WEC Energy Group, Inc Q4 2025 Earnings Call Transcript

WEC Energy Group, Inc (NYSE: WEC) Q4 2025 Earnings Call dated Feb. 05, 2026

Presentation

Operator

Good afternoon and welcome to WEC Energy Group’s conference call for fourth quarter and year end 2025 results. This call is being recorded for rebroadcast and all participants are in a listen only mode at this time. After the presentation, the conference will be open to analysts for questions and answers. In conjunction with this call, a package of detailed financial information is posted@wecnergygroup.com A replay will be available approximately two hours after the conclusion of this call. Before the conference call begins, please note that all statements in the presentation other than historical facts are forward looking statements that involve risks and uncertainties that are subject to change at any time.

Such statements are based on management’s expectations at the time they are made. In addition to the assumption and other factors referred to in connection with the statements. Factors described in WEC Energy Group’s latest Form 10K and subsequent reports filed with the securities and Exchange Commission could cause actual results to differ materially from those contemplated during the discussions Referenced Earnings per share will be based on diluted earnings per share unless otherwise noted. This call also will include non GAAP financial information. The Company has provided reconciliations to the most directly comparable GAAP measures in the materials posted on its website for this conference call and now it’s my pleasure to introduce Scott Lober, President and Chief Executive Officer of WEC Energy Group.

Scott Lauber — President and CEO

Good afternoon everyone and thank you for joining us today as we review our results for the calendar year 2025. Here with me are Shaw Liu, our Chief Financial Officer, and Beth Stracha, Senior Vice President, Corporate Communications and Investor Relations. As you saw from our news release this morning, we reported full year 2025 adjusted earnings of $5.27 a share. This excludes a one time charge of 46 cents per share related to a proposed settlement in Illinois. We expect the settlement will fully, fully resolve all open reconciliation dockets on rider QIP spending from 2017 to the rider sunset in 2023.

It will also resolve all open reconciliations for the uncollectible rider for the period 2019 through 2023. I’ll provide more details on this in a few minutes. Across the company, I’m pleased to report that we delivered another year of solid results in virtually every meaningful measure from customer satisfaction to financial performance to steady execution of our capital plan. In just a few minutes, Shaw will provide more details on our financial results and outlook. But first let me highlight the strong economic growth in our region that’s driving our robust capital plan. There have been many exciting announcements and developments in our state, Microsoft is making good progress on its large data center complex with more than 2,000 acres purchased to date.

We have energy flowing to the site and the first phase of the project is expected to go online this year. Just last week, Microsoft received approval from local officials to expand the campus further with 15 additional data center buildings. Based on our updated plan, we are adding 500 megawatts of customer demand to the forecast. This is resulting in an estimated $1 billion of additional incremental capital to our capital plan. This brings our forecasted demand in the i94 corridor up to 2.6 gigawatts through 2030. Microsoft continues to be a great partner to work with. In a January statement referred to as its Community First AI Infrastructure plan, Microsoft pledged to be a good neighbor for its building data centers.

This includes paying its share for electricity, minimize water use, creating jobs, adding to the tax base and investing in the community. And to the north, we have another great partner. You’ll recall that Vantage Data Centers has signed on to develop facilities for Oracle and OpenAI on approximately 1900 acres. In December, Vantage broke ground on the initial phase of the project, which is planned for 670 acres. Vantage has stated that it expects to invest $15 billion to complete this phase in 2028. The first facility could come online late next year. We currently have 1.3 gigawatts of demand for this Vantage site in our forecast over the next five years.

And looking to the future, this site has the potential to reach three and a half gigawatts of demand over time. We are seeing an increase in local investments by other large businesses as well. For example, south of Milwaukee, Foxconn has announced new plans to renovate and expand its Racine county campus with a focus on manufacturing data center components. Foxconn expects to invest more than a half billion dollars in this expansion and add more than 1300 jobs at the site. In addition, Rockwell Automation plans in November to build a new manufacturing site in southeastern Wisconsin. The facility is expected to span more than a million square feet, and Rockwell announced this site could potentially become the company’s largest manufacturing campus globally.

