CDP. Module: Introduction. Page: Introduction Supply Chain. CDP 2017 Supply Chain 2017 Information Request. Climate change

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1 CDP CDP 2017 Supply Chain 2017 Information Request WEC Energy Group Module: Introduction Page: Introduction Supply Chain Climate change Please tick the box below to complete the introduction questions for Climate Change true CC0.1 Introduction Please give a general description and introduction to your organization. We were incorporated in the state of Wisconsin in 1981 and became a diversified holding company in We maintain our principal executive offices in Milwaukee, Wisconsin. Our wholly owned subsidiaries provide regulated natural gas and electricity, as well as nonregulated renewable energy. In addition, we have an approximate 60% equity interest in the American Transmission Company (an electric transmission company operating in Illinois, Michigan, Minnesota, and Wisconsin). On June 29, 2015, Wisconsin Energy Corporation acquired 100% of the outstanding common shares of Integrys Energy Group, Inc. and changed its name to WEC Energy Group, Inc. Wisconsin Electric Power Company, which is the largest electric utility in the state of Wisconsin, generates and distributes electric energy to customers located in southeastern Wisconsin (including the metropolitan Milwaukee area), east central Wisconsin, northern Wisconsin, and to an iron ore mine located in Michigan. Wisconsin Public Service Corporation generates and distributes electric energy to customers located in northeastern Wisconsin. Effective January 1, 2017, Wisconsin Electric and Wisconsin Public Service transferred their electric customers (other than the iron ore mine referenced above), electric distribution assets, natural gas customers and natural gas distribution assets located in the Upper Peninsula of Michigan to Upper Michigan Energy Resources Corporation, a new stand-alone utility owned by WEC Energy Group. We own the largest natural gas distribution utilities in Wisconsin, and we operate throughout the state, including the City of Milwaukee and surrounding areas, northeastern Wisconsin, and large areas of both central and western Wisconsin. In addition, Wisconsin Electric has a steam utility that generates, distributes, and sells steam to customers in metropolitan Milwaukee, Wisconsin for use in processing, space heating, domestic hot water, and humidification.

2 Our Illinois natural gas utilities, The Peoples Gas Light and Coke Company and North Shore Gas Company, serve customers in Chicago and the northern suburbs of Chicago. Our other natural gas utilities include Minnesota Energy Resources Corporation, serving customers in various cities and communities throughout Minnesota, and Michigan Gas Utilities, serving customers in the southern portion of lower Michigan. Our non-utility operations include W.E. Power, LLC, which designed and built certain electric generating units that it now leases to Wisconsin Electric; Wispark LLC, which develops and invests in real estate; and WPS Power Development LLC, which owns solar projects. CC0.2 Reporting Year Please state the start and end date of the year for which you are reporting data. The current reporting year is the latest/most recent 12-month period for which data is reported. Enter the dates of this year first. We request data for more than one reporting period for some emission accounting questions. Please provide data for the three years prior to the current reporting year if you have not provided this information before, or if this is the first time you have answered CDP information request. (This does not apply if you have been offered and selected the option of answering the shorter questionnaire). If you are going to provide additional years of data, please give the dates of those reporting periods here. Work backwards from the most recent reporting year. Please enter dates in following format: day/month/year (in full i.e. 2001). Enter Periods that will be disclosed Fri 01 Jan Sat 31 Dec 2016 CC0.3 Country list configuration Please select the countries for which you will be supplying data. Select country United States of America

3 CC0.4 Currency selection Please select the currency in which you would like to submit your response. All financial information contained in the response should be in this currency. USD($) CC0.5 Please select if you wish to complete a shorter information request. Water Please tick the box below to complete the introduction questions for Water false Further Information Module: Management Page: CC1. Governance CC1.1 Where is the highest level of direct responsibility for climate change within your organization? Board or individual/sub-set of the Board or other committee appointed by the Board

4 CC1.1a Please identify the position of the individual or name of the committee with this responsibility The Audit and Oversight Committee of the Board of Directors. CC1.2 Do you provide incentives for the management of climate change issues, including the attainment of targets? Yes CC1.2a Please provide further details on the incentives provided for the management of climate change issues Who is entitled to benefit from these incentives? The type of incentives Incentivized performance indicator Comment Corporate executive team Recognition (non-monetary) Emissions reduction target Behavior change related indicator Further Information Page: CC2. Strategy CC2.1 Please select the option that best describes your risk management procedures with regard to climate change risks and opportunities

