Good afternoon and welcome to WEC Energy Group's Conference Call for Fourth Quarter and Year-End 2016 Results. This call is being recorded for rebroadcast and all participants are in a listen-only mode at this time. Before the conference call begins, I remind you that all statements in the presentation, other than historical facts, are forward-looking statements that involve risks and uncertainties that are subject to change at any time. Such statements are based on management's expectations at the time they are made. In addition to the assumptions and other factors referred to in connection with the statements, factors described in WEC Energy Group's latest Form 10-K 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, a package of detailed financial information is posted at wecenergygroup.com. A replay will be available approximately two hours after the conclusion of this call. And now, it is my pleasure to introduce Allen Leverett, President and Chief Executive Officer of WEC Energy Group.

Good afternoon, everyone. Thank you for joining us today as we review our results for the year. I want to start by introducing the members of our team who are here with me today, Scott Lauber, who is our Chief Financial Officer; Jim Schubilske, our Treasurer; Susan Martin, our General Counsel; Bill Guc, our Controller; and finally Beth Straka, Senior Vice President of Corporate Communications and Investor Relations. Now, as you saw this morning, we reported full 2016 adjusted earnings per share of $2.97, ahead of our guidance range of $2.88 to $2.94. Our adjusted earnings exclude merger-related costs of $0.01 per share. Scott will provide a more detailed review in a moment. Now, we expect long-term earnings per share growth for WEC Energy Group to be in a range of 5% to 7% off a 2015 standalone Wisconsin Energy base of $2.72 per share. Our guidance for 2017 is in the range of $3.06 per share to $3.12 per share, and this is in line with our previously disclosed earnings per share growth expectations. In addition to our full-year results, we have two other positive developments to share with you today. On January 20, we signed an agreement to acquire Bluewater Gas Holding, which owns an underground natural gas storage facility in Michigan. This facility can provide approximately one-third of the storage needs of our natural gas distribution companies in Wisconsin. The total acquisition price is $230 million. Bluewater will have a long-term service agreement with each of our three natural gas distribution companies in Wisconsin. The earnings from this investment are expected to be the same as if the storage was owned by our local gas distribution companies. We plan to file a request with the Wisconsin Commission in the coming days for a declaratory ruling. In this…

Thank you, Allen. In 2016, our GAAP earnings grew $2.96 per share from $2.34 per share in 2015. Our 2016 results include a full year's impact of the Integrys acquisition. Recall that 2015 results only include two quarters of Integrys earnings. Excluding acquisition costs, adjusted earnings per share increased $0.33 from $2.64 per share in 2015 to $2.97 per share in 2016. For purposes of comparing 2016 and 2015 earnings on a consistent basis, the calculation of adjusted earnings per share for 2015 now includes Integrys earnings, all interest expense related to the acquisition financing, and all shares issued in conjunction with the acquisition. The earnings packet placed on our website this morning includes the results of the Integrys companies and has full GAAP to adjusted reconciliation. For 2016 results, I'll first focus on adjusted operating income by segment and then discuss other income, interest expense and income taxes. Integrys results for the first two quarters of 2016 are separated for comparability purposes. Referring to page 11 of the earnings package, our consolidated operating income for 2016 adjusted for costs related to the acquisition of Integrys was $1.6856 billion as compared to $1.3581 billion in 2015, an increase of $327.5 million. Starting with the Wisconsin segment, operating income totaled $1.027 billion for 2016, an increase of $128.6 million from 2015 adjusted operating income. We realized a $128.4 million contribution from the Wisconsin Public Service during the first two quarters of 2016, with remaining increase related to favorable weather, positive fuel recoveries and rate increases at Wisconsin Gas and Wisconsin Public Service, offset by an increase in operation and maintenance expense. Operation and maintenance expense in 2016 included $24.4 million of expense related to the earnings sharing mechanism in place at Wisconsin Electric Power Company and Wisconsin Gas, which were effective…

Thank you, Scott. Operator, we are now ready for the question-and-answer portion of our conference call.

Thank you. Now, we will take your questions. Your first question comes from the line of Greg Gordon with Evercore ISI. Please go ahead.

Thanks, guys. Good afternoon.

Hi, Greg.

