WEC Energy Group, Inc. (WEC) Q4 2015 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen. Thank you for waiting and welcome to WEC Energy Group's Conference Call to review the 2015 Year-End Results. This call is being recorded for rebroadcast, and all participants are in a listen-only mode at this time. Before the conference call begins, I will read the forward-looking language. All statements in this presentation, other than historical facts, are forward-looking statements that involve risks and uncertainties, which are subject to change at any time. Such statements are based on management's expectations at the time they are made. In addition to the assumptions and other factors referred to in connection with the statement, factors described in WEC Energy Group's and Integrys Holding's latest Form 10-Ks and subsequent reports filed with the Securities and Exchange Commission could cause actual results to differ materially from those contemplated. During the discussions, referenced earnings per share will be based on diluted earnings per share unless otherwise noted. After the presentation, the conference will be open to analysts for questions and answers. In conjunction with this call, WEC has posted on its website a package of detailed financial information at wecenergygroup.com. A replay of our remarks will be available approximately two hours after the conclusion of this call. And now, it's my pleasure to introduce Mr. Gale Klappa, Chairman of the Board and Chief Executive Officer of WEC Energy Group. Gale E. Klappa - Chairman & Chief Executive Officer: Helane, thank you. Good afternoon, everyone, and thank you for joining us today as we review our results for calendar year 2015. As you know, we formed WEC Energy Group on June 29 when we closed our acquisition of Integrys. So today's report reflects two full quarters as a combined company. I'll update our progress on a number of major initiatives in just a moment. But first, as always, I'd like to introduce the members of our management team who are here with me today. We have Allen Leverett, President of WEC Energy Group and CEO-elect; Pat Keyes, our Chief Financial Officer; Susan Martin, General Counsel; Bill Guc, Controller; Scott Lauber, Treasurer; and Beth Straka, Senior Vice President of Corporate Communications and Investor Relations. Turning now to our 2015 performance, I'd like to remind you that we're focusing on legacy Wisconsin Energy so our financial results have been adjusted to remove the impact of the acquisition. And as you saw from our news release this morning, we reported Wisconsin Energy adjusted standalone earnings of $2.73 a share for 2015, that compares with adjusted earnings of $2.65 a share for 2014. Looking back over the latest year, it was not only a transformational year for our company but a year also of significant achievements. We Energies was named the most reliable utility in the Midwest for the fifth consecutive year. In international studies, We Energies ranked in the top quartile in the Midwest again for customer service and power quality and in the top quartile nationally for customer service. In addition, Wisconsin Public Service in Green Bay was ranked number two in the Midwest for overall customer satisfaction among mid-sized utilities. We also reached a milestone for employee safety at We Energies, recording the safest year in more than 115 years of operation. We invested nearly $780 million in our legacy core business with all major projects on time and on budget. And, of course, we closed our acquisition of Integrys to form WEC Energy Group, the leading electric and natural gas utility system in the Midwest with now 4.4 million customers across the region. From a financial standpoint, we continued to deliver solid earnings growth. Through disciplined cost control and effective planning, we delivered record earnings in 2015 despite a very warm fourth quarter. In fact, Milwaukee experienced the warmest December in its history, surpassing the former record set way back in the day in 1877. Taking a look at the state's economy, Wisconsin's unemployment rate ended the year at 4.3%, well below the national average and the December statistics show that more Wisconsinites were employed than during any other month in history. The state's labor force participation rate also rose to 68%, which is more than 5 points better than the national rates. In addition, Wisconsin added 4,000 manufacturing jobs from November 2014 to November of 2015 despite some very challenging conditions for manufacturers. In light of these challenges, use of electricity by our large commercial and industrial customers moderated a bit. In 2015, our large customers, excluding the iron ore mines, consumed approximately 0.4% less electricity than they did in 2014. However, and this is an important point, we did see improvement in several significant sectors of the state's economy including food processing, printing, paper production and plastics. In addition, we continued to see an uptick in customer growth across our system. We Energies is serving approximately 6,500 more electric customers and more than 8,500 more customers on the gas side of our business today than we were a year ago. I'm also pleased with our post-acquisition work over the past several months as we've begun to operationalize the new WEC Energy Group. As I've said before, we see tremendous opportunity in the framework of the new company. WEC Energy Group has the scale, scope, technical depth, geographic reach, and financial resources to thrive in our consolidating industry. We're leveraging these strengths to deliver operational and financial benefits to all of our stakeholders. And with our proven leadership team, we're incorporating best practices across the organization to streamline our operations and to reduce costs. WEC Energy Group is now the eighth largest natural gas distribution company in the country and one of the 15 largest investor-owned utility systems in the United States with real opportunity for growth. Bottom line, we have the same top management team, but now with a new platform for growth, a platform focused on the energy infrastructure needs of 4.4 million customers across the Midwest and our plan calls for the combined company to grow earnings per share by 6% to 8% in 2016. Now, I'd like to spend a few minutes reviewing the impact of bonus depreciation, a subject I know you're very interested in. As you know, in December, Congress passed a tax law that extends and modifies bonus depreciation for property placed in service from 2015 to 2019. At this point, we estimate that we'll receive approximately $1 billion of cash benefits from this extension of bonus depreciation, with most of the benefits coming in 2016 and in 2017. First, let me say though, that we do not expect bonus depreciation to have any material impact on earnings this year. And over the longer term we have significant flexibility to bring forward reliability projects that will clearly benefit customers. The additional cash benefits will allow us to fund a strong backlog of infrastructure investments that the region needs for reliability. And if the Clean Power plan moves forward on the proposed timetable, our incremental cash flows could well be needed to support additional investments in renewable energy or new natural gas generation for our fleet. Of course, we also have the option to further deleverage the holding company. So bottom line, for the longer term, beyond 2016, we continue to see earnings per share growth of 5% to 7% a year. As a reminder, our current 10-year investment plan is primarily focused on modernizing our delivery networks. We expect that more than half of our capital investments, about $800 million a year roughly, will be dedicated to the gas delivery business, providing safer and more reliable infrastructure and extending our gas distribution lines to customers across the Midwest. We also plan to invest approximately $400 million a year to upgrade and harden our electric delivery networks. Now, the primary risks associated with these core distribution projects are naturally more manageable given the smaller scale and scope of the work. But the work is no less important than the mega projects we've completed over the years. Our focus now on renewing our distribution networks is essential to maintaining our status as one of the nation's most reliable utilities. We also expect the remaining investment, approximately $300 million a year, will be focused on our generating fleet and on what we call corporate infrastructure. To be clear, however, these projections did not include any capital that would be needed for compliance with the Clean Power Plan. Turning now to other developments, I'm pleased to report that the conversion of the Valley Power Plant near Downtown Milwaukee from coal to natural gas was completed in the fourth quarter on time and on budget. The total investment was approximately $60 million, excluding allowance for funds used during construction. We're also making very good progress on the major construction work at our Twin Falls hydroelectric plant on the border of Wisconsin and Michigan's Upper Peninsula. After more than 100 years of operation we're building a new powerhouse and adding spillway capacity to meet current federal standards. Overall, the Twin Falls project is on time and on budget with approximately 82% of the construction now complete. We're targeting commercial operation for the summer of this year, and we're forecasting a total investment of $60 million to $65 million, again, excluding allowance for funds used during construction. Next, you may recall that we're working to add fuel flexibilities at our Oak Creek expansion units. These units were initially permitted to burn bituminous coal. But given the current cost differential between bituminous coal and Powder River Basin coal, blending the two types of fuel could save customers anywhere between $25 million and $50 million a year, depending upon the mix. Work is under way now to expand our coal storage capability at the Oak Creek site. The larger site should be ready by early next year. Also, the first capital investment inside the plant was made on one of the units during a planned outage this past fall. We also plan to upgrade the second unit during the first quarter of this year. Our share of these investments for the new Oak Creek units is targeted at approximately $80 million, again, excluding allowance for funds used during construction. We're also moving forward on the Accelerated Main Replacement Program at Peoples Gas in Chicago. As you'll recall, this is one of the largest natural gas infrastructure projects in the country. The program calls for the replacement of approximately 2,000 miles of Chicago's aging gas pipelines and I'm pleased to report that over the past six months, we've taken significant steps to improve the management and performance of this project, which is now approximately 18% complete. We engaged a nationally recognized engineering firm that helped us conduct an extensive independent review of the work plan and the long-term cost estimates. And as part of our fresh start in Chicago, we filed a plan on November 30 that lays out our top priorities for the next three years. The components of the three-year plan include removal and replacement of more than 250 miles of aging cast iron pipes in the neighborhoods most at risk, a projected investment of between $250 million and $280 million a year, and regular updates to the Illinois Commerce Commission and other stakeholders to keep them fully informed of our progress. In assessing the plan that we filed on November 30, the Illinois Commerce Commission has scheduled a series of six workshops to be held by the end of March. Two of the workshops are already complete. While the engineering, fieldwork and cost recovery continue, these workshops are bringing together all of the stakeholders to review the scope, the schedule and the long-term cost of the plan with a focus on safety and reliability. I'm confident that the steps we're taking will provide Chicagoans with a safe modern natural gas delivery system that they deserve. Moving now to our transmission business, our electric transmission business, as you know, WEC is now a 60% owner of American Transmission Company. ATC's capital plan calls for investment of $3.7 billion to $4.5 billion between now and 2024 to bolster the reliability of the grid. As I've said in the past, we welcome the opportunity to increase our commitment to the transmission business. Turning now to our dividend policy, on January 21, as you may have read, our board declared a quarterly cash dividend of $0.495 a share, an increase of 8.2% over the previous quarterly dividend. Our annual dividend rate is now $1.98 a share. Going forward, we're targeting a payout ratio of 65% to 70% of earnings and we expect our dividend growth to be in line with the growth in earnings per share. On a final note, as I mentioned on one of our previous calls, we've been seeking a new owner for the Trillium compressed natural gas business. You'll recall that this business came to us as part of the Integrys transaction. We sold part of the business in late November of last year, and very recently, we reached an agreement to sell substantially all of the remaining Trillium assets. This agreement is subject to Hart-Scott-Rodino review and we're projecting to reach financial close by the end of the first quarter. In total, we expect at least $130 million of pre-tax cash proceeds from the combined sales of the Trillium assets. The fair value of Trillium was reflected in our purchase price allocation following the Integrys acquisition and as you know, the earnings on the Trillium business were not significant to our company. So, in summary, ladies and gentlemen, these are exciting times filled with opportunity and change for our company. And speaking of change, we recently announced that I'll be retiring as Chief Executive Officer effective May 1. After May 1, I'll continue to serve the company as the Non-Executive Chairman of the Board and I'm delighted that Allen Leverett will succeed me as Chief Executive. Allen has also been appointed to our board of directors. As most of you know, Allen has been a very key contributor to our success since he joined Wisconsin Energy the same year I did back in 2003, first as Chief Financial Officer, then as the leader of our power generation group and most recently as President of the parent firm at our Wisconsin, Minnesota and Michigan utilities. I've known and worked with Allen for more than 20 years. Now, I have to tell you he is not quite as fond of breed of financial audit as I am, but the depth of his experience, his management skills and his focus on execution make him the ideal person to lead our company through a time of continuing change in the energy industry. Allen, my congratulations. Allen L. Leverett - President & Director: Thank you, Gale. Gale E. Klappa - Chairman & Chief Executive Officer: And now for more details on our 2015 performance and our outlook for 2016, here's our Chief Financial Officer, Pat Keyes. Pat?

