U.S. Markets open in 6 hrs 40 mins

Edited Transcript of WEC earnings conference call or presentation 12-Feb-19 7:00pm GMT

Q4 2018 WEC Energy Group Inc Earnings Call

MILWAUKEE Feb 14, 2019 (Thomson StreetEvents) -- Edited Transcript of WEC Energy Group Inc earnings conference call or presentation Tuesday, February 12, 2019 at 7:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Gale E. Klappa

WEC Energy Group, Inc. - Executive Chairman

* Joseph Kevin Fletcher

WEC Energy Group, Inc. - President, CEO & Director

* Scott J. Lauber

WEC Energy Group, Inc. - Senior EVP, CFO & Treasurer

================================================================================

Conference Call Participants

================================================================================

* Andrew Marc Weisel

Scotia Howard Weil, Research Division - Analyst

* Michael Jay Lapides

Goldman Sachs Group Inc., Research Division - VP

* Michael P. Sullivan

Wolfe Research, LLC - Research Analyst

* Michael Weinstein

Crédit Suisse AG, Research Division - United States Utilities Analyst

* Paul Thomas Ridzon

KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst

* Praful Mehta

Citigroup Inc, Research Division - Director

* Vedula Murti

Millennium Management LLC - Senior Analyst & Assistant Portfolio Manager

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good afternoon, and welcome to WEC Energy Group's conference call for fourth quarter and year-end 2018 results. This call is being recorded for broadcast. (Operator Instructions)

Before the conference call begins, I remind you that all statements in the presentation, other than historical facts, are forward-looking statements that involve risks and uncertainties that are subject to change at any time. Such statements are based on management's expectations at the time they are made. In addition to the assumptions and other factors referred to in connection with the statements, factors described in WEC Energy Group's latest Form 10-K and subsequent reports filed with the Securities and Exchange Commission could cause actual results to differ materially from those contemplated.

During the discussions, referenced earnings per share will be based on diluted earnings per share, unless otherwise noted.

After the presentation, the conference will be open to analysts for questions and answers. In conjunction with this call, a package of detailed financial information is posted at wecenergygroup.com. A replay will be available approximately 2 hours after the conclusion of this call.

And now it is my pleasure to introduce Gale Klappa, Executive Chairman of WEC Energy Group.

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [2]

--------------------------------------------------------------------------------

Good afternoon, everyone. Thank you for joining us today as we review our results for calendar year 2018.

First, I'd like to make sure that everyone is familiar with the recent changes we made at the most senior level of our organization. The Board of Directors has approved the creation of the office of the chair staffed by 4 company veterans. We'll work together as a team to write the next chapter of our company's growth and service to consumers.

As of February 1, my title changed to Executive Chairman. I've agreed to stay in this role for the next 3 years. And as Executive Chair, I'll take the lead on board governance, corporate strategy, investor relations and economic development.

I'm also delighted that Kevin Fletcher has been promoted to Chief Executive. Kevin is a member of the office of the chair and will serve on the WEC Energy Group Board of Directors. Kevin will continue to report directly to me, and his main focus will be the direction and performance of our 7 customer-facing utilities.

In addition, the office of the chair includes Rick Kuester. Rick continues to serve as Senior Executive Vice President. He will have broad responsibility for the company's capital investment plan, information technology and power generation.

And last but not least, Scott Lauber. Scott has been named Senior Executive Vice President, Chief Financial Officer and Treasurer. He will be responsible for all of our finance-related functions.

This team, as you know, has delivered industry-leading results over many years, with a clear commitment to reliability, customer satisfaction and shareholder value. Our focus remains on the fundamentals of our business and on developing the next generation of leadership for our company.

And now I'd like to introduce the members of our management team who are here in the room with us today. We have Scott Lauber, our Chief Financial Officer; Bill Guc, our Controller; Peggy Kelsey, Executive Vice President and General Counsel; Beth Straka, Senior Vice President of Corporate Communications and Investor Relations; and of course, Kevin Fletcher, President and CEO of WEC Energy Group.

Now Scott will discuss our financial results in detail in just a moment. But as you saw from our news release this morning, we reported full year 2018 earnings of $3.34 a share. Overall, we're very pleased with our performance during this past year.

On virtually every meaningful measure, we made significant progress. We delivered solid earnings and dividend growth. We reached milestones in network reliability, customer satisfaction and company support. We made significant strides upgrading the natural gas infrastructure in Chicago and building a long-term solution for the power supply in Michigan's Upper Peninsula. We were again named one of the 100 Best Corporate Citizens in America by Corporate Responsibility Magazine. And we made real progress in reducing our carbon dioxide emissions. In fact, we're on track to exceed our goal of a 40% reduction below 2005 levels by the year 2030. Now we expect to achieve that goal by 2023. And we've set our sights on an 80% reduction by the year 2050. Last year alone, we retired nearly 1,500 megawatts of older, less efficient coal-fired generation. All in all, the company continues to perform at a very high level.

During 2018, we also identified several promising investments in our infrastructure segment. On December 28, we acquired an 80% interest in the Coyote Ridge Wind Farm that's located in Brookings County, South Dakota. This wind farm is currently being built by Avangrid Renewables and is expected to be in service before the end of 2019. Coyote Ridge will consist of 39 turbines with a capacity of roughly 97 megawatts. We expect to invest approximately $145 million for our 80% share of the wind farm. Unique to this transaction, we will be entitled to 99% of the tax benefits. We paid $60 million in December, with the final payment coming due after commercial operation is achieved. Under the tax rules, we expect the wind farm to qualify for production tax credits and for 100% bonus depreciation. The project has a 12-year offtake agreement with Google, Google Energy LLC, for all of the energy produced.

And now for a quick update on our previously announced investment in the Bishop Hill III Wind Energy Center. As you'll recall, in late June, we announced an agreement to acquire 80% in the Bishop Hill III Wind Farm located in Henry County, Illinois. We closed on that acquisition in late August. And this past December, we took advantage of an opportunity to increase our equity interest. We now have a 90% ownership interest in Bishop Hill III. As a reminder, this wind farm was developed by Invenergy and was placed into service in May of 2018. It consists of 53 turbines with a capacity of 132 megawatts. In total, our investment is $166 million. The project has a very long-term 22-year offtake agreement with one of our current wholesale customers, WPPI Energy. WPPI, of course, is based here in Wisconsin and has 51 member utilities.

