Equity Investments

12 Months Ended

Dec. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

EQUITY INVESTMENTS

Investment in ATC. Our wholly-owned subsidiary, ALLETE Transmission Holdings, owns approximately 8 percent of ATC, a Wisconsin-based utility that owns and maintains electric transmission assets in portions of Wisconsin, Michigan, Minnesota and Illinois. We account for our investment in ATC under the equity method of accounting. For the year ended December 31, 2019, we invested $6.6 million in ATC and on January 31, 2020, we invested an additional $0.4 million in ATC. In total, we expect to invest approximately $2.7 million in 2020.



ALLETE’s Investment in ATC
Year Ended December 31	2019			2018
Millions
Equity Investment Beginning Balance		$128.1			$118.7
Cash Investments	6.6			6.2
Equity in ATC Earnings	21.7			17.5
Distributed ATC Earnings	(16.1		)	(15.2		)
Amortization of the Remeasurement of Deferred Income Taxes	1.3			0.9
Equity Investment Ending Balance		$141.6			$128.1



ATC Summarized Financial Data
Balance Sheet Data
As of December 31	2019		2018
Millions
Current Assets		$84.6		$87.2
Non-Current Assets	5,244.3		4,928.8
Total Assets		$5,328.9		$5,016.0
Current Liabilities		$502.6		$640.0
Long-Term Debt	2,312.8		2,014.0
Other Non-Current Liabilities	298.9		295.3
Members’ Equity	2,214.6		2,066.7
Total Liabilities and Members’ Equity		$5,328.9		$5,016.0



Income Statement Data
Year Ended December 31	2019		2018		2017
Millions
Revenue		$744.4		$690.5		$721.6
Operating Expense	373.5		358.7		344.9
Other Expense	110.5		108.3		104.1
Net Income		$260.4		$223.5		$272.6
ALLETE’s Equity in Net Income		$21.7		$17.5		$22.5

ATC’s authorized return on equity is 9.88 percent, or 10.38 percent including an incentive adder for participation in a regional transmission organization, based on a November 2019 FERC order. (See Note 4. Regulatory Matters.)

NOTE 5. EQUITY INVESTMENTS (Continued)

Investment in Nobles 2. In December 2018, our wholly-owned subsidiary, ALLETE South Wind, entered into an agreement with Tenaska to purchase a 49 percent equity interest in Nobles 2, the entity that will own and operate a 250 MW wind energy facility in southwestern Minnesota pursuant to a 20-year PPA with Minnesota Power. The wind energy facility will be built in Nobles County, Minnesota and is expected to be completed in late 2020, with an estimated total project cost of approximately $350 million to $400 million. In the fourth quarter of 2019, we entered into a tax equity funding agreement to finance up to $125 million of the project costs. We account for our investment in Nobles 2 under the equity method of accounting. As of December 31, 2019, our equity investment in Nobles 2 was $56.0 million ($33.0 million at December 31, 2018). In the first quarter of 2019, Nobles 2 returned capital of $8.3 million based on its cash needs. For the year ended December 31, 2019, we invested $31.3 million in Nobles 2. We expect to invest approximately $115 million in 2020.