Thank you, Gale. As Gale mentioned, in 2015, our adjusted earnings grew to $2.73 compared with $2.65 a share for 2014. Our adjusted earnings exclude the Integrys company's earnings and the impacts of the acquisition. They are also adjusted for the shares issued in connection with the merger. To facilitate comparisons with last year, my discussion of 2015 results will focus primarily on legacy Wisconsin Energy. The earnings packet placed on our website this morning includes the results of the Integrys companies and has a full GAAP to adjusted reconciliation. First, I'll focus on operating income for Wisconsin Energy and then discuss other income, interest expense and income taxes. Our consolidated operating income for the full year 2015 was $1.137 billion as compared with $1.125 billion in 2014. That's an increase of $12 million. Starting with the Utility Energy segment, the operating income in 2015 totaled $767.7 million, an increase of $3.5 million over 2014. On the positive side, we had a $35 million increase in revenues due to the Wisconsin rate order. We also had $10.4 million of improved fuel recoveries and lower O&M cost, in part driven by lower benefits cost and reduced maintenance expense in the fourth quarter, decreased expenses by $10.2 million. On the downside, we estimate that our electric and gas margins decrease by $35.3 million, driven by warmer fourth quarter weather. The fourth quarter of 2015 was the second warmest in the history of We Energies. In addition, depreciation expense rose by $16.8 million with additional capital expenditures. Combining these and other factors results in a $3.5 million increase in adjusted Utility operating income in 2015 as compared with 2014. Our Non-Utility Energy operating income was $373.4 million, which is $5.4 million higher than the prior year due to additional investment in our Oak Creek expansion units. Our Corporate and Other segment showed an operating loss of $4.5 million, essentially flat with the prior year. Taking the changes for these segments together, you'd arrive at $12 million increase in adjusted operating income. During 2015, earnings from Wisconsin Energy's investment in American Transmission Company totaled $54.5 million, which was an $11.5 million decline from 2014. As we previously mentioned, ATC has established reserves in light of recent appeals to the FERC regarding authorized returns for regional transmission organizations. ATC re-evaluated those reserves in the fourth quarter and decided to increase them. Other income net increased by $24.3 million, driven in large part by second quarter asset sales. Higher AFUDC, driven primarily by our gas expansion project in Western Wisconsin, also contributed. 2015 net interest expense increased by $2 million. This was driven by slightly higher long-term debt, offset somewhat by lower interest rates. Wisconsin Energy's standalone income tax expense rose by $2.7 million for 2015. Our higher taxable income was slightly offset by a lower effective tax rate. Looking forward, we expect WEC Energy Group's effective income tax rate to be between 37.5% and 38.5% for 2016. Combining all of these items brings you to adjusted net income of $620.9 million or $2.73 per share for 2015. Turning now to operating cash flows. We have provided information in your earnings packet for the consolidated WEC Energy Group on a GAAP basis, which includes six months results from Integrys. We believe this will be a more accurate indicator of the cash position of the company. During 2015, WEC Energy Group's operating cash flow totaled $1.294 billion, which is a $95 million improvement over 2014. A major driver of the improvement was the inclusion of legacy Integrys companies for six months, which added both to depreciation and deferred income taxes. Legacy Wisconsin Energy's year-to-date operating cash flows in 2015 were about $41 million lower as compared to 2014. As previously discussed, we contributed $100 million to our pension plans in 2015. No such contributions were made during 2014. Our adjusted debt-to-capital ratio was 51.4% at the end of 2015. This ratio reflects the Integrys acquisition and treats half of WEC Energy Group's hybrid securities as common equity, which is consistent with past presentations. We continue to use cash to satisfy any shares required for our 401(k) plan, options, and other programs. Going forward, we do not expect to issue any additional shares. For comparison purposes, the annual sales information I'll discuss next will reflect results for We Energies only. Actual 2015 retail deliveries fell by 1.8%. Excluding the iron ore mines, retail deliveries fell by 0.8%. Weather-normalized retail deliveries, again excluding the iron ore mines, also fell by 0.8% compared to 2014. Looking at the individual customer segments now, we saw weather-normalized residential deliveries fall by 1.8%. Actual residential deliveries fell by 2%. Across our small commercial and industrial group, weather-normal deliveries rose by 0.2%. Actual deliveries fell by 0.1%. In the large commercial and industrial segment, deliveries for 2015 fell by 3.1%. Excluding the iron ore mines, large commercial and industrial deliveries fell by 0.4%. Our 2015 weather-normalized retail gas deliveries, excluding gas used for power generation, dropped 1.5% compared to 2014. Our actual gas deliveries, again, excluding gas used for power generation, were down 11% compared to the polar vortex-driven gas sales in 2014. For 2016, we will forecast and discuss delivery results for the State of Wisconsin, our largest segment. Our Wisconsin segment includes the results of both We Energies and Wisconsin Public Service. Note that, with decoupling, gas deliveries in Illinois are not as tightly tied to financial results. So in Wisconsin, we're forecasting a modest increase of 0.3% in weather-normalized retail electric deliveries excluding the iron ore mines. That compares to a 0.1% decline in 2015. We plan to meet our earnings targets without relying on any significant gains in energy usage by our customers. Looking at 2016 by individual customer segments, we expect residential deliveries to decline by 0.1%, impacted positively by continued modest growth in housing starts, but offset by conservation. In the small commercial and industrial segment, we are projecting sales to decline by 0.3%. And in the large commercial and industrial group, we are projecting an increase of 1.2%, excluding the mines. We project 2016 Wisconsin weather-normalized retail gas deliveries, excluding gas used for power generation, to increase by 0.5%. Turning now to our capital forecast. As Gale mentioned, we expect to invest at least $1.5 billion per year in capital projects, or $15 billion in the next decade. Correspondingly, we plan to invest $1.5 billion in 2016, primarily focused on modernizing our delivery networks. We will continue to evaluate both our short-term and long-term capital investment plans in light of bonus depreciation. Next, I'd like to remind you about earnings guidance for 2016. As previously mentioned, we expect earnings per share growth for WEC Energy Group to be in a range of 6% to 8% off a base of $2.72 a share. Therefore, our guidance for 2016 is in a range from $2.88 to $2.94 a share. This projection assumes normal weather and excludes any potential remaining acquisition-related costs. Again, our guidance for 2016 is $2.88 to $2.94 per share. Finally, let's look at first quarter guidance. Taking into account January weather and the timing of fuel recoveries, we project first quarter earnings to be in a range of $0.99 to $1.03 per share. That assumes normal weather for the rest of the quarter and excludes any remaining acquisition-related costs. Once again, first quarter guidance for the WEC Energy Group is $0.99 to $1.03 per share. And with that, I will turn things back to Gale. Gale E. Klappa - Chairman & Chief Executive Officer: Pat, thank you very much. Overall, we're suddenly on track and focused on delivering value for our customers and our shareholders.

