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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03/31/2018 Form 10-Q | i | WEC Energy Group, Inc. |
Subsidiaries and Affiliates | ||
ATC | American Transmission Company LLC | |
ATC Holdco | ATC Holdco, LLC | |
Bluewater | Bluewater Natural Gas Holding, LLC | |
Bostco | Bostco LLC | |
Integrys | Integrys Holding, Inc. | |
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 | |
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 | |
CPP | Clean Power Plan | |
GHG | Greenhouse Gas | |
NAAQS | National Ambient Air Quality Standards | |
NOV | Notice of Violation | |
WPDES | Wisconsin Pollutant Discharge Elimination System | |
Measurements | ||
Dth | Dekatherm | |
MW | Megawatt | |
MWh | Megawatt-hour | |
03/31/2018 Form 10-Q | ii | WEC Energy Group, Inc. |
Other Terms and Abbreviations | ||
2007 Junior Notes | WEC Energy Group, Inc.'s 2007 Junior Subordinated Notes Due 2067 | |
ALJ | Administrative Law Judge | |
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 | |
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 | |
Tax Legislation | Tax Cuts and Jobs Act of 2017 | |
VITA | Variable Income Tax Adjustment Rider |
03/31/2018 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, 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; |
• | The uncertainty surrounding the recently enacted Tax Legislation, including implementing regulations and IRS interpretations, the amount to be returned to our ratepayers, and its impact, if any, on our or our subsidiaries’ credit ratings; |
• | 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; |
• | Factors affecting the implementation of our generation reshaping plan, including related regulatory decisions, the cost of materials, supplies, and labor, and the feasibility of competing projects; |
• | Increased pressure on us by investors and other stakeholder groups to take more aggressive action to reduce future GHG emissions in order to limit future global temperature increases; |
• | 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; |
03/31/2018 Form 10-Q | 1 | WEC Energy Group, Inc. |
• | 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, that could prevent us from paying our common stock dividends, taxes, and other expenses, and meeting our debt obligations; |
• | 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 attacks and cyber security intrusions, as well as the threat of such incidents, including the failure to maintain the security of personally identifiable information, the associated costs to protect our utility assets, technology systems, 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 ability to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act, while both integrating and continuing to consolidate our enterprise systems; |
• | 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. |
03/31/2018 Form 10-Q | 2 | WEC Energy Group, Inc. |
CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited) | Three Months Ended | |||||||
March 31 | ||||||||
(in millions, except per share amounts) | 2018 | 2017 | ||||||
Operating revenues | $ | 2,286.5 | $ | 2,304.5 | ||||
Operating expenses | ||||||||
Cost of sales | 972.1 | 941.1 | ||||||
Other operation and maintenance | 511.9 | 504.5 | ||||||
Depreciation and amortization | 208.6 | 194.6 | ||||||
Property and revenue taxes | 48.8 | 49.6 | ||||||
Total operating expenses | 1,741.4 | 1,689.8 | ||||||
Operating income | 545.1 | 614.7 | ||||||
Equity in earnings of transmission affiliates | 32.8 | 41.9 | ||||||
Other income, net | 7.5 | 18.3 | ||||||
Interest expense | 106.7 | 104.7 | ||||||
Other expense | (66.4 | ) | (44.5 | ) | ||||
Income before income taxes | 478.7 | 570.2 | ||||||
Income tax expense | 88.3 | 213.3 | ||||||
Net income | 390.4 | 356.9 | ||||||
Preferred stock dividends of subsidiary | 0.3 | 0.3 | ||||||
