WEC Energy Group Inc.
10/30/2026 | Press release | Distributed by Public on 10/30/2026 05:36
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CORPORATE DEVELOPMENTS
The following discussion should be read in conjunction with the accompanying unaudited financial statements and related notes and our 2025 Annual Report on Form 10-K.
Introduction
We are a diversified holding company with natural gas and electric utility operations (serving customers in Wisconsin, Illinois, Michigan, and Minnesota), an approximately 60% equity ownership interest in ATC (a for-profit electric transmission company regulated by the FERC and certain state regulatory commissions), and non-utility energy infrastructure operations through We Power (which owns generation assets in Wisconsin that it leases to WE), Bluewater (which owns underground natural gas storage facilities in Michigan), and WECI (which holds ownership interests in several renewable generating facilities).
Corporate Strategy
We are working to build and sustain long-term value for our shareholders and customers by supporting economic growth in our region while focusing on the fundamentals of our business: reliability, operating efficiency, financial discipline, environmental stewardship, exceptional customer care, and safety. Our capital plan provides a roadmap for us to achieve this goal. It is a plan premised upon maintaining superior reliability, delivering savings for customers, and growing our investment in the future of energy.
Throughout our strategic planning process, we take into account important developments, risks and opportunities, including new technologies, customer preferences and affordability, energy resiliency efforts, and sustainability.
Supporting Economic Growth Within Our Communities
Economic growth continues in our Wisconsin service territories. Companies are investing in major projects, including data centers and modern manufacturing facilities. We anticipate electric demand growth in the years ahead from these economic developments. Microsoft has announced plans to invest over $20 billion in data centers in southeastern Wisconsin over the next several years, and we expect up to 3.2 GWs of load growth in the Milwaukee-to-Chicago corridor through 2031. The first phase of the project went into service in April 2026. Additionally, Vantage Data Centers is developing a large data center campus in Port Washington that is forecasted to add 1.3 GWs of demand through 2031. This site has the potential to add an incremental 2.2 GWs, for a total of up to 3.5 GWs over time. We are working closely with these large customers to provide power to meet this substantial projected demand. In May 2026, the PSCW approved new VLC and Bespoke Resources tariffs, which specifically address the unique needs of VLCs while protecting our other customers and shareholders. Subsequent to its approval, Microsoft entered into a service agreement to obtain service under the VLC tariff. See Note 24, Regulatory Environment, for more information on the VLC and Bespoke Resources tariffs.
To meet the forecasted electric demand growth in the years ahead, greater capacity will be required to provide affordable, reliable, and clean energy for our communities. In August 2026, we entered into an agreement to extend the PPA for the Point Beach nuclear power plant, which will allow us to continue purchasing approximately 1,000 MWs of capacity for an additional 20 years beyond the current agreement. This new agreement is subject to PSCW approval and if approved, will not take effect until the current PPA expires in 2030 for Unit 1 and 2033 for Unit 2. The forecasted demand growth is also addressed in our capital plan with a range of planned investments in natural gas-fired generation, renewables, and battery storage. We plan on investing approximately $9.4 billion from 2027 to 2031 in efficient natural gas-fired generation and related infrastructure, including:
•3,540 MWs of CTs and reciprocating internal combustion engine natural gas-fueled generation (we plan on constructing a new natural gas lateral pipeline to support the CTs planned at our OCPP site);
•750 MWs of combined cycle gas turbines; and
•200 MWs of combined cycle gas turbine summer upgrades.
We expect to invest approximately $13.7 billion from 2027 to 2031 in regulated renewable energy in Wisconsin. Our plan is to build and own zero-carbon-emitting renewable generation facilities that are anticipated to include the following investments:
•3,100 MWs of utility-scale solar;
•3,450 MWs of battery storage; and
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
•600 MWs of wind.
For more details on the projects discussed above, see Liquidity and Capital Resources - Cash Requirements - Significant Capital Projects.
Our capital plan also reflects the planned retirement of our older, fossil-fueled generation, which we expect to replace with the natural gas-fired generation and zero-carbon-emitting renewables discussed above. Our long-term goal is to achieve net carbon neutral electric generation by the end of 2050. We expect to achieve this goal by continuing to make operating refinements, retiring less efficient generating units, and executing our capital plan.
As part of our path toward this goal, we have started implementing co-firing with natural gas at the ERGS coal-fired units and at Weston Unit 4. Additionally, we have retired nearly 2,500 MWs of fossil-fueled generation since the beginning of 2018, which includes the retirement of OCPP Units 5 and 6 in May 2024, the 2019 retirement of the Presque Isle Power Plant, and the 2018 retirements of the Pleasant Prairie power plant, the J.P. Pulliam Generating power plant, and the jointly-owned Edgewater Generating Station Unit 4. We expect to retire additional coal-fired generation, including OCPP Units 7 and 8. See Note 7, Property, Plant, and Equipment, for more information related to the planned retirement of OCPP Units 7 and 8. We and the other co-owners of Columbia Units 1 and 2 currently plan to continue coal operations at these units through at least 2030.
When taken together, the retirements and new investments in natural gas generation and renewables should better balance our supply with our demand, while helping to maintain reliable, affordable energy for our customers.
We also continue to focus on methane emission reductions by improving and upgrading our natural gas distribution systems and using RNG throughout our natural gas utility systems. In 2023, we began transporting the output of local dairy farms onto our natural gas distribution systems in Wisconsin. The RNG supplied is replacing higher-emission methane from natural gas that would have entered our pipes. We currently have contracts in place for 2.1 Bcf of RNG.
Reliability
We have made significant reliability-related investments in recent years, and in accordance with our capital plan, expect to continue strengthening and modernizing our generation fleet, as well as our electric and natural gas distribution networks to further improve reliability.
Below are a few of the more significant projects that are proposed, currently underway, or recently completed.
•The PSCW approved WE's request to construct an LNG facility with a storage capacity of two Bcf, which will be located on the OCPP site. In addition, the construction of additional LNG facilities in Wisconsin has been proposed as part of our capital plan and would provide another approximately two Bcf of natural gas supply. The LNG facilities are expected to reduce the likelihood of constraints on our natural gas distribution system during the highest demand days of winter.
•PGL had been working to replace old iron pipes and facilities in Chicago's natural gas delivery system with modern polyethylene pipes to reinforce the long-term safety and reliability of the system. In November 2023, the ICC ordered PGL to pause spending on these projects until the ICC completed a proceeding to determine the optimal method for replacing aging natural gas infrastructure and a prudent investment level. In February 2025, the ICC issued an order setting expectations for PGL's prospective retirement of its aging natural gas infrastructure. The ICC directed PGL to focus on retiring all cast and ductile iron pipes that have a diameter of less than 36 inches by January 1, 2035. PGL is working to retire this cast and ductile iron pipe through its PRP. For more information, see Note 24, Regulatory Environment, and Factors Affecting Results, Liquidity, and Capital Resources - Regulatory, Legislative, and Legal Matters - Illinois Proceeding - Replacement of Aging Natural Gas Infrastructure.
•Our capital plan includes investments in battery energy storage systems, which are intended to capture excess power and release it during peak demand or when power is limited due to weather or other unexpected disruptions.
•Our utilities continue to upgrade their electric and natural gas distribution systems to enhance reliability and storm hardening.
We expect to spend approximately $7.6 billion and $5.2 billion on reliability related to natural gas and electric distribution projects, respectively, from 2027 to 2031, with continued investment over the next decade. For more details, see Liquidity and Capital Resources - Cash Requirements - Significant Capital Projects.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
Operating Efficiency
We continually look for ways to optimize the operating efficiency of our Company and will continue to do so under our capital plan. For example, we continue to make progress on our advanced metering infrastructure program, replacing aging meter-reading equipment on both our network and customer property. An integrated system of smart meters, communication networks, and data management programs enables two-way communication between our utilities and our customers. This program reduces the manual effort for customer connections and enhances outage management capabilities.
Through our multiyear Energy Delivery Program, we are planning to implement capabilities and standard processes for customer service, natural gas and electric operations, work management, and field operations. This includes improvements to outage management, geographic information systems, and work and asset management systems, as well as the implementation of new capabilities through advanced distribution management systems.
We continue to focus on integrating the resources of all our businesses and improving our business processes to find the best and most efficient processes possible, including evaluating the use of AI tools. We expect these efforts to continue to drive operational efficiency and to put us in a position to effectively support plans for future growth.
Financial Discipline
A strong adherence to financial discipline is essential to meeting our earnings projections and maintaining a strong balance sheet, stable cash flows, a growing dividend, and quality credit ratings. We work to earn allowed rates of return through a focus on cost control and strategic investment.
Our planned investment focus from 2027 to 2031 is in our regulated utilities and our investment in ATC. We expect total capital expenditures for our regulated utility businesses to be approximately $42.2 billion from 2027 to 2031. In addition, we currently forecast that our share of ATC's projected capital expenditures over the next five years will be approximately $5.3 billion. For additional information regarding projects included in our $47.5 billion capital plan, see Liquidity and Capital Resources - Cash Requirements - Significant Capital Projects.
We follow an asset management strategy that focuses on investing in and acquiring assets consistent with our strategic plans, as well as disposing of assets, including property, plants, equipment, and entire business units, that are no longer strategic to operations, are not performing as intended, or have an unacceptable risk profile. See Note 2, Acquisitions, and Note 3, Disposition, for additional information on our recent and pending transactions.
Exceptional Customer Care
Our approach is driven by an intense focus on delivering exceptional customer care every day. We strive to provide the best value for our customers by demonstrating personal responsibility for results, leveraging our capabilities and expertise, and using creative solutions to meet or exceed our customers' expectations.
A multiyear effort is driving a standardized, seamless approach to digital customer service across our companies. We have moved all utilities to a common platform for all customer-facing self-service options. Using common systems and processes reduces costs, provides greater flexibility and enhances the consistent delivery of exceptional service to customers.
Safety
Safety is one of our core values and a critical component of our culture. We are committed to keeping our employees and the public safe through a comprehensive corporate safety program that focuses on employee engagement and elimination of at-risk behaviors. To further protect public safety, we monitor the integrity of our distribution systems, have emergency response and business continuity plans in place, and provide key safety information to customers, contractors, and first responders.
Under our "Target Zero" mission, we have an ultimate goal of zero incidents, accidents, and injuries. Management and union leadership work together to reinforce the Target Zero culture. We set annual goals for safety results as well as measurable leading indicators, in order to raise awareness of at-risk behaviors and situations and guide injury-prevention activities. All employees are
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
encouraged to report unsafe conditions or incidents that could have led to an injury. Injuries and tasks with high levels of risk are assessed, and findings and best practices are shared across our companies.
Our corporate safety program provides a forum for addressing employee concerns, training employees and contractors on current safety standards, and recognizing those who demonstrate a safety focus.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2026
Consolidated Earnings
The following table compares our consolidated results for the third quarter of 2026 with the third quarter of 2025, including favorable or better, "B", and unfavorable or worse, "W", variances:
| Three Months Ended September 30 | ||||||||||||||||||||
| (in millions, except per share data) | 2026 | 2025 | B (W) | |||||||||||||||||
| Wisconsin | $ | 361.7 | $ | 281.3 | $ | 80.4 | ||||||||||||||
| Illinois | (21.2) | (30.5) | 9.3 | |||||||||||||||||
| Other states | (8.8) | (8.9) | 0.1 | |||||||||||||||||
| Electric transmission | 46.3 | 37.3 | 9.0 | |||||||||||||||||
| Non-utility energy infrastructure | 92.8 | 87.9 | 4.9 | |||||||||||||||||
| Corporate and other | (81.5) | (95.8) | 14.3 | |||||||||||||||||
| Net income attributed to common shareholders | $ | 389.3 | $ | 271.3 | $ | 118.0 | ||||||||||||||
| Diluted EPS | $ | 1.18 | $ | 0.83 | $ | 0.35 | ||||||||||||||
Earnings increased $118.0 million during the third quarter of 2026, compared with the same quarter in 2025. The $118.0 million increase in earnings was driven by:
•An $80.4 million increase in net income attributed to common shareholders at the Wisconsin segment, driven by higher margins due to the impact of the Wisconsin rate orders approved by the PSCW, effective January 1, 2026, higher retail sales volumes due to warmer summer weather and the impact of our VLCs, and carrying costs earned during the third quarter of 2026 on the construction of certain Bespoke Resources assigned to our VLCs. See Note 26, Regulatory Environment, in our 2025 Annual Report on Form 10-K, for more information on our Wisconsin rate orders. Higher AFUDC-Equity and increases in certain income tax benefits also contributed to the higher earnings. These positive impacts were partially offset by higher operating expenses, primarily due to an increase in regulatory amortizations and other pass through expenses, an increase in transmission expense, and higher depreciation and amortization expense. These increases in operating expenses were partially offset by lower benefit expense.
•A $14.3 million decrease in the net loss attributed to common shareholders at the corporate and other segment, driven by a decrease in an interim income tax expense recorded to adjust consolidated income tax expense to the projected, annualized consolidated effective income tax rate. Net earnings from our equity method investments in technology and energy-focused investment funds during the third quarter of 2026, compared with net losses during the same quarter in 2025 also contributed to the lower net loss attributed to common shareholders.
•A $9.3 million decrease in the net loss attributed to common shareholders at the Illinois segment, driven by lower benefit expense and an increase in revenues related to higher fixed charges.
•A $9.0 million increase in net income attributed to common shareholders at the electric transmission segment, driven by continued capital investment by ATC.
Non-GAAP Financial Measures
The discussions below address the contribution of each of our utility segments to net income attributed to common shareholders. The discussions include financial information prepared in accordance with GAAP, as well as utility margin, which is not a measure of
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
financial performance under GAAP. Utility margin (operating revenues less fuel and purchased power costs and cost of natural gas sold) is a non-GAAP financial measure because it excludes certain operation and maintenance expenses applicable to revenues, as well as depreciation and amortization and property and revenue taxes.
We believe that utility margin provides a useful basis for evaluating utility operations since the majority of prudently incurred fuel and purchased power costs, as well as prudently incurred natural gas costs, are passed through to customers in current rates. As a result, management uses utility margin internally when assessing the operating performance of our utility segments as these measures exclude the majority of revenue fluctuations caused by changes in these expenses. Similarly, the presentation of utility margin herein is intended to provide supplemental information for investors regarding our operating performance.
Our utility margin may not be comparable to similar measures presented by other companies. Furthermore, this measure is not intended to replace gross margin as determined in accordance with GAAP as an indicator of operating performance. Each of our three utility segment discussions below include a table that provides the calculation of both gross margin as determined in accordance with GAAP and utility margin, as well as a reconciliation between the two measures.