Turning quickly now to our investment in the Upstream Wind Energy Center. On August 20, we received approval from the Federal Energy Regulatory Commission to purchase an 80% ownership interest in the Upstream project. We closed on this transaction just about a month ago on January 10 at a purchase price of $276 million. As a reminder, Upstream is located in Antelope County, Nebraska and consists of 81 turbines with a capacity of approximately 200 megawatts. The project has a long-term 10-year offtake agreement with an affiliate of Allianz, which is an A-rated publicly traded company.

We're very encouraged about these investments in renewable energy. We expect the return on these investments to be higher than our regulated returns and, specifically, we're projecting an unlevered internal rate of return above 8% or in the mid-teens on a levered basis. And we're projecting returns on equity based on a 50-50 capital structure at or above our retail returns.

I would remind everyone though that these infrastructure investments make up just a small piece of our overall 5-year capital plan. As you know, we have a tax appetite, and we're being very selective as we vet future projects. We're only interested in projects that do not change our risk profile and achieve our financial returns.

We're also making progress on our quest to add utility-scale solar generation to our portfolio of regulated assets. To refresh your memory, on May 31, 2018, our Wisconsin Public Service subsidiary, along with Madison Gas and Electric, filed a joint application with the Wisconsin Commission to purchase 300 megawatts of solar generation at 2 locations right here in Wisconsin. The Badger Hollow Solar Farm will be located in Southwestern part of the state in Iowa County and will be developed by Invenergy. The Two Creek solar project will be located in the City of Two Rivers in Northeastern Wisconsin. Actually, that's near the Point Beach Nuclear Power Plant. The Two Creeks project is being developed by NextEra.

Our Wisconsin Public Service company will own 100 megawatts at each site, with an expected investment of approximately $260 million. We expect a decision from the Wisconsin Commission in March or early April. And with regulatory approval, the projects could be in commercial service by the end of 2020.

As many of you know, over the past few years, utility-scale solar has increased in efficiency. And prices have dropped by nearly 70%, making it a cost-effective option now for our customers, an option that also fits well with our summer peak demand curve and with our plan to significantly reduce carbon dioxide emissions.

In addition, we recently received approval from the Wisconsin Commission for 2 renewable energy pilot programs. The Solar Now program, as we call it, and the dedicated renewable energy resource pilot could bring another 185 megawatts of clean solar and wind energy to our regulated portfolio of assets. And the Solar Now program will provide us with valuable insight into operating distributed generation.

And now let's switch gears for a bit and take a look at the economy in our region. Wisconsin's published unemployment rate has been 3% or lower since February of last year. Folks, that's the longest stretch of near full employment in state history. The state continues also to witness significant economic development. For example, just in November, Amazon announced plans for a new state-of-the-art fulfillment center in Oak Creek, a suburb of Milwaukee. Amazon plans to invest $200 million in the project, a 2.6 million square foot facility on 75 acres. Amazon expects to employ 1,500 workers at this site. Distribution center is scheduled to open in early 2020 and will feature state-of-the-art robotics to pack, pick and ship small items to customers.

And looking just a few miles further south of Milwaukee, Foxconn has made tangible progress on its high-tech manufacturing and research campus. So far, Foxconn has invested $200 million in Wisconsin. They've moved 4 million cubic carats of dirt, so far, in the construction of the Wisconn Valley Science & Technology Park. The first building on the campus is now complete. It's a 120,000 square-foot multipurpose building. To date, more than 1,000 jobs have been created in support of the project.

And Foxconn has also expanded its presence across the state, buying buildings in Green Bay and Eau Claire and Racine, buildings that are expected to become Foxconn innovation centers.

In addition, we're beginning to see the positive ripple effect that we expected, with multiple commercial and industrial announcements spurring economic growth within just a few miles of the Foxconn campus.

As you know, over the past few weeks, there's been a good deal of speculation about Foxconn's future plans for Wisconsin. Just a few days ago, Foxconn issued a clarifying statement noting that its plans do include a fabrication plant and filling 13,000 jobs. But a number of you have asked whether a potential change in direction by Foxconn could impact the growth we're forecasting or our capital spending plans. The short answer is we remain very conservative in our projections. In fact, we weren't projecting a significant ramp-up from Foxconn until 2023.

And now I'll turn the call over to Kevin for some additional insight on our operations and our regulatory calendar for 2019. Kevin, all yours.

--------------------------------------------------------------------------------

Joseph Kevin Fletcher, WEC Energy Group, Inc. - President, CEO & Director [3]

--------------------------------------------------------------------------------

Thank you, Gale. First, I have some good news to share. Our largest subsidiary, We Energies, was named the most reliable electric utility in the Midwest for the eighth year running. That's a testament to our employees and our focus on building and maintaining resilient infrastructure.

And our employees did an excellent job keeping our customers warm during the polar vortex last month. We hit record peaks for natural gas distribution in our Wisconsin, Minnesota and Michigan service territories. In addition, we achieved the highest customer satisfaction ratings in the nation in JD Power's survey of large business and industrial customers served by electric utilities across the country. We also were named by Forbes Magazine as one of America's best employers for diversity for 2019.

Now I'd like to briefly review where we stand in our 4 state jurisdictions. As we look ahead in Wisconsin, we plan to file a general rate case for all of our Wisconsin utilities this spring. We would expect that new retail rates would go into effect in January of 2020. As a reminder, customers have benefited from a base rate freeze for the past 4 years and, more recently, from tax reform. In fact, after factoring in our fuel cost and federal tax reform, our retail rates in Wisconsin are actually lower today than they were in 2015.

