WELPM's Net Income Jumps 31.6% Amidst Soaring Capital Investments

TL;DR

WELPM is crushing it with big profit gains and massive capital spending, but keep an eye on that growing debt pile.

AI Summary

Wisconsin Electric Power Company (WELPM) reported a robust financial performance for the nine months ended September 30, 2025, with net income increasing by 31.6% to $512.6 million, up from $389.6 million in the prior year. Operating revenues also saw a significant rise, reaching $3,391.8 million, an increase of 12.3% from $3,020.1 million in the same period of 2024. This growth was driven by higher operating income, which climbed to $933.8 million from $809.3 million. However, the company experienced a substantial increase in capital expenditures, which more than doubled to $1,891.1 million from $988.0 million, indicating significant investment in infrastructure. Despite this, net cash provided by operating activities remained strong at $994.6 million. The company's balance sheet shows an increase in total assets to $18,664.3 million from $17,199.6 million at December 31, 2024, largely due to a rise in property, plant, and equipment, net, to $14,417.5 million. Long-term debt also increased to $4,222.1 million from $3,728.0 million, reflecting financing for these capital projects. The company received a substantial equity contribution from its parent, WEC Energy Group, Inc., totaling $1,085.0 million, bolstering its capital structure.

Why It Matters

WELPM's strong revenue and net income growth signal a healthy operational environment, which is positive for investors seeking stable utility returns. The significant increase in capital expenditures, more than doubling to $1,891.1 million, suggests aggressive investment in infrastructure, potentially for modernization or expansion, which could enhance long-term asset value and service reliability for customers. This investment, coupled with a substantial $1,085.0 million equity contribution from WEC Energy Group, Inc., indicates strong parent company support and a commitment to future growth, potentially strengthening WELPM's competitive position against other regional utilities. However, the rising long-term debt to $4,222.1 million warrants investor attention regarding future interest rate sensitivity and debt servicing capacity.

Risk Assessment

Risk Level: medium — While WELPM shows strong financial performance with a 31.6% increase in net income, the substantial increase in capital expenditures to $1,891.1 million and long-term debt to $4,222.1 million introduces execution and financing risks. The company's reliance on a significant equity contribution from its parent, WEC Energy Group, Inc., of $1,085.0 million, while supportive, also highlights the scale of these investments and potential future capital needs.

Analyst Insight

Investors should consider WELPM's strong operational performance and parent company support as positive indicators for long-term stability. However, closely monitor the company's capital expenditure efficiency and debt management strategies, as these will be critical for sustainable growth and shareholder returns.

Financial Highlights

debt To Equity

0.29

revenue

$3,391.8M

operating Margin

27.5%

total Assets

$18,664.3M

total Debt

$4,259.1M

net Income

$512.6M

eps

$5.12

gross Margin

72.5%

cash Position

$3.0M

revenue Growth

+12.3%

Revenue Breakdown

Key Numbers

• $512.6M — Net Income (Increased 31.6% for the nine months ended September 30, 2025, from $389.6M in 2024.)
• $3,391.8M — Operating Revenues (Increased 12.3% for the nine months ended September 30, 2025, from $3,020.1M in 2024.)
• $1,891.1M — Capital Expenditures (More than doubled for the nine months ended September 30, 2025, from $988.0M in 2024.)
• $1,085.0M — Equity Contribution from Parent (Significant capital injection from WEC Energy Group, Inc. for the nine months ended September 30, 2025.)
• $4,222.1M — Long-Term Debt (Increased from $3,728.0M at December 31, 2024, reflecting financing for capital projects.)
• $994.6M — Net Cash Provided by Operating Activities (Strong cash generation for the nine months ended September 30, 2025.)
• $14,417.5M — Property, Plant, and Equipment, net (Increased from $12,810.7M at December 31, 2024, indicating significant asset growth.)
• 31.6% — Net Income Growth (Percentage increase in net income for the nine months ended September 30, 2025.)
• 12.3% — Operating Revenue Growth (Percentage increase in operating revenues for the nine months ended September 30, 2025.)

