WEC 10-K & 10-Q changes, risk factors and insider trading

Our business is significantly impacted by governmental regulationlegislation, regulation, and oversight.

We are subject to significant state, local, and federal governmental legislation and regulations, including regulations by the various utility commissions in the states where we serve customers. TheseLegislation regulationsand regulation significantly influence our operating environment, may affect our ability to recover costs from utility customers, affect our ability to implement our corporate strategy, and cause us to incur substantial compliance and other costs. Changes in legislation or regulations, interpretationstheir of regulations,interpretation, or the imposition of new legislation or regulations could also significantly impact us, including requiring us to change our business operations. Many aspects of our operations are regulated and impacted by government regulation,legislation and regulations, including, but not limited to: the rates we charge our retail electric, natural gas, and steam customers; the authorized rates of return of our utilities; construction and operation of electric generating facilities and electric and natural gas distribution systems, including the ability to recover such costs; decommissioning generating facilities, the ability to recover the related costs, and continuing to recover the return on the net book value of these facilities; wholesale power service practices; electric reliability requirements; participation in the interstate natural gas pipeline capacity market; standards of service; issuance of securities; short-term debt obligations; transactions with affiliates; and billing practices. Failure to comply with any applicable rules or regulations may lead to customer refunds, penalties, and other payments, which could materially and adversely affect our results of operations and financial condition.

The rates, including adjustments determined under riders, we are allowed to charge our customers for retail and wholesale services have the most significant impact on our financial condition, results of operations, and liquidity. Rate regulation provides us an opportunity to recover prudently incurred costs and earn a reasonable rate of return on invested capital. However, our ability to obtain rate adjustments in the future is dependent upon regulatory action, the outcome of which can be influenced by the level of opposition by intervening parties; potential rate impacts; increasing levels of regulatory review; and changes in the political, regulatory, or legislative environments. There is no assurance that our regulators will consider all of our costs to have been prudently incurred. In addition, our rate proceedings may not always result in rates that fully recover our costs or provide for a reasonable ROE. We defer certain costs and revenues as regulatory assets and liabilities for future recovery from or refund to customers, as authorized by our regulators. Future recovery of regulatory assets is not assured and is subject to review and approval by our regulators. If recovery of regulatory assets is not approved or is no longer deemed probable, these costs would be recognized in current period expense and could have a material adverse impact on our results of operations, cash flows, and financial condition.

Changes in the local and national political, regulatory, and economic environmentenvironment, including significant attention on energy affordability concerns, have had, and may in the future have, an adverse effect on regulatory decisions, which could impair the ability of our utility subsidiaries to recover costs historically collected from customers. These decisions, which may come from any level of government, may cause us to cancel or delay current or planned projects, to reduce or delay other planned capital expenditures, or to pay for investments or otherwise incur costs that our utilities may not be able to recover through rates or otherwise. InFor itsexample, Novemberthe ICC's 2023 final rate orders for PGL and NSG, the ICCorder disallowed certain previously incurred capital costs, which resulted in PGL and NSG recording impairment losses in the fourth quarter of 2023, and caused PGL to pause spending on its SMP.PRP. AfterPGL awill limited rehearing,include the ICCcosts issuedof anecessary writteninfrastructure order in May 2024 approving additional spending for emergency workimprovements related to SMPthe projects.PRP PGLin andfuture NSGrate havecases, appealedthereby subjecting the ordersrecovery of these costs to theregulatory Illinoislag. AppellateIn Court.addition, Onin February 20, 2025, the ICC issued an order setting expectations for PGL's prospective operations under its SMP.PRP. The ICC directed us to focus on replacing all cast and ductile iron pipe that has a diameter under 36 inches by January 1, 2035. The ICC also indicated that failure to comply with this directive could subject us to civil penalties under Illinois statute. As a result of these proceedings and order, the recovery of existing and future investments in capital expenditures and our natural gas infrastructure in Illinois is uncertain and future capital plans may be impacted.

Prior to its expiration in December 2023, the QIP rider provided PGL with recovery of, and a return on, qualifying natural gas infrastructure investments that were placed in service between regulatory rate reviews. Due to the expiration of the QIP rider, PGL included the costs of necessary infrastructure improvements related to the SMP in its rate case, thereby subjecting the recovery of these costs to regulatory lag. In its August 2024 final order on PGL's 2016 annual reconciliation, the ICC disallowed certain capital costs, which resulted in PGL recording a pre-tax charge to income during the third quarter of 2024 related to the disallowance and the previously recognized return on these investments. This rider continues to be subject to an annual reconciliation whereby costs are reviewed for accuracy and prudency. ThereIn February 2026, PGL agreed on the terms of a proposed settlement that would, among other things, resolve all proceedings of the open reconciliation years related to the QIP rider. As a result, we recorded a charge to income during the fourth quarter of 2025 through an impairment to net property, plant, and equipment and a reduction to revenues. The proposed settlement is subject to ICC approval. Otherwise, there can be no assurance that all costs incurred under the QIP rider during the open reconciliation years, which includeincluding 2017 through 2023, will be deemed recoverable by the ICC.ICC, The risk of costs being deemed unrecoverable during the review of the outstanding reconciliations,which could have a material adverse impact on PGL’s, and correspondingly our, results of operations, financial position,condition, and liquidity.