5 Integrated into multi-disciplinary company wide risk management processes CC2.1a Please provide further details on your risk management procedures with regard to climate change risks and opportunities Frequency of monitoring To whom are results reported? Geographical areas considered How far into the future are risks considered? Comment Six-monthly or more frequently Board or individual/sub-set of the Board or committee appointed by the Board Service area > 6 years CC2.1b Please describe how your risk and opportunity identification processes are applied at both company and asset level The company has a formal process in place to provide regular updates regarding environmental issues, including climate change, to the Audit and Oversight Committee of the Board via a quarterly report from the Vice President of Environmental, who also provides an annual presentation to the Committee. The Chief Executive Officer provides the Board with more frequent updates on this matter as necessary. The Audit and Oversight Committee assists the Board of Directors in carrying out its oversight responsibility of the company s compliance with legal and regulatory requirements. The Committee's oversight of environmental matters includes reviewing and providing oversight of environmental compliance matters to ensure that appropriate management attention is being given to such matters. The Committee is responsible for discussing, among other things, the company s major environmental risk exposures and the steps management has taken to monitor and control such exposures. We continuously monitor our assets as well as the legislative, regulatory and legal developments in this area. In addition, we are members of, and actively participate in, several industry organizations (such as the Edison Electric Institute, the American Gas Association, the Utility Air Regulatory Group, the Utility Water Act Group, and the Utility Solid Waste Activities Group) that are very involved in the legislative and regulatory process. CC2.1c How do you prioritize the risks and opportunities identified? Prioritization of identified risks and opportunities includes evaluation with respect to projected impacts on the company s reliability as a result of estimated impacts on our fuel diversity and mix from potential regulations, as well as the resulting effects on energy costs for customers.

6 CC2.1d Please explain why you do not have a process in place for assessing and managing risks and opportunities from climate change, and whether you plan to introduce such a process in future Main reason for not having a process Do you plan to introduce a process? Comment CC2.2 Is climate change integrated into your business strategy? Yes CC2.2a Please describe the process of how climate change is integrated into your business strategy and any outcomes of this process Our business strategy has been influenced by climate change in that we continue to strategically reshape our portfolio of electric generation facilities with investments that have improved environmental performance and reduced emissions. One example of how our business strategy has been influenced is the change in our generating mix over the past decade to reduce our greenhouse gas emissions, including selling or retiring coal units, repowering facilities with lower-carbon fuels and increasing our investment in renewables, energy efficiency and conservation. The aspects of climate change that have influenced our strategy are the imperative to demonstrate our commitment to effective environmental stewardship by reducing GHG emissions while fulfilling an obligation to provide reliable, cost-effective energy to customers. Our short term strategy has been influenced by climate change in that we are working with the Electric Power Research Institute, the American Gas Association, and other organizations to assess the potential impacts to our operations, customers and system reliability, using modeling to analyze scenarios for reducing greenhouse gas emissions by various approaches and technologies. Our long term strategy has been influenced by climate change in that we are evaluating co-firing with lower carbon fuels in some units, continuing to evaluate possible future retirements of other coal-fueled units and evaluating alternative operating practices for existing power plants. WEC Energy Group is gaining strategic advantage over competitors by enhancing flexibility in fleet deployment decision making. Our electricity generation strategy is directly linked to our greenhouse gas emissions reduction target, and we are taking actions that will preserve fuel diversity,

7 reduce cost to customers, and reduce long term greenhouse gas emissions. One of the most substantial business decisions that may have a significant impact on our ability to achieve our greenhouse gas reduction target identified in section CC3.1 is the anticipated retirement of additional coal fired units in the next several years. CC2.2b Please explain why climate change is not integrated into your business strategy CC2.2c Does your company use an internal price on carbon? Yes CC2.2d Please provide details and examples of how your company uses an internal price on carbon The internal price of carbon has been utilized in internal analyses of power generation projects in sensitivity scenarios. CC2.3 Do you engage in activities that could either directly or indirectly influence public policy on climate change through any of the following? (tick all that apply) Direct engagement with policy makers Trade associations Funding research organizations Other

8 CC2.3a On what issues have you been engaging directly with policy makers? Focus of legislation Corporate Position Details of engagement Proposed legislative solution Mandatory carbon reporting Energy efficiency Adaptation resiliency Other: Support Support Support Support Participating in regulatory process Participating in regulatory process Participating in regulatory process Participating in regulatory process Not applicable Not applicable Not applicable Not applicable CC2.3b Are you on the Board of any trade associations or provide funding beyond membership? Yes CC2.3c Please enter the details of those trade associations that are likely to take a position on climate change legislation Trade association Is your position on climate change consistent with theirs? Please explain the trade association's position How have you, or are you attempting to, influence the position? Edison Electric Institute Consistent Global climate change presents one of the biggest energy and environmental policy challenges this country has ever faced. EEI member companies are committed to addressing the challenge of climate change and have undertaken a wide range of initiatives over the last 30 years to reduce, We attend meetings and discussions of the Edison Electric Institute regarding

