WEC Energy Group Inc (WEC) — Q3 2025 Earnings Call Transcript

Good afternoon, everyone, and thank you for joining us today as we review our results for the third quarter of 2025. Here with me are Xia Liu, our Chief Financial Officer; and Beth Straka, Senior Vice President of Corporate Communications and Investor Relations. As you saw from our news release this morning, we reported third quarter 2025 earnings of $0.83 per share. With this solid quarter, we remain on track for strong 2025 results. Our focus on executing the fundamentals of the business is creating real value for our customers and stockholders. Today, we are reaffirming our earnings guidance for the year at a range of $5.17 to $5.27 a share. Of course, this assumes normal weather through the remainder of 2025. In addition, I'm excited to share our new 5-year capital plan. Let's start by talking about the economic growth that's driving the plan. We continue to see major businesses building a future in our region. Overall, our electric demand is expected to grow 3.4 gigawatts between 2026 and 2030, an increase of 1.6 gigawatts compared to the prior plan. Microsoft is making good progress on its large data center complex in Mount Pleasant, Wisconsin. The company has stated that the first phase of that project is on track to go online next year. In addition, Microsoft also recently announced plans for a second phase in Mount Pleasant that will be similar in size and power. Its projected investment is an incremental $4 billion on top of the original $3.3 billion investment. The economic development south of Milwaukee is supporting approximately 2.1 gigawatts of our overall 3.4 gigawatt demand growth. And as you recall, Vantage Data Centers has signed on to develop data center facilities on approximately 1,900 acres north of Milwaukee in Port Washington. Just last week, Vantage announced that this campus named Lighthouse will be part of OpenAI and Oracle's partnership on the Stargate expansion. Vantage has reported that the site has the potential to reach 3.5 gigawatts of demand over time. Right now, we're focused on providing generation for an estimated 1.3 gigawatts of demand at the site in the next 5 years. The city of Port Washington approved Vantage's plan in August for the initial development on 670 acres. Vantage has stated that it expects to invest $15 billion in the project. The campus will feature 4 data centers and construction is planned to start this year. Vantage has announced that the facility could go online in late 2027, with this first phase of the project scheduled for completion in 2028. Of course, the growth of large customers is also fostering small commercial and residential development throughout our service territory. And Wisconsin's unemployment rate stands at 3.1%, continuing a long-running trend below the national average. This significant economic development is driving our capital plan. As you may have seen from our announcement this morning, we expect to invest $36.5 billion in capital projects between 2026 and 2030, an increase of $8.5 billion above our previous 5-year plan. That's more than a 30% increase. With this updated capital plan, we expect asset-based growth at an average rate of just over 11% a year. We expect that strong asset base growth to support our updated long-term projected earnings per share growth of 7% to 8% a year on a compound annual basis between 2026 and 2030, based on the midpoint of our 2025 guidance. For the next two years, however, we expect to maintain our existing EPS growth rate of 6.5% to 7% on a compound basis and then accelerate starting in 2028 to the upper half of the new guidance range on a compound basis. As you are well aware, we're in the early stages of deploying the capital required to support the robust growth in our region, and it takes time to fully put the projects in service. The increase in our plan is driven by investments in regulated electric generation, transmission, and distribution in Wisconsin and the pipe retirement program in Illinois. Let me give you a few more details. Over the next 5 years, we'll utilize an all-of-the-above approach for generation to support economic growth and reliability by investing in new natural gas, batteries, and renewables. The key for reliability is dispatchable resources. Between 2026 and 2030, we expect to invest an incremental $3.4 billion in modern, efficient natural gas generation versus the prior plan. This includes combustion turbines, reciprocating internal combustion engines or race units, and upgrades to existing facilities. We also will continue to invest in renewable generation and battery storage, increasing our projected investment by $2.5 billion over our prior plan. In addition, American Transmission Company plans to continue to invest in our transmission capabilities to serve our region's economic growth, connect new generation, and strengthen the system. Part of that new transmission is planned to serve customers and new data center needs. Our plan calls for us to invest approximately $4.1 billion in ATC projects between 2026 and 2030. This represents a $900 million increase from the previous plan. And to help assure reliability and support economic growth, we're continuing to invest in our electric and natural gas distribution networks with an additional $2 billion in the plan. This includes significant investment in our pipe retirement program in Chicago. Recall that the Illinois Commerce Commission directed us to focus on retiring all cast iron and ductile iron pipe with a diameter under 36 inches by January 1, 2035. We expect that over 1,000 miles of older pipe will need to be replaced. Turning to the regulatory front, I have just a few updates across our service areas. In Wisconsin, our proposed very large customer tariff remains with the Public Service Commission for a review. As we discussed earlier this year, this tariff is designed to meet the needs of our very large customers while protecting all of our other customers and investors. As currently proposed, and in our testimony filed earlier this month, the tariff would provide for a fixed return on equity in an updated range of 10.48% to 10.98% and an equity ratio of 57%. These financial terms have been agreed upon with the customers. The proposed terms of the agreements are 20 years for wind and solar and the depreciable lives for natural gas and battery storage assets. We worked with a very large customer in designing the tariff, including the financial parameters, and we believe the tariff is a key component to making Wisconsin a prime spot for data center investment. We have a procedural schedule and provided our direct testimony earlier this month. A commission order is expected by early May of next year for customers to take service in June. And in Illinois, we are continuing to coordinate with the City of Chicago under the pipe retirement program. As we are ramping up these efforts, we will continue to have regulatory reviews of the process. This includes the forecast in the general rate case proceeding, which we are planning to file in early 2026 for the test year 2027. Of course, we'll keep you updated on any further developments. Now I'll turn it to Xia to provide you more details on the financial results and our financial plans.

