Employee Benefits

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

EMPLOYEE BENEFITS

EMPLOYEE BENEFITS

Pension and Other Postretirement Employee Benefits

We and our subsidiaries have defined benefit pension plans that cover substantially all of our employees, as well as several unfunded non-qualified retirement plans. In addition, we and our subsidiaries offer multiple OPEB plans to employees. The benefits for a portion of these plans are funded through irrevocable trusts, as allowed for income tax purposes. We also offer medical, dental, and life insurance benefits to active employees and their dependents. We expense the costs of these benefits as incurred.

Generally, former Wisconsin Energy Corporation employees who started with the company after 1995 receive a benefit based on a percentage of their annual salary plus an interest credit, while employees who started before 1996 receive a benefit based upon years of service and final average salary. Wisconsin Energy Corporation management employees hired after December 31, 2014, and certain new represented employees hired after May 1, 2017, receive an annual company contribution to their 401(k) savings plan instead of being enrolled in the defined benefit plans.

For former Integrys employees, the defined benefit pension plans are closed to all new hires. In addition, the service accruals for the defined benefit pension plans were frozen for non-union employees as of January 1, 2013. These employees receive an annual company contribution to their 401(k) savings plan, which is calculated based on age, wages, and full years of vesting service as of December 31 each year.

We use a year-end measurement date to measure the funded status of all of our pension and OPEB plans. Due to the regulated nature of our business, we have concluded that substantially all of the unrecognized costs resulting from the recognition of the funded status of our pension and OPEB plans qualify as a regulatory asset.

The following tables provide a reconciliation of the changes in our plans' benefit obligations and fair value of assets:

	Pension Benefits				OPEB Benefits
(in millions)	2023		2022		2023		2022
Change in benefit obligation
Obligation at January 1	$	2,315.9	$	3,136.6	$	402.3	$	530.2
Service cost	24.0		50.8		9.8		14.3
Interest cost	122.3		91.8		21.6		15.4
Participant contributions	—		—		11.8		12.5
Plan amendments	—		—		—		0.2
Actuarial (gain) loss	81.9		(682.3)		45.9		(127.9)
Benefit payments	(191.7)		(281.0)		(46.0)		(45.7)
Federal subsidy on benefits paid	N/A		N/A		1.5		1.4
Transfer	—		—		1.2		1.9
Obligation at December 31	$	2,352.4	$	2,315.9	$	448.1	$	402.3
Change in fair value of plan assets
Fair value at January 1	$	2,628.0	$	3,328.9	$	835.3	$	1,000.2
Actual return on plan assets	214.9		(431.3)		76.4		(135.4)
Employer contributions net of plan transfer (1)	14.6		11.4		(47.9)		3.7
Participant contributions	—		—		11.8		12.5
Benefit payments	(191.7)		(281.0)		(46.0)		(45.7)
Fair value at December 31	$	2,665.8	$	2,628.0	$	829.6	$	835.3
Funded status at December 31	$	313.4	$	312.1	$	381.5	$	433.0

(1)    Employer contribution includes a $50.0 million transfer out of the WEC Energy Group Retiree Welfare Plan, in 2023, associated with the overfunded position of this plan.

In 2023, we had actuarial losses related to our pension benefit obligations of $81.9 million and actuarial gains in 2022 of $682.3 million. The primary driver for the actuarial loss was a lower discount rate in 2023. Partially offsetting the loss in 2023, was higher than expected asset returns. The discount rate for our pension benefits was 5.19%, 5.49%, and 2.96% in 2023, 2022, and 2021, respectively.

In 2023, we had actuarial losses related to our OPEB benefit obligation of $45.9 million and actuarial gains in 2022 of $127.9 million. The primary driver for the actuarial loss was changes to medical trend assumptions and a lower discount rate in 2023. Partially offsetting the loss in 2023, was higher than expected asset returns. The discount rate for our OPEB benefits was 5.16%, 5.50%, and 2.92% in 2023, 2022, and 2021, respectively.

The amounts recognized on our balance sheets at December 31 related to the funded status of the benefit plans were as follows:

	Pension Benefits				OPEB Benefits
(in millions)	2023		2022		2023		2022
Pension and OPEB assets	$	475.2	$	470.6	$	395.7	$	446.1
Pension and OPEB obligations	161.8		158.5		14.2		13.1
Total net assets	$	313.4	$	312.1	$	381.5	$	433.0

The accumulated benefit obligation for all defined benefit pension plans was $2,279.6 million and $2,250.6 million as of December 31, 2023 and 2022, respectively.