Turning to Illinois. We continue to make progress on the Peoples Gas system modernization plan. As a reminder, this program is critical to providing our Chicago customers with a natural gas delivery network that is modern, safe and reliable. For many years to come, we'll be replacing outdated natural gas piping, some of which was installed more than a century ago, with state of the art materials. This past year, we invested approximately $295 million in the effort, and we expect the project to continue through 2035.

And now a word about our Minnesota utility, Minnesota Energy Resources. On December 26 of last year, the commission approved a rate increase of $3.1 million or 1.26% effective January 1, 2018. The order also increased the equity ratio to 50.9% and the allowed return on equity to 9.7%. The Minnesota Attorney General has requested a review of the authorized ROE in the order.

Now we'll turn to Michigan. We're nearing completion of the new natural gas power generation in the Upper Peninsula. Engineering, procurement and construction are essentially complete. Startup is well underway, and we anticipate commercial operation, as planned, in the second quarter of this year. And at that time or soon thereafter, we'll expect to retire our coal-fired power plant at Presque Isle.

We're investing $266 million in 10 reciprocating internal combustion engines, or as we call them, RICE units. They'll be capable of generating a total of 180 megawatts of electricity. These units, which will be owned by one of our Michigan utilities, Upper Michigan Energy Resources, will provide a cost-effective, long-term power supply for the customers in the Upper Peninsula.

And with that, I'll turn it back to Gale.

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [4]

--------------------------------------------------------------------------------

Kevin, thank you very much. The new year is off to a strong start. We're on track to meet our 2019 guidance. If you recall, that's in a range of $3.48 a share to $3.52 a share. This guidance translates to a growth rate between 6.1% and 7.3% off our 2018 base of $3.28 a share. Recall that the $3.28 was the midpoint of our original guidance for 2018.

And finally, a word about our dividend policy. At its January meeting, our Board of Directors raised the quarterly cash dividend to $0.59 per share. That's an increase of 6.8% over the previous rate. The new quarterly dividend is equivalent to an annual rate of $2.36 a share. This will mark the 16th consecutive year that our company will reward our shareholders with higher dividends. We continue to target a payout ratio of 65% to 70% of earnings. We're smack dab in the middle of that range now, so I expect our dividend growth will continue to be in line with the growth in our earnings per share.

And now with details on our 2018 results and our outlook for 2019, is our famous CFO, Scott Lauber. Scott?

--------------------------------------------------------------------------------

Scott J. Lauber, WEC Energy Group, Inc. - Senior EVP, CFO & Treasurer [5]

--------------------------------------------------------------------------------

Thanks, Gale. Our 2018 GAAP earnings were $3.34 per share compared to $3.79 per share in 2017. The 2017 results included the impact of tax reform on the company's nonutility assets and assets of the parent company. Excluding this deferred tax benefit, our 2017 adjusted earnings were $3.14 per share.

Comparable results for 2018 were $3.34 per share with no adjustments. This represents an increase of $0.20 per share or 6.4% over adjusted earnings for 2017. For the rest of my presentation, I will refer exclusively to adjusted earnings for 2017.

Our solid 2018 results were largely driven by additional capital investment, effective cost control and higher sales volumes. Earnings benefited from both warmer-than-normal summer weather and colder-than-normal winter across all of our jurisdictions. The favorable weather, coupled with economic growth, drove energy use significantly above our forecast.

The earnings packet placed on our website this morning includes a comparison of fourth quarter and full year 2018 and 2017 results. My focus will be on the full year, beginning with operating income by segment and then other income, interest expense and income taxes.

Referring to Page 13 of the earnings packet, our consolidated operating income for 2018 was $1,468,000,000 as compared to operating income of $1,776,000,000 in 2017, a decrease of $308 million. Excluding 2 tax items, operating income actually increased by $88 million. We have a breakout of these items for your reference on Page 9 and 10 of the earnings package.

Recall that as part of our Wisconsin settlement, we agreed to apply the benefits of tax repairs to offset the growth of certain regulatory asset balances. That plan continues to proceed as expected. We now project that the transmission escrow balance at Wisconsin Electric will be reduced from approximately $220 million to 0 by the end of 2019. In addition to tax reform, the earning sharing mechanism at Wisconsin Electric provided an additional benefit. By segment update, we'll focus on the $88 million increase in operating income as shown on Page 13 of the packet, which excludes the impact of the tax items.

Starting with the Wisconsin segment, the increase in operating income, net of tax adjustments, was $53.1 million. Higher sales volume drove a $92.1 million increase in margins. This was partially offset by a $28.1 million increase in depreciation expense and a $7.4 million increase in operations and maintenance expense.

The increase in O&M expense was largely driven by 2 items. The first item was a $7 million expense related to staff reductions, as we continue to streamline, process and reshape our generation portfolio. Second, we accrued $64.6 million more in 2018 related to the earning sharing mechanism we have in place at our Wisconsin utilities. This was the result of our strong performance in 2018. Excluding these 2 items, operations and maintenance expense actually decreased $64.2 million, driven by the closing of coal plants and effective cost control across the business.

In Illinois, operating income increased $5.4 million net of tax adjustments. The increase was primarily driven by our continued investment in the Peoples Gas system modernization program.

Excluding the impact of tax reform, operating income in our Other States segment increased $22.4 million. Higher sales volumes resulting from colder winter weather and customer growth drove a $10 million increase year-over-year. We also benefited from an increase in revenues due to Minnesota rate case. Recall that interim rates have been in place since January 1, 2018. The remaining increase of $4.8 million was attributable to a favorable judgment received on a property tax matter.

Turning now to our energy infrastructure segment. Excluding the impact of tax reform, operating income at this segment was up $15.7 million. Bluewater Natural Gas Holding, which was acquired on June 30, 2017, contributed $13.6 million to the increase in operating income. The remaining increase was driven by additional investments in our Power the Future plants. The results also reflect the acquisition of our interest in Bishop Hill in the fall of 2018. Recall that a portion of the earnings for this facility come in the form of production tax credits and is recognized as an offset to income tax expense.

The operating loss at our corporate and others segment increased by $8.3 million. The change is primarily due to an impairment recorded on some nonregulated assets that we inherited from the Integrys acquisition. Combining these changes, and excluding the 2 tax items I discussed, operating income increased $88 million.