And Uline, the leading North American distributor of shipping, industrial and packaging materials, completed yet another large plan purchase to further expand its business operations in southeast Wisconsin. In summary, with the expansion of Microsoft, we are now projecting 2.6 gigawatts of growth in the I94 corridor and 1.3 gigawatts to the north of Milwaukee, for a total of 3.9 gigawatts of electric demand. Growth in our five year plan and to meet our region’s growing energy needs, we are focused on executing our updated $37.5 billion capital plan over the next five years. We are projecting long term earnings per share growth of 7% to 8% a year on a compound annual basis between 2026 and 2030.

This is based on the midpoint of our 2025 adjusted guidance. We expect that growth to accelerate to the upper half of the range starting in 2028 as we put more projects into service. Our electric utilities need to maintain a reliable, balanced generation mix. Between 2026 and 2030 we expect to invest a total of $7.4 billion in modern, efficient natural gas generation and LNG storage. This includes combustion turbines, rice units and upgrades to existing facilities. We have a strong labor force lined up to bring our projects online at our Oak Creek site. Construction on our new 5 unit 1100 megawatt combustion turbine project is well underway.

We also broke ground on a large 2bcf LNG facility and our seven unit Paris rice generation site in the fourth quarter. In renewables over the next five years we expect to invest $12.6 billion to add 6,500 megawatts to our generation fleet. We currently have seven renewable generation projects and two battery storage facilities under construction, including two solar facilities expected to come online later this year. Overall, we have a lot of confidence in our ability to execute on our capital plan and continue our growth trajectory. Turning to regulatory matters, I have a few updates on current and upcoming rate reviews.

First, let’s update you on our Wisconsin and our proposed Very Large Customer tariff. As we discussed before, this tariff is designed to meet the needs of our Very large load customers while protecting all of our other customers and investors. The proposed tariff remains at the Public Service Commission for review. Staff and intervener testimony was submitted in January. A Commission order is expected in early May for customers to take service under the tariff in June. In April we plan to file rate reviews in Wisconsin for forward looking test years 20, 27 and 20. We are currently pulling that filing together.

And in Illinois, as I mentioned earlier, People’s Gas and North Shore Gas reach agreements on the terms of a proposed settlement with the Illinois Attorney General that if approved by the Illinois Commerce Commission, would resolve all issues related to 12 pending cases. That these cases represent approximately $2.3 billion of open dockets and include the rider QIP reconciliation from 2017 to 2023 and the uncollectible rider cases from 2019 through 2023. The proposed settlement terms calls for a $130 million rate based reduction which would be prospective with new rates in the pending People’s Gas case. In addition, customers would receive $125 million over three years.

This settlement is subject to Commission approval, which we anticipate requesting in the coming weeks. In early January, we filed a rate request in Illinois for test year 2027. A key driver of this request is to support the Pipe Retirement Program in Chicago. As you’ll recall, the company ordered all cast iron and ductile iron pipe under 36 inches in diameter to be retired by the end of 2034. We expect the Commission’s review of our filing to last 11 months with new rates starting January 1, 2027. Of course, we’ll keep you updated on any future developments. Next up, SHA will provide you with more details on our financials.

Xia Liu — CFO

Thanks Scott Turning now TO earnings, our 2025 adjusted earnings were $5 per share, an increase of $0.39 per share over 2024 adjusted earnings. Now let’s take a closer look at our year over year variances. Our earnings package includes a comparison of adjusted full year results on page 17. I’ll walk through the significant drivers starting with our utility operations. Adjusted earnings were 63 cents higher in 2025 compared to 2024. Weather positively impacted utility earnings by approximately 35 cents relative to last year compared to normal conditions. We estimate that weather had a 10 cent favorable impact in 2025 compared to a 25 cent unfavorable impact in 2024.

Rate based growth contributed 74 cents more to earnings. This was largely driven by the Wisconsin Rate Review outcomes that were effective on January 1, 2025. It also includes $0.12 of incremental AFUDC equity from projects under construction. These positive drivers were partially offset by 46 cents from higher depreciation and amortization expense day to day O and M, as well as tax and other items. Now, before I discuss earnings comparisons at the other segments, let me briefly comment on our weather Normal electric sales for 2025 Retail Electric deliveries in Wisconsin, excluding the iron ore mine, increased 1.1% year over year.