Thank you, Scott. Our third quarter 2025 earnings were $0.83 per share, $0.01 over third quarter 2024 adjusted earnings. Our earnings package includes a comparison of third quarter results on Page 16. I'll walk through the significant drivers. Starting with our utility operations, earnings were $0.12 higher when compared to third quarter 2024 adjusted earnings. Weather positively impacted earnings by about $0.01 relative to last year. Compared to normal conditions, we estimate that weather had a $0.03 favorable impact in the third quarter of 2025 compared to a $0.02 favorable impact in 2024. Rate-based growth contributed $0.15 more to earnings, and the timing of fuel expense, tax, and other items added another $0.07. These positive drivers were partially offset by $0.06 from higher depreciation and amortization expense and $0.05 from higher day-to-day O&M. In terms of our weather-normal retail electric deliveries, excluding the iron ore mine, we saw a 1.8% increase compared to the third quarter of 2024. This was led by the large commercial and industrial segment, which grew 2.9%. The residential and small commercial and industrial segments grew 1.3% and 1.4%, respectively. Overall, we are slightly ahead of our annual electric sales growth forecast. Looking ahead, with the updated load growth, we now expect our annual electric sales growth to be between 6% and 7% for the period 2028 through 2030, that's up from the 4.5% to 5% we previously forecasted. Turning to American Transmission Company, capital investment growth contributed an incremental $0.02 to Q3 earnings versus 2024. And at our Energy Infrastructure segment, earnings increased $0.01 in the third quarter of 2025 from higher production tax credits. Next, you'll see that earnings from the Corporate and Other segment increased $0.11. This was largely driven by tax timing and higher interest expense. In terms of common equity, we issued about $800 million through the first 9 months via our ATM program as well as the dividend reinvestment and employee benefit plans. This largely satisfied our common equity needs for this year. As Scott noted, we're reaffirming our 2025 earnings guidance of $5.17 to $5.27 per share. This includes October weather and assumes normal weather for the remainder of the year. Going forward, with the updated capital plan, we expect our EPS growth to accelerate post-2027. Overall, based off the midpoint of the 2025 guidance range, our long-term growth rate CAGR is expected to be 7% to 8% through 2030. Now let me comment on the financing plan that supports this growth and the new capital plan. As we have consistently guided you, we expect any incremental capital will be funded with 50% equity content. When compared to the prior plan, we added $8.5 billion of capital and about $4 billion of incremental equity content equally split between incremental common equity and hybrid or like-kind securities. So here are the details of the funding sources. Over the next 5 years, we expect cash from operations to be approximately $21 billion, funding more than half of our cash needs. Approximately $14 billion of the funding is expected to come from incremental debt, and the remaining cash is expected to be funded by approximately $5 billion of common equity. As a reminder, the cadence of common equity is a function of capital expenditures. For 2026, we expect common equity issuances to be between $900 million to $1.1 billion. In closing, as Scott discussed previously, the strong economic development and low growth in Wisconsin is the foundation of our new 5-year plan. With the asset base forecasted to grow at 11.3% a year on average, we expect to nearly double our asset base over the next 5 years. It's important to note that the bespoke assets allocated to our very large customers are projected to represent 14% of our total asset base by 2030. As a reminder, the tariff is designed so these customers pay their fair share and are not being subsidized by other customers. We're very excited about our company's future and the investment opportunities ahead of us. With that, I'll turn it back to Scott.