And now, we would like to take the questions. Your first question comes from the line of Julien Dumoulin-Smith with UBS. Please go ahead. Gale E. Klappa - Chairman & Chief Executive Officer: Afternoon, Julien.

Hey. Good afternoon and congratulations to both of you. Gale E. Klappa - Chairman & Chief Executive Officer: Thank you very much. Allen L. Leverett - President & Director: Thank you.

Absolutely. So perhaps just... Gale E. Klappa - Chairman & Chief Executive Officer: (26:12), Julien.

Absolutely. Thank you. Kicking it off here, I'd just be curious, Peoples Gas, just the earned ROEs and expectations into 2016, looks like there could be a nice pick-up there. But I'd be curious if you can elaborate kind of what you're thinking about an earned ROE embedded in that range. Gale E. Klappa - Chairman & Chief Executive Officer: Okay.

Or what should we be thinking about for that segment? Gale E. Klappa - Chairman & Chief Executive Officer: I am really glad you asked, Julien. Let me first say that for calendar year 2015, the Illinois utilities, Peoples Gas and North Shore, earned their allowed rate of return, which is 9.05% (26.54) and that's exactly what's embedded in our forecast for 2016 earnings guidance. I know you had...

All right. Gale E. Klappa - Chairman & Chief Executive Officer: ...questions about whether we could achieve that.

No, well, there we go. And then secondly, I'd just be curious, in terms of the bonus depreciation, if you can elaborate a little further there. Can you discuss a little bit more what the offsets were for 2016 and how you were able to entirely offset it? And then looking forward a little bit more prospectively here, could you talk about what there too, what are the items adding up in terms of added spend, et cetera, to make it up? Gale E. Klappa - Chairman & Chief Executive Officer: Well, let me try to frame that for you, and if any of our guys want to add additional detail, feel free to do so. But for 2016, since there will be no – basically, there will be no base rate changes for calendar 2016 across our major utilities. We really don't see any immediate type of a hit in terms of bonus depreciation. However, in terms of the cash that we'll be receiving, it has allowed us to pull forward several important infrastructure projects. Really it's not large projects, but it's things like replacement of additional underground lines, substation transformer replacements, et cetera. Virtually all of that is in Wisconsin and that's worth about an additional $100 million that we've identified so far for 2016 just as an example. So I think most of the projects that we are looking at that will be able to be funded with the bonus depreciation cash are exactly those types of projects; on our gas delivery networks and on our electric delivery networks, all related to reliability, all related to upgrading, modernizing and hardening for safety purposes.

Great, excellent. And then last, just follow-up there if you can, thinking big picture CPP longer term, we've heard a lot of other states talk a lot about adjacencies to Canada and imports. Can you talk a little bit more about the Manitoba Hydro opportunity in the long term and how that fits into your five-year and 10-year CapEx plan? Gale E. Klappa - Chairman & Chief Executive Officer: Well, it really has no impact on the 5-year CapEx plan or really nothing specific in the 10-year CapEx plan. However, and I'll ask Allen to talk about this, if there are going to be more hydro imports from Canada, there clearly would have to be additional transmission built. Allen? Allen L. Leverett - President & Director: Yeah. So, of course, the Manitoba Hydro, we wouldn't actually be an investor, we will be an offtaker of the power. So in terms of a direct investment, we wouldn't have any direct investment in the hydro units themselves. But as Gale mentioned, if you're going to have deliverability and actually be able to affect the generation dispatch in Wisconsin, you'd have to be able to deliver it, so you'd need the electric transmission. But at this point, we certainly don't have a number on what that investment might look like.