We believe we have obtained the necessary permits, approvals, authorizations, certificates, and licenses for our existing operations, have complied in all material respects with all of their associated terms, and that our businesses are conducted in accordance with applicable laws. These permits, approvals, authorizations, certificates, and licenses may be revoked or modified by the agencies that granted them if facts develop that differ significantly from the facts assumed when they were issued. In addition, permits and other approvals and licenses are often granted for a term that is less than the expected life of the associated facility. Licensesfacility and permits may require periodic renewal, which may result in additional requirements being imposed by the granting agency. In addition, existing regulations may be revised or reinterpreted by federal, state, and local agencies, or these agencies may adopt new laws and regulations that apply to us. We cannot predict the impact on our business and operating results of any such actions by these agencies.

If we are unable to recover regulatory compliance costs of complying with regulations or other associated costs in customer rates in a timely manner, or if we are unable to obtain, renew, or comply with these governmental permits, approvals, authorizations, certificates, or licenses, our results of operations and financial condition could be materially and adversely affected.

Certain of our service territories in Wisconsin are located in areas that, in December 2024, were determined to be in "serious" nonattainment status under the EPA's ozone standard. ThisIn February 2025, the State of Wisconsin filed a petition for review of this classification in the U.S. Court of Appeals for the Seventh Circuit. Wisconsin subsequently moved for a stay of the reclassification, which was granted in September 2025, pending the Court’s review. As a result, southeast Wisconsin has returned to "moderate" status while the underlying lawsuit proceeds. A nonattainment status of "serious" could affect future permitting activities for our facilities, including additional costs associated with more strenuous emission control requirements or the need to purchase emission reduction credits. In addition, economic growth in these areas may be constrained by the inability to obtain the required permits, limiting investment and expansion over the coming years, includingimpacting our ability to execute on our capital plan.

We incur significant capital costs and expend operating resources to comply with environmental laws, regulations, and requirements, including costs associated with the installation of pollution control equipment; operating restrictions on our facilities; and environmental monitoring, emissions fees, and permits at our facilities. The operation of emission control equipment and compliance with rules regulating our intake and discharge of water could also increase our operating costs and reduce the generating capacity of our power plants. These regulations may create substantial additional costs in the form of taxes or emission allowances and could affect the availability and/or cost of fossil fuels and our ability to continue operating certain generating units. Failure to comply with these laws, regulations, and requirements, even if caused by factors beyond our control, may result in the assessment of civil or criminal penalties and fines. We continue to assess the potential cost of complying,compliance and to explore different compliance alternatives in order to comply, with these and other environmental regulations. The cost of compliance with these regulations, and other factors, has resulted in certain of our coal-fired electric generating units being retired or converted to an alternative type of fuel, and may impact the future operations of our existing fossil-fueled generation.

Our operations, capital expenditures, and financial results may be affected by the impact of greenhouse gas legislation, regulation, and our emission reduction goals.goal.

There has been significant attention to issues concerning climate change as well as activism from certain stakeholders, including institutional investors and other sources of financing, to accelerate the transition to limit GHG emissions. Although the EPA is pursuing a large deregulatory effort of GHG laws and regulations, significant laws and regulations restricting emissions of GHGs continue to impact our current and planned operations. Costs associated with such legislation, regulation, and our emission reduction goalsgoal could be significant within our electric and natural gas operations. New or additional restrictive GHG regulations, at either the federallegislation or state level,regulations may cause our environmental compliance spending to differ materially from the amounts currently estimated. There is no guarantee that we will be allowed to fully recover compliance costs incurred to comply withof these and other federal and state regulationsregulations, or that cost recovery will not be delayed or otherwise conditioned. TheseGHG regulations,legislation, regulation, or the emission reduction goal, as well as changes in the fuel markets and advances in technology,technology could make additional electric generating units uneconomic to maintain or operate,maintain, may impact how we operate our existing fossil-fueled power plants and biomass facility, and could cause us to retire and replace units earlier than planned under our capital plan, which could lead to a possible loss on abandonment and reduced revenues.

In a movement toward electrification, certain states and municipalities near or in our service territories have passed legislation or are considering ordinances banning natural gas used in new construction in order to limit GHG emissions. For example, the ICC is exploring the role of natural gas in the future and issues related to decarbonization of the natural gas distribution system in Illinois. There have also been efforts to restrict residential natural gas-fired appliances. Future local, statewide, or nationwide actions like these to regulate GHG emissions in our service territories could increase the price of natural gas,gas reduceresulting thein reduced demand forfor, and revenues from, natural gas, cause us to accelerate the replacement and/or updating of our natural gas delivery systems, and adversely affect our ability to operate our natural gas facilities. A significant increase in the price of natural gas may increase rates for our natural gas customers, which could also reduce natural gas demand and revenues. The adoption of electrification initiatives and/or mandates could also result in an increase in electrical demand and increased investment costs for existing or new electrical systems. These types of initiatives and/or mandates could result in increased costs associated with permitting and siting of new technologies and delayed installation and start-up timelines. In addition, financial investments in older carbon intensivecarbon-intensive technologies may not be fully realized.

