Commission File Number | Registrant; State of Incorporation; Address; and Telephone Number | IRS Employer Identification No. | ||
001-09057 | WEC ENERGY GROUP, INC. | 39-1391525 | ||
(A Wisconsin Corporation) | ||||
231 West Michigan Street | ||||
P.O. Box 1331 | ||||
Milwaukee, WI 53201 | ||||
(414) 221-2345 |
Large accelerated filer [X] | Accelerated filer [ ] | ||
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | |||
Smaller reporting company [ ] | |||
Emerging growth company [ ] |
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03/31/2017 Form 10-Q | i | WEC Energy Group, Inc. |
Subsidiaries and Affiliates | ||
ATC | American Transmission Company LLC | |
Bostco | Bostco LLC | |
Integrys | Integrys Holding, Inc. | |
ITF | Integrys Transportation Fuels, LLC | |
MERC | Minnesota Energy Resources Corporation | |
MGU | Michigan Gas Utilities Corporation | |
NSG | North Shore Gas Company | |
PGL | The Peoples Gas Light and Coke Company | |
UMERC | Upper Michigan Energy Resources Corporation | |
WBS | WEC Business Services LLC | |
WE | Wisconsin Electric Power Company | |
We Power | W.E. Power, LLC | |
WG | Wisconsin Gas LLC | |
Wisvest | Wisvest LLC | |
WPS | Wisconsin Public Service Corporation | |
Federal and State Regulatory Agencies | ||
EPA | United States Environmental Protection Agency | |
FERC | Federal Energy Regulatory Commission | |
ICC | Illinois Commerce Commission | |
MDEQ | Michigan Department of Environmental Quality | |
MPSC | Michigan Public Service Commission | |
MPUC | Minnesota Public Utilities Commission | |
PSCW | Public Service Commission of Wisconsin | |
SEC | United States Securities and Exchange Commission | |
WDNR | Wisconsin Department of Natural Resources | |
Accounting Terms | ||
AFUDC | Allowance for Funds Used During Construction | |
ASU | Accounting Standards Update | |
FASB | Financial Accounting Standards Board | |
GAAP | United States Generally Accepted Accounting Principles | |
LIFO | Last-In, First-Out | |
OPEB | Other Postretirement Employee Benefits | |
Environmental Terms | ||
CAA | Clean Air Act | |
CO2 | Carbon Dioxide | |
CSAPR | Cross-State Air Pollution Rule | |
GHG | Greenhouse Gas | |
NAAQS | National Ambient Air Quality Standards | |
NOV | Notice of Violation | |
NOx | Nitrogen Oxide | |
SO2 | Sulfur Dioxide | |
03/31/2017 Form 10-Q | ii | WEC Energy Group, Inc. |
Measurements | ||
Dth | Dekatherm | |
MW | Megawatt | |
MWh | Megawatt-hour | |
Other Terms and Abbreviations | ||
6.11% Junior Notes | Integrys's 2006 6.11% Junior Subordinated Notes Due 2066 | |
ALJ | Administrative Law Judge | |
CNG | Compressed Natural Gas | |
D.C. Circuit Court of Appeals | United States Court of Appeals for the District of Columbia Circuit | |
ERGS | Elm Road Generating Station | |
Exchange Act | Securities Exchange Act of 1934, as amended | |
FTRs | Financial Transmission Rights | |
MCPP | Milwaukee County Power Plant | |
MISO | Midcontinent Independent System Operator, Inc. | |
MISO Energy Markets | MISO Energy and Operating Reserves Markets | |
OCPP | Oak Creek Power Plant | |
OC 5 | Oak Creek Power Plant Unit 5 | |
OC 6 | Oak Creek Power Plant Unit 6 | |
OC 7 | Oak Creek Power Plant Unit 7 | |
OC 8 | Oak Creek Power Plant Unit 8 | |
PIPP | Presque Isle Power Plant | |
QIP | Qualifying Infrastructure Plant | |
ROE | Return on Equity | |
SMP | Gas System Modernization Program | |
SMRP | System Modernization and Reliability Project | |
Supreme Court | United States Supreme Court | |
VAPP | Valley Power Plant |
03/31/2017 Form 10-Q | iii | WEC Energy Group, Inc. |
• | Factors affecting utility operations such as catastrophic weather-related damage, environmental incidents, unplanned facility outages and repairs and maintenance, and electric transmission or natural gas pipeline system constraints; |
• | Factors affecting the demand for electricity and natural gas, including political developments, unusual weather, changes in economic conditions, customer growth and declines, commodity prices, energy conservation efforts, and continued adoption of distributed generation by customers; |
• | The timing, resolution, and impact of rate cases and negotiations, including recovery of deferred and current costs and the ability to earn a reasonable return on investment, and other regulatory decisions impacting our regulated operations; |
• | The ability to obtain and retain customers, including wholesale customers, due to increased competition in our electric and natural gas markets from retail choice and alternative electric suppliers, and continued industry consolidation; |
• | The timely completion of capital projects within budgets, as well as the recovery of the related costs through rates; |
• | The impact of federal, state, and local legislative and regulatory changes, including changes in rate-setting policies or procedures, tax law changes, deregulation and restructuring of the electric and/or natural gas utility industries, transmission or distribution system operation, the approval process for new construction, reliability standards, pipeline integrity and safety standards, allocation of energy assistance, and energy efficiency mandates; |
• | Federal and state legislative and regulatory changes relating to the environment, including climate change and other environmental regulations impacting generation facilities and renewable energy standards, the enforcement of these laws and regulations, changes in the interpretation of permit conditions by regulatory agencies, and the recovery of associated remediation and compliance costs; |
• | The risks associated with changing commodity prices, particularly natural gas and electricity, and the availability of sources of fossil fuel, natural gas, purchased power, materials needed to operate environmental controls at our electric generating facilities, or water supply due to high demand, shortages, transportation problems, nonperformance by electric energy or natural gas suppliers under existing power purchase or natural gas supply contracts, or other developments; |
• | Changes in credit ratings, interest rates, and our ability to access the capital markets, caused by volatility in the global credit markets, our capitalization structure, and market perceptions of the utility industry, us, or any of our subsidiaries; |
• | Costs and effects of litigation, administrative proceedings, investigations, settlements, claims, and inquiries; |
• | Restrictions imposed by various financing arrangements and regulatory requirements on the ability of our subsidiaries to transfer funds to us in the form of cash dividends, loans or advances; |
03/31/2017 Form 10-Q | 1 | WEC Energy Group, Inc. |
• | The risk of financial loss, including increases in bad debt expense, associated with the inability of our customers, counterparties, and affiliates to meet their obligations; |
• | Changes in the creditworthiness of the counterparties with whom we have contractual arrangements, including participants in the energy trading markets and fuel suppliers and transporters; |
• | The direct or indirect effect on our business resulting from terrorist incidents, the threat of terrorist incidents, and cyber security intrusion, including the failure to maintain the security of personally identifiable information, the associated costs to protect our assets and personal information, and the costs to notify affected persons to mitigate their information security concerns; |
• | The financial performance of ATC and its corresponding contribution to our earnings, as well as the ability of ATC and Duke-American Transmission Company to obtain the required approvals for their transmission projects; |
• | The investment performance of our employee benefit plan assets, as well as unanticipated changes in related actuarial assumptions, which could impact future funding requirements; |
• | Factors affecting the employee workforce, including loss of key personnel, internal restructuring, work stoppages, and collective bargaining agreements and negotiations with union employees; |
• | Advances in technology that result in competitive disadvantages and create the potential for impairment of existing assets; |
• | The timing, costs, and anticipated benefits associated with the remaining integration efforts relating to the Integrys acquisition; |
• | The risk associated with the values of goodwill and other intangible assets and their possible impairment; |
• | Potential business strategies to acquire and dispose of assets or businesses, which cannot be assured to be completed timely or within budgets, and legislative or regulatory restrictions or caps on non-utility acquisitions, investments, or projects, including the State of Wisconsin's public utility holding company law; |
• | The timing and outcome of any audits, disputes, and other proceedings related to taxes; |
• | The effect of accounting pronouncements issued periodically by standard-setting bodies; and |
• | Other considerations disclosed elsewhere herein and in other reports we file with the SEC or in other publicly disseminated written documents. |
03/31/2017 Form 10-Q | 2 | WEC Energy Group, Inc. |
CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited) | Three Months Ended | |||||||
March 31 | ||||||||
(in millions, except per share amounts) | 2017 | 2016 | ||||||
Operating revenues | $ | 2,304.5 | $ | 2,194.8 | ||||
Operating expenses | ||||||||
Cost of sales | 941.1 | 838.9 | ||||||
Other operation and maintenance | 501.9 | 531.5 | ||||||
Depreciation and amortization | 194.6 | 187.9 | ||||||
Property and revenue taxes | 49.6 | 47.2 | ||||||
Total operating expenses | 1,687.2 | 1,605.5 | ||||||
Operating income | 617.3 | 589.3 | ||||||
Equity in earnings of transmission affiliate | 41.9 | 38.5 | ||||||
Other income, net | 15.7 | 32.7 | ||||||
Interest expense | 104.7 | 100.9 | ||||||
Other expense | (47.1 | ) | (29.7 | ) | ||||
Income before income taxes | 570.2 | 559.6 | ||||||
Income tax expense | 213.3 | 213.1 | ||||||
Net income | 356.9 | 346.5 | ||||||
Preferred stock dividends of subsidiary | 0.3 | 0.3 | ||||||
Net income attributed to common shareholders | $ | 356.6 | $ | 346.2 | ||||
Earnings per share | ||||||||
Basic | $ | 1.13 | $ | 1.10 | ||||
Diluted | $ | 1.12 | $ | 1.09 | ||||
Weighted average common shares outstanding | ||||||||
Basic | 315.6 | 315.7 | ||||||
Diluted | 317.2 | 317.1 | ||||||
Dividends per share of common stock | $ | 0.5200 | $ | 0.4950 |
03/31/2017 Form 10-Q | 3 | WEC Energy Group, Inc. |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) | Three Months Ended | |||||||
March 31 | ||||||||
(in millions) | 2017 | 2016 | ||||||
Net income | $ | 356.9 | $ | 346.5 | ||||
Other comprehensive loss, net of tax | ||||||||
Derivatives accounted for as cash flow hedges | ||||||||
Reclassification of gains to net income, net of tax | (0.3 | ) | (0.3 | ) | ||||
Defined benefit plans | ||||||||
Amortization of pension and OPEB costs included in net periodic benefit cost, net of tax | 0.1 | — | ||||||
Other comprehensive loss, net of tax | (0.2 | ) | (0.3 | ) | ||||
Comprehensive income | 356.7 | 346.2 | ||||||
Preferred stock dividends of subsidiary | 0.3 | 0.3 | ||||||
Comprehensive income attributed to common shareholders | $ | 356.4 | $ | 345.9 |
03/31/2017 Form 10-Q | 4 | WEC Energy Group, Inc. |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in millions, except share and per share amounts) | March 31, 2017 | December 31, 2016 | ||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 45.7 | $ | 37.5 | ||||
Accounts receivable and unbilled revenues, net of reserves of $123.1 and $108.0, respectively | 1,191.4 | 1,241.7 | ||||||
Materials, supplies, and inventories | 417.1 | 587.6 | ||||||
Prepayments | 161.8 | 204.4 | ||||||
Other | 39.3 | 97.5 | ||||||
Current assets | 1,855.3 | 2,168.7 | ||||||
Long-term assets | ||||||||
Property, plant, and equipment, net of accumulated depreciation of $8,312.8 and $8,214.6, respectively | 19,990.2 | 19,915.5 | ||||||
Regulatory assets | 3,084.1 | 3,087.9 | ||||||
Equity investment in transmission affiliate | 1,513.3 | 1,443.9 | ||||||
Goodwill | 3,046.2 | 3,046.2 | ||||||
Other | 527.5 | 461.0 | ||||||
Long-term assets | 28,161.3 | 27,954.5 | ||||||
Total assets | $ | 30,016.6 | $ | 30,123.2 | ||||
Liabilities and Equity | ||||||||
Current liabilities | ||||||||
Short-term debt | $ | 670.4 | $ | 860.2 | ||||
Current portion of long-term debt | 158.0 | 157.2 | ||||||
Accounts payable | 582.3 | 861.5 | ||||||
Accrued payroll and benefits | 107.5 | 163.8 | ||||||
Accrued interest | 115.1 | 67.0 | ||||||
Other | 421.3 | 321.9 | ||||||
Current liabilities | 2,054.6 | 2,431.6 | ||||||
Long-term liabilities | ||||||||
Long-term debt | 9,143.6 | 9,158.2 | ||||||
Deferred income taxes | 5,287.4 | 5,146.6 | ||||||
Deferred revenue, net | 561.0 | 566.2 | ||||||
Regulatory liabilities | 1,563.4 | 1,563.8 | ||||||
Environmental remediation liabilities | 630.7 | 633.6 | ||||||
Pension and OPEB obligations | 458.9 | 498.6 | ||||||
Other | 1,161.0 | 1,164.4 | ||||||
Long-term liabilities | 18,806.0 | 18,731.4 | ||||||
Commitments and contingencies (Note 14) | ||||||||
Common shareholders' equity | ||||||||
Common stock – $0.01 par value; 325,000,000 shares authorized; 315,579,222 and 315,614,941 shares outstanding, respectively | 3.2 | 3.2 | ||||||
Additional paid in capital | 4,297.7 | 4,309.8 | ||||||
Retained earnings | 4,822.0 | 4,613.9 | ||||||
Accumulated other comprehensive income | 2.7 | 2.9 | ||||||
Common shareholders' equity | 9,125.6 | 8,929.8 | ||||||
Preferred stock of subsidiary | 30.4 | 30.4 | ||||||
Total liabilities and equity | $ | 30,016.6 | $ | 30,123.2 |
03/31/2017 Form 10-Q | 5 | WEC Energy Group, Inc. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | Three Months Ended | |||||||
March 31 | ||||||||
(in millions) | 2017 | 2016 | ||||||
Operating Activities | ||||||||
Net income | $ | 356.9 | $ | 346.5 | ||||
Reconciliation to cash provided by operating activities | ||||||||
Depreciation and amortization | 194.6 | 191.9 | ||||||
Deferred income taxes and investment tax credits, net | 150.2 | 214.6 | ||||||
Contributions and payments related to pension and OPEB plans | (106.0 | ) | (15.1 | ) | ||||
Equity income in transmission affiliate, net of distributions | (6.7 | ) | (23.4 | ) | ||||
Change in – | ||||||||
Accounts receivable and unbilled revenues | 55.0 | (48.6 | ) | |||||
Materials, supplies, and inventories | 170.5 | 217.2 | ||||||
Other current assets | 41.2 | (63.7 | ) | |||||
Accounts payable | (212.7 | ) | (123.7 | ) | ||||
Other current liabilities | 90.8 | 56.7 | ||||||
Other, net | (19.2 | ) | (56.5 | ) | ||||
Net cash provided by operating activities | 714.6 | 695.9 | ||||||
Investing Activities | ||||||||
Capital expenditures | (329.7 | ) | (312.0 | ) | ||||
Capital contributions to transmission affiliate | (27.6 | ) | (9.0 | ) | ||||
Proceeds from the sale of assets and businesses | 13.1 | 106.5 | ||||||
Withdrawal of restricted cash from Rabbi trust for qualifying payments | 16.1 | 21.0 | ||||||
Other, net | 2.5 | 5.1 | ||||||
Net cash used in investing activities | (325.6 | ) | (188.4 | ) | ||||
Financing Activities | ||||||||
Exercise of stock options | 5.9 | 21.4 | ||||||
Purchase of common stock | (20.2 | ) | (59.6 | ) | ||||
Dividends paid on common stock | (164.1 | ) | (156.2 | ) | ||||
Retirement of long-term debt | (12.0 | ) | (139.4 | ) | ||||
Change in short-term debt | (189.8 | ) | (198.6 | ) | ||||
Other, net | (0.6 | ) | 9.8 | |||||
Net cash used in financing activities | (380.8 | ) | (522.6 | ) | ||||
Net change in cash and cash equivalents | 8.2 | (15.1 | ) | |||||
Cash and cash equivalents at beginning of period | 37.5 | 49.8 | ||||||
Cash and cash equivalents at end of period | $ | 45.7 | $ | 34.7 |
03/31/2017 Form 10-Q | 6 | WEC Energy Group, Inc. |
03/31/2017 Form 10-Q | 7 | WEC Energy Group, Inc. |
Award Type | Number of Awards | ||
Stock options (1) | 552,215 | ||
Restricted shares (2) | 82,622 | ||
Performance units | 237,650 |
(1) | Stock options awarded had a weighted-average exercise price of $58.31 and a weighted-average grant date fair value of $7.45 per option. |
(2) | Restricted shares awarded had a weighted-average grant date fair value of $58.10 per share. |
(in millions) | Retained Earnings | |||
Balance at December 31, 2016 | $ | 4,613.9 | ||
Net income attributed to common shareholders | 356.6 | |||
Common stock dividends | (164.1 | ) | ||
Cumulative effect of adoption of ASU 2016-09 | 15.7 | |||
Other | (0.1 | ) | ||
Balance at March 31, 2017 | $ | 4,822.0 |
03/31/2017 Form 10-Q | 8 | WEC Energy Group, Inc. |
(in millions, except percentages) | March 31, 2017 | December 31, 2016 | ||||||
Commercial paper | ||||||||
Amount outstanding | $ | 670.4 | $ | 860.2 | ||||
Weighted-average interest rate on amounts outstanding | 1.18 | % | 0.96 | % |
(in millions) | Maturity | March 31, 2017 | ||||
WEC Energy Group | December 2020 | $ | 1,050.0 | |||
WE | December 2020 | 500.0 | ||||
WPS | December 2020 | 250.0 | ||||
WG | December 2020 | 350.0 | ||||
PGL | December 2020 | 350.0 | ||||
Total short-term credit capacity | $ | 2,500.0 | ||||
Less: | ||||||
Letters of credit issued inside credit facilities | $ | 29.1 | ||||
Commercial paper outstanding | 670.4 | |||||
Available capacity under existing agreements | $ | 1,800.5 |
(in millions) | March 31, 2017 | December 31, 2016 | ||||||
Natural gas in storage | $ | 45.8 | $ | 223.1 | ||||
Materials and supplies | 208.3 | 206.5 | ||||||
Fossil fuel | 163.0 | 158.0 | ||||||
Total | $ | 417.1 | $ | 587.6 |
03/31/2017 Form 10-Q | 9 | WEC Energy Group, Inc. |
March 31, 2017 | ||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Derivative assets | ||||||||||||||||
Natural gas contracts | $ | 2.3 | $ | 9.5 | $ | — | $ | 11.8 | ||||||||
FTRs | — | — | 1.7 | 1.7 | ||||||||||||
Coal contracts | — | 1.0 | — | 1.0 | ||||||||||||
Total derivative assets | $ | 2.3 | $ | 10.5 | $ | 1.7 | $ | 14.5 | ||||||||
Investments held in rabbi trust | $ | 101.7 | $ | — | $ | — | $ | 101.7 | ||||||||
Derivative liabilities | ||||||||||||||||
Natural gas contracts | $ | — | $ | 0.9 | $ | — | $ | 0.9 | ||||||||
