In April 2024, WE, WPS, and WG filed requests with the PSCW to increase their retail electric, natural gas, and steam rates, as applicable. The primary drivers of the requested increases in electric rates were continued capital investments to transition our generation fleets from coal to renewables and natural gas-fueled generation, increased costs driven by higher inflation and interest rates, and the recovery of regulatory assets previously approved by the PSCW. The requested increases in natural gas rates were driven by the companies' ongoing capital investments in reliability and safety projects, including LNG storage facilities, as well as the impacts from higher inflation and increased interest rates.

On December 19, 2024, the PSCW issued final written orders approving electric, natural gas, and steam base rate increases, effective January 1, 2025 and 2026, as applicable. The final written orders reflected the following:


	WE					WPS					WG
2025 rate increase
Electric (1)	$	144.0	million	/	4.2%	$	55.1	million	/	4.5%	N/A
Gas	$	41.3	million	/	7.1%	$	14.9	million	/	3.8%	$	34.5	million	/	4.2%
Steam	$	1.5	million	/	5.0%	N/A					N/A
2026 rate increase (2)
Electric (1)	$	169.5	million	/	4.5%	$	30.0	million	/	2.3%	N/A
Gas	$	29.8	million	/	4.5%	$	13.5	million	/	3.1%	$	23.5	million	/	2.6%
ROE	9.8%					9.8%					9.8%
Common equity component average on a financial basis	53.0%					53.0%					53.0%

Effective January 1, 2025, WE was required to implement a new earnings sharing mechanism, under which, if WE earns above its authorized ROE: (i) it retains 100.0% of earnings for the first 15 basis points above the authorized ROE; (ii) 50.0% of the next 25 basis points is required to be refunded to ratepayers; and (iii) 100.0% of any remaining excess earnings is required to be refunded to ratepayers.

WPS and WG are required to maintain their current earnings sharing mechanism. Under the current mechanism, if the utility earns above its authorized ROE: (i) the utility retains 100.0% of earnings for the first 15 basis points above the authorized ROE; (ii) 50.0% of the next 60 basis points is required to be refunded to ratepayers; and (iii) 100.0% of any remaining excess earnings is required to be refunded to ratepayers.

In accordance with their rate orders approved by the PSCW in December 2022, WE, WPS, and WG filed requests for limited electric and natural gas rate case re-openers, as applicable, with the PSCW in May 2023. The WE and WPS limited electric rate case re-openers included updated fuel costs and revenue requirements for the generation projects that were previously approved by the PSCW and were placed into service in 2023 or were expected to be placed into service in 2024. WE's limited electric re-opener also included the projected savings from the retirement of the OCPP Units 5 and 6, which were retired in May 2024. WE and WG also filed a request for a limited natural gas rate case re-opener to reflect the additional revenue requirements associated with their previously approved LNG projects. WE's and WG's LNG projects were placed into service in November 2023 and February 2024, respectively.

In April 2022, WE, WPS, and WG filed requests with the PSCW to increase their retail electric, natural gas, and steam rates, as applicable. These requests were updated in July 2022 to reflect new developments that impacted the original proposals. The requested increases in electric rates were driven by capital investments in new wind, solar, and battery storage; capital investments in natural gas generation; reliability investments, including grid hardening projects to bury power lines and strengthen WE's distribution system against severe weather; and changes in wholesale business with other utilities. Many of these investments had already been approved by the PSCW. The requested increases in natural gas rates primarily related to capital investments previously approved by the PSCW, including LNG storage for our natural gas distribution system.


	WE					WPS					WG
2023 base rate increase
Electric	$	283.5	million	/	9.1%	$	120.5	million	/	9.8%	N/A
Gas	$	46.1	million	/	9.6%	$	26.4	million	/	7.1%	$	46.5	million	/	6.4%
Steam	$	7.6	million	/	35.3%	N/A					N/A
ROE	9.8%					9.8%					9.8%
Common equity component average on a financial basis	53.0%					53.0%					53.0%

•The utilities kept their then current earnings sharing mechanisms, under which, if a utility earned above its authorized ROE: (i) the utility retained 100.0% of earnings for the first 15 basis points above the authorized ROE; (ii) 50.0% of the next 60 basis points was refunded to ratepayers; and (iii) 100.0% of any remaining excess earnings was required to be refunded to ratepayers.

•WE and WPS were required to continue to work with PSCW staff and other interested parties to develop alternative low income assistance programs. WE and WPS also collectively contributed $4.0 million to the Keep Wisconsin Warm Fund.

•WE, WPS, and WG were required to implement escrow accounting treatment for pension and OPEB costs in 2023 and 2024. As a result, they defer as a regulatory asset or liability, the difference between actual pension and OPEB costs and those included in rates until recovery or refund is authorized in a future rate proceeding.