We have set a goal for our generation fleet to be net carbon neutral by the end of 2050. We expect to be in a position to eliminate coal as an energy source by the end of 2032. In addition, we continue to monitor the financial and operational feasibility of taking more aggressive action to further reduce GHG emissions in order to limit future global temperature increases. The ability to achieve thesethis reductions in CO2 and methane emissionsgoal depends on many external factors, including the ability to make operating refinements, the retirement of less efficient generating units, the development of relevant energy technologies, the use of RNG throughout our natural gas utility systems, the ability to procure RTCs,renewable thermal credits, legislative and regulatory support for renewable generation, the ability to maintain reliability with demand growth, and the ability to execute our capital plan. These efforts could impact how we operate our electric generating units and natural gas facilities and lead to increased competition and regulation, all of which could have a material adverse effect on our operations and financial condition. There can be no guarantee that we will achieve our targets.

Tax legislation and regulations can adversely affect, among other things, our financial condition, results of operations, cash flows, liquidity, and credit ratings. Future changes to corporate tax rates or policies, including under Treasury Regulations and guidance issued in connection with the IRA,IRA and OBBBA, could require us to take material charges against earnings. Such changes include, among other things, increasing the federal corporate income tax rate, disallowing or limiting the use of certainsolar and wind tax incentives and other tax benefits and carryforwards, limiting interest deductions, and altering the expensing of capital expenditures. Our inability to manage these changes, an adverse determination by one of the applicable taxing jurisdictions, or additional interpretations, implementing regulations, amendments, or technical corrections by the Treasury Department, the IRS, or state income tax authorities, could significantly impact our financial results and cash flows.

In addition, we have invested, and plan to continue to invest, in renewable energy generating facilities. These facilities generate PTCs or ITCs that we can use to reduce our federal tax obligations. Under the IRA, a transferability option also allows us to sell these tax credits to third parties. This is a relatively new market that may require additional regulations and guidance from taxing authorities. The amount of tax credits we earn depends on available government incentives and policies, the amount of electricity produced, the applicable tax credit rate, or the amount of the investment in qualifying property. Any reductionsReductions or eliminations of tax credits or other governmental incentives that promote renewable energy generating facilities, includingor the repealimposition of additional taxes, tariffs, or amendmentother ofassessments portionsrelated of the IRA and the executive order issued by the new presidential administration, could make it less conducive for the development and operation ofto renewable energy facilities.projects or the equipment necessary to generate or deliver it, may limit our ability to make further investments in renewable energy generating facilities or reduce the returns on our existing investments. In addition, a variety of operating and economic factors, including transmission constraints, adverse weather conditions, and breakdown or failure of equipment, could significantly reduce the PTCs generated by the renewable projects we have invested in, resultingany of which could result in a material adverse impact on our financial condition and results of operations. The imposition of additional taxes, tariffs, or other assessments related to renewable energy projects or the equipment necessary to generate or deliver it, as well as any reductions or eliminations of tax credits or other governmental incentives that promote renewable energy generating facilities, may also limit our ability to make further investments in renewable energy generating facilities or reduce the returns on our existing investments.

Our electric utilities are subject to mandatory reliability and critical infrastructure protection standards established by the North American Electric Reliability Corporation and enforced by the FERC. The critical infrastructure protection standards focus on controlling access to critical physical and cybersecurity assets. Compliance with the mandatory reliability standards could subject our electric utilities to higher operating costs. If our electric utilities are found to be in noncomplianceNoncompliance with the mandatory reliability standards, theystandards could beresult subject toin sanctions, including substantial monetary penalties, or damage to our reputation.

Public health crises, including epidemics and pandemics, and any related government responses may adversely impact the economy and financial markets and could have a variety of adverse impacts on us, including a decrease in revenues; increased bad debt expense; increases in past due accounts receivable balances; and access to the capital markets at unreasonable terms or rates. These crises and any related government responses could also impair our ability to develop, construct, and operate facilities. Risks include extended disruptions to supply chains and inflation, resulting in increased costs for labor, materials, and services, which could adversely impact our ability to implement our corporate strategy. We may also be adversely impacted by labor disruptions and productivity as a result of infections, employee attrition, andor athe reduced abilityinability to replace departingor employeesmaintain asappropriate staffing. The extent to which future public health crises may affect us depends on factors beyond our knowledge or control. As a resultresult, we are unable to determine the potential impact any such public health crises may have on our business plans and operations, liquidity, financial condition, and results of employees who leave or forego employment to avoid any required precautionary measures.operations.

Our operations are subject to risks arising from the reliability and safety of our electric generation, transmission, and distribution facilities, natural gas infrastructure facilities, natural gas storage fields, renewable energy facilities, and other facilities, as well as the reliability of third-party transmission providers.