Earnings from our investment in American Transmission Company totaled $136.7 million, a decrease of $17.6 million as compared to 2017. Excluding the impacts from the tax reform, our equity earnings increased by $16.7 million. Higher earnings were driven by continued capital investment and the absence of a FERC audit expense that was recorded in 2017.

Other income net decreased by $3.4 million year-over-year. Our net interest expense increased $29.4 million, primarily driven by higher debt balances related to our continued capital investment and slightly higher interest rates.

Our adjusted consolidated income tax expense decreased $420 million. As previously discussed, lower tax expense was driven by the impact of tax reform and the flow-through of tax repairs. The effective tax rate was 13.8% in 2018. Excluding the benefits of tax repairs, our effective tax rate would have been 24%.

Looking forward into 2019, we expect our effective income tax rate to be between 10.5% and 11.5%. Excluding the benefits of tax repairs, we expect our 2019 effective tax rate to be between 20% and 21%. We are projecting a lower rate in 2019 because of production tax credits from our infrastructure investments. We now expect to be a partial taxpayer in 2020.

Looking now at the cash flow statement on Page 8 of the earnings package. Net cash provided by operating activities increased $367 million during 2018. Stronger earnings contributed to the increase in cash provided by operating activities.

Our capital expenditures were approximately $2.1 billion for 2018, a $156 million increase from 2017, reflecting continued investment in our core business.

In 2018, our FFO-to-debt was 20.7% due to strong cash flow as previously discussed. Looking forward, we continue to expect FFO-to-debt to be in the range of 16% to 18%.

We are using cash to satisfy any shares required for our 401(k) plans, options and other programs. Going forward, we do not expect to issue any additional shares.

We paid $697 million in common dividends during 2018, an increase of $41 million over 2017, which reflects the increase to the annualized dividend level in 2018.

Turning now to sales. We continue to see customer growth across our system. At the end of 2018, our utilities were serving approximately 11,000 more electric and 19,000 more natural gas customers compared to a year ago. Retail electric and natural gas sales volumes are shown on a comparative basis on Pages 16 and 17 of the earnings package.

Overall, retail deliveries of electricity, excluding the iron ore mine, were up 2.6% from 2017. And on a weather-normalized basis, retail deliveries were up 1.2%.

Natural gas deliveries in Wisconsin increased 9.1% versus 2017. This excludes gas used for power generation. Natural gas deliveries in Wisconsin grew by 4.3% on a weather-normalized basis.

Overall, electric and natural gas volumes were above our expectations for 2018.

And now I'll briefly touch on our 2019 sales forecast for the State of Wisconsin, our largest segment. We are forecasting a slight increase of 0.3% in weather-normalized retail electric deliveries, excluding the iron ore mine. We project Wisconsin weather-normalized retail gas deliveries, excluding gas used for power generation, to increase by 0.8%.

And finally, let's look at the quarter -- the first quarter of 2019 guidance. In the first quarter last year, we earned $1.23 per share. The first quarter of 2018 was helped by approximately $0.04 of positive fuel recoveries related to market conditions. Taking this factor into account, we project first quarter 2019 earnings to be in the range of $1.23 per share to $1.25 per share. This assumes normal weather for the rest of the quarter.

With that, I'll turn things back to Gale.

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [6]

--------------------------------------------------------------------------------

Scott, thank you very much. Overall, we're on track and focused on delivering value for our customers and our stockholders. I might add, the Milwaukee Bucks have the best record in the NBA.

So operator, we're ready to rock and open it up now for the question-and-answer portion of our call.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) Your first question comes from Praful Mehta with Citigroup.

--------------------------------------------------------------------------------

Praful Mehta, Citigroup Inc, Research Division - Director [2]

--------------------------------------------------------------------------------

Appreciate your comments on Foxconn. Wanted to get a little bit more specific in terms of that cash tax comment that you made earlier and the fact that you will become partial cash taxpayer in 2020. I was looking at the cash flow statement and there is a meaningful deferred tax add-back right now that is benefiting cash flows and operating cash flows. How does that cash flow get impacted as you move towards more of being a cash taxpayer? And does that mean any pressure on your credit metrics in that 2020, '21 time frame?

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [3]

--------------------------------------------------------------------------------

Well, great question. And I'll ask Scott to address it. First of all, though, just to kind of frame the answer in context for you, we're saying now that we're projecting to be a partial cash taxpayer in 2020, but that assumes no additional investments in the infrastructure segment that would provide, in essence, additional tax credits. So that's a snapshot in time today just taking into account the infrastructure investments that we've already announced. Scott?

--------------------------------------------------------------------------------

Scott J. Lauber, WEC Energy Group, Inc. - Senior EVP, CFO & Treasurer [4]

--------------------------------------------------------------------------------

Yes, that's exactly it, Gale. And when you look at it, if you look at the cash flow statement, cash flow statement is never straightforward as you'd hope because there's a lot of different pieces how the money we are saving on taxes, some of it is flowing against regulatory assets, et cetera. So we didn't pay cash taxes in 2017 or 2018. And right now, we don't expect in 2019, and like Gale said, a partial in 2020. So some of these cash taxes, I mean, the deferred tax, that's a long unwind as we look across it as we work into a rate case.

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [5]

--------------------------------------------------------------------------------

And some of that unwind goes out 15 and 20 years, Praful.

--------------------------------------------------------------------------------

Praful Mehta, Citigroup Inc, Research Division - Director [6]

--------------------------------------------------------------------------------

Got you. So there isn't -- you don't foresee in the 2021 time frame any pressure on credit that would -- given your high growth and your investment, is there any kind of need for equity is what I'm trying to get at, I guess, through the credit question.

--------------------------------------------------------------------------------

Scott J. Lauber, WEC Energy Group, Inc. - Senior EVP, CFO & Treasurer [7]

--------------------------------------------------------------------------------

No. And that's why we're being real diligent on these infrastructure projects that pushes out to 2021.