Okay. Still a bit early. But it is something indeed that you're interested in exploring, correct? Gale E. Klappa - Chairman & Chief Executive Officer: Absolutely. Allen L. Leverett - President & Director: Yeah. I mean, I think it's something – another item in the toolbox that would help us potentially with compliance. Gale E. Klappa - Chairman & Chief Executive Officer: And to Allen's point, Julien, if we're facing, as a state, in Wisconsin a 41% reduction in CO2 emissions, we're going to need every cost-effective tool we have.

Yeah. Thank you. Gale E. Klappa - Chairman & Chief Executive Officer: You're welcome. Thank you, Julien. Appreciate it.

Your next question comes from the line of Jim von Riesemann with Mizuho. Please go ahead. Gale E. Klappa - Chairman & Chief Executive Officer: Rock and roll, Jim. How are you?

Meet the new boss, same as the old boss. Allen L. Leverett - President & Director: But without Mexican food.

Without Mexican food. Well, you know... Gale E. Klappa - Chairman & Chief Executive Officer: It may change a little bit, Jim.

So not to quote The Who or anything, but the question really is for Allen. So how would you describe your management style versus Gale's? And what would you say are the nuances in your respective strategic visions for WEC going forward? Gale E. Klappa - Chairman & Chief Executive Officer: Oh, man, this is going to be interesting. Allen L. Leverett - President & Director: Well, Jim, that's such a long...

Has your post been paid yet, Allen? Allen L. Leverett - President & Director: That's such a long question; I'm going to give you a very short answer. And it's probably easier for me to talk about what won't change, Jim.

Okay. Allen L. Leverett - President & Director: And we talked about a lot of things that will, and Mexican food – no Mexican food at the staff meetings. But what won't change is really a focus on execution and delivering results. So that's a short answer to your very long conceptual question.

Okay. Allen L. Leverett - President & Director: But that's what won't change.

Let me ask you a second broad topic before I go into a modeling or two question. With respect to growth, what we've seen over the last several weeks from the companies that have been reporting is that not all G is created equal. Can you talk about why your G is standing out and why you're so confident in your 5% to 7% longer term growth rate? Gale E. Klappa - Chairman & Chief Executive Officer: Well, I'll take a shot at it. Allen certainly should offer his view. I think the reason we're confident in our 6% to 8% growth in 2016 and then 5% to 7% afterward is essentially the need for the significant capital investments in the kinds of projects that we have embedded in that 10-year plan. Our huge generation projects are behind us by and large. But the kind of reliability upgrades, the kind of modernization that's needed on the natural gas delivery networks and the electric delivery networks, those are essential for reliability going forward. And when we see the significant backlog that we have and, of course, our capital spending doubling with the acquisition of Integrys compared to standalone Wisconsin Energy, the need and the backlog of the projects gives me, at least, very significant confidence in our ability to hit the growth rates. Allen? Allen L. Leverett - President & Director: Yeah. I guess the only thing I would add, Jim, to Gale's comment, quite a bit of the investment we're looking at is in the natural gas side of the business. So there is a clear need from an infrastructure standpoint. So I think that's something else that you should keep in mind when you look at the longer-term numbers. Gale E. Klappa - Chairman & Chief Executive Officer: And to Allen's point, Jim, it's not just Chicago. We have a significant amount of natural gas delivery network investment in Wisconsin as well. And for that matter, expansions in Minnesota, in Rochester, growth in Michigan with the natural gas utility there. So I think we said earlier that about $800 million a year on average of our $1.5 billion of capital investment will be devoted toward the natural gas delivery business.

Okay. Switching over to a couple financial questions, can you talk broadly about your financing plans for 2016 and 2017 in terms of expected debt issuances, maybe on a net basis? And then talk about your free cash flow expectations over the same period with free cash flow being defined both pre and post dividend? Gale E. Klappa - Chairman & Chief Executive Officer: Sure. We'll let Pat and Scott talk with you specifically. I will say that right now the first thing we have out of the box in 2016, and we announced it earlier this week, is a tender offer for the hybrids or a portion of the hybrids that were outstanding at TEG. It's one of the issues of the hybrids that we have a tender offer for right now. So that's the first refinancing or the first financing opportunity that we have that's underway right now. Pat?

Yeah. And them Jim, in 2016, this is actually a pretty light year for us. We only project right now to have two bond offerings, one in Wisconsin Gas probably in the first half of the year, and then at PGL in the second half of the year. So this is – certainly relative to last year, not a lot going on.

Let me be a bit more straightforward. Do you expect to be free cash flow positive this year, next year?

No, we do not. We do not expect to be free cash flow positive this year or next year.

What's the delta versus being free cash?

I don't have that number at my fingertips, but part of what Gale said is we're evaluating, and my comments as well, as we evaluate the capital plan, even if I had that number, that would be a little bit in flux as we evaluate how to deploy that bonus depreciation cash we've received. So we can follow up when we kind of frame that up in a little more detail, if you'd like, but I'd rather not wallow around in it, if that's all right.

Okay. Gale E. Klappa - Chairman & Chief Executive Officer: And Jim, an additional comment on that. Remember, we do not have any need to issue additional equity. So basically, we might be talking about a slight increase in commercial paper or one of these bond offerings that Pat laid out. But we're within the – I mean, we're basically within the confines of not needing additional equity and maintaining the current type of debt to capital that we've been historically maintaining.

Okay. Thank you. Gale E. Klappa - Chairman & Chief Executive Officer: You're welcome, Jim. Thanks for the comments.

Your next question comes from the line of Michael Lapides with Goldman Sachs. Please go ahead. Gale E. Klappa - Chairman & Chief Executive Officer: Greetings, Michael. How are you today? Michael Lapides - Goldman Sachs & Co.: I'm well. Congrats to both of you, gentlemen. Gale E. Klappa - Chairman & Chief Executive Officer: Thank you. Michael Lapides - Goldman Sachs & Co.: A couple of just questions, I want to make sure – I hopped on a tad bit late, so I want to make sure I understand. You've got your rate case filing coming in Wisconsin in the next couple of months, April-May timeframe I think. Should we imply that given the fact you have extra capital as part of bonus depreciation that the CapEx requirements or the CapEx spends for kind of the two-year period that case will cover, 2017 and 2018, potentially higher than what you kind of disclosed in the EEI-related slide decks given the fact you have a lot more capital available to you at that subsidiary – or at those subsidiaries? Gale E. Klappa - Chairman & Chief Executive Officer: Well, I think certainly because we now have the availability of additional cash through the federal government's extension of bonus depreciation, I mean, yes, we are looking at for the benefit of customers to be able to invest in more modernization than what you saw in our slide deck in terms of the 10-year capital plan. Because as you'll recall, we did not take for granted that there would be an extension of bonus depreciation when we laid out the new 10-year capital plan at the EEI Conference in November. So yes, I think you could expect us to have additional capital investment, again, along the lines of additional upgrading of our natural gas and electricity delivery networks, particularly in Wisconsin. But in light of the fact that this is additional cash coming in, it really would not have any material effect on our rate review. Michael Lapides - Goldman Sachs & Co.: Meaning as long as the CapEx increase and the bonus D&A impact on rate base are a one-for-one swap.