Our natural gas utilities purchase almost all of their natural gas supply from interstate sources that must be transported to the applicable service territories. Interstate pipeline companies transport the natural gas to our natural gas utilities’ systems under firm service agreements that are designed to meet the requirements of their core markets. Certain of our natural gas facilities have experienced significant disruptions to operations as a result of problems with interstate pipelines. A significant disruption to interstate pipelines capacity or reduction in natural gas supply due to events including, but not limited to, operational failures or disruptions, hurricanes, tornadoes, floods, freeze-off of natural gas wells, terrorist or physical attacks, cyberattacks, other acts of war, or legislative or regulatory actions or requirements, including remediation related to integrity inspections or regulations and laws enacted to address climate change or other environmental matters, could reduce the normal interstate supply of natural gas and thereby significantly disrupt our operations and/or reduce earnings.

Our operations are subject to various conditions that can result in fluctuations in energy sales to customers, including fluctuations in customer growth and general economic conditions in our service areas, varying weather conditions, and energy conservation efforts.

•Weather conditions. Demand for electricity is greater in the summer and winter months when cooling and heating is necessary. In addition, demandDemand for natural gas peaks in the winter heating season. As a result, our overall results may fluctuate substantially on a seasonal basis.basis Inand addition,could be negatively impacted by milder temperatures during the summer cooling season and during the winter heating season may result in lower revenues and net income.season.

As part of our planning process, we estimate the impacts of changes in customer growth and general economic conditions, weather, and customer energy conservation efforts, but risks still remain. The growth of data centers and development of associated technology may make it more difficult to accurately forecast customer demand or to recover additional costs. Any of these matters, as well as any regulatory delay in adjusting rates as a result of reducedfluctuations salesin fromenergy effective conservation measuresdemand or the adoption of new technologies, could adversely impact our results of operations and financial condition. In addition, elimination or reduced financial support of programs that provide energy assistance to our customers, including the Low Income Home Energy Assistance Program, could impact the demand for energy and/or adversely impact our liquidity.

A changing climate creates uncertainty and could result in broad changes, both physical and financial in nature, to our service territories. If climate changes occur that result in extreme temperatures in our service territories, our financial results could be adversely impacted by lower electric and natural gas usage and higher natural gas costs. Our operations could be adversely affected and our facilities placed at greater risk of damage should changes in global climate produce, among other possible conditions, unusual variations in temperature and weather patterns, which could result in more intense, frequent and extreme weather events, such as storms, including derecho events, with high winds, lightning, and hail, floods, drought, wild fires, tornadoes, snow and ice storms, or abnormal levels of precipitation. An extreme weather event could result in downeddamage wiresto distribution and poles,transmission as well as damage toinfrastructure, wind and solar generation facilities, or other operating equipment. This could result in us incurring significant restoration costs at our utilities and/or at WECI, and foregoing sales of energy and lost revenues. Extreme weather in summer could cause electric load to be interrupted or certain customers to be curtailed who participate in load management programs. Additionally, an extreme weather event could also cause the cost of natural gas purchased for our natural gas utility customers and for the use of fuel at our generation facilities to be temporarily driven significantly higher than our normal winter weather expectations. Although our utilities have regulatory mechanisms in place for recovering all prudently incurred natural gas costs, our regulators could disallow recovery or order the refund of any costs determined to be imprudent.

In addition, our operations could be adversely affected and our facilities placed at greater risk of damage should changes in global climate produce, among other possible conditions, unusual variations in temperature and weather patterns, which could result in more intense, frequent and extreme weather events, such as storms, including derecho events, with high winds, lightning, and hail, floods, drought, wild fires, tornadoes, snow and ice storms, or abnormal levels of precipitation. Extreme weather may also result in unexpected increases in customer load, requiring us to procure additional power at wholesale prices for our retail operations, unpredictable curtailment of customer load by MISO to maintain grid reliability, or other grid reliability issues. Any of these events could lead to substantial financial losses including increased maintenance costs, unanticipated capital expenditures, or a reduction of revenues related to our non-utility renewable energy facilities. The cost of storm restoration efforts may also not be fully recoverable through the regulatory process.

OurChanges in our corporate strategy may be impacted by policy and legal, technology, market, and reputational risks and opportunities that are associated with the transition to lower GHG emissions. In addition, changes in policy to combat climate change, including mitigation and adaptation efforts,efforts and technology advancement, each of which can also accelerate the implications of a transition to lower emissions, may materially adversely impact our results of operations and cash flows through significant capital expenditures and investments in renewable generation.flows.

Our ability to execute our corporate strategy and achieve anticipated financial outcomes are influenced by the expectations of our customers, regulators, investors, and other stakeholders. Those expectations are based in part on the core fundamentals of affordability and reliability but are also increasingly focused on our ability to meet rapidly changing demands for new and varied products, services, and offerings. Additionally,Efforts to roll back certain environmental rules and social policies and programs may conflict with the risksexpectations of globalour climatecustomers, changeregulators, continuesor investors, creating additional uncertainty as we look to shapebalance our customers’stakeholders' sustainabilitycompeting goalspriorities, and energycould needs,lead asto well as the investmentlitigation and financinggovernment criteria of investors.investigations. Failure to meet these expectations or to adequately address the risks and external pressures may impact our reputation and affect our ability to achieve favorable outcomes in future rate cases or our results of operations. The new presidential administration's efforts to roll back certain climate and diversity, equity, and inclusion policies and programs may conflict with the expectations of our customers, regulators, and investors, creating additional uncertainty as we look to balance our stakeholders' competing priorities, and could lead to litigation and government investigations. Furthermore, the increasing use of social media may accelerate and increase the potential scope of negative publicity we might receive and could increase the negative impact on our reputation, business, results of operations, and financial condition.