9 Trade association Is your position on climate change consistent with theirs? Please explain the trade association's position How have you, or are you attempting to, influence the position? American Gas Association Consistent avoid or sequester GHG emissions. Policies to address climate change should seek to minimize impacts on consumers and avoid harm to U.S. industry and the economy. As of the end of 2016, electric power sector CO2 emissions had declined nearly 25 percent from 2005 levels, driven in part by low natural gas prices, increased deployment of renewable generation and customer demands. (From Natural gas is a clean and efficient fuel from an environmental perspective. It contains very low levels of pollutants and emits less carbon relative to other fossil fuels. It is also highly efficient in its production, transportation and use. When natural gas is used, very little fuel is wasted from the point of production through consumption. This combination of relatively low pollutants and emissions and high efficiency levels results in less environmental impact than other fuels with respect to climate change, acid rain, urban smog, solid waste, water quality and visibility. In fact, natural gas attributes make it particularly noteworthy with respect to climate change in that the core philosophy to reducing greenhouse gas emissions is the increased efficient use of clean fuels. (From policy matters, including climate change, and provide input to ensure that the company's perspectives are considered. We attend meetings and discussions of the American Gas Association regarding policy matters, including climate change, and provide input to ensure that the company's perspectives are considered. CC2.3d Do you publicly disclose a list of all the research organizations that you fund? Yes CC2.3e Please provide details of the other engagement activities that you undertake We have met with representatives of the US Environmental Protection Agency, Wisconsin Department of Natural Resources, Public Service Commission of Wisconsin, Michigan Department of Environmental Quality, other state regulators, other electric utilities, and various environmental groups to discuss issues related to the development of greenhouse gas new source performance standards for new and existing fossil-fueled power plants.

10 CC2.3f What processes do you have in place to ensure that all of your direct and indirect activities that influence policy are consistent with your overall climate change strategy? We convene regular meetings of climate policy decision makers and staff to ensure that their engagement efforts are coordinated and effectively promoting the company's climate change strategy. CC2.3g Please explain why you do not engage with policy makers Further Information Page: CC3. Targets and Initiatives CC3.1 Did you have an emissions reduction or renewable energy consumption or production target that was active (ongoing or reached completion) in the reporting year? Absolute target Intensity target CC3.1a Please provide details of your absolute target

11 ID Scope % of emissions in scope % reduction from base year Base year Base year emissions covered by target (metric tonnes CO2e) Target year Is this a science-based target? Comment Abs1 Scope 1 100% 40% Yes, but this target has not been approved as science-based by the Science Based Targets initiative CC3.1b Please provide details of your intensity target ID Scope % of emissions in scope % reduction from base year Metric Base year Normalized base year emissions covered by target Target year Is this a science-based target? Comment Int1 Scope 1 100% 40% Metric tonnes CO2e per megawatt hour (MWh)* Yes, but this target has not been approved as science-based by the Science Based Targets initiative CC3.1c Please also indicate what change in absolute emissions this intensity target reflects

12 ID Direction of change anticipated in absolute Scope 1+2 emissions at target completion? % change anticipated in absolute Scope 1+2 emissions Direction of change anticipated in absolute Scope 3 emissions at target completion? % change anticipated in absolute Scope 3 emissions Comment Int1 Decrease 40 No change 0 The intensity target covers our Scope 1 emissions. We have no scope 2 emissions because all acquired energy is for delivery to customers. CC3.1d Please provide details of your renewable energy consumption and/or production target ID Energy types covered by target Base year Base year energy for energy type covered (MWh) % renewable energy in base year Target year % renewable energy in target year Comment CC3.1e For all of your targets, please provide details on the progress made in the reporting year

13 ID % complete (time) % complete (emissions or renewable energy) Comment Abs1 7% 22% Int1 7% 22% CC3.1f Please explain (i) why you do not have a target; and (ii) forecast how your emissions will change over the next five years CC3.2 Do you classify any of your existing goods and/or services as low carbon products or do they enable a third party to avoid GHG emissions? Yes CC3.2a Please provide details of your products and/or services that you classify as low carbon products or that enable a third party to avoid GHG emissions