Petroleum products contracts | 0.3 | — | — | 0.3 | ||||||||||||
Coal contracts | — | 3.0 | — | 3.0 | ||||||||||||
Total derivative liabilities | $ | 0.3 | $ | 3.9 | $ | — | $ | 4.2 |
03/31/2017 Form 10-Q | 10 | WEC Energy Group, Inc. |
December 31, 2016 | ||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Derivative assets | ||||||||||||||||
Natural gas contracts | $ | 10.1 | $ | 24.2 | $ | — | $ | 34.3 | ||||||||
Petroleum products contracts | 0.2 | — | — | 0.2 | ||||||||||||
FTRs | — | — | 5.1 | 5.1 | ||||||||||||
Coal contracts | — | 2.0 | — | 2.0 | ||||||||||||
Total derivative assets | $ | 10.3 | $ | 26.2 | $ | 5.1 | $ | 41.6 | ||||||||
Investments held in rabbi trust | $ | 103.9 | $ | — | $ | — | $ | 103.9 | ||||||||
Derivative liabilities | ||||||||||||||||
Natural gas contracts | $ | 0.2 | $ | 0.2 | $ | — | $ | 0.4 | ||||||||
Petroleum products contracts | 0.1 | — | — | 0.1 | ||||||||||||
Coal contracts | — | 1.9 | — | 1.9 | ||||||||||||
Total derivative liabilities | $ | 0.3 | $ | 2.1 | $ | — | $ | 2.4 |
Three Months Ended March 31 | ||||||||
(in millions) | 2017 | 2016 | ||||||
Balance at the beginning of the period | $ | 5.1 | $ | 3.6 | ||||
Realized and unrealized losses | — | (0.2 | ) | |||||
Sales | — | (0.1 | ) | |||||
Settlements | (3.4 | ) | (2.2 | ) | ||||
Balance at the end of the period | $ | 1.7 | $ | 1.1 |
March 31, 2017 | December 31, 2016 | |||||||||||||||
(in millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Preferred stock | $ | 30.4 | $ | 28.9 | $ | 30.4 | $ | 28.8 | ||||||||
Long-term debt, including current portion * | 9,272.7 | 9,730.2 | 9,285.8 | 9,818.2 |
* | The carrying amount of long-term debt excludes capital lease obligations of $28.9 million and $29.6 million at March 31, 2017 and |
03/31/2017 Form 10-Q | 11 | WEC Energy Group, Inc. |
March 31, 2017 | December 31, 2016 | |||||||||||||||
(in millions) | Derivative Assets | Derivative Liabilities | Derivative Assets | Derivative Liabilities | ||||||||||||
Other current | ||||||||||||||||
Natural gas contracts | $ | 11.4 | $ | 0.7 | $ | 31.4 | $ | 0.4 | ||||||||
Petroleum products contracts | — | 0.3 | 0.2 | 0.1 | ||||||||||||
FTRs | 1.7 | — | 5.1 | — | ||||||||||||
Coal contracts | 1.0 | 1.8 | 1.5 | 1.4 | ||||||||||||
Total other current * | $ | 14.1 | $ | 2.8 | $ | 38.2 | $ | 1.9 | ||||||||
Other long-term | ||||||||||||||||
Natural gas contracts | $ | 0.4 | $ | 0.2 | $ | 2.9 | $ | — | ||||||||
Coal contracts | — | 1.2 | 0.5 | 0.5 | ||||||||||||
Total other long-term * | $ | 0.4 | $ | 1.4 | $ | 3.4 | $ | 0.5 | ||||||||
Total | $ | 14.5 | $ | 4.2 | $ | 41.6 | $ | 2.4 |
* | On our balance sheets, we classify derivative assets and liabilities as other current or other long-term based on the maturities of the underlying contracts. |
Three Months Ended March 31, 2017 | Three Months Ended March 31, 2016 | |||||||||||
(in millions) | Volumes | Gains (Losses) | Volumes | Gains (Losses) | ||||||||
Natural gas contracts | 34.1 Dth | $ | (0.3 | ) | 50.1 Dth | $ | (33.5 | ) | ||||
Petroleum products contracts | 4.9 gallons | (0.5 | ) | 3.0 gallons | (1.1 | ) | ||||||
FTRs | 9.2 MWh | 3.0 | 7.6 MWh | 3.0 | ||||||||
Total | $ | 2.2 | $ | (31.6 | ) |
03/31/2017 Form 10-Q | 12 | WEC Energy Group, Inc. |
March 31, 2017 | December 31, 2016 | |||||||||||||||
(in millions) | Derivative Assets | Derivative Liabilities | Derivative Assets | Derivative Liabilities | ||||||||||||
Gross amount recognized on the balance sheet | $ | 14.5 | $ | 4.2 | $ | 41.6 | $ | 2.4 | ||||||||
Gross amount not offset on the balance sheet | (1.2 | ) | (1.2 | ) | (4.9 | ) | * | (0.5 | ) | |||||||
Net amount | $ | 13.3 | $ | 3.0 | $ | 36.7 | $ | 1.9 |
* | Includes cash collateral received of $4.4 million. |
Total Amounts Committed at | Expiration | |||||||||||||||
(in millions) | March 31, 2017 | Less Than 1 Year | 1 to 3 Years | Over 3 Years | ||||||||||||
Guarantees | ||||||||||||||||
Standby letters of credit (1) | $ | 29.1 | $ | 28.0 | $ | 1.1 | $ | — | ||||||||
Surety bonds (2) | 10.9 | 10.2 | 0.7 | — | ||||||||||||
Other guarantees (3) | 8.1 | 0.5 | — | 7.6 | ||||||||||||
Total guarantees | $ | 48.1 | $ | 38.7 | $ | 1.8 | $ | 7.6 |
(1) | At our request or the request of our subsidiaries, financial institutions have issued standby letters of credit for the benefit of third parties that have extended credit to our subsidiaries. These amounts are not reflected on our balance sheets. |
(2) | Primarily for workers compensation self-insurance programs and obtaining various licenses, permits, and rights-of-way. These amounts are not reflected on our balance sheets. |
(3) | Consists of $8.1 million related to other indemnifications, for which a liability of $7.6 million related to workers compensation coverage was recorded on our balance sheets. |
Pension Costs | ||||||||
Three Months Ended March 31 | ||||||||
(in millions) | 2017 | 2016 | ||||||
Service cost | $ | 11.7 | $ | 11.3 | ||||
Interest cost | 31.2 | 33.2 | ||||||
Expected return on plan assets | (49.6 | ) | (49.0 | ) | ||||
Amortization of prior service cost | 0.7 | 0.9 | ||||||
Amortization of net actuarial loss | 21.9 | 20.5 | ||||||
Net periodic benefit cost | $ | 15.9 | $ | 16.9 |
03/31/2017 Form 10-Q | 13 | WEC Energy Group, Inc. |
OPEB Costs | ||||||||
Three Months Ended March 31 | ||||||||
(in millions) | 2017 | 2016 | ||||||
Service cost | $ | 6.3 | $ | 6.7 | ||||
Interest cost | 8.5 | 9.2 | ||||||
Expected return on plan assets | (13.7 | ) | (13.1 | ) | ||||
Amortization of prior service credit | (2.8 | ) | (2.3 | ) | ||||
Amortization of net actuarial loss | 1.5 | 2.3 | ||||||
Net periodic benefit (credit) cost | $ | (0.2 | ) | $ | 2.8 |
Three Months Ended March 31 | ||||||||
(in millions) | 2017 | 2016 | ||||||
Balance at beginning of period | $ | 1,443.9 | $ | 1,380.9 | ||||
Add: Earnings from equity method investment | 41.9 | 38.5 | ||||||
Add: Capital contributions | 27.6 | 9.0 | ||||||
Add: Adjustment to equity method goodwill | — | 9.3 | ||||||
Less: Distributions * | — | 15.1 | ||||||
Less: Other | 0.1 | 0.1 | ||||||
Balance at end of period | $ | 1,513.3 | $ | 1,422.5 |
* | Distributions of $35.2 million, received in the first quarter of 2017, were approved and recorded in December 2016. |
Three Months Ended March 31 | ||||||||
(in millions) | 2017 | 2016 | ||||||
Charges to ATC for services and construction | $ | 4.2 | $ | 4.1 | ||||
Charges from ATC for network transmission services | 87.3 | 100.8 | ||||||
Refund from ATC per FERC ROE order | (28.3 | ) | — |
(in millions) | March 31, 2017 | December 31, 2016 | ||||||
Accounts receivable | ||||||||
Services provided to ATC | $ | 1.2 | $ | 2.2 | ||||
Accounts payable | ||||||||
Services received from ATC | 29.1 | 28.7 |
03/31/2017 Form 10-Q | 14 | WEC Energy Group, Inc. |
Three Months Ended March 31 | ||||||||
(in millions) | 2017 | 2016 | ||||||
Income statement data | ||||||||
Revenues | $ | 174.7 | $ | 164.2 | ||||
Operating expenses | 82.4 | 79.1 | ||||||
Other expense | 26.4 | 24.0 | ||||||
Net income | $ | 65.9 | $ | 61.1 |
(in millions) | March 31, 2017 | December 31, 2016 | ||||||
Balance sheet data | ||||||||
Current assets | $ | 85.5 | $ | 75.8 | ||||
Noncurrent assets | 4,402.2 | 4,312.9 | ||||||
Total assets | $ | 4,487.7 | $ | 4,388.7 | ||||
Current liabilities | $ | 401.8 | $ | 495.1 | ||||
Long-term debt | 1,940.4 | 1,865.3 | ||||||
Other noncurrent liabilities | 282.9 | 271.5 | ||||||
Shareholders' equity | 1,862.6 | 1,756.8 | ||||||
Total liabilities and shareholders' equity | $ | 4,487.7 | $ | 4,388.7 |
• | The Wisconsin segment includes the electric and natural gas utility operations of WE, WG, and WPS, including WE's and WPS's electric and natural gas operations in the state of Michigan that were transferred to UMERC effective January 1, 2017. |
• | The Illinois segment includes the natural gas utility and non-utility operations of PGL and NSG. |
• | The other states segment includes the natural gas utility and non-utility operations of MERC and MGU. |
• | The electric transmission segment includes our approximate 60% ownership interest in ATC, a for-profit, electric transmission company regulated by the FERC and certain state regulatory commissions. |
• | The We Power segment includes our nonregulated entity that owns and leases generating facilities to WE. |
• | The corporate and other segment includes the operations of the WEC Energy Group holding company, the Integrys holding company, the Peoples Energy, LLC holding company, Wispark LLC, Bostco, Wisvest, Wisconsin Energy Capital Corporation, WBS, WPS Power Development LLC, and ITF. The sale of ITF was completed in the first quarter of 2016. In the first quarter of 2017, we sold substantially all of the remaining assets of Bostco and in the second quarter of 2016, we sold certain assets of Wisvest. See Note 3, Dispositions, for more information on these sales. |
03/31/2017 Form 10-Q | 15 | WEC Energy Group, Inc. |
Regulated Operations | ||||||||||||||||||||||||||||||||||||
(in millions) | Wisconsin | Illinois | Other States | Electric Transmission | Total Regulated Operations | We Power | Corporate and Other | Reconciling Eliminations | WEC Energy Group Consolidated | |||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||||||
March 31, 2017 | ||||||||||||||||||||||||||||||||||||
External revenues | $ | 1,612.1 | $ | 525.3 | $ | 157.9 | $ | — | $ | 2,295.3 | $ | 6.3 | $ | 2.9 | $ | — | $ | 2,304.5 | ||||||||||||||||||
Intersegment revenues | — | — | — | — | — | 109.0 | — | (109.0 | ) | — | ||||||||||||||||||||||||||
Other operation and maintenance | 462.9 | 120.9 | 28.3 | — | 612.1 | 0.4 | (1.6 | ) | (109.0 | ) | 501.9 | |||||||||||||||||||||||||
Depreciation and amortization | 129.3 | 36.2 | 6.0 | — | 171.5 | 17.5 | 5.6 | — | 194.6 | |||||||||||||||||||||||||||
Operating income (loss) | 332.3 | 155.4 | 33.4 | — | 521.1 | 97.4 | (1.2 | ) | — | 617.3 | ||||||||||||||||||||||||||
Equity in earnings of transmission affiliate | — | — | — | 41.9 | 41.9 | — | — | — | 41.9 | |||||||||||||||||||||||||||
Interest expense | 48.7 | 11.1 | 2.3 | — | 62.1 | 15.3 | 29.1 | (1.8 | ) | 104.7 |
Regulated Operations | ||||||||||||||||||||||||||||||||||||
(in millions) | Wisconsin | Illinois | Other States | Electric Transmission | Total Regulated Operations | We Power | Corporate and Other | Reconciling Eliminations | WEC Energy Group Consolidated | |||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||||||
March 31, 2016 | ||||||||||||||||||||||||||||||||||||
External revenues | $ | 1,579.8 | $ | 448.5 | $ | 148.4 | $ | — | $ | 2,176.7 | $ | 6.2 | $ | 11.9 | $ | — | $ | 2,194.8 | ||||||||||||||||||
Intersegment revenues | 0.1 | — | — | — | 0.1 | 104.5 | — | (104.6 | ) | — | ||||||||||||||||||||||||||
Other operation and maintenance | 491.3 | 117.9 | 30.0 | — | 639.2 | 0.4 | (3.5 | ) | (104.6 | ) | 531.5 | |||||||||||||||||||||||||
Depreciation and amortization | 122.9 | 32.8 | 5.1 | — | 160.8 | 17.0 | 10.1 | — | 187.9 | |||||||||||||||||||||||||||
Operating income (loss) | 327.5 | 137.0 | 31.8 | — | 496.3 | 93.3 | (0.3 | ) | — | 589.3 | ||||||||||||||||||||||||||
Equity in earnings of transmission affiliate | — | — | — | 38.5 | 38.5 | — | — | — | 38.5 | |||||||||||||||||||||||||||
Interest expense | 44.5 | 9.7 | 2.5 | — | 56.7 | 15.6 | 31.3 | (2.7 | ) | 100.9 |
03/31/2017 Form 10-Q | 16 | WEC Energy Group, Inc. |
03/31/2017 Form 10-Q | 17 | WEC Energy Group, Inc. |
03/31/2017 Form 10-Q | 18 | WEC Energy Group, Inc. |
03/31/2017 Form 10-Q | 19 | WEC Energy Group, Inc. |
(in millions) | March 31, 2017 | December 31, 2016 | ||||||
Regulatory assets | $ | 685.4 | $ | 702.7 | ||||
Reserves for future remediation | 630.5 | 633.4 |
03/31/2017 Form 10-Q | 20 | WEC Energy Group, Inc. |
Three Months Ended March 31 | ||||||||
(in millions) | 2017 | 2016 | ||||||
Cash (paid) for interest, net of amount capitalized | $ | (56.6 | ) | $ | (53.0 | ) | ||
Cash received (paid) for income taxes, net | 8.9 | (0.4 | ) | |||||
Significant non-cash transactions | ||||||||
Accounts payable related to construction costs | 116.4 | 90.1 | ||||||
Increase (decrease) in restricted cash from the sale (purchase) of investments held in the rabbi trust | 8.3 | (1.5 | ) | |||||
Portion of Bostco real estate holdings sale financed with note receivable * | 7.0 | — | ||||||
Amortization of deferred revenue | 6.2 | 6.2 |
* | See Note 3, Dispositions, for more information on this sale. |
03/31/2017 Form 10-Q | 21 | WEC Energy Group, Inc. |
03/31/2017 Form 10-Q | 22 | WEC Energy Group, Inc. |
03/31/2017 Form 10-Q | 23 | WEC Energy Group, Inc. |
03/31/2017 Form 10-Q | 24 | WEC Energy Group, Inc. |
03/31/2017 Form 10-Q | 25 | WEC Energy Group, Inc. |
• | UMERC, our newly created Michigan electric and natural gas utility, is proposing a long-term generation solution for electric reliability in the Upper Peninsula of Michigan. The plan calls for UMERC to construct and operate approximately 180 MWs of natural gas-fired generation that will be located in the Upper Peninsula of Michigan. The new generation would provide the region with affordable, reliable electricity that generates less emissions than PIPP. Subject to regulatory approval, the new generation is expected to achieve commercial operation in 2019 and should allow for the retirement of PIPP no later than 2020. For more information, see Note 16, Regulatory Environment. |
• | PGL is continuing to work on its SMP, which primarily involves replacing old cast and ductile iron gas pipes and facilities in the city of Chicago’s natural gas delivery system with modern polyethylene pipes to reinforce the long-term safety and reliability of the system. |
• | WPS continues work on its SMRP, which involves modernizing parts of its electric distribution system by burying or upgrading lines. The project focuses on electric lines that currently have the lowest reliability in its system, primarily in rural areas that are heavily forested. |
03/31/2017 Form 10-Q | 26 | WEC Energy Group, Inc. |
• | See Note 2, Acquisition, for information about our pending acquisition of a natural gas storage facility in Michigan. |
• | See Note 3, Dispositions, for information on the sale of ITF, the MCPP, and Bostco's real estate holdings. |
03/31/2017 Form 10-Q | 27 | WEC Energy Group, Inc. |
Three Months Ended March 31 | ||||||||||||
(in millions, except per share data) | 2017 | 2016 | B (W) | |||||||||
Wisconsin | $ | 332.3 | $ | 327.5 | $ | 4.8 | ||||||
Illinois | 155.4 | 137.0 | 18.4 | |||||||||
Other states | 33.4 | 31.8 | 1.6 | |||||||||
We Power | 97.4 | 93.3 | 4.1 | |||||||||
Corporate and other | (1.2 | ) | (0.3 | ) | (0.9 | ) | ||||||
Total operating income | 617.3 | 589.3 | 28.0 | |||||||||
Equity in earnings of transmission affiliate | 41.9 | 38.5 | 3.4 | |||||||||
Other income, net | 15.7 | 32.7 | (17.0 | ) | ||||||||
Interest expense | 104.7 | 100.9 | (3.8 | ) | ||||||||
Income before income taxes | 570.2 | 559.6 | 10.6 | |||||||||
Income tax expense | 213.3 | 213.1 | (0.2 | ) | ||||||||
Preferred stock dividends of subsidiary | 0.3 | 0.3 | — | |||||||||
Net income attributed to common shareholders | $ | 356.6 | $ | 346.2 | $ | 10.4 | ||||||
Diluted earnings per share | $ | 1.12 | $ | 1.09 | $ | 0.03 |
• | A $28.4 million pre-tax ($17.0 million after tax) decrease in other operation and maintenance expenses at the Wisconsin segment. The decrease primarily related to lower operation and maintenance expenses at our electric generation plants, lower electric and natural gas distribution expenses, and a decrease in benefit costs. |
• | An $18.4 million pre-tax ($11.0 million after tax) increase in operating income at the Illinois segment. The increase was driven by higher natural gas margins at PGL due to continued capital investment in projects under its QIP rider and a decrease in benefit costs related to both lower pension costs and lower medical costs. |
• | A $16.1 million pre-tax ($9.7 million after tax) decrease in electric margins at the Wisconsin segment primarily driven by lower retail sales volumes in the first quarter of 2017. |
• | A $17.0 million pre-tax ($10.2 million after tax) decrease in other income, net. The decrease was driven by the quarter-over-quarter impact of the gain recognized in 2016 related to the repurchase of a portion of Integrys's 6.11% Junior Notes. |
03/31/2017 Form 10-Q | 28 | WEC Energy Group, Inc. |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2017 | 2016 | B (W) | |||||||||
Electric revenues | $ | 1,115.3 | $ | 1,117.2 | $ | (1.9 | ) | |||||
Fuel and purchased power | 350.5 | 336.3 | (14.2 | ) | ||||||||
Total electric margins | 764.8 | 780.9 | (16.1 | ) | ||||||||
Natural gas revenues | 496.8 | 462.7 | 34.1 | |||||||||
Cost of natural gas sold | 296.6 | 261.6 | (35.0 | ) | ||||||||
Total natural gas margins | 200.2 | 201.1 | (0.9 | ) | ||||||||
Total electric and natural gas margins | 965.0 | 982.0 | (17.0 | ) | ||||||||
Other operation and maintenance | 462.9 | 491.3 | 28.4 | |||||||||
Depreciation and amortization | 129.3 | 122.9 | (6.4 | ) | ||||||||
Property and revenue taxes | 40.5 | 40.3 | (0.2 | ) | ||||||||
Operating income | $ | 332.3 | $ | 327.5 | $ | 4.8 |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2017 | 2016 | B (W) | |||||||||
Operation and maintenance not included in line items below | $ | 186.9 | $ | 215.7 | $ | 28.8 | ||||||
We Power (1) | 127.6 | 128.6 | 1.0 | |||||||||
Transmission (2) | 103.9 | 105.8 | 1.9 | |||||||||
Regulatory amortizations and other pass through expenses (3) | 44.5 | 41.2 | (3.3 | ) | ||||||||
Total other operation and maintenance | $ | 462.9 | $ | 491.3 | $ | 28.4 |
(1) | Represents costs associated with the We Power generation units, including operating and maintenance costs incurred by WE, as well as the lease payments that are billed from We Power to WE and then recovered in WE's rates. During the three months ended March 31, 2017 and 2016, $124.7 million and $122.8 million, respectively, of both lease and operating and maintenance costs were billed to or incurred by WE, with the difference in costs billed or incurred and expenses recognized, deferred, or deducted from the regulatory asset. |