Our operations and corporate strategy may be adversely affected by supply chain disruptionsdisruptions, inflation, and inflation.tariffs.

Our business is dependent on the global supply chain to ensure that equipment, materials, and other resources are available to both expand and maintain services in a safe and reliable manner. Protracted,Increased expanding or escalating regional or international conflicts, including the conflicts involving Ukraine, Israel, and parts of the Middle East, as well as strained relationshipstensions between the United States and other countriescountries, relatedas towell suchas conflicts,new, protracted, or escalating regional or international conflicts could result in domestic and global supply chain disruptions that delay the delivery, or result in shortages of, materials, equipment, and other resources that are critical to our business operations. Failure to eliminate or manage the constraints in the supply chain may eventually impact the availability of items that are necessary to support normal operations as well as materials that are required to implement our corporate strategy for continued utility and infrastructure growth, including our renewable energy projects.

Moreover, pricesPrices of equipment, materials, and other resources have increased as a result of supply chain disruptions and may continue to increase in the future, as a result of supply chain disruptions, inflation, and tariffs. Further governmental actions related to trade policy could exacerbate global supply chain disruptions and/or inflation. Increases in inflation raise ourIncreased costs for labor, materials, and services, as a result of supply chain disruptions, inflation, or tariffs, and failure to secure these resources on economically acceptable terms, as well as any regulatory delay in adjusting rates to account for increased costs, may adversely impact our business operations, financial conditioncondition, and/or resultscapital of operations.plan.

Our business requires substantial capital expenditures for investments in, among other things, capital improvements to our electric generating facilities, electric and natural gas distribution infrastructure, natural gas and LNG storage, and other projects, including projects for environmental compliance. We also expect to continue constructing and investing in renewable energy and natural gas generating facilities as part of our capital plan and our goal to be net carbon neutral by the end of 2050. In addition, we continue to invest in technology and the development of software applications to support our businesses.

Achieving the intended benefits of any large construction project is subject to many uncertainties, some of which we will have limited or no control over, that could adversely affect project costs and completion time. Supply chain disruptions, including solar panel shortages and delays, increasing material costs, government regulations and tariffs, and other factors, could impact the timing of completion of our renewable projects. For example, the UFLPA's prohibition on imports of solar panels manufactured with certain silica-based products originating in Xinjiang, China, has and could delay the release of solar panels to us for our renewables projects. Additional risks include, but are not limited to, the ability to adhere to established budgets and time frames; the availability of labor or materials at estimated costs; the ability of contractors to perform under their contracts; strikes; adverse weather conditions; potential legal challenges; changes in applicable laws or regulations; rising interest rates; inflation; tariffs; the impact of public health crises; other governmental actions; continued public and policymaker support for such projects; and events in the global economy.

Certain of these projects require the approval of our regulators. If construction of commission-approved projects should materially and adversely deviate from the schedules, estimates, and/or projections on which the approval was based, our regulators may deem the additional capital costs as imprudent and disallow recovery of them through rates, and otherwise available PTCs and ITCs for renewable energy projects could be lost or lose value. Efforts to pause approvals related to wind development could threaten our ability to execute our capital plan. Other renewable energy sources, including solar developments, could also be at risk. In addition, regulators, in a future rate proceeding, may alter the timing or amount of certain costs for which recovery is allowed, such as was the case in the ICC's November 2023 rate orders and annual QIP reconciliation reviews for PGL and NSG.PGL.

Recent legislation,Legislation, including the IRA and the Infrastructure Investment and Jobs Act, has promoted the construction and cost-effectiveness of renewable energy generation, including distributed generation technologies for self-supply of electricity by our customers and third parties. Increased use of technologies such as private solar and battery storage in our service territories could reduce our recovery of fixed costs, could result in customers leaving the electric distribution system, and could cause an increase in customer net energy metering, which allows customers with private solar to receive bill credits for surplus power at the full retail amount. Over time, customer adoption of these technologies could result in our electric utilities not being able to fully recover the costs and investment in generation.

We are a diversified holding company with natural gas and electric utility operations (serving customers in Wisconsin, Illinois, Michigan, and Minnesota), an approximately 60% equity ownership interest in ATC (a for-profit electric transmission company regulated by the FERC and certain state regulatory commissions), and non-utility energy infrastructure operations through We Power (which owns generation assets in Wisconsin that it leases to WE), Bluewater (which owns underground natural gas storage facilities in Michigan), and WECI,WECI (which holds ownership interests in several renewable generating facilities.facilities).