Looking at 2017, looking at your margin walk, you had $38.9 million of margin in 2016 from weather, but then in excess of the earnings sharing mechanism, you also had a $33.4 million increase in O&M. So, as you think about 2017 in a normal weather scenario, should we be thinking about your ability to modulate O&M in order to still earn close to or at your targeted allowed return? And what are the factors that are sort of the puts and takes that get you into sort of a confidence range around a normal weather, meaning you can earn your authorized return?

Right. Good question, Greg. And I think maybe I'll just answer the question. It's kind of at a summary high level. The plan that we put together for 2017 would call for us to reduce O&M. So if you look at the 2016 run rate, the run rate in 2017 would be 3% below the level that it was at in 2016. Now, in addition to that Greg, as we have always done in previous years, weather is obviously uncertain, could be better or worse than normal, so we certainly have levers if you will above and below that 3% level, so that we can adjust our operations as we see weather that's either favorable or unfavorable. But the base plan would call for a 3% reduction in the level of O&M.

Thanks. What is the timeline for you engaging with the Public Service Commission and making a decision to either file for a general rate case this year, or decide mutually to defer that for another year?

Yeah. So, I think you're referring to the Wisconsin Commission, and we...

Yeah.

...began engaging with their staff right after the holiday. So the first week of January, we started having discussions with them. In terms of a likely timetable, Greg, my view at this point would be, from traditionally if you're going to file a case, you're filing kind of the mid-to-late April, early May sort of timeframe. So, I think we certainly need to come to a resolution before, say, that mid-April timeframe. And I think we're on track to either be able to file a case although we don't think that's the best path or to let the mechanism that the Commission put in place continue to operate for at least another year.

Great. My last question is on, your last published slide deck is your January deck and you gave capital spending of 2020. If I start with 2017 averaging about $1.9 billion and then an incremental, your portion of ATC averaging, let's call it around $300 million over the similar timeframe, maybe a little less, the acquisition you're making of the storage fields, that is incremental to that plan or was that incorporated in that plan?

Yeah. The storage field will be incremental to that plan. And we'll have the new slide deck out shortly.

Okay. So, if you would have added that $200 million into your plan and we're to presume that you're going to earn out your authorized returns across all the jurisdictions and all the investments you're making over this period, where inside the sort of 5% to 7% earnings growth aspiration would you expect to be at this juncture?

Sure. And so, let me bridge back to the capital plan that I'd discussed kind of in the prepared remarks. So, if you take the $9.7 billion, what I would just call the more of the retail business, add the $1.4 billion for ATC inside the footprint and then, put on top of that the $300 million outside the footprint. Greg, I see that getting us kind of more of the low end of that 5% to 7% range. And then, what you'd need to do in order to kind of move up in that range, I'd say most likely would be to make some significant investment outside the footprint, the traditional footprint at ATC. But the capital plan that I described in the prepared remarks, very supportive of something kind of near that low end of the range.

Great. Thank you, guys. Have a great day.

Thanks, Greg.

Your next question comes from the line of Julien Dumoulin-Smith with UBS. Please go ahead.

Hi, Julien.

Hey. Good afternoon, guys.

How are you?

Good. Thank you. Well, perhaps just a follow-up on Greg's question if you may. Can I ask – you alluded to ATC as being kind of another lever to get you higher up in that range? You also discussed on the call, if I heard right, a new JV effort. Is that something we should be paying attention to in terms of meaningful drivers in the ATC, is that an equation, or what would then ATC would be that prospect, or what geography are we talking about?

Yeah. I would say, well, short answer is yes, you should be paying attention, Julien, because I think that Arizona, there are certainly a lot of needs for transmission in Arizona. So, I would say though in terms of most likely places that ATC could do things outside the footprint, Arizona is one of them and then going into the California market, because they're going to be looking. They still have very aggressive renewable goals, and they're going to be looking to import effectively renewable power in the California. So, I think the largest potential opportunities outside footprint are in the West and more likely the North Arizona and California.

Got it. That's great. So then, maybe just turning back to the latest acquisition if you will, can you elaborate a little bit further, one, on the specific acquisition you just did, where will that be accounted for if it's outside the utilities, that's just going to be at a holdco kind of figure? And then separately, just to clarify a typical equity ratio, typical ROE on the full 200 and change number that you're acquiring this far.