We were slightly ahead of our forecast in every segment for 2026. We’re projecting weather normal retail electric sales in Wisconsin to grow 1.6% from 2025 levels. I’ll note that we expect the large commercial and industrial segment to grow 5.8% fueled by our forecasted data center load. Now back to our earnings comparison. Regarding our investment In American Transmission Company earnings increased $0.02 compared to 2024, driven by a $0.06 increase from continued capital investment to meet demand growth and maintain reliability, partially offset by a one time gain we recognized in 2024 and at our Energy Infrastructure segment.

Earnings increased $0.10 in 2025 from higher production tax credits associated with the acquisition of additional solar generation projects in late 2024 and early 2025. Finally, you’ll see a 24 cent variance at our corporate and other segment. This was driven by higher interest expense resulting from higher debt balances, gains recorded in 2024 from early debt to retirement, and a few other items. In terms of common equity, consistent with our plan, we issued approximately $800 million in 2025. Overall, we grew our EPS by 39 cents per share or 8% year over year on an adjusted basis. Next, let’s look at our earnings guidance for the first quarter.

This year we project to earn in the range of $2.27 per share to $2.37 per share. This forecast takes into account January weather and assumes normal weather for the rest of the quarter and for the full year 2026, we’re reaffirming our annual guidance of $5.51 to $5.61 per share. Of course, this assumes normal weather for the rest of the year. Finally, some comments on financing in 2026, we expect debt funding to be in the range of 4 to 5 billion dollars. This includes refinancing for 1.4 billion dollars of senior notes that mature this year. And consistent with previous disclosures, we plan to issue between 900 million and $1.1 billion of common equity this year via our ATM program as well as the dividend reinvestment and employee benefit plans.

As we have mentioned before, we expect any incremental capital will be funded with 50% equity content. This applies to the incremental $1 billion of investment that Scott mentioned a few minutes ago. We don’t expect it to impact our funding plans for the near term as the spending is projected to be in 2029 and beyond. With that, I’ll turn it back to Scott.

Scott Lauber — President and CEO

Thank you Shah. As you may have seen, our board at its January meeting increased the dividend by 6.7% to an annualized $3.81 per share. This will mark the 23rd consecutive year that our shareholders will be rewarded with higher dividends. The increase is consistent with our policy of paying out 65 to 70% of our earnings and dividends. Before I open up for Q and A, I want to summarize some of the highlights of the call we at the top end of the 2025 earnings guidance on an adjusted basis. We reach an agreement with the Illinois Attorney General on the terms of a proposed settlement that would allow US to put 12 historical reconciliation dockets behind us so we can now focus on the future.

Economic growth is driving another 500 megawatts of forecasted demand for a total of 3.9 gigawatt increase in our five year plan. This growth is adding $1 billion to our five year capital plan which is now at $37.5 billion. All of these developments give us even more confidence in our 7 to 8% long term EPS compound annual growth rate with acceleration to the upper half of the range starting in 2028. Overall, we’re on track and focused on providing value for our customers and and our stockholders. Operator we are now ready for the question and answer portion of the call.

Question & Answers

Operator

Now we will take your questions. The question and answer session will be conducted electronically. To ask a question, please press the star key followed by the digit 1 on your phone. If you are using a speakerphone, turn off your mute function to allow your signal to reach our equipment. We will take as many questions as time permits. Once again, press start and then one on your phone to ask a question. Your first question comes from the line of Julian Domalin Smith with Jeffries. Your line is now open. Please go ahead.

Julian Dumoulin-Smith

Hey, good afternoon team. Nicely done. Gotta say a bevy of updates here today, no doubt. Nonetheless, I wanted to follow up on the commentary you guys started with at the top of the call on Microsoft here. Can you elaborate a little bit more about the 500 megawatts that you’re putting in here now? I mean to what extent is there even more beyond that? Right. Every time you give us some, we’re going to ask about the next piece. But also as it pertains to the capex, right, you talk about a billion dollars of additional capex. To what extent does that 500 megawatts or the billion dollars stretch beyond technically the five year period as well? What do you know about the further ramp there too?