Thank you, Xia. Finally, a quick reminder about the dividend. As usual, I expect we'll provide our 2026 dividend plan and earnings guidance in December. We continue to target a payout ratio of 65% to 70% of earnings, and we're currently positioned well within that range. We expect to grow the dividend at a rate of 6.5% to 7%, consistent with our past practice. Overall, we're optimistic about our 5-year plan and the longer-term outlook. I think we're in the early stages of the growth cycle as we continue to see opportunities in economic development in our region, including data centers. We look forward to providing additional details on our plan in just over a week at the EEI conference. Operator, we are now ready for the questions-and-answer portion of the call.

Given the updated growth outlook, there is an inflection point after 2027. Some may be surprised that it is more back-end loaded. Could you explain how the compound annual growth rate shapes up in the latter half of the plan? Is there a possibility for it to accelerate? Are there other incremental factors to consider? Can we smooth this out a bit?

Sure. Great question. As we have done in the past, we’ve taken the midpoint of the current year's guidance along with the 2025 guidance and evaluated the compound annual growth rate. To give you a clearer picture, let me break it down year by year in relation to our capital plan. In 2026, we're anticipating between $6.5 billion and $7 billion. Moving into 2027, our capital plans are projected to increase to nearly $7 billion, exceeding $7.7 billion. With this growth, we expect to see part of those earnings reflected. For 2027, we are looking at a year-over-year growth of about 7% to 8%. In the following years from 2028 to 2030, I'm expecting close to 8% growth. It may take some time to ramp up, but it aligns well with our capital plan, contributing to that compound growth rate of 7% to 8% at the upper end of our projections. Does that help clarify things?

No, it does. And is there any opportunity, Scott, to smooth it out a little bit? Or is this the plan as the plan.

I believe there are opportunities as things potentially pick up speed. We are seeking approvals on many items, and the commission is doing an excellent job facilitating that. There is a lot happening, and we want to be very careful about understanding the requirements for getting approvals and for starting to implement our plans. I see potential here. We prefer to have no gaps in our process; we want to ensure that we can execute and deliver. We believe this is very viable.

Perfect. I appreciate that. And then just my perennial question for you is just around the Point Beach conversations just with NextEra. I guess any sort of sense of timing around an announcement? Are you still to have an Analyst Day coming up in early December? Are you still thinking about year-end? Or are the conversations kind of shifting a little bit further out?

Yes, that’s a great question. The discussions are still ongoing, but they may be extending a bit further out. I want to clarify that our plan does not account for any specific direction at this point. We haven’t allocated any capital for replacing that capacity. Ultimately, our focus is on what's best for our end-use customers and the value we provide to them. We need to be very cautious and aware of the opportunities available. In fact, if we decide not to renew something, there could potentially be capital benefits. Our evaluation will be centered on the customer perspective and what makes the most sense overall.

I am wearing the rally cap for you guys here today on this one.

I appreciate that.

Of course. With that said, there's a lot to take on here. Let me come back to the question on this Microsoft expansion in the second phase. Obviously, they made some headlines recently. How should we interpret that as being incremental or not to the plan if eventually, there's something that folds in there? I mean, to what extent is it or isn't it fully reflected here?