Right. I think your description was very good, Julien, but maybe just let me review it for everybody on the call. So, what we would do, Bluewater Holding would be a first here subsidiary of WEC Energy Group. We would capitalize at approximately 50% equity, 50% debt. The equity would come from the parent, and then we would issue debt sort of on balance sheet, if you will, non-recourse debt down at that subsidiary. Equity return in the low 10%s is what you typically see right now for the Wisconsin utilities. So that's how we would structure it. And then you would have a collection of three service agreements back from Bluewater Holding, an agreement to each of the three Wisconsin LDCs.

Got it. And just to clarify, what's the tenure of the contract that we're talking about with between the new gas storage sub and your utilities? I know you guys want to make this utility like, so perhaps just emphasize...

Sure.

...for us what that profile looks like, what the tenure is, and to what degree have you mitigated the risks. And then maybe let me throw it in while I got the mic here. The last question being, are there incremental opportunities either off of this existing asset that you're acquiring or further acquisition target both in Wisconsin or elsewhere that you would want to scale up this gas storage opportunities efficiently?

Okay. So, let me start with kind of the nature of the service agreements. So, when we'll lay this out in our declaratory ruling request, I mean literally in a matter of days, so we'll include in there the service agreements as we would propose them. In terms of tenure, Julien, we would actually propose 60-year agreements, so very long tenure agreements. And effectively what the agreement would provide for is a return on and of capital that's been invested, including the initial investment, and then as you have O&M, which we expect you would have O&M of course and I think it'd be modest capital but if you had some additional capital that would be required at the field that would also be recovered kind of through that return of and on mechanism. So, we'll lay all that out in the declaratory ruling and there will be attachments to that. The service agreements will be attached to that ruling request. Getting kind of to the second question that you ask, additional opportunities, I believe in terms of working gas, this field has like 23.2 bcf in terms of working gas, that's about a third of our requirements. I do believe, you could do some additional expansion at the field and you could add some more working gas at the field. If you did that, that would be also covered by that service agreement, sort of structure that I mentioned. I think other than that for the Wisconsin utilities, there really aren't any other gas infrastructure things that we're looking at. So, hopefully... (39:44)

Yeah. So, it's not that big of an incremental opportunity on the gas storage side, not looking to fully cover your needs, shall we say beyond the...

Yeah, it only covers the third of the needs, so there certainly would be room to do a bit more own storage in the future because it's only a third.

Right. But at the site principally not necessarily incremental?

That's right.

Got it. Excellent. Thank you for the time.

Yeah.

Your next question comes from the line of Jonathan Arnold with Deutsche Bank. Please go ahead.

Good afternoon, guys.

Good afternoon.

Thanks for the extra color on tax and the detail there. I'm wondering can you – should we think about that – you obviously have framed the magnitude of how you see the impact to different pieces. Do you feel that these are within a framework that you would be able to work to offset through other means, be it cost or investment, or is this kind of a net look?

Right. Well, I think maybe I'll talk about in terms of the shareholder impacts. When we talked about rate base, it was a cumulative impact of $300 million on rate base and again that's cumulative over a five-year period. So, I would certainly view that on a company of this size, there certainly would be other opportunities that we could pull forward or identify that would help offset that $300 million. So, I think from a rate base standpoint, I'd certainly think that's manageable. Not much to say about the deferred tax impact at We Power, that would be a shareholder benefit, and that kind of leaves interest deductibility. And I think I would just stress to you Jonathan and everybody on the call, all this that we put into the earnings deck, it's bit of a speculative enterprise, I mean we're just trying to give people a sense for the impacts. On the interest deductibility front, if you take one extreme where it's still deductible but at a 20% level, well, that's $0.05 a share on a base of say circa $3, so that'd be fairly small and I would expect that that's probably manageable. As you start getting the things more like $0.15, that'd be tougher for us to manage. But as I look at it, I mean it's not a foregone conclusion, but that's where they're headed in terms of how this would be structured. Does that help?

No, that's helpful. Thank you. And my other question was answered. So, I will see you. Thank you.

Thank you.

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

Hi, Dan.

Hi. Good afternoon. I also had a couple questions just around the tax, if the tax law changes, and it's more in terms of your capital structure. I've seen a number of studies saying that as tax rates go down or as tax interest deductibility becomes less of an issue, companies tend to have less leverage. Have you thought at all about any impacts on your capital structure strategy particularly, in terms of how you would capitalize your utilities for rate filings and so forth in terms of debt to equity ratios and so forth?

