Schedule I - Condensed Parent Company Financial Statements

12 Months Ended

Dec. 31, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

SCHEDULE I - CONDENSED PARENT COMPANY FINANCIAL STATEMENTS

SCHEDULE I – CONDENSED

PARENT COMPANY FINANCIAL STATEMENTS

WEC ENERGY GROUP, INC. (PARENT COMPANY ONLY)

A. INCOME STATEMENTS

Year Ended December 31
(in millions)	2017		2016		2015
Operating expenses	$	6.0	$	7.0	$	42.2
Equity in earnings of subsidiaries	1,234.7		996.5		695.7
Other income, net	2.1		2.7		23.2
Interest expense	82.0		90.0		71.2
Income before income taxes	1,148.8		902.2		605.5
Income tax benefit	54.9		36.8		33.0
Net income attributed to common shareholders	$	1,203.7	$	939.0	$	638.5

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

B. STATEMENTS OF COMPREHENSIVE INCOME

Year Ended December 31
(in millions)	2017			2016			2015
Net income attributed to common shareholders	$	1,203.7		$	939.0		$	638.5
Other comprehensive (loss) income, net of tax
Derivatives accounted for as cash flow hedges
Gains on settlement, net of tax of $7.6	—			—			11.4
Reclassification of gains to net income, net of tax	(1.3		)	(1.3		)	(0.8		)
Cash flow hedges, net	(1.3		)	(1.3		)	10.6
Defined benefit plans
Pension and OPEB costs arising during the period, net of tax	(0.1		)	(1.0		)	(1.5		)
Amortization of pension and OPEB costs included in net periodic benefit cost, net of tax	0.2			0.3			—
Defined benefit plans, net	0.1			(0.7		)	(1.5		)
Other comprehensive income (loss) from subsidiaries, net of tax	1.2			0.3			(4.8		)
Other comprehensive (loss) income, net of tax	—			(1.7		)	4.3
Comprehensive income attributed to common shareholders	$	1,203.7		$	937.3		$	642.8

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

C. BALANCE SHEETS

At December 31
(in millions)	2017		2016
Assets
Current assets
Cash and cash equivalents	$	4.0	$	1.2
Accounts receivable from related parties	1.9		1.8
Notes receivable from related parties	64.1		76.4
Prepaid taxes	17.5		47.6
Other	0.6		0.5
Current assets	88.1		127.5
Long-term assets
Investments in subsidiaries	12,101.9		11,155.4
Note receivable from UMERC	50.0		—
Other	47.7		134.7
Long-term assets	12,199.6		11,290.1
Total assets	$	12,287.7	$	11,417.6
Liabilities and Equity
Current liabilities
Short-term debt	$	494.8	$	321.8
Current portion of long-term debt	300.0		—
Accounts payable to related parties	2.7		3.2
Notes payable to related parties	406.0		241.3
Other	8.9		10.3
Current liabilities	1,212.4		576.6
Long-term liabilities
Long-term debt	1,592.3		1,890.0
Other	21.6		21.2
Long-term liabilities	1,613.9		1,911.2
Common shareholders' equity	9,461.4		8,929.8
Total liabilities and equity	$	12,287.7	$	11,417.6

