WEC Energy Group Q2 2023 Earnings Call Transcript

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Provided by Quartr
August 1, 2023

There are 9 speakers on the call.

Operator

Afternoon, and welcome to WEC Energy Group's Conference Call for Second Quarter 2023 Results. This call is being recorded for rebroadcast and all participants are in a listen only mode at this time. 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 ks and subsequent reports filed with the Securities and Exchange Commission could cause actual results to differ materially from those contemplated.

Operator

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's my pleasure to introduce Gail Coppa, Executive Chairman of WEC Energy Group.

Speaker 1

Well, good afternoon, everyone. Thank you for joining us today as we review our results for the Q2 of 2023. First, I'd like to introduce the members of our management team who are here with me today. We have Scott Lauber, our President and Chief Executive Sha Lu, our Chief Financial Officer and Beth Straka, Senior Vice President of Corporate Communications and Investor Relations. As you saw from our news release this morning, we reported Q2 2023 earnings of $0.92 a share.

Speaker 1

After a down first quarter, Marked by one of the warmest winners on record, we delivered solid results in the Q2 and we're firmly on track for a strong 2023. Today, we're reaffirming our guidance for the year. The range is $4.58 to $4.62 a share. This, of course, assumes normal weather going forward. As always, we're focused on the fundamentals of our business, financial discipline, operating efficiency and customer satisfaction.

Speaker 1

During the Q2, we also continued to move forward on our major initiatives, including the investments outlined in our $20,100,000,000 ESG progress plan. As we've discussed, The plan is based on projects that are low risk and highly executable. We expect to quadruple the amount of renewable generation for our regulated customers, and highly efficient gas fuel capacity to ensure reliability and continue to harden our delivery networks. Scott will provide you with more detail on several specific projects in just a moment. As a reminder, we project that our ESG progress plan will drive growth in earnings per share of 6.5% to 7% a year.

Speaker 1

And as we've discussed, there is no need to issue equity for this $20,100,000,000 5 year plan. Now over the past few months, many of you have asked about the trajectory of our next 5 year plan. Our updated plan will cover the period 2024 through 2028. Of course, if growth in demand for capacity and energy drives our next capital plan significantly higher, then we'll evaluate all our financing options. In addition to incremental debt and refinancing opportunities.

Speaker 1

Our options could include accessing the equity market through our dividend reinvestment plans, employee benefit plans and at the market programs. I would stress that at this point, we do not see the need for any block equity offering. Again, as a reminder, any equity need would be driven by growth and would support our long term growth projections. As you would expect, we're on schedule with the development of our next 5 year plan. And as usual, we'll share the details with you in the fall.

Speaker 1

Now let's take a brief look. We'll switch gears and take a brief look at our regional economy. We're still seeing a very strong labor market in Wisconsin. In June, the state added 7,000 private sector jobs. The unemployment rate came in at 2.5%, well below the national average, And the labor force participation rate rose for the 4th straight month in Wisconsin to 65.3 percent, very solid numbers.

Speaker 1

We're also encouraged by the pipeline of economic activity in our region. Last quarter, you heard that Microsoft plans to make an initial investment of $1,000,000,000 to create a new data center campus. This new complex will be built south of Milwaukee in the Wisconsin Innovation Park where Foxconn is located. Microsoft has purchased 315 acres in Area 3 of the park and is moving full speed ahead. In fact, earthwork at the site began just a few days ago.

Speaker 1

So along with American Transmission Company, we're working closely in fact on a weekly basis with to determine the full extent of the energy infrastructure that will be needed to serve this development. We're excited about supporting Microsoft as the company moves forward with a major technology investment and we'll update you as the planning proceeds. With that, I'll turn the call over to Scott for more information on our regulatory developments and on our operations. Scott, all yours.

Speaker 2

Thank you, Gail. I'd like to start with a few updates on the regulatory front. In May, we filed a limited reopener to set 2024 rates for our Wisconsin Utilities. The filings address the recovery of capital investments for certain projects going into service this year and in 2024. These are renewable facilities, rice generation and LNG reliability investments.

Speaker 2

The projects have already been approved by the Wisconsin Commission. The return on equity and the equity layer are all set and are not up for consideration as part of this proceeding. We expect a decision from the commission by the end of this year. And as you recall, we have rate filings under review in Illinois for Peoples Gas and Northshore Gas. After 9 years without a base rate case at Peoples Gas, we're making these requests for 2024 to support our investments in critical infrastructure.

