RELATED PARTIES

We routinely enter into transactions with related parties, including WEC Energy Group, its other subsidiaries, ATC (a for-profit electric transmission company regulated by the FERC and certain state regulatory commissions), and other affiliated entities.

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.

On January 1, 2017, based upon input we received from the PSCW, we transferred our $415.4 million investment in ATC, and the related receivable for distributions approved and recorded in December 2016 to another subsidiary of WEC Energy Group. In addition, during 2017 we transferred $186.8 million of related deferred income tax liabilities. These transactions were non-cash equity transfers recorded to additional paid in capital between entities under common control, and therefore, did not result in the recognition of a gain or loss.

We pay ATC for transmission and other related services it provides. In addition, we provide a variety of operational, maintenance, and project management work for ATC, which is reimbursed by ATC. Services are billed to and from ATC under agreements approved by the PSCW, at each of our fully allocated costs.

Our balance sheets included the following receivables and payables related to transactions entered into with ATC:



(in millions)	June 30, 2018		December 31, 2017
Accounts receivable
Services provided to ATC	$	1.3	$	0.8
Accounts payable
Services received from ATC	19.3		22.2

The following table shows activity associated with our related party transactions:



	Three Months Ended June 30				Six Months Ended June 30
(in millions)	2018		2017		2018		2017
Lease agreements
Lease payments to We Power ⁽¹⁾	$	95.1	$	106.7	$	187.3	$	211.1
Construction work in progress billed to We Power	5.0		8.9		8.8		25.2
Transactions with WBS ⁽²⁾
Billings to WBS	2.8		60.5		8.7		117.0
Billings from WBS ⁽³⁾	68.6		52.9		176.7		102.7
Transactions with WPS ⁽²⁾
Billings to WPS	4.3		5.2		7.3		7.7
Billings from WPS	1.9		1.1		5.1		2.2
Transactions with WG
Natural gas purchases from WG	1.3		1.3		2.6		2.6
Billings to WG ^{(2) (4)}	13.2		16.1		27.1		31.9
Billings from WG ⁽²⁾	5.0		5.8		9.7		11.3
Transactions with UMERC
Electric sales to UMERC	6.9		6.4		15.0		14.1
Billings to UMERC ⁽²⁾	2.9		29.3		7.1		33.9
Transactions with Bluewater ⁽⁵⁾
Storage service fees	4.6		—		5.9		—
Transactions with ATC
Charges to ATC for services and construction	2.7		2.4		5.7		5.2
Charges from ATC for network transmission services	58.1		60.4		116.1		120.7
Refund from ATC related to a FERC audit	15.4		—		15.4		—
Refund from ATC per FERC ROE order	—		—		—		19.4


⁽¹⁾	We make lease payments to We Power, another subsidiary of WEC Energy Group, for PWGS Units 1 and 2 and ERGS Units 1 and 2. Lease payments were reduced in 2018 as a result of tax savings related to Tax Legislation.


⁽²⁾	Includes amounts billed for services, pass through costs, and other items in accordance with approved affiliated interest agreements.


⁽³⁾	Includes $8.7 million and $57.6 million for the transfer of certain software assets from WBS during the three and six months ended June 30, 2018, respectively. There were no software assets transferred from WBS during 2017.


⁽⁴⁾	Includes $5.2 million for the transfer of certain software assets to WG during the three and six months ended June 30, 2018. There were no software assets transferred to WG during 2017.


⁽⁵⁾	WEC Energy Group's acquisition of Bluewater was completed June 30, 2017. See below for more information.

Upper Michigan Energy Resources Corporation

In December 2016, both the MPSC and the PSCW approved the operation of UMERC as a stand-alone utility in the Upper Peninsula of Michigan. UMERC, a subsidiary of WEC Energy Group, became operational effective January 1, 2017, and we transferred customers and property, plant, and equipment as of that date. We transferred approximately 27,500 retail electric customers and 50 electric distribution-only customers to UMERC, along with approximately 2,500 miles of electric distribution lines. We also transferred related electric distribution substations in the Upper Peninsula of Michigan and all property rights for the distribution assets to UMERC. The book value of net assets, including the related deferred income tax liabilities, transferred to UMERC from us in 2017 was $61.1 million. This transaction was a non-cash equity transfer recorded to additional paid in capital between entities under common control, and therefore, did not result in the recognition of a gain or loss. UMERC currently meets its market obligations through power purchase agreements with us and WPS.

WEC Energy Group's Acquisition of Natural Gas Storage Facilities in Michigan

On June 30, 2017, WEC Energy Group completed the acquisition of Bluewater for $226.0 million. Bluewater owns natural gas storage facilities in Michigan that provide a portion of the current storage needs for our natural gas utility operations. In September 2017, we finalized a long-term service agreement with a wholly owned subsidiary of Bluewater to take the allocated storage, which was then approved by the PSCW in November 2017.