Revenues

NSP-Wisconsin principally generates revenue from the transmission, distribution and sale of electricity and the transportation, distribution and sale of natural gas to retail customers. Performance obligations related to the sale of energy are satisfied as energy is delivered to customers. NSP-Wisconsin recognizes revenue in an amount that corresponds directly to the price of the energy delivered to the customer. The measurement of energy sales to customers is generally based on the reading of their meters, which occurs on a systematic basis throughout the month. At the end of each month, amounts of energy delivered to customers since the date of the last meter reading are estimated, and the corresponding unbilled revenue is recognized. Contract terms are generally short-term in nature, and as such NSP-Wisconsin does not recognize a separate financing component of its collections from customers. NSP-Wisconsin presents its revenues net of any excise or other fiduciary-type taxes or fees.

NSP-Wisconsin has various rate-adjustment mechanisms in place that provide for the recovery of natural gas, electric fuel and purchased energy costs. These cost-adjustment tariffs may increase or decrease the level of revenue collected from customers and are revised periodically for differences between the total amount collected under the clauses and the costs incurred. When applicable,

under governing regulatory commission rate orders, fuel cost over-recoveries (the excess of fuel revenue billed to customers over fuel

costs incurred) are deferred as regulatory liabilities and under-recoveries (the excess of fuel costs incurred over fuel revenues billed to

customers) are deferred as regulatory assets. NSP-Wisconsin must submit a forward looking fuel cost plan annually for approval by the PSCW. The rules also allow for deferral of any under-recovery or over-recovery of fuel costs in excess of a two percent annual tolerance band, for future rate recovery or refund, subject to PSCW approval.

Certain rate rider mechanisms qualify as alternative revenue programs under GAAP. These mechanisms arise from costs imposed upon the utility by action of a regulator or legislative body related to an environmental, public safety or other mandate. When certain criteria are met (including collection within 24 months), revenue is recognized equal to the revenue requirement, which may include return on rate base items and incentives. The mechanisms are revised periodically for differences between the total amount collected and the revenue recognized, which may increase or decrease the level of revenue collected from customers. Alternative revenue is recorded on a gross basis and is disclosed separate from revenue from contracts with customers in the period earned.

In the following tables, revenue is classified by the type of goods/services rendered and market/customer type. The tables also reconcile revenue to the reportable segments.



	Three Months Ended March 31, 2018
(Thousands of Dollars)	Regulated Electric		Regulated Natural Gas		All Other		Total
Major revenue types
Revenue from contracts with customers:
Residential	$	67,803	$	30,326	$	16	$	98,145
Commercial and industrial (C&I)	104,817		24,550		25		129,392
Other	1,606		—		237		1,843
Total retail	174,226		54,876		278		229,380
Interchange	37,674		—		—		37,674
Other	1,504		1,007		—		2,511
Total revenue from contracts with customers	213,404		55,883		278		269,565
Alternative revenue and other	2,962		617		—		3,579
Total revenues	$	216,366	$	56,500	$	278	$	273,144



	Three Months Ended March 31, 2017
(Thousands of Dollars)	Regulated Electric		Regulated Natural Gas		All Other		Total
Major revenue types
Revenue from contracts with customers:
Residential	$	66,043	$	26,628	$	20	$	92,691
C&I	102,380		20,258		24		122,662
Other	1,520		—		231		1,751
Total retail	169,943		46,886		275		217,104
Interchange	42,378		—		—		42,378
Other	969		908		—		1,877
Total revenue from contracts with customers	213,290		47,794		275		261,359
Alternative revenue and other	3,019		553		—		3,572
Total revenues	$	216,309	$	48,347	$	275	$	264,931