Correct. Gale E. Klappa - Chairman & Chief Executive Officer: That is correct. You stated it very well. Michael Lapides - Goldman Sachs & Co.: And are there enough projects that you don't need to – that don't have lengthy approval processes where you could make a $400 million to $500 million a year increase in your capital budget for like the 2017-2018 timeframe? And that just seems like a very significant increase. If you're saying that bonus D&A is worth about $1 billion to you, that would be a pretty significant increase to the capital budget. I'm just trying to think about the ability to actually execute that type of CapEx increase. Gale E. Klappa - Chairman & Chief Executive Officer: Well, we don't have $400 million to $500 million a year of additional projects, but I would say to you that looking at our legitimate backlog of investment needs, what we can pull forward is very significant. And then in the back half of that period, remember the period is really 2015 through 2019, in the back half of that period, as I mentioned in our prepared remarks, if the proposed time table for the clean power plant compliance stays on track, we may be looking at the need for investment in our fleet either additional renewables, additional natural gas-fired generation. So those could be some fairly large projects in the back half of this period that we're talking about, but certainly in the front half of the period, 2016, 2017-ish. We really are looking at smaller discrete projects, such as additional ability to replace aging underground lines, replace and upgrade substation transformers, more distribution automation, those types of projects. They really don't meet the threshold of a specific approval from any of the regulators. Michael Lapides - Goldman Sachs & Co.: Okay. And this one maybe for Allen. Just trying to think about ATC and the impact bonus depreciation would have on ATC's earnings power and therefore its earnings contribution up to WEC. Allen L. Leverett - President & Director: Yeah. So I think when Gale talked about, in the prepared remarks, the $1 billion worth of cash from the tax savings, that included in effect our ownership share of ATC. So it's certainly not in addition to that. It's already included in that estimate. As you know, Michael, the transmission projects are pretty long lead time, so I can't see anything at all at or (40:37) ATC's capital budget of 2016 and 2017. But the team at ATC is looking at things that can be pulled into the back half of the period that Gale mentioned, say, in 2018 and 2019, which would allow us or ATC to pull some projects up that are beneficial to customers. Michael Lapides - Goldman Sachs & Co.: Got it. Last one, and somebody asked a little bit of this, but I'm just curious. You issued a lot of very low cost debt at the holding company to pay for Integrys – to pay for part of the equity component of Integrys. Just curious about how you are thinking about over the next two to three, three to four years, how much of that holding company debt you would like to term out versus how much of that holding company debt you would like to simply take out and reduce the leverage at the holding company level. Gale E. Klappa - Chairman & Chief Executive Officer: Yeah. Very good question, Michael. And the honest answer to you is, we're going to continue to iterate as we move along. I mentioned in the prepared remarks, we have additional distribution network projects that we can use the additional cash to very beneficial use for customers. As Allen mentioned, there are maybe some additional transmission investments in the back half of that five-year period. There may be a generation investment because of Clean Power Plan compliance. But the other option we have is further deleveraging of the holding company. There will be some deleveraging in the plan to begin with. It just will happen, given our – the way we've laid out our forecast. But we also have the opportunity to deleverage. So what we are going to do as we continue to move forward through this period here is we're going to say, okay, what is the best use of the cash for our customers and shareholders, and put that cash to the best use we can. And what we were trying to do for you is lay out the series of options that we have that will balance going forward. So I can't give you a precise answer at this point in time other than additional beyond the plan deleveraging of the holding company is an option. Michael Lapides - Goldman Sachs & Co.: Got it. Thank you, Gale and Allen. Much appreciated. Gale E. Klappa - Chairman & Chief Executive Officer: Welcome. I will you see in a few days, Michael. Michael Lapides - Goldman Sachs & Co.: I will see you in two weeks, yes. Gale E. Klappa - Chairman & Chief Executive Officer: Great. Thank you.

Your next question comes from the line of Brian Russo with Ladenburg Thalmann. Please go ahead. Gale E. Klappa - Chairman & Chief Executive Officer: Greetings, Brian. Brian J. Russo - Ladenburg Thalmann & Co., Inc. (Broker): Hi. How are you? Gale E. Klappa - Chairman & Chief Executive Officer: We're good. Are you wonderful and award winning today, Brian? Brian J. Russo - Ladenburg Thalmann & Co., Inc. (Broker): Just to follow on that last question on the parent debt, when is the first call date? I mean, you'd probably have to pay a premium prior to callable dates, correct? Gale E. Klappa - Chairman & Chief Executive Officer: Are you thinking about the holding company debt, or are you talking... Brian J. Russo - Ladenburg Thalmann & Co., Inc. (Broker): Yeah, holding company debt. Gale E. Klappa - Chairman & Chief Executive Officer: Well, we got to carve it up. There's multiple debt instruments at the holding company, Brian, between the hybrid. Are you talking specifically the acquisition debt? Brian J. Russo - Ladenburg Thalmann & Co., Inc. (Broker): Yes, acquisition debt. Gale E. Klappa - Chairman & Chief Executive Officer: I'm sorry. The acquisition debt, the first tranche expires at the end of three years, so 2018. So, it was three, five and 10 years, so 2018, 2020 and 2025. Allen L. Leverett - President & Director: Three, five and 10 years, and then about $300 million of commercial paper. Gale E. Klappa - Chairman & Chief Executive Officer: Correct. Brian J. Russo - Ladenburg Thalmann & Co., Inc. (Broker): Okay. Got it. And just to be clear, this is embedded in your 5% to 7% EPS CAGR or it's an addition to it? Just how does those moving parts work in terms of the CAGR? Gale E. Klappa - Chairman & Chief Executive Officer: When you say – all of that debt is embedded. Brian J. Russo - Ladenburg Thalmann & Co., Inc. (Broker): No. I mean, is there assumption for debt reduction of the acquisition debt in the 5% to 7% CAGR? Gale E. Klappa - Chairman & Chief Executive Officer: Yeah. Well, we're assuming that – again, we want to see what kind of flexibility we have, but we'll either retire it or refinance it. Brian J. Russo - Ladenburg Thalmann & Co., Inc. (Broker): Okay. Understood. Thank you.

Your next question comes from the line of Dan Jenkins with State of Wisconsin Investment Board. Please go ahead.

Hi. Good afternoon. Gale E. Klappa - Chairman & Chief Executive Officer: Dan, how are you?

Good. And congratulations to both of you. Gale E. Klappa - Chairman & Chief Executive Officer: Thank you. Dan, I am so glad you called since this is my last call, and I've been wanting to have a conversation with you about all the advice that I've freely given you about your behavior over the years, and I'm hoping that I've been helpful to you – improved behavior on your part. I was just thinking, though, with this being my last call, I just wanted to offer you, and you can certainly feel free to think about this, but I just wanted to offer you perhaps, for a nominal fee, being your life coach going forward. What do you think, Dan?

