Schedule I - Condensed Parent Company Financial Statements

12 Months Ended

Dec. 31, 2016

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

SCHEDULE I - CONDENSED PARENT COMPANY FINANCIAL STATEMENTS

SCHEDULE I – CONDENSED

PARENT COMPANY FINANCIAL STATEMENTS

WEC ENERGY GROUP, INC. (PARENT COMPANY ONLY)

A. INCOME STATEMENTS

Year Ended December 31
(in millions)	2016		2015		2014
Operating expenses	$	7.0	$	42.2	$	26.8
Equity in earnings of subsidiaries	996.5		695.7		635.0
Other income, net	2.7		23.2		2.8
Interest expense	90.0		71.2		53.1
Income before income taxes	902.2		605.5		557.9
Income tax benefit	36.8		33.0		30.4
Net income attributed to common shareholders	$	939.0	$	638.5	$	588.3

The accompanying Notes to Condensed Parent Company Financial Statements are an integral part of these financial statements.

B. STATEMENTS OF COMPREHENSIVE INCOME

Year Ended December 31
(in millions)	2016			2015			2014
Net income attributed to common shareholders	$	939.0		$	638.5		$	588.3
Other comprehensive (loss) income, net of tax
Derivatives accounted for as cash flow hedges
Gains on settlement, net of tax of $7.6	—			11.4			—
Reclassification of gains to net income, net of tax	(1.3		)	(0.8		)	—
Cash flow hedges, net	(1.3		)	10.6			—
Defined benefit plans
Pension and OPEB costs arising during the period, net of tax	(1.0		)	(1.5		)	—
Amortization of pension and OPEB costs included in net periodic benefit cost, net of tax	0.3			—			—
Defined benefit plans, net	(0.7		)	(1.5		)	—
Other comprehensive income (loss) from subsidiaries, net of tax	0.3			(4.8		)	—
Other comprehensive (loss) income, net of tax	(1.7		)	4.3			—
Comprehensive income attributed to common shareholders	$	937.3		$	642.8		$	588.3

The accompanying Notes to Condensed Parent Company Financial Statements are an integral part of these financial statements.

C. BALANCE SHEETS

At December 31
(in millions)	2016		2015
Assets
Current assets
Cash and cash equivalents	$	1.2	$	1.3
Accounts receivable from related parties	1.8		13.2
Notes receivable from related parties	76.4		123.2
Prepaid taxes	47.6		—
Other	0.5		2.2
Current assets	127.5		139.9
Long-term assets
Investments in subsidiaries	11,155.4		10,792.6
Other	134.7		254.0
Long-term assets	11,290.1		11,046.6
Total assets	$	11,417.6	$	11,186.5
Liabilities and Equity
Current liabilities
Short-term debt	$	321.8	$	307.9
Accounts payable to related parties	3.2		1.7
Notes payable to related parties	241.3		119.0
Accrued taxes	—		75.6
Other	10.3		17.5
Current liabilities	576.6		521.7
Long-term liabilities
Long-term debt	1,890.0		1,887.2
Other	21.2		122.8
Long-term liabilities	1,911.2		2,010.0
Common shareholders' equity	8,929.8		8,654.8
Total liabilities and equity	$	11,417.6	$	11,186.5

The accompanying notes to Condensed Parent Company Financial Statements are an integral part of these financial statements.

