[WEC] WEC Energy Group Thesis 2026: $28B Capex Plan Tests Wisconsin Renewable Transition
Key Takeaways
- $28B+ FY2025-2029 Capex Plan: Selected $28B+ aggregate FY2025-2029 capex plan reflecting selected ~$10B Wisconsin renewable transition (selected solar + wind + storage; post-2024 IRA Section 45 PTC + 48 ITC eligibility) + selected ~$8B grid modernization + selected ~$5B Peoples Gas Chicago safety modernization + selected ~$3-4B Wisconsin natural gas + selected ~$2B Minnesota + Michigan; selected rate base growth ~7-8% CAGR; ~6-8% EPS growth target.
- Wisconsin Renewable Transition: We Energies (Wisconsin) ~$4.7B FY2025 (~50% of total); ~1.6M+ Wisconsin electric + ~1.5M+ natural gas customers; selected post-2024 Wisconsin Energy Mix transition (selected ~50%+ renewable by 2030); selected coal retirements (Oak Creek + Pleasant Prairie + selected); FY2026 catalyst: continued Wisconsin renewable build-out + selected coal retirement transition.
- Peoples Gas Chicago Safety Modernization: Peoples Gas (Illinois Chicago natural gas) ~$1.8B FY2025 (~20% of total); ~870K+ Chicago natural gas customers; selected ~$5B aggregate FY2025-2029 Peoples Gas safety modernization investments (selected post-2018 Illinois Commerce Commission accelerated pipe replacement program); FY2026 catalyst: continued Peoples Gas pipeline replacement + selected ICC rate case approvals.
- 22+ Year Dividend Track + Capital Return:
$3.36-3.52 annual dividend FY2025 ($0.84-0.88/quarter; ~22+ year continuous track post-2003 dividend initiation); modest buybacks; investment-grade A3/A- credit ratings; FCF -$1-1.5B (post-capex investment); FY2026 expected dividend toward $3.52-3.70 (+5-7%) maintaining ~23-year dividend track.
Company Background
WEC Energy Group, Inc. (NYSE: WEC) is the leading Wisconsin + Illinois + Minnesota + Michigan regulated utility focused on We Energies Wisconsin electric + natural gas + Peoples Gas Chicago natural gas + selected Minnesota + Michigan + selected WEC Infrastructure capital investments. Founded 1896 as Wisconsin Electric Power Company in Milwaukee Wisconsin (selected 129-year heritage; selected initial focus on selected Milwaukee municipal electric utility); selected current WEC Energy Group formed June 29, 2015 via merger of Wisconsin Energy Corporation + Integrys Energy Group ($9.1B aggregate transaction). Selected post-2015 merger consolidating selected Wisconsin + Illinois + Minnesota + Michigan utility operations.
Headquartered in Milwaukee Wisconsin; ~7,300+ employees globally with FY2025 revenue ~$9-9.5B (+5-8% YoY) generating ~$1.5-1.7B net income (~16-18% net margin reflecting selected regulated utility model) and ~$4.85-5.40 EPS on ~316M diluted shares.
The company operates four reporting segments: Wisconsin (We Energies) ~50% of revenue ($4.7B — Wisconsin Electric Power + Wisconsin Gas; ~1.6M+ Wisconsin electric customers + ~1.5M+ Wisconsin natural gas customers); Illinois (Peoples Gas) ~20% ($1.8B — Peoples Gas Light & Coke Company + North Shore Gas; ~870K+ Chicago + Northern Illinois natural gas customers post-2015 Integrys merger); Minnesota (Minnesota Energy Resources) + Michigan ~5% ($0.5B — Minnesota natural gas + Michigan Gas Utilities); WEC Infrastructure (capital investments + selected non-utility) ~25% ($2.3B — selected renewable capital investments + selected non-utility holdings).
CEO Scott Lauber since May 2022 (~3-year tenure; succeeded Gale Klappa CEO 2018-2022 retired second time who had previously led WEC 2003-2016; Lauber ex-WEC CFO 2018-2022 + ex-various Wisconsin Energy roles + ~25-year career; selected Wisconsin native). Selected internal succession reflected board's preference for operational continuity through capex investment cycle.
$28B+ FY2025-2029 Capex Plan
Selected $28B+ aggregate FY2025-2029 capex plan represents WEC's most ambitious investment program. Selected key components: (i) selected ~$10B Wisconsin renewable transition (solar + wind + storage; post-2024 IRA Section 45 PTC + 48 ITC eligibility); (ii) selected ~$8B grid modernization (smart grid + reliability + selected wildfire mitigation); (iii) selected ~$5B Peoples Gas Chicago safety modernization (post-2018 Illinois Commerce Commission accelerated pipe replacement program); (iv) selected ~$3-4B Wisconsin natural gas modernization; (v) selected ~$2B Minnesota + Michigan operations. Selected rate base growth ~7-8% CAGR through FY2029 supports ~6-8% EPS growth target via regulated utility return on equity ~9-10%.
FY2026 catalyst: continued capex deployment + selected Public Service Commission of Wisconsin (PSCW) + Illinois Commerce Commission (ICC) + Minnesota PUC + Michigan Public Service Commission rate case approvals.
Material change rule: capex plan reduced below $22B aggregate FY2025-2029 (would signal selected regulator pushback or execution challenges; ~$0.10-0.20 annual EPS at-risk per ~$1.5B capex reduction) OR major PSCW or ICC disallowance.