Wisconsin Segment Contribution to Net Income Attributed to Common Shareholders
The Wisconsin segment's contribution to net income attributed to common shareholders was $361.7 million during the third quarter of 2026, representing an $80.4 million, or 28.6%, increase over the same quarter in 2025. The increase in earnings was driven by higher margins due to the impact of the Wisconsin rate orders approved by the PSCW, effective January 1, 2026, higher retail sales volumes due to warmer summer weather and the impact of our VLCs, and carrying costs earned during the third quarter of 2026 on the construction of certain Bespoke Resources assigned to our VLCs. See Note 26, Regulatory Environment, in our 2025 Annual Report on Form 10-K, for more information on our Wisconsin rate orders. Higher AFUDC-Equity and increases in certain income tax benefits also contributed to the higher earnings. These positive impacts were partially offset by higher operating expenses, primarily due to an increase in regulatory amortizations and other pass through expenses, an increase in transmission expense, and higher depreciation and amortization expense. These increases in operating expenses were partially offset by lower benefit expense.
| Three Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operating revenues | $ | 1,964.7 | $ | 1,791.6 | $ | 173.1 | ||||||||||||||
| Operating expenses | ||||||||||||||||||||
|
Cost of sales (1)
|
609.4 | 578.2 | (31.2) | |||||||||||||||||
| Other operation and maintenance | 479.3 | 443.7 | (35.6) | |||||||||||||||||
| Depreciation and amortization | 271.8 | 255.7 | (16.1) | |||||||||||||||||
| Property and revenue taxes | 49.0 | 44.5 | (4.5) | |||||||||||||||||
| Operating income | 555.2 | 469.5 | 85.7 | |||||||||||||||||
| Other income, net | 43.6 | 25.0 | 18.6 | |||||||||||||||||
| Interest expense | 175.0 | 158.9 | (16.1) | |||||||||||||||||
| Income before income taxes | 423.8 | 335.6 | 88.2 | |||||||||||||||||
| Income tax expense | 61.8 | 54.0 | (7.8) | |||||||||||||||||
| Preferred stock dividends of subsidiary | 0.3 | 0.3 | - | |||||||||||||||||
| Net income attributed to common shareholders | $ | 361.7 | $ | 281.3 | $ | 80.4 | ||||||||||||||
(1) Cost of sales includes fuel and purchased power and cost of natural gas sold.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
The following table shows a breakdown of other operation and maintenance:
| Three Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operation and maintenance not included in line items below | $ | 189.3 | $ | 214.7 | $ | 25.4 | ||||||||||||||
|
Transmission (1)
|
163.7 | 146.2 | (17.5) | |||||||||||||||||
|
Regulatory amortizations and other pass through expenses (2)
|
81.6 | 51.7 | (29.9) | |||||||||||||||||
|
We Power (3)
|
30.6 | 31.9 | 1.3 | |||||||||||||||||
|
Earnings sharing mechanisms (4)
|
14.1 | (0.8) | (14.9) | |||||||||||||||||
| Total other operation and maintenance | $ | 479.3 | $ | 443.7 | $ | (35.6) | ||||||||||||||
(1)Represents transmission expense that our electric utilities are authorized to collect in rates. The PSCW has approved escrow accounting for ATC and MISO network transmission expenses for WE and WPS. As a result, WE and WPS defer as a regulatory asset or liability, the difference between actual transmission costs and those included in rates until recovery or refund is authorized in a future rate proceeding. During the third quarter of 2026 and 2025, $184.4 million and $157.9 million, respectively, of costs were billed to our electric utilities by transmission providers.
(2)Regulatory amortizations and other pass through expenses are substantially offset in margins and therefore do not have a significant impact on net income.
(3)Represents costs associated with the We Power generation units, including operating and maintenance costs recognized by WE. During the third quarter of 2026 and 2025, $28.2 million and $29.0 million, respectively, of costs were billed to or incurred by WE related to the We Power generation units, with the difference in costs billed or incurred and expenses recognized, either deferred or deducted from the regulatory asset or liability.
(4) Represents operation and maintenance associated with the earnings mechanisms we have in place, both the current year sharing estimate and the amortization of prior year amounts. See Note 26, Regulatory Environment, in our 2025 Annual Report on Form 10-K, for more information.
The following tables provide information on delivered sales volumes by customer class and weather statistics:
| Three Months Ended September 30 | ||||||||||||||||||||
|
Electric Sales Volumes (MWh - in thousands)
|
2026 | 2025 | B (W) | |||||||||||||||||
| Customer Class | ||||||||||||||||||||
| Residential | 3,510.8 | 3,339.2 | 171.6 | |||||||||||||||||
|
Small commercial and industrial (1)
|
3,679.5 | 3,555.8 | 123.7 | |||||||||||||||||
|
Large commercial and industrial (1)
|
3,640.0 | 3,239.0 | 401.0 | |||||||||||||||||
| Other | 23.1 | 25.5 | (2.4) | |||||||||||||||||
|
Total retail (1)
|
10,853.4 | 10,159.5 | 693.9 | |||||||||||||||||
| Wholesale | 465.1 | 476.1 | (11.0) | |||||||||||||||||
| Resale | 1,481.5 | 1,667.8 | (186.3) | |||||||||||||||||
|
Total sales in MWh (1)
|
12,800.0 | 12,303.4 | 496.6 | |||||||||||||||||
(1)Includes distribution sales for customers who have purchased power from an alternative electric supplier in Michigan.
| Three Months Ended September 30 | ||||||||||||||||||||
|
Natural Gas Sales Volumes (Therms - in millions)
|
2026 | 2025 | B (W) | |||||||||||||||||
| Customer Class | ||||||||||||||||||||
| Residential | 56.7 | 58.5 | (1.8) | |||||||||||||||||
| Commercial and industrial | 56.7 | 60.7 | (4.0) | |||||||||||||||||
| Total retail | 113.4 | 119.2 | (5.8) | |||||||||||||||||
| Transportation | 283.8 | 274.2 | 9.6 | |||||||||||||||||
| Total sales in therms | 397.2 | 393.4 | 3.8 | |||||||||||||||||
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
| Three Months Ended September 30 | ||||||||||||||||||||
|
Weather (Degree Days) (1)
|
2026 | 2025 | B (W) | |||||||||||||||||
|
WE and WG
|
||||||||||||||||||||
|
Heating (90 Normal)
|
69 | 68 | 1.5 | % | ||||||||||||||||
|
Cooling (530 Normal)
|
606 | 574 | 5.6 | % | ||||||||||||||||
|
WPS
|
||||||||||||||||||||
|
Heating (168 Normal)
|
128 | 163 | (21.5) | % | ||||||||||||||||
|
Cooling (387 Normal)
|
463 | 469 | (1.3) | % | ||||||||||||||||
|
UMERC
|
||||||||||||||||||||
|
Heating (290 Normal)
|
200 | 261 | (23.4) | % | ||||||||||||||||
|
Cooling (259 Normal)
|
331 | 270 | 22.6 | % | ||||||||||||||||
(1)Normal degree days are based on a 20-year moving average of monthly temperature readings from National Oceanic and Atmospheric Administration weather stations within each company's respective service territories.
Gross Margin GAAP and Utility Margin Non-GAAP
The following table summarizes our Wisconsin segment gross margin (GAAP) and reconciles gross margin (GAAP) to utility margin (non-GAAP). See Non-GAAP Financial Measures above for additional information regarding gross margin (GAAP) and utility margin (non-GAAP).
| Three Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Electric revenues | $ | 1,808.3 | $ | 1,611.0 | $ | 197.3 | ||||||||||||||
| Natural gas revenues | 156.4 | 180.6 | (24.2) | |||||||||||||||||
| Operating revenues | 1,964.7 | 1,791.6 | 173.1 | |||||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Fuel and purchased power | (559.1) | (502.4) | (56.7) | |||||||||||||||||
| Cost of natural gas sold | (50.3) | (75.8) | 25.5 | |||||||||||||||||
|
Other operation and maintenance (1)
|
(309.0) | (315.5) | 6.5 | |||||||||||||||||
| Depreciation and amortization | (271.8) | (255.7) | (16.1) | |||||||||||||||||
| Property and revenue taxes | (49.0) | (44.5) | (4.5) | |||||||||||||||||
| Gross margin (GAAP) | 725.5 | 597.7 | 127.8 | |||||||||||||||||
|
Other operation and maintenance (1)
|
309.0 | 315.5 | (6.5) | |||||||||||||||||
| Depreciation and amortization | 271.8 | 255.7 | 16.1 | |||||||||||||||||
| Property and revenue taxes | 49.0 | 44.5 | 4.5 | |||||||||||||||||
| Utility margin (non-GAAP) | $ | 1,355.3 | $ | 1,213.4 | $ | 141.9 | ||||||||||||||
(1) Operating and maintenance expenses deemed to be directly attributable to our revenue-producing activities include plant operating and maintenance expenses related to our generating units; costs associated with the We Power generating units; and transmission, distribution and customer service expenses. These expenses are included in the above table to calculate gross margin as defined under GAAP.
Gross margin (GAAP) at the Wisconsin segment increased $127.8 million during the third quarter of 2026, compared with the same quarter in 2025, and utility margin (non-GAAP) increased $141.9 million during the third quarter of 2026, compared with the same quarter in 2025. Both measures were driven by:
•A $54.8 million increase in margins driven by the impact of the Wisconsin rate orders approved by the PSCW, effective January 1, 2026. See Note 26, Regulatory Environment, in our 2025 Annual Report on Form 10-K, for more information.
•A $47.5 million net increase in margins related to higher electric retail sales volumes, driven by a $24.3 million increase from warmer summer weather. As measured by cooling degree days, the third quarter of 2026 was 5.6% warmer than the same quarter in 2025 in the combined WE and WG service area. In addition, margins related to weather-normalized customer growth increased $23.2 million, driven by the impact of our VLCs.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
•A current return of $38.3 million consisting of carrying costs earned during the construction of certain Bespoke Resources assigned to our VLCs during the third quarter of 2026. See Note 4, Operating Revenues, for more information.
Additionally, the smaller increase in gross margin (GAAP) as compared with the increase in utility margin (non-GAAP), was driven by the following items that are further described in Other Operating Expenses below:
•A $17.5 million increase in transmission expense;
•A $16.1 million increase in depreciation and amortization expense;
•A $9.0 million increase in electric and natural gas distribution expense; and
•A partially offsetting $13.7 million decrease in other operating and maintenance related to our power plants.
Other Operating Expenses (includes other operation and maintenance, depreciation and amortization, and property and revenue taxes)
Other operating expenses at the Wisconsin segment increased $56.2 million during the third quarter of 2026, compared with the same quarter in 2025. The significant factors impacting the increase in other operating expenses were:
•A $29.9 million increase in regulatory amortizations and other pass through expenses, as discussed in the notes under the other operation and maintenance table above.
•A $17.5 million increase in transmission expense as approved by the PSCW in our Wisconsin rate orders, effective January 1, 2026. See the notes under the other operation and maintenance table above for more information.
•A $16.1 million increase in depreciation and amortization expense, driven by assets being placed into service as we continue to execute on our capital plan.
•A $14.9 million increase in expense related to the earnings sharing mechanisms in place at our Wisconsin utilities, driven by earnings sharing recorded at WE during the third quarter of 2026. The earnings sharing mechanisms are discussed in the notes under the other operation and maintenance table above.
•A $9.0 million increase in electric and natural gas distribution expenses, driven by higher costs to maintain the distribution systems and an increase in storm costs during the third quarter of 2026, compared with the same quarter in 2025.
These increases were partially offset by the following:
•A $28.2 million decrease in benefit expenses, driven by various employee compensation plans.
•A $13.7 million decrease in other operating and maintenance related to our power plants during the third quarter of 2026, compared with the same quarter in 2025, driven by a reduction in allowed expense for OCPP and Columbia under escrow accounting, as approved by the PSCW in our Wisconsin rate orders.
Other Income, Net
Other income, net at the Wisconsin segment increased $18.6 million during the third quarter of 2026, compared with the same quarter in 2025, driven by a $19.7 million positive impact from higher AFUDC-Equity due to continued capital investment.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
Interest Expense
Interest expense at the Wisconsin segment increased $16.1 million during the third quarter of 2026, compared with the same quarter in 2025. The increase was primarily due to the impact of long-term debt issuances in the fourth quarter of 2025 and 2026. This increase was partially offset by AFUDC-Debt that was $8.8 million higher quarter-over-quarter due to continued capital investment, and the impact of long-term debt maturities in 2025.
Income Tax Expense
Income tax expense at the Wisconsin segment increased $7.8 million during the third quarter of 2026, compared with the same quarter in 2025, driven by higher pre-tax income.
Partially offsetting this increase in income tax expense was:
•A $5.3 million favorable income tax impact associated with certain tax-related regulatory deferrals;
•A $5.4 million increase in PTCs and ITCs; and
•A $3.6 million increase in income tax benefits associated with AFUDC-Equity, driven by continued capital investment.
See Note 13, Income Taxes, for more information.
Illinois Segment Contribution to Net Income Attributed to Common Shareholders
The Illinois segment's net loss attributed to common shareholders was $21.2 million during the third quarter of 2026, representing a $9.3 million, or 30.5%, reduction in the net loss over the same quarter in 2025. The decrease in the net loss was driven by lower benefit expense and an increase in revenues related to higher fixed charges.
Since the majority of PGL and NSG customers use natural gas for heating, net income attributed to common shareholders at the Illinois segment is sensitive to weather and is generally higher during the winter months.
| Three Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operating revenues | $ | 183.2 | $ | 183.5 | $ | (0.3) | ||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Cost of natural gas sold | 27.4 | 21.4 | (6.0) | |||||||||||||||||
| Other operation and maintenance | 89.2 | 108.0 | 18.8 | |||||||||||||||||
| Depreciation and amortization | 67.1 | 65.0 | (2.1) | |||||||||||||||||
| Property and revenue taxes | 11.2 | 11.4 | 0.2 | |||||||||||||||||
| Operating loss | (11.7) | (22.3) | 10.6 | |||||||||||||||||
| Other income, net | 2.6 | 2.1 | 0.5 | |||||||||||||||||
| Interest expense | 21.1 | 21.8 | 0.7 | |||||||||||||||||
| Loss before income taxes | (30.2) | (42.0) | 11.8 | |||||||||||||||||
| Income tax benefit | (9.0) | (11.5) | (2.5) | |||||||||||||||||
| Net loss attributed to common shareholders | $ | (21.2) | $ | (30.5) | $ | 9.3 | ||||||||||||||
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
The following table shows a breakdown of other operation and maintenance:
| Three Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operation and maintenance not included in the line items below | $ | 78.8 | $ | 87.6 | $ | 8.8 | ||||||||||||||
|
Riders (1)
|
10.3 | 19.6 | 9.3 | |||||||||||||||||
|
Regulatory amortizations (1)
|
0.1 | 0.8 | 0.7 | |||||||||||||||||
| Total other operation and maintenance | $ | 89.2 | $ | 108.0 | $ | 18.8 | ||||||||||||||
(1)These riders and regulatory amortizations are substantially offset in margins and therefore do not have a significant impact on net income.
The following tables provide information on delivered sales volumes by customer class and weather statistics:
| Three Months Ended September 30 | ||||||||||||||||||||
|
Natural Gas Sales Volumes (Therms - in millions)
|
2026 | 2025 | B (W) | |||||||||||||||||
| Customer Class | ||||||||||||||||||||
| Residential | 43.8 | 43.3 | 0.5 | |||||||||||||||||
| Commercial and industrial | 20.6 | 20.8 | (0.2) | |||||||||||||||||
| Total retail | 64.4 | 64.1 | 0.3 | |||||||||||||||||
| Transportation | 84.4 | 82.4 | 2.0 | |||||||||||||||||
| Total sales in therms | 148.8 | 146.5 | 2.3 | |||||||||||||||||
| Three Months Ended September 30 | ||||||||||||||||||||
|
Weather (Degree Days) (1)
|
2026 | 2025 | B (W) | |||||||||||||||||
| Heating (46 Normal) | 30 | 34 | (11.8) | % | ||||||||||||||||
(1)Normal heating degree days are based on a 12-year moving average of monthly temperature readings from National Oceanic and Atmospheric Administration weather stations throughout our Illinois service territories.
