WEC Energy Group Leans Into Data Center-Driven Growth

WEC Energy Group Inc ((WEC)) has held its Q1 earnings call. Read on for the main highlights of the call.

WEC Energy Group’s latest earnings call struck an optimistic tone, balancing solid execution with clear-eyed acknowledgment of emerging pressures. Management highlighted a year-over-year earnings beat, reaffirmed guidance, and leaned into a sizable capital plan driven by data center and renewable growth, while downplaying manageable headwinds from gas volume softness, O&M inflation, and future nuclear replacement spending.

Q1 EPS Growth Shows Solid Start to 2026

Reported first-quarter 2026 earnings per share of $2.45, an $0.18 increase versus the prior year’s quarter, underscored strong early-year execution. Management emphasized that core utility operations and infrastructure investments were key contributors, setting a firm base for meeting full-year earnings targets.

Full-Year Earnings Guidance Reaffirmed

The company reaffirmed its 2026 EPS guidance range of $5.51 to $5.61, signaling confidence in the underlying trajectory. Second-quarter guidance was set at $0.76 to $0.82 per share, assuming normal weather patterns, reinforcing the message that near-term performance remains on track.

Ambitious Capital Plan and Long-Term Growth

WEC reiterated a five-year capital plan totaling $37.5 billion, framed as low-risk and executable, with a significant portion tied to large customer demand. Management is targeting long-term EPS growth of 7% to 8% annually from 2026 to 2030, with growth expected to accelerate toward the upper end of that range starting in 2028.

Data Center Demand Provides Structural Upside

Data center growth remains a centerpiece of the investment story, with 1.3 GW of near-term demand forecast for the Vantage site over the next five years and potential to reach 3.5 GW over time. Across approved sites, WEC has around 3.9 GW in its five-year plan and sees further upside from additional acreage and continued developer interest in the region.

Renewables and Storage Pipeline Expands

The company placed a new solar facility into service in March, representing roughly $225 million of capital investment and further diversifying its generation mix. In Wisconsin, regulators approved WEC’s purchase of three additional solar projects and a battery storage project, totaling about $730 million in planned spending and supporting both decarbonization and reliability goals.

Regulatory Win on VLC Tariff

WEC secured a verbal approval from the Wisconsin Public Service Commission for its VLC tariff, with a written order expected in the coming weeks. The framework includes an authorized return on equity range of 10.48% to 10.98% and a 57% equity ratio, designed to safeguard both non-VLC customers and the company’s financial strength.

Generation Build-Out and Reliability Measures

Construction continues at the Paris and Old Creek natural gas facilities, with combustion turbines expected to come online in late 2027 to meet surging peak demand. To bridge the period, the operating lives of units 7 and 8 at Old Creek have been extended, which management said will bolster reliability and help keep customer costs in check.

Capital Markets Execution De-Risks Funding

The company executed strongly in capital markets, locking in about $455 million of common equity during the first quarter, including $430 million via at-the-market forward contracts. This means roughly half of the planned $1.1 billion equity need for 2026 is already secured, supporting the targeted 50% equity share on incremental capital.

Dividend Growth Streak Continues

WEC’s board approved a 6.7% dividend increase, marking the 23rd consecutive year of dividend growth and aligning with its 6.5% to 7% target growth rate. Management framed the move as evidence of confidence in cash flow visibility and the durability of its earnings growth profile.

Broad-Based Segment Earnings Improvements

Utility operations led the way with roughly $0.17 of year-over-year earnings improvement in the first quarter, reflecting both load growth and disciplined cost management. Energy Infrastructure earnings rose by about $0.04, aided by a full quarter from the Harden 3 solar asset, while Corporate & Other and American Transmission Company added modest tailwinds from tax timing and transmission returns.

Electric Sales Growth Driven by Large Customers

Weather-normal retail electric deliveries, excluding an iron ore mine, increased 1.3% year over year in the quarter, with large commercial and industrial customers posting 3% growth. Management reiterated its expectation for about 1.5% electric sales growth for the full year, pointing to continued industrial and data center-driven demand.

Natural Gas Volumes Under Pressure

In contrast, weather-adjusted natural gas deliveries fell approximately 2.1% year over year, coming in modestly below internal forecasts. Executives cited changing usage patterns in metropolitan and residential segments and suggested that gas trends could remain a modest headwind relative to electric growth.

O&M Inflation Looms After Timing Tailwinds

Day-to-day O&M expenses were about $0.05 favorable in the first quarter, mostly due to timing of maintenance and benefit costs rather than structural savings. Management cautioned that they expect day-to-day O&M to rise 3% to 5% in 2026 versus 2025 actuals and flagged that some of the early-year favorability will reverse as the year progresses.

Point Beach Replacement a Major Future Spend

Looking ahead to the 2030s, WEC faces a significant capital requirement as its Point Beach power purchase agreements roll off in 2030 and 2033. The company is modeling roughly $2.0 to $2.5 billion of replacement investment for about 1 GW of capacity, likely a mix of gas or combined-cycle generation with renewables, underscoring the long-dated but material capex overhang.

Regulatory and Rate Case Outcomes Still Pending

Key rate cases in Wisconsin and Illinois remain unresolved, with final orders expected by year-end and new Wisconsin rates anticipated to take effect in 2027 and 2028. Illinois proceedings include a ramp-up of a pipe retirement program, around $200 million in 2026 scaling higher in 2027–2028, and may lead to a more regular cadence of filings in that jurisdiction.

Local Opposition Creates Targeted Development Risk

Management acknowledged localized challenges from opposition and short-term moratoria, citing issues such as the Port Washington TIF referendum and certain one-year development pauses. However, they stressed that core data center projects remain on track, characterizing the risks as project-specific rather than systemic to their broader growth plan.

Timing-Driven Earnings Boost Seen as Transient

Some of the first-quarter earnings strength was attributed to timing benefits and a roughly $0.02 gain from a planned asset sale, which management expects will reverse over the remainder of the year. Investors were cautioned not to extrapolate these short-term boosts, as the company continues to focus on underlying operational performance and regulated growth.

Guidance and Long-Term Outlook Remain Intact

WEC reaffirmed its 2026 EPS guidance of $5.51 to $5.61 per share and second-quarter EPS of $0.76 to $0.82, anchored by expected full-year electric sales growth of about 1.5%. The company reiterated its $37.5 billion five-year capital plan, including a $15 billion Vantage phase investment, ongoing renewables and storage deployments, a 7% to 8% long-term EPS CAGR from 2026 to 2030, and a disciplined financing strategy with roughly $455 million of 2026 equity already locked in.

The earnings call portrayed a utility leaning hard into structural growth from data centers and renewables while maintaining balance-sheet discipline and regulatory support. While natural gas softness, O&M inflation, and large future nuclear replacement capex present challenges, WEC’s execution, capital visibility, and dividend growth track record suggest the company is well-positioned for investors seeking steady, regulated growth exposure.