(2) | The PSCW has approved escrow accounting for ATC and MISO network transmission expenses for our Wisconsin electric utilities. As a result, WE and WPS defer as a regulatory asset or liability the differences between actual transmission costs and those included in rates until recovery or refund is authorized in a future rate proceeding. During the three months ended March 31, 2017 and 2016, $82.9 million and $123.5 million, respectively, of costs were billed by transmission providers to our electric utilities. |
(3) | Regulatory amortizations and other pass through expenses are substantially offset in margins and therefore do not have a significant impact on operating income. |
03/31/2017 Form 10-Q | 29 | WEC Energy Group, Inc. |
Three Months Ended March 31 | |||||||||
MWh (in thousands) | |||||||||
Electric Sales Volumes | 2017 | 2016 | B (W) | ||||||
Customer Class | |||||||||
Residential | 2,598.3 | 2,655.3 | (57.0 | ) | |||||
Small commercial and industrial * | 3,192.6 | 3,197.0 | (4.4 | ) | |||||
Large commercial and industrial * | 3,080.4 | 3,372.6 | (292.2 | ) | |||||
Other | 47.2 | 47.5 | (0.3 | ) | |||||
Total retail * | 8,918.5 | 9,272.4 | (353.9 | ) | |||||
Wholesale | 942.9 | 856.1 | 86.8 | ||||||
Resale | 2,277.1 | 2,232.3 | 44.8 | ||||||
Total sales in MWh * | 12,138.5 | 12,360.8 | (222.3 | ) |
* | Includes distribution sales for customers who purchased power from an alternative electric supplier in Michigan. |
Three Months Ended March 31 | |||||||||
Therms (in millions) | |||||||||
Natural Gas Sales Volumes | 2017 | 2016 | B (W) | ||||||
Customer Class | |||||||||
Residential | 472.4 | 477.8 | (5.4 | ) | |||||
Commercial and industrial | 275.9 | 270.8 | 5.1 | ||||||
Total retail | 748.3 | 748.6 | (0.3 | ) | |||||
Transport | 382.7 | 380.5 | 2.2 | ||||||
Total sales in therms | 1,131.0 | 1,129.1 | 1.9 |
Three Months Ended March 31 | |||||||||
Degree Days | |||||||||
Weather | 2017 | 2016 | B(W) | ||||||
WE and WG (1) | |||||||||
Heating (3,278 normal) | 2,849 | 3,105 | (256 | ) | |||||
WPS (2) | |||||||||
Heating (3,651 normal) | 3,273 | 3,438 | (165 | ) | |||||
UMERC (3) | |||||||||
Heating (3,954 normal) | 3,662 | N/A | N/A |
(1) | Normal heating degree days are based on a 20-year moving average of monthly temperatures from Mitchell International Airport in Milwaukee, Wisconsin. |
(2) | Normal heating degree days are based on a 20-year moving average of monthly temperatures from the Green Bay, Wisconsin weather station. |
(3) | Normal heating degree days are based on a 20-year moving average of monthly temperatures from the Iron Mountain, Michigan weather station. |
• | A $15.0 million decrease related to lower retail sales volumes during the first quarter of 2017, partially related to warmer winter weather and an additional day of sales during the same period in 2016 due to leap year. As measured by heating degree days, the first quarter of 2017 was 8.2% and 4.8% warmer than the same period in 2016 in the Milwaukee and Green Bay areas, respectively. |
03/31/2017 Form 10-Q | 30 | WEC Energy Group, Inc. |
• | A $5.6 million negative impact from collections of fuel and purchased power costs compared with costs approved in rates in the first quarter of 2017, as compared with the same period in 2016. Under the Wisconsin fuel rules, the margins of our electric utilities are impacted by under or over-collections of certain fuel and purchased power costs that are less than a 2% price variance from the costs included in rates, and the remaining variance that exceeds the 2% variance is deferred. |
• | A $3.9 million decrease in steam margins related to the sale of the MCPP in April 2016. See Note 3, Dispositions, for more information. |
• | An $11.3 million decrease in operation and maintenance expenses at our plants, partially related to the seasonal operation of our plants, the timing of planned outages and maintenance, and the sale of the MCPP in April 2016. See Note 3, Dispositions, for more information on the sale of the MCPP. |
• | A $6.5 million decrease in electric and natural gas distribution expenses. |
• | A $5.9 million decrease in benefit costs, primarily driven by lower employee and postretirement medical costs and stock-based compensation. |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2017 | 2016 | B (W) | |||||||||
Natural gas revenues | $ | 525.3 | $ | 448.5 | $ | 76.8 | ||||||
Cost of natural gas sold | 207.7 | 157.3 | (50.4 | ) | ||||||||
Total natural gas margins | 317.6 | 291.2 | 26.4 | |||||||||
Other operation and maintenance | 120.9 | 117.9 | (3.0 | ) | ||||||||
Depreciation and amortization | 36.2 | 32.8 | (3.4 | ) | ||||||||
Property and revenue taxes | 5.1 | 3.5 | (1.6 | ) | ||||||||
Operating income | $ | 155.4 | $ | 137.0 | $ | 18.4 |
03/31/2017 Form 10-Q | 31 | WEC Energy Group, Inc. |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2017 | 2016 | B (W) | |||||||||
Operation and maintenance not included in the line items below | $ | 77.8 | $ | 94.1 | $ | 16.3 | ||||||
Riders * | 42.3 | 23.1 | (19.2 | ) | ||||||||
Regulatory amortizations * | 0.7 | 0.6 | (0.1 | ) | ||||||||
Other | 0.1 | 0.1 | — | |||||||||
Total other operation and maintenance | $ | 120.9 | $ | 117.9 | $ | (3.0 | ) |
* | Riders and regulatory amortizations are substantially offset in margins and therefore do not have a significant impact on operating income. |
Three Months Ended March 31 | |||||||||
Therms (in millions) | |||||||||
Natural Gas Sales Volumes | 2017 | 2016 | B (W) | ||||||
Customer Class | |||||||||
Residential | 407.0 | 431.6 | (24.6 | ) | |||||
Commercial and industrial | 85.7 | 88.4 | (2.7 | ) | |||||
Total retail | 492.7 | 520.0 | (27.3 | ) | |||||
Transport | 328.3 | 345.9 | (17.6 | ) | |||||
Total sales in therms | 821.0 | 865.9 | (44.9 | ) |
Three Months Ended March 31 | |||||||||
Degree Days | |||||||||
Weather * | 2017 | 2016 | B (W) | ||||||
Heating (3,171 Normal) | 2,661 | 2,908 | (247 | ) |
* | Normal heating degree days are based on a 12-year moving average of monthly temperatures from Chicago's O'Hare Airport. |
03/31/2017 Form 10-Q | 32 | WEC Energy Group, Inc. |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2017 | 2016 | B (W) | |||||||||
Natural gas revenues | $ | 157.9 | $ | 148.4 | $ | 9.5 | ||||||
Cost of natural gas sold | 86.4 | 78.4 | (8.0 | ) | ||||||||
Total natural gas margins | 71.5 | 70.0 | 1.5 | |||||||||
Other operation and maintenance | 28.3 | 30.0 | 1.7 | |||||||||
Depreciation and amortization | 6.0 | 5.1 | (0.9 | ) | ||||||||
Property and revenue taxes | 3.8 | 3.1 | (0.7 | ) | ||||||||
Operating income | $ | 33.4 | $ | 31.8 | $ | 1.6 |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2017 | 2016 | B (W) | |||||||||
Operation and maintenance not included in line item below | $ | 19.5 | $ | 20.9 | $ | 1.4 | ||||||
Regulatory amortizations and other pass through expenses * | 8.8 | 9.1 | 0.3 | |||||||||
Total other operation and maintenance | $ | 28.3 | $ | 30.0 | $ | 1.7 |
* | Regulatory amortizations and other pass through expenses are substantially offset in margins and therefore do not have a significant impact on operating income. |
Three Months Ended March 31 | |||||||||
Therms (in millions) | |||||||||
Natural Gas Sales Volumes | 2017 | 2016 | B (W) | ||||||
Customer Class | |||||||||
Residential | 133.8 | 142.0 | (8.2 | ) | |||||
Commercial and industrial | 83.9 | 87.6 | (3.7 | ) | |||||
Total retail | 217.7 | 229.6 | (11.9 | ) | |||||
Transport | 191.4 | 227.1 | (35.7 | ) | |||||
Total sales in therms | 409.1 | 456.7 | (47.6 | ) |
Three Months Ended March 31 | |||||||||
Degree Days | |||||||||
Weather * | 2017 | 2016 | B (W) | ||||||
Heating (3,558 Normal) | 3,134 | 3,231 | (97 | ) |
* | Normal heating degree days for MERC and MGU are based on a 20-year moving average and 15-year moving average, respectively, of monthly temperatures from various weather stations throughout their respective service territories. |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2017 | 2016 | B (W) | |||||||||
Operating income | $ | 97.4 | $ | 93.3 | $ | 4.1 |
03/31/2017 Form 10-Q | 33 | WEC Energy Group, Inc. |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2017 | 2016 | B (W) | |||||||||
Operating loss | $ | (1.2 | ) | $ | (0.3 | ) | $ | (0.9 | ) |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2017 | 2016 | B (W) | |||||||||
Equity in earnings of transmission affiliate | $ | 41.9 | $ | 38.5 | $ | 3.4 |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2017 | 2016 | B (W) | |||||||||
AFUDC – Equity | $ | 2.4 | $ | 7.0 | $ | (4.6 | ) | |||||
Gain on repurchase of notes | — | 23.6 | (23.6 | ) | ||||||||
Other, net | 13.3 | 2.1 | 11.2 | |||||||||
Other income, net | $ | 15.7 | $ | 32.7 | $ | (17.0 | ) |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2017 | 2016 | B (W) | |||||||||
Interest expense | $ | 104.7 | $ | 100.9 | $ | (3.8 | ) |
Three Months Ended March 31 | |||||||||
2017 | 2016 | B (W) | |||||||
Effective tax rate | 37.4 | % | 38.1 | % | 0.7 | % |
03/31/2017 Form 10-Q | 34 | WEC Energy Group, Inc. |
(in millions) | 2017 | 2016 | Change in 2017 Over 2016 | |||||||||
Cash provided by (used in): | ||||||||||||
Operating activities | $ | 714.6 | $ | 695.9 | $ | 18.7 | ||||||
Investing activities | (325.6 | ) | (188.4 | ) | (137.2 | ) | ||||||
Financing activities | (380.8 | ) | (522.6 | ) | 141.8 |
• | A $151.5 million increase in cash related to higher overall collections from customers, primarily due to higher commodity prices. The average per-unit cost of natural gas sold increased 21.8% during the first quarter of 2017, compared with the same period in 2016. |
• | A $43.4 million increase in cash from lower payments for operating and maintenance costs. During the first quarter of 2017, our payments related to transmission, electric generation costs, and employee benefits decreased. |
• | A $20.1 million increase in cash distributions provided by ATC during the first quarter of 2017. |
• | A $110.3 million decrease in cash resulting from higher payments for natural gas and fuel and purchased power, due to higher commodity prices during the first quarter of 2017, compared with the same period in 2016. |
• | A $90.9 million increase in contributions and payments to our pension and OPEB plans during the first quarter of 2017. |
• | A $93.4 million decrease in the proceeds received from the sale of assets and businesses during the first quarter of 2017, compared with the same period in 2016. See Note 3, Dispositions, for more information. |
• | An $18.6 million increase in our capital contributions to ATC during the first quarter of 2017. Our capital contributions increased due to the continued investment in equipment and facilities by ATC to improve reliability as well as the ROE refunds that ATC was required to provide as a result of the FERC order issued in September 2016. See Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations – Factors Affecting Results, Liquidity, and Capital Resources – Other Matters – American Transmission Company Allowed Return on Equity Complaints for more information on this FERC order. |
• | A $17.7 million increase in cash paid for capital expenditures during the first quarter of 2017, which is discussed in more detail below. |
03/31/2017 Form 10-Q | 35 | WEC Energy Group, Inc. |
Reportable Segment (in millions) | 2017 | 2016 | Change in 2017 Over 2016 | |||||||||
Wisconsin | $ | 199.0 | $ | 201.8 | $ | (2.8 | ) | |||||
Illinois | 97.5 | 76.2 | 21.3 | |||||||||
Other states | 12.6 | 10.3 | 2.3 | |||||||||
We Power | 5.2 | 4.2 | 1.0 | |||||||||
Corporate and other | 15.4 | 19.5 | (4.1 | ) | ||||||||
Total capital expenditures | $ | 329.7 | $ | 312.0 | $ | 17.7 |
• | A $127.4 million decrease in cash used for the repayment of long-term debt during the first quarter of 2017. In February 2016, we repurchased a portion of Integrys's 6.11% Junior Notes at a discount. |
• | A $39.4 million decrease in cash used to purchase shares of our common stock during the first quarter of 2017 to satisfy requirements of our stock-based compensation plans. |
03/31/2017 Form 10-Q | 36 | WEC Energy Group, Inc. |
(in millions) | Actual | Adjusted | ||||||
Common equity | $ | 9,125.6 | $ | 9,375.6 | ||||
Preferred stock of subsidiary | 30.4 | 30.4 | ||||||
Long-term debt (including current portion) | 9,301.6 | 9,051.6 | ||||||
Short-term debt | 670.4 | 670.4 | ||||||
Total capitalization | $ | 19,128.0 | $ | 19,128.0 | ||||
Total debt | $ | 9,972.0 | $ | 9,722.0 | ||||
Ratio of debt to total capitalization | 52.1 | % | 50.8 | % |
(in millions) | 2017 | 2018 | 2019 | |||||||||
Wisconsin | $ | 1,376.1 | $ | 1,270.5 | $ | 1,203.8 | ||||||
Illinois | 544.8 | 517.7 | 523.4 | |||||||||
Other states | 91.0 | 102.7 | 106.8 | |||||||||
We Power | 38.4 | 35.0 | 36.4 | |||||||||
Corporate and other | 131.9 | 30.9 | 28.9 | |||||||||
Total | $ | 2,182.2 | $ | 1,956.8 | $ | 1,899.3 |
03/31/2017 Form 10-Q | 37 | WEC Energy Group, Inc. |
03/31/2017 Form 10-Q | 38 | WEC Energy Group, Inc. |
• | In June 2016, the PSCW approved the deferral of costs related to WPS's ReACT™ project above the originally authorized $275.0 million level through 2017. In April 2017, WPS requested an extension of this deferral through 2019 from the PSCW as part of a settlement agreement. We expect the PSCW to issue a final order related to this extension in 2017. See Note 16, Regulatory Environment, for more information. WPS will be required to obtain a separate approval for collection of these deferred costs. |
• | Prior to its acquisition, Integrys initiated an information technology project with the goal of improving the customer experience at its subsidiaries. Specifically, the project is expected to provide functional and technological benefits to the billing, call center, and credit collection functions. As of March 31, 2017, we had not received any significant disallowances of the costs incurred for this project. We will be required to obtain approval for the recovery of additional costs incurred through the completion of this long-term project. |
• | In January 2014, the ICC approved PGL's use of the QIP rider as a recovery mechanism for costs incurred related to investments in QIP. This rider is subject to an annual reconciliation whereby costs are reviewed for accuracy and prudency. In March 2017, PGL filed its 2016 reconciliation with the ICC, which, along with the 2015 reconciliation, is still pending. For PGL's 2014 reconciliation, the ALJ has issued a schedule, and we expect to receive an order from the ICC in 2017. As of March 31, 2017, there can be no assurance that all costs incurred under the QIP rider will be recoverable. |
03/31/2017 Form 10-Q | 39 | WEC Energy Group, Inc. |
03/31/2017 Form 10-Q | 40 | WEC Energy Group, Inc. |
03/31/2017 Form 10-Q | 41 | WEC Energy Group, Inc. |
03/31/2017 Form 10-Q | 42 | WEC Energy Group, Inc. |
03/31/2017 Form 10-Q | 43 | WEC Energy Group, Inc. |
2017 | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||
January 1 – January 31 | 18,881 | $ | 58.71 | — | $ | — | ||||||||
February 1 – February 28 | 6,250 | 57.19 | — | $ | — | |||||||||
March 1 – March 31 | — | — | — | $ | — | |||||||||
Total * | 25,131 | $ | 58.33 | — |
* | All shares were surrendered by employees to satisfy tax withholding obligations upon vesting of restricted stock. |
03/31/2017 Form 10-Q | 44 | WEC Energy Group, Inc. |
Number | Exhibit | ||
31 | Rule 13a-14(a) / 15d-14(a) Certifications | ||
31.1 | Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
31.2 | Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
32 | Section 1350 Certifications | ||
32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
32.2 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
101 | Interactive Data File |
03/31/2017 Form 10-Q | 45 | WEC Energy Group, Inc. |
WEC ENERGY GROUP, INC. | ||
(Registrant) | ||
/s/ WILLIAM J. GUC | ||
Date: | May 5, 2017 | William J. Guc |
Vice President and Controller | ||
(Duly Authorized Officer and Chief Accounting Officer) |
03/31/2017 Form 10-Q | 46 | WEC Energy Group, Inc. |
1. | I have reviewed this Quarterly Report on Form 10-Q of WEC Energy Group, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | May 5, 2017 | |
/s/ ALLEN L. LEVERETT | ||
Allen L. Leverett | ||
Chief Executive Officer and President | ||
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of WEC Energy Group, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | May 5, 2017 | |
/s/ SCOTT J. LAUBER | ||
Scott J. Lauber | ||
Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer) |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ ALLEN L. LEVERETT | |
Allen L. Leverett | |
Chief Executive Officer and President | |
May 5, 2017 |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ SCOTT J. LAUBER | |
Scott J. Lauber | |
Executive Vice President and Chief Financial Officer | |
May 5, 2017 |
DOCUMENT AND ENTITY INFORMATION |
3 Months Ended |
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Mar. 31, 2017
shares
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Document and Entity Information [Abstract] | |
Entity Registrant Name | WEC Energy Group, Inc. |
Entity Central Index Key | 0000783325 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Document Type | 10-Q |
Document Period End Date | Mar. 31, 2017 |
Document Fiscal Year Focus | 2017 |
Document Fiscal Period Focus | Q1 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding | 315,579,222 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2017 |
Mar. 31, 2016 |
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Statement of Comprehensive Income [Abstract] | ||
Net income | $ 356.9 | $ 346.5 |
Derivatives accounted for as cash flow hedges | ||
Reclassification of gains to net income, net of tax | (0.3) | (0.3) |
Defined benefit plans | ||
Amortization of pension and OPEB costs included in net periodic benefit cost, net of tax | 0.1 | 0.0 |
Other comprehensive loss, net of tax | (0.2) | (0.3) |
Comprehensive income | 356.7 | 346.2 |
Preferred stock dividends of subsidiary | 0.3 | 0.3 |
Comprehensive income attributed to common shareholders | $ 356.4 | $ 345.9 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