Scott Lauber — President and CEO

Sure. Julian, thanks, thanks for the question. And when you look at it, Microsoft is, it has been working on that first 1364 acres and now and we’ve always talked that, you know, the growth that we have has been started in that main spot and now they’re starting to add to the north of Highway 11 locally it’s that project north. So that’s where we added the 500 I think as you, as we continue and when you listen to the Microsoft conference call, someone asked about The Wisconsin development and they talked about that as a multi year delivery.

So I think there’s going to be a lot to come as you start thinking about 2031 in the future also. And remember there’s still more land that they are looking to purchase and haven’t developed yet. So I think there’s a lot of opportunities here.

Julian Dumoulin-Smith

Do you want to expand on that? I mean it seems as if the other parcel here might even be bigger than the first one. Can you just elaborate a little bit about what we understand in sort of the multi stage? I get maybe at times folks are shy to talk about the full extent of the opportunity, but still obviously phase one has been so large, 500 megawatts. Do we have any other further clues about just how big and how fast this could go? Sorry to press you so much on it, but it tantalizes.

Scott Lauber — President and CEO

Yeah, I understand completely. And we’re very excited about the development here. What they’re doing here in Wisconsin, you know, I do not want to get out ahead of Microsoft and their plans. All I can really say is, you know, they’re starting to do land at about 570 acres and that’s about where we put that 500 megawatts. There’s more land. You know, that’s just the start of that development. When you think about the amount of megawatts people are now putting on land. And then I think there’s at least another couple hundred or so that they haven’t developed and they’re looking for more land.

As we talked to the paper, they’ve been very transparent here in southeastern Wisconsin on their plan. So more to come but and I don’t want to get ahead of Microsoft by any means. So just very positive as we continue to see their development grow.

Julian Dumoulin-Smith

Awesome. And then just. I’ll bring up another subject real quickly on Point Beach. How are the negotiations progressing and at what point do you need to make a decision about the 500 megawatts there for replacement power or what have you for the 2030 piece?

Scott Lauber — President and CEO

Yeah, great question. And when we look at it, you know, those contracts end in 2030 and then the second one is in 2033, I think at the beginning of 2033. So we have time. You know, we’re still communications with, with, with Nextera on the plant. We’re going to factor all that in and what we need, which I only can see is potentially upside in our plan in our fall update. So we’re going through our planning process like we do every summer looking at, you know, how did the Winter, you know, this cold spell. How did the system perform? What do we look at in the future for additional growth? Adding another year onto our sales forecast.

And then of course, factoring in this point Beach PPA if we need to replace it with some other generation, you know, I see that as potential upside in the plan, but we’ll factor that into the fall.

Julian Dumoulin-Smith

Awesome. Nicely done, guys. We’ll talk to you soon. Take care. Take care. G ood luck.

Scott Lauber — President and CEO

Thank you. Yep.

Operator

Your next question comes from the line of Char Pereza with Wells Fargo. Please give a hat.

Alex

Hey, good afternoon everyone. It’s actually Alex on for sure. Thanks for taking our questions.

Scott Lauber — President and CEO

Absolutely. Alex.

Alex

So, you know, obviously you’re seeing a lot of growth on the data center front. So you’ve highlighted Microsoft and the Vantage projects. But can you maybe talk a little bit more maybe to the extent that you can? Are you seeing additional interest from other hyperscaler customers? And if I could just add on, there’s been local opposition around data centers in other parts of the state, but can you just talk about your strategy and overall confidence level around attracting customers despite some of these headwinds we’ve seen recently? Thanks.

Scott Lauber — President and CEO

Sure, sure. And you have seen a little noise around the state. I think you’re seeing a couple things now. And I’m very confident that other people are looking at opportunities in Wisconsin. And we have a lot of discussions and even Microsoft has talked about even being more transparent. So I think everyone understands they need to be more transpar, working more with the communities, being much more proactive than they were two years ago. So I think that’s all positive developments here. I think also our very large customer tariff that protects all our other customers, the hyperscalers understand it and like the fact that they can really point to something very transparent and protecting other customers.

