Wisconsin Electric Power Co 10-Q for FY2023 Q3

Wisconsin Electric Power Co (WELPP)

10-Q 2023-11-02 For: 2023-09-30

Added on April 11, 2026

About this 10-Q

Wisconsin Electric Power Co filed this 10-Q on November 2, 2023, covering the quarter ended September 30, 2023 (FY2023 Q3).

Headline figures

Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.1B; up 2.0% from $1.08B a year earlier

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Affiliates
ATC						American Transmission Company LLC
We Power						W.E. Power, LLC
WEC Energy Group						WEC Energy Group, Inc.
WEPCo Environmental Trust						WEPCo Environmental Trust Finance I, LLC
WPS						Wisconsin Public Service Corporation

Federal and State Regulatory Agencies
Army Corps						United States Army Corps of Engineers
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
PSCW						Public Service Commission of Wisconsin
SEC						United States Securities and Exchange Commission
WDNR						Wisconsin Department of Natural Resources

Accounting Terms
AFUDC						Allowance for Funds Used During Construction
ASC						Accounting Standards Codification
ASU						Accounting Standards Update
FASB						Financial Accounting Standards Board
GAAP						United States Generally Accepted Accounting Principles
OPEB						Other Postretirement Employee Benefits
VIE						Variable Interest Entity

Environmental Terms

BATW						Bottom Ash Transport Water
BTA						Best Technology Available

CASAC						Clean Air Scientific Advisory Committee
CCR						Coal Combustion Residuals
CO2						Carbon Dioxide
CWA						Clean Water Act
ELG						Steam Electric Effluent Limitation Guidelines
FGD						Flue Gas Desulfurization
GHG						Greenhouse Gas
LDC						Local Distribution Company
MATS						Mercury and Air Toxics Standards
NAAQS						National Ambient Air Quality Standards
NOx						Nitrogen Oxide
PM						Particulate Matter
WOTUS						Waters of the United States
WPDES						Wisconsin Pollutant Discharge Elimination System
ZLD						Zero Liquid Discharge

Measurements
Dth						Dekatherm
lb/MMBtu						Pound Per Million British Thermal Unit
MW						Megawatt
MWh						Megawatt-hours
µg/m3						Micrograms Per Cubic Meter


Other Terms and Abbreviations

AMI						Advanced Metering Infrastructure
Badger Hollow II						Badger Hollow Solar Park II
Chicago, IL-IN-WI						Chicago, Illinois, Indiana, and Wisconsin


Darien						Darien Solar Park
DER						Distributed Energy Resource
DRER						Dedicated Renewable Energy Resource


ERGS						Elm Road Generating Station
ESG Progress Plan						WEC Energy Group's Capital Investment Plan for Efficiency, Sustainability, and Growth for 2024-2028
ETB						Environmental Trust Bond
EV						Electric Vehicle
Exchange Act						Securities Exchange Act of 1934, as amended

FTR						Financial Transmission Right
IRA						Inflation Reduction Act
ITC						Investment Tax Credit
Koshkonong						Koshkonong Solar Park
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

PTC						Production Tax Credit
PWGS						Port Washington Generating Station
RICE						Reciprocating Internal Combustion Engine
RNG						Renewable Natural Gas

S&P						Standard & Poor's
SIP						State Implementation Plan
Supreme Court						United States Supreme Court
Tax Legislation						Tax Cuts and Jobs Act of 2017
UFLPA						Uyghur Forced Labor Prevention Act
West Riverside						West Riverside Energy Center
Whitewater						Whitewater Cogeneration Facility
WRO						Withhold Release Order
WUA						Wisconsin Utilities Association


CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited)	Three Months Ended				Nine Months Ended
	September 30				September 30
(in millions)	2023		2022		2023		2022
Operating revenues	$	1,103.1	$	1,081.9	$	3,095.3	$	3,097.4

