What this security is. WELPM is the Six Per Cent. Preferred Stock of Wisconsin Electric Power Company (We Energies), the regulated electric, natural gas and steam utility serving southeastern Wisconsin (including metropolitan Milwaukee), east central Wisconsin and northern Wisconsin. All of the company's common stock is owned by WEC Energy Group, so the only publicly traded shares of Wisconsin Electric are its two small, legacy preferred series. This one has a $100 par value, pays $6.00 a year ($1.50 each quarter, paid January 31, April 30, July 31 and October 31), and has 44,498 shares outstanding, a total claim of about $4.4 million. Unlike the company's separate 3.60% Serial Preferred, the 10-K lists no redemption price for this series, indicating the company cannot call it away. The holder owns a fixed $6.00 a year with no maturity date. The dividend does not grow and does not share in the utility's growth. How safe the $6.00 is. Preferred holders are paid after lenders and before the common shareholder. Wisconsin Electric's combined dividend on both preferred series is $1.2 million a year. Its net income was $628 million in 2025, $514 million in 2024 and $482 million in 2023, so the preferred dividend is covered roughly 400 to 500 times. Book common equity behind the preferred was $7.26 billion at June 30, 2026. The company's articles bar it from paying common dividends to WEC Energy Group while any preferred dividend is unpaid. Those common dividends run to hundreds of millions of dollars a year ($345 million of distributions to the parent in the first half of 2026 alone), so the parent has a strong reason never to let a preferred payment lapse. The utility earns a regulated return set by the Public Service Commission of Wisconsin, currently a 9.80% authorized return on equity with a 53% equity layer. Rates are designed to recover prudently incurred costs plus a return on investment. How we valued the business underneath. The preferred is only as good as the business ahead of it, so we valued the utility first and then subtracted everything that ranks ahead of the preferred. One accounting judgement mattered a lot. Wisconsin Electric is in a very heavy building phase: capital spending was $2.74 billion in 2025 against $630 million of depreciation, and another $1.39 billion in the first half of 2026. That spending is gas-fired generation, renewables, batteries and grid work, largely to serve Microsoft's announced $20 billion-plus data center program and the planned Vantage campus in Port Washington. A mechanical rule that treats only spending matched by same-year revenue growth as expansion would label nearly all of this as upkeep. On that reading the business would show negative cash generation and look worth less than its debt. That reading is wrong for a rate-regulated utility, where new plant enters customer rates only after it is built and approved, so revenue trails the spending by one to three years. For the business value we therefore treated replacement spending as equal to depreciation, the regulator-approved measure of plant used up each year. We counted spending above that as expansion: it is funded by parent equity ($1.245 billion contributed in 2025) and by new debt, and it is not a cost of standing still. We gave no credit for the earnings this new plant should produce once it is in rates. The debt that paid for it is subtracted in full. On that basis, cash the business produced before paying its lenders was $815 million in 2021, $722 million in 2022, $925 million in 2023, $1,114 million in 2024 and $1,029 million in 2025. We use the five-year median of about $925 million as the earnings level. That window reflects the business as it now operates under the current lease accounting and rate structure. In 2025 this measure fell about 8% while reported earnings rose 22%, because of working-capital and timing items. We hold the level flat in the base case rather than projecting that decline forward, because the first half of 2026 confirms the higher run rate: operating cash flow was $778 million against $568 million a year earlier, and net income was $386 million against $315 million. What ranks ahead of the preferred, at June 30, 2026: long-term debt of about $5.61 billion (only $9.4 million due in 2026 and $9.5 million in 2027, then $460 million in 2028, $660 million in 2029 and $510 million in 2030), commercial paper of $216 million, and about $2.84 billion of finance-lease obligations for the Port Washington and Elm Road (Oak Creek) generating stations, which the company leases from an affiliate. Those leases carry an implied cost of roughly 11.5%, well above what ordinary debt costs, so we added about $1.06 billion to reflect their extra cost over their remaining life. We gave no offsetting credit for the company's older low-coupon bonds. Total claims ahead of the preferred come to about $9.7 billion. The three cases for the business.
Base: the regulated franchise keeps earning about $925 million a year before lenders. It is an exclusive service territory, and depreciation-level reinvestment keeps the asset base intact indefinitely. That makes the business worth about $15.4 billion. After $9.7 billion of debt, about $5.7 billion is left, more than 180 times the $30.4 million total for both preferred series.
Bear: we built this from named risks. The first is a recession of the 2008-2010 kind. We assume it cuts cash generation 15% for two years, deeper than the low-single-digit fall in US retail electricity sales in 2009. The second is a permanent cut in the allowed return from 9.80% to about 9.0%, worth about $50 million a year. The third is a $1 billion write-off of generation built for data-center load if that load does not arrive; the very-large-customer tariff meant to protect other customers was still a proposal before the regulator at the 2025 10-K. In this case the business is worth about $13.3 billion. After $9.7 billion of debt, about $3.6 billion is left, still over 100 times the preferred claim. Even in the recession years, cash before lenders of about $745 million exceeds an estimated interest bill of about $605 million.
Bull: the 2023-2025 level of about $1,029 million holds. The business is worth about $17.1 billion and $7.4 billion is left after debt. In none of these cases does the $6.00 dividend stop. Nothing in the bull case raises it, because the payment is fixed and the company cannot call the shares. What the preferred is worth. In all three cases the holder receives $6.00 a year indefinitely, so each case values the share at about $100.00. We found no evidenced risk severe enough to impair the payment. To wipe out the cushion under the preferred, the utility would have to lose roughly another $3.6 billion of value beyond everything in the bear case. Recession and data-center risk do not do that for a Wisconsin rate-regulated utility with an exclusive territory. Upside is equally capped: there is no call premium, no conversion and no growth. What could make this wrong. (1) If the regulator refused to put most of the current building program into rates, the cushion would shrink sharply. On the strict mechanical reading described above, the business would be worth only about $6.2 billion against $9.7 billion of debt. We consider that outcome implausible given Wisconsin's cost-recovery framework, but it is the scenario to watch. (2) The holder depends on WEC Energy Group continuing to run Wisconsin Electric as a stand-alone regulated subsidiary. A restructuring of the WEC group could change the trading market for these shares. (3) The issue is tiny and trades over the counter only sporadically. A trade may take time to complete and may move the price. An earlier write-up under this listing described the company's 3.60% series rather than this Six Per Cent. series and was built on a different basis; those figures are not comparable. Margin-of-safety price. We are about as sure of this payment as of any equity-like security: coverage of hundreds of times, billions of dollars of cushion even in the bear case, and a regulator whose job includes keeping the utility financially sound. The worst plausible event is a regulatory disallowance of the data-center buildout combined with a recession. It would cut deeply into the common shareholder's position but leave the preferred dividend intact. The structure survives it: debt maturities are spread out, the parent keeps putting equity in, and the dividend block on common payments protects preferred holders. The two things we are most likely to be wrong about, the size of a disallowance and the cost of the affiliate leases, change the cushion by billions. They do not change the $6.00. The real uncertainty is time. Nothing the business does will move this price toward value, because the payment never grows. The return consists of the $6.00 plus any move in the price toward what the stream is worth. The price assumes a holding period of about four years. At $64 the dividend alone equals about 9.4% a year over that period, and if the price reaches the roughly $100 value within four years, the implied total return is about 20% a year. If it takes longer, the high income keeps most of that implied return intact. A shorter holding period would justify a higher price, but the shares' thin trading argues against counting on one. The margin-of-safety price is $64.