So, you know, we don’t have a tendency to talk about a pipeline because we want to just talk about what’s actually announced and develop. But there’s other opportunities and we’re in multiple discussions.

Alex

Got it. That’s helpful. And then just sort of, you know, looking at the five year outlook you have out there. So 26, 27, you’re at that 6.5 to 7% growth. Obviously you’re seeing a lot of growth. Is this just timing as to when data centers start coming online? Just want to get a sense on, you know, what could be holding you back from growing at that seven to eight in the first half of the plan. Is there anything you see out there that could potentially move the needle? Thanks.

Scott Lauber — President and CEO

Yeah, yeah, that’s a great question. And you know, we’re six and a half to seven this year and we’re consistent. We talked about seven to eight in 27 and then in the eight range after that. It really just mirrors our capital plan and everyone’s doing a great job getting projects identified and getting things staged. It just takes a while for all those capital to get ramped up. But we’re right on time. And in fact, we’ve even ramped up maybe even a little faster than we anticipated here in a couple of projects, which is good to see.

Too early to do anything, move anything, but really positive. And it really just mirrors our capital plan. But adding this extra billion, which is as Shaw said, probably in that 2930 timeframe, just really is going to strengthen the long term outlook for our capital plan.

Alex

Great. Thanks for the color. I’ll leave it there.

Scott Lauber — President and CEO

Thank you.

Operator

Your next question comes from the line of Nicholas Campanella with Barclays. Please go ahead.

Nicholas Campanella — Analyst, Barclays

Hey, good afternoon, everyone. Hope everyone’s well. Thanks for taking my questions.

Scott Lauber — President and CEO

Absolutely. Good afternoon, you two.

Nicholas Campanella — Analyst, Barclays

Yeah, absolutely. Good to, good to get all the updates. Just wanted to ask on regulatory just now that we kind of have all the testimonies out there on the vlc, how do you feel about the potential to kind of settle this, if that’s important at all and if the window is open to do so. And then I’m also just wondering the timing on the GRC filing, if that’s still on track for midway through this year. Thanks.

Scott Lauber — President and CEO

Sure. Great question. And the very large customer tariff, I see that going the entire period that the commission makes a decision and one of the items that we want to make sure we have. When everyone talks about affordability and data center causing rate increases, this tariff is one of the best or the best out there. We think to make sure the data centers pay their fair share. We want true transparency and we want to go through the entire audit process and get all those questions out there. So remember, we filed it in conjunction and Microsoft and Vantage have supported the tariff and now we’re just going through a very thorough vetting process and I don’t have any concerns going through the entire process.

But once again, the goal of this is to make sure the customers pay their fair share and to make sure everyone understands how it’s working. So we have true transparency on our largest customers. And then on the rate case filing, we’re on track. Filing in April, we’re still, we’re in the process of pulling the numbers together but you know, on track to get that filing out there.

Nicholas Campanella — Analyst, Barclays

Hey, great. Thanks for, thanks for that. And then just maybe really quick on the financing. Just, I know that there was a couple comments around, you know, the 1 billion ATM for 26. Just any thoughts on, you know, further de. Risking the plan past that or, you know, could there be any downside to this number if you guys were to lean on some additional hybrid that there is capacity? Thank you.

Scott Lauber — President and CEO

Yeah, I’ll let Shaw answer that one.

Xia Liu — CFO

Yeah, absolutely. We are all over that. So we have very limited hybrid financing so far. We had a $600 million issuance last year, so we have a significant capacity for hybrid. But this 900 to $1.1 billion I talked about is for common equity financing. And as I said, we’re relying on atm, so we fully expect to get that executed throughout the year.

Nicholas Campanella — Analyst, Barclays

Thank you.

Scott Lauber — President and CEO

Thank you.

Operator

Your next question comes from the line of Carly Davenport with Goldman Sachs. Please go ahead.

Carly Davenport — Analyst, Goldman Sachs

Hey, good afternoon. Thanks so much for taking the questions. Maybe to start, just can you talk a bit about how you’re thinking about potential election rhetoric around affordability just in the face of filing a rate case in Wisconsin in the next couple of months and, and just how that might inform your filing or the rate case process?