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [8]

--------------------------------------------------------------------------------

But no additional plans for equity, period. End of story.

--------------------------------------------------------------------------------

Praful Mehta, Citigroup Inc, Research Division - Director [9]

--------------------------------------------------------------------------------

Okay. Good. I'll be good to clarify. I guess, the other question I wanted to get was you had this slide where you talked about load growth, and this was in your January update. And you seem to have, like, a higher load growth projection on Slide 25 of that deck in that '22, '23 time frame of 1.2% to 1.5%, both on the electric and gas side. Just wanted to understand what's driving that increase. Is it the industrial load that you're seeing? Or is it something else that's driving that load growth and how would that correlate with the 5% to 7% growth that you're talking about more generally on the earnings side?

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [10]

--------------------------------------------------------------------------------

Okay. Great question. Let me try to give -- there are 2 or 3 pieces to the answer. And the first is that I mentioned that we're already seeing a significant amount of ripple effect economic development, partially from the Foxconn investments that are going on. But also, if you recall, we've had other major investments announced in the last -- just in the last 24 months. In addition to Foxconn, the German candy manufacturer, HARIBO, is coming in with one of the largest confectionery plants in North America. They're going to be breaking ground later this year, so we'll see some uptick from that development later on in our forecast period. I mentioned Amazon, which will be cranking up in late 2020. Milwaukee Electric Tool is just adding another huge expansion. And then in the fall of this past year, we announced Komatsu, the major mining manufacturing company, is going to build a huge manufacturing complex just south of downtown Milwaukee in the Harbor District. So you put that together with the other economic development projects that -- some smaller, but also very meaningful that we're already seeing in the pipeline and have been announced. And that -- those factors are driving an uptick in our projection of sales growth for the latter part of this 5-year forecast period. Scott, anything to add to that?

--------------------------------------------------------------------------------

Scott J. Lauber, WEC Energy Group, Inc. - Senior EVP, CFO & Treasurer [11]

--------------------------------------------------------------------------------

No, that's exactly it. It takes a while because these are just starting construction on all these.

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [12]

--------------------------------------------------------------------------------

And all of that will still, we believe, keep us in that 5% to 7% earnings per share growth.

--------------------------------------------------------------------------------

Operator [13]

--------------------------------------------------------------------------------

Your next question comes from Michael Weinstein with Crédit Suisse.

--------------------------------------------------------------------------------

Michael Weinstein, Crédit Suisse AG, Research Division - United States Utilities Analyst [14]

--------------------------------------------------------------------------------

I had a question about the infrastructure business. I think, in the past, you said you wanted to grow that to about 3% of total asset base. Could you just remind us what is the goal and time frame for that goal? And where do you stand now versus that goal?

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [15]

--------------------------------------------------------------------------------

Well, if you -- what we talked about really when we said about 3% of the asset base is that it's a small percentage of our total 5-year capital plan. So in the 5-year capital plan, in essence, we've got about just under -- just over $1 billion budgeted for this particular segment of capital spending. We're well away -- basically, the one we just announced, the Coyote Ridge project, is the project that would have been a 2019 project. That's already done. We already have the contract signed. The project will come in line -- come online, we believe, toward the end of 2019, so we're a good ways along. With Bishop Hill, with Upstream and with Coyote Ridge, we're, I would say, about 40% toward that goal. Scott?

--------------------------------------------------------------------------------

Scott J. Lauber, WEC Energy Group, Inc. - Senior EVP, CFO & Treasurer [16]

--------------------------------------------------------------------------------

Yes, yes. You're exactly right. And as -- we have all the projects announced that we have in our capital spending through June 2019 already. And right now, we're looking at 3% was really in the 5-year plan that we're talking. And remember, we really look at that Bluewater gas storage as really an extension of our Wisconsin business because it feeds all of our Wisconsin utilities.

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [17]

--------------------------------------------------------------------------------

And Michael, as I've mentioned to you, we can be -- given our competitive advantage with our tax appetite and the strength of our balance sheet and our ability to use the production tax credits, we're in a very competitive position. So as we vet future projects, we have a really robust list of future projects to choose from. And as I mentioned, we will be very selective. We are only going to invest in this segment in projects that we have an incredibly high confidence level in, in terms of not changing our risk profile, but with offtake agreements with some of the best, most robust companies in the country.

--------------------------------------------------------------------------------

Michael Weinstein, Crédit Suisse AG, Research Division - United States Utilities Analyst [18]

--------------------------------------------------------------------------------

Right. Understood. In fact, I think, if I recall, you had previously said you'd be a noncash taxpayer through 20 -- or I think it was only through 2019, now through the end of 2019. Is that -- this is a slightly extended period now, right, that you're going to be a noncash taxpayer?

--------------------------------------------------------------------------------

Scott J. Lauber, WEC Energy Group, Inc. - Senior EVP, CFO & Treasurer [19]

--------------------------------------------------------------------------------

Right. That's exactly correct. So as soon as we announced the last yield here, that moved us to 2020, the Coyote Ridge.

--------------------------------------------------------------------------------

Michael Weinstein, Crédit Suisse AG, Research Division - United States Utilities Analyst [20]

--------------------------------------------------------------------------------

Okay. So that means the lack of -- I guess, the ability of these projects to avoid equity reduces the -- as long as we're not harming the credit rating or putting pressure on the balance sheet in any kind of way. Our -- really, they have a lower cost of capital, right?

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [21]

--------------------------------------------------------------------------------

Actually, in an interesting way, they are helpful to our FFO-to-debt calculation because of the bonus depreciation. So basically, the cash comes back from these investments very, very quickly.

--------------------------------------------------------------------------------

Operator [22]

--------------------------------------------------------------------------------

Your next question comes from Michael Lapides with Goldman Sachs.

--------------------------------------------------------------------------------

Michael Jay Lapides, Goldman Sachs Group Inc., Research Division - VP [23]

--------------------------------------------------------------------------------

Real quick. Where do you think you're tracking for the next 1 to 2 years on your CapEx plan original targets that you laid out around the EEI time frame? Do you think you're tracking ahead? Do you think you're tracking in line? Do you think you're tracking below? And if different than where you originally laid out, I know it's not been very long since you put that out there, but if it's different, where and how?

