disclosed in Item 1A. Risk Factors in Part I of our 2021 Annual Report on Form 10-K.

06/30/2022 Form 10-Q			82			WEC Energy Group, Inc.

Table of Contents

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth information regarding the purchases of our equity securities made by or on behalf of us or any affiliated purchaser (as defined in Exchange Act Rule 10b-18) during the three months ended June 30, 2022:

Issuer Purchases of Equity Securities
2022						Total Number of Shares Purchased						Average Price Paid per Share						Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs						Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 – April 30						—						—						—						$	—
May 1 – May 31						—						—						—						—
June 1 – June 30						5,304						$	104.92					—						—
Total (1)						5,304						$	104.92					—

(1)All shares were surrendered by employees to satisfy tax withholding obligations upon vesting of restricted stock.

ITEM 6. EXHIBITS
Number						Exhibit
31						Rule 13a-14(a) / 15d-14(a) Certifications
						31.1			Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
						31.2			Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32						Section 1350 Certifications
						32.1			Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
						32.2			Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101						Interactive Data Files
						101.INS			Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
						101.SCH			Inline XBRL Taxonomy Extension Schema
						101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase
						101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase
						101.LAB			Inline XBRL Taxonomy Extension Label Linkbase
						101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

06/30/2022 Form 10-Q			83			WEC Energy Group, Inc.

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

						WEC ENERGY GROUP, INC.
						(Registrant)
						/s/ WILLIAM J. GUC
Date:			August 4, 2022			William J. Guc
						Vice President and Controller
						(Duly Authorized Officer and Chief Accounting Officer)

06/30/2022 Form 10-Q			84			WEC Energy Group, Inc.