Wisconsin’s largest utility says electricity use by large industrial customers is down 18% since Gov. Tony Evers issued his “safer at home” order, and the company expects total retail sales to fall 5% over the next nine months as the economy begins to recover from the COVID-19 health crisis.
WEC Energy Group Chairman Gale Klappa said shelter-in-place orders that took effect in March had a “minimal impact” on the company’s first-quarter earnings, reported Monday, but since March 24 overall company electricity sales are down 7%.
WEC, the parent company of We Energy and Wisconsin Public Service Corporation, does not expect sales to fully recover this year.
The large industrial segment is expected to see the biggest hit, with sales 18% below company forecasts in the second quarter and remaining 7% below by the fourth quarter, chief financial officer Scott Lauber said Monday in a conference call with investors.
Small industrial and commercial sales are expected to fall 8% in the second quarter, improving to a 3% reduction in the fourth quarter.
Residential sales, which so far are up about 5% with most people staying home during the day, are expected to be up 4% in the second quarter and return to near-normal levels by the end of the year.
Klappa said major economic expansion projects, including a Foxconn flat-screen manufacturing facility, remain on track despite the pandemic.
“If in the region we can get the economy restarted by June things will evolve in fits and starts,” Klappa said. “The real question for everybody is how confident consumers will be in going back to (normal) buying patterns.”
Klappa expects the impact of the pandemic response will trim up to $80 million from the company’s pre-tax profits in 2020, though the company is positioned to absorb that and produce earnings of $3.71 to $3.75 per share.
“We’re about as well-positioned as we can be to endure this pandemic,” Klappa said.
With much of the company’s workforce operating remotely, Klappa said the company may not need some facilities currently being planned.
“I don’t think we’re going to need all of them,” he said. “Maybe none of them.”
WEC reported first-quarter revenue was down more than 11% compared to the same period last year, largely because of record warm temperatures. With expenses down more than 19%, WEC earned $452.5 million, an increase of 7.5%.
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