Net income attributed to common shareholders | $ | 390.1 | $ | 356.6 | ||||
Earnings per share | ||||||||
Basic | $ | 1.24 | $ | 1.13 | ||||
Diluted | $ | 1.23 | $ | 1.12 | ||||
Weighted average common shares outstanding | ||||||||
Basic | 315.5 | 315.6 | ||||||
Diluted | 316.9 | 317.2 | ||||||
Dividends per share of common stock | $ | 0.5525 | $ | 0.5200 |
03/31/2018 Form 10-Q | 3 | WEC Energy Group, Inc. |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) | Three Months Ended | |||||||
March 31 | ||||||||
(in millions) | 2018 | 2017 | ||||||
Net income | $ | 390.4 | $ | 356.9 | ||||
Other comprehensive income (loss), net of tax | ||||||||
Derivatives accounted for as cash flow hedges | ||||||||
Reclassification of gains to net income, net of tax | (0.2 | ) | (0.3 | ) | ||||
Defined benefit plans | ||||||||
Amortization of pension and OPEB costs included in net periodic benefit cost, net of tax | 1.9 | 0.1 | ||||||
Other comprehensive income (loss), net of tax | 1.7 | (0.2 | ) | |||||
Comprehensive income | 392.1 | 356.7 | ||||||
Preferred stock dividends of subsidiary | 0.3 | 0.3 | ||||||
Comprehensive income attributed to common shareholders | $ | 391.8 | $ | 356.4 |
03/31/2018 Form 10-Q | 4 | WEC Energy Group, Inc. |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in millions, except share and per share amounts) | March 31, 2018 | December 31, 2017 | ||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 48.1 | $ | 38.9 | ||||
Accounts receivable and unbilled revenues, net of reserves of $160.5 and $143.2, respectively | 1,356.8 | 1,350.7 | ||||||
Materials, supplies, and inventories | 376.0 | 539.0 | ||||||
Prepayments | 165.9 | 210.0 | ||||||
Other | 34.0 | 74.9 | ||||||
Current assets | 1,980.8 | 2,213.5 | ||||||
Long-term assets | ||||||||
Property, plant, and equipment, net of accumulated depreciation of $8,819.8 and $8,618.5, respectively | 21,466.3 | 21,347.0 | ||||||
Regulatory assets | 2,929.7 | 2,803.2 | ||||||
Equity investment in transmission affiliates | 1,598.9 | 1,553.4 | ||||||
Goodwill | 3,052.8 | 3,053.5 | ||||||
Other | 757.1 | 619.9 | ||||||
Long-term assets | 29,804.8 | 29,377.0 | ||||||
Total assets | $ | 31,785.6 | $ | 31,590.5 | ||||
Liabilities and Equity | ||||||||
Current liabilities | ||||||||
Short-term debt | $ | 1,200.3 | $ | 1,444.6 | ||||
Current portion of long-term debt | 957.9 | 842.1 | ||||||
Accounts payable | 592.8 | 859.9 | ||||||
Accrued payroll and benefits | 107.4 | 169.1 | ||||||
Other | 747.5 | 553.6 | ||||||
Current liabilities | 3,605.9 | 3,869.3 | ||||||
Long-term liabilities | ||||||||
Long-term debt | 8,617.5 | 8,746.6 | ||||||
Deferred income taxes | 3,069.9 | 2,999.8 | ||||||
Deferred revenue, net | 538.1 | 543.3 | ||||||
Regulatory liabilities | 3,924.3 | 3,718.6 | ||||||
Environmental remediation liabilities | 617.2 | 617.4 | ||||||
Pension and OPEB obligations | 523.1 | 397.4 | ||||||
Other | 1,191.4 | 1,206.3 | ||||||
Long-term liabilities | 18,481.5 | 18,229.4 | ||||||
Commitments and contingencies (Note 19) | ||||||||
Common shareholders' equity | ||||||||
Common stock – $0.01 par value; 325,000,000 shares authorized; 315,538,808 and 315,574,624 shares outstanding, respectively | 3.2 | 3.2 | ||||||
Additional paid in capital | 4,267.3 | 4,278.5 | ||||||
Retained earnings | 5,392.7 | 5,176.8 | ||||||
Accumulated other comprehensive income | 4.6 | 2.9 | ||||||
Common shareholders' equity | 9,667.8 | 9,461.4 | ||||||
Preferred stock of subsidiary | 30.4 | 30.4 | ||||||
Total liabilities and equity | $ | 31,785.6 | $ | 31,590.5 |
03/31/2018 Form 10-Q | 5 | WEC Energy Group, Inc. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | Three Months Ended | |||||||
March 31 | ||||||||
(in millions) | 2018 | 2017 | ||||||
Operating Activities | ||||||||
Net income | $ | 390.4 | $ | 356.9 | ||||