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

D. STATEMENTS OF CASH FLOWS

Year Ended December 31
(in millions)	2017			2016			2015
Operating activities
Net income attributed to common shareholders	$	1,203.7		$	939.0		$	638.5
Reconciliation to cash provided by operating activities
Equity income in subsidiaries, net of distributions	(686.1		)	(262.1		)	(156.9		)
Deferred income taxes	89.5			23.2			30.9
Change in –
Prepaid taxes	28.4			(47.6		)	—
Other current assets	(0.1		)	13.0			(9.3		)
Accrued taxes	—			(75.6		)	175.7
Other current liabilities	(1.9		)	(5.6		)	(3.2		)
Other, net	0.9			6.3			(18.4		)
Net cash provided by operating activities	634.4			590.6			657.3
Investing activities
Integrys acquisition	—			—			(1,486.2		)
Bluewater acquisition	(226.0		)	—			—
Capital contributions to subsidiaries	(173.4		)	(55.8		)	(135.3		)
Short-term notes receivable from related parties, net	167.8			46.8			(91.0		)
Issuance of long-term note receivable to UMERC	(50.0		)	—			—
Purchase of subsidiary's common stock	—			(66.4		)	—
Proceeds from the sale of assets and businesses	—			—			20.8
Other, net	4.5			(0.4		)	(0.1		)
Net cash used in investing activities	(277.1		)	(75.8		)	(1,691.8		)
Financing activities
Exercise of stock options	30.8			41.6			30.1
Purchase of common stock	(71.3		)	(108.0		)	(74.7		)
Dividends paid on common stock	(656.5		)	(624.9		)	(455.4		)
Issuance of long-term debt	—			—			1,200.0
Change in short-term debt	173.0			13.9			307.9
Short-term notes payable to related parties, net	169.5			162.3			1.8
Other, net	—			0.2			(11.2		)
Net cash (used in) provided by financing activities	(354.5		)	(514.9		)	998.5
Net change in cash and cash equivalents	2.8			(0.1		)	(36.0		)
Cash and cash equivalents at beginning of year	1.2			1.3			37.3
Cash and cash equivalents at end of year	$	4.0		$	1.2		$	1.3

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

SCHEDULE I – CONDENSED

PARENT COMPANY FINANCIAL STATEMENTS

WEC ENERGY GROUP, INC. (PARENT COMPANY ONLY)

E. NOTES TO PARENT COMPANY FINANCIAL STATEMENTS

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

NOTE 2—CASH DIVIDENDS RECEIVED FROM SUBSIDIARIES

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

(in millions)	2017		2016		2015
WE	$	240.0	$	455.0	$	240.0
We Power	181.0		197.9		262.8
ATC Holding LLC	82.6		6.5		6.0
WG	45.0		75.0		30.0
Total	$	548.6	$	734.4	$	538.8

NOTE 3—LONG-TERM DEBT

The following table shows the future maturities of our long-term debt outstanding as of December 31, 2017:

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

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

NOTE 4—FAIR VALUE MEASUREMENTS

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

	2017				2016
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term note receivable from UMERC	$	50.0	$	49.5	$	—	$	—
Long-term debt, including current portion	1,892.3		1,941.5		1,890.0		1,906.1

The carrying value of cash and cash equivalents, accounts receivable, short-term notes receivable, accounts payable, and short-term borrowings approximates fair value due to the short-term nature of these instruments. The fair value of our long-term note receivable and 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. These fair values are categorized within Level 2 of the fair value hierarchy.

NOTE 5—SUPPLEMENTAL CASH FLOW INFORMATION

(in millions)	2017			2016			2015
Cash (paid) for interest	$	(82.5	)	$	(89.6	)	$	(68.8	)
Cash received (paid) for income taxes, net	169.9			(62.9		)	242.9
Significant non-cash equity transactions
Issuance of short-term note receivable to Bluewater	115.0			—			—
Issuance of short-term note receivable to UMERC	40.5			—			—
Settlement of short-term note payable with Bostco	4.8			—			—
Settlement of short-term note payable with Wisvest	—			40.0			—

NOTE 6—SHORT-TERM NOTES RECEIVABLE FROM RELATED PARTIES

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

(in millions)	2017		2016
UMERC	$	38.1	$	—
Wispark	26.0		15.9
Integrys	—		42.0
Bostco	—		18.5
Total	$	64.1	$	76.4

NOTE 7—SHORT-TERM NOTES PAYABLE TO RELATED PARTIES

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

(in millions)	2017		2016
Integrys	$	278.2	$	—
WECC	110.2		109.3
WBS	16.4		131.1
Wisvest	0.9		0.9
Bluewater Gas Storage, LLC	0.3		—
Total	$	406.0	$	241.3