You mean Allen isn't going to take that over? Allen L. Leverett - President & Director: Dan, now we know there's going to be a second change. No more Mexican food and no kicking Jenkins around. Gale E. Klappa - Chairman & Chief Executive Officer: And I know you're going to miss that, Dan. But what can we do for you today, Dan?

First just a clarification. You gave your expectation for 2016 on the energy sales. And I'm not sure I got for the large industrial ex mines. It was 1-point-what? Gale E. Klappa - Chairman & Chief Executive Officer: 1.2%, Dan.

And so, related to that, I was kind of curious where you see that coming from, given how 2015 performed, that seems like kind of a pickup. But I wondered if you could give us more color on that. And somewhat related to that, I was wondering if you are seeing any impact in the sand customers related to what's going on with the energy. Gale E. Klappa - Chairman & Chief Executive Officer: A very good question, Dan. And let me try to cover the waterfront for you. Pat and Scott should add any color they would like to add. But first of all, let me tackle the frac sand. In essence, given the frac sand operations, and there are about 110 of them in the western part of the State of Wisconsin. We really don't serve electricity to any of the major ones in the western part of the state. It's really – that's really natural gas demand for us. And because we've just completed in November the largest expansion of our natural gas distribution network in Wisconsin gas history, we haven't up till now served a significant amount of the frac sand demand for natural gas. So while the frac sand industry has declined along with the big drop in oil prices, we still have an opportunity to grow over the longer term and the medium term in terms of our natural gas distribution service to that industry in the western part of the state. So long story short, because we haven't had a lot of the service in place or a lot of the capability in place up until now, we've not really been hurt to any significant degree by the decline in the frac sand business in light of the oil crash, if I'm making any sense.

Sure. Okay. Gale E. Klappa - Chairman & Chief Executive Officer: All right. Then in terms of industrial demand for electricity and how are we seeing a percent-or-so growth, a couple of thoughts and then we'll ask Scott Lauber, our Treasurer, who tracks our electricity demand. I track it every day, he tracks it every hour. Long story short, we serve 17 different sectors of the industrial economy in the State of Wisconsin, and many of those sectors are either flat or slightly down when you look at 2015 performance. But there are four sectors where we have significant concentration in Wisconsin that actually have shown a little growth and we think may continue to show some growth in our projections in 2016. So that's food processing, paper production, printing, and plastics. So those are fairly large industrial sectors. Among the 17, those four are pretty large. And we've actually seen some uptick throughout 2015 in those four sectors. And that, in part, underlies the percent-or-so growth that we're projecting for 2016. Scott? Scott J. Lauber - Vice President & Treasurer: In addition, we have some attractive rates to bring in new customers into the area. So we are actually seeing some customers building specifically in Southeastern Wisconsin some distribution centers, Amazon built here. So we're seeing that – and those actually are increasing our load in 2016 also. Gale E. Klappa - Chairman & Chief Executive Officer: Yeah, it's a very good point. And, for example, Scott mentioned Amazon, well, they just built a 1 million square foot distribution center that's now operational. And now that they've got it operational, I believe they've announced they're adding another 250,000 square feet right immediately adjacent to the 1 million square feet that they just built. Uline, which is a major company that has moved to Wisconsin in the last seven or eight years, is just growing by leaps and bounds, and they're adding distribution capacity. So we're seeing, as Scott said, not only some strength in some of the traditional clusters in Wisconsin, but we're also seeing some large commercial growth that is now in place and beginning to operate.

Okay. Then the second thing I was curious about, you mentioned that your kind of two workshops in of the six workshops around the main replacement plan at Peoples Gas, I was wondering if you could give a little color on kind of what the discussion's been there in terms of the Commission concerns or Commission directives or if they've had any recommendations. Gale E. Klappa - Chairman & Chief Executive Officer: Well, actually, no recommendations yet. But I've been very encouraged by the entire approach that the Illinois Commerce Commission has decided to take in terms of taking, as we suggested, a fresh look at the entire program. The workshops are very granular and technical in nature. So for example, at one of the workshops, folks from the federal pipeline safety administration have been invited to come in and discuss the 2011 call to action from the federal government to replace some of these aging cast iron and bare steel pipes. So this is – the way that workshops have gone so far, and you're right, two of the six have been completed, and the subject matter for the remaining four are public and the agendas are public. It's really almost stepping back and let's taking – take a complete reexamination for the need, the schedule and the shorter and long term cost estimates. And then importantly, and one of the workshops will be dedicated to this, cooperation and collaboration with the City of Chicago. And I can't tell you how important that is. I mean, while we are in the process of trying to replace 2,000 miles of aging underground pipes in Chicago, the City of Chicago is also trying to replace a significant number of aging water mains. So cooperation in terms of trying to get that work done in a scheduled collaborative basis is a real issue that needs – we need to continue to work on this. I think we've made real progress with the City of Chicago in terms of sharing information and planning for construction. But one of those workshops is really going to be dedicated to, okay, how can the two entities that are ripping up streets in Chicago best work together. So very technical in nature, but really going through – again, it's almost a complete new primer on the need for the program and how the program should be structured and scheduled going forward.

So would you expect any revisions potentially to the CapEx budget related to the resolution of this process or how should we think about that? Gale E. Klappa - Chairman & Chief Executive Officer: Well, the way I would think about it is, certainly the Illinois Commerce Commission is interested in the timetable and the cost. And originally, the commission set a deadline of 2030 to complete that program. I think we all want to talk about is that still a realistic deadline for completing the program; how much can efficiently and effectively be spent in any given year, and how much risk would be taken if you extended the program. But right now, while all of that is still being processed and all of that's still being discussed, and I believe the Commission will vote on a new plan in June, the best advice I could give you is to stick with the $250 million to $280 million a year investment plan. That's what we're finding right now. It's probably the sweet spot in terms of how much can be done efficiently during the construction (53:58) Chicago.

Okay. And then just wanted to say, given your successful completion of Power the Future and Integrys, you've obviously made a large impact on the company and left a tough legacy for Allen to follow. So, good luck. Gale E. Klappa - Chairman & Chief Executive Officer: To whom was that addressed? Allen L. Leverett - President & Director: Thank you, Dan.

Bye. Gale E. Klappa - Chairman & Chief Executive Officer: Bye-bye.

Your next question comes from the line of Steve Fleishman with Wolfe Research. Please go ahead. Gale E. Klappa - Chairman & Chief Executive Officer: Hey, Steve. You don't need a life coach, do you?

I hope not. Thanks, Gale, and congrats on your retirement on time and on budget. Gale E. Klappa - Chairman & Chief Executive Officer: Thank you, Steve.