Reconciliation to cash provided by operating activities | ||||||||
Depreciation and amortization | 208.6 | 194.6 | ||||||
Deferred income taxes and investment tax credits, net | 17.0 | 150.2 | ||||||
Contributions and payments related to pension and OPEB plans | (5.3 | ) | (106.0 | ) | ||||
Equity income in transmission affiliates, net of distributions | 7.1 | (6.7 | ) | |||||
Change in – | ||||||||
Accounts receivable and unbilled revenues | (60.1 | ) | 55.0 | |||||
Materials, supplies, and inventories | 163.0 | 170.5 | ||||||
Other current assets | 81.3 | 41.2 | ||||||
Accounts payable | (170.9 | ) | (212.7 | ) | ||||
Other current liabilities | 128.6 | 90.8 | ||||||
Other, net | 134.3 | (19.2 | ) | |||||
Net cash provided by operating activities | 894.0 | 714.6 | ||||||
Investing Activities | ||||||||
Capital expenditures | (439.6 | ) | (329.7 | ) | ||||
Capital contributions to transmission affiliates | (12.8 | ) | (27.6 | ) | ||||
Proceeds from the sale of assets and businesses | 0.8 | 13.1 | ||||||
Proceeds from the sale of investments held in rabbi trust | 16.5 | 8.6 | ||||||
Other, net | (0.7 | ) | 2.5 | |||||
Net cash used in investing activities | (435.8 | ) | (333.1 | ) | ||||
Financing Activities | ||||||||
Exercise of stock options | 2.1 | 5.9 | ||||||
Purchase of common stock | (15.8 | ) | (20.2 | ) | ||||
Dividends paid on common stock | (174.2 | ) | (164.1 | ) | ||||
Retirement of long-term debt | (12.6 | ) | (12.0 | ) | ||||
Change in short-term debt | (244.3 | ) | (189.8 | ) | ||||
Other, net | (0.3 | ) | (0.6 | ) | ||||
Net cash used in financing activities | (445.1 | ) | (380.8 | ) | ||||
Net change in cash, cash equivalents, and restricted cash | 13.1 | 0.7 | ||||||
Cash, cash equivalents, and restricted cash at beginning of period | 58.6 | 72.7 | ||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 71.7 | $ | 73.4 |
03/31/2018 Form 10-Q | 6 | WEC Energy Group, Inc. |
(in millions) | ||||
Current assets | $ | 2.0 | ||
Net property, plant, and equipment | 218.3 | |||
Goodwill | 6.6 | |||
Current liabilities | (0.9 | ) | ||
Total purchase price | $ | 226.0 |
03/31/2018 Form 10-Q | 7 | WEC Energy Group, Inc. |
• | We elected to exclude from the transaction price any amounts collected from customers for all sales taxes and other similar taxes. |
• | When applicable, we elected to apply the standard to a portfolio of contracts with similar characteristics, primarily our tariff-based contracts, as we reasonably expect that the effects on the financial statements of applying this guidance to the portfolio would not differ materially from applying this guidance to the individual contracts. |
• | We elected to recognize revenue in the amount we have the right to invoice for performance obligations satisfied over time when the consideration received from a customer corresponds directly with the value provided to the customer during the same period. |
• | We elected to not disclose the remaining performance obligations of a contract that has an original expected duration of one year or less. |
• | We elected to apply this standard only to contracts that are not completed as of the date of initial application. |
03/31/2018 Form 10-Q | 8 | WEC Energy Group, Inc. |
(in millions) | Wisconsin | Illinois | Other States | Total Utility Operations | Electric Transmission | Non-Utility Energy Infrastructure | Corporate and Other | Reconciling Eliminations | WEC Energy Group Consolidated | |||||||||||||||||||||||||||
Three Months Ended March 31, 2018 | ||||||||||||||||||||||||||||||||||||
Electric | $ | 1,067.7 | $ | — | $ | — | $ | 1,067.7 | $ | — | $ | — | $ | — | $ | — | $ | 1,067.7 | ||||||||||||||||||
Natural gas | 518.0 | 507.6 | 172.7 | 1,198.3 | — | 14.9 | — | (2.5 | ) | 1,210.7 | ||||||||||||||||||||||||||
Total utility revenues | 1,585.7 | 507.6 | 172.7 | 2,266.0 | — | 14.9 | — | (2.5 | ) | 2,278.4 | ||||||||||||||||||||||||||