Operating expenses
Cost of sales	394.3		459.1		1,131.3		1,288.8
Other operation and maintenance	236.6		201.9		674.9		599.8
Depreciation and amortization	132.8		120.0		389.9		358.8
Property and revenue taxes	28.5		27.7		86.8		81.2
Total operating expenses	792.2		808.7		2,282.9		2,328.6

Operating income	310.9		273.2		812.4		768.8

Other income, net	17.9		15.2		52.0		37.2
Interest expense	115.3		113.3		350.0		339.8
Other expense	(97.4)		(98.1)		(298.0)		(302.6)

Income before income taxes	213.5		175.1		514.4		466.2
Income tax expense	49.7		44.0		116.7		118.2
Net income	163.8		131.1		397.7		348.0

Preferred stock dividend requirements	0.3		0.3		0.9		0.9
Net income attributed to common shareholder	$	163.5	$	130.8	$	396.8	$	347.1


CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in millions, except share and per share amounts)	September 30, 2023		December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	6.5	$	6.1
Accounts receivable and unbilled revenues, net of reserves of $42.3 and $49.7, respectively	542.4		582.6
Accounts receivable from related parties	119.8		113.2
Materials, supplies, and inventories	275.1		292.9
Prepaid taxes	80.4		113.1
Other prepayments	15.2		25.6
Collateral on deposit	40.8		46.7
Other	9.0		27.1
Current assets	1,089.2		1,207.3

Long-term assets
Property, plant, and equipment, net of accumulated depreciation and amortization of $5,683.4 and $5,450.3, respectively	11,325.3		10,718.6
Regulatory assets (September 30, 2023 and December 31, 2022 include $87.5 and $92.4, respectively, related to WEPCo Environmental Trust)	2,852.0		2,817.5
Pension and OPEB assets	107.3		143.3
Other	115.7		133.5
Long-term assets	14,400.3		13,812.9
Total assets	$	15,489.5	$	15,020.2

Liabilities and Equity
Current liabilities
Short-term debt	$	36.0	$	460.7
Current portion of long-term debt (related to WEPCo Environmental Trust)	9.0		8.9
Current portion of finance lease obligations	83.5		112.3
Accounts payable	396.1		400.5
Accounts payable to related parties	155.3		179.4

Accrued payroll and benefits	45.5		43.3
Accrued interest	52.1		17.6
Other	131.2		149.6
Current liabilities	908.7		1,372.3

Long-term liabilities
Long-term debt (September 30, 2023 and December 31, 2022 include $89.8 and $94.1, respectively, related to WEPCo Environmental Trust)	3,349.2		3,351.5
Finance lease obligations	2,695.8		2,702.3
Deferred income taxes	1,509.1		1,467.3
Regulatory liabilities	1,622.6		1,637.4

Other	324.5		322.2
Long-term liabilities	9,501.2		9,480.7

Commitments and contingencies (Note 20)

Common shareholder's equity
Common stock – $10 par value; 65,000,000 shares authorized; 33,289,327 shares outstanding	332.9		332.9
Additional paid in capital	2,522.4		1,746.8
Retained earnings	2,193.9		2,057.1
Common shareholder's equity	5,049.2		4,136.8

Preferred stock	30.4		30.4
Total liabilities and equity	$	15,489.5	$	15,020.2


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)	Nine Months Ended
	September 30
(in millions)	2023		2022
Operating activities
Net income	$	397.7	$	348.0
Reconciliation to cash provided by operating activities
Depreciation and amortization	389.9		358.8
Deferred income taxes and ITCs, net	22.7		49.8


Change in –
Accounts receivable and unbilled revenues, net	52.3		(31.8)
Materials, supplies, and inventories	22.7		(59.6)
Prepaid taxes	32.7		24.3



Other current assets	12.2		7.3
Accounts payable	(77.3)		32.4


Accrued interest	34.5		29.7

Other current liabilities	(25.3)		3.1
Other, net	(53.1)		(88.2)
Net cash provided by operating activities	809.0		673.8