Congrats as well to Allen. So just a quick follow-up on the Illinois process. So could you maybe give a little color if the AG's office is kind of involved in these discussions on this kind of new plan? And then also, there is some attempt to still go back and keep looking back at what happened, just any color on where you see that process heading? Gale E. Klappa - Chairman & Chief Executive Officer: Yeah, I'd be happy to, Steve. First of all, the six workshops that the Illinois Commerce Commission has scheduled, the invitees are really all of the parties that have been involved in this entire program from day one. So it would be the Citizens Utility Board, it would be the City of Chicago, it would be the State Attorney General's Office. It would be a significant representation from the natural gas division of the Illinois Commerce Commission. In fact, the workshops are being moderated by the head of the natural gas division of the Illinois Commerce Commission. And all of the folks that have been invited to participate are participating. From what we've seen so far in the first two workshops, I would say that there are more informational type questions. I mean, for example, the State Attorney General's Office has asked, "Well, does all the cast iron pipe that's a certain age really need to be replaced?" So they're very technical questions. I mean, this is almost, I think, a terrific opportunity to get everybody on the same basis in terms of information and knowledge about the program. So I'm actually very encouraged by the approach that the Illinois Commerce Commission has taken. I think it will be an opportunity, again, to put everybody on the same basis of information and also really have a very strong dialogue with the natural gas division of how the company and the City of Chicago need to cooperate in the streets. So that's really kind of the color I would give you so far. Again, very encouraged by the participation, by the kind of questions, and by the understanding that's building that with this kind of aging infrastructure, this is something that should not, cannot be ignored. So that would be my thoughts on the workshops. And again, we've filed a three-year plan that put our top priorities in place for the neighborhoods that we thought were most at risk, and we'll see what the Commission decides. But their plan would be to vote on the longer-term future for the advanced main replacement program by June. And again, I would say to you, given everything we've seen around the country, both from a natural gas and water standpoint, it's just not – I don't think anyone thinks it's wise to ignore the urgent need to upgrade that system in Chicago.

Okay. Gale E. Klappa - Chairman & Chief Executive Officer: And then going backward, the Attorney General's Office is asking, as they have, about an $8 billion cost estimate for the long-term investment need of the program, and that need or that cost estimate surfaced, as you know, immediately after we acquired the company. And so the Attorney General's Office is wondering, who knew in the prior company, the prior management, about the $8 billion estimate and why was the $8 billion estimate, which was a preliminary estimate, why was that not disclosed prior to the closing of the acquisition? So that docket, if you will, is still open before the Illinois Commerce Commission.

Okay. Great. Thank you. Gale E. Klappa - Chairman & Chief Executive Officer: You're welcome, Steve.

Good luck. Gale E. Klappa - Chairman & Chief Executive Officer: Thanks.

Your next question comes from the line of Paul Patterson with Glenrock Associates. Please go ahead.

Good afternoon. Gale E. Klappa - Chairman & Chief Executive Officer: Hey, Paul. How are you today?

All right. Congratulations to both you.. Allen L. Leverett - President & Director: Thank you.

...and Allen. One quick one for you here. The sales growth projection, does that include leap year or is that taken out? Gale E. Klappa - Chairman & Chief Executive Officer: That actually, includes leap year. Yep. It's worth about 0.3% (59:19).

Right. So that would indicate that you guys really are not expecting much in the way of any growth. Gale E. Klappa - Chairman & Chief Executive Officer: That is correct. Allen L. Leverett - President & Director: Yep.

Has there been a change in how you've begun to forecast things since it's been, generally speaking, lower than what you guys had – over the years, you guys have been a little bit more optimistic about sales growth than what's actually happened. Have you reappraised that, or are you guys just getting more – or is there something else that's driving you to wind down the sales growth? Gale E. Klappa - Chairman & Chief Executive Officer: Well, I think certainly given the experience of 2015 and 2014, and obviously we were projecting at least 0.5% growth in electric demand or electric consumption on the retail side in those prior years, we brought it down a little. There's no question about that.

What do you think is going on? Gale E. Klappa - Chairman & Chief Executive Officer: Well, I think there may be a couple of things here. And we ask ourselves – we have all kinds of meetings saying, what the hell is going on? But first of all, many companies in our industry were projecting far stronger growth than we have projected, and they haven't seen it develop either. My own view, and this is strictly a personal view and anecdotal, but just based on years of experience, I think there are three things going on. 2014 and 2015 may be a bit of an aberration from a small commercial and residential standpoint. 2014 and 2015, the weather was just mild is probably the best word, mild summers, mild winters, just no abnormally high or abnormally low temperatures, but no persistence of a weather trend. And one of the things that weather normalization techniques does not pick up is the lack of, say, 15 days of 90-degree weather. If you have two days of 90-degree weather, you can do the weather normalization. But I don't think it picks up the fact that you didn't have any persistent weather one way or another and persistent weather drives consumption and drives usage. So, I think one thing that has happened is we haven't seen a really good long heat wave and even though last winter was a little bit colder than normal, it was spotty. It wasn't 15 days in a row of 10 degrees. So, in my mind, the jury is still out related to longer-term growth. If we get back to a year in which we have some consistent and persistent weather patterns. That's number one. But number two, I don't think there's any question that we're seeing more residential conservation in the last couple of years. I don't think there's any question about that. And when you think about why that may be, I mean, it really comes down to technology. You've heard me say before that if you replace a big screen television that you may be bought seven or eight years ago with a brand new one, you're probably going to use 60% to 80% less electricity. Your iPad requires less energy to charge than your computer screen standalone. You buy a new washer and dryer. They're far more energy efficient, same thing with refrigerators. You have the Nest thermostats. There's just a lot more technology available to customers. So essentially, what we're kind of seeing here is our customer growth, which continues to be good, being offset by conservation.

Okay. There have been some articles about these coal dust complaints by neighbors in around Oak Creek. Can you comment on that in terms of how should we think about that? Gale E. Klappa - Chairman & Chief Executive Officer: Sure. Well, first of all, let me just reiterate that we have air monitors that continually give us data on emissions from the Oak Creek plant, and we are well within compliance with all the air standards, number one. Number two, there are a number of homes in the general vicinity of the Oak Creek plant where individuals have indicated they are having health problems, and they believe it's because of the infiltration of coal dust in their homes. So, what we've agreed to do and what we're in the process right now is we have agreed with those homeowners on a testing protocol, and we are having a firm (1:03:55) go into each one of these homes and through samples collected them from various places in the homes of these individuals. And then we're having a lab analyze the dust samples and indicate to all of the homeowners – we're sending them over, explaining what is in their dust samples. Right now, the scene would indicate that there are health problems, at least from our expert standpoint, nothing that would indicate that there are health problems from any prevalence of dust.

Okay. And then back to the deleveraging potential, what would be the security or what would be the interest rate that you guys might be thinking about retiring? In other words, if you were to pay down debt at the parent, what are we thinking about in terms of the cost of that debt? Gale E. Klappa - Chairman & Chief Executive Officer: Well, the average cost of the debt was 2.21%.

Well, let's separate, I think it's important to kind of separate out the debt. There's the acquisition debt, which is the 2.21% as Gale just pointed out, and then there's all the other debt at the holding company. Gale E. Klappa - Chairman & Chief Executive Officer: Right.

Example of which is the hybrid security that flips the floating at the end of this year. That's I believe paying 6.11% right now. And there's also some longer-term debt instruments at the holding company. Think of the hybrids and those longer-term bonds is what we're targeting for takeout, not the 2.21% debt.