D. STATEMENTS OF CASH FLOWS

Year Ended December 31
(in millions)	2016			2015			2014
Operating activities
Net income attributed to common shareholders	$	939.0		$	638.5		$	588.3
Reconciliation to cash provided by operating activities
Equity in earnings of subsidiaries	(996.5		)	(695.7		)	(635.0		)
Dividends from subsidiaries	734.4			538.8			720.0
Deferred income taxes	23.2			30.9			60.1
Change in –
Prepaid taxes	(47.6		)	—			—
Other current assets	13.0			(9.3		)	(0.3		)
Accrued taxes	(75.6		)	175.7			4.1
Other current liabilities	(5.6		)	(3.2		)	5.1
Other, net	6.3			(18.4		)	(8.1		)
Net cash provided by operating activities	590.6			657.3			734.2
Investing activities
Business acquisition	—			(1,486.2		)	—
Capital contributions to subsidiaries	(55.8		)	(135.3		)	(225.5		)
Short-term notes receivable from related parties, net	46.8			(91.0		)	—
Purchase of subsidiary's common stock	(66.4		)	—			—
Proceeds from the sale of assets and businesses	—			20.8			—
Other, net	(0.4		)	(0.1		)	5.0
Net cash used in investing activities	(75.8		)	(1,691.8		)	(220.5		)
Financing activities
Exercise of stock options	41.6			30.1			50.3
Purchase of common stock	(108.0		)	(74.7		)	(123.2		)
Dividends paid on common stock	(624.9		)	(455.4		)	(352.0		)
Issuance of long-term debt	—			1,200.0			—
Change in short-term debt	13.9			307.9			(72.0		)
Short-term notes payable to related parties, net	162.3			1.8			3.5
Other, net	0.2			(11.2		)	16.7
Net cash (used in) provided by financing activities	(514.9		)	998.5			(476.7		)
Net change in cash and cash equivalents	(0.1		)	(36.0		)	37.0
Cash and cash equivalents at beginning of year	1.3			37.3			0.3
Cash and cash equivalents at end of year	$	1.2		$	1.3		$	37.3

The accompanying Notes to Condensed Parent Company Financial Statements are an integral part of these financial statements.

SCHEDULE I – CONDENSED

PARENT COMPANY FINANCIAL STATEMENTS

WEC ENERGY GROUP, INC. (PARENT COMPANY ONLY)

E. NOTES TO PARENT COMPANY FINANCIAL STATEMENTS

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

For Parent Company only presentation, investments in subsidiaries are accounted for using the equity method. The condensed Parent Company financial statements and notes should be read in conjunction with the consolidated financial statements and notes of WEC Energy Group, Inc. appearing in this Annual Report on Form 10-K.

NOTE 2—CASH DIVIDENDS RECEIVED FROM SUBSIDIARIES

Dividends received from our subsidiaries during the years ended December 31 were as follows:

(in millions)	2016		2015		2014
WE	$	455.0	$	240.0	$	390.0
WG	75.0		30.0		33.0
We Power	197.9		262.8		297.0
ATC Holding LLC	6.5		6.0		—
Total	$	734.4	$	538.8	$	720.0

NOTE 3—LONG-TERM DEBT

The following table shows the future maturities of our long-term debt outstanding as of December 31, 2016:

(in millions)
2018	$	300.0
2020	400.0
Thereafter	1,200.0
Total	$	1,900.0

WECC is our subsidiary and has $50.0 million of long-term notes outstanding. In a Support Agreement between WECC and us, we agreed to make sufficient liquid asset contributions to WECC to permit WECC to service its debt obligations as they become due.

The following table shows the financial instruments included on our balance sheets that are not recorded at fair value as of December 31:

	2016				2015
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt	$	1,890.0	$	1,906.1	$	1,887.2	$	1,900.7

The carrying value of cash and cash equivalents, accounts receivable, short-term notes receivable, accounts payable, and short-term borrowings approximates fair value due to the short-term nature of these instruments. The fair value of our long-term debt is estimated based upon the quoted market value for the same issue, similar issues, or upon the quoted market prices of United States Treasury issues having a similar term to maturity, adjusted for our bond rating and the present value of future cash flows.

NOTE 4—SUPPLEMENTAL CASH FLOW INFORMATION

(in millions)	2016			2015			2014
Cash (paid) for interest	$	(89.6	)	$	(68.8	)	$	(44.4	)
Cash (paid) received for income taxes, net	(62.9		)	242.9			95.1

During 2016, we settled a $40.0 million short-term note payable to our subsidiary, Wisvest, through a non-cash capital contribution.

NOTE 5—SHORT-TERM NOTES RECEIVABLE FROM RELATED PARTIES

The following table shows our outstanding short-term notes receivable from related parties as of December 31:

(in millions)	2016		2015
Integrys	$	42.0	$	95.1
Bostco	18.5		19.6
Wispark	15.9		8.5
Total	$	76.4	$	123.2

NOTE 6—SHORT-TERM NOTES PAYABLE TO RELATED PARTIES

The following table shows our outstanding short-term notes payable to related parties as of December 31:

(in millions)	2016		2015
WBS	$	131.1	$	—
WECC	109.3		108.4
Wisvest	0.9		10.6
Total	$	241.3	$	119.0