14 Level of aggregation Description of product/group of products Are you reporting low carbon product/s or avoided emissions? Taxonomy, project or methodology used to classify product/s as low carbon or to calculate avoided emissions % revenue from low carbon product/s in the reporting year % R&D in low carbon product/s in the reporting year Comment Product Energy for Tomorrow ; NatureWise; SolarWise for Schools Low carbon product and avoided emissions Other: 0.1% Less than or equal to 10% Energy for Tomorrow is accredited by Center for Resource Solutions and is Green-e Energy certified. Renewable Energy Credits (RECs) from both Energy for Tomorrow and NatureWise are tracked and retired using the Midwest Renewable Energy Tracking System program. CC3.3 Did you have emissions reduction initiatives that were active within the reporting year (this can include those in the planning and/or implementation phases) Yes CC3.3a Please identify the total number of projects at each stage of development, and for those in the implementation stages, the estimated CO2e savings Stage of development Number of projects Total estimated annual CO2e savings in metric tonnes CO2e (only for rows marked *) Under investigation 0 0

15 Stage of development Number of projects Total estimated annual CO2e savings in metric tonnes CO2e (only for rows marked *) To be implemented* Implementation commenced* 0 0 Implemented* Not to be implemented 0 0 CC3.3b For those initiatives implemented in the reporting year, please provide details in the table below Activity type Description of activity Estimated annual CO2e savings (metric tonnes CO2e) Scope Voluntary/ Mandatory Annual monetary savings (unit currency - as specified in CC0.4) Investment required (unit currency - as specified in CC0.4) Payback period Estimated lifetime of the initiative Comment Fugitive emissions reductions The System Modernization Program involves replacing cast and ductile iron natural gas mains with modern polyethylene pipes on the Peoples Gas natural gas distribution system. Under the EPA s Methane Challenge, Peoples Gas has committed to replace its remaining iron natural gas mains at an annual rate of at least 2 percent for the next five years. Fugitive methane emissions are expected to be 7600 Scope 1 Voluntary >25 years years The projected average annual investment through 2019 is between $280 million and $300 million.

16 Activity type Description of activity Estimated annual CO2e savings (metric tonnes CO2e) Scope Voluntary/ Mandatory Annual monetary savings (unit currency - as specified in CC0.4) Investment required (unit currency - as specified in CC0.4) Payback period Estimated lifetime of the initiative Comment significantly reduced. "Investment required" amount is the expected average annual investment over the next three years. CC3.3c What methods do you use to drive investment in emissions reduction activities? Method Comment Compliance with regulatory requirements/standards Other Building on ongoing analyses, we will develop a plan to respond to whatever form the Clean Power Plan or its successor ultimately takes. We are currently implementing actions (e.g., power plant fuel and operational choices) that preserve fuel diversity, reduce costs to customers, and reduce long term greenhouse gas emissions, independent of greenhouse gas regulatory requirements/standards. CC3.3d If you do not have any emissions reduction initiatives, please explain why not

17 Further Information The company's GHG emission reduction goal aligns well with national and international U.S. government climate policy commitments to date. Energy efficiency initiatives will continue to be evaluated along with other demand- and supply-side options in our future GHG emission reduction strategies, in the context of an electric utility industry regulatory structure in transition. Page: CC4. Communication CC4.1 Have you published information about your organization s response to climate change and GHG emissions performance for this reporting year in places other than in your CDP response? If so, please attach the publication(s) Publication Status Page/Section reference Attach the document Comment In voluntary communications In mainstream reports (including an integrated report) but have not used the CDSB Framework Underway - previous year attached Complete Environmental (pages 42-56) various Change 2017/Shared Documents/Attachments/CC4.1/wec-corporate-responsibility-report pdf Change 2017/Shared Documents/Attachments/CC4.1/WEC Energy Group K.pdf Further Information Module: Risks and Opportunities Page: CC5. Climate Change Risks CC5.1 Have you identified any inherent climate change risks that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply

18 Risks driven by changes in regulation Risks driven by changes in physical climate parameters Risks driven by changes in other climate-related developments CC5.1a Please describe your inherent risks that are driven by changes in regulation Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Uncertainty surrounding new regulation Federal, state, regional, and international authorities have undertaken efforts to limit GHG emissions. In 2015, the EPA issued the Clean Power Plan, which is a final rule that regulates GHG emissions from existing generating units. The EPA also issued final performance standards for modified and reconstructed Reduction/disruption in production capacity 3 to 6 years Direct Likely Medium The Clean Power Plan or its successor is not expected to result in significant additional compliance costs, including capital expenditures, but may impact how we operate our existing fossil-fueled power plants and biomass facility. A quantitative estimate of the inherent financial We are continuing to analyze the GHG emission profile of our electric generation resources and to work with other stakeholders to determine the potential impacts to our operations of the Clean Power Plan, any successor rule, and federal GHG regulations in general. These efforts are expected to No additional costs expected.