OurWe goalare is to continueworking to build and sustain long-term value for our shareholders and customers by supporting economic growth in our region while focusing on the fundamentals of our business: environmental stewardship; reliability;reliability, operating efficiency;efficiency, financial discipline;discipline, environmental stewardship, exceptional customer care;care, and safety. Our capital plan provides a roadmap for us to achieve this goal. It is an aggressivea plan topremised cutupon emissions, maintainmaintaining superior reliability, deliver significantdelivering savings for customers, and growgrowing our investment in the future of energy.

•1,1003,300 MWs of combustion turbines to be constructed at our OCPP siteCTs (we plan on constructing a new natural gas lateral pipeline to support thisthe generationCTs planned at our OCPP site); withand

•An additional 114180 MWs of RICE natural gas-fueled generation planned.generation.

We also continue to focus on methane emission reductions by improving ourand natural gas distribution system. We set a target acrossupgrading our natural gas distribution operations to achieve net-zero methane emissions by the end of 2030. We plan to achieve our net-zero goal through an effort that includes continuous operational improvementssystems and equipment upgrades, as well as the use ofusing RNG throughout our natural gas utility systems. In 2022, we received approval from the PSCW for our RNG pilots and in 2023, we began transporting the output of local dairy farms onto our natural gas distribution systems in Wisconsin. The RNG supplied willis directly replacereplacing higher-emission methane from natural gas that would have entered our pipes. We currently have contracts in place for 2.1 Bcf of RNG. In addition, subject to regulatory approval and market conditions, we expect to procure RTCs.

Below are a few examples of reliabilitythe projects that are proposed, currently underway, or recently completed.

•InThe AprilPSCW 2024,approved WE filed aWE's request with the PSCW to construct an LNG facility with a storage capacity of two Bcf, which wouldwill be located on the OCPP site. In addition, the construction of additional LNG facilities in Wisconsin has been proposed as part of the 2025-2029our capital plan and would provide another approximately four Bcf of natural gas supply. The LNG facilities are expected to reduce the likelihood of constraints on our natural gas distribution system during the highest demand days of winter.

•Through the SMP, PGL had been working to replace old iron pipes and facilities in Chicago’s natural gas delivery system with modern polyethylene pipes to reinforce the long-term safety and reliability of the system. In November 2023, the ICC ordered PGL to pause spending on thethese SMPprojects until the ICC completed a proceeding to determine the optimal method for replacing aging natural gas infrastructure and a prudent investment level. The ICC granted PGLIn a limited-scope rehearing relatedof tothis order, PGL was authorized spending for the completion of SMP projects that had started in 20232023. andIn theFebruary authorized spending for emergency repairs needed to ensure the safety and reliability of PGL's delivery system. On May 30, 2024,2025, the ICC issued a writtenan order onsetting theexpectations rehearing,for approvingPGL's $28.5prospective millionretirement of additionalits spendingaging fornatural emergencygas work,infrastructure. whichThe representsICC directed us to focus on retiring all cast and ductile iron pipe that has a $1.6diameter millionof increaseless than 36 inches by January 1, 2035. PGL is working to PGL'sretire annualthis revenuecast requirement.and ductile iron pipe through its PRP. For more information, see Note 26, Regulatory Environment, and Factors Affecting Results, Liquidity, and Capital Resources - Regulatory, Legislative, and Legal Matters - Illinois Proceedings.

We expect to spend approximately $4.5$7.1 billion fromand 2025$4.7 to 2029billion on reliability related projectsto natural gas and electric distribution projects, respectively, from 2026 to 2030, with continued investment over the next decade. For more details, see Liquidity and Capital Resources – Cash Requirements – Significant Capital Projects.

We continually look for ways to optimize the operating efficiency of our company and will continue to do so under our capital plan. For example, we are making progress on our AMIadvanced metering infrastructure program, replacing aging meter-reading equipment on both our network and customer property. An integrated system of smart meters, communication networks, and data management programs enables two-way communication between our utilities and our customers. This program reduces the manual effort for disconnectscustomer and reconnectsconnections and enhances outage management capabilities.

We continue to focus on integrating the resources of all our businesses and findingimproving our business processes to find the best and most efficient processes.processes possible, including evaluating the use of AI tools. We expect these efforts to continue to drive operational efficiency and to put us in a position to effectively support plans for future growth.

A strong adherence to financial discipline is essential to meeting our earnings projections and maintaining a strong balance sheet, stable cash flows, a growing dividend, and quality credit ratings. We work to earn allowed rates of return through a focus on cost control and strategic investment.

Our planned investment focus from 20252026 to 20292030 is in our regulated utilities and our investment in ATC. We expect total capital expenditures for our regulated utility businesses to be approximately $24.4$33.4 billion from 20252026 to 2029.2030. In addition, we currently forecast that our share of ATC's projected capital expenditures over the next five years will be approximately $3.2$4.1 billion. InFor Februaryadditional 2025,information we invested approximately $405.9 million in our non-utility energy infrastructure business with the acquisition of Hardin III. Specificregarding projects included in the $28.0$37.5 billion capital planplan, are discussed in more detail below undersee Liquidity and Capital Resources – Cash Requirements – Significant Capital Projects. Also, see Note 2, Acquisitions, for additional information on the acquisition of Hardin III and other recent and pending transactions. See Note 3, Disposition, for more information on the disposal of real estate.

