Skip to content
AnalystLens

Wec Energy Group Annual Report, Year Ended Dec 31, 2006

Filing Date
Filed February 28, 2007
Period End
December 31, 2006
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.

  1. FY2018 annual report10-K · Feb ’19Feb ’19
  2. Leadership change8-K · Jan ’22Jan ’22
  3. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed February 28, 2007. Cited figures are marked; the original filing is the authoritative source.

Wisconsin Energy Corporation's 2006 Form 10-K reports consolidated operating revenues of $3,996.4 milliona and net income of $316.4 million, with diluted EPS of $2.67 (continuing operations $2.64), up from $2.61 in 2005.

Utility energy operating income was $532.8 millionb, down from $542.4 million, as mild weather reduced sales and operation and maintenance expenses rose, while the non-utility energy segment's operating income increased to $43.1 million from $19.5 million on a full year of PWGS 1 operations. Total assets were $11.13 billion at year-end, and the debt-to-total-capital ratio was 59.5%. The central strategic initiative is the Power the Future (PTF) program, which the company says will add 2,320 MW of generating capacity through 2010, with roughly $1.2 billion of the approximately $2.6 billion estimated cost spent through December 31, 2006.

In December 2006 Wisconsin Electric agreed to sell Point Beach Nuclear Plant to an affiliate of FPL for approximately $998 millionc, subject to closing price adjustments and regulatory approval; the company anticipates closing in the third quarter of 2007 and expects over $1 billion of after-tax proceeds if the sale is completed. Capital expenditures were $928.7 million in 2006 and are estimated at $1,371.0 million for 2007.

Risks highlighted in the filing include regulatory outcomes, PTF construction costs and schedules, the Point Beach sale approvals (including a possible IRS private letter ruling affecting the purchase price), environmental regulation including an EPA consent decree estimated at about $1 billiond through 2013, and the outcome of formal arbitration with two iron ore mine customers. The board also raised the quarterly dividend 8.7% to $0.25 per share, equivalent to $1.00 annually.

02—Key points

Key Highlights

  1. Net income of $316.4 million in 2006, up from $308.7 million in 2005; diluted EPS of $2.67 versus $2.61.
  2. Operating revenues of $3,996.4 million, up from $3,815.5 million, with electric utility revenues up 7.6% and gas utility gross margin up 8.5%.
  3. Utility energy segment operating income declined to $532.8 million from $542.4 million, mainly due to mild weather and higher operation and maintenance expenses.
  4. Non-utility energy operating income rose to $43.1 million from $19.5 million, reflecting a full year of PWGS 1 operations.
  5. Agreement to sell Point Beach Nuclear Plant to an affiliate of FPL for approximately $998 million, with expected closing in Q3 2007 and over $1 billion of after-tax proceeds if completed.
  6. Power the Future program plans 2,320 MW of new generation through 2010; about $1.2 billion of the roughly $2.6 billion estimated investment was spent through December 31, 2006.
  7. Quarterly dividend increased 8.7% to $0.25 per share (annual rate $1.00); debt-to-total-capital ratio of 59.5% at year-end.

03—Questions

Frequently Asked Questions

  1. What drove the change in earnings in 2006?

    Net income rose to $316.4 million from $308.7 million, and diluted EPS rose to $2.67 from $2.61. Growth came largely from the non-utility segment, where PWGS 1 contributed a full year of operating income, and from higher gas margins, partly offset by mild weather that reduced electric and gas sales and by higher other operation and maintenance expenses in the utility segment.

  2. What is the status of the Point Beach sale?

    Wisconsin Electric signed a definitive agreement in December 2006 to sell Point Beach to an affiliate of FPL for approximately $998 million, subject to closing price adjustments. The sale requires review and approval by the NRC, PSCW, MPSC and FERC, and the company anticipates closing in the third quarter of 2007. The company has also requested an IRS private letter ruling, and if it is not favorable the purchase price would be adjusted upward by about $50 million.

  3. How large is the capital program and how will it be funded?

    Capital expenditures were $928.7 million in 2006 and are estimated at $1,371.0 million for 2007, $1,030.0 million for 2008 and $808.0 million for 2009. The company expects to finance most of the PTF strategy with internally generated cash and debt, and does not currently plan to issue new common equity for PTF.

  4. What are the main risks flagged in the filing?

    Key risks include construction cost and schedule risk for the PTF units, regulatory recovery and rate approvals, natural gas and coal price volatility, nuclear operating and decommissioning risks, environmental compliance costs (including an EPA consent decree estimated at about $1 billion through 2013), and a pending arbitration with two iron ore mine customers whose contracts expire in December 2007.

  5. Will the company continue paying and growing its dividend?

    The Board raised the quarterly common dividend 8.7% to $0.25 per share, an annual rate of $1.00, and has set a goal of increasing the annual dividend at about half the expected rate of earnings per share growth. Future dividends remain subject to earnings, financial condition, regulatory limits and Board discretion.

04—Continue

← View all 10-K filings