We collaborate with Microsoft and other customers in Southeast Wisconsin, contributing to the 2.1 gigawatts for the region. While I cannot share specific customer details, I am very optimistic about the growth potential in Southeastern Wisconsin, and I believe there is more growth to come in the next five years as we consider our plans. If you listened to the recent Microsoft conference call, they mentioned the growth in Southeastern Wisconsin and referred to the data center Fairwater, which is expected to go online soon. They also indicated that it could scale up to 2 gigawatts by itself. Overall, there seem to be many opportunities ahead as we look at the next five years.

Got it. Excellent. If I can ask you about a couple of details here. One thing that stood out is that you raised the transmission CapEx by slightly less than $1 billion. But I think the Port Washington transmission project with ATC was 1.3%. Is that fully included? Again, I know it's a partial ownership for you, but I just wanted to clarify that.

Sure. And we're a 60% owner of American Transmission Company. So it's all kind of factored in here. I think there's maybe a little bit more upside as we see other data centers in there. I think it's probably the basic is factored in our plan. So there's probably a little more runway there. Remember, there's only so much transmission you can do on the system at a time. So it's maybe limited a little bit by that.

Got it. And sorry to one more here. The ramp in Illinois seems a little bit more than perhaps some were expecting. Again, it's a pretty healthy number here with the $1.5 billion. Can you speak a little bit to what's taking place there? And also, if you have any latest thoughts about what could happen with this Illinois legislation, if it has any meaningful impact for you guys?

Sure, sure. It's very consistent with what we've been laying out that it's going to ramp up some in 2026, then in 2027, and we expect we'll be up to about that $500 million in 2028 and going forward. Remember, we had about $90 million a year on the plan. So it falls in line between that $1.4 billion and $1.6 billion. We have $1.5 billion in here. So that all is kind of consistent with what we've been saying. The Illinois legislation, we'll see where that goes; it's a little bit on the efficiencies in there. I don't think you'll have a significant effect on us, but we, of course, are watching it.

Scott, I wanted to start with Slide 22. If you could just help on the bridging the asset base growth to earnings growth? Is the delta there from 11% to 7%-8%? Is it all just equity dilution? Or is there anything else we should be thinking about it? And then on that same slide, of asset base with the bespoke customer? Is that like a proxy for like earnings attached to those projects as well?

So a couple of items, and we'll let Xia address it, too. At a high level, the bespoke portion there is to identify. People had asked how much of the potential rate base in those outer years will be tied to that very large customer tariff. And that's the current projection. And it's about 14% of our asset base up in 2030, dealing with that, the renewables and other stuff that the VLCpayer will cover. And then the 11.3% to our growth rate, a large of it is just dealing with choice. I think it looks like what we do with the financing and the dilution from the equity issuance.

Yes. I think roughly 3% is from the equity and the rest is the little bit holding company, Terry, Michael?

Okay. That's very helpful. And then sticking with the financing plan, any sense of where you are in terms of capacity for junior subs and hybrids? Like are there any thresholds that eventually you run into at some point or still a lot of runway?

Still a lot of runway. And as you know, the agencies have a slightly different definition for the capacity; S&P uses the percentage of the total capitalization and Moody's uses a percentage of the total debt capacity. The 5-year plan with the planned juniors sub, we still have billions of dollars of capacity left. So we're good.

I wanted to ask just a very large increase in the capital plan and the rate base growth following that. That's obviously coming with a financing need. And you are in a lot of different states and jurisdictions. I noticed that you also, as part of this plan, put some capital out of WEC infrastructure. Just wondering what the appetite is to recycle capital to replace common equity needs or other financing needs in the plan?

That's a great question. If an opportunity arises, we would certainly consider it, but we need to ensure that it aligns with our financial goals and is beneficial for our investors. We are pleased with the performance of some of our smaller companies, which have been doing very well with minimal effort, and we continue to focus on them. Our team is strong, so we are not actively looking to sell. However, we would evaluate any potential opportunity that may come our way, always prioritizing the interests of our investors.

