RELATED PARTIES

We routinely enter into transactions with related parties, including WEC Energy Group, its subsidiaries, ATC, 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.

A new AIA took effect January 1, 2017. The new agreement replaced the previous agreements. The pricing methodology and services under this new agreement are substantially identical to those under the agreements that were replaced. In June 2017, the PSCW approved modifications to the new AIA to incorporate WEC Energy Group's acquisition of Bluewater, which is discussed in more detail below. The proposal to incorporate Bluewater into the AIA is pending before the Minnesota Public Utilities Commission.

Prior to January 1, 2017, we held a 10.37% investment in WPSI, which was accounted for as an equity method investment. WPSI holds an approximate 34% interest in ATC, a for-profit, electric transmission company regulated by the FERC and certain state regulatory commissions. Effective January 1, 2017, based upon input we received from the PSCW, we transferred our $67.2 million ownership interest in WPSI to another subsidiary of Integrys. In addition, we transferred $43.1 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.

We provide services to WRPC under an operating agreement approved by the PSCW. We are also under a service agreement with WRPC where we are billed for services provided by WRPC. Services are billed to and from WRPC under these agreements at a fully allocated cost.

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



(in millions)	June 30, 2017		December 31, 2016
Accounts receivable
Services provided to ATC	$	0.3	$	1.1
Accounts payable
Network transmission services from ATC	9.0		8.8
Liability related to income tax allocation
Integrys	4.4		4.8

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



	Three Months Ended June 30				Six Months Ended June 30
(in millions)	2017		2016		2017			2016
Transactions with WE ⁽¹⁾
Billings to WE	$	1.1	$	0.6	$	2.2		$	1.0
Billings from WE	5.2		1.9		7.7			2.9
Transactions with WBS ⁽¹⁾
Billings to WBS ⁽²⁾	4.2		3.9		168.3			13.3
Billings from WBS ⁽³⁾	35.3		45.7		68.2			82.4
Transactions with UMERC ⁽⁴⁾
Electric sales to UMERC	4.0		—		8.1			—
Billings from UMERC ⁽¹⁾	5.1		—		6.7			—
Transactions related to ATC
Charges from ATC for network transmission services	26.9		27.7		53.9			55.4
Charges to ATC for services and construction	1.4		2.0		2.8			4.0
Refund from ATC per FERC ROE order	—		—		(8.9		)	—
Transactions with equity-method investees
Lease payments to WRPC ⁽⁵⁾	0.4		—		0.5			—
Purchases of energy from WRPC ⁽⁵⁾	—		0.9		0.5			1.9
Charges from WRPC for services	0.6		—		0.8			—
Charges to WRPC for operations	0.3		0.2		0.5			0.3
Equity earnings from WPSI	—		1.8		—			4.1


⁽¹⁾	Includes amounts billed for services, pass through costs, and other items in accordance with approved AIAs.

⁽²⁾

Includes $161.9 million of cash received related to our transfer of pension trust assets in conjunction with the Integrys pension plan split for the six months ended June 30, 2017. Effective January 1, 2017, the Integrys Energy Group Retirement Plan was split into six separate plans. As a result, we now have our own pension plan. While the split did not impact our pension benefit obligation, federal regulations required a different allocation of assets among the new plans. Assets were transferred out of our plan in January 2017. There were no transfers of assets to WBS for the three months ended June 30, 2017. The three and six months ended June 30, 2016, included $0.9 million and $7.3 million, respectively, for the transfer of certain software assets to WBS.


⁽³⁾	Includes $9.2 million for the transfer of certain software assets to us for the three and six months ended June 30, 2017. There were no transfers of software assets to us for the three and six months ended June 30, 2016.


⁽⁴⁾	UMERC became operational effective January 1, 2017. See below for more information.


⁽⁵⁾	In March 2017, we terminated our purchased power agreement with WRPC and entered into a lease agreement with WRPC to lease 50% of its hydroelectric power generation facilities.

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 9,000 retail electric customers and 5,300 natural gas customers to UMERC, along with approximately 600 miles of electric distribution lines and approximately 100 miles of natural gas distribution mains. 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 the net assets (including the related deferred income tax liabilities) transferred to UMERC from us as of January 1, 2017, was $21.1 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 obtains its energy through the MISO Energy Markets and meets its market obligations through power purchase agreements with us and WE.

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 will provide for some of our current storage needs for our natural gas utility operations. We plan to enter into a long-term service agreement with Bluewater to take the allocated storage. See Note 14, Regulatory Environment, for more information.