Employee Benefits

12 Months Ended

Dec. 31, 2024

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.

Other than those employees who receive a contribution to their 401(k) savings plan as described below, 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. 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)	2024		2023		2024		2023
Change in benefit obligation
Obligation at January 1	$	2,352.4	$	2,315.9	$	448.1	$	402.3
Service cost	24.2		24.0		10.9		9.8
Interest cost	116.6		122.3		22.7		21.6
Participant contributions	—		—		11.2		11.8
Actuarial (gain) loss	(99.6)		81.9		6.9		45.9
Benefit payments	(184.4)		(191.7)		(41.7)		(46.0)
Federal subsidy on benefits paid	N/A		N/A		1.4		1.5
Transfer	—		—		1.4		1.2
Obligation at December 31	$	2,209.2	$	2,352.4	$	460.9	$	448.1
Change in fair value of plan assets
Fair value at January 1	$	2,665.8	$	2,628.0	$	829.6	$	835.3
Actual return on plan assets	129.8		214.9		49.5		76.4
Employer contributions net of plan transfer (1)	13.1		14.6		1.4		(47.9)
Participant contributions	—		—		11.2		11.8
Benefit payments	(184.4)		(191.7)		(41.7)		(46.0)
Fair value at December 31	$	2,624.3	$	2,665.8	$	850.0	$	829.6
Funded status at December 31	$	415.1	$	313.4	$	389.1	$	381.5

(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 2024, we had actuarial gains related to our pension benefit obligations of $99.6 million and actuarial losses in 2023 of $81.9 million. The primary driver for the actuarial gain was a higher discount rate in 2024. Partially offsetting the gain in 2024, was lower than expected asset returns. The discount rate for our pension benefits was 5.69%, 5.19%, and 5.49% in 2024, 2023, and 2022, respectively.

In 2024 and 2023, we had actuarial losses related to our OPEB benefit obligation of $6.9 million and $45.9 million, respectively, both of which were driven by claims and premium updates and changes to medical trend assumptions. Partially offsetting the losses, was a higher discount rate in 2024. The discount rate for our OPEB benefits was 5.71%, 5.16%, and 5.50% in 2024, 2023, and 2022, 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)	2024		2023		2024		2023
Pension and OPEB assets	$	562.4	$	475.2	$	406.1	$	395.7
Other long-term liabilities	147.3		161.8		17.0		14.2
Total net assets	$	415.1	$	313.4	$	389.1	$	381.5

The accumulated benefit obligation for all defined benefit pension plans was $2,156.8 million and $2,279.6 million as of December 31, 2024 and 2023, 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)	2024		2023
Accumulated benefit obligation	$	286.0	$	300.7
Fair value of plan assets	143.2		147.3

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)	2024		2023
Projected benefit obligation	$	290.5	$	306.7
Fair value of plan assets	143.2		147.3

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)	2024		2023
Accumulated benefit obligation	$	194.0	$	21.0
Fair value of plan assets	177.0		6.9

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)	2024		2023		2024		2023
Pre-tax accumulated other comprehensive income (loss) (1)
Net actuarial loss (gain)	$	12.3	$	12.7	$	(1.1)	$	(1.2)
Prior service credits	—		—		—		—
Total	$	12.3	$	12.7	$	(1.1)	$	(1.2)
Net regulatory assets (liabilities) (2)
Net actuarial loss (gain)	$	578.7	$	688.9	$	(148.8)	$	(166.3)
Prior service credits	(2.1)		(2.2)		(15.8)		(29.3)
Total	$	576.6	$	686.7	$	(164.6)	$	(195.6)

(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)	2024		2023		2022		2024		2023		2022
Service cost	$	24.2	$	24.0	$	50.8	$	10.9	$	9.8	$	14.3
Interest cost	116.6		122.3		91.8		22.7		21.6		15.4
Expected return on plan assets	(182.1)		(187.4)		(208.0)		(52.7)		(53.0)		(68.9)
Plan settlement	4.0		1.3		6.2		—		—		—
Amortization of prior service cost (credit)	(0.1)		—		1.6		(13.5)		(14.8)		(15.9)
Amortization of net actuarial loss (gain)	59.5		33.0		75.3		(7.6)		(12.3)		(24.7)
Net periodic benefit cost (credit)	$	22.1	$	(6.8)	$	17.7	$	(40.2)	$	(48.7)	$	(79.8)

Effective January 1, 2023, the PSCW approved escrow accounting for pension and OPEB costs. As a result, as of December 31, 2024 and 2023, our balance sheet included a $24.9 million and a $6.0 million regulatory asset for pension costs, respectively, and a $38.2 million and a $14.8 million regulatory asset for OPEB costs, respectively.

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
	2024	2023	2024	2023
Discount rate	5.69%	5.19%	5.71%	5.16%
Rate of compensation increase	4.00%	4.00%	N/A	N/A
Interest credit rate	4.85%	4.84%	N/A	N/A
Assumed medical cost trend rate (Pre 65)	N/A	N/A	7.00%	6.25%
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	2033	2031
Assumed medical cost trend rate (Post 65)	N/A	N/A	6.10%	6.39%
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	2030

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
	2024	2023	2022
Discount rate	5.18%	5.49%	3.18%
Expected return on plan assets	6.61%	6.62%	6.88%
Rate of compensation increase	4.00%	4.00%	4.00%
Interest credit rate	4.84%	4.62%	3.78%

	OPEB Benefits
	2024	2023	2022
Discount rate	5.16%	5.50%	2.92%
Expected return on plan assets	6.50%	6.50%	7.00%
Assumed medical cost trend rate (Pre 65)	6.25%	6.50%	5.70%
Ultimate trend rate (Pre 65)	5.00%	5.00%	5.00%
Year ultimate trend rate is reached (Pre 65)	2031	2031	2028
Assumed medical cost trend rate (Post 65)	6.39%	6.00%	5.67%
Ultimate trend rate (Post 65)	5.00%	5.00%	5.00%
Year ultimate trend rate is reached (Post 65)	2030	2031	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 2025, the expected return on assets assumption is 6.61% 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 target asset allocations are 25% equity investments, 55% fixed income investments, and 20% private equity and real estate investments for both the legacy Wisconsin Energy Corporation and legacy Integrys pension trusts. 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, 2024
	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	$	168.4	$	—	$	—	$	168.4	$	93.8	$	—	$	—	$	93.8
International equity	158.2		—		—		158.2		86.4		—		—		86.4
Fixed income securities: (1)
United States bonds	—		880.1		—		880.1		99.0		205.6		—		304.6
International bonds	—		81.6		—		81.6		—		11.2		—		11.2
	$	326.6	$	961.7	$	—	$	1,288.3	$	279.2	$	216.8	$	—	$	496.0
Investments measured at net asset value:
Equity securities							414.9								190.4
Fixed income securities							126.0								51.8
Other							795.1								111.8
Total							$	2,624.3							$	850.0

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

	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.

Cash Flows

We expect to contribute $12.1 million to the pension plans and $2.6 million to the OPEB plans in 2025, 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
2025	$	212.5	$	35.3
2026	214.4		36.7
2027	205.0		37.9
2028	197.2		38.5
2029	188.7		38.8
2030-2034	839.4		189.4

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 $61.6 million, $57.5 million, and $54.4 million in 2024, 2023, and 2022, respectively.