Related Party Transactions

9 Months Ended

Sep. 30, 2015

We and our subsidiary, Bostco, routinely enter into transactions with related parties, including WEC Energy Group, its subsidiaries, and other entities in which we have material interests.

We provide and receive services, property, and other items of value to and from our parent, WEC Energy Group, and other subsidiaries of WEC Energy Group. Following the acquisition of Integrys by Wisconsin Energy on June 29, 2015, an affiliated interest agreement (Non-WBS AIA) went into effect. The Non-WBS AIA governs the provision and receipt of services by WEC Energy Group's subsidiaries, except that WEC Business Services, LLC (WBS) will continue to provide services to Integrys and its subsidiaries only under the existing WBS affiliated interest agreements (WBS AIAs). WBS will provide services to WEC Energy Group and the former Wisconsin Energy subsidiaries, including us, under new interim WBS affiliated interest agreements (interim WBS AIAs). The PSCW and two other state commissions have approved the Non-WBS AIA or granted appropriate waivers related to the Non-WBS AIA. Approval of the Non-WBS AIA is still needed from the Minnesota Public Utilities Commission (MPUC).

Services under the Non-WBS AIA are subject to various pricing methodologies. All services provided by any regulated subsidiary to another regulated subsidiary are priced at cost. All services provided by any regulated subsidiary to any nonregulated subsidiary are priced at the greater of cost or fair market value. All services provided by any nonregulated subsidiary to any regulated subsidiary are priced at the lesser of cost or fair market value. All services provided by any regulated or nonregulated subsidiary to WBS are priced at cost.

WBS provides 15 categories of services (including financial, human resource, and administrative services) to us pursuant to the interim WBS AIAs, which have been approved, or from which we have been granted appropriate waivers, by the appropriate regulators, including the PSCW. As required by FERC regulations for centralized service companies, WBS renders services at cost. The PSCW must be notified prior to making changes to the services offered under and the allocation methods specified in the interim WBS AIAs. Other modifications or amendments to the interim WBS AIAs would require PSCW approval. Recovery of allocated costs is addressed in our rate cases.

The PSCW orders approving the Non-WBS AIA and the interim WBS AIAs include an April 1, 2016, sunset date for WEC Energy Group and the former Wisconsin Energy subsidiaries, including us. We may request one extension of the sunset date. Prior to the sunset date, WEC Energy Group will need to file new or modified Non-WBS and WBS AIAs for approval with the PSCW and other state commissions.

We provide services to and receive services from ATC for its transmission facilities under several agreements approved by the PSCW. Services are billed to ATC under these agreements at our fully allocated cost.

The table below includes information summarizing other transactions entered into with related parties:



(in millions)	September 30, 2015		December 31, 2014
Notes payable *
WEC Energy Group	$	19.7	$	22.4
Accounts payable
Network transmission services from ATC	19.7		18.1


*	Bostco, our consolidated subsidiary, has a note payable to our parent company, WEC Energy Group.

The following table shows activity associated with related party transactions:



	Three Months Ended September 30				Nine Months Ended September 30
(in millions)	2015		2014		2015		2014
Lease agreements
Lease payments to W.E. Power, LLC ⁽¹⁾	$	96.9	$	90.9	$	290.1	$	274.0
Natural gas transactions
Purchases from Wisconsin Public Service Corporation	0.3		—		0.3		—
Interest expense ⁽²⁾
WEC Energy Group	0.3		0.4		1.0		1.1
Transactions with equity method investees
Charges from ATC for network transmission services	59.0		54.2		176.1		162.1
Charges to ATC for services and construction	2.6		1.9		7.6		5.5


⁽¹⁾	We make lease payments to W.E. Power, LLC, a subsidiary of WEC Energy Group, for Port Washington Generating Station Units 1 and 2 and Oak Creek expansion Units 1 and 2.


⁽²⁾	Bostco, our consolidated subsidiary, has a note payable to our parent company, WEC Energy Group.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

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