Scott Lauber — President and CEO

Sure, sure. And you’re, you know, across the country you’re hearing affordability. And in Wisconsin here, as you mentioned, you know, we do have a governor’s race. It’s a pretty open race. Our Governor Eaters is not running again. So there are several Democrats who have thrown their hat in the ring. We’re really early in the process. There’s several issues that they’re bringing up. You know, in addition to affordability and property taxes, they’re also looking at health care, childcare, education. So there’s a lot of topics that are being, that are being floated around, but we’re definitely aware of affordability.

And, you know, we continue to, you know, we’re pulling our numbers together, but we are doing a lot to try to keep our rates as low as possible, having a lot of initiatives to keep cost low. And in fact, as we closed the book this, the books this last year in Wisconsin Electric, when you look at the performance of our plants and the fuel cost, we were able to be in a positive fuel recovery. And because of the warmer weather, we got into a positive position on their sharing mechanism. At Wisconsin Electric, the results are approximately $55 million that we’ll be able to give back to customers.

So we think about affordability every day, but that’s how we’re kind of factoring stuff in.

Carly Davenport — Analyst, Goldman Sachs

That’s great. Thank you so much for the color there. And then the follow up maybe just on Illinois, you’re still early stages on the prp, but I guess are there any near term milestones we should be watching there to gauge progress and also gauge the support from the commission for those investments?

Scott Lauber — President and CEO

Sure. Great question and you are exactly right. We are in the early stages this year. I think we’re looking at retiring approximately 35 miles and that’s ramping up every year until we get to what we think is a run rate in 2028. We are, you know, this settlement is a big step forward as in we stopped to look, looking backwards and now we’re looking forward. The early indications will be and we were working on the projects and soon starts to kick off with field work. We’ve done a little bit last year laying out the plan plans but really in this test year we’ll have forward looking capital plans that the commission will also have a look at.

And we’re working very closely now that the safety monitor is on staff and has been hired and laying out our plans of what we’re doing and how we’re reporting to the safety monitor. So I think the indication is going to be probably the first one is what happens in our rate case filing that we just filed, which is really forward looking for 2027 and how we prioritize the project.

Carly Davenport — Analyst, Goldman Sachs

Got it. Great. Thanks so much for the updates.

Scott Lauber — President and CEO

Thank you.

Operator

Your next question comes from the line of Michael Sullivan with Wolf Research. Please go ahead.

Michael Sullivan — Analyst, Wolf Research

Hey, good afternoon. I’ll just pick up on the last. Hey Scott, I’ll just pick up on the last line of questions. Sticking with Illinois, any chance you can settle these rate cases? And then also as it relates to the riders you just settled on, I mean it seems like the bill credits and rate based reduction creates a little bit of a headwind. So just how you’re thinking about offsetting that.

Scott Lauber — President and CEO

Sure, sure. And it’s really early to even think about settlements on the Illinois case yet. So we’ll see where we get as we get through the audit and the staff audit and intervenor. So a little bit too early on on all of that. When you think about the settlement we just had in Illinois and you look and I really look at the overall picture, that’s why we reaffirmed our long term growth rate of that 7 to 8% with 7 to 8% growth with the upper end of the range in 2028 and beyond. I mean we factored all that in as we as we looked at that and as you heard on the call, we just add another billion dollars of growth.

And remember, that growth is really driven by the hyperscalers which are paying their share for the electricity costs. So it doesn’t have a burden on our other customers rate. So you know, we were able to offset it very quickly here. But a good spot to move forward in Illinois.

Michael Sullivan — Analyst, Wolf Research

Okay, great. Then maybe I’ll just go there next in terms of the what is Microsoft ramp could do. They’re paying their fair share. Is it possible they actually can lower rates for customers and maybe any sense of size you could give us on the upcoming Wisconsin rate case?

Scott Lauber — President and CEO

Yeah, sure. I mean, you think about it, they’re paying their fair share, which includes corporate allocations and other common costs, which eventually and I think you’re going to see more of this as that bill gets bigger. Of course, the more corporate allocations you have, the less burden it is on all other customers. So it’s hard to really quantify that until we start seeing actual real stuff going to service. Remember, their first site is just starting to go into service and a lot of that capital spending is in the lighter part of the plan. But long term it’s incrementally good for customers.