Okay. Great. And then I guess just as we think about the ability for current customers to gross up commitments in your territory or potential new customers? I guess one thing we've heard through this earnings season from some other companies, they talked about just available turbine capacity, what their advantage in the supply chain would be to kind of deliver on those incremental deals. How do you kind of think about that from the WEC side if Vantage was to come and do an increased commitment or Microsoft was to come or other large load customers? Do you have the turbines or maybe the renewable agreements to kind of execute on that?

Certainly. We have a dedicated team working closely with our large and prospective customers to explore how we can provide increased load capacity or support their growth initiatives. Our supply chain is strong, and we are collaborating with developers to ensure we can meet their needs. I feel very confident that demand will rise and we will be able to assist them. We have been proactively engaging with these customers for several years to stay ahead of their requirements. The plans we have shown reflect the firm commitments from these customers.

Maybe if I could just sneak one more in quickly, just on Point Beach. Just recognizing the license extension there just recently happened in the last few months, what's just the state of urgency from state stakeholders to kind of further lock up this capacity through the end of the decade or the end of 2030 now? And is that something that you think we could see by year-end?

So I mean, we've got the capacity, I think it's to 2030 and 2033. So we have a lot of time. We've been working with NextEra. We just got to make sure that we have the right agreement for our customers. But as I said, we do have access to other abilities if we need to replace that capacity. So we're working with them. We just got to get to the right position. And if we get there, great. If we don't get there, there's a lot of opportunities for us, too.

First question, sorry if I'm asking two, but for the period from 2028 to 2030, are you suggesting an increase of 8% or something like 7.5% to 8%? And if it's the latter, doesn't the math indicate that the overall five-year period would fall below the midpoint?

Well, I don't think it will be below the midpoint. I think we're going to look at probably in that 8% area that will get us to the midpoint on a compound basis.

I think there's a little confusion, Andrew, in terms of the upper half on the slide. I think that's a compound number of the midpoint of 2025. What Scott is talking about is on an annual basis; if you look at from '27 to '28, '28 to '29, we're seeing that 8% range. And if you compound it back, that's the 7% to 8% of the midpoint of 2025.

Okay. Great. Just wanted to clarify. So it's about 8% for the later years, right?

On an annual basis.

Okay. Great. Just wanted to clarify that. Next question, on the CapEx update, first of all, very impressive numbers, a huge increase. What I want to understand, though, is it's an $8.5 billion increase. But when I add up the pieces on Page 18, I'm calculating a total of $8.1 billion. So I don't know if it's rounding or if there's some pieces missing, but can you help me bridge that gap? Where is the extra $400 million coming from?

Yes, we highlighted a couple of key points. If you look at the specific reconciliation with the bar chart, there's an additional gas distribution of a couple of hundred million. It involves various smaller factors including generation and others. We focused on the most significant items.

Okay. That's what I thought. I just wanted to be sure. Then lastly, in terms of demand, again, a big increase. You're forecasting 3.4 gigawatts by 2030, up from 1.8 gigawatts in '29 previously. Is that increase related to data center projects you've been talking about ramping up? Or is it some of the other manufacturing activity you've discussed in the past? I know there's a lot going on along the I-94 corridor. How much of that is existing projects ramping versus new incremental projects coming online?

Yes, great question. So when you look at it, it's about 1.6 gigawatts growth; 1.3 is the Vantage data center in Port Washington. And then in Southeastern Wisconsin, as you can imagine, a significant part is from the data center in Southeastern Wisconsin, but it really is all the customers in that area. We have Eli Lilly expanding. We've got Amazon. We've got other companies coming to the region. And then that's not even counting all the residential load we're starting to see in new construction starting in the area. So I think it's all of the above, but definitely significantly related to data center growth.

Comprehensive update today. So if I may just dig in a little bit on the data center announcements, right? There's been a slew of announcements lately; some assets traded hands. So I think there's some confusion, what's incremental, what's in the plan. So could you make it very clear to us what's actually in the plan of the recent gigawatts of announcements and what yet is not in the plan, I guess?