Safety is one of our core values and a critical component of our culture. We are committed to keeping our employees and the public safe through a comprehensive corporate safety program that focuses on employee engagement and elimination of at-risk behaviors. To further protect public safety, we monitor the integrity of our distribution systems, have emergency response and business continuity plans in place, and provide key safety information to customers, contractors, and first responders.

The following discussion and analysis of our Results of Operations includes comparisons of our results for the year ended December 31, 2025 with the year ended December 31, 2024. For a similar discussion that compares our results for the year ended December 31, 2024 with the year ended December 31, 2023, see Item 7. Management's Discussion and forAnalysis theof yearFinancial endedCondition Decemberand 31,Results 2023of Operations – Results of Operations in Part II of our 2024 Annual Report on Form 10-K, which was filed with the yearSEC endedon DecemberFebruary 31,21, 2022.2025.

•AnA $11.8$191.7 million increase in net income attributed to common shareholders at the Wisconsin segment, driven by an increase inhigher margins due tofrom the impact of the Wisconsin limited rate case re-openersorders approved by the PSCW, effective January 1, 2024,2025, higher retail sales volumes, and aan increase in certain income tax benefits. These positive impact from collections of fuel and purchased power costs. These increasesimpacts were partially offset by higher operating expenses, primarilylargely due to increases in depreciation and amortization expense, costs related to our power plants, transmission expense, and expense related to our earnings sharing mechanisms. Lower other income, driven by highera depreciationnegative impact from the non-service components of our net periodic pension and amortization.OPEB costs, also partially offset the positive impacts to earnings. See Note 26, Regulatory Environment, for more information on the limitedWisconsin rate case re-openers.orders.

•AnA $11.6$30.3 million increase in net income attributed to common shareholders at the non-utility energy infrastructure segment, primarilydriven due toby an increase in PTCs drivenfrom byour non-utility renewable generating facilities related to the acquisition of additional renewable generation facilities in the secondfourth halfquarter of 20222024 and the first quarter of 2023,2025. This increase was partially offset by higher interest expense.expense due to the issuance of long-term debt at WECI Energy Holding III in December 2024.

Economic growth continues in our Wisconsin service territories. Companies are investing in major projects, including data centers and modern manufacturing facilities. We anticipate electric demand growth in the years ahead from these economic developments. Microsoft has announced plans to invest over $20 billion in data centers in southeastern Wisconsin over the next several years, and we expect up to 2.6 GWs of load growth in the Milwaukee-to-Chicago corridor through 2030. The first phase of the project went into service in April 2026. Additionally, Vantage Data Centers planis to developdeveloping a large data center campus in Port Washington that is forecasted to add 1.3 GWs of demand through 2030. This site has the potential to add an incremental 2.2 GWs, for a total of up to 3.5 GWs over time. We are working closely with these large customers to provide power to meet this substantial projected demand. OnIn April 24,May 2026, we received verbal approval from the PSCW forapproved new VLC and Bespoke Resources tariffs.tariffs, These tariffswhich specifically address the unique needs of VLCs while protecting our other customers and shareholders. Subsequent to its approval, Microsoft entered into a service agreement to obtain service under the VLC tariff. See Note 23,24, Regulatory Environment, for more information on the VLC and Bespoke Resources tariffs.

To meet the forecasted electric demand growth in the years ahead, greater capacity will be required to provide affordable, reliable, and clean energy for our communities. Our capital plan addresses that demand with a range of planned investments in natural gas-fired generation, renewables, and battery storage. We plan on investing approximately $5.4$6.1 billion from 2026 to 2030 in a combination of efficient natural gas-fired generation,generation and related infrastructure, including:

As part of our path toward this goal, we have started implementing co-firing with natural gas at the ERGS coal-fired units and at Weston Unit 4. We and the other co-owners of Columbia Units 1 and 2 currently plan to continue coal operations at these units through at least 2029, but continue to evaluate the conversion of both units to natural gas. Additionally, we have retired nearly 2,500 MWs of fossil-fueled generation since the beginning of 2018, which includes the retirement of OCPP Units 5 and 6 in May 2024, the 2019 retirement of the Presque Isle Power Plant, and the 2018 retirements of the Pleasant Prairie power plant, the J.P. Pulliam Generating power plant, and the jointly-owned Edgewater Generating Station Unit 4 generating unit.4. We expect to retire approximately 900 MWs of additional coal-fired generation by the end of 2031, which includes the planned retirements of OCPP Units 7 and 8 and Weston Unit 3. See Note 7, Property, Plant, and Equipment, for more information related to the planned retirement of OCPP Units 7 and 8.

