LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

Debentures and Notes: As of December 31, 2014, the maturities and sinking fund requirements of our long-term debt outstanding (excluding obligations under capital leases) were as follows:



	(Millions of Dollars)

2015	$	399.5
2016	27.4
2017	29.5
2018	281.1
2019	282.7
Thereafter	3,532.2
Total	$	4,552.4

We amortize debt premiums, discounts and debt issuance costs over the lives of the debt and we include the costs in interest expense.

Wisconsin Electric is the obligor under two series of tax-exempt pollution control refunding bonds in outstanding principal amount of $147 million. In August 2009, Wisconsin Electric terminated letters of credit that provided credit and liquidity support for the bonds, which resulted in a mandatory tender of the bonds. Wisconsin Electric purchased the bonds at par plus accrued interest to the date of purchase. As of December 31, 2014 and 2013, the repurchased bonds were still outstanding, but were not reported in our consolidated long-term debt or included on our Consolidated Statements of Capitalization because they are held by Wisconsin Electric. Depending on market conditions and other factors, Wisconsin Electric may change the method used to determine the interest rate on the bonds and have them remarketed to third parties.

In connection with our outstanding Junior Notes, we executed the Replacement Capital Covenant dated May 11, 2007 (RCC) for the benefit of persons that buy, hold or sell a specified series of long-term indebtedness (covered debt). Our 6.20% Senior Notes due April 1, 2033 have been designated as the covered debt under the RCC. The RCC provides that we may not redeem, defease or purchase and our subsidiaries may not purchase any Junior Notes on or before May 15, 2037, unless, subject to certain limitations described in the RCC, during the 180 days prior to the date of redemption, defeasance or purchase, we have received a specified amount of proceeds from the sale of qualifying securities.

Effective May 2017, the $500 million of Junior Notes will bear interest at the three-month LIBOR Rate plus 211.25 basis points and will reset quarterly.

Obligations Under Capital Leases: In 1997, Wisconsin Electric entered into a 25-year power purchase contract with an unaffiliated independent power producer. The contract, for 236 MW of firm capacity from a gas-fired cogeneration facility, includes no minimum energy requirements. When the contract expires in 2022, Wisconsin Electric may, at its option and with proper notice, renew for another ten years or purchase the generating facility at fair value or allow the contract to expire. We account for this contract as a capital lease and recorded the leased facility and corresponding obligation under the capital lease at the estimated fair value of the plant's electric generating facilities. We are amortizing the leased facility on a straight-line basis over the original 25-year term of the contract.

We treat the long-term power purchase contract as an operating lease for rate-making purposes and we record our minimum lease payments as purchased power expense on the Consolidated Income Statements. We paid a total of $34.9 million and $33.7 million in lease payments during 2014 and 2013, respectively. We record the difference between the minimum lease payments and the sum of imputed interest and amortization costs calculated under capital lease accounting as a deferred regulatory asset on our Consolidated Balance Sheets (see Regulatory Assets - Deferred plant related -- capital lease in Note C). Due to the timing and the amounts of the minimum lease payments, the regulatory asset increased to approximately $78.5 million during 2009, at which time the regulatory asset began to be reduced to zero over the remaining life of the contract. The total obligation under the capital lease was $84.5 million as of December 31, 2014, and will decrease to zero over the remaining life of the contract.

The following is a summary of our capitalized leased facilities as of December 31:



Capital Lease Assets	2014			2013
	(Millions of Dollars)
Leased Facilities
Long-term power purchase commitment	$	140.3		$	140.3
Accumulated amortization	(98.3		)	(92.5		)
Total Leased Facilities	$	42.0		$	47.8

Future minimum lease payments under our capital lease and the present value of our net minimum lease payments as of December 31, 2014 are as follows:



	(Millions of Dollars)
2015	$	43.5
2016	45.1
2017	13.9
2018	14.7
2019	15.5
Thereafter	41.3
Total Minimum Lease Payments	174.0
Less: Estimated Executory Costs	(54.7		)
Net Minimum Lease Payments	119.3
Less: Interest	(34.8		)
Present Value of Net
Minimum Lease Payments	84.5
Less: Due Currently	(24.6		)
	$	59.9