Sure. In our plan, we have 2.1 gigawatts in Southeastern Wisconsin, which includes the commitments from Microsoft over the next five years. Additionally, the Port Washington site in the North is mainly associated with Vantage, which has collaborated with Oracle, amounting to 1.3 gigawatts. However, we're not including additional land of about 1,200 acres in Port Washington that could potentially accommodate more than 2 gigawatts of capacity in the future. Similarly, in Southeastern Wisconsin, there are over 700 acres linked to the Microsoft site that could also be developed later to increase overall gigawatt capacity. There's significant potential for growth going forward. I hope this clarifies things.

Yes. So it sounds like the plan as it stands right now is just like super conservative. Is this a fair way to say?

Yes. We only include the information that our customers provide us.

Got it. Okay. My other question is about the 14% of your rate base that will fall under the large load customer tariff by the end of 2030. What do you expect the economics to be for the rest of the rate base? When you develop your plan, do you anticipate that the overall average will remain similar to what you have today, follow the same trajectory, or will there be some deterioration in the economics of the rest of the rate base? Or do you expect the rest to be unaffected by the addition of this new premium portion of the rate base?

We assume that the remainder of the rate base will earn the current authorized return that we have in each jurisdiction when considered individually. In Wisconsin, we are currently at a 9.8% return on equity, with a regulated ratio of approximately 57.5% to 58% for Wisconsin Electric, and each of those entities earns their respective return. It's important to remember that our tariff structure ensures that large customers neither receive subsidies nor provide subsidies to other customers; they each contribute their fair share.

Two quick questions. Just in terms of the execution or state of conversations for some of the Vantage expansion beyond the 1.3, any color you could share around maybe the engagement level or the timeline that conversations are progressing through?

Sure. We're actively engaged in discussions with Vantage, Microsoft, and other potential partners. Currently, Vantage is focused on the initial 1.3 gigawatts. They have announced plans to employ around 4,000 construction workers once they commence construction. Everyone is focused on this first phase, which we also want to ensure we can successfully accomplish. We anticipate more discussions as the year progresses.

Okay. And then there was a lot of mention about Microsoft and Oracle. But beyond those 2 customers, the engagement level fairly broad? Or is it really focused on a more narrow group of potential customers for expansion?

We have other customers that we're in discussions with, but the two main ones are already in the area and have made public announcements. We're engaging with others as well, but I prefer to let them make their announcements or finalize purchase agreements before making any premature claims.

Okay. And then unrelated, just to clarify around your plan, is the assumption embedded in the plan conservative and that doesn't assume an outcome or doesn't assume the higher very large load tariff ROE? And to the extent that you were to be successful in that application that, that would be additive to the plan or help provide additional buffer?

No, we are assuming the very large tariff is implemented. As discussed on the call, there is a range of return on equity from 10.48% to 10.98%. We are committed to the fundamentals and ensuring we do not have any negative impacts on our other customers. We are working on higher returns in some areas closer to that 10.98%, but we will provide more updates as we continue to collaborate with our customers.

First question has to do with the Microsoft announcement where they canceled the Caledonia site. But what they said, I think, was that they would continue to look for alternative sites in Southeastern Wisconsin in your service territory. What other locations do they have land? Or do you potentially have land that you would be able to sell to them?

Yes, you're right. They are seeking a different site than originally planned. We don’t have much similar land available elsewhere, but I’m not aware of their specific plans. They've mentioned they are exploring options in Southeastern Wisconsin, so we can expect more updates in that area. Overall, this is beneficial for the community in terms of property taxes and well-paying jobs. They're still in the early stages of their search, so we’ll see how it develops. This could represent more potential growth for us.

Great. How long do you think it will take for them to find a replacement? Would it be around 12 months, or what would be a reasonable assumption?

Yes. And I can't talk for Microsoft, but they move pretty fast. I think a year is maybe reasonable, but we'll see where it goes. Okay. My next question on Point Beach would be, if you're unable to reach an accommodation with NextEra, what type of generation would you build? And when would you have to start building it? Yes. That's a good question. And we'll look at it, but it would have to be something that would be dispatchable that we could cover the dispatch on. So it would have to be some type of gas. We'll see what the EPA rules. Do we eventually look at a combined cycle maybe and maybe some renewables in there. So we like the all-the-above approach. And I know some people don't like renewables, but when you think the gas prices at times when they're high, renewables are very popular when gas prices are high. And also, we look at all of the above mix. So if you think about it, the contracts are 2030 and 2033. So there's still plenty of time. And like we said, we work with all our large customers, and our planning team is looking at how do we replace this, and I'm sure we have several options available.