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Statement of Financial Position [Abstract] | ||
Accounts receivable and accrued unbilled revenues, reserves | $ 123.1 | $ 108.0 |
Property, plant, and equipment, accumulated depreciation | $ 8,312.8 | $ 8,214.6 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 325,000,000 | 325,000,000 |
Common stock, shares outstanding | 315,579,222 | 315,614,941 |
GENERAL INFORMATION |
3 Months Ended |
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Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GENERAL INFORMATION | GENERAL INFORMATION WEC Energy Group serves approximately 1.6 million electric customers and 2.8 million natural gas customers, and owns approximately 60% of ATC. As used in these notes, the term "financial statements" refers to the condensed consolidated financial statements. This includes the income statements, statements of comprehensive income, balance sheets, and statements of cash flows, unless otherwise noted. In this report, when we refer to "the Company," "us," "we," "our," or "ours," we are referring to WEC Energy Group and all of its subsidiaries. We have prepared the unaudited interim financial statements presented in this Form 10-Q pursuant to the rules and regulations of the SEC and GAAP. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for annual financial statements. These financial statements should be read in conjunction with the consolidated financial statements and footnotes in our Annual Report on Form 10-K for the year ended December 31, 2016. Financial results for an interim period may not give a true indication of results for the year. In particular, the results of operations for the three months ended March 31, 2017, are not necessarily indicative of expected results for 2017 due to seasonal variations and other factors. In management's opinion, we have included all adjustments, normal and recurring in nature, necessary for a fair presentation of our financial results. |
ACQUISITION |
3 Months Ended |
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Mar. 31, 2017 | |
Business Combinations [Abstract] | |
ACQUISITION | ACQUISITION Acquisition of a Natural Gas Storage Facility in Michigan In January 2017, we signed an agreement for the acquisition of a natural gas storage facility in Michigan for $225 million that would provide approximately one-third of the current storage needs for our Wisconsin natural gas utilities. In addition, we expect to incur approximately $5 million of acquisition related costs. A request has been filed with the PSCW for a declaratory ruling related to the recovery of this investment. PSCW approval and closing of this transaction are expected to occur by the third quarter of 2017. |
DISPOSITIONS |
3 Months Ended |
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Mar. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISPOSITIONS | DISPOSITIONS Wisconsin Segment Sale of Milwaukee County Power Plant In April 2016, we sold the MCPP steam generation and distribution assets, located in Wauwatosa, Wisconsin. MCPP primarily provided steam to the Milwaukee Regional Medical Center hospitals and other campus buildings. During the second quarter of 2016, we recorded a pre-tax gain on the sale of $10.9 million ($6.5 million after tax), which was included in other operation and maintenance on our income statements. The assets included in the sale were not material and, therefore, were not presented as held for sale. The results of operations of this plant remained in continuing operations through the sale date as the sale did not represent a shift in our corporate strategy and did not have a major effect on our operations and financial results. Corporate and Other Segment Sale of Bostco Real Estate Holdings In March 2017, we sold the remaining real estate holdings of Bostco located in downtown Milwaukee, Wisconsin, which included retail, office, and residential space. During the first quarter of 2017, we recorded an insignificant gain on the sale, which was included in other income, net on our income statements. The assets included in the sale were not material and, therefore, were not presented as held for sale. The results of operations associated with these assets remained in continuing operations through the sale date as the sale did not represent a shift in our corporate strategy and did not have a major effect on our operations and financial results. Sale of Certain Assets of Wisvest In April 2016, as part of the MCPP sale transaction, we sold the chilled water generation and distribution assets of Wisvest, which were used to provide chilled water services to the Milwaukee Regional Medical Center hospitals and other campus buildings. During the second quarter of 2016, we recorded a pre-tax gain on the sale of $19.6 million ($11.8 million after tax), which was included in other income, net on our income statements. The assets included in the sale were not material and, therefore, were not presented as held for sale. The results of operations associated with these assets remained in continuing operations through the sale date as the sale did not represent a shift in our corporate strategy and did not have a major effect on our operations and financial results. Sale of Integrys Transportation Fuels Through a series of transactions in the fourth quarter of 2015 and the first quarter of 2016, we sold ITF, a provider of CNG fueling services and a single-source provider of CNG fueling facility design, construction, operation, and maintenance. There was no gain or loss recorded on the sales, as ITF's assets and liabilities were adjusted to fair value through purchase accounting. The results of operations of ITF remained in continuing operations through the sale date as the sale of ITF did not represent a shift in our corporate strategy and did not have a major effect on our operations and financial results. The pre-tax profit or loss of this component was not material through the sale date in 2016. |
COMMON EQUITY |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMON EQUITY | COMMON EQUITY Stock-Based Compensation During the first quarter of 2017, the Compensation Committee of our Board of Directors awarded the following stock-based compensation awards to our directors, officers, and certain other key employees:
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which modifies certain aspects of the accounting for stock-based compensation awards. This ASU became effective for us on January 1, 2017. Under the new guidance, all excess tax benefits and tax deficiencies are recognized as income tax expense or benefit in the income statement on a prospective basis. Prior to January 1, 2017, these amounts were recorded in additional paid in capital on the balance sheet, and the tax benefits could only be recognized to the extent they reduced taxes payable. In the first quarter of 2017, we recorded a $15.7 million cumulative-effect adjustment to retained earnings for excess tax benefits that had not been recognized in prior years as they did not reduce taxes payable. The following table shows the changes to our retained earnings for the three months ended March 31, 2017:
ASU 2016-09 also requires excess tax benefits to be classified as an operating activity on the statement of cash flows. As we have elected to apply this provision on a prospective basis, the prior year amounts will continue to be reflected as a financing activity. As allowed under this ASU, we have also elected to account for forfeitures as they occur, rather than estimating expected forfeitures and recording them over the vesting period. Restrictions Our ability as a holding company to pay common stock dividends primarily depends on the availability of funds received from our utility subsidiaries and our non-utility subsidiary, We Power. Various financing arrangements and regulatory requirements impose certain restrictions on the ability of our subsidiaries to transfer funds to us in the form of cash dividends, loans, or advances. All of our utility subsidiaries, with the exception of MGU, are prohibited from loaning funds to us, either directly or indirectly. See Note 11, Common Equity, in our 2016 Annual Report on Form 10-K for additional information on these and other restrictions. We do not believe that these restrictions will materially affect our operations or limit any dividend payments in the foreseeable future. Common Stock Dividends On April 20, 2017, our Board of Directors declared a quarterly cash dividend of $0.52 per share, payable on June 1, 2017, to stockholders of record on May 12, 2017. |
SHORT-TERM DEBT AND LINES OF CREDIT |
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SHORT-TERM DEBT AND LINES OF CREDIT | SHORT-TERM DEBT AND LINES OF CREDIT The following table shows our short-term borrowings and their corresponding weighted-average interest rates:
Our average amount of commercial paper borrowings based on daily outstanding balances during the three months ended March 31, 2017, was $746.2 million with a weighted-average interest rate during the period of 1.01%. The information in the table below relates to our revolving credit facilities used to support our commercial paper borrowing programs, including remaining available capacity under these facilities:
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MATERIALS, SUPPLIES, AND INVENTORIES |
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MATERIALS, SUPPLIES, AND INVENTORIES | MATERIALS, SUPPLIES, AND INVENTORIES Our inventory consisted of:
PGL and NSG price natural gas storage injections at the calendar year average of the cost of natural gas supply purchased. Withdrawals from storage are priced using the LIFO cost method. For interim periods, the difference between current projected replacement cost and the LIFO cost for quantities of natural gas temporarily withdrawn from storage is recorded as a temporary LIFO liquidation debit or credit. At March 31, 2017, we had a temporary LIFO liquidation credit of $31.6 million recorded within other current liabilities on our balance sheet. Due to seasonality requirements, PGL and NSG expect these interim reductions in LIFO layers to be replenished by year end. Substantially all other natural gas in storage, materials and supplies, and fossil fuel inventories are recorded using the weighted-average cost method of accounting. |
FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Fair value accounting rules provide a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are defined as follows: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 – Pricing inputs are observable, either directly or indirectly, but are not quoted prices included within Level 1. Level 2 includes those financial instruments that are valued using external inputs within models or other valuation methods. Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methods that result in management's best estimate of fair value. Level 3 instruments include those that may be more structured or otherwise tailored to customers' needs. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. We use a mid-market pricing convention (the mid-point price between bid and ask prices) as a practical measure for valuing certain derivative assets and liabilities. We primarily use a market approach for recurring fair value measurements and attempt to use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. When possible, we base the valuations of our derivative assets and liabilities on quoted prices for identical assets and liabilities in active markets. These valuations are classified in Level 1. The valuations of certain contracts not classified as Level 1 may be based on quoted market prices received from counterparties and/or observable inputs for similar instruments. Transactions valued using these inputs are classified in Level 2. Certain derivatives are categorized in Level 3 due to the significance of unobservable or internally-developed inputs. We recognize transfers at their value as of the end of the reporting period. The following tables summarize our financial assets and liabilities that were accounted for at fair value on a recurring basis, categorized by level within the fair value hierarchy:
The derivative assets and liabilities listed in the tables above include options, swaps, futures, physical commodity contracts, and other instruments used to manage market risks related to changes in commodity prices. They also include FTRs, which are used to manage electric transmission congestion costs in the MISO Energy Markets. The following table summarizes the changes to derivatives classified as Level 3 in the fair value hierarchy:
Unrealized gains and losses on Level 3 derivatives are deferred as regulatory assets or liabilities. Therefore, these fair value measurements have no impact on earnings. Realized gains and losses on these instruments flow through cost of sales on the income statements. Fair Value of Financial Instruments The following table shows the financial instruments included on our balance sheets that are not recorded at fair value:
December 31, 2016, respectively. Due to the short-term nature of cash and cash equivalents, net accounts receivable and unbilled revenues, accounts payable, and short-term debt, the carrying amount of each such item approximates fair value. The fair value of our preferred stock is estimated based on the quoted market value for the same issue, or by using a dividend discount model. 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 the issuing company's bond rating and the present value of future cash flows. The fair values of our long-term debt and preferred stock are categorized within Level 2 of the fair value hierarchy. |
DERIVATIVE INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS We use derivatives as part of our risk management program to manage the risks associated with the price volatility of purchased power, generation, and natural gas costs for the benefit of our customers and shareholders. Our approach is non-speculative and designed to mitigate risk. Regulated hedging programs are approved by our state regulators. We record derivative instruments on our balance sheets as an asset or liability measured at fair value unless they qualify for the normal purchases and sales exception, and are so designated. We continually assess our contracts designated as normal and will discontinue the treatment of these contracts as normal if the required criteria are no longer met. Changes in the derivative's fair value are recognized currently in earnings unless specific hedge accounting criteria are met or we receive regulatory treatment for the derivative. For most energy-related physical and financial contracts in our regulated operations that qualify as derivatives, our regulators allow the effects of fair value accounting to be offset to regulatory assets and liabilities. The following table shows our derivative assets and derivative liabilities:
Realized gains (losses) on derivative instruments are primarily recorded in cost of sales on the income statements. Our estimated notional sales volumes and realized gains (losses) were as follows:
On our balance sheets, the amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral are not offset against the fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement. At March 31, 2017 and December 31, 2016, we had posted cash collateral of $19.3 million and $16.4 million, respectively, in our margin accounts. These amounts were recorded on the balance sheets in other current assets. At December 31, 2016, we had also received cash collateral of $4.4 million in our margin accounts. This amount was recorded on our balance sheet in other current liabilities. The following table shows derivative assets and derivative liabilities if derivative instruments by counterparty were presented net on our balance sheets:
Certain of our derivative and nonderivative commodity instruments contain provisions that could require "adequate assurance" in the event of a material change in our creditworthiness, or the posting of additional collateral for instruments in net liability positions, if triggered by a decrease in credit ratings. The aggregate fair value of all derivative instruments with specific credit risk-related contingent features that were in a net liability position was $0.9 million and $0.2 million at March 31, 2017 and December 31, 2016, respectively. At March 31, 2017 and December 31, 2016, we had not posted any collateral related to the credit risk-related contingent features of these commodity instruments. If all of the credit risk-related contingent features contained in derivative instruments in a net liability position had been triggered at March 31, 2017 and December 31, 2016, we would not have been required to post any collateral. |
GUARANTEES |
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Guarantees [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GUARANTEES | GUARANTEES The following table shows our outstanding guarantees:
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EMPLOYEE BENEFITS |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE BENEFITS | EMPLOYEE BENEFITS The following tables show the components of net periodic pension and OPEB costs for our benefit plans.
During the three months ended March 31, 2017, we made payments of $104.1 million to our pension plans and $1.9 million to our OPEB plans. We expect to make payments of $9.0 million related to our pension plans and $6.5 million related to our OPEB plans during the remainder of 2017, dependent upon various factors affecting us, including our liquidity position and possible tax law changes. |
INVESTMENT IN AMERICAN TRANSMISSION COMPANY |
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Equity Method Investments and Joint Ventures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT IN AMERICAN TRANSMISSION COMPANY | INVESTMENT IN AMERICAN TRANSMISSION COMPANY We own approximately 60% of ATC, a for-profit, electric transmission company regulated by the FERC and certain state regulatory commissions. The following table shows changes to our investment in ATC:
We pay ATC for transmission and other related services it provides. In addition, we provide a variety of operational, maintenance, and project management work for ATC, which are reimbursed by ATC. We are required to pay the cost of needed transmission infrastructure upgrades for new generation projects while the projects are under construction. ATC reimburses us for these costs when the new generation is placed in service. The following table summarizes our significant related party transactions with ATC:
Our balance sheets included the following receivables and payables related to ATC:
Summarized financial data for ATC is included in the following tables:
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SEGMENT INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION At March 31, 2017, we reported six segments, which are described below.
All of our operations are located within the United States. The following tables show summarized financial information related to our reportable segments for the three months ended March 31, 2017 and 2016:
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VARIABLE INTEREST ENTITIES |
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Mar. 31, 2017 | |
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure, Determination Methodology and Factors [Abstract] | |
VARIABLE INTEREST ENTITIES | VARIABLE INTEREST ENTITIES The primary beneficiary of a variable interest entity must consolidate the entity's assets and liabilities. In addition, certain disclosures are required for significant interest holders in variable interest entities. We assess our relationships with potential variable interest entities, such as our coal suppliers, natural gas suppliers, coal transporters, natural gas transporters, and other counterparties related to power purchase agreements, investments, and joint ventures. In making this assessment, we consider, along with other factors, the potential that our contracts or other arrangements provide subordinated financial support, the obligation to absorb the entity's losses, the right to receive residual returns of the entity, and the power to direct the activities that most significantly impact the entity's economic performance. American Transmission Company We own approximately 60% of ATC, a for-profit, electric transmission company regulated by the FERC and certain state regulatory commissions. We have determined that ATC is a variable interest entity but that consolidation is not required since we are not ATC's primary beneficiary. As a result of our limited voting rights, we do not have the power to direct the activities that most significantly impact ATC's economic performance. We account for ATC as an equity method investment. See Note 11, Investment in American Transmission Company, for more information. The significant assets and liabilities related to ATC recorded on our balance sheets included our equity investment and accounts payable. At March 31, 2017 and December 31, 2016, our equity investment was $1,513.3 million and $1,443.9 million, respectively, which approximates our maximum exposure to loss as a result of our involvement with ATC. In addition, we had $29.1 million and $28.7 million of accounts payable due to ATC at March 31, 2017 and December 31, 2016, respectively, for network transmission services. Purchased Power Agreement We have identified a purchased power agreement that represents a variable interest. This agreement is for 236 MWs of firm capacity from a natural gas-fired cogeneration facility, and we account for it as a capital lease. The agreement includes no minimum energy requirements over the remaining term of approximately five years. We have examined the risks of the entity, including operations, maintenance, dispatch, financing, fuel costs, and other factors, and have determined that we are not the primary beneficiary of the entity. We do not hold an equity or debt interest in the entity, and there is no residual guarantee associated with the purchased power agreement. We have approximately $81.9 million of required payments over the remaining term of this agreement. We believe that the required lease payments under this contract will continue to be recoverable in rates. Total capacity and lease payments under this contract for the three months ended March 31, 2017 and 2016 were $4.5 million and $13.5 million, respectively. Our maximum exposure to loss is limited to the capacity payments under the contract. |
COMMITMENTS AND CONTINGENCIES |
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES We and our subsidiaries have significant commitments and contingencies arising from our operations, including those related to unconditional purchase obligations, environmental matters, and enforcement and litigation matters. Unconditional Purchase Obligations Our electric utilities have obligations to distribute and sell electricity to their customers, and our natural gas utilities have obligations to distribute and sell natural gas to their customers. The utilities expect to recover costs related to these obligations in future customer rates. In order to meet these obligations, we routinely enter into long-term purchase and sale commitments for various quantities and lengths of time. Our minimum future commitments related to these purchase obligations as of March 31, 2017, including those of our subsidiaries, were $11,774.4 million. Environmental Matters Consistent with other companies in the energy industry, we face significant ongoing environmental compliance and remediation obligations related to current and past operations. Specific environmental issues affecting us include, but are not limited to, current and future regulation of air emissions such as SO2, NOx, fine particulates, mercury, and GHGs; water discharges; disposal of coal combustion products such as fly ash; and remediation of impacted properties, including former manufactured gas plant sites. Air Quality Cross-State Air Pollution Rule In July 2011, the EPA issued the CSAPR, which replaced a previous rule, the Clean Air Interstate Rule. The purpose of the CSAPR was to limit the interstate transport of NOx and SO2 that contribute to fine particulate matter and ozone nonattainment in downwind states through a proposed allowance allocation and trading plan. After several lawsuits and related appeals, in October 2014, the D.C. Circuit Court of Appeals issued a decision that allowed the EPA to begin implementing CSAPR on January 1, 2015. The emissions budgets of Phase I of the rule applied in 2015 and 2016, while the Phase II emissions budgets apply to 2017 and beyond. The EPA published its proposed update to the CSAPR for the 2008 ozone NAAQS in December 2015, and issued the final rule in September 2016. We are well positioned to meet the rule requirements and do not expect to incur significant costs to comply with this rule. Sulfur Dioxide National Ambient Air Quality Standards The EPA issued a revised 1-Hour SO2 NAAQS that became effective in August 2010. The EPA issued a final rule in August 2015 describing the implementation requirements and established a compliance timeline for the revised standard. The final rule affords state agencies some latitude in rule implementation. A nonattainment designation could have negative impacts for a localized geographic area, including additional permitting requirements for new or existing sources in the area. In June 2016, we provided modeling to the WDNR that shows the area around the Weston Power Plant to be in compliance. Based upon the submittal, the WDNR provided final modeling to the EPA demonstrating the area around the Weston Power Plant to be in compliance. We expect that the EPA will consider the WDNR's recommendation and finalize its recommended designation in August 2017, for finalization by the end of 2017. We believe our fleet overall is well positioned to meet the new regulation and do not expect to incur significant costs to comply with this regulation. 8-Hour Ozone National Ambient Air Quality Standards The eastern portion of Kenosha County, along with Sheboygan County, are currently designated as nonattainment with the 2008 ozone standard. In response, Wisconsin has updated the 2008 ozone NAAQS attainment plan for Kenosha County and submitted it to the EPA for approval. The plan concluded that Wisconsin will not need to implement any new regulatory measures or programs. The area is forecasted to meet the standard by the 2018 compliance date due to emission control measures already in place. A final EPA action regarding Wisconsin's attainment plan is expected later in 2017. Wisconsin has not yet provided an attainment plan for Sheboygan County. After completing its review of the 2008 ozone standard, the EPA released a final rule in October 2015, which lowered the limit for ground-level ozone, creating a more stringent standard than the 2008 NAAQS. This is expected to cause nonattainment for Wisconsin's Lake Michigan shoreline counties (or partial counties), with potential future impacts for our fossil-fueled power plant fleet. In January 2017, the EPA released preliminary interstate ozone transport modeling for the 2015 ozone NAAQS. The EPA is currently scheduled to finalize designations in October 2017. For nonattainment areas, the state of Wisconsin will have to develop a state implementation plan to bring the areas back into attainment. We will be required to comply with this state implementation plan no earlier than 2020. We will not know the potential impacts for complying with the 2015 ozone NAAQS until the designations are final and until the state prepares a draft attainment plan. Although we are still in the process of reviewing and determining potential impacts resulting from this rule, we believe we are well positioned to meet the ozone standard and do not expect to incur significant costs to comply. Climate Change In 2015, the EPA issued a final rule regulating GHG emissions from existing generating units, referred to as the Clean Power Plan (CPP), a proposed federal plan and model trading rules as alternatives or guides to state compliance plans, and final performance standards for modified and reconstructed generating units and new fossil-fueled power plants. In October 2015, following publication of the CPP, numerous states (including Wisconsin and Michigan) and other parties, filed lawsuits challenging the final rule, including a request to stay the implementation of the final rule pending the outcome of these legal challenges. The D.C. Circuit Court of Appeals denied the stay request, but in February 2016, the Supreme Court stayed the effectiveness of the CPP until disposition of the litigation in the D.C. Circuit Court of Appeals and to the extent that further appellate review is sought, at the Supreme Court. The D.C. Circuit Court of Appeals heard one case in September 2016, and the other case is still pending. On April 28, 2017, pursuant to motions made by the EPA, the D.C. Circuit Court of Appeals ordered the cases to be held in abeyance, with supplemental briefs to be provided by May 15, 2017, addressing whether the cases should be remanded to the EPA rather than held in abeyance. The CPP seeks to achieve state-specific GHG emission reduction goals by 2030, and would have required states to submit plans by September 2016. The goal of the final rule is to reduce nationwide GHG emissions by 32% from 2005 levels. The rule is seeking GHG emission reductions in Wisconsin and Michigan of 41% and 39%, respectively, below 2012 levels by 2030. Interim goals starting in 2022 would require states to achieve about two-thirds of the 2030 required reduction. In March 2017, President Trump issued an executive order that, among other things, specifically directs the EPA to review, and if appropriate, initiate proceedings to suspend, revise, or rescind the CPP. The EPA announced that it has initiated this review. As a result of this order and related EPA review, as well as the ongoing legal proceedings, the timelines for the GHG emission reduction goals and all other aspects of the CPP are uncertain. In April 2017, the EPA withdrew the proposed rule for a federal plan and model trading rules that were published in October 2015 for use in developing state plans to implement the CPP or for use in states where a plan is not submitted or approved. In addition, the Governor of Wisconsin issued an executive order in February 2016, which prohibits state agencies, departments, boards, commissions, or other state entities from developing or promoting the development of a state plan. Notwithstanding the uncertain future of the CPP, and given current fuel and technology markets, we continue to evaluate opportunities and actions that preserve fuel diversity, lower costs for our customers, and contribute towards long-term GHG reductions. Our plan is to work with our industry partners, environmental groups, and the State of Wisconsin, with a goal of reducing CO2 emissions by approximately 40% below 2005 levels by 2030. We continue to evaluate numerous options in order to meet our CO2 reduction goal, such as increased use of existing natural gas combined cycle units, co-firing or switching to natural gas in existing coal-fired units, reduced operation or retirement of existing coal-fired units, addition of new renewable energy resources (wind, solar), and consideration of supply and demand-side energy efficiency and distributed generation. We are required to report our CO2 equivalent emissions from our electric generating facilities under the EPA Greenhouse Gases Reporting Program. For 2016, we reported aggregated CO2 equivalent emissions of approximately 29.6 million metric tonnes to the EPA. The level of CO2 and other GHG emissions vary from year to year and are dependent on the level of electric generation and mix of fuel sources, which is determined primarily by demand, the availability of the generating units, the unit cost of fuel consumed, and how our units are dispatched by MISO. We are also required to report CO2 equivalent emissions from the natural gas that our natural gas utilities distribute and sell. For 2016, we reported aggregated CO2 equivalent emissions of approximately 26.7 million metric tonnes to the EPA. Water Quality Clean Water Act Cooling Water Intake Structure Rule In August 2014, the EPA issued a final regulation under Section 316(b) of the Clean Water Act, which requires that the location, design, construction, and capacity of cooling water intake structures at existing power plants reflect the Best Technology Available (BTA) for minimizing adverse environmental impacts from both impingement (entrapping organisms on water intake screens) and entrainment (drawing organisms into water intake). The rule became effective in October 2014, and applies to all of our existing generating facilities with cooling water intake structures, except for the ERGS units, which were permitted under the rules governing new facilities. Facility owners must select from seven compliance options available to meet the impingement mortality (IM) reduction standard. The rule requires state permitting agencies to make BTA determinations, subject to EPA oversight, for IM reduction over the next several years as facility permits are reissued. Based on our assessment, we believe that existing technologies at our generating facilities, except for Pulliam Units 7 and 8 and Weston Unit 2, satisfy the IM BTA requirements. We plan to evaluate the available IM options for Pulliam Units 7 and 8. We also expect that limited studies will be required to support the future WDNR BTA determinations for Weston Unit 2. Based on preliminary discussions with the WDNR, we anticipate that the WDNR will not require physical modifications to the Weston Unit 2 intake structure to meet the IM BTA requirements based on low capacity use of the unit. BTA determinations must also be made by the WDNR and MDEQ to address entrainment mortality (EM) reduction on a site-specific basis taking into consideration several factors. We have received an EM BTA determination by the WDNR, with EPA concurrence, for our intake modification at VAPP. BTA determinations for EM will be made in future permit reissuances for Pulliam Units 7 and 8, Weston Units 2 through 4, Port Washington Generating Station, Pleasant Prairie Power Plant, PIPP, and OC 5 through OC 8. During 2017 and 2018, we will continue to complete studies and evaluate options to address the EM BTA requirements at these plants. With the exception of Pleasant Prairie Power Plant and Weston Units 3 and 4 (which all have existing cooling towers that meet EM BTA requirements), we cannot yet determine what, if any, intake structure or operational modifications will be required to meet the new EM BTA requirements at the facilities. We also expect that limited studies to support WDNR BTA determinations will be conducted at the Weston facility. Based on preliminary discussions with the WDNR, we anticipate that the WDNR will not require physical modifications to the Weston Unit 2 intake structure to meet the EM BTA requirements based on low capacity use of the unit. Based on discussions with the MDEQ, if we provide information about unit retirements with our next National Pollutant Discharge Elimination System permit application and then submit a signed certification by August 2017 stating that PIPP will be retired no later than the end of the next permit cycle (assumed to be October 1, 2022), then the EM BTA requirements will be waived. Entrainment studies are currently being conducted at Pulliam Units 7 and 8 and were recently completed at PIPP. See the UMERC discussion in Note 16, Regulatory Environment, regarding the potential retirement of PIPP. We believe our fleet overall is well positioned to meet the new regulation and do not expect to incur significant costs to comply with this regulation. Steam Electric Effluent Guidelines The EPA's final steam electric effluent guidelines rule took effect in January 2016 and applies to discharges of