Investing activities
Capital expenditures	(741.3)		(704.0)
Acquisition of Whitewater	(38.0)		—
Acquisition of West Riverside	(95.3)		—
Proceeds from the sale of assets	24.3		1.6
Payments for ATC's construction costs that will be reimbursed	(16.2)		(15.8)


Insurance proceeds received for property damage	—		41.0
Other, net	(7.4)		(1.3)
Net cash used in investing activities	(873.9)		(678.5)

Financing activities
Change in short-term debt	(424.7)		(333.0)
Issuance of long-term debt	—		500.0
Retirement of long-term debt	(4.4)		(4.4)
Payments for finance lease obligations	(56.8)		(55.1)
Equity contribution from parent	775.0		380.0
Payment of dividends to parent	(260.0)		(470.0)
Other, net	(0.9)		(5.9)
Net cash provided by financing activities	28.2		11.6

Net change in cash, cash equivalents, and restricted cash	(36.7)		6.9
Cash, cash equivalents, and restricted cash at beginning of period	47.7		3.0
Cash, cash equivalents, and restricted cash at end of period	$	11.0	$	9.9


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


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


CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

	Wisconsin Electric Power Company Common Shareholder's Equity
(in millions)	Common Stock		Additional Paid In Capital		Retained Earnings		Total Common Shareholder's Equity		Preferred Stock		Total Equity
Balance at December 31, 2022	$	332.9	$	1,746.8	$	2,057.1	$	4,136.8	$	30.4	$	4,167.2
Net income attributed to common shareholder	—		—		121.7		121.7		—		121.7
Payment of dividends to parent	—		—		(60.0)		(60.0)		—		(60.0)
Equity contribution from parent	—		415.0		—		415.0		—		415.0
Stock-based compensation and other	—		0.5		0.1		0.6		—		0.6
Balance at March 31, 2023	$	332.9	$	2,162.3	$	2,118.9	$	4,614.1	$	30.4	$	4,644.5
Net income attributed to common shareholder	—		—		111.6		111.6		—		111.6
Payment of dividends to parent	—		—		(60.0)		(60.0)		—		(60.0)
Equity contribution from parent	—		290.0		—		290.0		—		290.0
Balance at June 30, 2023	$	332.9	$	2,452.3	$	2,170.5	$	4,955.7	$	30.4	$	4,986.1
Net income attributed to common shareholder	—		—		163.5		163.5		—		163.5
Payment of dividends to parent	—		—		(140.0)		(140.0)		—		(140.0)
Equity contribution from parent	—		70.0		—		70.0		—		70.0
Stock-based compensation and other	—		0.1		(0.1)		—		—		—
Balance at September 30, 2023	$	332.9	$	2,522.4	$	2,193.9	$	5,049.2	$	30.4	$	5,079.6


	Three Months Ended September 30				Nine Months Ended September 30
(in millions)	2023		2022		2023		2022
Wisconsin Electric Power Company
Electric utility	$	1,052.5	$	1,009.5	$	2,721.3	$	2,683.7
Natural gas utility	47.8		69.2		362.1		402.0
Total revenues from contracts with customers	1,100.3		1,078.7		3,083.4		3,085.7
Other operating revenues	2.8		3.2		11.9		11.7
Total operating revenues	$	1,103.1	$	1,081.9	$	3,095.3	$	3,097.4


(in millions, except percentages)	September 30, 2023			December 31, 2022
Commercial paper
Amount outstanding	$	36.0		$	460.7
Weighted-average interest rate on amounts outstanding	5.42		%	4.59		%


(in millions)	Maturity	September 30, 2023
Revolving credit facility	September 2026	$	500.0

Less:
Letters of credit issued inside credit facility		1.0
Commercial paper outstanding		36.0
Available capacity under existing credit facility		$	463.0


(in millions)
Three months ended December 31, 2023	$	—
2024	0.6
2025	1.6
2026	1.7
2027	1.7
2028	1.7
Thereafter	131.4
Total minimum lease payments	138.7
Less: Interest	(105.1)
Present value of minimum lease payments	33.6
Less: Short-term lease liabilities	—
Long-term lease liabilities	$	33.6