Okay. So the 6.11% would be the sort of pre-tax benefit you guys would see from buying it back, is that right? What you're thinking – I mean, obviously, (1:05:43) acquisition team may browse. But is that kind of what we're thinking about in terms of what the cost of the securities you're thinking of retiring potentially would be? Gale E. Klappa - Chairman & Chief Executive Officer: Well, that's one good example or if it wasn't retired and again, we're assessing what the best options are here. If it wasn't retired, it flips to a very low floating interest rate, right.

Right. I mean, that's why I'm sort of wondering about it. I mean, it would seem to me, what we're seeing is a lot of leverage that's being deployed in terms of acquisitions that are being proposed and what have you recently. And I'm just wondering given the cost of debt, it doesn't usually look like that big a bang for the buck. And I just wonder if you'd elaborate a little bit more in terms of you're thinking process about that. Your credit ratings for the most part are pretty strong. So, I mean, I'm just sort of thinking about sort of why you guys are bringing this up now and sort of what might be driving that? Gale E. Klappa - Chairman & Chief Executive Officer: I'll give a shot at that. I think the real answer to your question is we wanted to show the range of options that we have for beneficial use of the cash that's coming from bonus depreciation. And clearly, our preferred option is to benefit customers from that cash with projects that really are useful and needed for reliability. So that's option one, two, three, four, and five. And, as Allen mentioned, there may be – in the latter part of that five-year period for bonus depreciation, there may be the emergence of some transmission projects or generation projects for compliance with the Clean Power Plan. So all of those things are kind of preferred options. But if none of those things or if not all of them came to pass, we also have an option to further deleverage beyond the plan. So, it really wasn't – we didn't mean to give you the idea that this was going to be an immediate type of a preferred priority. It is something we have in the toolbox if needed.

Okay. But not perhaps all that likely to be used, depending on what opportunities are in the business as well? Gale E. Klappa - Chairman & Chief Executive Officer: That's how I would look at it. It is an option, and we'll iterate as we go along for the best benefit of customers and shareholders.

Okay. Thanks so much and congratulations again. Gale E. Klappa - Chairman & Chief Executive Officer: All right. Thank you, Paul.

Your next question comes from the line of Paul Ridzon with KeyBanc. Please go ahead. Gale E. Klappa - Chairman & Chief Executive Officer: Hey, Paul. How are you?

I'm well. Thank you. It's February in Cleveland, and the kids in the neighborhood are wearing shorts. Gale E. Klappa - Chairman & Chief Executive Officer: Yeah. Man, it's amazing, isn't it?

Crazy. As you look at Manitoba Hydro and ATC, what kind of incremental capital opportunities do you see there? Allen L. Leverett - President & Director: At this point, I really can't give you an estimate.

Just too early? Allen L. Leverett - President & Director: It's just too early. Gale E. Klappa - Chairman & Chief Executive Officer: It's too early.

And what was the fuel, under or over recovery in the fourth quarter? Gale E. Klappa - Chairman & Chief Executive Officer: In the fourth quarter we were fully recovered I think going into Q4.

Okay. Allen L. Leverett - President & Director: So it's...

And then your comment... Allen L. Leverett - President & Director: We'll follow offline... Gale E. Klappa - Chairman & Chief Executive Officer: We'll get the precise number for you and we'll get the precise number and we'll ask Colleen or Beth to give you a callback. But it was not a material impact on earnings in Q4.

And then can you review your comments on Trillium and what the gain is and when you'll realize that? Gale E. Klappa - Chairman & Chief Executive Officer: I'll ask Allen to comment but we expect pre-tax cash proceeds of approximately $130 million. But again, that sale falls within the window of purchase price accounting adjustments. So, in terms of the report of ongoing earnings that we would provide to you next quarter, it won't have any impact on plus or minus on earnings. Allen?

Thank you very much. Oh, go ahead... Gale E. Klappa - Chairman & Chief Executive Officer: No. Allen was saying, yeah.

Congratulations, Allen, and happy trails (1:09:53), Gale. Gale E. Klappa - Chairman & Chief Executive Officer: Thank you so much. Take care.

Your next question comes from the line of Andy Levi with Avon Capital. Please go ahead. Gale E. Klappa - Chairman & Chief Executive Officer: My favorite, Andy Levi. How are you, Andy? Andrew Levi - Avon Capital/Millennium: Hey. I'm doing well. I just want to say thanks, Gale. You've done a great job. Gale E. Klappa - Chairman & Chief Executive Officer: Well, thank you, Andy. I appreciate your support. Andrew Levi - Avon Capital/Millennium: I appreciate your friendship over the years. And Allen, I remember meeting you when you were an IR person back at Southern. I remember saying to Paul Patterson that you'd make a great CEO one day. So, there you go. Gale E. Klappa - Chairman & Chief Executive Officer: I bet. Were you one of the first (01:10:31)? Andrew Levi - Avon Capital/Millennium: Seriously, Allen. You will do a great job. I know you will and... Allen L. Leverett - President & Director: I appreciate it, Andy. Andrew Levi - Avon Capital/Millennium: ...I congratulate you. And actually all my questions were asked and answered. So, I'm good. I'm great. Gale E. Klappa - Chairman & Chief Executive Officer: Andy, thank you so much. We'll see you soon. Andrew Levi - Avon Capital/Millennium: Yeah.

Your final question comes from the line of Jim von Riesemann with Mizuho. Please go ahead.

Hi guys. Gale E. Klappa - Chairman & Chief Executive Officer: The last guy is up. A double dip today.

Yeah. A follow-up question. Quick new bucket, since there's been so many moving pieces here, what you expect maybe broadly speaking, the earnings contributions from WPS, We, Power The Future and Peoples, just the big buckets, for 2016, just so our models are all calibrated correctly? Gale E. Klappa - Chairman & Chief Executive Officer: Okay. I'm going to look toward Pat and Scott. I've got a general idea, but they've got more specific bucket delineation than I have right in front of me.

Can I do it by segment, Jim? That might be easier on the call. Gale E. Klappa - Chairman & Chief Executive Officer: Why don't we take it by segment and like by state.

Yeah. So by segment or by state, if you look at Wisconsin, maybe 16%; 11% Illinois; 2% from our MERC and MGU, so our Michigan and Minnesota Gas Utilities; maybe 10% from ATC. What does that give me, Power the Future? And Power the Future is... Scott J. Lauber - Vice President & Treasurer: 20%.

Do the math in whatever I missed, 20%?

71%, 81%, 83%, so 17%. Allen L. Leverett - President & Director: 17%, somewhere in that zip code. That Scott's trustee calculator back of the envelope. We can get you something a little more crisp, but that's directionally correct.

So then where's the 5% to 7% earnings growth coming from? Scott J. Lauber - Vice President & Treasurer: All of those entities. It's actually 6% to 8%.

6% to 8% next year, then we can kind of step through that as – when we have the new investor materials, we could probably walk through where each segment is moving relative and how that could contributes to the 6% to 8%.

Okay. Sounds good. Thank you.

Again, we will see earnings growth from every one of those segments. Gale E. Klappa - Chairman & Chief Executive Officer: That is correct.

Okay. Gale E. Klappa - Chairman & Chief Executive Officer: Thank you, Jim.

Thank you.