Gross Margin GAAP and Utility Margin Non-GAAP
The following table summarizes our Illinois segment gross margin (GAAP) and reconciles gross margin (GAAP) to utility margin (non-GAAP). See Non-GAAP Financial Measures above for additional information regarding gross margin (GAAP) and utility margin (non-GAAP).
| Three Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operating revenues | $ | 183.2 | $ | 183.5 | $ | (0.3) | ||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Cost of natural gas sold | (27.4) | (21.4) | (6.0) | |||||||||||||||||
|
Other operation and maintenance (1)
|
(58.5) | (58.9) | 0.4 | |||||||||||||||||
| Depreciation and amortization | (67.1) | (65.0) | (2.1) | |||||||||||||||||
| Property and revenue taxes | (11.2) | (11.4) | 0.2 | |||||||||||||||||
| Gross margin (GAAP) | 19.0 | 26.8 | (7.8) | |||||||||||||||||
|
Other operation and maintenance (1)
|
58.5 | 58.9 | (0.4) | |||||||||||||||||
| Depreciation and amortization | 67.1 | 65.0 | 2.1 | |||||||||||||||||
| Property and revenue taxes | 11.2 | 11.4 | (0.2) | |||||||||||||||||
| Utility margin (non-GAAP) | $ | 155.8 | $ | 162.1 | $ | (6.3) | ||||||||||||||
(1) Operating and maintenance expenses deemed to be directly attributable to our revenue-producing activities include distribution and customer service expenses. These expenses are included in the above table to calculate gross margin as defined under GAAP.
Gross margin (GAAP) at the Illinois segment decreased $7.8 million during the third quarter of 2026, compared with the same quarter in 2025, and utility margin (non-GAAP) decreased $6.3 million during the third quarter of 2026, compared with the same quarter in 2025. Both measures were driven by a $9.3 million decrease in revenues associated with certain riders that are offset in
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
other operation and maintenance and therefore do not have a significant impact on net income. This decrease in gross margin (GAAP) and utility margin (non-GAAP) was partially offset by a $1.4 million increase in revenues associated with fixed customer charges during the third quarter of 2026, compared with the same quarter in 2025.
Additionally, the larger decrease in gross margin (GAAP) as compared with the decrease in utility margin (non-GAAP), was driven by the following items that are further described in Other Operating Expenses below:
•A $2.1 million increase in depreciation and amortization expense;
•A $1.5 million increase in natural gas distribution and maintenance costs; and
•A partially offsetting $0.6 million decrease in costs at the Manlove Gas Storage Field.
Other Operating Expenses (includes other operation and maintenance, depreciation and amortization, and property and revenue taxes)
Other operating expenses at the Illinois segment decreased $7.6 million, net of the $9.3 million impact of the riders referenced above, during the third quarter of 2026, compared with the same quarter in 2025. The significant factors impacting the decrease in other operating expenses were:
•A $9.6 million decrease in benefit expense.
•A $0.6 million decrease in costs at the Manlove Gas Storage Field.
These decreases in operating expenses were partially offset by:
•A $2.1 million increase in depreciation and amortization expense, driven by assets being placed into service as we continue to execute on our capital plan.
•A $1.5 million increase in natural gas distribution and maintenance costs, primarily related to maintaining the natural gas infrastructure.
Interest Expense
Interest expense at the Illinois segment decreased $0.7 million during the third quarter of 2026, compared with the same quarter in 2025, driven by the impact of PGL's Series VV and Series ZZ mortgage bonds redemptions in March 2026. See Note 10, Long-Term Debt, for more information.
Income Tax Benefit
The income tax benefit at the Illinois segment decreased $2.5 million during the third quarter of 2026, compared with the same quarter in 2025, driven by a decrease in pre-tax loss.
Other States Segment Contribution to Net Income Attributed to Common Shareholders
The other states segment's net loss attributed to common shareholders was $8.8 million during the third quarter of 2026, representing a $0.1 million, or 1.1%, decrease in the net loss over the same quarter in 2025. The lower net loss was driven by a decrease in benefit expense and an increase in margins related to higher sales volumes. These positive impacts were partially offset by an increase in the provision for credit losses and higher depreciation and amortization expense.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
Since the majority of MERC and MGU customers use natural gas for heating, net income attributed to common shareholders at the other states segment is sensitive to weather and is generally higher during the winter months.
| Three Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operating revenues | $ | 60.9 | $ | 53.0 | $ | 7.9 | ||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Cost of natural gas sold | 23.3 | 17.5 | (5.8) | |||||||||||||||||
| Other operation and maintenance | 24.7 | 23.6 | (1.1) | |||||||||||||||||
| Depreciation and amortization | 13.5 | 12.5 | (1.0) | |||||||||||||||||
| Property and revenue taxes | 6.8 | 6.6 | (0.2) | |||||||||||||||||
| Operating loss | (7.4) | (7.2) | (0.2) | |||||||||||||||||
| Other income, net | 0.3 | 0.1 | 0.2 | |||||||||||||||||
| Interest expense | 4.8 | 5.0 | 0.2 | |||||||||||||||||
| Loss before income taxes | (11.9) | (12.1) | 0.2 | |||||||||||||||||
| Income tax benefit | (3.1) | (3.2) | (0.1) | |||||||||||||||||
| Net loss attributed to common shareholders | $ | (8.8) | $ | (8.9) | $ | 0.1 | ||||||||||||||
The following table shows a breakdown of other operation and maintenance:
| Three Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operation and maintenance not included in line item below | $ | 20.2 | $ | 21.4 | $ | 1.2 | ||||||||||||||
|
Regulatory amortizations and other pass through expenses (1)
|
4.5 | 2.2 | (2.3) | |||||||||||||||||
| Total other operation and maintenance | $ | 24.7 | $ | 23.6 | $ | (1.1) | ||||||||||||||
(1)Regulatory amortizations and other pass through expenses are substantially offset in margins and therefore do not have a significant impact on net income.
The following tables provide information on delivered sales volumes by customer class and weather statistics:
| Three Months Ended September 30 | ||||||||||||||||||||
|
Natural Gas Sales Volumes (Therms - in millions)
|
2026 | 2025 | B (W) | |||||||||||||||||
| Customer Class | ||||||||||||||||||||
| Residential | 17.0 | 16.8 | 0.2 | |||||||||||||||||
| Commercial and industrial | 13.7 | 15.4 | (1.7) | |||||||||||||||||
| Total retail | 30.7 | 32.2 | (1.5) | |||||||||||||||||
| Transportation | 183.8 | 159.8 | 24.0 | |||||||||||||||||
| Total sales in therms | 214.5 | 192.0 | 22.5 | |||||||||||||||||
| Three Months Ended September 30 | ||||||||||||||||||||
|
Weather (Degree Days) (1)
|
2026 | 2025 | B (W) | |||||||||||||||||
| MERC | ||||||||||||||||||||
|
Heating (189 Normal)
|
127 | 148 | (14.2) | % | ||||||||||||||||
| MGU | ||||||||||||||||||||
|
Heating (106 Normal)
|
86 | 92 | (6.5) | % | ||||||||||||||||
(1)Normal heating degree days for MERC and MGU are based on a 20-year moving average and 15-year moving average, respectively, of monthly temperature readings from National Oceanic and Atmospheric Administration weather stations throughout their respective service territories.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
Gross Margin GAAP and Utility Margin Non-GAAP
The following table summarizes our other states segment gross margin (GAAP) and reconciles gross margin (GAAP) to utility margin (non-GAAP). See Non-GAAP Financial Measures above for additional information regarding gross margin (GAAP) and utility margin (non-GAAP).
| Three Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operating revenues | $ | 60.9 | $ | 53.0 | $ | 7.9 | ||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Cost of natural gas sold | (23.3) | (17.5) | (5.8) | |||||||||||||||||
|
Other operation and maintenance (1)
|
(15.3) | (15.0) | (0.3) | |||||||||||||||||
| Depreciation and amortization | (13.5) | (12.5) | (1.0) | |||||||||||||||||
| Property and revenue taxes | (6.8) | (6.6) | (0.2) | |||||||||||||||||
| Gross margin (GAAP) | 2.0 | 1.4 | 0.6 | |||||||||||||||||
|
Other operation and maintenance (1)
|
15.3 | 15.0 | 0.3 | |||||||||||||||||
| Depreciation and amortization | 13.5 | 12.5 | 1.0 | |||||||||||||||||
| Property and revenue taxes | 6.8 | 6.6 | 0.2 | |||||||||||||||||
| Utility margin (non-GAAP) | $ | 37.6 | $ | 35.5 | $ | 2.1 | ||||||||||||||
(1) Operating and maintenance expenses deemed to be directly attributable to our revenue-producing activities include distribution and customer service expenses. These expenses are included in the above table to calculate gross margin as defined under GAAP.
Gross margin (GAAP) increased $0.6 million during the third quarter of 2026, compared with the same quarter in 2025, and utility margin (non-GAAP) increased $2.1 million during the third quarter of 2026, compared with the same quarter in 2025. Both measures were driven by:
•A $1.4 million increase in margins related to higher sales volumes during the second quarter of 2026, compared with the same quarter in 2025.
•A $0.8 million positive impact related to MGU's energy optimization program, which provides rebates, incentives, and energy efficiency education to customers.
Additionally, the smaller increase in gross margin (GAAP) as compared to the increase in utility margin (non-GAAP), was driven by a $1.0 million increase in depreciation and amortization expense that is further described in Other Operating Expenses below.
Other Operating Expenses (includes other operation and maintenance, depreciation and amortization, and property and revenue taxes)
Other operating expenses at the other states segment increased $2.3 million during the third quarter of 2026, compared with the same quarter in 2025. The significant factors impacting the increase in operating expenses were:
•A $1.7 million increase in the provision for credit losses, primarily driven by the aging of MGU's customer receivables.
•A $1.0 million increase in depreciation and amortization expense related to continued capital investment.
•A $0.8 million increase related to MGU's energy optimization program.
These increases in operating expenses were partially offset by a $1.7 million decrease in benefit expense.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
Interest Expense
Interest expense at the other states segment decreased $0.2 million during the third quarter of 2026, compared with the same quarter in 2025, driven by lower average short-term debt interest rates.
Electric Transmission Segment Contribution to Net Income Attributed to Common Shareholders
| Three Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Equity in earnings of transmission affiliates | $ | 65.8 | $ | 54.8 | $ | 11.0 | ||||||||||||||
| Interest expense | 3.9 | 4.8 | 0.9 | |||||||||||||||||
| Income before income taxes | 61.9 | 50.0 | 11.9 | |||||||||||||||||
| Income tax expense | 15.6 | 12.7 | (2.9) | |||||||||||||||||
| Net income attributed to common shareholders | $ | 46.3 | $ | 37.3 | $ | 9.0 | ||||||||||||||
Equity in Earnings of Transmission Affiliates
Equity in earnings of transmission affiliates increased $11.0 million during the third quarter of 2026, compared with the same quarter in 2025, driven by continued capital investment by ATC.
Interest Expense
Interest expense at the electric transmission segment decreased $0.9 million during the third quarter of 2026, compared with the same quarter in 2025, due to the maturity of long-term debt in December 2025.
Income Tax Expense
Income tax expense at the electric transmission segment increased $2.9 million during the third quarter of 2026, compared with the same quarter in 2025, driven by higher pre-tax income.
Non-Utility Energy Infrastructure Segment Contribution to Net Income Attributed to Common Shareholders
| Three Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operating income | $ | 103.5 | $ | 92.0 | $ | 11.5 | ||||||||||||||
| Other income, net | 0.7 | 0.8 | (0.1) | |||||||||||||||||
| Interest expense | 30.0 | 30.5 | 0.5 | |||||||||||||||||
| Income before income taxes | 74.2 | 62.3 | 11.9 | |||||||||||||||||
| Income tax benefit | (19.3) | (24.2) | (4.9) | |||||||||||||||||
| Net (income) loss attributed to noncontrolling interests | (0.7) | 1.4 | (2.1) | |||||||||||||||||
| Net income attributed to common shareholders | $ | 92.8 | $ | 87.9 | $ | 4.9 | ||||||||||||||
Operating Income
Operating income at the non-utility energy infrastructure segment increased $11.5 million during the third quarter of 2026, compared with the same quarter in 2025, driven by the following items at WECI:
•An $8.8 million increase in capacity revenues due to strong capacity pricing.
•A $6.1 million reduction in operation and maintenance expenses due primarily to having fixed-cost full service agreements in place in 2026.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
•A net $3.5 million positive impact related to lower impairment losses recorded at our Thunderhead wind and Samson I and Delilah I solar facilities in the third quarter of 2026 related to damage incurred associated with various storms.
These increases in operating income at WECI were partially offset by a $9.0 million decrease due to performance payments received in the third quarter of 2025.
In addition to the above items at WECI, there was a $2.7 million positive impact from We Power due to continued capital investment.
Interest Expense
Interest expense at the non-utility energy infrastructure segment decreased $0.5 million during the third quarter of 2026, compared with the same quarter in 2025, primarily due to a lower principal balance, as a result of the semi-annual principal payments on long-term debt at WECI's subsidiaries. Partially offsetting the decrease was a $1.3 million increase in interest expense due to WECI's issuance of a $100.0 million long-term intercompany note to WEC Energy Group in April 2026. This intercompany interest expense is offset by higher interest income at our corporate and other segment and is eliminated in consolidation.
Income Tax Benefit
The income tax benefit at the non-utility energy infrastructure segment decreased $4.9 million during the third quarter of 2026, compared with the same quarter in 2025, primarily due to higher pre-tax income.
Corporate and Other Segment Contribution to Net Income Attributed to Common Shareholders
| Three Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operating income (loss) | $ | 2.5 | $ | (2.0) | $ | 4.5 | ||||||||||||||
| Other income, net | 11.3 | 3.7 | 7.6 | |||||||||||||||||
| Interest expense | 94.3 | 90.9 | (3.4) | |||||||||||||||||
| Loss before income taxes | (80.5) | (89.2) | 8.7 | |||||||||||||||||
| Income tax expense | 1.0 | 6.6 | 5.6 | |||||||||||||||||
| Net loss attributed to common shareholders | $ | (81.5) | $ | (95.8) | $ | 14.3 | ||||||||||||||
Operating Income (Loss)
The corporate and other segment had operating income of $2.5 million during the third quarter of 2026, compared with an operating loss of $2.0 million during the same quarter in 2025. The quarter-over-quarter change was driven by a decrease in benefit expense at WEC Energy Group during the third quarter of 2026.
Other Income, Net
Other income, net at the corporate and other segment increased $7.6 million during the third quarter of 2026, compared with the same quarter in 2025, driven by an $8.9 million increase due to $0.2 million of net earnings from our equity method investments in technology and energy-focused investment funds during the third quarter of 2026, compared with net losses of $8.7 million during the same quarter in 2025. This increase was partially offset by a $2.4 million decrease in the net gains from the investments held in the Integrys rabbi trust. Gains from the investments held in the rabbi trust partially offset increases in benefit costs related to certain deferred compensation, which are primarily included in other operation and maintenance expense in our utility segments. See Note 14, Fair Value Measurements, for more information on our investments held in the Integrys rabbi trust.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
Interest Expense
Interest expense at the corporate and other segment increased $3.4 million during the third quarter of 2026, compared with the same quarter in 2025, due to higher average short-term debt balances. Partially offsetting the increase was the impact of long-term debt maturities.
Income Tax Expense
Income tax expense at the corporate and other segment decreased $5.6 million during the third quarter of 2026, compared with the same quarter in 2025. This decrease was driven by an $8.8 million decrease in the interim tax expense recorded to adjust consolidated income tax expense to the projected, annualized consolidated effective income tax rate during the third quarter of 2026, compared with the same quarter in 2025. Partially offsetting this decrease in income tax expense was a lower pre-tax loss.