Speaker 2

In mid July, the staff filed its rebuttal testimony recommending a 9.83% return on equity and an equity layer of 50.83 percent for Peoples Gas. This was consistent with the initial recommendations from the staff. We expect a final decision by the end of the year. And moving to the other states, we are very pleased that we have reached a settlement agreement and our rate reviews at both Minnesota Energy Resources and Michigan Gas Utilities. The Minnesota Commission is considering a settlement that would provide a 7.1% increase in base rates.

Speaker 2

As a quick reminder, that's based on a 9.65% return on equity with an equity layer of 53%. And we're pleased to update you that in Michigan, we have reached a unanimous settlement and the details will be made public later this week. We expect final commissioned approval by the end of the year. Meanwhile, we're continuing progress on a number of regulated capital projects. At the beginning of June, we closed on our first option of West Riverside Energy Center for $95,000,000 This adds 100 megawatt of efficient combined cycle natural gas generation to our portfolio.

Speaker 2

As you recall, this plant is in operation and the purchase price was based on book value. And in the next few weeks, we plan to file a request to purchase another 100 megawatts of Riverside capacity under our remaining option. We also put 128 megawatts of new natural gas generation online last month. As you recall, we invested $170,000,000 to build this generation at our existing Weston Power Plant site in Northern Wisconsin. The facility uses 7 reciprocating internal combustion engines or as we call them, race units.

Speaker 2

Elsewhere in the state, work continues on the Badger Hollow II solar facility and the Paris and Darien Solar Battery Parks. The Badger Hollow 2 site has begun receiving panels using non Chinese polysilicon. Also, We continue to work on securing custom release of panels from a bonded warehouse in Chicago and we're still expecting Badger Hollow 2 to go into service late this year or early next year with Paris Solar Park to follow. In addition, work has begun on the Darien's solar facility, which is planned to go into service in 2024.

Speaker 1

We'll keep you posted and updated on future developments. With that, I'll turn you back to Gail. Scott, thanks very much. As you may recall, our Board of Directors at its January meeting raised our quarterly cash dividend by 7.2%. We believe this continues to rack our dividend growth in the top decile of our industry.

Speaker 1

We're targeting a payout ratio of 65% to 70% of earnings. We're right 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. Next up, Shah will provide you with more detail on our financial results and unveil our Q3 guidance. Shah, all yours.

Speaker 3

Thanks, Gail. Our 2023 second quarter earnings of $0.92 per share increased $0.01 per share compared to the Q2 of 2022. Our earnings package includes a comparison of 2nd quarter results on Page 15. I'll walk through the significant drivers. Our earnings from utility operations were $0.04 above the Q2 of 2022.

Speaker 3

First, weather had an estimated $0.05 negative impact quarter over quarter. Higher depreciation and amortization expense And interest expense added another $0.09 of negative variance. These negative variances were more than offset in the quarter. Rate based growth contributed $0.11 to earnings. This includes the base rate increase for our Wisconsin utilities as well as the interim rate increase for Minnesota Energy Resources, both of which were effective January 1, 2023.

Speaker 3

Additionally, timing of fuel expense improved our earnings by a nickel and lower day to day O and M, Taxes and other items resulted in a $0.02 improvement. Before I turn to earnings at the other segment, Let me briefly discuss our weather normalized sales for the quarter. You can find this sales information on Page 11 of the earnings package. Retail electric deliveries in Wisconsin, excluding the iron ore mine, were down 0.6% on a weather normal basis. This was driven by lower sales volumes to large commercial and industrial customers.

Speaker 3

Residential usage, Again, on a weather normal basis was flat quarter over quarter, which is in line with our forecast. Also sales to our small commercial and industrial customers were up 1.4%, which is ahead of forecast. Earnings at our Energy Infrastructure segment improved $0.02 in the Q2 of 2023 compared to the Q2 of 20 22. This was largely driven by higher production tax credit as a result of the acquisition of renewable projects. Finally, you'll see that earnings at our Corporate and Other segment decreased $0.05 primarily driven by an increase in interest expense.

Speaker 3

This was partially offset by favorable Rabbi Trust performance and some tax and other items. Remember, Rabbi Trust performance is largely offset in O and M. Overall, we improved on our 7 quarter performance by $0.01 per share compared to last year and by $0.08 per share compared to the midpoint of our Q2 guidance. Looking now at the cash flow statement on Page 6 of the earnings package. Net cash provided by operating activities was relatively flat compared to the prior year.