Michael Sullivan — Analyst, Wolf Research

Okay, great. Thank you.

Scott Lauber — President and CEO

Thank you.

Operator

Your next question comes from the line of Stephen d’ Ambrizzi with RBC Capital Markets. Please go ahead.

Stephen D’ Ambrisi

Hi, Scott. Hi Shaw. Thanks very much for taking my question.

Scott Lauber — President and CEO

Absolutely.

Stephen D’ Ambrisi

I, I just had a quick one. You know, congratulations on, on increasing the Microsoft load, but I really wanted to follow on to Julian’s Point beach questions and just quickly understand, you know, to the extent you do move forward with replacing the Point Beach PPA with generation, do you, do you have interconnect generation, interconnect agreements or slots in the MISO queue or can you participate in the ERAs process? I think there’s a rolling window where you can cycle in and then just wasn’t sure if you already had any slots or we’re looking to potentially add some or if that’s a place that we could watch to see potential activity on your end.

Thanks.

Scott Lauber — President and CEO

Yeah, that’s, that’s a good question. And we work alongside with a very good developer at Vinergy as we develop our plans to make sure we have, you know, renewables, batteries, you know, natural gas generation. And you know, I feel very confident in talking to our generation team, not to give you too many details here, that we can replace that power as we look at 20, 30 and 33. We’re going to look, of course at what’s economic for our customers. So we’re going to really balance the economics of our customers and what makes sense as we look at Point beach and we look at capital investments.

What’s overall best for our customers.

Operator

Your next question comes from the line of Andrew Weisel with Scotiabank. Please go ahead.

Andrew Weisel — Analyst, Scotiabank

Hey, good afternoon everybody.

Scott Lauber — President and CEO

Hey, Andrew.

Andrew Weisel — Analyst, Scotiabank

First, just a quick one. The gap charge you took related to Illinois, is there a cash component to that or might there be one going forward?

Scott Lauber — President and CEO

Sure. There’s two components and the total is at 46 cents that you saw on that adjustment. The one component is $130 million rate based components. That is forward looking in perspective and we factored in in the final rate order. That’s what we’re anticipating will happen. And then there’s 125 million of cash credits that go back to customers over the next three years. It’s approximately 50 million in that first year. And then the last two years are split evenly for the remaining 75. So that’s. It’ll be a little cash. It’ll be a little pressure of course on our FFIO with the debt matrix.

But good to get these old cases behind us.

Andrew Weisel — Analyst, Scotiabank

Got it, thank you. Next, I’m hoping you can clarify a little the interplay between the VLC tariff and the general rate case. I’ve been getting enough questions. I think there’s some confusion. Firstly, can you preview when you file in April, just round numbers? What kind of rate impact should we expect for the general customers now that the data center customers are being separated?

Scott Lauber — President and CEO

Sure, sure. And we’re pulling those numbers together. So I really there’s a lot of stuff that has to happen and look at it. But we do keep affordability in our mind as we pull this case together. But just to give you a little color on how we’re looking at it, the total company will be provided on what our total expenses, capital spending and then we’ll have separated just like we do for our wholesale customers, separated for these very large customers, the wholesale customers. And then what’s remaining for our general rate case. So it’ll be very once again very transparent on all the assets that the very large customers are paying for in total.

So that’s kind of how it’s going to be broken out and of course you know how the bills and stuff are set up and all the costs will be allocated that are directly assigned or allocated to those very large customers. So we’re in process of laying out how that will look right now. But that’s the concepts.

Andrew Weisel — Analyst, Scotiabank

Okay. Fair enough. And then, you know, going one step further over the longer term, beyond 27 and 28 Test period, that will be addressed. How should we think about kind of this idea? If data center activity exceeds expectations, would that help the rest of the customers by lowering their rates or just leave them unimpacted? In other words, is the idea that data centers are completely independent or is the idea that excess data center activity should help the rest of the customers.