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [24]

--------------------------------------------------------------------------------

No, I think it's a good question, Michael. And I think the honest answer is we're exactly where we thought we would be in terms of the capital spending plan over the 5-year period. We're on track. The projects we had identified for 2019 are all underway. I don't -- I mean, again, remember, we refreshed our capital plan back October, November. Very little has changed. We're right on target where we want to be. Kevin, Scott?

--------------------------------------------------------------------------------

Scott J. Lauber, WEC Energy Group, Inc. - Senior EVP, CFO & Treasurer [25]

--------------------------------------------------------------------------------

The only one is our last announcement on the infrastructure that was built in, in our 2019 bucket, so we're getting to be more selective as we go forward.

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [26]

--------------------------------------------------------------------------------

Yes. And in terms of all of our regulated capital spending plans, right on target. Everything is exactly as we hoped it would be.

--------------------------------------------------------------------------------

Michael Jay Lapides, Goldman Sachs Group Inc., Research Division - VP [27]

--------------------------------------------------------------------------------

Got it. And another question. I know no one likes to litigate rate cases on earnings conference calls, but as we think about this year from a regulatory construct and past perspective, is there anything else to think about besides the Wisconsin rate cases? And do you see these rate cases as being significant items in the course of the company? Or do you see these relative to kind of historical trends or other companies in the state or the region as being kind of less urgent or less impactful relative to what you see elsewhere around the U.S.?

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [28]

--------------------------------------------------------------------------------

Compared to what we see elsewhere around the U.S., rate cases in Wisconsin are generally more genteel, if you will. And as we've said, we would expect the rate filings in Wisconsin this year -- and I'll ask Kevin to comment in a second, the rate filings this year to be pretty modest in their asks. So I don't see a ton of drama surrounding these particular rate cases. Kevin?

--------------------------------------------------------------------------------

Joseph Kevin Fletcher, WEC Energy Group, Inc. - President, CEO & Director [29]

--------------------------------------------------------------------------------

Gale, I'd say you've summed it up very well. We're certainly in the process of evaluating our rate case and our options now. And as you said, I think it'd be in line with inflation and nothing major there.

--------------------------------------------------------------------------------

Operator [30]

--------------------------------------------------------------------------------

Your next question comes from Michael Sullivan with Wolfe Research.

--------------------------------------------------------------------------------

Michael P. Sullivan, Wolfe Research, LLC - Research Analyst [31]

--------------------------------------------------------------------------------

So maybe just one quick follow-up to start on the rate case side of things. I just wanted to clarify that the reason you're filing in Wisconsin is because you were required per the last settlement agreement? Or there actually is a need, would you have filed otherwise anyways?

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [32]

--------------------------------------------------------------------------------

Well, to directly answer your question, there is a specific order point in the last rate agreement, the last rate settlement that requires us to file a rate case, I believe, by the 2nd of April of this coming -- of 2019. So there is a regulatory requirement. Would we have filed anyway? Maybe, maybe not. But clearly, it will be a good time to, to really -- I mean, there are a number of tweaks that we think would be helpful in terms of rate design, in terms of a number of other accounting issues, et cetera, et cetera. So I don't know that we wouldn't have filed anyway. But it really is a moot point in that there's an order requiring us to file by April.

--------------------------------------------------------------------------------

Michael P. Sullivan, Wolfe Research, LLC - Research Analyst [33]

--------------------------------------------------------------------------------

Okay. Great. And then just a separate one on the O&M side of things, obviously, a big driver, again, in 2018 for you all. Just curious how we should think about that maybe on a normalized percentage basis and then maybe what you're targeting for this year on the cost-cutting side.

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [34]

--------------------------------------------------------------------------------

Sure, be happy to. Let me first explain the backdrop, and that is that in 2019, we will reap a full year worth of savings from the closure of the Pleasant Prairie Power Plant. Remember, a large coal-fired plant of that time requires a very significant amount of annual operating and maintenance costs. Wisconsin Public Service closed the Pulliam power plant and the jointly owned unit called Edgewater, jointly owned with other Wisconsin utilities that closed in the fall as well. And then we expect, and Kevin mentioned the new power supply, the RICE units that should go commercial in the spring of this year. And that will allow us to retire the Presque Isle Power Plant up in the North -- up in the Upper Peninsula of Michigan, way up North. You put all of those O&M savings together and we expect another leg down in operation and maintenance cost in 2019 compared to 2018, Scott and Kevin, I'm thinking in the 3% to 4% range.

--------------------------------------------------------------------------------

Scott J. Lauber, WEC Energy Group, Inc. - Senior EVP, CFO & Treasurer [35]

--------------------------------------------------------------------------------

Yes, that's correct. Yes. That's the ballpark is what we're looking at. Very similar to what we did this year.

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [36]

--------------------------------------------------------------------------------

Fine. That's right.

--------------------------------------------------------------------------------

Operator [37]

--------------------------------------------------------------------------------

(Operator Instructions) Your next question comes from Vedula Murti with Avon Capital.

--------------------------------------------------------------------------------

Vedula Murti, Millennium Management LLC - Senior Analyst & Assistant Portfolio Manager [38]

--------------------------------------------------------------------------------

Let's see, a few things. One, if I'm not mistaken, I think I saw something relating to the Illinois gas utility with the main replacement program that you've been discussing and that the ICC staff may have some issues in terms of some investments or expenses that they don't think were -- or have some questions about. Can you just kind of elaborate on that a little bit?

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [39]

--------------------------------------------------------------------------------

Sure, be happy to, Vedula. The matter you're referring to relates to the capital investment that was made for the system modernization during calendar year 2015. And if you'll recall, our acquisition of Integrys, which included the Peoples Gas Company, took place -- I think we closed on June 29, 2015. So as the commission looks at, retrospectively, the prudency of the program and how it was run, how the investment program was run in 2015. Remember, we had the company for 6 months. The prior management had the company for 6 months. And essentially, what the commission staff is saying is that they don't think the program was run as efficiently as it should have been, certainly, prior to the acquisition, and that's what the issue is. So we'll work our way through that. I'm not overly alarmed. It's just a matter of getting through this particular process. And this is an annual review, which is part of the regulatory compact there. So it's not -- it's something we're very familiar with. But it really relates to the 2015 investment in which we only had 6 months of operation at Peoples Gas.