NINE MONTHS ENDED SEPTEMBER 30, 2026
Consolidated Earnings
The following table compares our consolidated results for the nine months ended September 30, 2026 with the nine months ended September 30, 2025, including favorable or better, "B", and unfavorable or worse, "W", variances:
| Nine Months Ended September 30 | ||||||||||||||||||||
| (in millions, except per share data) | 2026 | 2025 | B (W) | |||||||||||||||||
| Wisconsin | $ | 978.0 | $ | 823.6 | $ | 154.4 | ||||||||||||||
| Illinois | 187.2 | 170.2 | 17.0 | |||||||||||||||||
| Other states | 30.0 | 37.7 | (7.7) | |||||||||||||||||
| Electric transmission | 132.4 | 109.8 | 22.6 | |||||||||||||||||
| Non-utility energy infrastructure | 332.1 | 279.0 | 53.1 | |||||||||||||||||
| Corporate and other | (166.8) | (179.4) | 12.6 | |||||||||||||||||
| Net income attributed to common shareholders | $ | 1,492.9 | $ | 1,240.9 | $ | 252.0 | ||||||||||||||
| Diluted EPS | $ | 4.54 | $ | 3.85 | $ | 0.69 | ||||||||||||||
Earnings increased $252.0 million during the nine months ended September 30, 2026, compared with the same period in 2025. The significant factors impacting the $252.0 million increase in earnings were:
•A $154.4 million increase in net income attributed to common shareholders at the Wisconsin segment, driven by higher margins due to the impact of the Wisconsin rate orders approved by the PSCW, effective January 1, 2026, carrying costs earned during 2026 on the construction of certain Bespoke Resources assigned to our VLCs, and higher retail sales volumes due to the impact of our VLCs. Higher AFUDC-Equity and increases in certain income tax benefits also contributed to the higher earnings. These positive impacts were partially offset by higher operating expenses, primarily due to an increase in regulatory amortizations and other pass through expenses, higher depreciation and amortization expense, and an increase in transmission expense. These increases in operating expenses were partially offset by lower benefit expense.
•A $53.1 million increase in net income attributed to common shareholders at the non-utility energy infrastructure segment, driven by higher operating income at WECI, reflecting improved market conditions, lower operating costs, and lower losses from storm damage.
•A $22.6 million increase in net income attributed to common shareholders at the electric transmission segment, driven by continued capital investment by ATC.
•A $17.0 million increase in net income attributed to common shareholders at the Illinois segment, driven by lower operating expenses, primarily due to the positive impact from a gain on the sale of certain real estate at PGL during the nine months ended September 30, 2026 and a decrease in benefit expense. See Note 3, Disposition, for more information on the sale.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
Expected 2026 Annual Effective Tax Rate
We expect our 2026 annual effective tax rate to be between 8.0% and 9.0%. Our effective tax rate calculations are revised every quarter based on the best available year-end tax assumptions, adjusted in the following year after returns are filed. Tax accrual estimates are trued-up to the actual amounts claimed on the tax returns and further adjusted after examinations by taxing authorities, as needed.
Non-GAAP Financial Measures
The discussions below address the contribution of each of our utility segments to net income attributed to common shareholders. The discussions include financial information prepared in accordance with GAAP, as well as utility margin, which is not a measure of financial performance under GAAP. Utility margin (operating revenues less fuel and purchased power costs and cost of natural gas sold) is a non-GAAP financial measure because it excludes certain operation and maintenance expenses applicable to revenues, as well as depreciation and amortization and property and revenue taxes.
We believe that utility margin provides a useful basis for evaluating utility operations since the majority of prudently incurred fuel and purchased power costs, as well as prudently incurred natural gas costs, are passed through to customers in current rates. As a result, management uses utility margin internally when assessing the operating performance of our utility segments as these measures exclude the majority of revenue fluctuations caused by changes in these expenses. Similarly, the presentation of utility margin herein is intended to provide supplemental information for investors regarding our operating performance.
Our utility margin may not be comparable to similar measures presented by other companies. Furthermore, this measure is not intended to replace gross margin as determined in accordance with GAAP as an indicator of operating performance. Each of our three utility segment discussions below include a table that provides the calculation of both gross margin as determined in accordance with GAAP and utility margin, as well as a reconciliation between the two measures.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
Wisconsin Segment Contribution to Net Income Attributed to Common Shareholders
The Wisconsin segment's contribution to net income attributed to common shareholders was $978.0 million during the nine months ended September 30, 2026, representing a $154.4 million, or 18.7%, increase over the same period in 2025. The increase in earnings was driven by higher margins due to the impact of the Wisconsin rate orders approved by the PSCW, effective January 1, 2026, carrying costs earned during 2026 on the construction of certain Bespoke Resources assigned to our VLCs, and higher retail sales volumes due to the impact of our VLCs. Higher AFUDC-Equity and increases in certain income tax benefits also contributed to the higher earnings. These positive impacts were partially offset by higher operating expenses, primarily due to an increase in regulatory amortizations and other pass through expenses, higher depreciation and amortization expense, and an increase in transmission expense. These increases in operating expenses were partially offset by lower benefit expense.
| Nine Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operating revenues | $ | 5,924.5 | $ | 5,438.7 | $ | 485.8 | ||||||||||||||
| Operating expenses | ||||||||||||||||||||
|
Cost of sales (1)
|
2,080.3 | 1,867.2 | (213.1) | |||||||||||||||||
| Other operation and maintenance | 1,389.4 | 1,274.8 | (114.6) | |||||||||||||||||
| Depreciation and amortization | 802.6 | 749.5 | (53.1) | |||||||||||||||||
| Property and revenue taxes | 148.8 | 135.0 | (13.8) | |||||||||||||||||
| Operating income | 1,503.4 | 1,412.2 | 91.2 | |||||||||||||||||
| Other income, net | 138.9 | 62.4 | 76.5 | |||||||||||||||||
| Interest expense | 499.1 | 478.6 | (20.5) | |||||||||||||||||
| Income before income taxes | 1,143.2 | 996.0 | 147.2 | |||||||||||||||||
| Income tax expense | 164.3 | 171.5 | 7.2 | |||||||||||||||||
| Preferred stock dividends of subsidiary | 0.9 | 0.9 | - | |||||||||||||||||
| Net income attributed to common shareholders | $ | 978.0 | $ | 823.6 | $ | 154.4 | ||||||||||||||
(1) Cost of sales includes fuel and purchased power and cost of natural gas sold.
The following table shows a breakdown of other operation and maintenance:
| Nine Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operation and maintenance not included in line items below | $ | 546.6 | $ | 571.7 | $ | 25.1 | ||||||||||||||
|
Transmission (1)
|
487.9 | 439.1 | (48.8) | |||||||||||||||||
|
Regulatory amortizations and other pass through expenses (2)
|
249.7 | 170.5 | (79.2) | |||||||||||||||||
|
We Power (3)
|
92.8 | 97.0 | 4.2 | |||||||||||||||||
|
Earnings sharing mechanisms (4)
|
12.4 | (3.5) | (15.9) | |||||||||||||||||
| Total other operation and maintenance | $ | 1,389.4 | $ | 1,274.8 | $ | (114.6) | ||||||||||||||
(1)Represents transmission expense that our electric utilities are authorized to collect in rates. The PSCW has approved escrow accounting for ATC and MISO network transmission expenses for WE and WPS. As a result, WE and WPS defer as a regulatory asset or liability, the difference between actual transmission costs and those included in rates until recovery or refund is authorized in a future rate proceeding. During the nine months ended September 30, 2026 and 2025, $543.2 million and $466.7 million, respectively, of costs were billed to our electric utilities by transmission providers.
(2)Regulatory amortizations and other pass through expenses are substantially offset in margins and therefore do not have a significant impact on net income.
(3)Represents costs associated with the We Power generation units, including operating and maintenance costs recognized by WE. During the nine months ended September 30, 2026 and 2025, $93.2 million and $88.9 million, respectively, of costs were billed to or incurred by WE related to the We Power generation units, with the difference in costs billed or incurred and expenses recognized, either deferred or deducted from the regulatory asset or liability.
(4) Represents operation and maintenance associated with the earnings mechanisms we have in place, both the current year sharing estimate and the amortization of prior year amounts.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
The following tables provide information on delivered sales volumes by customer class and weather statistics:
| Nine Months Ended September 30 | ||||||||||||||||||||
|
Electric Sales Volumes (MWh - in thousands)
|
2026 | 2025 | B (W) | |||||||||||||||||
| Customer Class | ||||||||||||||||||||
| Residential | 8,849.2 | 8,700.3 | 148.9 | |||||||||||||||||
|
Small commercial and industrial (1)
|
10,019.8 | 9,879.1 | 140.7 | |||||||||||||||||
|
Large commercial and industrial (1)
|
9,901.1 | 9,095.6 | 805.5 | |||||||||||||||||
| Other | 77.4 | 84.2 | (6.8) | |||||||||||||||||
|
Total retail (1)
|
28,847.5 | 27,759.2 | 1,088.3 | |||||||||||||||||
| Wholesale | 1,300.7 | 1,342.6 | (41.9) | |||||||||||||||||
| Resale | 3,078.5 | 4,486.4 | (1,407.9) | |||||||||||||||||
|
Total sales in MWh (1)
|
33,226.7 | 33,588.2 | (361.5) | |||||||||||||||||
(1)Includes distribution sales for customers who have purchased power from an alternative electric supplier in Michigan.
| Nine Months Ended September 30 | ||||||||||||||||||||
|
Natural Gas Sales Volumes (Therms - in millions)
|
2026 | 2025 | B (W) | |||||||||||||||||
| Customer Class | ||||||||||||||||||||
| Residential | 720.3 | 761.6 | (41.3) | |||||||||||||||||
| Commercial and industrial | 471.2 | 502.9 | (31.7) | |||||||||||||||||
| Total retail | 1,191.5 | 1,264.5 | (73.0) | |||||||||||||||||
| Transportation | 1,014.9 | 1,005.4 | 9.5 | |||||||||||||||||
| Total sales in therms | 2,206.4 | 2,269.9 | (63.5) | |||||||||||||||||
| Nine Months Ended September 30 | ||||||||||||||||||||
|
Weather (Degree Days) (1)
|
2026 | 2025 | B (W) | |||||||||||||||||
|
WE and WG
|
||||||||||||||||||||
|
Heating (4,184 Normal)
|
4,028 | 4,364 | (7.7) | % | ||||||||||||||||
|
Cooling (709 Normal)
|
740 | 750 | (1.3) | % | ||||||||||||||||
|
WPS
|
||||||||||||||||||||
|
Heating (4,679 Normal)
|
4,602 | 4,577 | 0.5 | % | ||||||||||||||||
|
Cooling (543 Normal)
|
578 | 629 | (8.1) | % | ||||||||||||||||
|
UMERC
|
||||||||||||||||||||
|
Heating (5,373 Normal)
|
5,185 | 5,341 | (2.9) | % | ||||||||||||||||
|
Cooling (346 Normal)
|
408 | 372 | 9.7 | % | ||||||||||||||||
(1)Normal degree days are based on a 20-year moving average of monthly temperature readings from the National Oceanic and Atmospheric Administration weather stations within each company's respective service territories.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
Gross Margin GAAP and Utility Margin Non-GAAP
The following table summarizes our Wisconsin segment gross margin (GAAP) and reconciles gross margin (GAAP) to utility margin (non-GAAP). See Non-GAAP Financial Measures above for additional information regarding gross margin (GAAP) and utility margin (non-GAAP).
| Nine Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Electric revenues | $ | 4,611.8 | $ | 4,242.6 | $ | 369.2 | ||||||||||||||
| Natural gas revenues | 1,312.7 | 1,196.1 | 116.6 | |||||||||||||||||
| Operating revenues | 5,924.5 | 5,438.7 | 485.8 | |||||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Fuel and purchased power | (1,392.6) | (1,284.5) | (108.1) | |||||||||||||||||
| Cost of natural gas sold | (687.7) | (582.7) | (105.0) | |||||||||||||||||
|
Other operation and maintenance (1)
|
(958.6) | (920.2) | (38.4) | |||||||||||||||||
| Depreciation and amortization | (802.6) | (749.5) | (53.1) | |||||||||||||||||
| Property and revenue taxes | (148.8) | (135.0) | (13.8) | |||||||||||||||||
| Gross margin (GAAP) | 1,934.2 | 1,766.8 | 167.4 | |||||||||||||||||
|
Other operation and maintenance (1)
|
958.6 | 920.2 | 38.4 | |||||||||||||||||
| Depreciation and amortization | 802.6 | 749.5 | 53.1 | |||||||||||||||||
| Property and revenue taxes | 148.8 | 135.0 | 13.8 | |||||||||||||||||
| Utility margin (non-GAAP) | $ | 3,844.2 | $ | 3,571.5 | $ | 272.7 | ||||||||||||||
(1) Operating and maintenance expenses deemed to be directly attributable to our revenue-producing activities include plant operating and maintenance expenses related to our generating units; costs associated with the We Power generating units; and transmission, distribution and customer service expenses. These expenses are included in the above table to calculate gross margin as defined under GAAP.
Gross margin (GAAP) at the Wisconsin segment increased $167.4 million during the nine months ended September 30, 2026, compared with the same period in 2025, and utility margin (non-GAAP) increased $272.7 million during the nine months ended September 30, 2026, compared with the same period in 2025. Both measures were driven by:
•A $177.5 million increase in margins driven by the impact of the Wisconsin rate orders approved by the PSCW, effective January 1, 2026.
•A current return of $53.4 million consisting of carrying costs earned during the construction of certain Bespoke Resources assigned to our VLCs during the nine months ended September 30, 2026.
•A $40.7 million net increase in margins related to higher electric retail sales volumes, including a $45.2 million increase from weather-normalized customer growth, driven by the impact of our VLCs. The margin impact from weather-normalized customer growth was partially offset by a $4.5 million decrease from unfavorable weather. As measured by heating degree days, the nine months ended September 30, 2026 were 7.7% warmer than the same period in 2025 in the combined WE and WG service area. As measured by cooling degree days, the nine months ended September 30, 2026 were 1.3% and 8.1% colder than the same period in 2025 in the combined WE and WG service area and the WPS service area, respectively.
Additionally, the smaller increase in gross margin (GAAP) as compared with the increase in utility margin (non-GAAP), was driven by the following items that are further described in Other Operating Expenses below:
•A $53.1 million increase in depreciation and amortization expense;
•A $48.8 million increase in transmission expense;
•A $13.8 million increase in property and revenues taxes;
•A $3.2 million increase in electric and natural gas distribution expense; and
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
•A partially offsetting $12.7 million decrease in other operating and maintenance related to our power plants.
Other Operating Expenses (includes other operation and maintenance, depreciation and amortization, and property and revenue taxes)
Other operating expenses at the Wisconsin segment increased $181.5 million during the nine months ended September 30, 2026, compared with the same period in 2025. The significant factors impacting the increase in other operating expenses were:
•A $79.2 million increase in regulatory amortizations and other pass through expenses, as discussed in the notes under the other operation and maintenance table above.
•A $53.1 million increase in depreciation and amortization expense, driven by assets being placed into service as we continue to execute on our capital plan.
•A $48.8 million increase in transmission expense as approved by the PSCW in our Wisconsin rate orders, effective January 1, 2026. See the notes under the other operation and maintenance table above for more information.
•A $15.9 million increase in expense related to the earnings sharing mechanisms in place at our Wisconsin utilities, driven by earnings sharing recorded at WE during the third quarter of 2026. The earnings sharing mechanisms are discussed in the notes under the other operation and maintenance table above
•A $13.8 million increase in property and revenue taxes, driven by higher gross receipt taxes.
•A $3.2 million increase in electric and natural gas distribution expenses, driven by higher costs to maintain the distribution systems during the nine months ended September 30, 2026, compared with the same period in 2025.
These increases in operating expenses were partially offset by:
•A $22.8 million decrease in benefit expense, driven by various employee compensation plans.