In March 2021, WE, WPS, and WG filed an application with the PSCW for the approval of certain accounting treatments that allowed them to maintain their electric, natural gas, and steam base rates through 2022 and forego filing a rate case for one year. In connection with the request, the three utilities also entered into an agreement, dated March 23, 2021, with various stakeholders. Pursuant to the terms of the agreement, the stakeholders fully supported the application. In September 2021, the PSCW issued written orders approving the application.

In January 2023, PGL and NSG filed requests with the ICC to increase their natural gas base rates. The requested rate increases were primarily driven by capital investments made to strengthen the safety and reliability of each utility’s natural gas distribution system. PGL was also seeking to recover costs incurred to upgrade its natural gas storage field and operations facilities and to continue improving customer service. PGL did not request an extension of the QIP rider as PGL returned to the traditional rate making process to recover the costs of necessary infrastructure improvements.

On November 16, 2023, the ICC issued final written orders approving base rate increases for PGL and NSG. The written orders were subsequently amended for various technical corrections. The amended written orders approved the following base rate increases:

•A $304.6 million (43.5%) base rate increase for PGL’s natural gas customers. This amount includes the recovery of costs related to PGL’s SMP that were previously being recovered under its QIP rider. PGL's new rates were effective December 1, 2023.

•An $11.0 million (11.6%) base rate increase for NSG’s natural gas customers. The new rates at NSG were not effective until February 1, 2024 as changes were required to NSG's billing system as a result of the final rate order.

As part of its decisions, the ICC, among other things, disallowed $236.2 million of capital costs related to the construction and improvement of PGL’s shops and facilities and $1.7 million of capital costs related to NSG's construction of a gas infrastructure project.

In addition, the ICC ordered PGL to pause spending on its SMP until the ICC had a proceeding to determine the optimal method for replacing aging natural gas infrastructure and a prudent investment level. In accordance with the written order, the ICC initiated the proceeding in January 2024. On February 20, 2025, the ICC issued an order setting expectations for PGL's prospective operations under its SMP. 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. We are evaluating the impact of this order on our operations and capital plan.

In December 2023, PGL and NSG filed an application for rehearing with the ICC requesting reconsideration of various issues in the ICC's November 16, 2023 written orders. The ICC granted PGL and NSG a limited-scope rehearing focused exclusively on the authorized spending for the completion of SMP projects that started in 2023 and emergency repairs needed to ensure the safety and reliability of PGL's delivery system. On May 30, 2024, the ICC issued a written order on the rehearing. The order approved $28.5 million of additional spending for emergency work, representing a $1.6 million increase to PGL's annual revenue requirement.

As the ICC did not grant a rehearing on the disallowance of PGL's and NSG's capital costs, we recorded a $178.9 million non-cash impairment of our property, plant, and equipment during the fourth quarter of 2023. This amount included $177.2 million of previously incurred disallowed costs at PGL related to its shops and facilities, and the $1.7 million of capital costs disallowed at NSG. The remaining disallowance of capital costs at PGL related to expected future spend.

On June 7, 2024, PGL and NSG filed a petition with the Illinois Appellate Court for review of the November 16, 2023 and May 30, 2024 orders. The appeal includes the ICC's $237.9 million combined disallowance of capital costs at PGL and NSG discussed above, along with the $116.0 million disallowance of SMP capital investments needed to meet safety and reliability requirements. Although the ICC ordered PGL to complete safety and reliability work in 2024, it denied the recovery of these costs.

The rates of PGL and NSG include a UEA rider for cost recovery or refund of uncollectible expense based on the difference between actual uncollectible write-offs and the amounts recovered in rates. The UEA rider is subject to an annual reconciliation whereby costs are reviewed for accuracy and prudency by the ICC. In May 2023, the ICC issued a written order on PGL's and NSG's 2018 UEA rider reconciliation. The order required a $15.4 million and $0.7 million refund to ratepayers at PGL and NSG, respectively. These amounts were refunded over a period of nine months, which began on September 1, 2023. In July 2023, PGL and NSG petitioned the Illinois Appellate Court for review of the ICC order. On November 7, 2024, the Illinois Appellate Court issued an opinion affirming the ICC order and the related disallowance. PGL and NSG petitioned the Illinois Supreme Court on December 12, 2024 seeking review and reversal of the May 2023 order.

As of December 31, 2024, there can be no assurance that all costs incurred under the UEA rider during the open reconciliation years, which include 2019 through 2024, will be deemed recoverable by the ICC. The combined annual costs of PGL and NSG included in the rider, which reflect uncollectible write-offs in excess of what is recovered in base rates, have ranged from $10 million to $40 million during these open reconciliation years. Disallowances by the ICC, if any, could be material and have a material adverse impact on our results of operations.

In July 2013, Illinois Public Act 98-0057, The Natural Gas Consumer, Safety & Reliability Act, became law. This law provides natural gas utilities with a cost recovery mechanism that allows collection, through a surcharge on customer bills, of prudently incurred costs to upgrade Illinois natural gas infrastructure. In January 2014, the ICC approved a QIP rider for PGL, which was in effect until December 1, 2023. As discussed above, PGL has returned to the traditional rate-making process for recovery of these costs, and they are now included in PGL's base rates.