And then last question for me. When we look at the $4.8 billion to $5.2 billion of common equity, would some of that be junior subordinated debt? Or would any junior subordinated debt issuances be incremental?

It's the latter. The $4.8 billion to $5.2 billion would be common equity.

And then is there junior subordinated debt contemplated then as part of your incremental debt?

Correct. As I said in the prepared remarks, we added $4 billion of equity content. So 2 more of common and the other 2 would come from the junior subordinated debt or like-kind securities.

Just one quick one. I'm curious, with all the load and growth that we haven't seen for years in this sector, I'm curious if this is making earnings forecasting and rate base growth forecasting easier or harder? Like is it chunkier with these large loads coming in, and it's becoming more of a challenge of forecasting out? Or is this all this load just such a tailwind and it's making life a lot easier on the forecasting?

It's great to have increased load driving our capital plan, which certainly helps. However, there are numerous factors we need to consider, such as the timing of when services start and the timing of the load itself. We have a dedicated team focused on ensuring we have the turbines and renewable sites ready. We always welcome growth and are prepared to tackle the associated challenges, but it requires a significant effort from many people keeping track of everything. Execution is crucial, and we have a team actively managing the capital projects. Following our commission approval this summer, we're currently working on those projects, and the situation is just different now.

I have a quick question regarding the existing hyperscale sites and their expansion timelines. What's particularly interesting is that your company doesn't often discuss the sales funnel with other customers. I'm curious whether you think obtaining the VLC tariff from the Public Service Commission could help expand your customer base. You've had notable success with major data centers in your service areas, so I'm eager to hear about potential opportunities with other clients.

Yes, that's a great question. We have attracted some of our first customers even before implementing a large customer tariff. If you consider our location, both WEC and the American Transmission Company are able to deliver generation and renewable energy quickly in the Wisconsin area and the MISO footprint, which is a significant advantage. Additionally, being in Wisconsin provides a cooler environment for air storage cooling, and we are fortunate to be less affected by natural disasters compared to other regions. All of these factors are beneficial. Our large customers were involved when we filed for the large customer tariff, and they have expressed that they find it fair, which is a positive aspect. Once it is approved, it should be very beneficial. The main concern from our large customers is to ensure that we do not impact the rates of other customers, which has been a solid basis for our approach. Having the tariff approved will be advantageous, and we are enthusiastic about the discussions we are having now and the growth potential at various significant sites we have in Wisconsin.

Most of the questions have been asked. Just one question clarifying. Just on the step-up in the asset base growth. Was there any additional offsets there or anything that came out? Just thinking because the back of envelope math maybe would have supported given the $8.5 billion of CapEx, something maybe a little bit closer to 12%. So I'm just curious if there's anything else different in the bridge there.

No. I think the only thing we took out is we don't have any investments in WECE for the most part. But overall, I don't think there's much other changes there. It's just more back-end loaded starting more in '27, I guess.

Okay. From an affordability perspective, what can you share about the plan regarding the average annual rate increases for residential customers on the electric side?

So we will be filing a rate case in Wisconsin for our biannual process. So we're pulling those numbers together now that we'll file sometime in the end of the first quarter, most likely beginning of the second quarter. We're looking at inflation-type increases, but it's early in the process now. The key is none of it is going to be costs that are coming in from any of the hyperscalers. They're paying their fair share.

I just had one clarification. Just on some of the other growth opportunities. As you think about the next 5 years, do you see incremental capacity and potential on the system for more load to be added in the course of the current plan? Or would that be largely beyond the 2030 time frame as you think about those opportunities?

So I think as we work with these very large customers, I think at the end of our current 5-year plan, we potentially could see additional growth come in depending upon how they look at their individual development. So I think there's a potential for both on the current plan plus in the next 5 years. Sounds good. Thank you. All right. That concludes our conference call for today. Thank you for participating. If you have more questions, feel free to contact Beth Straka at (414) 221-4639.