•A $12.7 million decrease in other operating and maintenance related to our power plants during the nine months ended September 30, 2026, compared with the same period in 2025, driven by a reduction in allowed expense for OCPP and Columbia under escrow accounting, as approved by the PSCW in our Wisconsin rate orders.
Other Income, Net
Other income, net at the Wisconsin segment increased $76.5 million during the nine months ended September 30, 2026, compared with the same period in 2025, driven by a $76.1 million positive impact from higher AFUDC-Equity due to continued capital investment.
Interest Expense
Interest expense at the Wisconsin segment increased $20.5 million during the nine months ended September 30, 2026, compared with the same period in 2025. The increase was primarily due to the impact of long-term debt issuances in 2025 and 2026. Also contributing to the increase was higher average short-term debt balances. These increases were partially offset by AFUDC-Debt that was $34.2 million higher year-over-year due to continued capital investment, and the impact of long-term debt maturities in 2025.
Income Tax Expense
Income tax expense at the Wisconsin segment decreased $7.2 million during the nine months ended September 30, 2026, compared with the same period in 2025. This decrease was driven by:
•A $17.5 million increase in income tax benefits associated with AFUDC-Equity, driven by continued capital investment;
•A $13.1 million favorable income tax impact associated with certain tax-related regulatory deferrals; and
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
•A $13.0 million increase in PTCs and ITCs.
Partially offsetting these favorable income tax variances was higher pre-tax income.
Illinois Segment Contribution to Net Income Attributed to Common Shareholders
The Illinois segment's contribution to net income attributed to common shareholders was $187.2 million during the nine months ended September 30, 2026, representing a $17.0 million, or 10.0%, increase over the same period in 2025. The increase was driven by lower operating expenses, primarily due to the positive impact from a gain on the sale of certain real estate at PGL during the nine months ended September 30, 2026 and a decrease in benefit expense. See Note 3, Disposition, for more information on the sale.
Since the majority of PGL and NSG customers use natural gas for heating, net income attributed to common shareholders at the Illinois segment is sensitive to weather and is generally higher during the winter months.
| Nine Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operating revenues | $ | 1,195.1 | $ | 1,242.4 | $ | (47.3) | ||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Cost of natural gas sold | 335.1 | 339.1 | 4.0 | |||||||||||||||||
| Other operation and maintenance | 310.3 | 367.3 | 57.0 | |||||||||||||||||
| Depreciation and amortization | 199.4 | 194.2 | (5.2) | |||||||||||||||||
| Property and revenue taxes | 33.5 | 44.6 | 11.1 | |||||||||||||||||
| Operating income | 316.8 | 297.2 | 19.6 | |||||||||||||||||
| Other income, net | 6.7 | 6.5 | 0.2 | |||||||||||||||||
| Interest expense | 63.3 | 67.1 | 3.8 | |||||||||||||||||
| Income before income taxes | 260.2 | 236.6 | 23.6 | |||||||||||||||||
| Income tax expense | 73.0 | 66.4 | (6.6) | |||||||||||||||||
| Net income attributed to common shareholders | $ | 187.2 | $ | 170.2 | $ | 17.0 | ||||||||||||||
The following table shows a breakdown of other operation and maintenance:
| Nine Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operation and maintenance not included in the line items below | $ | 231.9 | $ | 249.4 | $ | 17.5 | ||||||||||||||
|
Riders (1)
|
77.9 | 115.8 | 37.9 | |||||||||||||||||
|
Regulatory amortizations (1)
|
0.5 | 2.1 | 1.6 | |||||||||||||||||
| Total other operation and maintenance | $ | 310.3 | $ | 367.3 | $ | 57.0 | ||||||||||||||
(1)These riders and regulatory amortizations are substantially offset in margins and therefore do not have a significant impact on net income.
The following tables provide information on delivered sales volumes by customer class and weather statistics:
| Nine Months Ended September 30 | ||||||||||||||||||||
|
Natural Gas Sales Volumes (Therms - in millions)
|
2026 | 2025 | B (W) | |||||||||||||||||
| Customer Class | ||||||||||||||||||||
| Residential | 552.1 | 577.5 | (25.4) | |||||||||||||||||
| Commercial and industrial | 211.6 | 215.4 | (3.8) | |||||||||||||||||
| Total retail | 763.7 | 792.9 | (29.2) | |||||||||||||||||
| Transportation | 504.1 | 539.8 | (35.7) | |||||||||||||||||
| Total sales in therms | 1,267.8 | 1,332.7 | (64.9) | |||||||||||||||||
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
| Nine Months Ended September 30 | ||||||||||||||||||||
|
Weather (Degree Days) (1)
|
2026 | 2025 | B (W) | |||||||||||||||||
| Heating (3,798 Normal) | 3,518 | 3,774 | (6.8) | % | ||||||||||||||||
(1)Normal heating degree days are based on a 12-year moving average of monthly temperature readings from National Oceanic and Atmospheric Administration weather stations throughout our Illinois service territories.
Gross Margin GAAP and Utility Margin Non-GAAP
The following table summarizes our Illinois segment gross margin (GAAP) and reconciles gross margin (GAAP) to utility margin (non-GAAP). See Non-GAAP Financial Measures above for additional information regarding gross margin (GAAP) and utility margin (non-GAAP).
| Nine Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operating revenues | $ | 1,195.1 | $ | 1,242.4 | $ | (47.3) | ||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Cost of natural gas sold | (335.1) | (339.1) | 4.0 | |||||||||||||||||
|
Other operation and maintenance (1)
|
(172.9) | (179.9) | 7.0 | |||||||||||||||||
| Depreciation and amortization | (199.4) | (194.2) | (5.2) | |||||||||||||||||
| Property and revenue taxes | (33.5) | (44.6) | 11.1 | |||||||||||||||||
| Gross margin (GAAP) | 454.2 | 484.6 | (30.4) | |||||||||||||||||
|
Other operation and maintenance (1)
|
172.9 | 179.9 | (7.0) | |||||||||||||||||
| Depreciation and amortization | 199.4 | 194.2 | 5.2 | |||||||||||||||||
| Property and revenue taxes | 33.5 | 44.6 | (11.1) | |||||||||||||||||
| Utility margin (non-GAAP) | $ | 860.0 | $ | 903.3 | $ | (43.3) | ||||||||||||||
(1) Operating and maintenance expenses deemed to be directly attributable to our revenue-producing activities include distribution and customer service expenses. These expenses are included in the above table to calculate gross margin as defined under GAAP.
Gross margin (GAAP) at the Illinois segment decreased $30.4 million during the nine months ended September 30, 2026, compared with the same period in 2025, and utility margin (non-GAAP) decreased $43.3 million during the nine months ended September 30, 2026, compared with the same period in 2025. Both measures were driven by:
•A $37.9 million decrease in revenues associated with certain riders that are offset in other operation and maintenance and therefore do not have a significant impact on net income.
•A $10.9 million decrease in revenues associated with the invested capital tax adjustment rider, which is offset in property and revenue taxes and therefore does not have a significant impact on net income. The invested capital tax adjustment rider is a mechanism that allows us to recover or refund the difference between the cost of invested capital tax incurred and the amount collected through base rates.
These decreases in margins were partially offset by a $1.5 million increase in revenues associated with fixed customer charges during the nine months ended September 30, 2026, compared with the same period in 2025.
Additionally, the smaller decrease in gross margin (GAAP) as compared with the decrease in utility margin (non-GAAP), was driven by the following items that are further described in Other Operating Expenses below:
•An $11.1 million decrease in property and revenue taxes;
•A $3.2 million decrease in natural gas distribution and maintenance costs; and
•A partially offsetting $5.2 million increase in depreciation and amortization expense, primarily related to maintaining the natural gas infrastructure.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
Other Operating Expenses (includes other operation and maintenance, depreciation and amortization, and property and revenue taxes)
Other operating expenses at the Illinois segment decreased $25.0 million, net of the $37.9 million impact of the riders referenced in the table above, during the nine months ended September 30, 2026, compared with the same period in 2025. The significant factors impacting the decrease in other operating expenses were:
•An $11.9 million gain related to the sale of certain real estate owned by PGL during the nine months ended September 30, 2026. See Note 3, Disposition, for more information.
•An $11.1 million decrease in property and revenue taxes, driven by the invested capital tax.
•A $6.7 million decrease in benefit expense.
•A $3.2 million decrease in natural gas distribution and maintenance costs, primarily related to maintaining the natural gas infrastructure.
These decreases in operating expenses were partially offset by:
•A $5.2 million increase in depreciation and amortization expense, driven by assets being placed into service as we continue to execute on our capital plan.
•A $2.7 million pre-tax gain on the renegotiation of a lease contract during the nine months ended September 30, 2025.
Interest Expense
Interest expense at the Illinois segment decreased $3.8 million during the nine months ended September 30, 2026, compared with the same period in 2025, due the impact of PGL's Series VV and Series ZZ mortgage bonds redemptions in March 2026, and lower average short-term debt interest rates.
Income Tax Expense
Income tax expense at the Illinois segment increased $6.6 million during the nine months ended September 30, 2026, compared with the same period in 2025, driven by an increase in pre-tax income.
Other States Segment Contribution to Net Income Attributed to Common Shareholders
The other states segment's contribution to net income attributed to common shareholders was $30.0 million during the nine months ended September 30, 2026, representing a $7.7 million, or 20.4%, decrease over the same period in 2025. The lower earnings were driven by a decrease in margins related to lower retail sales volumes and higher operating expenses.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
Since the majority of MERC and MGU customers use natural gas for heating, net income attributed to common shareholders at the other states segment is sensitive to weather and is generally higher during the winter months.
| Nine Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operating revenues | $ | 402.5 | $ | 362.4 | $ | 40.1 | ||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Cost of natural gas sold | 209.2 | 165.1 | (44.1) | |||||||||||||||||
| Other operation and maintenance | 78.3 | 76.2 | (2.1) | |||||||||||||||||
| Depreciation and amortization | 39.7 | 37.0 | (2.7) | |||||||||||||||||
| Property and revenue taxes | 20.5 | 19.9 | (0.6) | |||||||||||||||||
| Operating income | 54.8 | 64.2 | (9.4) | |||||||||||||||||
| Other income, net | 0.6 | 0.3 | 0.3 | |||||||||||||||||
| Interest expense | 15.0 | 14.0 | (1.0) | |||||||||||||||||
| Income before income taxes | 40.4 | 50.5 | (10.1) | |||||||||||||||||
| Income tax expense | 10.4 | 12.8 | 2.4 | |||||||||||||||||
| Net income attributed to common shareholders | $ | 30.0 | $ | 37.7 | $ | (7.7) | ||||||||||||||
The following table shows a breakdown of other operation and maintenance:
| Nine Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operation and maintenance not included in line item below | $ | 60.0 | $ | 60.7 | $ | 0.7 | ||||||||||||||
|
Regulatory amortizations and other pass through expenses (1)
|
18.3 | 15.5 | (2.8) | |||||||||||||||||
| Total other operation and maintenance | $ | 78.3 | $ | 76.2 | $ | (2.1) | ||||||||||||||
(1)Regulatory amortizations and other pass through expenses are substantially offset in margins and therefore do not have a significant impact on net income.
The following tables provide information on delivered sales volumes by customer class and weather statistics:
| Nine Months Ended September 30 | ||||||||||||||||||||
|
Natural Gas Sales Volumes (Therms - in millions)
|
2026 | 2025 | B (W) | |||||||||||||||||
| Customer Class | ||||||||||||||||||||
| Residential | 211.3 | 218.0 | (6.7) | |||||||||||||||||
| Commercial and industrial | 137.0 | 138.6 | (1.6) | |||||||||||||||||
| Total retail | 348.3 | 356.6 | (8.3) | |||||||||||||||||
| Transportation | 594.2 | 550.7 | 43.5 | |||||||||||||||||
| Total sales in therms | 942.5 | 907.3 | 35.2 | |||||||||||||||||
| Nine Months Ended September 30 | ||||||||||||||||||||
|
Weather (Degree Days) (1)
|
2026 | 2025 | B (W) | |||||||||||||||||
| MERC | ||||||||||||||||||||
|
Heating (5,043 Normal)
|
4,716 | 4,938 | (4.5) | % | ||||||||||||||||
| MGU | ||||||||||||||||||||
|
Heating (3,976 Normal)
|
3,805 | 3,915 | (2.8) | % | ||||||||||||||||
(1)Normal heating degree days for MERC and MGU are based on a 20-year moving average and 15-year moving average, respectively, of monthly temperature readings from National Oceanic and Atmospheric Administration weather stations throughout their respective service territories.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
Gross Margin GAAP and Utility Margin Non-GAAP
The following table summarizes our other states segment gross margin (GAAP) and reconciles gross margin (GAAP) to utility margin (non-GAAP). See Non-GAAP Financial Measures above for additional information regarding gross margin (GAAP) and utility margin (non-GAAP).
| Nine Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operating revenues | $ | 402.5 | $ | 362.4 | $ | 40.1 | ||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Cost of natural gas sold | (209.2) | (165.1) | (44.1) | |||||||||||||||||
|
Other operation and maintenance (1)
|
(45.8) | (44.4) | (1.4) | |||||||||||||||||
| Depreciation and amortization | (39.7) | (37.0) | (2.7) | |||||||||||||||||
| Property and revenue taxes | (20.5) | (19.9) | (0.6) | |||||||||||||||||
| Gross margin (GAAP) | 87.3 | 96.0 | (8.7) | |||||||||||||||||
|
Other operation and maintenance (1)
|
45.8 | 44.4 | 1.4 | |||||||||||||||||
| Depreciation and amortization | 39.7 | 37.0 | 2.7 | |||||||||||||||||
| Property and revenue taxes | 20.5 | 19.9 | 0.6 | |||||||||||||||||
| Utility margin (non-GAAP) | $ | 193.3 | $ | 197.3 | $ | (4.0) | ||||||||||||||
(1) Operating and maintenance expenses deemed to be directly attributable to our revenue-producing activities include distribution and customer service expenses. These expenses are included in the above table to calculate gross margin as defined under GAAP.
Gross margin (GAAP) decreased $8.7 million during the nine months ended September 30, 2026, compared with the same period in 2025, and utility margin (non-GAAP) decreased $4.0 million during the nine months ended September 30, 2026, compared with the same period in 2025. Both measures were driven by:
•A $5.2 million decrease in margins related to lower retail sales volumes, including the unfavorable impact of weather, during the nine months ended September 30, 2026, compared with the same period in 2025.
•A $0.9 million decrease related to MERC CIP revenue, which was offset in operation and maintenance expense. Rebates and programs are available to residential and commercial customers of MERC through the CIP, which is funded by ratepayers using the Conservation Cost Recovery Charge and the Conservation Cost Recovery Adjustment funds that are collected on their monthly billing statements.
Partially offsetting these decreases was a $2.4 million increase related to MGU's energy optimization program.
Additionally, the larger decrease in gross margin (GAAP) as compared to the decrease in utility margin (non-GAAP), was driven by the following items that are further described in Other Operating Expenses below:
•A $2.7 million increase in depreciation and amortization expense; and
•A $1.4 million increase in natural gas operations and customer service expense.
Other Operating Expenses (includes other operation and maintenance, depreciation and amortization, and property and revenue taxes)
Other operating expenses at the other states segment increased $5.4 million during the nine months ended September 30, 2026, compared with the same period in 2025. The significant factors impacting the increase in operating expenses were:
•A $2.7 million increase in depreciation and amortization expense related to continued capital investment.
•A $2.4 million increase in revenues related to MGU's energy optimization program.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
•A $1.4 million increase in natural gas operations and customer service expense, driven by increased training costs and additional service maintenance expense.
•A $1.4 million increase in the provision for credit losses, primarily driven by the aging of customer receivables.