Speaker 3

And total capital expenditures and asset acquisitions were $2,100,000,000 during the first half of twenty twenty three, An increase of more than $1,000,000,000 from the first half of twenty twenty two. This was primarily driven by acquisition of generation projects in our regulated and infrastructure segment. Now let me give you the guidance for the Q3. We're expecting a range of $0.88 to $0.90 per share. This accounts for July weather and assumes normal weather for the rest of the quarter.

Speaker 3

As a reminder, we earned $0.96 per share in the Q3 last year, which included a positive $0.02 from weather and a $0.05 pickup related to the resolution of the MISO ROE complaint. As Gail mentioned earlier, We're reaffirming our 2023 earnings guidance of $4.58 to $4.62 per share, assuming normal weather for the rest of the year. As a reminder, largely due to timing of O and M and fuel expense, We expect earnings in Q4 to be materially better than Q4 of 2022. With that, I'll turn it back to Gail.

Speaker 1

Great, Shaw. Thank you. Overall, we're on track and focused on providing value for our customers and our stockholders. And operator, we're ready now for the question and answer portion of the call.

Operator

We will now take your questions. The question and answer session will be conducted electronically. We will take as many questions as time permits. Our first Question will come from the line of Julien Dumoulin Smith with Bank of America. Please go ahead.

Speaker 1

Hey, Julien. Julien, before we start, I know Before we start, I know a great puppy trainer, so just let me know. Julian, are you still with us?

Operator

Julian, your line is open.

Speaker 4

Can you hear me now? Darius, go for it. We can.

Operator

We can.

Speaker 5

I thought I

Speaker 1

heard a dog barking in the back

Speaker 4

there too. Sorry about that. I don't know what happened. I thought I was on mute. I'm off mute there, but I said go figure.

Speaker 4

I was

Speaker 1

just saying, Julian Julian, I was just saying that I know a great puppy trainer, so let me know.

Speaker 4

Alright. I'm going to put it duly noted, sir, duly noted. I appreciate it. And by the way, congrats guys on all the updates here, really nicely done. I mean to that effect, when you think about the settlement here in Michigan, how do you think about Illinois here and the ability to settle that out At least in part here as you get through the bulk of the hearings here in the near term.

Speaker 4

Any opportunities and also any thoughts here on the legislative side Going into 2024 for gas in Illinois as well.

Speaker 1

Okay. Appreciate the questions, Julian, very much. Tackle the first one first and that's any potential or possibility for a rate settlement in our Peoples Gas and Northshore Gas cases in Illinois. So as many of you know, the way the process really unfolds during normal rate reviews in Illinois, Historically, settlement windows really don't occur or really don't open Until the administrative law judge has prepared a draft order. And if I remember correctly, the schedule for that administrative law judge draft order Probably looks like late October, early November.

Speaker 1

Scott is agreeing that that's the case. So if there's a settlement opportunity, I think those discussions would take place probably in the November timeframe. So we'll see. Again, as Scott mentioned in his prepared remarks, The staff has reiterated its position with a 983 return on equity recommendation and an equity layer higher than what we have at Peoples Gas today. So I hope that responds to your question.

Speaker 1

And then as far as legislation related to gas in Illinois, we'll just have to see what takes place. And but first things first, we continue to work on a positive resolution of the cases currently pending before the Illinois Commerce Commission. Hope that helps, Julian.

Speaker 4

Certainly does. And then just quickly if I can, Any thoughts about converts here? I mean, I heard your opening comments, Gail. And just curious if open to following the trend across the space.

Speaker 1

As we look at our financing package that will be needed to support our new 5 year capital plan, I mean, we'll look at it. It could be part of the mix. But again, I think it really depends upon the circumstances at the time. We haven't ruled it out. We followed the companies that have used this particular financing and I think you saw one announced today as a matter of fact.

Speaker 1

So we haven't ruled it out. We haven't ruled it in, but it certainly will be part of what we look at going forward.

Speaker 4

Awesome. We'll leave it there. I'll follow-up with you, Gal. All right. Take care.

Speaker 1

Sounds good. Thanks, Julien.

Operator

Your next question will come from the line of Shar Pourreza with Guggenheim Partners. Please go ahead.

Speaker 1

Shar, you didn't do any permanent damage to Those Porsches,

Speaker 6

did you?

Speaker 4

You have to have Southern Company

Speaker 7

that, not me.