I've not thought about that a great deal at this point, Dan. But I think look if you basically or Congress makes changes in the tax that effectively changes the after-tax cost of the different components, you'd most certainly have to rethink what's the best capital structure for the utilities. But quite candidly, I haven't gotten to that level yet in my thinking.

Okay. And then I just want to make sure on your page 18, where you show these preliminary estimates that I understand your note there under the holding company. We were saying that's only a change in rate and not additive so...

Right. Scott, do you want to take the answer to that?

Yeah. And the reason for the note is, if there would be only a change of rate, it would be the $0.05 that we talked about at the holding company. When you go down the holding company page, if non-deductibility of interest would happen, it would be $0.14, so it's not additive. I don't want someone to go and add the $0.05 and $0.14 together, it's either $0.05 or $0.14, which once again, Allen talked about the non-deductibility of interest and where that would actually go.

Okay. So you would use one or the other, but not...

Correct.

They're not netted in anyway.

Correct.

Okay. I also had a question around debt. I guess, you saw the Bloomberg is changing rules for inclusion of debt issuance in their indices and a large number of your issues are going to fall out of the index given that they are at currently at a size of $250 million. I guess how do you expect to respond to that, while you tend to issue larger sizes going forward or do you think you still have adequate access to the debt markets if you issue at $250 million or have you thought about that?

Yeah. So, that's a good question. And we'll be looking at as debt issuances come due. Probably we'll look at it in a couple of ways. One, there may be an opportunity to open some of the existing debt and get it at that larger level, so keep it at the index level. We will also look at, should we issue in larger amounts and maybe have to look at our CP program overall. But we've been very successful at the smaller utilities, even issue under the index size debt. So we've been successful either way. But we'll evaluate them as they come due and what's the most efficient to execute them.

Okay. And then the last question I had is around the numbers on page 10 and 11. You had fairly sizable impacts in Wisconsin related to O&M that even after excluding the earning sharing. I was wondering if you could give some more color on what happened there in the fourth quarter in particular.

Yeah. In order to really look at the fourth quarter O&M, you really have to take a step back to 2015. So in 2015 as you recall, we had an extremely warm fourth quarter, and in that fourth quarter, we had to really look at our O&M expenses. And in the end, we had to control O&M expenses to get to our authorized return. And when you look at this year, we're just getting back to running the normal O&M in the projects that we were doing. There may be some timing between the third and fourth quarter, but we've really looked at the total expense over the entire year. So, there is a little more O&M, specifically in this fourth quarter, but it was exaggerated by what we did last year in 2015. But overall, we're able to hit our authorized return in all the jurisdictions. And like Allen mentioned, next year, we're looking about 3% reduction in total O&M.

Okay. Thank you.

You're welcome.

Thanks, Dan.

Your next question comes from the line of Joe Zhou (48:00) with Avon Advisors (sic) [Avon Capital]. Please go ahead.

(48:04) Andrew Stuart Levi - Avon Capital/Millennium Partners: Thank you, guys. Hey. No, it's actually Andy Levi. How are you?

Hey, Andy. Andrew Stuart Levi - Avon Capital/Millennium Partners: I had a question on the growth rate, but I think you guys were very clear on that. So I'm all set. Thank you very much.

Thanks, Andy.

Thanks, Andy.

Your next question comes from the line of Michael Lapides with Goldman Sachs. Please go ahead. Michael Lapides - Goldman Sachs & Co.: Hey, guys. I'm actually going to pick up where Andy just left off. Can you talk about how many – I know you're talking about 3% O&M down in the 2017 over 2016, so 2016 O&M was almost $2.2 billion. So, that's a pretty sizable chunk of O&M reduction. Do you see multiple years of this? I mean we've seen some of your peers go to mergers. One of the East Coast utilities did an acquisition or did a merger with a peer and they've been able to do four or five years of 2% to 3% O&M reductions. Just curious if you see that kind of runway ahead for cost saves, that would benefit both shareholders and other stakeholders including customers?

