WEC Energy Group, Inc, (NYSE: WEC) is one of the nation’s premier energy companies, serving 4.4 million electric and natural gas customers in Wisconsin, Illinois, Michigan and Minnesota. The group, a component of the S&P 500, has nearly $29bn of assets, 8,500 employees and approximately 55,000 stockholders of record.
We invited Gale E. Klappa, the firm’s Chairman and Chief Executive Officer, to provide us with an insight into the new firm and his role in the company’s success.
WEC Energy Group was formed in June 2015 through the acquisition of Integrys Energy in a transaction valued at $9 billion. The transaction creates the leading electric and natural gas utility in the Midwest.
With your merger with Integrys, how do you make sure culture stays at the forefront?
The most direct and influential way we are working to ensure that our existing culture and focus remain at the heart of what we do is through the selection of the new leadership team for the combined company.
We were fortunate in that we were able to work our way through approvals for the acquisition in four states – Wisconsin, Illinois, Michigan, Minnesota – and two federal agencies, all in just 53 weeks. We were fortunate to move through the process that quickly.
As we sought these regulatory approvals, we also developed a new organizational structure for the combined company. Shortly before we closed the transaction, we selected proven leaders for the top 70 positions in the combined company.
I believe this was the most direct and immediate way to maintain our culture – because every one of those leaders has proven they have the right focus.
What impact will these two organizations coming together have for the future?
At $9 billion, this acquisition was the largest non-bank acquisition ever made by a Wisconsin company. The benefits that we believe we can deliver from the acquisition are two-fold:
First, we are in an era of low demand growth. And as costs for infrastructure continue to rise, companies like ours need to have scale and scope, a broad reach and technical depth to successfully participate in what is likely to be a consolidating industry going forward.
This acquisition gives us all of those things. We are now serving 4.4 million customers across four states; we are the eighth largest natural gas distribution company in America; and in terms of investor-owned utility systems, we are one of the 15 largest in the United States.
This gives us a strong platform of geographic reach and depth that we need to be one of the best performing utility systems in the country.
Secondly, the acquisition gives us a real opportunity to continue the investment growth we have experienced over the past decade for our shareholders.
For example, with the infrastructure needs of this company and the company we have acquired, capital spending will probably be in the range of $1.5 billion per year for as many years going forward as the eye can see. That is more than double the investment opportunity that Wisconsin Energy had stand alone.
Going forward, will all energy companies need to have substantial scope to survive?
Over time, the smallest players will have more difficulty being cost-competitive for their customers because there are so many fixed costs in our business. In a low-growth environment, we have to find a way to spread those costs over a broader base of customers.
This was very much a part of our thinking. For example, we have said publicly that in Wisconsin alone, we think there will be more than $1 billion of cost savings for customers over the next decade from this acquisition.
How critical is it to maintain a service business mentality?
It is at the core of everything we do – so important that I will personally take customer calls if there is a concern.
All success in our business is local. All success in our business derives from customer satisfaction.
Company: WEC Energy Group
Name: Gale E. Klappa, Chairman and Chief Executive Officer
Email: gale.klappa@ wecenergygroup.com
Address: 231 W. Michigan St., Milwaukee, WI 53203