These increases in operating expenses were partially offset by:
•A $1.6 million positive impact from a settlement payment MGU received during the second quarter of 2026 related to a 2025 natural gas outage in its service territory.
•A $0.9 million decrease in operation and maintenance expense related to MERC's CIP program, which has an offsetting decrease in margins.
Interest Expense
Interest expense at the other states segment increased $1.0 million during the nine months ended September 30, 2026, compared with the same period in 2025, driven by the impact of MERC and MGU issuing long-term debt in April 2025. This increase was partially offset by MERC and MGU long-term debt maturities in May 2025 and lower average short-term debt interest rates.
Income Tax Expense
Income tax expense at the other states segment decreased $2.4 million during the nine months ended September 30, 2026, compared with the same period in 2025, driven by lower pre-tax income.
Electric Transmission Segment Contribution to Net Income Attributed to Common Shareholders
| Nine Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Equity in earnings of transmission affiliates | $ | 187.9 | $ | 160.3 | $ | 27.6 | ||||||||||||||
| Interest expense | 11.8 | 14.5 | 2.7 | |||||||||||||||||
| Income before income taxes | 176.1 | 145.8 | 30.3 | |||||||||||||||||
| Income tax expense | 43.7 | 36.0 | (7.7) | |||||||||||||||||
| Net income attributed to common shareholders | $ | 132.4 | $ | 109.8 | $ | 22.6 | ||||||||||||||
Equity in Earnings of Transmission Affiliates
Equity in earnings of transmission affiliates increased $27.6 million during the nine months ended September 30, 2026, compared with the same period in 2025. This increase in earnings was primarily due to continued capital investment by ATC, partially offset by a $3.6 million gain recognized in March 2025 related to the sale of an investment at ATC Holdco.
Interest Expense
Interest expense at the electric transmission segment decreased $2.7 million during the nine months ended September 30, 2026, compared with the same period in 2025, due to the impact of a long-term debt maturity in December 2025.
Income Tax Expense
Income tax expense at the electric transmission segment increased $7.7 million during the nine months ended September 30, 2026, compared with the same period in 2025, primarily due to an increase in pre-tax income.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
Non-Utility Energy Infrastructure Segment Contribution to Net Income Attributed to Common Shareholders
| Nine Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operating income | $ | 344.1 | $ | 267.6 | $ | 76.5 | ||||||||||||||
| Other income, net | 1.9 | 2.2 | (0.3) | |||||||||||||||||
| Interest expense | 90.6 | 92.6 | 2.0 | |||||||||||||||||
| Income before income taxes | 255.4 | 177.2 | 78.2 | |||||||||||||||||
| Income tax benefit | (80.3) | (98.7) | (18.4) | |||||||||||||||||
| Net (income) loss attributed to noncontrolling interests | (3.6) | 3.1 | (6.7) | |||||||||||||||||
| Net income attributed to common shareholders | $ | 332.1 | $ | 279.0 | $ | 53.1 | ||||||||||||||
Operating Income
Operating income at the non-utility energy infrastructure segment increased $76.5 million during the nine months ended September 30, 2026, compared with the same period in 2025, driven by the following items at WECI:
•An $18.2 million increase in revenue related to lower congestion related costs.
•A $13.9 million increase in capacity revenues due to strong capacity pricing.
•A net $13.5 million positive impact related to lower impairment losses recorded at our Thunderhead wind and Samson I and Delilah I solar facilities during the first nine months of 2026 compared to the same period in 2025, related to damage incurred associated with various storms.
•An $8.4 million reduction in operation and maintenance expenses, primarily due to fixed-cost full service agreements in place in 2026 and lower benefit costs.
•A $5.5 million increase in insurance proceeds related to storms that occurred in 2023 and 2024 at our Samson I solar facility.
•A $5.2 million positive impact related to the receipt of performance payments.
•A $2.5 million increase in PPA revenues due to higher generation at certain sites and lower electricity curtailments.
•A $1.3 million increase due to higher amounts recognized for REC sales in 2026 at Blooming Grove, driven by higher contracted REC prices.
In addition to the above items at WECI, there was a $7.3 million positive impact from We Power due to continued capital investment.
Interest Expense
Interest expense at the non-utility energy infrastructure segment decreased $2.0 million during the nine months ended September 30, 2026, compared with the same period in 2025, driven by a lower principal balance, as a result of the semi-annual principal payments on long-term debt at WECI's subsidiaries. Partially offsetting the decrease was a $3.4 million increase in interest expense due to WECI's issuance of $160.0 million and $100.0 million long-term intercompany notes to WEC Energy Group in February 2025 and April 2026, respectively. This intercompany interest expense is offset by higher interest income at our corporate and other segment and is eliminated in consolidation.
Income Tax Benefit
The income tax benefit at the non-utility energy infrastructure segment decreased $18.4 million during the nine months ended September 30, 2026, compared with the same period in 2025, primarily due to higher pre-tax income.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
Corporate and Other Segment Contribution to Net Income Attributed to Common Shareholders
| Nine Months Ended September 30 | ||||||||||||||||||||
| (in millions) | 2026 | 2025 | B (W) | |||||||||||||||||
| Operating loss | $ | (6.4) | $ | (6.8) | $ | 0.4 | ||||||||||||||
| Other income, net | 36.9 | 20.3 | 16.6 | |||||||||||||||||
| Interest expense | 281.3 | 266.3 | (15.0) | |||||||||||||||||
| Loss before income taxes | (250.8) | (252.8) | 2.0 | |||||||||||||||||
| Income tax benefit | (84.0) | (73.4) | 10.6 | |||||||||||||||||
| Net loss attributed to common shareholders | $ | (166.8) | $ | (179.4) | $ | 12.6 | ||||||||||||||
Other Income, Net
Other income, net at the corporate and other segment increased $16.6 million during the nine months ended September 30, 2026, compared with the same period in 2025. The significant factors impacting the increase in other income, net were:
•A $13.7 million increase due to $0.9 million of net earnings from our equity method investments in technology and energy-focused investment funds during the nine months ended September 30, 2026, compared with net losses of $12.8 million during the same period in 2025.
•A $3.4 million increase in intercompany interest income from WECI, due to WECI's issuance of $160.0 million and $100.0 million long-term intercompany notes to WEC Energy Group in February 2025 and April 2026, respectively. This intercompany interest income is offset by higher intercompany interest expense at our non-utility energy infrastructure segment and is eliminated in consolidation.
Interest Expense
Interest expense at the corporate and other segment increased $15.0 million during the nine months ended September 30, 2026, compared with the same period in 2025, driven by higher average short-term debt balances. Partially offsetting the increase was the impact of long-term debt maturities.
Income Tax Benefit
The income tax benefit at the corporate and other segment increased $10.6 million during the nine months ended September 30, 2026, compared with the same period in 2025. This increase was driven by a $10.4 million increase in the interim tax benefit recorded to adjust consolidated income tax expense to the projected, annualized consolidated effective income tax rate during the nine months ended September 30, 2026, compared with the same period in 2025.
LIQUIDITY AND CAPITAL RESOURCES
Overview
We expect to maintain adequate liquidity to meet our cash requirements for the operation of our businesses and implementation of our corporate strategy through the internal generation of cash from operations and access to the capital markets.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
Cash Flows
The following table summarizes our cash flows during the nine months ended September 30:
| (in millions) | 2026 | 2025 | Change in 2026 Over 2025 | |||||||||||||||||
| Cash provided by (used in): | ||||||||||||||||||||
| Operating activities | $ | 3,413.1 | $ | 2,954.8 | $ | 458.3 | ||||||||||||||
| Investing activities | (3,599.8) | (3,570.5) | (29.3) | |||||||||||||||||
| Financing activities | 246.3 | 691.2 | (444.9) | |||||||||||||||||
Operating Activities
Net cash provided by operating activities increased $458.3 million during the nine months ended September 30, 2026, compared with the same period in 2025, driven by:
•A $445.5 million increase in cash from higher overall collections from customers during the nine months ended September 30, 2026, compared with the same period in 2025. This increase was driven by the impact of the Wisconsin rate orders approved by the PSCW, effective January 1, 2026, and the impact of the VLCs.
•A $106.8 million increase in cash from lower payments for operating and maintenance expenses. During the nine months ended September 30, 2026, our payments were lower due to the timing of payments for accounts payable, partially offset by higher transmission costs.
These increases in net cash provided by operating activities were partially offset by:
•A $38.1 million increase in cash paid for property and revenue taxes driven by higher gross receipts taxes in Wisconsin, revenue taxes in Illinois, and property taxes for WECI during the nine months ended September 30, 2026, compared with the same period in 2025.
•A $25.8 million decrease in cash from higher payments for interest driven by higher average short-term debt balances during the nine months ended September 30, 2026, compared with the same period in 2025, as well as long-term debt issuances in 2025 and 2026.
•A $20.8 million decrease in cash received from income taxes driven by estimated tax payments that were made in 2026. See Note 13, Income Taxes, for more information.
•A $16.8 million decrease in cash driven by higher amounts of collateral paid to counterparties during the nine months ended September 30, 2026, compared with the same period in 2025.
Investing Activities
Net cash used in investing activities increased $29.3 million during the nine months ended September 30, 2026, compared with the same period in 2025, driven by:
•A $198.7 million increase in cash paid for capital expenditures, including AFUDC-Debt during the nine months ended September 30, 2026, compared with the same period in 2025, which is discussed in more detail below.
•A $170.8 million refundable aggregate payment for exclusive rights to purchase certain generation projects during the nine months ended September 30, 2026. See Note 18, Goodwill and Intangibles, for more information.
•A $30.6 million increase in capital contributions paid to transmission affiliates during the nine months ended September 30, 2026, compared with the same period in 2025. See Note 19, Investment in Transmission Affiliates, for more information.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
•A $29.3 million decrease in cash received from ATC during the nine months ended September 30, 2026, compared with the same period in 2025, for the reimbursement of transmission infrastructure upgrades. See Note 19, Investment in Transmission Affiliates, for more information.
•A $14.0 million decrease in cash received from the sale of investments held in the rabbi trust during the nine months ended September 30, 2026, compared with the same period in 2025.
These increases in net cash used in investing activities were partially offset by:
•The acquisition of a 90% ownership interest in Hardin III in February 2025 for $406.1 million, net of cash acquired of $0.2 million. See Note 2, Acquisitions, for more information.
•An $18.2 million increase in proceeds received from the sale of assets during the nine months ended September 30, 2026, compared with the same period in 2025. See Note 3, Disposition, for more information.
Capital Expenditures
Capital expenditures, including AFUDC-Debt, by segment for the nine months ended September 30 were as follows:
|
Reportable Segment
(in millions)
|
2026 | 2025 | Change in 2026 Over 2025 | |||||||||||||||||
| Wisconsin | $ | 2,883.2 | $ | 2,716.8 | $ | 166.4 | ||||||||||||||
| Illinois | 271.9 | 219.3 | 52.6 | |||||||||||||||||
| Other states | 82.1 | 84.9 | (2.8) | |||||||||||||||||
| Non-utility energy infrastructure | 62.8 | 84.3 | (21.5) | |||||||||||||||||
| Corporate and other | 18.7 | 14.7 | 4.0 | |||||||||||||||||
| Total capital expenditures | $ | 3,318.7 | $ | 3,120.0 | $ | 198.7 | ||||||||||||||
The increase in cash paid for capital expenditures at the Wisconsin segment during the nine months ended September 30, 2026, compared with the same period in 2025, was driven by higher payments for the CTs and LNG at WE, electric distribution at WE and WPS, and natural gas distribution at WE. These increases in capital expenditures at the Wisconsin segment were partially offset by lower payments for renewable energy projects at WE, WPS, and at UMERC for Renegade, which achieved commercial operation in March 2026.
The increase in cash paid for capital expenditures at the Illinois segment during the nine months ended September 30, 2026, compared with the same period in 2025, was driven by higher payments related to PGL's upgrade of its natural gas delivery system.
The decrease in cash paid for capital expenditures at the non-utility energy infrastructure segment during the nine months ended September 30, 2026, compared with the same period in 2025, was driven by lower payments for new generator units at Port Washington Generating Station.
See Capital Resources and Requirements - Capital Requirements - Significant Capital Projects for more information.
Financing Activities
Net cash provided by financing activities decreased $444.9 million during the nine months ended September 30, 2026, compared with the same period in 2025, driven by:
•A $364.1 million decrease in cash due to lower issuances of common stock during the nine months ended September 30, 2026, compared with the same period in 2025. See Note 8, Common Equity, for more information.
•A $272.6 million decrease in cash due to higher retirements of long-term debt during the nine months ended September 30, 2026, compared with the same period in 2025.
•A $163.6 million decrease in cash due to $21.9 million of net repayments of commercial paper during the nine months ended September 30, 2026, compared with $141.7 million of net borrowings of commercial paper during the same period in 2025.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
•A $73.4 million decrease in cash due to higher dividends paid on our common stock during the nine months ended September 30, 2026, compared with the same period in 2025. In January 2026, our Board of Directors increased our quarterly dividend by $0.06 per share (6.7%) effective with the March 2026 dividend payment.
•A $27.7 million decrease in cash related to a lower number of stock options exercised during the nine months ended September 30, 2026, compared with the same period in 2025.
These decreases in net cash provided by financing activities were partially offset by a $451.0 million increase in cash due to the issuance of more long-term debt during the nine months ended September 30, 2026, compared with the same period in 2025.
Other Significant Financing Activities
For more information on our other significant financing activities, see Note 8, Common Equity, Note 9, Short-Term Debt and Lines of Credit, and Note 10, Long-Term Debt.
Cash Requirements
We require funds to support and grow our businesses. Our significant cash requirements primarily consist of capital and investment expenditures, payments to retire and pay interest on long-term debt, the payment of common stock dividends to our shareholders, and the funding of our ongoing operations. See the discussion below and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Cash Requirements in our 2025 Annual Report on Form 10-K for additional information regarding our significant cash requirements.
Significant Capital Projects
We have several capital projects and acquisitions that will require significant capital expenditures over the next three years and beyond. All projected capital requirements are subject to periodic review and may vary significantly from estimates, depending on a number of factors. These factors include environmental and regulatory requirements, changes in tax laws and regulations, acquisition and development opportunities, market volatility, economic trends, supply chain disruptions, inflation, and interest rates. Our estimated capital expenditures and acquisitions for the next three years are reflected below. These amounts include anticipated expenditures for environmental compliance and certain remediation issues. For a discussion of certain environmental matters affecting us, see Note 22, Commitments and Contingencies.
| (in millions) |
2026 (1)
|
2027 | 2028 | |||||||||||||||||
| Wisconsin - Non-VLC/Bespoke Resources | $ | 2,521.7 | $ | 3,001.2 | $ | 2,929.0 | ||||||||||||||
| Wisconsin - VLC/Bespoke Resources | 2,057.0 | 4,300.0 | 5,025.0 | |||||||||||||||||
| Illinois | 477.9 | 807.6 | 813.0 | |||||||||||||||||
| Other states | 117.3 | 123.0 | 129.9 | |||||||||||||||||
| Non-utility energy infrastructure | 90.1 | 152.6 | 162.8 | |||||||||||||||||
| Corporate and other | 22.0 | 23.6 | 18.3 | |||||||||||||||||
| Total | $ | 5,286.0 | $ | 8,408.0 | $ | 9,078.0 | ||||||||||||||
(1)This includes actual capital expenditures incurred through September 30, 2026, as well as estimated capital expenditures for the remainder of the year.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
We are committed to investing in solar, wind, battery storage, and natural gas-fired generation. In addition, our utilities continue to upgrade their electric and natural gas distribution systems to enhance reliability. Below are the anticipated investment amounts for the next three years for generation, LNG, and distribution projects that are proposed or currently underway.
| (in millions) |
2026 (1)
|
2027 | 2028 | |||||||||||||||||
| Generation: | ||||||||||||||||||||
| Solar | $ | 938.4 | $ | 2,176.6 | $ | 1,732.8 | ||||||||||||||
| Wind | 105.1 | 169.6 | 295.6 | |||||||||||||||||
| Battery | 462.9 | 604.1 | 922.2 | |||||||||||||||||
| Thermal | 935.6 | 2,008.6 | 2,864.6 | |||||||||||||||||
| Other | 423.0 | 661.1 | 717.8 | |||||||||||||||||
| LNG | 189.0 | 73.0 | 16.0 | |||||||||||||||||
| Distribution: | ||||||||||||||||||||
| Electric distribution | 1,032.0 | 1,023.0 | 976.0 | |||||||||||||||||
| Gas distribution | 1,200.0 | 1,692.0 | 1,553.0 | |||||||||||||||||
| Total | $ | 5,286.0 | $ | 8,408.0 | $ | 9,078.0 | ||||||||||||||
(1)This includes actual capital expenditures incurred through September 30, 2026, as well as estimated capital expenditures for the remainder of the year.