Right. Well, I think in terms of being able to continue to maintain O&M reductions, I do believe we'll have additional capacity to reduce O&M, Michael. But I would say, as you look out say to 2018, 2019, 2020, which I think is kind of more where you're going, the larger reductions in O&M are most likely going to be centered around our generation portfolio as we restructure that generation portfolio. And let me just give you one example in particular, bridge back to the conversation or the prepared remarks when I was talking about the new gas-fired generation in the UP. Well, once we have that new generation online, and we're able to retire the Presque Isle Power Plant, the run rate of O&M at Presque Isle, it's about $40 million a year, which very, very significant both for Wisconsin Electric as well as the consolidated entity. So, I do believe, there'll be additional opportunities, but the really big opportunities in terms of O&M reduction are going to come more from the generation side. There will be more modest, not unimportant but more modest opportunities and say, we implement our new ERP system, so now we're going through efforts where we're trying to get all of our utilities on common systems. So, as we implement our new ERP system in this year and in 2018, I would see more savings opportunities there, but that's a little more modest. Michael Lapides - Goldman Sachs & Co.: Got it. And one follow-up just on the Bluewater Gas acquisition, the gas storage acquisition. Can you all remind us where are your gas utilities currently buying storage from? And how should we think about what the impact of this, if you assume like a utility like return, what the impact of this is for the customer?

Yeah. So right now, the largest single, say, third-party provider of storage is ANR. So, ANR is the largest single provider. I believe that they provide about 40% of the storage or thereabouts for the operating companies, so that's the biggest one Michael. As the service agreements would be put in place, if you look at it from a present value standpoint, okay, so cover all the return of capital, cover all those costs, we would see roughly a $213 million net present value savings to customers. And in terms of the year where you would see an absolute reduction due to this, I think that's in year four, so pretty quickly gets to annual reduction in rates, and any increase in the early years, it's less than 1%, but present value, that's $200 million-plus – $213 million net present value, so very significant savings that we would see. Does that help Michael? Michael Lapides - Goldman Sachs & Co.: That helps a lot. And one last one, I apologize for the short list here. First quarter guidance and I know weather has not been so wonderful January to date, but first quarter guidance seems a little tepid. Can you talk a little bit about, given you're much more gassy now than you were pre-Integrys, what that means in terms of your kind of where you think you'll fall within 2017's range, if it has any impact at all and maybe how you're thinking about how kind of – and I know you've touched on this a little bit, but kind of how you're thinking about the broader growth of the company over time, multi-years out?

Yeah. And Scott, why don't you address Michael's question about the first quarter?

Yeah. So the first quarter, you're correct Michael, the month of January right now is about 12% warmer than normal. It's like the seventh warmest in the last 57 years, so it's a pretty warm January. So, we did have an entry last year that took that $1.9 down to about $1.05. So if you take some weather of $0.01 or $0.02, we're kind of in the middle of the range that we provided. But it's really early in the year to say how that's going to affect our overall guidance, like Allen mentioned, we have a lot of O&M that we look at and monitor and we manage the business to get to our log (54:12) returns.

Yeah. And then I think Michael, in terms of longer-term growth, I addressed that in the script and also talked a little bit about it in the response to Greg Gordon's question, was there any other aspect specifically about that that you want me to cover? Michael Lapides - Goldman Sachs & Co.: No, just kind of thinking about whether you see your electric business or your gas business, which of those two being a higher growth business and is the spread between the two significant? Are we talking about pennies or nickels, not dimes and quarters?

Right. Well, in terms of – and let me talk about that in terms of capital allocation, if you will. So if you look at the five-year capital budget, just that half, in fact, maybe a little over half of the capital that we would expect to commit over the next five years is in the natural gas distribution business. So, given that the natural gas distribution as measured by rate base is about a quarter of the company, right now. In terms of percentage growth, we're going to see much greater or expect to see much greater percentage growth in earnings in the natural gas business than we would in electric. But in terms of absolute capital employed, it's almost even, electric versus gas. But in terms of percentage growth, most of it's going to come from gas we would expect. Michael Lapides - Goldman Sachs & Co.: Got it. Thank you, Allen. Thanks, guys. Much appreciated.

Thanks, Michael.

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

Good afternoon, Jim.

Hey, how are you?

Good.

My questions have been asked and answered. Thank you, guys.

Okay. Take care, Jim.

Thanks, Jim.

Yep.

All right. Well, that concludes our conference call. Thank you all for participating. If you have any more questions, please contact Beth Straka at the company. Her direct number is 414-221-4639.

Thank you. This concludes today's conference call. You may now disconnect.