WEC ENERGY GROUP INC

Non-Utility Energy Infrastructure Segment

The non-utility energy infrastructure segment includes We Power, which owns and leases generating facilities to WE; Bluewater, which owns underground natural gas storage facilities in Michigan; and WECI, which holds ownership interests in several renewable generating facilities. See Item 2. Properties, for more information on our non-utility energy infrastructure facilities.

W.E. Power, LLC

We Power, through wholly owned subsidiaries, designed and built approximately 2,500 MWs of generation in Wisconsin. This generation is made up of capacity from the two coal-fired ERGS units, ER 1 and ER 2, which were placed in service in February 2010 and January 2011, respectively, and the two natural gas-fired PWGS units, PWGS 1 and PWGS 2, which were placed in service in July 2005 and May 2008, respectively. Two unaffiliated entities collectively own approximately 17%, or approximately 211 MWs, of ER 1 and ER 2. We Power's share of the ERGS units and both PWGS units are being leased to WE under long-term leases (the ERGS units have 30-year leases that began on the in-service dates of the generating units and the PWGS units have 25-year leases that began on the in-service dates of the generating units). As part of our carbon emission reduction goals, we have started implementing co-firing with natural gas at the ERGS coal-fired units. For information on our carbon emission reduction goals, see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Corporate Developments.

Because of the significant investment necessary to construct these generating units, we constructed the plants under Wisconsin's Leased Generation Law, which allows a non-utility affiliate to construct an electric generating facility and lease it to the public utility. The law allows a public utility that has entered into a lease approved by the PSCW to recover fully in its retail electric rates that portion of any payments under the lease that the PSCW has allocated to the public utility's Wisconsin retail electric service, and all other costs that are prudently incurred in the public utility's operation and maintenance of the electric generating facility allocated to the utility's Wisconsin retail electric service. In addition, the PSCW may not modify or terminate a lease it has approved under the Leased Generation Law except as specifically provided in the lease or the PSCW's order approving the lease. This law effectively created regulatory certainty in light of the significant investment being made to construct the units. All four units were constructed under leases approved by the PSCW.

We are recovering our costs of these units, including subsequent capital additions, through lease payments that are billed from We Power to WE and then recovered in WE's rates as authorized by the PSCW and the FERC. Under the lease terms, our return is calculated using a 12.7% ROE and the equity ratio is assumed to be 55% for the ERGS units and 53% for the PWGS units.

Bluewater Natural Gas Holding, LLC

Bluewater, located in Michigan, primarily provides natural gas storage and hub services to our Wisconsin natural gas utilities. WE, WPS, and WG have entered into long-term service agreements for approximately one-third of their combined natural gas storage needs with a wholly owned subsidiary of Bluewater.

WEC Infrastructure LLC

At December 31, 2024, our non-utility energy infrastructure segment included WECI's ownership interests in the renewable generating facilities reflected in the table below.

(1)Although Samson I was commercially operational in May 2022, WECI didn't complete the purchase of its initial 80.0% ownership interest in this solar facility until February 2023. WECI completed the acquisition of an additional 10.0% of Samson I in January 2024, bringing its ownership interest in Samson I to 90.0%. See Note 2, Acquisitions, for more information.

Bishop Hill III, Coyote Ridge, Blooming Grove, Tatanka Ridge, Jayhawk, Thunderhead, Samson I, Sapphire Sky, Maple Flats, and Delilah I have offtake agreements with creditworthy counterparties for the sale of all of the energy they produce over periods ranging from 10 to 22 years following commercial operation. In addition, Upstream's revenue is substantially fixed over the 10-year period following commercial operation through an agreement with a creditworthy counterparty. Under the Tax Legislation, all of these investments qualify for PTCs. WECI is entitled to the tax benefits of Bishop Hill III, Upstream, Blooming Grove, Thunderhead, Samson I, Sapphire Sky, Maple Flats, and Delilah I in proportion to its ownership interest. WECI is entitled to 99% of the tax benefits of Coyote Ridge and Tatanka Ridge for the first 11 years following commercial operation, and is entitled to 99% of the tax benefits of Jayhawk for the first 10 years following commercial operation, after which WECI will be entitled to any tax benefits from these three facilities in proportion to its ownership interests. WECI recognizes PTCs as power is generated over a period of 10 years following commercial operation. Under the IRA transferability option, WEC Energy Group sold substantially all of its 2023 generated PTCs, including those generated by WECI, to a third party. In addition, WEC Energy Group has entered into agreements to sell substantially all of its 2024 generated PTCs and the majority of the PTCs expected to be generated in 2025, including PTCs generated by WECI, to third parties. See Note 1(q), Income Taxes, for more information about the impact of these sales. See Note 25, Supplemental Cash Flow Information, for more information on proceeds received in 2024 and 2023 related to the sale of PTCs.

In February 2025, WECI completed the acquisition of a 90.0% ownership interest in Hardin III, a 250 MW solar generating facility located in Hardin County, Ohio. The project has an offtake agreement for all of the energy to be produced by the facility for a period of 15 years from the date of commercial operation. Hardin III qualifies for PTCs and is included in the non-utility energy infrastructure segment.

See Note 2, Acquisitions, for more information on certain of these renewable generating facilities.

Seasonality

The electricity produced and revenues generated by our wind generating facilities depend heavily on wind conditions, which are variable. Operating results for wind generating facilities vary significantly from period to period depending on the wind conditions during the periods in question. Historically, wind production has been greater in the first and fourth quarters.

The electricity produced and revenues generated by solar generating facilities is also variable and depends heavily on seasonality and weather conditions. Spring and summer are usually the peak solar production seasons due to increased direct sunlight and longer days. With regards to weather, solar panels will still work on cloudy and rainy days, but solar system output will be lower than on clear, sunny days. Also, major storms can damage solar panels and other equipment and lead to lower power generation until equipment can be repaired or replaced and brought back online. See Note 7, Property, Plant, and Equipment, for more information on the wind storms that damaged equipment at Samson I.

Corporate and Other Segment

The corporate and other segment includes the operations of the WEC Energy Group holding company, the Integrys holding company, and the PELLC holding company, as well as the operations of Wispark and WBS. Wispark develops and invests in real estate, primarily in southeastern Wisconsin. WBS is a wholly owned centralized service company that provides administrative and general support services to our regulated entities. WBS also provides certain administrative and support services to our nonregulated entities. This segment also includes Wisvest, WECC, and PDL which no longer have significant operations.