19 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management generating units, as well as for new fossil-fueled power plants. With the January 2017 change in the Federal Executive Administration, the legal and regulatory future of federal GHG regulations are on hold and face increased uncertainty. In October 2015, numerous states (including Wisconsin and Michigan), trade associations, and private parties filed lawsuits challenging the Clean Power Plan, including a request to stay the implementation of the final rule pending the outcome of these legal challenges. The D.C. Circuit Court of Appeals impacts of the risk is not currently available. reduce the magnitude of risk associated with future GHG regulation over the next 3-6 years.

20 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management denied the stay request, but in February 2016, the Supreme Court stayed the effectiveness of the Clean Power Plan rules until disposition of the litigation in the D.C. Circuit Court of Appeals and to the extent that further appellate review is sought, at the Supreme Court. In addition, in February 2016, the Governor of Wisconsin issued Executive Order 186, which prohibits state agencies, departments, boards, commissions, or other state entities from developing or promoting the development of a state plan. These regulations, as well as changes in the fuel

21 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Other regulatory drivers markets and advances in technology, could make some of our electric generating units uneconomic to maintain or operate, and could affect unit retirement and replacement decisions. There is no guarantee that we will be allowed to fully recover costs incurred to comply with the Clean Power Plan or other federal regulations, or that cost recovery will not be delayed or otherwise conditioned. Increased operational cost 3 to 6 years Direct Unknown Mediumhigh The Clean Power Plan and any other related regulations that may be adopted in the future, at either the federal or state level, may cause our environmental compliance spending to differ materially from the amounts currently estimated. A quantitative estimate of the inherent Governance and project approval measures are in place to ensure that costs to comply with federal environmental regulations are prudently incurred. These measures are expected to reduce the likelihood and/or magnitude of this cost recovery risk over the next 3-6 years. No additional costs expected.

22 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Renewable energy regulation In December 2016, Michigan enacted Act 342, which requires additional renewable energy requirements beyond The new legislation retains the 10% renewable energy portfolio requirement for years 2016 through 2018, increases the requirement to 12.5% for years 2019 through 2020, and increases the requirement to 15.0% for These regulations, as well as changes in the fuel markets and advances in Reduction/disruption in production capacity 3 to 6 years Direct Unlikely Low financial impacts of the risk is not currently available. These regulations could adversely affect our future results of operations, cash flows, and financial condition. A quantitative estimate of the inherent financial impacts of the risk is not currently available. Our generation planning processes evaluate potential impacts of renewable energy penetration, changes in the fuel markets and advances in technology, in part in order to support decisions regarding unit retirement and replacement decisions. These processes are expected to reduce the magnitude of unexpected adverse impacts of increased renewable energy No additional costs expected.

23 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Uncertainty surrounding new regulation technology, could make some of our electric generating units uneconomic to maintain or operate, and could affect unit retirement and replacement decisions. Our natural gas delivery systems and natural gas storage fields may generate fugitive gas as a result of normal operations and as a result of excavation, construction, and repair. Fugitive gas typically vents to the atmosphere and consists primarily of methane. CO2 is also a byproduct of natural gas consumption. Future regulation of GHG emissions could Reduced demand for goods/services 3 to 6 years Direct Unlikely Low Future regulation of GHG emissions could increase the price of natural gas, restrict the use of natural gas, and adversely affect our ability to operate our natural gas facilities. A quantitative estimate of the inherent financial impacts of the risk is not currently available. penetration risk over the next 3-6 years. Our load forecasting and fuel procurement processes evaluate potential impacts of changes in fuel prices on customer demand. These processes are expected to reduce the magnitude of unanticipated natural gas price risk over the next 3-6 years. No additional costs expected.

24 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management increase the price of natural gas; a significant increase in the price of natural gas may increase rates for our natural gas customers, which could reduce natural gas demand. CC5.1b Please describe your inherent risks that are driven by changes in physical climate parameters Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Uncertainty of physical risks Our financial performance depends on the successful operation of our electric generation and natural gas and electric Reduction/disruption in production capacity 1 to 3 years Direct Unlikely Lowmedium Any of the described events could lead to substantial financial losses. Unplanned outages at our power plants Our electric reliability and planning area evaluates potential impacts of risks associated with weather events on system No additional costs expected.

