Dive Brief:

• Chicago-based Integrys Energy Group expects zero earnings growth from its unregulated operations in the next few years, company officials said during an earnings call with analysts.
• Integrys Energy Services, an unregulated subsidiary, sold 21.3 million MWh last year, up 60% from the year before, but margins fell about 56% because of competition, officials said. The company expects to sell up to 30 million MWh this year, with Illinois, Michigan and Ohio making up its main markets.
• Retail electric sales at Wisconsin Public Service (WPS), based in Green Bay, Wisconsin, fell 2% to 16 million MWh last year. WPS has decoupling so its revenue was less affected by the drop in sales than it otherwise would have been.
• WPS expects a pollution control project at its West 3 coal-fired unit to cost $345 million, up from an earlier $275 million estimate. Even so, the company believes the project is cost effective and the utility will be able to recover its investment in rates.

Dive Insight:

Integrys several years ago scaled back its unregulated operations and views them as a key part of the company's overall strategy, despite their tough earnings outlook. In contrast, utilities like FirstEnergy are going back to basics and dropping unregulated businesses.

Bucking the trend, Integrys is comfortable with its current level of unregulated operations. “Our regulated businesses are our core, and as you've seen, they continue to perform well and provide the vast majority of our earnings and our growth,” James Schott, chief financial officer, told an analyst. “But we do like, as part of our strategy, having a diversified portfolio. And in this sense, some non-utility investments, which I think provides opportunities or value in the form of some incremental income, as well as some of the intangible things that you and I have talked about over time with respect to risk management [and] line of sight into different markets.”