Wisconsin Renewable Transition
We Energies Wisconsin ~$4.7B FY2025 (~50%) reflects: (i) selected ~1.6M+ Wisconsin electric + ~1.5M+ Wisconsin natural gas customers; (ii) selected post-2024 Wisconsin Energy Mix transition (selected ~50%+ renewable by 2030 PSCW target); (iii) selected coal retirements (Oak Creek Power Plant + Pleasant Prairie + selected); (iv) selected ~$10B aggregate Wisconsin renewable + grid investments through FY2029; (v) selected post-2024 PSCW rate case approvals.
FY2026 catalyst: continued Wisconsin renewable build-out (~$2B FY2026 Wisconsin renewable capex) + coal retirement transition + PSCW rate case approvals.
Peoples Gas Chicago Safety Modernization + Capital Return
Peoples Gas (Illinois) ~$1.8B FY2025 (~20%) reflects: (i) selected ~870K+ Chicago + Northern Illinois natural gas customers; (ii) selected post-2018 Illinois Commerce Commission accelerated pipe replacement program (post-2014 selected Chicago natural gas pipeline safety incidents driving regulatory mandate); (iii) selected ~$5B aggregate FY2025-2029 Peoples Gas safety modernization investments; (iv) selected post-2024 ICC rate case approvals.
Capital return: ~$3.36-3.52 annual dividend FY2025 (~22-year continuous track post-2003 dividend initiation; ~5-7% annual increases); modest buybacks; investment-grade A3/A- credit ratings.
Key Core Metrics
| Metric | FY2022 | FY2023 | FY2024 | FY2025E | FY2026E |
|---|---|---|---|---|---|
| Total Revenue | $9.60B | $8.89B | $8.59B | $9-9.5B | $9.4-10B |
| Wisconsin (We Energies) | $5.0B | $4.7B | $4.5B | $4.7B | $4.9-5.2B |
| Illinois (Peoples Gas) | $1.8B | $1.5B | $1.6B | $1.8B | $1.8-2.0B |
| Minnesota + Michigan | $0.5B | $0.5B | $0.5B | $0.5B | $0.5-0.6B |
| WEC Infrastructure | $2.3B | $2.2B | $2.0B | $2.3B | $2.2-2.4B |
| Adj. EPS | $4.50 | $4.20 | $4.83 | $4.85-5.40 | $5.10-5.75 |
| FCF | -$1B | -$1.5B | -$1.5B | -$1-1.5B | -$1-1.5B (capex investment) |
| Rate Base ($B) | ~$22 | ~$24 | ~$26 | ~$28-30 | ~$30-32 |
| Capital Return | FY2024 | FY2025E | FY2026E |
|---|---|---|---|
| Dividend per Share | $3.34 | $3.36-3.52 | $3.52-3.70 |
| Dividend Continuous Years | ~21 | ~22 | ~23 |
| Buybacks | $0 | $0 | $0 |
| Total Capital Return | $1.05B | $1.06-1.11B | $1.11-1.17B |
| Credit Rating | A3/A- | A3/A- | A3/A- |
Market Evaluation
WEC currently trades at ~17-20x earnings reflecting: (i) selected $28B+ capex plan supporting rate base growth ~7-8%; (ii) selected ~22-year continuous dividend track post-2003; (iii) selected Wisconsin renewable transition optionality; (iv) selected investment-grade A3/A- credit; offset by (v) selected interest rate sensitivity; (vi) selected Wisconsin + Illinois regulatory exposure.
Selected peer comparison: Ameren (AEE ~17-22x P/E Missouri/Illinois utility), DTE Energy (DTE ~17-20x P/E Michigan utility), CMS Energy (CMS ~17-20x P/E Michigan utility), Xcel Energy (XEL ~17-20x P/E multi-state utility). WEC valuation reflects mid-tier Wisconsin/Illinois utility positioning with selected dividend continuity premium.
FY2026 catalysts: (i) capex deployment continued; (ii) Wisconsin renewable build-out; (iii) ~23-year dividend track; (iv) Peoples Gas rate case approvals. Risks: (i) PSCW + ICC disallowance; (ii) major capital project cost overruns; (iii) interest rate severe; (iv) Peoples Gas Chicago pipeline incidents.
Wisconsin Renewable Transition and Capex Cycle
The FY2026 thesis hinges on WEC's ability to execute $28B+ FY2025-2029 capex plan + sustain Wisconsin renewable transition + maintain ~23-year dividend track. Capex deployment supports selected rate base growth ~7-8% CAGR + selected EPS growth ~6-8% target.
We Energies Wisconsin trajectory toward $4.9-5.2B FY2026 (+4-10%) reflects continued renewable build-out + Wisconsin coal retirement transition. Total revenue $9.4-10B FY2026 (+4-6%) + adj. EPS $5.10-5.75 (+5-7%) reflects selected rate base growth + selected operational excellence.
Material risks: (i) capex plan reduced below $22B; (ii) PSCW + ICC disallowance; (iii) interest rate severe; (iv) major Peoples Gas Chicago pipeline incident.
FY2026-2027 base case: revenue $9.4-10B (+4-6%) + $9.8-10.5B (+4-5%); adj. EPS $5.10-5.75 + $5.40-6.10 (+5-7% growth); rate base $30-32B + $32-34B; capital return $1.11-1.17B + $1.16-1.23B; dividend $3.52-3.70 + $3.70-3.90 maintaining 23-24 consecutive year dividend track post-2003. Selected Wisconsin/Illinois utility franchise + selected $28B+ capex plan optionality + selected continued dividend continuity support continued strategic positioning through FY2029.