Speaker 1

Well, I noticed they're taking a charge this quarter, so I was a little worried about what you did down there.

Speaker 4

We'll have to wait for that one. I

Speaker 7

know you mentioned the Microsoft facility could be in service by late 'twenty four, early 'twenty five, which obviously that overlaps with your Should we be thinking about Microsoft related investment as something that's separate and incremental to the Current 5 year plan or is the focus on really maintaining that 7.7% asset based growth As you manage customer affordability, so in other words, so could other base spending be pushed out to make room for Microsoft related spending? Thanks.

Speaker 1

Well, great question, Shar. And first off, I don't think really just given the magnitude of the construction that Microsoft seems to be planning. My own belief is we won't see the Microsoft campus in operation in 2024. I think that's just too much of a stretch. My guess, although the company is still very much in its refining its plans, my guess is Q4 'twenty five, early 'twenty six would be my guess for the first element of the plan that Microsoft is putting together to be operational.

Speaker 1

And then secondly, to your question about would the Microsoft investment that we need to make to support their energy needs and reliability, Would that investment be incremental to the plan? Absolutely incremental to the plan. I don't think there's any question about that because it was not in our current 5 year plan. Although there are many moving pieces at this stage of the game, but I would just say this is a really positive exciting opportunity For a major new high-tech investment in our state.

Speaker 7

Okay, perfect. So we shouldn't look at it as Crowding out other base related spending as you're managing rates in the vehicle?

Speaker 1

No, absolutely. I mean, think about It's a great question, Shar, but I would think about it this way.

Speaker 7

I

Speaker 1

mean, clearly, with the way our customer rates are set, Demand from Microsoft, I mean, essentially, I mean, given the rate charges that Microsoft would receive, they will pay their fair share of whatever additional Capacity and energy is needed. So it wouldn't be a crowd out type of a factor at all in my opinion.

Speaker 7

Okay, perfect. And then just on the equity comment scale, I just want to get a little bit of a better sense on timing and then the trigger. Is it like would it be Microsoft related spending? Because I have to imagine if the facility is whatever 25, 26 Facility, the generation needs would be before that, transmission and distribution needs would be before that. So What's the trigger for incremental equity?

Speaker 7

Is it Microsoft or is there other things we should be thinking about?

Speaker 1

I think it's both. I mean, certainly, if we need to add significant capacity to support Microsoft's operation here, but there are other things going on, other economic developments That have occurred, for example, I mean we talk a lot about Haribo, but they are now up and running and they've told us they will produce £132,000,000 of of gummy bears in the next 12 month period. So there's a good bit of economic activity going on. So if you think about transmission And we're going to start to see in the next 5 year plan the impact of tranche 1 from the MISO planning process. So I think we're going to see an uptick in transmission investments.

Speaker 1

I think we're going to see clearly some additional capacity need. We need to continue to harden our distribution networks. There are a lot of moving pieces and all of them moving in a direction of a stronger capital budget. And as Scott and I have talked about, Stronger for longer in terms of our continuing growth projections.

Speaker 7

Okay, perfect. I guess we'll wait for EEI should An interesting update. And for the record, Gail, I did not crash any courses. Thanks, guys.

Speaker 1

Rock and roll, Shahriar.

Operator

Your next question will come from the line of Durgesh Chopra with Evercore ISI. Please go ahead.

Speaker 1

Hi, Grigesh. How are you doing?

Speaker 5

Hey, good afternoon, Gil. I'm doing just fine. Thanks for asking. Hey, just Shah, sorry if I missed it, but what drove the $0.08 variance versus guidance? Like what are the Kind of the tailwinds you had, which then drove the beat versus your guidance in the quarter?

Speaker 1

Shah told me it was superior management, She probably has a more granular answer.

Speaker 3

It was a little better fuel and Quite a bit better O and M, and weather was actually slightly negative compared to normal, Better fuel, better O and M and a couple of other items.

Speaker 5

Got it. So I mean, I guess in terms of The guidance for back half of the year, I'm just thinking about like how are you positioned versus your guidance there? I mean is Better O and M, versus your plan, correct?

Speaker 3

Yes. We see quite a bit of O and M tailwind coming in, in the Q4. So we'll expect To see O and M to be much better than Q4 last year, we expect fuel to be better and additional PTCs and other items, but quite a bit of O and M fuel tailwind in the Q4.