Key Players & Entities

• WISCONSIN ELECTRIC POWER COMPANY (company) — registrant
• WEC Energy Group, Inc. (company) — parent company and common stock holder
• Public Service Commission of Wisconsin (regulator) — state regulatory agency
• United States Securities and Exchange Commission (regulator) — federal regulatory agency
• $512.6 million (dollar_amount) — net income for nine months ended September 30, 2025
• $389.6 million (dollar_amount) — net income for nine months ended September 30, 2024
• $3,391.8 million (dollar_amount) — operating revenues for nine months ended September 30, 2025
• $1,891.1 million (dollar_amount) — capital expenditures for nine months ended September 30, 2025
• $1,085.0 million (dollar_amount) — equity contribution from parent for nine months ended September 30, 2025
• $4,222.1 million (dollar_amount) — long-term debt as of September 30, 2025

FAQ

Risk Factors

• Environmental Regulations [high — regulatory]: The company is subject to stringent environmental regulations, including those related to greenhouse gas emissions (GHG Power Plant Rule 2024) and effluent limitations (ELG). Non-compliance can lead to significant fines and operational disruptions. For example, the company must adhere to Mercury and Air Toxics Standards (MATS).
• Infrastructure Investment and Capital Expenditures [medium — operational]: Capital expenditures more than doubled to $1,891.1 million for the nine months ended September 30, 2025, from $988.0 million in the prior year. This significant investment in property, plant, and equipment ($14,417.5 million) is crucial for maintaining and upgrading infrastructure but also increases financial leverage and execution risk.
• Increased Debt Levels [medium — financial]: Long-term debt increased to $4,222.1 million from $3,728.0 million at December 31, 2024, to finance capital projects. This rise in debt, coupled with significant equity contributions from the parent, indicates a shift in capital structure to support growth initiatives.
• Interest Rate Fluctuations [medium — market]: The company's interest expense was $367.3 million for the nine months ended September 30, 2025. Changes in interest rates can impact the cost of servicing its substantial debt of $4,222.1 million.
• Rate Regulation [medium — regulatory]: The company operates under the jurisdiction of the Public Service Commission of Wisconsin (PSCW), which approves rates and service standards. Changes in regulatory policy or unfavorable rate decisions could impact profitability.
• Supply Chain and Materials [low — operational]: The company maintains $337.8 million in materials, supplies, and inventories. Disruptions in the supply chain or significant price increases for these materials could impact operating costs.

Industry Context

Wisconsin Electric Power Company operates in the regulated utility sector, characterized by significant capital intensity and long-term infrastructure investments. The industry is increasingly focused on the transition to cleaner energy sources, driven by regulatory mandates and evolving customer preferences. Competition exists from other utilities and, to a lesser extent, from independent power producers and renewable energy developers.

Regulatory Implications

The company is heavily influenced by regulatory bodies like the Public Service Commission of Wisconsin. Evolving environmental regulations (e.g., GHG emissions) and the need for rate case approvals present ongoing compliance and financial risks. The company's significant investments in property, plant, and equipment are subject to regulatory scrutiny and approval for cost recovery.

What Investors Should Do

1. Monitor capital expenditure execution and return on investment.
2. Assess the impact of regulatory decisions on future earnings.
3. Evaluate the company's debt management strategy.
4. Analyze the drivers of revenue growth and operating income.

Key Dates

• 2025-09-30: Nine months ended September 30, 2025 — Reported significant net income growth of 31.6% to $512.6 million and a 12.3% increase in operating revenues to $3,391.8 million, alongside a doubling of capital expenditures.
• 2024-12-31: As of December 31, 2024 — Year-end balance sheet figures provide a baseline for comparison, showing total assets of $17,199.6 million and long-term debt of $3,728.0 million.

Glossary

AFUDC

Allowance for Funds Used During Construction (This is an accounting concept that allows companies to capitalize interest and other costs incurred on funds used for construction projects, which are then recovered over the life of the asset.)