The DOC set duties on solar panels and cells imported from four southeast Asian countries as well as from Laos, Indonesia, and India, and began an investigation into cells from Ethiopia. See Factors Affecting Results, Liquidity, and Capital Resources - Regulatory, Legislative, and Legal Matters - United States Department of Commerce Complaints and Factors Affecting Results, Liquidity, and Capital Resources - Regulatory, Legislative, and Legal Matters - Uyghur Forced Labor Prevention Act for information on the duties set by the DOC and its current investigation, as well as CBP actions, respectively. The forecasted costs identified above already reflect some of these impacts.
See Factors Affecting Results, Liquidity, and Capital Resources - Regulatory, Legislative, and Legal Matters - Renewable Energy Legislation for potential impacts to our capital projects as a result of the OBBBA.
In accordance with its November 2023 PGL rate order, the ICC initiated a proceeding in January 2024 to determine the optimal method and a prudent investment level for replacing aging natural gas infrastructure. In February 2025, the ICC issued an order setting expectations for PGL's prospective operations. The ICC directed PGL to focus on retiring all cast and ductile iron pipes that have a diameter under 36 inches by January 1, 2035. PGL is working to retire this cast and ductile iron pipe through its PRP. Annual investment for pipe replacement is expected to ramp up to approach $500 million in 2028. For more information on regulatory proceedings related to this matter, see Note 24, Regulatory Environment, and Factors Affecting Results, Liquidity, and Capital Resources - Regulatory, Legislative, and Legal Matters - Illinois Proceeding - Replacement of Aging Natural Gas Infrastructure.
We expect to provide total capital contributions to ATC (not included in the above table) of approximately $820 million from 2026 through 2028. We do not expect to make any contributions to ATC Holdco during that period. Our portion of the investment in MISO Tranche 1 and Tranche 2.1 is estimated to be approximately $500 million and $700 million, respectively, between 2027 and 2031, a portion of which will be funded by ATC's cash from operations. Tranche 1 is part of MISO's Long Range Transmission Planning initiative to upgrade the grid so that it can reliably accommodate for the shift in generation to lower-carbon resources. Tranche 2.1 is the second phase of long range transmission planning and builds on the foundation of Tranche 1.
Long-Term Debt
See Note 10, Long-Term Debt, for information regarding the changes in our outstanding long-term debt during the nine months ended September 30, 2026.
Common Stock Dividends
Our current quarterly dividend rate is $0.9525 per share, which equates to an annual dividend of $3.81 per share. For information related to our most recent common stock dividend declared, see Note 8, Common Equity.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
Other Significant Cash Requirements
See Note 22, Commitments and Contingencies, for information regarding our minimum future commitments related to purchase obligations for the procurement of fuel, power, and natural gas supply, as well as the related storage and transportation. There were no material changes to our other significant commitments outside the ordinary course of business during the nine months ended September 30, 2026.
Off-Balance Sheet Arrangements
We are a party to various financial instruments with off-balance sheet risk as a part of our normal course of business, including financial guarantees and letters of credit that support construction projects, commodity contracts, and other payment obligations. We believe that these agreements do not have, and are not reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources. For additional information, see Note 9, Short-Term Debt and Lines of Credit, Note 16, Guarantees, and Note 21, Variable Interest Entities.
Sources of Cash
Liquidity
We anticipate meeting our short-term and long-term cash requirements to operate our businesses and implement our corporate strategy through internal generation of cash from operations and access to the capital markets, and common equity. Accessing the capital markets allows us to obtain external short-term borrowings, including commercial paper and term loans, and issue intermediate or long-term debt securities, as well as other types of securities. We also issue common equity through a combination of our employee benefit plans and stock purchase and dividend reinvestment plan, as well as through an at-the-market program. Cash generated from operations is primarily driven by sales of electricity and natural gas to our utility customers, reduced by costs of operations. Our access to the capital markets is critical to our overall strategic plan and allows us to supplement cash flows from operations with external borrowings to manage seasonal variations, working capital needs, commodity price fluctuations, unplanned expenses, and unanticipated events. Subject to market conditions and other factors, we may repurchase our debt securities through open market purchases, privately negotiated transactions and/or other types of transactions.
WEC Energy Group, WE, WPS, WG, and PGL maintain bank back-up credit facilities, which provide liquidity support for each company's obligations with respect to commercial paper and for general corporate purposes. We review our bank back-up credit facility needs on an ongoing basis and expect to be able to maintain adequate credit facilities to support our operations.
The amount, type, and timing of any financings for the remainder of 2026, as well as in subsequent years, will be contingent on investment opportunities and our cash requirements and will depend upon prevailing market conditions, regulatory approvals for certain subsidiaries, and other factors. Our regulated utilities plan to maintain capital structures consistent with those approved by their respective regulators. For more information on our utilities' approved capital structures, see Item 1. Business - E. Regulation in our 2025 Annual Report on Form 10-K.
The issuance of securities by our utility companies is subject to the approval of the applicable state commissions or FERC. Additionally, with respect to the public offering of securities, we, WE, and WPS file registration statements with the SEC under the Securities Act of 1933, as amended (1933 Act). The amounts of securities authorized by the appropriate regulatory authorities, as well as the securities registered under the 1933 Act, are closely monitored and appropriate filings are made to ensure flexibility in the capital markets.
At September 30, 2026, our current liabilities exceeded our current assets by $2,438.4 million. We do not expect this to have an impact on our liquidity, as we currently believe that our available capacity under our existing revolving credit facilities, cash generated from ongoing operations, and access to the capital markets are adequate to meet our short-term and long-term cash requirements.
See Note 8, Common Equity, Note 9, Short-Term Debt and Lines of Credit, and Note 10, Long-Term Debt, for more information about our common stock activity, credit facilities, commercial paper, and debt securities.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
Investments in Outside Trusts
We maintain investments in outside trusts to fund the obligation to provide pension and certain OPEB benefits to current and future retirees. These trusts have investments consisting of fixed income and equity securities that are subject to the volatility of the stock market and interest rates. For more information, see Investments in Outside Trusts in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Sources of Cash in our 2025 Annual Report on Form 10-K.
Capitalization Structure
The following table shows our capitalization structure as of September 30, 2026, as well as an adjusted capitalization structure that we believe is consistent with how a majority of the rating agencies currently view our Junior Notes:
| (in millions) | Actual | Adjusted | ||||||||||||
| Common shareholders' equity | $ | 14,575.4 | $ | 15,250.4 | ||||||||||
| Preferred stock of subsidiary | 30.4 | 30.4 | ||||||||||||
| Long-term debt (including current portion) | 20,851.7 | 20,176.7 | ||||||||||||
| Short-term debt | 1,904.3 | 1,904.3 | ||||||||||||
| Total capitalization | $ | 37,361.8 | $ | 37,361.8 | ||||||||||
| Total debt | $ | 22,756.0 | $ | 22,081.0 | ||||||||||
| Ratio of debt to total capitalization | 60.9 | % | 59.1 | % | ||||||||||
Included in long-term debt on our balance sheet as of September 30, 2026, was $600.0 million principal amount of WEC Energy Group's 2025 Junior Notes due 2056 and $750.0 million principal amount of WEC Energy Group's 2024 Junior Notes (2024A Junior Notes and 2024B Junior Notes, collectively) due 2055. The adjusted presentation attributes $675.0 million of the Junior Notes to common shareholders' equity and $675.0 million to long-term debt.
The adjusted presentation of our consolidated capitalization structure is included as a complement to our capitalization structure presented in accordance with GAAP. Management evaluates and manages our capitalization structure, including our total debt to total capitalization ratio, using the GAAP calculation as adjusted to reflect the treatment of the 2025 Junior Notes and 2024 Junior Notes by the majority of rating agencies. Therefore, we believe the non-GAAP adjusted presentation reflecting this treatment is useful and relevant to investors in understanding how management and the rating agencies evaluate our capitalization structure.
Debt Covenants
Certain of our short-term and long-term debt agreements contain financial covenants that we must satisfy, including debt to capitalization ratios and debt service coverage ratios. At September 30, 2026, we were in compliance with all such covenants related to outstanding short-term and long-term debt. We expect to be in compliance with all such debt covenants for the foreseeable future. See Note 11, Common Equity, Note 13, Short-Term Debt and Lines of Credit, and Note 14, Long-Term Debt, in our 2025 Annual Report on Form 10-K, for more information regarding our debt covenants.
Credit Rating Risk
Cash collateral postings and prepayments made with external parties, including postings related to exchange-traded contracts, and cash collateral posted by external parties were immaterial as of September 30, 2026. From time to time, we may enter into commodity contracts that could require collateral or a termination payment in the event of a credit rating change to below BBB- at S&P Global Ratings, a division of S&P Global Inc., and/or Baa3 at Moody's Investors Service, Inc. If WE had a sub-investment grade credit rating at September 30, 2026, it could have been required to post $109 million of additional collateral or other assurances pursuant to the terms of a PPA. We also have other commodity contracts that, in the event of a credit rating downgrade, could result in a reduction of our unsecured credit granted by counterparties.
In addition, access to capital markets at a reasonable cost is determined in large part by credit quality. Any credit ratings downgrade could impact our ability to access capital markets.
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Subject to other factors affecting the credit markets as a whole, we believe our current ratings should provide a significant degree of flexibility in obtaining funds on competitive terms. However, these security ratings reflect the views of the rating agency only. An explanation of the significance of these ratings may be obtained from the rating agency. Such ratings are not a recommendation to buy, sell, or hold securities. Any rating can be revised upward or downward or withdrawn at any time by a rating agency.
FACTORS AFFECTING RESULTS, LIQUIDITY, AND CAPITAL RESOURCES
The following is a discussion of certain factors that may affect our results of operations, liquidity, and capital resources. This discussion should be read together with the information in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Factors Affecting Results, Liquidity, and Capital Resources in our 2025 Annual Report on Form 10-K, which provides a more complete discussion of factors affecting us, including market risks and other significant risks, competitive markets, environmental and regulatory matters, critical accounting policies and estimates, and other matters.
Regulatory, Legislative, and Legal Matters
Regulatory Recovery
Our utilities account for their regulated operations in accordance with accounting guidance under the Regulated Operations Topic of the FASB ASC. Regulated entities are allowed to defer certain costs that would otherwise be charged to expense if the regulated entity believes the recovery of those costs is probable. We record regulatory assets pursuant to generic and/or specific orders issued by our regulators. Recovery of the deferred costs in future rates is subject to the review and approval by those regulators. We assume the risks and benefits of ultimate recovery of these items in future rates. If the recovery of the deferred costs, including those referenced below, is not approved by our regulators, the costs would be charged to income in the current period. Regulators can impose liabilities on a prospective basis for amounts previously collected from customers and for amounts that are expected to be refunded to customers. We record these items as regulatory liabilities. See Note 6, Regulatory Assets and Liabilities, for more information on our regulatory assets and liabilities. See Note 24, Regulatory Environment, in this report, and Note 26, Regulatory Environment, in our 2025 Annual Report on Form 10-K for more information regarding recent and pending rate proceedings, orders, and investigations involving our utilities.
Illinois Riders
Uncollectible Expense Adjustment Rider
The rates of PGL and NSG include a UEA rider for cost recovery or refund of uncollectible expense based on the difference between actual uncollectible write-offs and the amounts recovered in rates. The UEA rider is subject to an annual reconciliation whereby costs are reviewed for accuracy and prudency by the ICC.
In May 2026, the ICC issued a final written order approving a settlement agreement PGL and NSG entered into with the Illinois Attorney General and ICC staff that resolved all open proceedings related to the 2019 through 2023 annual reconciliations of the UEA rider. Under the terms of the settlement, PGL and NSG will refund $49.0 million and $1.0 million, respectively, to customers as bill credits over a period of three years between 2026 and 2028. Half of the refunds will be credited to customers in 2026, and 25% will be refunded in each of 2027 and 2028. PGL and NSG will begin refunding amounts in November 2026. As a result of this agreement, we recorded a $50.0 million reduction to revenues during the fourth quarter of 2025.
Qualifying Infrastructure Plant Rider
In January 2014, the ICC approved PGL's use of the QIP rider as a recovery mechanism for costs incurred related to investments in QIP. This rider, which was in effect until December 1, 2023, was subject to an annual reconciliation whereby costs were reviewed for accuracy and prudency.
In August 2024, the ICC issued a final order on PGL's 2016 annual reconciliation, which included a disallowance of $14.8 million of certain capital costs. PGL subsequently filed a petition with the Illinois Appellate Court for review of the ICC's August 2024 order; however, in connection with the settlement agreement discussed below, in June 2026, PGL, the ICC, and the Illinois Attorney General filed a joint motion to dismiss the appeal with prejudice, which was granted by the court.
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In May 2026, the ICC issued a final written order approving a settlement agreement PGL entered into with the Illinois Attorney General, ICC staff, and the Illinois Citizens Utility Board that resolved all remaining open annual reconciliation proceedings from 2017 through 2023 related to the QIP rider. Under the terms of the settlement, PGL agreed to permanently remove $130.0 million of qualified infrastructure investment costs from rate base starting in 2027 and to refund $75.0 million to customers as bill credits over a period of three years between 2026 and 2028. As a result of this agreement, we recorded a $155.0 million charge to income during the fourth quarter of 2025. The charge was recorded as a $130.0 million impairment to PGL's net property, plant, and equipment and a $25.0 million reduction to revenues. The total of the rate base reduction and the obligation to refund amounts to customers through bill credits recorded on our balance sheet at September 30, 2026 was $205.0 million. This includes the $155.0 million charge to income recorded during the fourth quarter of 2025 and a $50.0 million charge to income recorded in years prior to 2025. PGL will begin refunding amounts to customers in November 2026, with $25.0 million being refunded in each of the three years starting in 2026 through 2028.
Illinois Proceeding - Replacement of Aging Natural Gas Infrastructure
In the PGL rate order issued by the ICC in November 2023, the ICC ordered PGL to pause spending on its projects to upgrade its natural gas delivery system until the ICC completed a proceeding to determine the optimal method for replacing aging natural gas infrastructure and a prudent investment level. In February 2025, the ICC issued an order setting expectations for PGL's prospective operations. The ICC directed PGL to focus on retiring all cast and ductile iron pipes that have a diameter under 36 inches by January 1, 2035. The ICC also indicated that failure to comply with this directive could subject us to civil penalties under Illinois statute. PGL is working to retire this cast and ductile iron pipe through its PRP. Costs incurred under the PRP will be evaluated for prudency by the ICC in future rate cases. In addition, the program will be overseen by a safety monitor hired by the ICC. PGL initiated a general rate case proceeding in January 2026, which we anticipate will provide further regulatory clarity before we significantly increase our spend associated with the PRP.