25 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management distribution facilities. The operation of these facilities involves many risks, including the breakdown or failure of equipment or processes. Potential breakdown or failure may occur due to severe weather; catastrophic events (i.e., fires, earthquakes, explosions, tornadoes, floods, droughts, pandemic health events, etc.); significant changes in water levels in waterways; or operating limitations that may be imposed by environmental or other regulatory requirements. Because our electric generation may reduce our revenues or cause us to incur significant costs if we are required to operate our higher cost electric generators or purchase replacement power to satisfy our obligations, and could result in additional maintenance expenses. A quantitative estimate of the inherent financial impacts of the risk is not currently available. availability and reliability. Their well-established processes are expected to reduce the magnitude of energy generation and delivery risks associated with weather events over the next 1-3 years. In 2016, for the sixth year in a row, We Energies received the ReliabilityOne Award for Outstanding Reliability Performance in the Midwest. The award, based on performance statistics from the prior year, is given annually to utilities that have excelled in delivering dependable electric service to their customers. The

26 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management facilities are interconnected with third-party transmission facilities, the operation of our facilities could also be adversely affected by events impacting their systems. company is upgrading its infrastructure and plans to rebuild hundreds of miles of electric distribution lines and replace thousands of poles and transformers. These investments will renew and modernize delivery networks, reduce operating costs and improve energy efficiency, all of which is expected to strengthen the company's position as a reliable electric service provider. In 2016, as part of our process for improving equipment reliability, the company created an

27 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Change in mean (average) temperature Our operations are subject to various conditions that can result in fluctuations in energy sales to customers, including varying weather conditions. Our results of operations and cash flows are affected by the demand for Reduced demand for goods/services 1 to 3 years Direct About as likely as not Lowmedium Our overall results may fluctuate substantially on a seasonal basis. Milder temperatures during the summer cooling season and during the winter heating season may result in lower revenues and net income. A equipment reliability index based on industry best practices to gauge our equipment reliability program performance, identify opportunities to improve equipment reliability and gain the associated cost and performance benefits. We perform economic analyses of weather and energy use in order to establish historical relationships which are used for generation, financial and strategic planning. These analyses include long- and short- No additional costs expected.

28 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management electricity and natural gas, which can vary greatly based upon weather conditions. quantitative estimate of the inherent financial impacts of the risk is not currently available. term forecasts of sales revenues and demand. The forecasts are supported by load research which identifies who uses what energy. This analysis drives the cost of service studies used in price setting and market research areas of the company. This planning process is expected to reduce the magnitude of risks associated with changes in customer demand over the next 1-3 years. CC5.1c Please describe your inherent risks that are driven by changes in other climate-related developments

29 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Other drivers Our customers' use of electricity and natural gas has decreased as a result of individual conservation efforts, including the use of more energy efficient technologies. These conservation efforts could continue. Customers could also voluntarily reduce their consumption of energy in response to decreases in their disposable income and increases in energy prices. Conservation of energy can be influenced by certain federal and state programs that are intended to influence how consumers use energy. In addition, several states, including Wisconsin and Michigan, have adopted energy efficiency targets to reduce energy consumption by certain dates. Reduced demand for goods/services 1 to 3 years Direct Likely Lowmedium Any of the described matters, as well as any regulatory delay in adjusting rates as a result of reduced sales from effective conservation measures or the adoption of new technologies, could adversely impact our results of operations and financial condition. A quantitative estimate of the inherent financial impacts of the risk is not currently available. As part of our planning process, we estimate the impacts of changes in customer growth and customer energy conservation efforts. This planning process is expected to reduce the magnitude of risks associated with changes in customer demand over the next 1-3 years. No additional costs expected.

30 CC5.1d Please explain why you do not consider your company to be exposed to inherent risks driven by changes in regulation that have the potential to generate a substantive change in your business operations, revenue or expenditure CC5.1e Please explain why you do not consider your company to be exposed to inherent risks driven by changes in physical climate parameters that have the potential to generate a substantive change in your business operations, revenue or expenditure CC5.1f Please explain why you do not consider your company to be exposed to inherent risks driven by changes in other climate-related developments that have the potential to generate a substantive change in your business operations, revenue or expenditure Further Information Page: CC6. Climate Change Opportunities CC6.1

31 Have you identified any inherent climate change opportunities that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply Opportunities driven by changes in regulation Opportunities driven by changes in physical climate parameters Opportunities driven by changes in other climate-related developments CC6.1a Please describe your inherent opportunities that are driven by changes in regulation Opportunity driver Description Potential impact Timeframe Direct/Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management General environmental regulations, including planning Our companies repowered coal plants to natural gas, added a new natural gas combined cycle unit and more efficient coalfueled units, and retired older, less efficient coal units. We also increased investment in energy efficiency, conservation and load management programs for our electricity and natural gas customers; Investment opportunities 1 to 3 years Direct Very likely Medium Wisconsin Act 141 established a goal that 10% of all electricity consumed in Wisconsin be generated by renewable resources by December 31, The program is funded by utilities based on 1.2% of annual operating revenues. Michigan Act 342 requires additional renewable energy requirements Generation planning and project approval measures are in place to ensure that potential opportunities for costeffective renewable and other environmental programs are identified over the next 1-3 years. No additional costs expected.