Costs previously incurred under PGL's QIP rider are still subject to an annual reconciliation whereby costs are reviewed for accuracy and prudency. In August 2024, the ICC issued a final order on PGL's 2016 annual reconciliation, which included a disallowance of $14.8 million of certain capital costs. PGL recorded a pre-tax charge to income of $25.3 million during the third quarter of 2024 related to the disallowance and the previously recognized return on and of these investments. The charge was recorded on the income statement as a $12.9 million reduction in revenues for the amounts previously collected from customers, a $12.1 million increase to operating expenses for the impairment of PGL's property, plant, and equipment, and a $0.3 million increase to interest expense related to the amounts due to customers. On October 25, 2024, PGL filed a petition with the Illinois Appellate Court for review of the ICC's August order.

In March 2024, PGL filed its 2023 reconciliation with the ICC, which, along with the reconciliations from 2017 through 2022, is still pending. The aggregate capital costs included in the rider during the open reconciliation years, which include 2017 through 2023, along with any previously recognized return on these investments, totaled approximately $2.8 billion as of December 31, 2024. There can be no assurance that all of these costs and the previously recognized returns will be deemed recoverable by the ICC. Further disallowances by the ICC, if any, could be material and have a material adverse impact on our results of operations.

In November 2022, MERC initiated a rate proceeding with the MPUC to increase its retail natural gas base rates. In December 2022, the MPUC approved MERC's request for interim rates totaling $37.0 million, subject to refund. The interim rates went into effect on January 1, 2023.

In November 2023, the MPUC issued a written order approving a settlement agreement MERC reached with certain intervenors. The settlement agreement reflects a natural gas base rate increase of $28.8 million (7.1%), along with a 9.65% ROE and a common equity component average of 53.0%. The natural gas rate increase was primarily driven by increased capital investments as well as inflationary pressure on operating costs. Under the terms of the settlement agreement, MERC will continue the use of its decoupling mechanism for residential customers, and it will be expanded to include certain small commercial and industrial customers.

Final rates went into effect on March 1, 2024. MERC’s customers were entitled to an $8.9 million refund due to the interim rate increase exceeding the final approved rate increase, which was retroactive to January 1, 2023. These amounts were refunded to customers during the second quarter of 2024.

In February 2021, MERC incurred approximately $75 million of natural gas costs in excess of the benchmark set in its GCRM. In August 2021, the MPUC issued a written order approving a joint proposal filed by MERC and four other Minnesota utilities to recover their respective excess natural gas costs. In accordance with the order, MERC recovered $10 million of these costs through its annual natural gas true-up process over a period of 12 months, and the remaining $65 million was to be recovered over a period of 27 months, both beginning in September 2021. Recovery of these costs and the issue of prudence was referred to a contested-case proceeding. In October 2022, the MPUC issued a written order approving a settlement agreement entered into by MERC and various parties related to the recovery of the extraordinary natural gas costs incurred in February 2021. Under the settlement agreement, MERC agreed to not seek recovery of $3 million of these costs. MERC recovered the remaining $62 million of extraordinary natural gas costs over the previously approved 27-month recovery period.

In March 2024, MGU filed a request with the MPSC to increase its retail natural gas base rates. In September 2024, the MPSC issued a final order approving a settlement agreement, which authorizes MGU to increase its natural gas base rates by $7.0 million (3.88%). The rate increase reflects a 9.86% ROE and a common equity component average of 50.0%. The rate increase is primarily driven by inflationary pressure on capital projects and operating and maintenance costs and the significant increase in interest rates over the past few years. The order also authorizes MGU to defer any expenses incurred to implement the PHMSA's proposed rulemaking titled "Gas Pipeline Leak Detection and Repair."

In March 2023, MGU filed a request with the MPSC to increase its retail natural gas base rates. In August 2023, the MPSC issued a written order approving a comprehensive settlement that resolved all issues in MGU's rate case. The key terms of the settlement agreement included:

The rate increase was primarily driven by capital investments made to strengthen the safety and reliability of MGU's natural gas distribution system and to provide service to additional customers. Inflationary pressure on operating costs also contributed to the rate increase. The new rates were effective January 1, 2024.

In May 2024, UMERC filed a request with the MPSC to increase its electric base rates for non-mine customers. On October 10, 2024, the MPSC issued a final order approving a settlement agreement, which authorizes UMERC to increase electric base rates for non-mine customers by $6.6 million (8.2%). The rate increase reflects a 9.86% ROE and a common equity component average of 50.0%. The rate increase is primarily driven by the construction of the now in-service RICE generation facilities located in the Upper Peninsula of Michigan and a reduction in sales volumes resulting from the implementation of limited retail choice since UMERC’s predecessor utilities last reset rates. A reduction of operation and maintenance costs partially offset these impacts.