WEC Energy Group Leans Into Data Center-Fueled 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 as management balanced strong near‑term execution with an ambitious long‑term growth plan. Executives pointed to higher earnings, a robust capital program driven by data center demand, and constructive regulatory progress, while acknowledging pressure from gas volume declines, rising O&M costs, and sizable future replacement needs at Point Beach.

Q1 EPS Momentum Sets a Strong 2026 Start

WEC reported first‑quarter 2026 earnings per share of $2.45, an $0.18 improvement over the prior year’s $2.27, underscoring solid operational performance across the portfolio. Management noted that segment contributions were broadly positive and that the quarter provides a firm base for meeting full‑year targets.

Guidance Reaffirmed on Steady Earnings Trajectory

The company reaffirmed its full‑year 2026 EPS guidance range of $5.51 to $5.61, signaling confidence in earnings visibility despite known headwinds. Second‑quarter EPS is expected between $0.76 and $0.82, assuming normal weather patterns and continued disciplined cost management.

Five-Year Capital Plan Anchors Long-Term Growth

WEC laid out a $37.5 billion five‑year capital plan focused on regulated infrastructure and large‑customer growth, calling it low‑risk and highly executable. Management targets 7% to 8% annual EPS growth from 2026 through 2030, with acceleration toward the upper end of that range beginning in 2028 as more projects enter service.

Data Center Demand Fuels Capacity Expansion

Data centers were a central theme, with the Vantage campus forecast to add 1.3 GW of demand over the next five years and potentially up to 3.5 GW over time. Across all approved sites, WEC has about 3.9 GW in its five‑year plan and expects roughly 15% of its asset base to be tied to very large customers by 2030, leaving additional upside as developers pursue more acreage.

Solar and Storage Build-Out Accelerates

Renewables remain a critical pillar of the strategy, with a new solar facility placed in service in March representing roughly $225 million of capital. The Wisconsin commission also cleared three more solar projects plus a battery storage facility, together accounting for about $730 million of planned investment and enhancing both decarbonization and grid flexibility.

VLC Tariff Approval Strengthens Regulatory Framework

The Wisconsin Public Service Commission verbally approved WEC’s VLC tariff, with a written order expected soon, setting a return on equity range of 10.48% to 10.98%. The tariff includes a 57% equity layer and is designed to support large‑customer expansion while shielding traditional customers, reinforcing the company’s financial stability as it invests.

Generation Projects Bolster Reliability and Capacity

Construction is progressing on new natural gas plants at Paris and Old Creek, with combustion turbines scheduled to come online in late 2027 to meet rising load. WEC also extended the operating life of Old Creek units 7 and 8 through 2027, providing extra insurance for peak‑season reliability and affordability as demand grows.

Financing Plan De-Risks Equity Needs

Capital markets execution was a bright spot, with WEC securing approximately $455 million of common equity in the first quarter, including $430 million via at‑the‑market forward contracts. That moves the company roughly halfway toward its $1.1 billion equity requirement for 2026 and supports its goal of maintaining about a 50% equity mix on incremental capital.

Dividend Growth Streak Continues

Income investors saw further support as the board approved a 6.7% dividend increase, marking the 23rd straight year of dividend growth. Management said the raise aligns with its long‑term dividend growth target of roughly 6.5% to 7%, consistent with the anticipated EPS trajectory.

Segment Performance Shows Broad-Based Strength

Utility operations posted about a $0.17 year‑over‑year earnings gain in the first quarter, reflecting higher electric load and rate recovery. Energy Infrastructure added roughly $0.04 on the back of a full quarter from the Harden 3 solar project, while Corporate & Other and American Transmission Company contributed modest gains from tax timing and transmission investments.

Electric Sales Growth Driven by Large Customers

Weather‑normal retail electric deliveries, excluding an iron ore mine, rose 1.3% year over year, with large commercial and industrial customers up a robust 3%. Management maintained its expectation for around 1.5% electric sales growth in 2026, underscoring solid demand fundamentals as new and existing large users expand.

Natural Gas Volumes Under Pressure

In contrast, weather‑adjusted natural gas deliveries fell about 2.1% versus the prior‑year quarter, coming in modestly weaker than internal forecasts. Executives cited evolving usage patterns in metropolitan and residential markets and will watch trends closely as they balance future gas infrastructure investments.

O&M Inflation Looms Despite Early Favorability

Day‑to‑day O&M expenses were roughly $0.05 favorable in the quarter, largely driven by timing factors in maintenance and benefits. However, management cautioned that O&M is expected to rise 3% to 5% in 2026 versus 2025, and some of the early‑year savings are likely to reverse over the balance of the year.

Point Beach Replacement Represents Major Future Spend

The upcoming expiration of Point Beach power purchase agreements in 2030 and 2033 will require significant replacement capacity, estimated at $2.0 to $2.5 billion for about 1 GW. WEC is modeling solutions that could include gas‑fired combined‑cycle plants paired with renewables, framing this as a long‑dated but material capital requirement.

Pending Rate Cases Add Regulatory Uncertainty

Rate cases in Wisconsin and Illinois are still pending, with final decisions expected by year‑end and new Wisconsin rates likely effective in early 2027 and 2028. In Illinois, regulators are reviewing a stepped‑up pipe retirement program of around $200 million in 2026 and rising thereafter, and management signaled that an annual filing cadence may be necessary.

Local Opposition Poses Targeted Development Risks

The company acknowledged localized challenges, including moratoriums and issues such as the Port Washington TIF referendum, which can slow specific projects. Even so, WEC emphasized that its core data center developments remain on track and that it continues to work with communities to align economic growth with local concerns.

Timing Effects Temper Quality of Q1 Beat

Management flagged that part of the first‑quarter earnings strength reflects transient items, including deferred maintenance, benefit cost timing, and a $0.02 gain tied to a planned asset sale. These factors are expected to reverse over the rest of 2026, prompting investors to focus on underlying trends rather than over‑extrapolating the quarterly beat.

Forward Guidance Underscores Data Center and Renewables Upside

Looking ahead, WEC reaffirmed 2026 EPS guidance of $5.51 to $5.61 and second‑quarter EPS of $0.76 to $0.82, underpinned by roughly 1.5% expected electric sales growth and modestly higher O&M. The five‑year, $37.5 billion capital plan, including a $15 billion Vantage phase and about $1 billion of solar and storage projects, supports a 7% to 8% EPS CAGR from 2026 to 2030, even as the company prepares for Point Beach replacement and executes a balanced equity financing strategy.

WEC’s earnings call painted the picture of a utility leaning aggressively into data center and renewable growth while keeping its balance sheet and regulatory footing intact. Investors will need to monitor gas demand softness, rising O&M, and the large future Point Beach spend, but the combination of robust capital deployment, reliable dividend growth, and constructive regulation positions the company for durable, regulated‑driven earnings expansion.