	Three Months Ended September 30, 2023				Three Months Ended September 30, 2022
(in millions)	Amount		Effective Tax Rate		Amount		Effective Tax Rate
Statutory federal income tax	$	44.7	21.0	%	$	36.7	21.0	%
State income taxes net of federal tax benefit	12.8		6.0	%	10.8		6.2	%
Federal excess deferred tax amortization	(7.2)		(3.4)	%	(7.2)		(4.1)	%
AFUDC–Equity	(3.0)		(1.4)	%	(1.6)		(0.9)	%
PTCs, net	(2.7)		(1.3)	%	(0.6)		(0.3)	%
Domestic production activities deferral	2.3		1.1	%	2.0		1.1	%

Other, net	2.8		1.3	%	3.9		2.1	%
Total income tax expense	$	49.7	23.3	%	$	44.0	25.1	%

	Nine Months Ended September 30, 2023				Nine Months Ended September 30, 2022
(in millions)	Amount		Effective Tax Rate		Amount		Effective Tax Rate
Statutory federal income tax	$	107.8	21.0	%	$	97.7	21.0	%
State income taxes net of federal tax benefit	30.8		6.0	%	29.0		6.2	%

Federal excess deferred tax amortization	(17.2)		(3.4)	%	(19.3)		(4.1)	%
PTCs, net	(9.6)		(1.9)	%	(1.5)		(0.3)	%
AFUDC–Equity	(7.1)		(1.4)	%	(3.4)		(0.7)	%
Domestic production activities deferral	5.3		1.0	%	5.3		1.1	%
Other, net	6.7		1.4	%	10.4		2.2	%
Total income tax expense	$	116.7	22.7	%	$	118.2	25.4	%


	September 30, 2023
(in millions)	Level 1		Level 2		Level 3		Total
Derivative assets
Natural gas contracts	$	0.4	$	0.8	$	—	$	1.2
FTRs	—		—		3.9		3.9
Coal contracts	—		0.1		—		0.1
Total derivative assets	$	0.4	$	0.9	$	3.9	$	5.2

Derivative liabilities
Natural gas contracts	$	23.5	$	1.8	$	—	$	25.3
Coal contracts	—		24.5		—		24.5
Total derivative liabilities	$	23.5	$	26.3	$	—	$	49.8


	Pension Benefits
	Three Months Ended September 30				Nine Months Ended September 30
(in millions)	2023		2022		2023		2022
Service cost	$	2.6	$	3.3	$	7.7	$	10.0
Interest cost	11.7		8.2		35.3		24.5
Expected return on plan assets	(16.0)		(17.8)		(48.2)		(53.5)

Amortization of prior service credit	(0.1)		—		(0.1)		(0.1)
Amortization of net actuarial loss	2.3		7.4		6.9		22.3
Net periodic benefit cost	$	0.5	$	1.1	$	1.6	$	3.2


	Three Months Ended September 30				Nine Months Ended September 30
(in millions)	2023		2022		2023		2022
Residential	$	445.9	$	395.6	$	1,141.6	$	1,059.8
Small commercial and industrial	327.7		301.8		899.8		838.7
Large commercial and industrial	189.5		194.8		480.2		491.3
Other	4.9		4.7		15.4		14.9
Total retail revenues	968.0		896.9		2,537.0		2,404.7
Wholesale	10.4		11.5		32.4		49.3
Resale	70.0		91.8		130.0		195.4
Steam	2.5		2.9		18.2		19.7
Other utility revenues	1.6		6.4		3.7		14.6
Total electric utility operating revenues	$	1,052.5	$	1,009.5	$	2,721.3	$	2,683.7