wastewater from our power plant processes in Wisconsin and Michigan. This rule is being litigated in the United States Court of Appeals for the Fifth Circuit (Fifth Circuit Court of Appeals) and may result in changes to the discharge requirements. In April 2017, the EPA granted a petition filed by the Utility Water Act Group to reconsider and stay the steam effluent guidelines and related compliance deadlines. On April 24, 2017, in response to a motion by the EPA, the Fifth Circuit Court of Appeals ordered a stay of the litigation for 120 days while the rule is being redrafted to address the petition's concerns. After a final rule is back in effect, the WDNR and MDEQ will modify the state rules as necessary and incorporate the new requirements into our facility permits, which are renewed every five years. We expect the new requirements to be phased in between 2018 and 2023 as our permits are renewed. Our power plant facilities already have advanced wastewater treatment technologies installed that meet many of the discharge limits established by this rule. However, these standards will require additional wastewater treatment retrofits as well as installation of other equipment to minimize process water use. The final rule phases in new or more stringent requirements related to limits of arsenic, mercury, selenium, and nitrogen in wastewater discharged from wet scrubber systems. New requirements for wet scrubber wastewater treatment will require additional zero liquid discharge or other advanced treatment capital improvements for the Oak Creek site and Pleasant Prairie facilities. The rule also requires dry fly ash handling, which is already in place at all of our power plants. Dry bottom ash transport systems are required by the new rule, and modifications will be required at OC 7, OC 8, the Pleasant Prairie units, Pulliam Units 7 and 8, and Weston Unit 3. We are beginning preliminary engineering for compliance with the rule and estimate a total cost range of $80 million to $110 million for these advanced treatment and bottom ash transport systems. A similar system would be required at PIPP if we were not expecting to retire the plant. See the UMERC discussion in Note 16, Regulatory Environment, regarding the potential retirement of PIPP. Land Quality Manufactured Gas Plant Remediation We have identified sites at which our utilities or a predecessor company owned or operated a manufactured gas plant or stored manufactured gas. We have also identified other sites that may have been impacted by historical manufactured gas plant activities. Our natural gas utilities are responsible for the environmental remediation of these sites, some of which are in the EPA Superfund Alternative Approach Program. We are also working with various state jurisdictions in our investigation and remediation planning. These sites are at various stages of investigation, monitoring, remediation, and closure. In addition, we are coordinating the investigation and cleanup of some of these sites subject to the jurisdiction of the EPA under what is called a "multisite" program. This program involves prioritizing the work to be done at the sites, preparation and approval of documents common to all of the sites, and use of a consistent approach in selecting remedies. At this time, we cannot estimate future remediation costs associated with these sites beyond those described below. The future costs for detailed site investigation, future remediation, and monitoring are dependent upon several variables including, among other things, the extent of remediation, changes in technology, and changes in regulation. Historically, our regulators have allowed us to recover incurred costs, net of insurance recoveries and recoveries from potentially responsible parties, associated with the remediation of manufactured gas plant sites. Accordingly, we have established regulatory assets for costs associated with these sites. We have established the following regulatory assets and reserves related to manufactured gas plant sites:
Enforcement and Litigation Matters We and our subsidiaries are involved in legal and administrative proceedings before various courts and agencies with respect to matters arising in the ordinary course of business. Although we are unable to predict the outcome of these matters, management believes that appropriate reserves have been established and that final settlement of these actions will not have a material effect on our financial condition or results of operations. Consent Decrees Wisconsin Public Service Corporation Consent Decree – Weston and Pulliam In November 2009, the EPA issued a NOV to WPS, which alleged violations of the CAA's New Source Review requirements relating to certain projects completed at the Weston and Pulliam plants from 1994 to 2009. WPS entered into a Consent Decree with the EPA resolving this NOV. This Consent Decree was entered by the United States District Court for the Eastern District of Wisconsin in March 2013. Also, in May 2010, WPS received from the Sierra Club a Notice of Intent to file a civil lawsuit based on allegations that WPS violated the CAA at the Weston and Pulliam plants. WPS entered into a Standstill Agreement with the Sierra Club by which the parties agreed to negotiate as part of the EPA NOV process, rather than litigate. The Standstill Agreement ended in October 2012, but no further action has been taken by the Sierra Club as of March 31, 2017. It is unknown whether the Sierra Club will take further action in the future. Joint Ownership Power Plants Consent Decree – Columbia and Edgewater In December 2009, the EPA issued a NOV to Wisconsin Power and Light, the operator of the Columbia and Edgewater plants, and the other joint owners of these plants, including Madison Gas and Electric, WE (former co-owner of an Edgewater unit), and WPS. The NOV alleged violations of the CAA's New Source Review requirements related to certain projects completed at those plants. WPS, along with Wisconsin Power and Light, Madison Gas and Electric, and WE, entered into a Consent Decree with the EPA resolving this NOV. This Consent Decree was entered by the United States District Court for the Western District of Wisconsin in June 2013. The Consent Decree contains a requirement to, among other things, refuel, repower, or retire Edgewater Unit 4, of which WPS is a joint owner, by no later than December 31, 2018. In the first quarter of 2015, management of the joint owners recommended that Edgewater Unit 4 be retired in December 2018. However, a final decision on how to address the requirement for this unit has not yet been made by the joint owners, as early retirement is contingent on various operational and market factors, and other alternatives to retirement are still available. |
SUPPLEMENTAL CASH FLOW INFORMATION |
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Supplemental Cash Flow Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | SUPPLEMENTAL CASH FLOW INFORMATION
At March 31, 2017, and December 31, 2016, restricted cash of $26.9 million and $33.6 million, respectively, was recorded within other long-term assets on our balance sheets. The majority of this amount was held in the Integrys rabbi trust and represents a portion of the required funding that was triggered by the announcement of the Integrys acquisition. Withdrawals of restricted cash from the rabbi trust for qualifying payments are shown as an investing activity on the statements of cash flows. Changes in restricted cash due to the sale or purchase of investments held in the rabbi trust are non-cash transactions and are included in the table above. |
REGULATORY ENVIRONMENT |
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Mar. 31, 2017 | |
Regulated Operations [Abstract] | |
REGULATORY ENVIRONMENT | REGULATORY ENVIRONMENT Wisconsin Electric Power Company, Wisconsin Gas LLC, and Wisconsin Public Service Corporation 2018 and 2019 Rates During April 2017, WE, WG, and WPS filed an application with the PSCW for approval of a settlement agreement they made with several of their commercial and industrial customers regarding 2018 and 2019 base rates. In this proposed settlement agreement, WE, WG, and WPS agreed to keep electric and natural gas base rates frozen for their customers through 2019. In addition, WE and WPS agreed to extend and expand the electric real-time pricing options for large commercial and industrial customers, and WE agreed to prevent the continued growth of certain escrowed costs. Deferral by WE, WG, and WPS of the revenue requirement impacts of any federal corporate tax reform enacted in 2017, or during the rate freeze period, was included in the agreement as well. The agreement also allows WPS to extend, through 2019, the deferral for the revenue requirement of ReACT™ costs above the authorized $275.0 million level, as well as extend other deferrals related to its electric real-time pricing program and network transmission expenses. Pursuant to the settlement agreement, WPS also agreed to adopt, beginning in 2018, the earnings sharing mechanism currently in place for WE and WG, and all three utilities agreed to keep the mechanism in place through 2019. Under this earnings sharing mechanism, if WE, WG, or WPS earns above its authorized ROE, 50% of the first 50 basis points of additional utility earnings must be shared with customers. All utility earnings above the first 50 basis points must also be shared with customers. We expect the PSCW to issue a final order on the settlement agreement in 2017. Natural Gas Storage Facility in Michigan In January 2017, we signed an agreement for the acquisition of a natural gas storage facility in Michigan that would provide approximately one-third of the current storage needs for WE, WG, and WPS. As a result of this agreement, WE, WG, and WPS filed a request with the PSCW in February 2017 for a declaratory ruling on various items associated with the storage facility. In the filing, WE, WG, and WPS requested that the PSCW review and confirm the reasonableness and prudency of their potential long-term storage service agreements and interstate natural gas transportation contracts related to the storage facility. WE, WG, and WPS also requested approval to amend our Affiliated Interest Agreement to ensure WBS and our other subsidiaries would be able to provide services to the storage facility. We expect to receive these PSCW declarations and approvals by the third quarter of 2017. The Peoples Gas Light and Coke Company and North Shore Gas Company Illinois Investigations In March 2015, the ICC opened a docket, naming PGL as respondent, to investigate the veracity of certain allegations included in anonymous letters that the ICC staff received regarding PGL's SMP. PGL and the ICC staff filed a settlement agreement related to these anonymous letters with the ICC during March 2017. In this agreement, we agreed to modify our code of business conduct to address certain concerns regarding conflicts of interest and provide a quarterly report to the ICC for four years identifying code of conduct and conflict of interest allegations. The agreement also requested that PGL provide semi-annual quality assurance reports to the ICC for four years on the SMP capital construction performed by PGL crews and contractors. We are uncertain when the ICC will issue an order related to this settlement agreement. In December 2015, the ICC ordered a series of stakeholder workshops to evaluate PGL's SMP. This ICC action did not impact PGL's ongoing work to modernize and maintain the safety of its natural gas distribution system, but it instead provided the ICC with an opportunity to analyze long-term elements of the program through the stakeholder workshops. The workshops commenced in January 2016 and were completed in March 2016. The ICC staff submitted a report on the workshop process in May 2016. In July 2016, the ICC initiated a proceeding to review, among other things, the planning, reporting, and monitoring of the program, including the target end date for the program. In March 2017, the ICC issued an order directing that additional hearings be held before the ALJ on certain issues to further develop the evidentiary record in the case. This proceeding is expected to result in a final order by the ICC during the second half of 2017. We are currently unable to determine what, if any, long-term impact there will be on the SMP. Qualifying Infrastructure Plant Rider In July 2013, Illinois Public Act 98-0057, The Natural Gas Consumer, Safety & Reliability Act, became law. The Act provides PGL with a cost recovery mechanism that allows collection, through a surcharge on customer bills, of prudently incurred costs to upgrade Illinois natural gas infrastructure. This Act eliminated a requirement for PGL to file biennial rate proceedings under existing Illinois coal-to-gas legislation. In September 2013, PGL filed with the ICC requesting the proposed rider, which was approved in January 2014 and became effective as of January 1, 2014. PGL's QIP rider is subject to an annual reconciliation whereby costs are reviewed for accuracy and prudency. In March 2017, PGL filed its 2016 reconciliation with the ICC, which, along with the 2015 reconciliation, is still pending. For PGL's 2014 reconciliation, the ALJ has issued a schedule, and we expect to receive an order from the ICC in 2017. As of March 31, 2017, there can be no assurance that all costs incurred under PGL's QIP rider will be recoverable. Minnesota Energy Resources Corporation 2016 Minnesota Rate Order In September 2015, MERC initiated a rate proceeding with the MPUC. In October 2016, the MPUC issued a final written order for MERC, effective March 1, 2017. The order authorized a retail natural gas rate increase of $6.8 million (3.0%). The rates reflect a 9.11% ROE and a common equity component average of 50.32%. The order approved MERC's request to continue the use of its currently authorized decoupling mechanism for another three years. The final approved rate increase was lower than the interim rates collected from customers during 2016. Therefore, as of March 31, 2017, we estimated that $4.1 million will be refunded to MERC's customers in May 2017. Upper Michigan Energy Resources Corporation Formation of Upper Michigan Energy Resources Corporation In December 2016, both the MPSC and the PSCW approved the operation of UMERC as a stand-alone utility in the Upper Peninsula of Michigan, and UMERC became operational effective January 1, 2017. This utility holds the electric and natural gas distribution assets previously held by WE and WPS located in the Upper Peninsula of Michigan. In August 2016, we entered into an agreement with the Tilden Mining Company (Tilden), under which Tilden will purchase electric power from UMERC for its iron ore mine for 20 years. The agreement also calls for UMERC to construct and operate approximately 180 MWs of natural gas-fired generation located in the Upper Peninsula of Michigan. During January 2017, UMERC filed an application with the MPSC for a certificate of necessity to begin construction of the proposed generation. The estimated cost of this project is approximately $265 million ($275 million with AFUDC), 50% of which is expected to be recovered from Tilden, with the remaining 50% expected to be recovered from utility customers located in the Upper Peninsula of Michigan. Subject to regulatory approval of both the agreement with Tilden and the construction of the proposed generation, the new units are expected to begin commercial operation in 2019 and should allow for the retirement of PIPP no later than 2020. Tilden will remain a customer of WE until this new generation begins commercial operation. 2015 Michigan Rate Order Prior to the formation of UMERC, in October 2014, WPS initiated a rate proceeding with the MPSC. In April 2015, the MPSC issued a final written order for WPS, effective April 24, 2015, approving a settlement agreement. As a result of the formation of UMERC, the terms and conditions of this WPS rate order now apply to UMERC, including the deferrals described below. The order authorized a retail electric rate increase of $4.0 million to be implemented over three years to recover costs for the 2013 acquisition of the Fox Energy Center as well as other capital investments associated with the Crane Creek wind farm and environmental upgrades at generation plants. The rates reflected a 10.2% ROE and a common equity component average of 50.48%. The increase reflected the continued deferral of costs associated with the Fox Energy Center until the second anniversary of the order. The increase also reflected the deferral of Weston Unit 3 ReACT™ environmental project costs. On the second anniversary of the order, the Fox Energy Center costs deferral was discontinued and amortization of this deferral began, along with the amortization of the deferral associated with the termination of a Fox Energy Center tolling agreement. In the order, the MPSC also approved the deferral and amortization of the undepreciated book value of the retired plant associated with Pulliam Units 5 and 6 and Weston Unit 1 starting with the actual retirement date, June 1, 2015, and concluding by 2023. UMERC will not seek an increase to retail electric base rates that would become effective prior to January 1, 2018. |
NEW ACCOUNTING PRONOUNCEMENTS |