--------------------------------------------------------------------------------

Vedula Murti, Millennium Management LLC - Senior Analyst & Assistant Portfolio Manager [40]

--------------------------------------------------------------------------------

Does that mean that has '16 and '17 already been reviewed and it's basically been resolved? Or is it going to be reviewed going forward?

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [41]

--------------------------------------------------------------------------------

It will be reviewed in the future. Right now, they're focused on 2015. Remember, Vedula, we've made very significant improvements in the management of that program.

--------------------------------------------------------------------------------

Vedula Murti, Millennium Management LLC - Senior Analyst & Assistant Portfolio Manager [42]

--------------------------------------------------------------------------------

Okay. No, I understand that. Second -- my second question kind of ties to what Praful was asking about in terms of the uptick on the sales forecast. To the extent -- and I understand that it seems to tie into when you would expect a lot of Foxconn and all the ancillaries to basically be pretty much up and running or at the position where they are fully deployed or mature, whatever term you want to use. When I take a look at the math, it was about roughly a little over $4 billion, I think, at that time. A close margin between Wisconsin Electric and Wisconsin Gas, a 1%, 1.2% uptick versus underlying. It's about $40 million to $50 million in terms of gross margin or almost $0.10 a share compounding. So to the extent -- just wondering about the potential variability of that sales forecast given the leverage that it would show on the back end and as it ties into being able to continue the 5% to 7% that you've been able to do.

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [43]

--------------------------------------------------------------------------------

Well, let me take a shot at that and I'll also ask Scott to chime in. And Kevin, if you have anything as well. I mean, first of all, let me reemphasize that the economic growth we're seeing, yes, Foxconn is a significant piece of it, but it's a lot more than Foxconn. When you see the growth in the corridor between Milwaukee and Chicago, it is significant with or without Foxconn. In fact, for example, the polar vortex days we had here just last week clearly are pointing to the need for some additional capital in that corridor just for natural gas consumption and reliability, without Foxconn consuming one therm today. So my sense is yes, we're ramping up just a bit our sales forecast for the outer years of the 5-year plan. But recall that, that will all get factored into rates. So I think you're maybe -- and Scott, if you'll comment on this, I think you're thinking a little too -- more granularly than you should be about the gross margin impact. Scott?

--------------------------------------------------------------------------------

Scott J. Lauber, WEC Energy Group, Inc. - Senior EVP, CFO & Treasurer [44]

--------------------------------------------------------------------------------

No. Yes, when you look at the volumes in that -- the sales forecast, I think when we talked at EEI, these are the larger industrial customers that are coming, the Amazons, the Foxconns, the HARIBOs. That -- the lower margin, when you look at industrial classes, those are the lower-margin classes. So the margin isn't quite there. But what we did put in the forecast, and we only put known projects on there. So we don't know where the additional jobs, if that will be additional housing or the secondary suppliers, so we did not add that into the forecast, whether it be the capital to put those in or the volumes associated with it. But the volumes here are really shown more in that industrial segment. And I'd expect in a few years after that, we'd start seeing it in the smaller groups, those volumes coming in. But it all does get worked into rate cases or allow us to continue to keep rates where they are.

--------------------------------------------------------------------------------

Joseph Kevin Fletcher, WEC Energy Group, Inc. - President, CEO & Director [45]

--------------------------------------------------------------------------------

Gale, I would just add that, that certainly has been a growth part of our service territory. And with that, in any economic development project like you mentioned, the multiplier effect is going to be there. So that also is what's factored in as we look forward into the future.

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [46]

--------------------------------------------------------------------------------

And Vedula, to Kevin's point, we've already seen 2 big announcements about health care facilities, hospitals and medical complexes being built within miles of the Foxconn campus. Just last week, there was an announcement of a new hotel and a new distribution center and a new brewpub, by the way, so you need to get out here.

--------------------------------------------------------------------------------

Vedula Murti, Millennium Management LLC - Senior Analyst & Assistant Portfolio Manager [47]

--------------------------------------------------------------------------------

I will definitely do that in the summertime. One last thing. When you referred to the utility-scale solar, my recollection is that the new governor is particularly interested in utility sale -- scale solar as part of renewables. And I presume that the filing that you're going to have asking for approval is simply step one of a more developed program going forward. I'm wondering if you can tell us what your sense is, how you think that program will develop in terms of further utility-scale rate base solar development.

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [48]

--------------------------------------------------------------------------------

Well, first of all, as you know, one step at a time. And as I mentioned in the prepared remarks, we should receive a commission decision on the utility-scale solar projects that we have put in front of the commission for approval. We expect a decision certainly by end of March or early April. Then as we developed our internal plans, depending upon that approval, and I'm very optimistic about that, you could see us, as a next step, submitting a request for utility-scale solar for Wisconsin Electric because the one that's in front of the commission today is for our Wisconsin Public Service subsidiary based in Green Bay. And then I mentioned we have a couple -- we just received approval for a couple of pilot programs that are pretty sizable, and it could bring up to 185 megawatts of additional wind and solar to our regulated portfolio. So one step at a time. Wisconsin Public Service approval up-and-coming, we trust. Then we're going to work hard on these 2 pilot projects that the commission approved before the end of last year. And potentially, you'll see a filing also for Wisconsin Electric for utility-scale solar.

--------------------------------------------------------------------------------

Vedula Murti, Millennium Management LLC - Senior Analyst & Assistant Portfolio Manager [49]

--------------------------------------------------------------------------------

And those are reflected in the 5-year forecast for capital growth?

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [50]

--------------------------------------------------------------------------------

That is absolutely right.