	Three Months Ended September 30
(in millions)	2023		2022
Balance at July 1	$	45.1	$	47.6
Provision for credit losses	5.4		4.7
Provision for credit losses deferred for future recovery or refund	11.5		14.2
Write-offs charged against the allowance	(24.1)		(27.7)
Recoveries of amounts previously written off	4.4		5.1
Balance at September 30	$	42.3	$	43.9


	Nine Months Ended September 30
(in millions)	2023		2022
Balance at January 1	$	49.7	$	51.4
Provision for credit losses	16.7		17.4
Provision for credit losses deferred for future recovery or refund	27.0		21.5
Write-offs charged against the allowance	(65.7)		(62.0)
Recoveries of amounts previously written off	14.6		15.6
Balance at September 30	$	42.3	$	43.9


(in millions)	September 30, 2023		December 31, 2022
Regulatory assets
Finance leases	$	1,101.4	$	1,072.0
Plant retirement related items	604.8		632.7
Income tax related items	373.2		382.1
Pension and OPEB costs	330.5		337.2
System support resource	115.9		123.5
Securitization	87.5		92.4
Derivatives	55.7		40.3
Uncollectible expense	43.4		16.4
Asset retirement obligations	41.4		41.1
Energy costs recoverable through rate adjustments	25.5		2.8
Energy efficiency programs	14.6		17.7
We Power generation	3.7		21.6
Other, net	54.4		37.7
Total regulatory assets	$	2,852.0	$	2,817.5


	OPEB Benefits
	Three Months Ended September 30				Nine Months Ended September 30
(in millions)	2023		2022		2023		2022
Service cost	$	0.6	$	0.9	$	1.9	$	2.9
Interest cost	1.9		1.4		5.7		4.2
Expected return on plan assets	(3.3)		(4.4)		(10.0)		(13.2)
Amortization of prior service credit	(0.3)		(0.3)		(0.7)		(1.0)
Amortization of net actuarial gain	(2.1)		(3.0)		(6.5)		(9.1)
Net periodic benefit credit	$	(3.2)	$	(5.4)	$	(9.6)	$	(16.2)


Requested 2024 base rate increases
Electric	$	45.0	million	/	1.3%
Gas	$	23.9	million	/	4.5%


	Three Months Ended September 30
	MWh (in thousands)
Electric Sales Volumes	2023	2022	B (W)
Customer Class
Residential	2,345.2	2,345.0	0.2
Small commercial and industrial	2,327.8	2,338.9	(11.1)
Large commercial and industrial	1,758.5	1,848.1	(89.6)
Other	22.0	23.6	(1.6)
Total retail	6,453.5	6,555.6	(102.1)
Wholesale	125.2	146.4	(21.2)
Resale	2,078.8	1,124.7	954.1
Total sales in MWh	8,657.5	7,826.7	830.8


	Three Months Ended September 30
	Therms (in millions)
Natural Gas Sales Volumes	2023	2022	B (W)
Customer Class
Residential	20.5	22.5	(2.0)
Commercial and industrial	13.3	16.1	(2.8)
Total retail	33.8	38.6	(4.8)
Transportation	41.8	65.7	(23.9)
Total sales in therms	75.6	104.3	(28.7)


	Three Months Ended September 30
	Degree Days
Weather (1)	2023	2022	B (W)
Heating (99 Normal)	32	89	(64.0)	%
Cooling (591 Normal)	676	677	(0.1)	%


(in millions)
2023	$	1,240.3	(1)
2024	1,661.6
2025	1,877.4
Total	$	4,779.3


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)


		WISCONSIN ELECTRIC POWER COMPANY
		(Registrant)

		/s/ WILLIAM J. GUC
Date:	November 2, 2023	William J. Guc
		Vice President, Controller, and Assistant Corporate Secretary

		(Duly Authorized Officer and Chief Accounting Officer)


Date:			November 2, 2023

			/s/ SCOTT J. LAUBER
			Scott J. Lauber
			Chairman of the Board, President and Chief Executive Officer
			(Principal Executive Officer)


Date:			November 2, 2023

			/s/ XIA LIU
			Xia Liu
			Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)