Regulatory Assets

Costs that have been incurred but are not yet recognized as expenses in the income statement, pending recovery through future rates approved by regulators. (Wisconsin Electric Power Company has significant regulatory assets ($2,945.5 million as of September 30, 2025), indicating a substantial portion of its costs are subject to regulatory approval for recovery.)

Regulatory Liabilities

Amounts that are recognized as liabilities but are expected to be recovered from customers through future rates. (The company has regulatory liabilities ($1,696.8 million as of September 30, 2025), representing amounts collected from customers that are to be refunded or used to offset future costs.)

WEPCo Environmental Trust

A trust established to finance environmental compliance projects, often related to emissions control. (The company has significant balances related to the WEPCo Environmental Trust, impacting its regulatory assets, liabilities, and long-term debt, as noted in the balance sheet details.)

MISO

Midcontinent Independent System Operator, Inc. (This is a regional transmission organization that manages the electric grid and wholesale electricity market in the region where Wisconsin Electric Power Company operates, influencing market dynamics and operational planning.)

Year-Over-Year Comparison

Compared to the prior year, Wisconsin Electric Power Company has demonstrated strong top-line growth, with operating revenues increasing by 12.3% to $3,391.8 million and net income surging by 31.6% to $512.6 million. This performance is underpinned by higher operating income. However, the company has significantly ramped up capital expenditures, more than doubling them to $1,891.1 million, indicating a substantial investment phase. Long-term debt has also risen to $4,222.1 million to support these investments. New risks related to the scale of these capital projects and increased leverage are now more prominent.

Key Financial Figures

• $10 — atest practicable date: Common Stock, $10 Par Value, 33,289,327 shares outstandi

Filing Documents

• wep-20250930.htm (10-Q) — 1735KB
• a2025q3we10qexhibit311.htm (EX-31.1) — 11KB
• a2025q3we10qexhibit312.htm (EX-31.2) — 11KB
• a2025q3we10qexhibit321.htm (EX-32.1) — 4KB
• a2025q3we10qexhibit322.htm (EX-32.2) — 4KB
• 0000107815-25-000207.txt ( ) — 8628KB
• wep-20250930.xsd (EX-101.SCH) — 60KB
• wep-20250930_cal.xml (EX-101.CAL) — 80KB
• wep-20250930_def.xml (EX-101.DEF) — 290KB
• wep-20250930_lab.xml (EX-101.LAB) — 713KB
• wep-20250930_pre.xml (EX-101.PRE) — 498KB
• wep-20250930_htm.xml (XML) — 1402KB

FINANCIAL STATEMENTS (UNAUDITED)

FINANCIAL STATEMENTS (UNAUDITED) 4 Condensed Consolidated Income Statements 4 Condensed Consolidated Balance Sheets 5 Condensed Consolidated Statements of Cash Flows 6 Condensed Consolidated Statements of Equity 7 Notes to Condensed Consolidated Financial Statements 8 Page Note 1 General Information 8 Note 2 Acquisition 8 Note 3 Operating Revenues 9 Note 4 Credit Losses 10 Note 5 Regulatory Assets and Liabilities 12 Note 6 Property, Plant, and Equipment 12 Note 7 Common Equity 13 Note 8 Short-Term Debt and Lines of Credit 13 Note 9 Long-Term Debt 13 Note 10 Leases 13 Note 11 Materials, Supplies, and Inventories 14 Note 12 Income Taxes 15 Note 13 Fair Value Measurements 16 Note 14 Derivative Instruments 17 Note 15 Guarantees 18 Note 16 Employee Benefits 18 Note 17 Segment Information 19 Note 18 Variable Interest Entities 20 Note 19 Commitments and Contingencies 21 Note 20 Supplemental Cash Flow Information 26 Note 21 Regulatory Environment 26 Note 22 New Accounting Pronouncements 27 ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 28 ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 49 ITEM 4.

CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES 49 PART II. OTHER INFORMATION 50 ITEM 1.

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS 50 ITEM 1A.

