Company: WELPM
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0000107815-25-000105
Chunk: 21

Company: WISCONSIN ELECTRIC POWER CO
Filing Date: 2025-02-21
Form: 10-K
Item: Item 1
Chunk 21
---
2023, which provides approximately 1.0 Bcf of natural gas supply. In addition to our existing facilities, we have filed a request with the PSCW to construct an LNG facility with a storage capacity of 2.0 Bcf. In addition, the construction of additional LNG facilities in Wisconsin has been proposed as part of WEC Energy Group's 2025-2029 capital plan, which includes us. The facilities would provide another approximately 4.0 Bcf of natural gas supply (of which our portion is expected to be approximately 2.0 Bcf). The use of LNG allows us to meet anticipated peak demand without requiring the construction of additional interstate pipeline capacity. 

Natural Gas Supply

Our natural gas supply requirements are met through a combination of fixed-price purchases, index-priced purchases, storage, peak-shaving facilities, and natural gas supply call options. We contract for fixed-term firm natural gas supply each year to meet the demand of firm system sales customers. To supplement natural gas supply and manage risk, we purchase additional natural gas supply on the monthly and daily spot markets.

2024 Form 10-K11Wisconsin Electric Power Company

Hedging Natural Gas Supply Prices

As part of our hedging programs, we further reduce our supply cost volatility through the use of a mix of financial instruments, such as NYMEX-based natural gas options and futures contracts. We have PSCW approval to hedge up to 60% of planned winter demand and up to 15% of planned summer demand. This approval allows us to pass 100% of the hedging costs (premiums, brokerage fees and losses) and proceeds (gains) to customers through our GCRM.

Seasonality

Since the majority of our customers use natural gas for heating, customer use is sensitive to weather and is generally higher during the winter months. Accordingly, we are subject to some variations in earnings and working capital throughout the year as a result of changes in weather.

Our working capital needs are met by cash generated from operations and debt (both long-term and short-term). The seasonality of natural gas revenues causes the timing of cash collections to be concentrated from January through June. A portion of our winter natural gas supply needs is typically purchased and stored from April through November. Also, planned capital spending on our natural gas distribution facilities is concentrated in April through November. Because of these timing differences, the cash flow from customers is typically supplemented with temporary increases in short-term borrowings (from external sources) during the late summer and fall.