•PGL had been working to replace old iron pipes and facilities in Chicago’s natural gas delivery system with modern polyethylene pipes to reinforce the long-term safety and reliability of the system. In November 2023, the ICC ordered PGL to pause spending on these projects until the ICC completed a proceeding to determine the optimal method for replacing aging natural gas infrastructure and a prudent investment level. In a limited-scope rehearing of this order, PGL was authorized spending for completion of projects that had started in 2023. In February 2025, the ICC issued an order setting expectations for PGL's prospective retirement of its aging natural gas infrastructure. The ICC directed usPGL to focus on retiring all cast and ductile iron pipepipes that hashave a diameter of less than 36 inches by January 1, 2035. PGL is working to retire this cast and ductile iron pipe through its PRP. For more information, see Note 23,24, Regulatory Environment, and Factors Affecting Results, Liquidity, and Capital Resources – Regulatory, Legislative, and Legal Matters – Illinois Proceeding – Replacement of Aging Natural Gas Infrastructure.

Our planned investment focus from 2026 to 2030 is in our regulated utilities and our investment in ATC. We expect total capital expenditures for our regulated utility businesses to be approximately $33.4 billion from 2026 to 2030. In addition, we currently forecast that our share of ATC's projected capital expenditures over the next five years will be approximately $4.1 billion. For additional information regarding projects included in theour $37.5 billion capital plan, see Liquidity and Capital Resources – Cash Requirements – Significant Capital Projects.

THREE MONTHS ENDED MARCHJUNE 31,30, 2026

The following table compares our consolidated results for the firstsecond quarter of 2026 with the firstsecond quarter of 2025, including favorable or better, "B", and unfavorable or worse, "W", variances:

Earnings increased $80.2$53.8 million during the firstsecond quarter of 2026, compared with the same quarter in 2025. The $80.2$53.8 million increase in earnings was driven by:

•AnA $11.8$36.4 million increase in net income attributed to common shareholders at the non-utility energy infrastructure segment, driven by higher operating income at WECI.WECI, reflecting improved market conditions, lower operating costs, and lower losses from storm damage.

The Wisconsin segment's contribution to net income attributed to common shareholders was $408.1$208.2 million during the firstsecond quarter of 2026, representing a $48.2$25.8 million, or 13.4%,14.1%, increase over the same quarter in 2025. The increase in earnings was primarily due to higher margins from the impact of the Wisconsin rate orders approved by the PSCW, effective January 1, 2026. See Note 26, Regulatory Environment, in our 2025 Annual Report on Form 10-K10-K, for more information. Higher AFUDC-Equity and increases in certain income tax benefits also contributed to the higher earnings. These positive impacts were partially offset by higher operating expenses, primarily due to an increase in regulatory amortizations and other pass through expenses, higher depreciation and amortization expense, and an increase in transmission expense.

(1)Represents transmission expense that our electric utilities are authorized to collect in rates. The PSCW has approved escrow accounting for ATC and MISO network transmission expenses for WE and WPS. As a result, WE and WPS defer as a regulatory asset or liability, the difference between actual transmission costs and those included in rates until recovery or refund is authorized in a future rate proceeding. During the firstsecond quarter of 2026 and 2025, $164.3$194.5 million and $149.0$159.9 million, respectively, of costs were billed to our electric utilities by transmission providers.

(3)Represents costs associated with the We Power generation units, including operating and maintenance costs recognized by WE. During the firstsecond quarter of 2026 and 2025, $34.9$30.1 million and $27.1$32.9 million, respectively, of costs were billed to or incurred by WE related to the We Power generation units, with the difference in costs billed or incurred and expenses recognized, either deferred or deducted from the regulatory asset.asset or liability.

Gross margin (GAAP) at the Wisconsin segment increased $31.7$7.9 million during the firstsecond quarter of 2026, compared with the same quarter in 2025, and utility margin (non-GAAP) increased $74.4$56.4 million during the firstsecond quarter of 2026, compared with the same quarter in 2025. Both measures were driven by:

•A current return of $4.3$10.8 million consisting of carrying costs earned during the construction of certain bespoke resources assigned to our VLCs during the firstsecond quarter of 2026. See Note 4, Operating Revenues, for more information.

These increases in margins were partially offset by a $6.6$0.2 million net decrease related to lower sales volumes, driven by retaila natural$20.4 gas sales, including themillion impact offrom warmerunfavorable spring weather during the firstsecond quarter of 2026, compared with the same quarter in 2025. As measured by heating degree days, the firstsecond quarter of 2026 was 4.0%20.4% warmer than the same quarter in 2025 in the Milwaukeecombined WE and WG service area. As measured by cooling degree days, the second quarter of 2026 was 23.9% and 28.1% colder than the same quarter in 2025 in the combined WE and WG service area and the WPS service area, respectively. The margin impact from unfavorable spring weather was substantially offset by a $20.2 million increase in margins related to weather-normalized customer growth, driven by the impact of our VLCs.

•A $15.3$16.0 million increase in transmission expense; and

•A $5.3$4.0 million increase in property and revenues taxes; andtaxes.

Other operating expenses at the Wisconsin segment increased $59.5$65.8 million during the firstsecond quarter of 2026, compared with the same quarter in 2025. The significant factors impacting the increase in other operating expenses were:

•A $5.3$5.4 million increase in propertybenefit and revenue taxes,expenses, driven by grosshigher receiptdeferred taxes.compensation and an increase in employees.

•A $4.6$4.0 million increase in PTCs.property and revenue taxes, driven by gross receipt taxes.