LEASES

6 Months Ended

Jun. 30, 2025

Obligations Under Operating Leases

In February 2025, WECI closed on its acquisition of a 90% ownership interest in Hardin III, a solar generating facility. Related to its investment in Hardin III, WECI acquired several land leases that commenced in the first quarter of 2025. See Note 2, Acquisitions, for more information on this project.

The land leases acquired related to Hardin III have terms consisting of either 1) an initial term of 25 years with an option for an additional 25-year extension and 2) an initial term of 35 years with an option for a 10-year extension. We expect the optional extensions to be exercised, and, as a result, these land leases are being amortized over the extended terms of the leases. Our total obligation under these land-related operating leases was $29.4 million at June 30, 2025, and was included in other long-term liabilities on our balance sheet. Our operating lease right of use assets were $28.9 million as of June 30, 2025, and were included in other long-term assets on our balance sheet. Our weighted-average discount rate for these land-related operating leases was 6.30%. We used an estimate of the fully collateralized incremental borrowing rates based upon information available for similarly rated companies in determining the present value of lease payments.

Obligations Under Finance Leases

In June 2025, WE and WPS partnered with an unaffiliated utility to acquire and construct High Noon, a utility-scale solar-powered electric generating facility located in Columbia County, Wisconsin. Commercial operation of the project is targeted for 2027. Related to their investment in High Noon, WE and WPS, along with their unaffiliated utility partner, entered into several land leases that commenced in the second quarter of 2025. Each lease has an initial construction term that ends upon achieving commercial operation, then automatically extends for 25 years with an option for an additional 25-year extension. We expect the optional extension to be exercised, and, as a result, these land leases are being amortized over the extended term of the leases. Once High Noon achieves commercial operation, the lease liabilities will be remeasured to reflect the final total acres being leased. We expect to recover the lease payments through rates.

Our total obligation under the High Noon finance leases was $66.6 million at June 30, 2025, and was included in finance lease obligations on our balance sheet. Our finance lease right of use asset related to High Noon was also $66.6 million as of June 30, 2025, and was included in property, plant, and equipment on our balance sheet. Our weighted-average discount rate for the High Noon finance leases was 6.45%. We used an estimate of the fully collateralized incremental borrowing rate based upon information available for similarly rated companies in determining the present value of lease payments.

Future minimum lease payments and the corresponding present value of our net minimum lease payments under these land-related leases as of June 30, 2025, were as follows:


(in millions)	Operating Leases		Finance Leases
Six Months Ended December 31, 2025	$	0.4	$	2.7
2026	1.5		1.4
2027	1.5		1.8
2028	1.5		3.6
2029	1.6		3.7
2030	1.6		3.8
Thereafter	110.2		290.8
Total minimum lease payments	118.3		307.8
Less: Interest	(88.9)		(241.2)
Present value of minimum lease payments	29.4		66.6
Less: Short-term lease liabilities	—		—
Long-term lease liabilities	$	29.4	$	66.6