Investment in ATC

12 Months Ended

Dec. 31, 2014

Investment in ATC [Abstract]

Investment in ATC [Text Block]

INVESTMENT IN ATC

Our wholly-owned subsidiary, Rainy River Energy, owns approximately 8 percent of ATC, a Wisconsin-based utility that owns and maintains electric transmission assets in parts of Wisconsin, Michigan, Minnesota and Illinois. ATC rates are based on a FERC-approved 12.2 percent return on common equity dedicated to utility plant. We account for our investment in ATC under the equity method of accounting. As of December 31, 2014, our equity investment in ATC was $121.1 million ($114.6 million at December 31, 2013). On January 29, 2015, we invested an additional $0.4 million in ATC. In total, we expect to invest approximately $1.9 million throughout 2015.

ALLETE’s Investment in ATC
Year Ended December 31	2014			2013
Millions
Equity Investment Beginning Balance		$114.6			$107.3
Cash Investments	3.9			3.1
Equity in ATC Earnings	19.6			20.3
Distributed ATC Earnings	(17.0		)	(16.1		)
Equity Investment Ending Balance		$121.1			$114.6

NOTE 6. INVESTMENT IN ATC (Continued)

ATC Summarized Financial Data
Balance Sheet Data
As of December 31	2014		2013
Millions
Current Assets		$66.4		$80.7
Non-Current Assets	3,728.7		3,509.5
Total Assets		$3,795.1		$3,590.2
Current Liabilities		$313.1		$381.4
Long-Term Debt	1,701.0		1,550.0
Other Non-Current Liabilities	163.8		126.2
Members’ Equity	1,617.2		1,532.6
Total Liabilities and Members’ Equity		$3,795.1		$3,590.2

Income Statement Data
Year Ended December 31	2014		2013		2012
Millions
Revenue		$635.0		$626.3		$603.2
Operating Expense	307.4		295.1		281.0
Other Expense	88.9		83.6		84.8
Net Income		$238.7		$247.6		$237.4
ALLETE’s Equity in Net Income		$19.6		$20.3		$19.4

In November 2013, several customer groups located within the MISO service area filed a complaint with the FERC requesting, among other things, a reduction in the base return on equity used by MISO transmission owners, including ATC, to 9.15 percent. ATC's current authorized return on equity is 12.2 percent. In the fourth quarter of 2014, FERC ordered formal hearing proceedings to begin and established a date for potential refunds from November 12, 2013. An initial decision in the complaint is expected by November 30, 2015. In the fourth quarter of 2014, ATC recorded approximately an $18 million refund liability as ATC believes that it is probable that a refund will be required upon ultimate resolution of this matter. The refund liability is subject to adjustment in future periods if assumptions in the estimate change. ATC’s refund liability negatively impacted our Equity Earnings in ATC by approximately $1 million after-tax in 2014. We own approximately 8 percent of ATC and estimate that for every 50 basis point reduction in ATC’s allowed return on equity our equity earnings in ATC would be impacted annually by approximately $0.5 million on an after-tax basis.