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Wec Energy Group Annual Report, Year Ended Dec 31, 1998

Filing Date
Filed March 31, 1999
Period End
December 31, 1998
Security
WEC
In the record · 2016–202610-K1110-Q338-K260

WEC filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 260 current reports (8-K) between 2016 and 2026.

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01—Abstract

Summary

Summary of the 10-K filed March 31, 1999. Cited figures are marked; the original filing is the authoritative source.

Wisconsin Energy Corporation (now WEC Energy Group, Inc.) and its subsidiary Wisconsin Electric Power Company filed this combined Form 10-K for the fiscal year ended December 31, 1998.

Wisconsin Energy reported 1998 net income of $188.1 milliona, or $1.65 per share, compared with $60.7 million, or $0.54 per share, in 1997. Operating revenues rose to $1.98 billion from $1.79 billion. The increase was driven mainly by final and interim 1998 Wisconsin retail electric rate increases and a 6.5% rise in electric kilowatt-hour sales at Wisconsin Electric.

Gas therm deliveries fell 6.2%, and steam sales decreased 12%. The 1997 results had been hurt by a $31 millionb merger write-off and a $30 million Kimberly Cogeneration Equipment impairment, and 1997 fuel and purchased power costs were significantly higher. Point Beach Nuclear Plant returned to stronger performance, with 18% of Wisconsin Electric's 1998 net energy supply versus 6% in 1997.

The company guided to 1999 earnings of $1.85 to $2.05c per share, an increase of 12% to 24% over 1998. Management plans a 1999 construction budget of about $889 million, including $350 million for Wisconsin Electric and $539 million for non-utility subsidiaries and Edison Sault. The largest pending transaction is WISVEST Connecticut, LLC's $272 million purchase of two Connecticut fossil-fueled power plants, expected to close in the second quarter of 1999 and funded partly by a $245 million nonrecourse project financing.

The filing also notes that Wisconsin Energy's non-utility assets would rise from about 12% to over 18% of public utility assets under the Wisconsin asset cap once that acquisition closes. The company also acquired ESELCO, Inc., parent of Edison Sault Electric Company, effective May 31, 1998. Wisconsin Electric's Year 2000 program expects core critical business functions to be Year 2000 Ready by June 30, 1999, with total program expenses of about $44 milliond over 1998 through 2000.

02—Key points

Key Highlights

  1. Net income rose to $188.1 million ($1.65 per share) in 1998 from $60.7 million ($0.54 per share) in 1997, which included a $31 million merger write-off and a $30 million Kimberly equipment impairment.
  2. Operating revenues increased to $1.98 billion from $1.79 billion, led by electric revenues of $1.66 billion, up from $1.41 billion.
  3. Wisconsin retail electric rates increased by $160.2 million on an annualized basis effective May 1, 1998, following an interim increase effective January 1, 1998.
  4. Electric kilowatt-hour sales increased 6.5% during 1998, while gas therm deliveries declined 6.2%.
  5. 1999 earnings guidance is $1.85 to $2.05 per share, an increase of 12% to 24% over 1998.
  6. The 1999 construction budget is about $889 million, including $350 million for Wisconsin Electric and $539 million for non-utility subsidiaries and Edison Sault.
  7. WISVEST Connecticut, LLC agreed to buy two Connecticut power plants for $272 million, with closing expected in the second quarter of 1999.

03—Questions

Frequently Asked Questions

  1. How did Wisconsin Energy's earnings change in 1998?

    Net income was $188.1 million, or $1.65 per share, versus $60.7 million, or $0.54 per share, in 1997. The filing attributes the improvement mainly to retail electric rate increases and higher electric sales, along with stronger performance at Point Beach. The 1997 results had included a $31 million merger-related write-off and a $30 million impairment.

  2. What is the company's earnings outlook for 1999?

    The company estimates 1999 earnings of $1.85 to $2.05 per share, an increase of between 12 and 24 percent over 1998 earnings. The filing also expects electric sales to grow at a compound annual rate of 2.1% over 1999 through 2003, subject to moderate economic growth and normal weather.

  3. What major acquisitions or investments are pending?

    WISVEST Connecticut, LLC agreed in October 1998 to purchase two fossil-fueled plants, Bridgeport Harbor Station and New Haven Harbor Station, for $272 million from The United Illuminating Company, with closing expected in the second quarter of 1999. The purchase is expected to be financed with a $245 million nonrecourse project financing and a $105 million capital contribution from Wisconsin Energy. Wisconsin Energy also acquired ESELCO, Inc., the parent of Edison Sault Electric Company, effective May 31, 1998.

  4. What risks did the filing highlight for Point Beach and the company's regulatory environment?

    Point Beach had extended outages in 1997 and early 1999 and experienced unplanned shutdowns. The NRC identified an apparent violation related to safety-related equipment, which remains pending. The DOE has not begun removing spent fuel as required, and the company cannot predict when it will. Wisconsin regulators continue reviewing electric and gas restructuring, and the Wisconsin asset cap is expected to rise from about 12% to over 18% after the Connecticut acquisition.

04—Continue

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