RISK FACTORS

RISK FACTORS 50 ITEM 5. OTHER INFORMATION 51 ITEM 6. EXHIBITS 52 SIGNATURE 53 09/30/2025 Form 10-Q i Wisconsin Electric Power Company Table of Contents GLOSSARY OF TERMS AND ABBREVIATIONS The abbreviations and terms set forth below are used throughout this report and have the meanings assigned to them below: Affiliates ATC American Transmission Company LLC We Power W.E. Power, LLC WEC Energy Group WEC Energy Group, Inc. WEPCo Environmental Trust WEPCo Environmental Trust Finance I, LLC WPS Wisconsin Public Service Corporation Federal and State Regulatory Agencies CBP United States Customs and Border Protection Agency DOC United States Department of Commerce EPA United States Environmental Protection Agency IRS United States Internal Revenue Service PSCW Public Service Commission of Wisconsin SEC United States Securities and Exchange Commission USITC United States International Trade Commission WDNR Wisconsin Department of Natural Resources Accounting Terms AFUDC Allowance for Funds Used During Construction ASC Accounting Standards Codification ASU Accounting Standards Update FASB Financial Accounting Standards Board GAAP United States Generally Accepted Accounting Principles OPEB Other Postretirement Employee Benefits VIE Variable Interest Entity Environmental Terms BATW Bottom Ash Transport Water BTA Best Technology Available CASAC Clean Air Scientific Advisory Committee CCR Coal Combustion Residuals CO 2 Carbon Dioxide CRL Combustion Residual Leachate CWA Clean Water Act ELG Steam Electric Effluent Limitation Guidelines FGD Flue Gas Desulfurization GHG Greenhouse Gas GHG Power Plant Rule 2024 Greenhouse Gas Power Plant Rule MATS Mercury and Air Toxics Standards NAAQS National Ambient Air Quality Standards NOx Nitrogen Oxide PM Particulate Matter WPDES Wisconsin Pollutant Discharge Elimination System Measurements Bcf Billion Cubic Feet Dth Dekatherm lb/MMBtu Pound Per Million British Thermal Uni

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS WISCONSIN ELECTRIC POWER COMPANY CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited) Three Months Ended Nine Months Ended September 30 September 30 (in millions) 2025 2024 2025 2024 Operating revenues $ 1,201.9 $ 1,079.3 $ 3,391.8 $ 3,020.1 Operating expenses Cost of sales 401.2 353.9 1,127.1 986.0 Other operation and maintenance 271.2 241.6 773.1 720.6 Depreciation and amortization 160.4 145.5 467.6 427.1 Property and revenue taxes 29.7 17.0 90.2 77.1 Total operating expenses 862.5 758.0 2,458.0 2,210.8 Operating income 339.4 321.3 933.8 809.3 Other income, net 15.5 19.5 38.6 52.0 Interest expense 121.3 123.3 367.3 364.5 Other expense ( 105.8 ) ( 103.8 ) ( 328.7 ) ( 312.5 ) Income before income taxes 233.6 217.5 605.1 496.8 Income tax expense 36.2 47.8 92.5 107.2 Net income 197.4 169.7 512.6 389.6 Preferred stock dividend requirements 0.3 0.3 0.9 0.9 Net income attributed to common shareholder $ 197.1 $ 169.4 $ 511.7 $ 388.7 The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements. 09/30/2025 Form 10-Q 4 Wisconsin Electric Power Company Table of Contents WISCONSIN ELECTRIC POWER COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in millions, except share and per share amounts) September 30, 2025 December 31, 2024 Assets Current assets Cash and cash equivalents $ 3.0 $ 0.4 Accounts receivable and unbilled revenues, net of reserves of $ 31.7 and $ 46.9 , respectively 546.7 601.2 Accounts receivable from related parties 116.0 128.6 Materials, supplies, and inventories 337.8 354.8 Prepaid taxes 82.4 139.8 Other prepayments 17.3 24.9 Other 25.8 23.2 Current assets 1,129.0 1,272.9 Long-term assets Property, plant, and equipment, net of accumulated depreciation and amortization of $ 6,268.2 and $ 5,952.3 , respectively 14,417.5 12,810.7 Regulatory assets (September 30, 2025 and December 31, 2024 include $ 69.6 and $

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