Speaker 1

And our guests, just to add on to what Shah is saying, if you recall, There were a number of very significant items in Q4 last year that will not repeat in Q4 this year. So there's a very major difference as we compare the comps for Q4 of 2022 and what we expect to happen in Q4 of this year.

Speaker 3

And remember, we guided 2% to 3% higher on day to day O and M this year compared to last year. So you see some quarter to quarter variances, but for the year, we still expect that to be 2% to 3% higher than last year.

Speaker 5

Understood. Thanks for all that additional color. Maybe just Shahad, just I know we recently talked about Transferability and the implications to FFO and there was a lot of discussion amongst your peers on How that needs to be how that should be treated? Maybe just any additional color or thoughts there, progress you're making with other stakeholders How are you going to treat the transferability as cash flow?

Speaker 1

We'll ask Sean to give you The detail on this, but I would say one very important point to kind of kick off the answer is that our entire industry is really aligned around what we believe is the proper treatment of these ongoing transfers that will happen across the industry, the ongoing sale of production tax credits. And that alignment across the industry has really resulted in, I think, a very thorough and very solid white paper.

Speaker 3

Yes. EEI developed a very comprehensive white paper, really outlined the views from FASB, from the The 4 accounting firms from the over like Gil said, the industry. So they shared the white paper with the rating agencies. And all that is to say, I think everybody is aligned in terms of, we plan to follow GAAP And the transferability would go through income tax provision on income statement, therefore, would be picked up as FFO. So we are looking forward to continuing to work with the rating agencies on this issue.

Speaker 3

I will say though We would not issue equity just to address that transferability item. So that's something we'll continue to work with rating agencies

Speaker 5

Got it. Thanks. So it sounds like discussion is underway there. Appreciate that color as well. Thank you, guys.

Speaker 1

Take care, Durgesh.

Operator

Our next question will come from the line of Anthony Krowdell with Mizuho. Please go ahead.

Speaker 6

Good afternoon, Gail, Shaw, Scott. Hello? No dogs, no Porsches, but plenty of gummy bears here. Just maybe 2 housekeeping items I had on the PDF page 12 of your release. Just curious if you could give us some more color.

Speaker 6

The decline in large commercial industrial sales and maybe I have the wrong view. I typically view them as maybe like weather agnostic, but yet They've come in 3%. Just thoughts on that?

Speaker 1

Yes, a couple of thoughts and we'll ask Shah to give you some chapter and verse on some But two things that as we've looked at the data and again we have a very granular break So let me first say, most people, Just as you mentioned, Anthony, look at large commercial and industrial as fairly weather insensitive, fairly as you said, fairly weather agnostic. I will say though, and you've heard me say this a gazillion times, the weather normalization is more precise than accurate. And as we look at kind of the backdrop of the economy in Wisconsin, as we look at the jobs that have been added and as we kind of look at the industrial sectors, I would describe the industrial economy in Wisconsin for the first half of twenty twenty three is really fairly flat. There were a couple of major customers who had outages, planned outages, etcetera, that affected the numbers. But the 3% seems on a weather normal basis seems a little draconian to me.

Speaker 1

I think Scott and I and Shah have already Work through this and we kind of look at it as kind of first half flat. But having said that, the most recent data It's pretty encouraging. Shao?

Speaker 3

Yes. Just to put it in perspective, in Q1, we saw a minus 3.9% quarter over quarter. Q2, that number became better to minus 3.1 like you pointed out, Anthony. I think if you look at Q2 by month, June was fairly close to the forecast. If you look at the last 4 weeks compared to the last 13 weeks or even the prior 4 weeks, We're seeing lots of green.

Speaker 3

Actually, everything was picking up. So we are very cautiously optimistic That's the large C and I will come back in the second half of the year. So nothing to worry too much about. And I would Just say that, our residential is pretty flat year over year and but it's fairly Better than prior to COVID and that's the sticky point on the residential usage. Small C and I Actually year to date is on par with last year.

Speaker 3

So those are higher margin segments.

