WEC buys Michigan natural gas storage site
Bluewater acquisition cost $230 million
The parent company of utilities in eastern Wisconsin has acquired a natural gas storage field in Michigan for $230 million.
The acquisition of Bluewater Gas Storage near Detroit was announced Wednesday by Allen Leverett, president and chief executive of Milwaukeebased WEC Energy Group Inc.
Every winter, WEC subsidiaries We Energies and Wisconsin Public Service have contracts in place to store natural gas in underground reservoirs for use by home heating customers when the weather turns cold.
The acquisition gives the company the opportunity to own the natural gas storage facility that can store about onethird of the natural gas used by Wisconsin customers during a typical winter, Leverett said.
The Bluewater Gas Storage facility in St. Clair County, Mich., was sold Jan. 20 by Plains All American Pipeline of Houston. We Energies and WPS will soon seek state approval for 60-year agreements to enable the utilities to contract for gas storage from Bluewater.
Utility customers would start to see savings from the investment in about four years, he said.
“We think this is a good op-
portunity with the Wisconsin utilities and puts them on a similar footing with gas utilities in other states that own some of their storage,” Leverett said.
Leverett announced the acquisition during an investor conference call after the Milwaukee utility company reported that its earnings rose 8.5% in the fourth quarter.
However, WEC’s stock shares fell 3% Wednesday after the company said its earnings in the first quarter would be in the range of $1.06 to $1.10 per share, below the average of $1.13 forecast by investment analysts, according to MarketWatch.
WEC Energy reported net income of $194.4 million, or 61 cents a share, up from $179.3 million, or 57 cents a share, in the 2015 fourth quarter. The results were in line with forecasts of six investment
analysts, according to MarketWatch.
WEC Energy was created when Wisconsin Energy Corp. of Milwaukee bought Integrys Energy Group Inc. of Chicago in mid-2015.
WEC’s utilities include We Energies in Milwaukee, Wisconsin Public Service in Green Bay and Peoples Gas in Chicago. Including its utilities in Michigan and Minnesota, it’s the eighth-largest natural gas utility in the country.
“Our 2016 results reflect the positive impact from the Integrys acquisition,” Leverett said in a statement.
The utility exceeded its target of saving 3% to 5% on operating costs by combining the two companies. For 2016, the savings totaled 6%, he said in an interview.
For the full year, net income rose to $939 million, or $2.96 a share, from $638.5 million, or $2.34 per share — with Integrys results hitting the company’s bottom line for half the year. The company said earnings from the former Wisconsin
Energy company rose 12% to $605 million.
Earnings from the Integrys companies — including the Green Bay utility and natural gas utilities outside Wisconsin — rose to $342.8 million for all of 2016, compared with $106.3 million for the second half of 2015.
In 2016, weather-adjusted sales of electricity fell 0.2% for We Energies and Wisconsin Public Service, but that decline was linked to lower power sales to iron-ore mines in the Michigan’s Upper Peninsula.
Excluding the mines, weather-adjusted electricity sales rose 0.2%, with residential electricity sales up 0.4%, sales to small companies and factories up 0.9% and sales to large manufacturers down 0.7%.
The increase in sales to residential customers “may not seem like a lot but it’s the biggest yearover-year increase we’ve seen since 2007,” Leverett said.
WEC shares on Wednesday fell 3%, or $1.83, to $57.22.