--------------------------------------------------------------------------------

Operator [51]

--------------------------------------------------------------------------------

Your next question comes from Andrew Weisel with Scotia Howard.

--------------------------------------------------------------------------------

Andrew Marc Weisel, Scotia Howard Weil, Research Division - Analyst [52]

--------------------------------------------------------------------------------

Just a few questions on the regulatory front to elaborate on your comments. You mentioned a little bit of the rate design and tariff things that you might want to reconsider with this upcoming rate case in addition to the revenue increase. Can you elaborate what specifically, as far as rate design, might you be looking to improve? And how -- well, I'll leave it there for now. What rate design issues are on your mind?

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [53]

--------------------------------------------------------------------------------

I would just say watch this space. We're all obviously putting final touches together on our plans. But for example, there is a real-time pricing program that the commission approved a couple of years ago that has to get reviewed again. We think that's something that the commission will take a hard look at, and we will have some ideas. So that's one good example. And that's been a very popular program with our larger industrial customers. So that's just one example of a rate design type of an issue that we'll have good discussion with the commission. But watch this space.

--------------------------------------------------------------------------------

Andrew Marc Weisel, Scotia Howard Weil, Research Division - Analyst [54]

--------------------------------------------------------------------------------

Okay. Fair enough. Then any changes to the commission you've seen? It's only -- not even halfway through February, but with the new governor and potential changes to the commission and the staff, policies, mentality, anything that you foresee coming up in the rate case that might be a little different than the last few times you've gone through?

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [55]

--------------------------------------------------------------------------------

Well, I think we've -- it's pretty clear what areas of emphasis we'll be looking at in the rate case and the staff and the commissioners will be looking at. I think my honest thought at this point is, essentially, steady as she goes. No, I will just ask from Kevin or Scott if they had any other thoughts.

--------------------------------------------------------------------------------

Joseph Kevin Fletcher, WEC Energy Group, Inc. - President, CEO & Director [56]

--------------------------------------------------------------------------------

No, I agree with that, Gale. There's nothing else to add.

--------------------------------------------------------------------------------

Andrew Marc Weisel, Scotia Howard Weil, Research Division - Analyst [57]

--------------------------------------------------------------------------------

Good. Consistent with your -- that will be a good thing in your state. My last question is you've been on a pretty steady 2-year cycle for the rate cases as far as filings. Should we see the big pickup in demand with industrial and the trickle-down to residential and commercial, might there be opportunity to have less frequent rate cases? Or do you think this 2-year cycle is going to be continuing for the foreseeable future?

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [58]

--------------------------------------------------------------------------------

Well, first of all, remember, we've had a rate freeze for 4 years. So we really have, in some ways, deviated from the every-other-year rate case cycle. I will say, historically, the commission has wanted all of the Wisconsin utilities to file a case every 2 years. Whether that approach is still something the commission wants, we'll have to see because, obviously, we will have a new chair of the commission here by March, and there's a new staff director, et cetera. So I would guess, though, because the Wisconsin Commission has been so consistent in its approach over the years, I would guess that we probably will continue on an every 2-year cycle.

--------------------------------------------------------------------------------

Operator [59]

--------------------------------------------------------------------------------

Your last question comes from Paul Ridzon with KeyBanc.

--------------------------------------------------------------------------------

Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [60]

--------------------------------------------------------------------------------

Just a quick clarification question. You said O&M should be down 3% to 4%. What's the normalized number to bake into that?

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [61]

--------------------------------------------------------------------------------

Well, let's see. I think our -- the day-to-day O&M that we manage, if I remember correctly, and Scott, if I'm off here, please correct me, I think, because it's an easy number to remember. I think, for 2018, our day-to-day O&M expenses totaled $1,234,000,000. 1-2-3-4. That's the base on which we're talking about to reduce maybe 3% to 4%. Scott, am I correct?

--------------------------------------------------------------------------------

Scott J. Lauber, WEC Energy Group, Inc. - Senior EVP, CFO & Treasurer [62]

--------------------------------------------------------------------------------

Yes, you're exactly correct. We break down the O&M. When the 10-K comes out, then we break it out into more detail there because there's other items that are regulatory in nature. There are amortizations that come to the total number. So what Gale is quoting is that day-to-day O&M.

--------------------------------------------------------------------------------

Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [63]

--------------------------------------------------------------------------------

And then I think earlier, can you just review some of the things you said were unusual in the '18 O&M?

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [64]

--------------------------------------------------------------------------------

Unusual in the '18 O&M, well, you've got to think about, there's some confusion about where tax repairs are impacting. That's a biggie. Scott?

--------------------------------------------------------------------------------

Scott J. Lauber, WEC Energy Group, Inc. - Senior EVP, CFO & Treasurer [65]

--------------------------------------------------------------------------------

So when you look at the O&M in the earnings package and you try to break out how the tax repairs are pulled out of those ahead of it. I think what you're talking about is we really only had a part of a year of our retirement of the one coal plant in 2018 and now, the Pleasant Prairie Coal Plant will have a full year next year. And this year, in the second quarter, we expect that, that other coal plant in the Upper Peninsula, Presque Isle, to close. And there should be savings from that. Those are the 2 unique items we talked about earlier in the call.

--------------------------------------------------------------------------------

Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [66]

--------------------------------------------------------------------------------

There was nothing on sharing? Revenue sharing?

--------------------------------------------------------------------------------

Scott J. Lauber, WEC Energy Group, Inc. - Senior EVP, CFO & Treasurer [67]

--------------------------------------------------------------------------------

Sharing is a separate line item, correct. That's the $67 million of sharing this year.

--------------------------------------------------------------------------------

Gale E. Klappa, WEC Energy Group, Inc. - Executive Chairman [68]

--------------------------------------------------------------------------------

Very significant customer benefit to come into 2019 because of the company's performance last year.

Well, it looks like that concludes our conference call for today. Thank you so much for participating. If you have any questions, feel free to call Beth Straka at (414) 221-4639. Thanks, everybody. Take care.

--------------------------------------------------------------------------------

Operator [69]

--------------------------------------------------------------------------------

This concludes today's conference call. You may now disconnect.