Scott Lauber — President and CEO

In general, as you look at it, and it takes several years, but a lot of corporate allocations are allocated on total rate base and cost. So as you can imagine, even like we went through the acquisition of Integris, we were able to spread common cost across a bigger footprint. Having data centers will have significant rate base. I think in our five year plan, we’re looking at that rate base being 14 to 15% of our earnings. So a significant part of that. So corporate allocations will get spread across a larger rate base and you’re going to see more of that as those assets continue to build.

But that’s, you know, more of it’s going to be in service than that. 28, 29, 30 time frame.

Andrew Weisel — Analyst, Scotiabank

Okay, very good. One last. It does, yeah. Thank you. One last one. Just on timing, my understanding is the VLC ruling should come pretty much around the same time as you’re filing for the general rate case. Is it important that the first one concludes before the second one begins, or do you think of them as independent tracks now?

Scott Lauber — President and CEO

We’re pulling it together, assuming the filing that we have on the table right now and will be too independent because we’d have to file most likely, like you said, about the same time, or maybe even a little before that final decision is made on the vlcs.

Andrew Weisel — Analyst, Scotiabank

Okay, great. Thank you so much.

Scott Lauber — President and CEO

Thank you.

Operator

Your next question comes from the line of Paul Fremont with Ladenburg. Please go ahead.

Paul Fremont — Analyst, Ladenburg

Hey, thank you very much and congratulations. First question is the Microsoft announcement, should we think of that as the replacement for the canceled Caledonia project, or are they still looking to do something to replace that?

Scott Lauber — President and CEO

So a great question that. Thanks, Paul. When you look at it, they had already purchased this land before that Caledonia. They’re looking for additional land beyond the Caledonia. So they’re still looking for additional land to replace what they decided to pull out or remove away from in Caledonia.

Paul Fremont — Analyst, Ladenburg

Right. And then my next question has to do with sort of the pricing of Point beach terminates around $120 per megawatt hour. I would think that new build would be a savings over sort of the last Years of the contract pricing. So why should we not assume that you would opt for new build versus recontracting?

Scott Lauber — President and CEO

I think you’re gluing it together. A pretty good assumption there that those prices are pretty high and if those prices, you know, they think they should be that high. A new build, when you think about affordability, probably makes sense. But we got to run that analysis yet and more to come. But I do think there’s upside here.

Paul Fremont — Analyst, Ladenburg

Okay. And maybe last, sort of a quick follow up to that. Are there retired coal plant sites that could be sort of used as for a new build?

Scott Lauber — President and CEO

No. You know, right now, actually, the coal plant that we retired multiple years ago, that’s actually an economic development. Use that site. So we’ve already developed some of those sites for other economic development, but we’re looking at other locations and opportunities. Really. You got to think of it now as where is the natural gas line for those gas prices, pipes, and how do you get that capacity in? So more to come, but we have spots in mind.

Paul Fremont — Analyst, Ladenburg

Great. Thank you so much.

Scott Lauber — President and CEO

Thank you.

Operator

Your last question comes from the line of Paul Patterson with Glenrock Associates. Please go ahead.

Paul Patterson — Analyst, Glenrock Associates

Hey, good afternoon. Just have a quick few housekeeping items. Just whether the residential number looks like you’re planning it going down in 2026, not by much, but just in general. Is that because of energy efficiency or is there something else we should be thinking about?

Xia Liu — CFO

We always try to be a little conservative in the forecast. So the base assumption is we do see good customer growth, but there’s a little bit of decline in use per customer. So overall it’s a slight reduction, but we try to be conservative in the forecast.

Paul Patterson — Analyst, Glenrock Associates

Okay. And then just in terms of the impairment on the Illinois thing, I see the $130 million, I think in the income statement called out the other $75 million just from a geography, you know, AA income statement, geography. Where does that show up?

Scott Lauber — President and CEO

Yeah, the other 70. Yeah. The other amount goes through revenues for some accounting reasons.

Paul Patterson — Analyst, Glenrock Associates

Okay, fair enough.

Scott Lauber — President and CEO

Yep, absolutely. All right, that concludes our conference call for today. Thank you for participating. If you have any more questions, please feel free to contact Bestraca at 414-221-4639.

Operator

Thank you, ladies and gentlemen. That concludes today’s call. Thank you all for joining. You may now disconnect.