32 Opportunity driver Description Potential impact Timeframe Direct/Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management created two successful green pricing renewable energy programs: Energy for Tomorrow renewable energy program, and NatureWise renewable energy program; and for nearly two decades, have implemented the award-winning SolarWise for Schools solar installation and education program for local high schools. We have 447 megawatts of wind generation capacity, a 50- MW biomass cogeneration plant fueled by wood waste and wood shavings, and a long-term power purchase agreement for the energy beyond The new legislation retains the 10% renewable energy portfolio requirement for years 2016 through 2018, increases the requirement to 12.5% for years 2019 through 2020, and increases the requirement to 15.0% for These regulations, as well as changes in the fuel markets and advances in technology, could make some of our electric generating units uneconomic to maintain or operate, and could affect unit retirement and replacement decisions. Revenue from the electric

33 Opportunity driver Description Potential impact Timeframe Direct/Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management produced by Point Beach Nuclear Plant. The Peoples Gas System Modernization Program has been underway for several years and involves replacing cast and ductile iron natural gas mains with modern polyethylene pipes on the Peoples Gas natural gas distribution system. Under the EPA s Methane Challenge, Peoples Gas has committed to replacing iron natural gas mains at an annual rate of at least 2 percent per year, with significant fugitive methane emission reductions expected. utilities' renewable energy programs represents approximately 0.1% of total revenues.

34 CC6.1b Please describe your inherent opportunities that are driven by changes in physical climate parameters Opportunity driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Other physical climate opportunities Continue to evaluate adding new generation capacity from potential renewable sources Increased production capacity 3 to 6 years Direct Likely Medium A quantitative estimate of the inherent financial impacts of the opportunity is not currently available. Generation planning and project approval measures are in place to ensure that potential opportunities for costeffective renewable energy resource projects are identified over the next 3-6 years. No additional costs expected. CC6.1c Please describe your inherent opportunities that are driven by changes in other climate-related developments Opportunity driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Other drivers The company continues to sponsor research, development and demonstration through the Electric New products/business services 3 to 6 years Direct More likely than not Lowmedium A quantitative estimate of the inherent financial impacts of the opportunity is The company's participation on various EPRI committees, including the Board of No additional costs expected.

35 Opportunity driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Power Research Institute into: (i) the technical feasibility for the electric utility sector to achieve CO2 emissions reductions; (ii) the technology development pathways and associated RD&D funding needed to achieve this potential; and (iii) the economic impact of realizing emissions reduction targets. Other investments involve carbon sequestration, capture and storage/utilization, climate policy, and emissions trading. Through this research and the related investments, the company will have access to a variety of cost-effective alternatives it hopes will achieve lower carbon emissions. The use of a variety of initiatives could help to mitigate each one's risk. not currently available. Directors, ensures that potential opportunities for cost-effective investments in carbon reduction research and projects are identified over the next 3-6 years.

36 CC6.1d Please explain why you do not consider your company to be exposed to inherent opportunities driven by changes in regulation that have the potential to generate a substantive change in your business operations, revenue or expenditure CC6.1e Please explain why you do not consider your company to be exposed to inherent opportunities driven by changes in physical climate parameters that have the potential to generate a substantive change in your business operations, revenue or expenditure CC6.1f Please explain why you do not consider your company to be exposed to inherent opportunities driven by changes in other climate-related developments that have the potential to generate a substantive change in your business operations, revenue or expenditure Further Information Module: GHG Emissions Accounting, Energy and Fuel Use, and Trading Page: CC7. Emissions Methodology CC7.1

37 Please provide your base year and base year emissions (Scopes 1 and 2) Scope Base year Base year emissions (metric tonnes CO2e) Scope 1 Sat 01 Jan Sat 31 Dec Scope 2 (location-based) Scope 2 (market-based) CC7.2 Please give the name of the standard, protocol or methodology you have used to collect activity data and calculate Scope 1 and Scope 2 emissions Please select the published methodologies that you use US EPA Mandatory Greenhouse Gas Reporting Rule CC7.2a If you have selected "Other" in CC7.2 please provide details of the standard, protocol or methodology you have used to collect activity data and calculate Scope 1 and Scope 2 emissions