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New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS Revenue Recognition In May 2014, the FASB and the International Accounting Standards Board issued their joint revenue recognition standard, ASU 2014-09, Revenue from Contracts with Customers. Several amendments were issued subsequent to the standard to clarify the guidance. The core principle of the guidance is to recognize revenue in an amount that an entity is entitled to receive in exchange for goods and services. The guidance also requires additional disclosures about the nature, amount, timing, and uncertainty of revenues and the related cash flows arising from contracts with customers. We intend to adopt this standard for interim and annual periods beginning January 1, 2018, as required, and plan to use the modified retrospective method of adoption. If applicable, this method requires a cumulative-effect adjustment to be recorded on the balance sheet as of the beginning of 2018, as if the standard had always been in effect. If applicable, disclosures in 2018 will include a reconciliation of results under the new revenue guidance compared with what would have been reported in 2018 under the old revenue recognition guidance in order to help facilitate comparability with the prior periods. We are currently reviewing our contracts with customers and related financial disclosures to evaluate the impact of the amended guidance on our existing revenue recognition policies and procedures. We consider tariff sales at our regulated utilities, excluding the revenue component related to alternative revenue programs, to be in the scope of the new standard. We have evaluated the nature of these revenues and do not expect that there will be a significant shift in the timing or pattern of revenue recognition for such sales. However, in our evaluation, we are also monitoring unresolved implementation issues for our industry, including the impacts of the new guidance on our ability to recognize revenue for certain contracts where collectability is uncertain. The final resolution of these issues could impact our current accounting policies and revenue recognition. Recognition and Measurement of Financial Instruments In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Liabilities. This guidance is effective for fiscal years and interim periods beginning after December 15, 2017, and will be recorded with a cumulative-effect adjustment to beginning retained earnings as of the beginning of the fiscal year in which the guidance is effective. This guidance requires equity investments, including other ownership interests such as partnerships, unincorporated joint ventures, and limited liability companies, to be measured at fair value with changes in fair value recognized in net income. It also simplifies the impairment assessment of equity investments without readily determinable fair values and amends certain disclosure requirements associated with the fair value of financial instruments. This ASU does not apply to investments accounted for under the equity method of accounting. We are currently assessing the effects this guidance may have on our financial statements. Leases In February 2016, the FASB issued ASU 2016-02, Leases. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, and will be applied using a modified retrospective approach. The main provision of this ASU is that lessees will be required to recognize lease assets and lease liabilities for most leases, including those classified as operating leases under GAAP. We are currently assessing the effects this guidance may have on our financial statements. Financial Instruments Credit Losses In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. This ASU introduces a new impairment model known as the current expected credit loss model. The ASU requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. Previously, recognition of the full amount of credit losses was generally delayed until the loss was probable of occurring. We are currently assessing the effects this guidance may have on our financial statements. Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and will be applied using a retrospective transition method. There are eight main provisions of this ASU for which current GAAP either is unclear or does not include specific guidance. We are currently assessing the effects this guidance may have on our financial statements. Restricted Cash In November 2016, the FASB issued ASU 2016-18, Restricted Cash. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Under this ASU, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-the period and end-of-the period total amounts shown on the statements of cash flows. We do not believe the adoption of this guidance will have a significant impact on our financial statements. Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Under this ASU, an employer is required to disaggregate the service cost component from the other components of the net benefit cost. The amendments provide explicit guidance on how to present the service cost component and the other components of the net benefit cost in the income statement and allow only the service cost component of the net benefit cost to be eligible for capitalization. The amendments should be applied retrospectively for the presentation of the service cost component and the other components of the net benefit cost in the income statement, and prospectively for the capitalization of the service cost component in assets. We are currently assessing the effects this guidance may have on our financial statements. |
GENERAL INFORMATION (Policies) |
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Accounting policies | |
Consolidation | As used in these notes, the term "financial statements" refers to the condensed consolidated financial statements. This includes the income statements, statements of comprehensive income, balance sheets, and statements of cash flows, unless otherwise noted. In this report, when we refer to "the Company," "us," "we," "our," or "ours," we are referring to WEC Energy Group and all of its subsidiaries. |
Basis of Accounting | We have prepared the unaudited interim financial statements presented in this Form 10-Q pursuant to the rules and regulations of the SEC and GAAP. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for annual financial statements. These financial statements should be read in conjunction with the consolidated financial statements and footnotes in our Annual Report on Form 10-K for the year ended December 31, 2016. Financial results for an interim period may not give a true indication of results for the year. In particular, the results of operations for the three months ended March 31, 2017, are not necessarily indicative of expected results for 2017 due to seasonal variations and other factors. |
Fair Value Measurement | Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Fair value accounting rules provide a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are defined as follows: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 – Pricing inputs are observable, either directly or indirectly, but are not quoted prices included within Level 1. Level 2 includes those financial instruments that are valued using external inputs within models or other valuation methods. Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methods that result in management's best estimate of fair value. Level 3 instruments include those that may be more structured or otherwise tailored to customers' needs. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. We use a mid-market pricing convention (the mid-point price between bid and ask prices) as a practical measure for valuing certain derivative assets and liabilities. We primarily use a market approach for recurring fair value measurements and attempt to use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. When possible, we base the valuations of our derivative assets and liabilities on quoted prices for identical assets and liabilities in active markets. These valuations are classified in Level 1. The valuations of certain contracts not classified as Level 1 may be based on quoted market prices received from counterparties and/or observable inputs for similar instruments. Transactions valued using these inputs are classified in Level 2. Certain derivatives are categorized in Level 3 due to the significance of unobservable or internally-developed inputs. We recognize transfers at their value as of the end of the reporting period. |
Derivative Instruments | We use derivatives as part of our risk management program to manage the risks associated with the price volatility of purchased power, generation, and natural gas costs for the benefit of our customers and shareholders. Our approach is non-speculative and designed to mitigate risk. Regulated hedging programs are approved by our state regulators. We record derivative instruments on our balance sheets as an asset or liability measured at fair value unless they qualify for the normal purchases and sales exception, and are so designated. We continually assess our contracts designated as normal and will discontinue the treatment of these contracts as normal if the required criteria are no longer met. Changes in the derivative's fair value are recognized currently in earnings unless specific hedge accounting criteria are met or we receive regulatory treatment for the derivative. For most energy-related physical and financial contracts in our regulated operations that qualify as derivatives, our regulators allow the effects of fair value accounting to be offset to regulatory assets and liabilities. |
New Accounting Pronouncements | Revenue Recognition In May 2014, the FASB and the International Accounting Standards Board issued their joint revenue recognition standard, ASU 2014-09, Revenue from Contracts with Customers. Several amendments were issued subsequent to the standard to clarify the guidance. The core principle of the guidance is to recognize revenue in an amount that an entity is entitled to receive in exchange for goods and services. The guidance also requires additional disclosures about the nature, amount, timing, and uncertainty of revenues and the related cash flows arising from contracts with customers. We intend to adopt this standard for interim and annual periods beginning January 1, 2018, as required, and plan to use the modified retrospective method of adoption. If applicable, this method requires a cumulative-effect adjustment to be recorded on the balance sheet as of the beginning of 2018, as if the standard had always been in effect. If applicable, disclosures in 2018 will include a reconciliation of results under the new revenue guidance compared with what would have been reported in 2018 under the old revenue recognition guidance in order to help facilitate comparability with the prior periods. We are currently reviewing our contracts with customers and related financial disclosures to evaluate the impact of the amended guidance on our existing revenue recognition policies and procedures. We consider tariff sales at our regulated utilities, excluding the revenue component related to alternative revenue programs, to be in the scope of the new standard. We have evaluated the nature of these revenues and do not expect that there will be a significant shift in the timing or pattern of revenue recognition for such sales. However, in our evaluation, we are also monitoring unresolved implementation issues for our industry, including the impacts of the new guidance on our ability to recognize revenue for certain contracts where collectability is uncertain. The final resolution of these issues could impact our current accounting policies and revenue recognition. Recognition and Measurement of Financial Instruments In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Liabilities. This guidance is effective for fiscal years and interim periods beginning after December 15, 2017, and will be recorded with a cumulative-effect adjustment to beginning retained earnings as of the beginning of the fiscal year in which the guidance is effective. This guidance requires equity investments, including other ownership interests such as partnerships, unincorporated joint ventures, and limited liability companies, to be measured at fair value with changes in fair value recognized in net income. It also simplifies the impairment assessment of equity investments without readily determinable fair values and amends certain disclosure requirements associated with the fair value of financial instruments. This ASU does not apply to investments accounted for under the equity method of accounting. We are currently assessing the effects this guidance may have on our financial statements. Leases In February 2016, the FASB issued ASU 2016-02, Leases. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, and will be applied using a modified retrospective approach. The main provision of this ASU is that lessees will be required to recognize lease assets and lease liabilities for most leases, including those classified as operating leases under GAAP. We are currently assessing the effects this guidance may have on our financial statements. Financial Instruments Credit Losses In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. This ASU introduces a new impairment model known as the current expected credit loss model. The ASU requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. Previously, recognition of the full amount of credit losses was generally delayed until the loss was probable of occurring. We are currently assessing the effects this guidance may have on our financial statements. Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and will be applied using a retrospective transition method. There are eight main provisions of this ASU for which current GAAP either is unclear or does not include specific guidance. We are currently assessing the effects this guidance may have on our financial statements. Restricted Cash In November 2016, the FASB issued ASU 2016-18, Restricted Cash. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Under this ASU, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-the period and end-of-the period total amounts shown on the statements of cash flows. We do not believe the adoption of this guidance will have a significant impact on our financial statements. Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Under this ASU, an employer is required to disaggregate the service cost component from the other components of the net benefit cost. The amendments provide explicit guidance on how to present the service cost component and the other components of the net benefit cost in the income statement and allow only the service cost component of the net benefit cost to be eligible for capitalization. The amendments should be applied retrospectively for the presentation of the service cost component and the other components of the net benefit cost in the income statement, and prospectively for the capitalization of the service cost component in assets. We are currently assessing the effects this guidance may have on our financial statements. |
COMMON EQUITY (Tables) |
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Schedule of stock-based compensation awards granted | During the first quarter of 2017, the Compensation Committee of our Board of Directors awarded the following stock-based compensation awards to our directors, officers, and certain other key employees:
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Schedule of changes in retained earnings | The following table shows the changes to our retained earnings for the three months ended March 31, 2017:
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SHORT-TERM DEBT AND LINES OF CREDIT (Tables) |
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Short-term notes payable balances and their corresponding weighted average interest rate | The following table shows our short-term borrowings and their corresponding weighted-average interest rates:
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Schedule of revolving credit facilities and remaining available capacity | The information in the table below relates to our revolving credit facilities used to support our commercial paper borrowing programs, including remaining available capacity under these facilities:
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MATERIALS, SUPPLIES, AND INVENTORIES (Tables) |
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Schedule of inventory | Our inventory consisted of:
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FAIR VALUE MEASUREMENTS (Tables) |
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Fair value of assets and liabilities measured on a recurring basis, categorized by level within the fair value hierarchy | The following tables summarize our financial assets and liabilities that were accounted for at fair value on a recurring basis, categorized by level within the fair value hierarchy:
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Reconciliation of changes in fair value of items categorized as level 3 measurements | The following table summarizes the changes to derivatives classified as Level 3 in the fair value hierarchy:
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Schedule of carrying value and estimated fair value of financial instruments not recorded at fair value | The following table shows the financial instruments included on our balance sheets that are not recorded at fair value:
December 31, 2016, respectively. |
DERIVATIVE INSTRUMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative assets and derivative liabilities | The following table shows our derivative assets and derivative liabilities:
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Estimated notional volumes and realized gain (losses) | Our estimated notional sales volumes and realized gains (losses) were as follows:
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Offsetting assets and liabilities | The following table shows derivative assets and derivative liabilities if derivative instruments by counterparty were presented net on our balance sheets:
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GUARANTEES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantees [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of outstanding guarantees | The following table shows our outstanding guarantees:
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EMPLOYEE BENEFITS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the components of net periodic benefit cost | The following tables show the components of net periodic pension and OPEB costs for our benefit plans.
