Wisconsin Electric Power Co. (WELPM) 2025 Annual Report: Key Insights for Investors

Company: Wisconsin Electric Power Co.
Filing: Form 10-K Annual Report (Fiscal Year Ended December 31, 2025)
Filed: February 20, 2026
SEC File Number: 001-01245
Business Address: 231 W Michigan St, PO Box 2046, Milwaukee, WI 53290-0001
Business Phone: 414-221-2345

Key Highlights and Detailed Analysis

• Company Profile & Listing Status:
  • Wisconsin Electric Power Co. is classified under Electric Services (SIC 4911). The company’s main business is regulated utility operations.
  • It is a well-known seasoned issuer and is required to file regular reports with the SEC. However, the company is listed as a non-accelerated filer, not a large accelerated or accelerated filer. It is not a smaller reporting company or an emerging growth company.
  • Securities registered under Section 12(g): The company lists Serial Preferred Stock, 3.60% Series, \$100 Par Value and Six Per Cent. Preferred Stock, \$100 Par Value. There are no securities registered under Section 12(b).
• Financial and Regulatory Compliance:
  • The company has filed all required reports and submitted all interactive data files, indicating strong compliance and transparency.
  • There are no indications in the available content of missed filings or regulatory issues, which is positive for investor confidence regarding governance and reporting controls.
• Shareholder Returns and Dividend Information:
  • Preferred Stock Dividend Rate: The preferred stock dividend rate is maintained at 6.00% for the relevant classes. This is a notable yield in the current interest rate environment and may be of direct interest to income-focused shareholders.
• Return on Equity and Earnings Sharing:
  • The company recorded Return on Equity (ROE) in excess of authorized amounts at 0.15% and 0.25% above the authorized amount. Any ROE above regulatory authorized levels may be subject to earnings sharing mechanisms with regulators or ratepayers, which can impact future earnings retention.
  • There are regulatory mechanisms such as the Earnings Sharing Mechanism and revenue requirements associated with renewable generation facilities, as well as regulatory assets and liabilities relating to deferred income taxes, stranded costs, and pension costs. These indicate a mature regulatory environment but also highlight areas where regulatory outcomes could impact future earnings.
• Segment Reporting and Revenue Streams:
  • The company operates principally in the regulated utility segment, with primary revenue from electricity and natural gas sales to retail customers.
  • Additional revenue is generated from “Other Operating Revenues” including late payment charges and bespoke resource returns, which are relatively minor but represent additional income sources.
• Asset and Regulatory Matters:
  • The company has multiple regulatory assets and liabilities, including those related to uncollectible expenses, finance leases, deferred income tax charges, pension and other postretirement plan costs, system support resources, and securitization/bluewater storage costs. These items are important as changes in regulatory treatment could affect earnings, cash flow, and financial position.
  • The company applies fair value hierarchy disclosures and uses levels 1, 2, and 3 for pension and postretirement investments, as well as for derivatives (notably in natural gas and financial transmission rights). Changes in market values or regulatory fair value methodologies could impact reported asset values and funding ratios.
• Derivative and Hedging Activities:
  • The company uses derivatives for hedging risks related to commodity contracts (natural gas, financial transmission rights). The fair value of these derivatives is disclosed under various hierarchy levels, and some are designated as hedging instruments. Movements in commodity prices, or changes in hedge accounting, could impact reported earnings or regulatory asset/liability balances.
• Debt and Capital Structure:
  • The company lists various long-term debt instruments, including debentures due in 2044, 2045, 2048, and 2054, as well as commercial paper for short-term funding. The report references specific series and maturity dates, indicating a diversified maturity schedule.
  • Restrictions on Common Stock Equity:
    There are references to restrictions if common stock equity to total capitalization falls below certain thresholds (20% and 25%). Such covenants are relevant for preferred shareholders and bondholders and could affect the company’s ability to issue dividends or take on more debt.
• Regulatory Environment and Rate Cases:
  • The company is regulated by the Public Service Commission of Wisconsin and is subject to rate cases and mechanisms such as the Tax Cuts and Jobs Act of 2017 regulatory liability and various other cost-recovery and refund mechanisms.
  • Ongoing rate cases and regulatory reviews, especially related to renewable generation facilities, cost recovery, and earnings sharing, are important potential catalysts for future share price movement depending on outcomes.

Potentially Price Sensitive or Shareholder-Relevant Issues

• Dividend Policy: The continued payment of a 6% preferred dividend is a strong signal for income investors, but any future change to this policy or regulatory pressures on earnings retention could impact the attractiveness of the shares.
• Regulatory Outcomes: The company’s return on equity above authorized regulatory levels, earnings sharing mechanisms, and various regulatory assets and liabilities mean that rate case outcomes, regulatory approvals, or changes in allowed returns could materially impact future earnings and share value.
• Financial Position and Debt Covenants: Any breach of equity capitalization thresholds could trigger restrictions or impact preferred shareholders’ rights, potentially affecting market perception and pricing of the preferred stock.
• Derivative Exposure: The company’s use of derivatives, especially in commodities, exposes it to price volatility and potential mark-to-market impacts on earnings if market conditions shift.
• No Public Listing of Common Stock: There is no indication of common stock being publicly traded. The preferred shares are the main listed instruments, and their value is closely tied to the company’s financial strength and regulatory environment.

Summary for Investors

Wisconsin Electric Power Co. remains a solid, regulated utility with a focus on compliance, stable preferred dividends, and an active approach to regulatory asset and liability management. The main risks and opportunities are tied to regulatory outcomes, rate cases, and capital structure management. Investors should monitor future regulatory decisions, especially those relating to allowed returns, cost recovery, and dividend policies, as these could materially affect both earnings and the attractiveness of the preferred shares.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should review the full 10-K filing and consult with their financial advisors before making any investment decisions. Past performance is not indicative of future results, and regulatory or market changes can impact the company’s financial position and share value.

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