See Note 24, Regulatory Environment, for more information regarding the 2026 rate case filing and November 2023 ICC rate order.
Very Large Customer and Bespoke Resources Collateral Requirements
We have incurred significant costs to construct generation, transmission and distribution assets that will be used to provide energy and capacity to Oracle America Cloud Services LLC ("OACS"), which will be taking service under the approved VLC and Bespoke Resources tariffs. Following a credit rating downgrade of OACS's parent, our contracts required additional collateral to secure our credit exposure. OACS and its parent have provided the collateral required in conjunction with the credit rating downgrade. The amount of collateral required will increase as additional project costs are incurred, and we fully expect OACS and its parent to provide the additional required amounts. See Note 24, Regulatory Environment, for more information on the VLC and Bespoke Resources tariffs.
Uyghur Forced Labor Prevention Act
In June 2022, the CBP implemented the UFLPA, which establishes a rebuttable presumption that certain silica-based products wholly or partially manufactured in the Xinjiang Uyghur Autonomous Region of China, such as polysilicon included in the manufacturing of solar panels, are prohibited from entering the United States. While our suppliers have been able to provide the CBP sufficient documentation to meet the UFLPA compliance requirements, and we expect the same will be true for subsequent projects, we cannot currently predict what, if any, long-term impact the UFLPA will have on the overall supply of solar panels into the United States and whether we will experience any further impacts to the timing and cost of solar projects included in our long-term capital plan.
In 2025, and again in July 2026, the Department of Homeland Security expanded the UFLPA Entity List to include additional Chinese businesses across various industries, including several solar supply chain providers. We continue to work with our contractors and developers to avoid doing business with these companies and remain in compliance with the UFLPA.
United States Department of Commerce Complaints
Starting in June 2024, the DOC began applying duties to certain imports of solar cells from Malaysia, Vietnam, Thailand and Cambodia, with the potential for enhanced duties in certain circumstances, based on final findings by both the DOC and the USITC in their AD/CVD investigations that Chinese manufacturers were shifting products to those four Southeast Asian countries to avoid tariffs on products imported from China.
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In April 2025, based upon an investigation in response to a new petition, the DOC reached affirmative findings that some Chinese companies had moved their solar operations to avoid penalties imposed in the first investigation, increasing tariff rates, in some cases significantly. These increased rates became effective and enforceable in May 2025 upon the USITC's final affirmative determination.
In September 2026 the DOC set AD/CVD duties on imports of solar cells and panels from India, Indonesia and Laos based on findings that producers in those countries are benefiting from illegal subsidies and selling solar products below cost in the United States. The USITC is expected to make a final determination this fall. If the USITC votes affirmatively, final rates will then be issued and take effect. Further, the DOC recently began an investigation into solar panels from Ethiopia and a petition was filed requesting investigation into solar panels from South Korea, both based on similar claims that solar panels from those countries are being made with Chinese-made components in violation of AD/CVD laws.
As a result of the duties that have been imposed to date, the cost and availability of solar panels in the United States has been impacted and the United States solar industry overall has experienced higher costs of materials as well as delays. Some of these impacts have already been reflected in the estimated cost and in-service dates for certain of our solar projects; however, we are continuing to monitor the tariffs and investigations for any additional potential impact on our solar projects.
Bulk-Power System Executive Order
On August 26, 2026, President Trump issued Executive Order 14421, declaring a national emergency to protect the United States bulk-power system from security threats associated with foreign-supplied electric equipment and technology. The order authorizes the United States Secretary of Energy to restrict, evaluate, and mitigate transactions involving the installation of foreign-sourced bulk-power system components that pose certain security threats initiated after the order and to establish a framework for identifying and monitoring the same foreign-sourced components already in the domestic power infrastructure prior to this order. This order covers facilities and control systems necessary for operating an interconnected transmission network and electric generation facilities but excludes local distribution. The Executive Order requires the United States Department of Energy to publish rules or regulations implementing this order no later than 120 days from August 26, 2026, or December 24, 2026. We are currently evaluating the potential operational and financial implications of this order.
Renewable Energy Legislation
Infrastructure Investment and Jobs Act
In November 2021, the Infrastructure Investment and Jobs Act was signed into law and provides for approximately $1.2 trillion of federal spending through 2026, including approximately $85 billion for investments in power, utilities, and renewables infrastructure across the United States. Funding from this Act supports the work we are doing to reduce GHG emissions and to strengthen and protect the energy grid. In January 2025, disbursement of funds was paused until agency heads could determine whether grants, loans, contracts, and other disbursements were consistent with the administration's energy policy. The pause disrupted, and continues to disrupt, funding, temporarily or permanently, for infrastructure projects already in progress, caused project delays and cancellations, and impacted payment obligations for downstream contractors and suppliers.
Inflation Reduction Act
In August 2022, the IRA was signed into law and provides for $258 billion in energy-related provisions over a 10-year period. The IRA has helped reduce our cost of investing in projects that support our commitment to reduce emissions and provide affordable, reliable, and clean energy for our communities. We and our customers have benefited from the IRA's provisions to extend tax benefits for renewable technologies, increase or restore higher rates for PTCs, claim PTCs for solar projects, expand qualified ITC facilities to include standalone energy storage, and allow companies to transfer tax credits generated from renewable projects.
Under the IRA transferability option, we entered into agreements to sell the majority of the PTCs that we expect to generate in 2026 and a portion of the PTCs that we expect to generate in 2027 and 2028 to third parties. See Note 13, Income Taxes, for more information about these sales. The IRA also implements a 15% corporate alternative minimum tax and a 1% excise tax on stock repurchases. Although significant regulatory guidance is expected on the tax provisions in the IRA, we currently believe the provisions on alternative minimum tax and stock repurchases will not have a material impact on us.
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One Big Beautiful Bill Act
In July 2025, the OBBBA was signed into law, enacting significant modifications to clean-energy tax credits previously provided under the IRA. The OBBBA provides companies the ability to earn solar and wind tax credits at current credit rates if construction of projects began by July 4, 2026, and the projects are placed in-service within four years after beginning construction. However, wind and solar projects that begin construction more than one year after enactment of the OBBBA must be placed in service by December 31, 2027 to qualify for PTCs and ITCs. In addition, wind and solar projects that began construction after December 31, 2025 must also satisfy prohibited foreign entity material assistance requirements, as defined through proposed guidance by the United States Treasury Department in February 2026. The incentives can also be denied for taxpayers that exceed certain thresholds of equity or debt held by specified foreign entities. The phase out of PTCs and ITCs does not apply to energy storage, hydroelectric facilities, nuclear, or any other zero emission technology. The OBBBA preserves the ability to transfer tax credits, with the exception of transfers to a prohibited foreign entity. In August 2025, the United States Treasury Department implemented new beginning-of-construction safe harbor rules that became effective in September 2025. However, in June 2026, a federal court vacated the revised beginning-of-construction safe harbor rules and remanded the issue back to the IRS for reconsideration. Therefore, uncertainty remains. We will continue to monitor additional information as it becomes available. The capital plan for 2027 through 2031 reflects the impacts of OBBBA, including the revised beginning-of-construction rules.
American Transmission Company LLC's Ozaukee County Distribution Interconnection Project
In September 2025, ATC filed an application for a CPCN with the PSCW to construct the Ozaukee County Distribution Interconnection Project. This proposed project is an important part of our plan to serve the data center under construction in Port Washington, Wisconsin, and includes the construction of new transmission lines, rebuilding and upgrading existing lines, and the construction of up to five new electrical substations. The PSCW deemed this CPCN application complete in December 2025. However, on September 10, 2026, based upon numerous revisions, modifications, and additional documents filed by ATC, the PSCW issued an order stating the current state of the CPCN application was unreasonably complicated and rescinded its previous completeness determination. As requested by the PSCW, ATC refiled its application for a CPCN to construct the Ozaukee County Distribution Interconnection Project on September 14, 2026. We are monitoring this project and all related PSCW actions for any potential impacts on our capital plan and earnings.
American Transmission Company LLC Allowed Return on Equity Complaint
For transmission owners such as ATC, the ROE allowed by the FERC helps determine how much can be earned on their transmission assets as well as how much consumers pay for those assets. In November 2013, a group of MISO industrial customers filed a complaint with the FERC requesting a decrease in the base ROE used by MISO transmission owners, including ATC, from 12.2% to 9.15%. Due to this complaint, the FERC and the D.C. Circuit Court of Appeals have issued the following orders and opinions. The base ROEs listed below do not include the 50 basis point ROE incentive currently provided for membership in a transmission organization.
•Significant FERC Orders Issued Prior to August 2022 D.C. Circuit Court of Appeals Opinion
◦In November 2019, the FERC issued an order that expanded its base ROE methodology and reduced the base ROE for MISO transmission owners to 9.88% for the period covered by the complaint, November 12, 2013 through February 11, 2015 and September 28, 2016 going forward. Then, in May 2020, the FERC made additional revisions to its base ROE methodology and issued an order that increased the base ROE for all MISO transmission owners to 10.02% for the period covered by the complaint.
•August 2022 D.C. Circuit Court of Appeals Opinion
◦In August 2022, the D.C. Circuit Court of Appeals ruled the FERC failed to adequately explain why it made additional revisions to its base ROE methodology in its May 2020 Order. Due to this ruling, the D.C. Circuit Court of Appeals vacated the FERC's previous orders and remanded the issue of determining an appropriate base ROE for MISO transmission owners back to the FERC for additional proceedings.
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•Significant Orders and Opinions Issued After August 2022 D.C. Circuit Court of Appeals Opinion
◦In response to the August 2022 D.C. Circuit Court of Appeals Opinion, the FERC adjusted its base ROE methodology to remove the impacts of the May 2020 Order. As a result of this methodology change, orders were issued by the FERC in October 2024 and March 2025 that required MISO transmission owners to adopt a 9.98% base ROE for the period covered by the complaint. In June 2026, the D.C. Circuit Court of Appeals affirmed the FERC's October 2024 and March 2025 orders, which had no impact on our financial statements.
Environmental Matters
See Note 22, Commitments and Contingencies, for a discussion of certain environmental matters affecting us, including rules and regulations relating to air quality, water quality, land quality, and climate change.
Market Risks and Other Significant Risks
We are exposed to market and other significant risks as a result of the nature of our businesses and the environments in which those businesses operate. These risks include, but are not limited to, the risks described below. In addition, the war with Iran and increasing tensions between the United States and other countries, as well as other new, protracted or escalating regional and international conflicts have had, and are expected to have a continuing, impact on the global economy, supply chains, and fuel prices. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Factors Affecting Results, Liquidity, and Capital Resources - Market Risks and Other Significant Risks in our 2025 Annual Report on Form 10-K for a discussion of market and other significant risks applicable to us.
Changes to United States Trade Policy (Tariff Activity)
The United States continues to implement changes to its international trade policy including changes to tariffs, port fees and other policies relating to exports from and imports into the United States. In response to these changes, foreign governments also continue to adjust their trade policies, including the imposition of additional tariffs. There remains significant uncertainty as to the ultimate scope, duration and impact of the United States and foreign trade policies. In certain cases, both the United States and foreign trade policy changes have resulted in increased cost of materials and disrupted supply chains, which may impact our ability to repair or maintain our infrastructure; the timing, cost or completion of our infrastructure projects; and/or our ability to execute our capital plan. In addition, these changes, including their potential impact on economic conditions, could lead to reduced energy demand by our customers. Consequently, these policy changes could have a material adverse effect on our business, results of operations and financial condition.
We have received refunds of certain tariffs paid in connection with our capital projects and continue to pursue additional refunds, including requiring our contractors and vendors to seek refunds, as applicable, of tariffs paid under the International Emergency Economic Powers Act and other tariff provisions.
Inflation and Supply Chain Disruptions
We continue to monitor the impact of inflation and supply chain disruptions. We monitor the costs of medical plans, fuel, transmission access, construction costs, regulatory and environmental compliance costs, and other costs in order to minimize inflationary effects in future years, to the extent possible, through pricing strategies, productivity improvements, and cost reductions. We monitor the global supply chain, and related disruptions, so that we are able to procure the materials and other resources necessary to both maintain our energy services in a safe and reliable manner and to grow our infrastructure in accordance with our capital plan. For additional information concerning risks related to inflation and supply chain disruptions, see the four risk factors below that are disclosed in Part I of our 2025 Annual Report on Form 10-K.
•Item 1A. Risk Factors - Risks Related to the Operation of Our Business - Public health crises, including epidemics and pandemics, could adversely affect our business functions, financial condition, liquidity, and results of operations.
•Item 1A. Risk Factors - Risks Related to the Operation of Our Business - Our operations and corporate strategy may be adversely affected by supply chain disruptions, inflation, and tariffs.
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•Item 1A. Risk Factors - Risks Related to the Operation of Our Business - We are actively involved with multiple significant capital projects, which are subject to a number of risks and uncertainties that could adversely affect project costs and completion of construction projects.
•Item 1A. Risk Factors - Risks Related to Economic and Market Volatility - The fluctuation in demand for certain commodities and their respective prices could negatively impact our operations.
For additional information concerning risk factors, including market risks, see the Cautionary Statement Regarding Forward-Looking Information at the beginning of this report.
Critical Accounting Policies and Estimates
We have reviewed our critical accounting policies and considered whether any new critical accounting estimates or other significant changes to our accounting policies require additional disclosures. We have found that the disclosures made in our 2025 Annual Report on Form 10-K are still current and that there have been no significant changes, except as follows:
Goodwill
We completed our annual goodwill impairment tests for all of our reporting units that carried a goodwill balance as of July 1, 2026. No impairments were recorded as a result of these tests. For all of our reporting units, the fair values calculated in step one of the test were greater than their carrying values. The fair values for the reporting units were calculated using a combination of the income approach and the market approach.
For the income approach, we used internal forecasts to project cash flows. Any forecast contains a degree of uncertainty, and changes in these cash flows could significantly increase or decrease the calculated fair value of a reporting unit. For our reporting units that are regulated, a fair recovery of and return on costs prudently incurred to serve customers is assumed. An unfavorable outcome in a rate case could cause the fair values of our reporting units to decrease.
Key assumptions used in the income approach include ROEs, the long-term growth rates used to determine terminal values at the end of the discrete forecast period, and the discount rates. The discount rate is applied to estimated future cash flows and is one of the most significant assumptions used to determine fair value under the income approach. As interest rates rise, the calculated fair values will decrease. The discount rate is based on the weighted-average cost of capital for each reporting unit, taking into account both the after-tax cost of debt and cost of equity. The terminal year ROE for each utility is driven by its current allowed ROE. The terminal growth rate is based primarily on a combination of historical and forecasted statistics for real gross domestic product and personal income for each utility service area.
For the market approach, we used a higher weighting for the guideline public company method than the guideline merged and acquired company method due to a low number of mergers and acquisitions in recent years. The guideline public company method uses financial metrics from similar publicly traded companies to determine fair value. The guideline merged and acquired company method calculates fair value by analyzing the actual prices paid for recent mergers and acquisitions in the industry. We applied multiples derived from these two methods to the appropriate operating metrics for our reporting units to determine fair value.
The underlying assumptions and estimates used in the impairment tests were made as of a point in time. Subsequent changes in these assumptions and estimates could change the results of the tests.
For all of our reporting units that carried a goodwill balance at July 1, 2026, the fair value exceeded its carrying value by over 50%. Based on these results, our reporting units are not at risk of failing step one of the goodwill impairment test.
See Note 18, Goodwill and Intangibles, for more information.
| 09/30/2026 Form 10-Q | WEC Energy Group, Inc. | |||||||
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