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INVESTMENT IN AMERICAN TRANSMISSION COMPANY (Tables) - ATC |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in ATC | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes to our investment in ATC | The following table shows changes to our investment in ATC:
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Schedule of significant transactions with ATC | The following table summarizes our significant related party transactions with ATC:
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Schedule of receivables and payables with ATC | Our balance sheets included the following receivables and payables related to ATC:
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Schedule of summarized income statement data for ATC | Summarized financial data for ATC is included in the following tables:
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Schedule of summarized balance sheet data for ATC |
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SEGMENT INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial information of reportable segments | The following tables show summarized financial information related to our reportable segments for the three months ended March 31, 2017 and 2016:
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COMMITMENTS AND CONTINGENCIES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of regulatory assets and reserves related to manufactured gas plant sites | We have established the following regulatory assets and reserves related to manufactured gas plant sites:
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SUPPLEMENTAL CASH FLOW INFORMATION (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of supplemental cash flow information |
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GENERAL INFORMATION - GENERAL (Details) customer in Millions |
Mar. 31, 2017
customer
|
---|---|
Electric | |
Product information [Line Items] | |
Number Of Customers | 1.6 |
Natural gas | |
Product information [Line Items] | |
Number Of Customers | 2.8 |
ATC | |
Product information [Line Items] | |
Equity method investment, ownership interest (as a percent) | 60.00% |
ACQUISITION (Details) - Natural gas storage facility in Michigan - USD ($) $ in Millions |
1 Months Ended | |
---|---|---|
Jan. 31, 2017 |
Mar. 31, 2017 |
|
Business Acquisition [Line Items] | ||
Purchase price | $ 225 | |
Percentage of current storage needs provided | 33.00% | |
Expected acquisition costs | $ 5 |
DISPOSITIONS (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Mar. 31, 2016 |
|
Wisconsin | WE | ||
Dispositions | ||
After-tax gain on sale | $ 6.5 | |
Wisconsin | WE | Other operation and maintenance | ||
Dispositions | ||
Pre-tax gain on sale | 10.9 | |
Corporate and Other | Wisvest | ||
Dispositions | ||
After-tax gain on sale | 11.8 | |
Corporate and Other | Wisvest | Other income, net | ||
Dispositions | ||
Pre-tax gain on sale | $ 19.6 | |
Corporate and Other | ITF | ||
Dispositions | ||
Pre-tax gain on sale | $ 0.0 |
COMMON EQUITY - STOCK-BASED COMPENSATION AWARDS GRANTED (Details) |
3 Months Ended |
---|---|
Mar. 31, 2017
$ / shares
shares
| |
Stock options | |
Stock-based Compensation | |
Stock options granted | shares | 552,215 |
Stock options granted, weighted average exercise price | $ / shares | $ 58.31 |
Stock options granted, weighted-average grant date fair value | $ / shares | $ 7.45 |
Restricted shares | |
Stock-based Compensation | |
Awards granted | shares | 82,622 |
Restricted shares granted, weighted-average grant date fair value | $ / shares | $ 58.10 |
Performance units | |
Stock-based Compensation | |
Awards granted | shares | 237,650 |
COMMON EQUITY - ADOPTION OF ASU 2016-09 (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Changes in retained earnings [Roll Forward] | ||
Balance at December 31, 2016 | $ 4,613.9 | |
Net income attributed to common shareholders | 356.6 | $ 346.2 |
Common stock dividends | (164.1) | |
Cumulative effect of adoption of ASU 2016-09 | 15.7 | |
Other | (0.1) | |
Balance at March 31, 2017 | $ 4,822.0 |
COMMON EQUITY - COMMON STOCK DIVIDENDS (Details) - $ / shares |
3 Months Ended | ||
---|---|---|---|
Apr. 20, 2017 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Dividends Payable | |||
Quarterly cash dividend declared (in dollars per share) | $ 0.5200 | $ 0.4950 | |
Subsequent event | |||
Dividends Payable | |||
Quarterly cash dividend declared (in dollars per share) | $ 0.52 |
SHORT-TERM DEBT AND LINES OF CREDIT - SHORT-TERM BORROWINGS (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Short-term borrowings | ||
Commercial Paper | $ 670.4 | $ 860.2 |
Commercial paper | ||
Short-term borrowings | ||
Weighted-average interest rate on amounts outstanding | 1.18% | 0.96% |
Average amounts outstanding during the period | $ 746.2 | |
Weighted-average interest rate during the period | 1.01% |
SHORT-TERM DEBT AND LINES OF CREDIT - REVOLVING CREDIT FACILITIES (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Line of Credit Facility [Line Items] | ||
Short-term credit capacity | $ 2,500.0 | |
Letters of credit issued inside credit facilities | 29.1 | |
Commercial Paper | 670.4 | $ 860.2 |
Available capacity under existing agreements | 1,800.5 | |
WEC Energy Group | Credit facility maturing December 2020 | ||
Line of Credit Facility [Line Items] | ||
Short-term credit capacity | 1,050.0 | |
Wisconsin Electric | Credit facility maturing December 2020 | ||
Line of Credit Facility [Line Items] | ||
Short-term credit capacity | 500.0 | |
WPS | Credit facility maturing December 2020 | ||
Line of Credit Facility [Line Items] | ||
Short-term credit capacity | 250.0 | |
Wisconsin Gas | Credit facility maturing December 2020 | ||
Line of Credit Facility [Line Items] | ||
Short-term credit capacity | 350.0 | |
PGL | Credit facility maturing December 2020 | ||
Line of Credit Facility [Line Items] | ||
Short-term credit capacity | $ 350.0 |
MATERIALS, SUPPLIES, AND INVENTORIES (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Materials, supplies, and inventories | ||
Natural gas in storage | $ 45.8 | $ 223.1 |
Materials and supplies | 208.3 | 206.5 |
Fossil fuel | 163.0 | 158.0 |
Total | 417.1 | $ 587.6 |
PGL and NSG | ||
Materials, supplies, and inventories | ||
Temporary LIFO liquidation debit | $ 31.6 |
FAIR VALUE MEASUREMENTS - LEVEL 3 RECONCILIATION (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract] | ||
Balance at the beginning of the period | $ 5.1 | $ 3.6 |
Realized and unrealized losses | 0.0 | (0.2) |
Sales | 0.0 | (0.1) |
Settlements | (3.4) | (2.2) |
Balance at the end of period | 1.7 | 1.1 |
Unrealized gains and losses on level 3 derivatives included in earnings | $ 0.0 | $ 0.0 |
FAIR VALUE MEASUREMENTS - FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Financial Instruments | ||
Preferred stock | $ 30.4 | $ 30.4 |
Carrying Amount | ||
Financial Instruments | ||
Preferred stock | 30.4 | 30.4 |
Long-term debt, including current portion | 9,272.7 | 9,285.8 |
Capital lease obligations | 28.9 | 29.6 |
Fair Value | ||
Financial Instruments | ||
Preferred stock | 28.9 | 28.8 |
Long-term debt, including current portion | $ 9,730.2 | $ 9,818.2 |
DERIVATIVE INSTRUMENTS - GAINS (LOSSES) AND NOTIONAL VOLUMES (Details) gal in Millions, MWh in Millions, MMBTU in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017
USD ($)
MMBTU
MWh
gal
|
Mar. 31, 2016
USD ($)
MMBTU
MWh
gal
|
|
Realized Gain (Loss) on Derivatives, Net | ||
Gains (Losses) | $ 2.2 | $ (31.6) |
Natural gas contracts | ||
Realized Gain (Loss) on Derivatives, Net | ||
Gains (Losses) | $ (0.3) | $ (33.5) |
Notional Sales Volumes | ||
Notional sales volumes (Dth or MWh) | MMBTU | 34.1 | 50.1 |
Petroleum products contracts | ||
Realized Gain (Loss) on Derivatives, Net | ||
Gains (Losses) | $ (0.5) | $ (1.1) |
Notional Sales Volumes | ||
Notional sales volumes (gallons) | gal | 4.9 | 3.0 |
FTRs | ||
Realized Gain (Loss) on Derivatives, Net | ||
Gains (Losses) | $ 3.0 | $ 3.0 |
Notional Sales Volumes | ||
Notional sales volumes (Dth or MWh) | MWh | 9.2 | 7.6 |
DERIVATIVE INSTRUMENTS - BALANCE SHEET OFFSETTING (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Cash collateral | ||
Cash collateral in margin account | $ 19.3 | $ 16.4 |
Cash collateral received | 4.4 | |
Offsetting Derivative Assets | ||
Gross amount recognized on the balance sheet | 14.5 | 41.6 |
Gross amount not offset on the balance sheet | (1.2) | (4.9) |
Net amount | 13.3 | 36.7 |
Collateral received | 4.4 | |
Offsetting Derivative Liabilities | ||
Gross amount recognized on the balance sheet | 4.2 | 2.4 |
Gross amount not offset on the balance sheet | (1.2) | (0.5) |
Net amount | 3.0 | 1.9 |
Credit Risk Related Contingent Features | ||
Aggregate fair value of derivative instruments with credit risk-related contingent features that were in a liability position | $ 0.9 | $ 0.2 |
INVESTMENT IN AMERICAN TRANSMISSION COMPANY - CHANGES TO INVESTMENT (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Changes to investment in ATC | |||
Investment in ATC, balance at beginning of period | $ 1,443.9 | ||
Add: Earnings from equity method investment | 41.9 | $ 38.5 | |
Investment in ATC, balance at end of period | $ 1,513.3 | ||
ATC | |||
Investment in ATC | |||
Ownership interest in ATC (as a percent) | 60.00% | ||
Changes to investment in ATC | |||
Investment in ATC, balance at beginning of period | $ 1,443.9 | 1,380.9 | |
Add: Earnings from equity method investment | 41.9 | 38.5 | |
Add: Capital contributions | 27.6 | 9.0 | |
Add: Adjustment to equity method goodwill | 0.0 | 9.3 | |
Less: Distributions | 0.0 | 15.1 | |
Less: Other | 0.1 | 0.1 | |
Investment in ATC, balance at end of period | $ 1,513.3 | $ 1,422.5 | |
Dividends Receivable | $ 35.2 |
INVESTMENT IN AMERICAN TRANSMISSION COMPANY - RELATED PARTY TRANSACTIONS (Details) - ATC - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Investment in ATC | ||
Charges to ATC for services and construction | $ 4.2 | $ 4.1 |
Charges from ATC for network transmission services | 87.3 | 100.8 |
Refund from ATC per FERC ROE order | $ (28.3) | $ 0.0 |
INVESTMENT IN AMERICAN TRANSMISSION COMPANY - RELATED PARTY TRANSACTIONS BALANCE SHEET INFORMATION (Details) - ATC - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Investment in ATC | ||
Accounts receivable for services provided to ATC | $ 1.2 | $ 2.2 |
Accounts payable for services received from ATC | $ 29.1 | $ 28.7 |
INVESTMENT IN AMERICAN TRANSMISSION COMPANY - SUMMARIZED FINANCIAL DATA (Details) - ATC - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Income statement data | |||
Revenues | $ 174.7 | $ 164.2 | |
Operating expenses | 82.4 | 79.1 | |
Other expense | 26.4 | 24.0 | |
Net income | 65.9 | $ 61.1 | |
Balance sheet data | |||
Current assets | 85.5 | $ 75.8 | |
Noncurrent assets | 4,402.2 | 4,312.9 | |
Total assets | 4,487.7 | 4,388.7 | |
Current liabilities | 401.8 | 495.1 | |
Long-term debt | 1,940.4 | 1,865.3 | |
Other noncurrent liabilities | 282.9 | 271.5 | |
Shareholders' equity | 1,862.6 | 1,756.8 | |
Total liabilities and shareholders' equity | $ 4,487.7 | $ 4,388.7 |
VARIABLE INTEREST ENTITIES (Details) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017
USD ($)
MW
|
Mar. 31, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Variable interest entities | |||
Equity investment in ATC | $ 1,513.3 | $ 1,443.9 | |
ATC | |||
Variable interest entities | |||
Ownership interest in ATC (as a percent) | 60.00% | ||
Equity investment in ATC | $ 1,513.3 | 1,443.9 | |
Accounts payable due to ATC | $ 29.1 | $ 28.7 | |
Purchased power agreement | |||
Variable interest entities | |||
Firm capacity from purchased power agreement (in megawatts) | MW | 236 | ||
Minimum energy requirements over remaining term of purchased power agreement (in megawatts) | MW | 0 | ||
Remaining term of purchased power agreement (in years) | 5 years | ||
Residual guarantee associated with purchased power agreement | $ 0.0 | ||
Required payments over remaining term of purchased power agreement | 81.9 | ||
Total capacity and lease payments | $ 4.5 | $ 13.5 |
COMMITMENTS AND CONTINGENCIES - UNCONDITIONAL PURCHASE OBLIGATIONS (Details) $ in Millions |
Mar. 31, 2017
USD ($)
|
---|---|
Minimum future commitments for purchase obligations | |
Purchase obligations | $ 11,774.4 |
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Supplemental Cash Flow Information [Abstract] | |||
Cash (paid) for interest, net of amount capitalized | $ (56.6) | $ (53.0) | |
Cash received (paid) for income taxes, net | 8.9 | (0.4) | |
Accounts payable related to construction costs | 116.4 | 90.1 | |
Increase (decease) in restricted cash from the sale (purchase) of investments held in the rabbi trust | 8.3 | (1.5) | |
Portion of Bostco real estate holdings sale financed with note receivable | 7.0 | 0.0 | |
Amortization of deferred revenue | 6.2 | $ 6.2 | |
Long-term restricted cash | $ 26.9 | $ 33.6 |
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