Speaker 6

Great. And then just lastly, you've been very clear on what would cause you to issue more equity. Shaw, you had said it's not so much to If it was to I don't want to say put the words in your mouth, but like the credit agency, it's more for growth. Is it fair to say that if you got to the point where there was more growth that had to be financed that you would finance that cap structure that's probably Equal to what you have at the regulated utilities or is there an opportunity that you would look to over equitize, I guess, is the term someone using if you had the additional to

Speaker 3

I think the first and foremost is that we're So developing the capital plan, so the numbers are we're still developing it. But like Gil said in his prepared remarks, If growth capital growth is significantly higher, we wouldn't mind turning on the employee benefit Plans, the dribble plans and rely on maybe ATM, but we don't see any block sales at this point, number 1. Number 2, We are very confident in our long term EPS growth forecast. We don't expect any equity sales to Dilute the long term EPS growth. And I'll also say that we're very mindful about the rating agencies and we want to work with them,

Speaker 1

And very good Description that Charles just made. I will say, she also mentioned and I would just reiterate, for the one item On FFO to debt that might affect a rating at one particular agency, we wouldn't issue equity simply to chase that particular item.

Speaker 3

That's the transferability. Tax transferability. Yes.

Speaker 6

Great. Thanks for the clarity. And again, congrats on a great quarter.

Speaker 1

Great. Thank you. Good to see you.

Operator

Your next question will come from the line of Michael Sullivan with Wolfe Research. Please go ahead.

Speaker 1

Rock and roll, Michael. How are you doing?

Speaker 8

Hey, Gal. I'm doing great. Thanks. Wanted to just circle back to the Microsoft and just What you're seeing in terms of long term sales growth potential there? And then maybe if you could just compare and contrast What this looks like relative to there was a lot of excitement around the Foxconn build out a couple of years ago.

Speaker 8

I know Different companies, different situations, but just in terms of how you think about that from a planning standpoint with another Big name company coming to your service territory.

Speaker 1

Yes, great question, Michael. Let me just phrase it this way. I think we will certainly know by the fall and certainly in time for our new 5 year capital plan What the next what the time period between now and say 20, 2030 will look like in terms of Microsoft's capacity and energy needs. I mentioned in my prepared remarks, they are full speed ahead. I mean they purchased the 315 acres In a very short period of time in that technology park, earthwork has already begun.

Speaker 1

They are still refining their plans. But everything we're hearing from Microsoft would indicate that They're planning a very major investment here, and they need to do it in a relatively short timeframe. So there's really no question in our minds about How strong the intention and how strong the momentum is from the Microsoft development. As it relates to Foxconn, Well, back in 2017, they announced a long term very, very significant plan. They were talking about 10,000 jobs Over 10 to 12 years or 10 to 13 years, they were talking about $10,000,000,000 of investment.

Speaker 1

At this stage of the game, Fox Foxconn, which is working in Area 1 of that park. Foxconn has invested over $1,000,000,000 and has over 1,000 employees. So while they have been slower to ramp up and their business plan has changed almost completely from the original thinking, they are still growing in that area. But Microsoft's, I think they're really not talking at the moment about a long term 10 to 15 year plan like Foxconn was. They're talking about at least at the beginning here, they've called it an initial investment that they really want to get moving on and that would affect our next 5 year capital plan.

Speaker 1

Does that respond to your question, Michael?

Speaker 8

Yes, super helpful. And just as a follow on, I think someone asked earlier or there's been a couple of questions around new capacity needs and new generation that you might have to build. And Given the quick turnaround time is further delaying any currently planned retirements contemplated at all if things were looking Kind of tight from a timeframe perspective.

Speaker 1

Well, it's a great question and we're looking at all of that. We'll let Scott give you his view on that.

Speaker 2

So we're going it's a great question. We're going through the planning process right now. We're evaluating what our capacity needs are and you know MISO has changed its capacity needs over the seasonal approach too, which will also affect our Capital plans as we look at it this fall. So right now, nothing to announce. We're just going through the analysis.

Speaker 1

Scott has made a really good point that we shouldn't gloss over though and that is as MISO has looked at its responsibility to ensure reliability, They really are changing their capacity rules that all of us need to abide by, and it will have a we believe it will have a particular effect on our winter capacity reserves and that's all being factored into our new 5 year capital plan.

Speaker 2

Got it.

Speaker 8

Okay. Very helpful. Thanks. Thanks a

Speaker 1

lot. Take care, Michael.

Operator

With that, I'll turn the call back over to Gail Kwappa for any closing remarks.

Speaker 1

Terrific. Well, that concludes our conference call for today. Thanks so much for being with us. If you have any additional questions, feel free to call Beth Straka. She can be reached most days, no, every day at 414-221 4639.

Speaker 1

Thanks everybody. Take care.

Operator

That will conclude today's call. Thank you all for joining. You may now disconnect.

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