The following table shows information for pension plans with an accumulated benefit obligation in excess of plan assets. Amounts presented are as of December 31:

(in millions)	2023		2022
Accumulated benefit obligation	$	300.7	$	185.7
Fair value of plan assets	147.3		32.8

The following table shows information for pension plans with a projected benefit obligation in excess of plan assets. Amounts presented are as of December 31:

(in millions)	2023		2022
Projected benefit obligation	$	306.7	$	191.3
Fair value of plan assets	147.3		32.8

The following table shows information for OPEB plans with an accumulated benefit obligation in excess of plan assets. Amounts presented are as of December 31:

(in millions)	2023		2022
Accumulated benefit obligation	$	21.0	$	20.6
Fair value of plan assets	6.9		7.4

The following table shows the amounts that had not yet been recognized in our net periodic benefit cost (credit) as of December 31:

	Pension Benefits				OPEB Benefits
(in millions)	2023		2022		2023		2022
Pre-tax accumulated other comprehensive income (loss) (1)
Net actuarial loss (gain)	$	12.7	$	12.2	$	(1.2)	$	(1.6)
Prior service credits	—		—		—		—
Total	$	12.7	$	12.2	$	(1.2)	$	(1.6)
Net regulatory assets (liabilities) (2)
Net actuarial loss (gain)	$	688.9	$	669.2	$	(166.3)	$	(200.8)
Prior service credits	(2.2)		(2.1)		(29.3)		(44.2)
Total	$	686.7	$	667.1	$	(195.6)	$	(245.0)

(1)    Amounts related to the nonregulated entities are included in accumulated other comprehensive loss.

(2)    Amounts related to the utilities and WBS are recorded as net regulatory assets or liabilities.

The components of net periodic benefit cost (credit) (including amounts capitalized to our balance sheets) for the years ended December 31 were as follows:

	Pension Benefits						OPEB Benefits
(in millions)	2023		2022		2021		2023		2022		2021
Service cost	$	24.0	$	50.8	$	54.3	$	9.8	$	14.3	$	15.7
Interest cost	122.3		91.8		87.5		21.6		15.4		14.5
Expected return on plan assets	(187.4)		(208.0)		(200.9)		(53.0)		(68.9)		(66.0)
Plan settlement	1.3		6.2		3.9		—		—		—
Plan curtailment	—		—		—		—		—		(6.4)
Amortization of prior service cost (credit)	—		1.6		1.6		(14.8)		(15.9)		(15.9)
Amortization of net actuarial loss (gain)	33.0		75.3		109.4		(12.3)		(24.7)		(24.4)
Net periodic benefit cost (credit)	$	(6.8)	$	17.7	$	55.8	$	(48.7)	$	(79.8)	$	(82.5)

Effective January 1, 2023, the PSCW approved escrow accounting for pension and OPEB costs. As a result, as of December 31, 2023, we recorded a $6.0 million regulatory asset for pension costs and a $14.8 million regulatory asset for OPEB costs. The above table does not reflect any adjustments for the creation of these regulatory assets.

The weighted-average assumptions used to determine the benefit obligations for the plans were as follows for the years ended December 31:

	Pension Benefits		OPEB Benefits
	2023	2022	2023	2022
Discount rate	5.19%	5.49%	5.16%	5.50%
Rate of compensation increase	4.00%	4.00%	N/A	N/A
Interest credit rate	4.84%	4.61%	N/A	N/A
Assumed medical cost trend rate (Pre 65)	N/A	N/A	6.25%	6.50%
Ultimate trend rate (Pre 65)	N/A	N/A	5.00%	5.00%
Year ultimate trend rate is reached (Pre 65)	N/A	N/A	2031	2031
Assumed medical cost trend rate (Post 65)	N/A	N/A	6.39%	6.00%
Ultimate trend rate (Post 65)	N/A	N/A	5.00%	5.00%
Year ultimate trend rate is reached (Post 65)	N/A	N/A	2030	2031

The weighted-average assumptions used to determine the net periodic benefit cost for the plans were as follows for the years ended December 31:

	Pension Benefits
	2023	2022	2021
Discount rate	5.49%	3.18%	2.71%
Expected return on plan assets	6.62%	6.88%	6.88%
Rate of compensation increase	4.00%	4.00%	4.00%
Interest credit rate	4.62%	3.78%	3.71%

	OPEB Benefits
	2023	2022	2021
Discount rate	5.50%	2.92%	2.66%
Expected return on plan assets	6.50%	7.00%	7.00%
Assumed medical cost trend rate (Pre 65)	6.50%	5.70%	5.85%
Ultimate trend rate (Pre 65)	5.00%	5.00%	5.00%
Year ultimate trend rate is reached (Pre 65)	2031	2028	2028
Assumed medical cost trend rate (Post 65)	6.00%	5.67%	5.80%
Ultimate trend rate (Post 65)	5.00%	5.00%	5.00%
Year ultimate trend rate is reached (Post 65)	2031	2028	2028

We consult with our investment advisors on an annual basis to help us forecast expected long-term returns on plan assets by reviewing historical returns as well as calculating expected total trust returns using the weighted-average of long-term market returns for each of the major target asset categories utilized in the trust. For 2024, the expected return on assets assumption is 6.62% for the pension plans and 6.50% for the OPEB plans.