38 CC7.3 Please give the source for the global warming potentials you have used Gas Reference CH4 N2O IPCC Fourth Assessment Report (AR4-100 year) IPCC Fourth Assessment Report (AR4-100 year) CC7.4 Please give the emissions factors you have applied and their origin; alternatively, please attach an Excel spreadsheet with this data at the bottom of this page Fuel/Material/Energy Emission Factor Unit Reference Further Information WEC Energy Group has no Scope 2 emissions because the company has no "purchased or acquired electricity, steam, heat or cooling consumed by the reporting company" as defined in the CDP Accounting of Scope 2 emissions guidance document. All electricity, steam, heat or cooling consumed by the reporting company is produced by WEC Energy Group and therefore the emissions are Scope 1 emissions. Attachments Change 2017/Shared Documents/Attachments/ClimateChange2017/CC7.EmissionsMethodology/CC7.4 Emission factors.pdf

39 Page: CC8. Emissions Data - (1 Jan Dec 2016) CC8.1 Please select the boundary you are using for your Scope 1 and 2 greenhouse gas inventory Equity share CC8.2 Please provide your gross global Scope 1 emissions figures in metric tonnes CO2e CC8.3 Please describe your approach to reporting Scope 2 emissions Scope 2, location-based Scope 2, market-based Comment We are not reporting a Scope 2, location-based figure We have no operations where we are able to access electricity supplier emissions factors or residual emissions factors and are unable to report a Scope 2, marketbased figure We have no scope 2 emissions because all acquired energy is for delivery to customers. CC8.3a

40 Please provide your gross global Scope 2 emissions figures in metric tonnes CO2e Scope 2, location-based Scope 2, market-based (if applicable) Comment 0 0 We have no scope 2 emissions because all acquired energy is for delivery to customers. CC8.4 Are there any sources (e.g. facilities, specific GHGs, activities, geographies, etc.) of Scope 1 and Scope 2 emissions that are within your selected reporting boundary which are not included in your disclosure? No CC8.4a Please provide details of the sources of Scope 1 and Scope 2 emissions that are within your selected reporting boundary which are not included in your disclosure Source Relevance of Scope 1 emissions from this source Relevance of location-based Scope 2 emissions from this source Relevance of market-based Scope 2 emissions from this source (if applicable) Explain why the source is excluded CC8.5

41 Please estimate the level of uncertainty of the total gross global Scope 1 and 2 emissions figures that you have supplied and specify the sources of uncertainty in your data gathering, handling and calculations Scope Uncertainty range Main sources of uncertainty Please expand on the uncertainty in your data Scope 1 Scope 2 (locationbased) Scope 2 (market-based) Less than or equal to 2% Less than or equal to 2% Less than or equal to 2% No Sources of Uncertainty No Sources of Uncertainty No Sources of Uncertainty Reported emissions are based on continuous emission monitoring systems (CEMS) for the vast majority of reported emissions and the remaining emissions are calculated based on fuel records and emission factors supplied by the EPA. We have no scope 2 emissions because all acquired energy is for delivery to customers. We have no scope 2 emissions because all acquired energy is for delivery to customers. CC8.6 Please indicate the verification/assurance status that applies to your reported Scope 1 emissions No third party verification or assurance regulatory CEMS required CC8.6a Please provide further details of the verification/assurance undertaken for your Scope 1 emissions, and attach the relevant statements

42 Verification or assurance cycle in place Status in the current reporting year Type of verification or assurance Attach the statement Page/section reference Relevant standard Proportion of reported Scope 1 emissions verified (%) CC8.6b Please provide further details of the regulatory regime to which you are complying that specifies the use of Continuous Emission Monitoring Systems (CEMS) Regulation % of emissions covered by the system Compliance period Evidence of submission CFR 40 Part 75 Fri 01 Jan Sat 31 Dec Change 2017/Shared Documents/Attachments/CC8.6b/2016 EPA Acceptance Reports.pdf CC8.7 Please indicate the verification/assurance status that applies to at least one of your reported Scope 2 emissions figures No emissions data provided CC8.7a Please provide further details of the verification/assurance undertaken for your location-based and/or market-based Scope 2 emissions, and attach the relevant statements

43 Locationbased or market-based figure? Verification or assurance cycle in place Status in the current reporting year Type of verification or assurance Attach the statement Page/Section reference Relevant standard Proportion of reported Scope 2 emissions verified (%) CC8.8 Please identify if any data points have been verified as part of the third party verification work undertaken, other than the verification of emissions figures reported in CC8.6, CC8.7 and CC14.2 Additional data points verified Comment Renewable energy products Energy for Tomorrow, We Energies voluntary renewable energy green pricing program, is accredited by Center for Resource Solutions and is Green-e Energy certified. CC8.9 Are carbon dioxide emissions from biologically sequestered carbon relevant to your organization? Yes CC8.9a Please provide the emissions from biologically sequestered carbon relevant to your organization in metric tonnes CO Further Information