Plan Assets

Current pension trust assets and amounts which are expected to be contributed to the trusts in the future are expected to be adequate to meet pension payment obligations to current and future retirees.

The Investment Trust Policy Committee oversees investment matters related to all of our funded benefit plans. The Committee works with external actuaries and investment consultants on an on-going basis to establish and monitor investment strategies and target asset allocations. Forecasted cash flows for plan liabilities are regularly updated based on annual valuation results. Target allocations are determined utilizing projected benefit payment cash flows and risk analyses of appropriate investments. They are intended to reduce risk, provide long-term financial stability for the plans and maintain funded levels which meet long-term plan obligations while preserving sufficient liquidity for near-term benefit payments.

The legacy Wisconsin Energy Corporation pension trust target asset allocations are 25% equity investments, 55% fixed income investments, and 20% private equity and real estate investments. The legacy Integrys pension trust target asset allocations are 25% equity investments, 55% fixed income investments, and 20% private equity and real estate investments. The legacy Wisconsin

Energy Corporation OPEB trust target asset allocations are 45% equity investments, 45% fixed income investments, and 10% real estate investments. The two largest legacy OPEB trusts for Integrys have the same target asset allocations of 45% equity investments, 45% fixed income investments, and 10% real estate investments. Equity securities include investments in large-cap, mid-cap, and small-cap companies. Fixed income securities include corporate bonds of companies from diversified industries, mortgage and other asset backed securities, commercial paper, and United States Treasuries.

Pension and OPEB plan investments are recorded at fair value. See Note 1(r), Fair Value Measurements, for more information regarding the fair value hierarchy and the classification of fair value measurements based on the types of inputs used.

The following tables provide the fair values of our investments by asset class:

	December 31, 2023
	Pension Plan Assets								OPEB Assets
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Asset Class
Equity securities:
United States equity	$	179.3	$	—	$	—	$	179.3	$	91.8	$	—	$	—	$	91.8
International equity	174.0		—		—		174.0		84.6		—		—		84.6
Fixed income securities: (1)
United States bonds	—		906.6		—		906.6		91.5		203.2		—		294.7
International bonds	—		88.0		—		88.0		—		11.9		—		11.9
	353.3		994.6		—		1,347.9		267.9		215.1		—		483.0
Investments measured at net asset value:
Equity securities							407.4								182.1
Fixed income securities							124.2								47.7
Other							786.3								116.8
Total							$	2,665.8							$	829.6

(1)    This category represents investment grade bonds of United States and foreign issuers denominated in United States dollars from diverse industries.

	December 31, 2022
	Pension Plan Assets								OPEB Assets
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Asset Class
Equity securities:
United States equity	$	231.5	$	—	$	—	$	231.5	$	92.5	$	—	$	—	$	92.5
International equity	202.2		—		—		202.2		83.9		—		—		83.9
Fixed income securities: (1)
United States bonds	—		838.7		—		838.7		129.8		145.3		—		275.1
International bonds	—		95.0		—		95.0		—		13.2		—		13.2
	433.7		933.7		—		1,367.4		306.2		158.5		—		464.7
Investments measured at net asset value:
Equity securities							466.0								186.6
Fixed income securities							101.0								65.5
Other							693.6								118.5
Total							$	2,628.0							$	835.3

(1)    This category represents investment grade bonds of United States and foreign issuers denominated in United States dollars from diverse industries.

Cash Flows

We expect to contribute $13.1 million to the pension plans and $2.2 million to the OPEB plans in 2024, dependent upon various factors affecting us, including our liquidity position and possible tax law changes.

The following table shows the payments, reflecting expected future service, that we expect to make for pension and OPEB over the next 10 years:

(in millions)	Pension Benefits		OPEB Benefits
2024	$	207.0	$	34.3
2025	199.6		34.4
2026	202.2		34.9
2027	193.9		35.4
2028	188.8		35.5
2029-2033	847.4		175.3

Savings Plans

We sponsor 401(k) savings plans which allow employees to contribute a portion of their pre-tax and/or after-tax income in accordance with plan-specified guidelines. A percentage of employee contributions are matched by us through a contribution into the employee's savings plan account, up to certain limits. The 401(k) savings plans include an Employee Stock Ownership Plan. Certain employees receive an employer retirement contribution, in which amounts are contributed to the employee's savings plan account based on the employee's wages, age, and years of service. Total costs incurred under all of these plans were $57.5 million, $54.4 million, and $51.8 million in 2023, 2022, and 2021, respectively.