Other non-utility revenues | — | — | 3.9 | 3.9 | — | 7.1 | 1.3 | (0.7 | ) | 11.6 | ||||||||||||||||||||||||||
Total revenues from contracts with customers | 1,585.7 | 507.6 | 176.6 | 2,269.9 | — | 22.0 | 1.3 | (3.2 | ) | 2,290.0 | ||||||||||||||||||||||||||
Other operating revenues | 3.4 | (0.3 | ) | (6.7 | ) | (3.6 | ) | — | 96.1 | 0.1 | (96.1 | ) | (3.5 | ) | ||||||||||||||||||||||
Total operating revenues | $ | 1,589.1 | $ | 507.3 | $ | 169.9 | $ | 2,266.3 | $ | — | $ | 118.1 | $ | 1.4 | $ | (99.3 | ) | $ | 2,286.5 |
(in millions) | Electric Utility Operating Revenues | |||
Three Months Ended March 31, 2018 | ||||
Residential | $ | 384.3 | ||
Small commercial and industrial | 330.7 | |||
Large commercial and industrial | 203.9 | |||
Other | 7.7 | |||
Total retail revenues | 926.6 | |||
Wholesale | 54.9 | |||
Resale | 73.8 | |||
Steam | 9.7 | |||
Other utility revenues | 2.7 | |||
Total electric utility operating revenues | $ | 1,067.7 |
03/31/2018 Form 10-Q | 9 | WEC Energy Group, Inc. |
(in millions) | Wisconsin | Illinois | Other States | Total Natural Gas Utility Operations | ||||||||||||
Three Months Ended March 31, 2018 | ||||||||||||||||
Residential | $ | 356.7 | $ | 332.6 | $ | 123.2 | $ | 812.5 | ||||||||
Commercial and industrial | 187.9 | 109.4 | 64.7 | 362.0 | ||||||||||||
Total retail revenues | 544.6 | 442.0 | 187.9 | 1,174.5 | ||||||||||||
Transport | 21.0 | 77.7 | 9.9 | 108.6 | ||||||||||||
Other utility revenues * | (47.6 | ) | (12.1 | ) | (25.1 | ) | (84.8 | ) | ||||||||
Total natural gas utility operating revenues | $ | 518.0 | $ | 507.6 | $ | 172.7 | $ | 1,198.3 |
* | Includes amounts (refunded to) collected from customers for purchased gas adjustment costs. |
03/31/2018 Form 10-Q | 10 | WEC Energy Group, Inc. |
(in millions) | Three Months Ended March 31, 2018 | |||
We Power revenues | $ | 6.4 | ||
Appliance service revenues | 3.9 | |||
Distributed renewable solar project revenues | 1.3 | |||
Total other non-utility operating revenues | $ | 11.6 |
(in millions) | Three Months Ended March 31, 2018 | |||
Alternative revenues * | $ | (16.1 | ) | |
Late payment charges | 11.4 | |||
Leases | 1.2 | |||
Total other operating revenues | $ | (3.5 | ) |
* | Negative amounts can result from alternative revenues being reversed to revenues from contracts with customers as the customer is billed for these alternative revenues. Negative amounts can also result from revenues to be refunded to customers subject to decoupling mechanisms and wholesale true-ups, as discussed below. |
03/31/2018 Form 10-Q | 11 | WEC Energy Group, Inc. |
• | The rates of PGL, NSG, and MERC include decoupling mechanisms. These mechanisms differ by state and allow the utilities to recover or refund the differences between actual and authorized margins for certain customers. |
• | MERC’s rates include a conservation improvement program rider, which includes a financial incentive for meeting energy savings goals. |
• | WE and WPS provide wholesale electric service to customers under market-based rates and FERC formula rates. The customer is charged a base rate each year based upon a formula using prior year actual costs and customer demand. A true-up is calculated based on the difference between the amount billed to customers for the demand component of their rates and what the actual cost of service was for the year. The true-up can result in an amount that we will recover or refund to the customer. We consider the true-up portion of the wholesale electric revenues to be alternative revenues. |
03/31/2018 Form 10-Q | 12 | WEC Energy Group, Inc. |
Award Type | Number of Awards | ||
Stock options (1) | 710,710 | ||
Restricted shares (2) | 156,340 | ||
Performance units | 217,560 |
(1) | Stock options awarded had a weighted-average exercise price of $65.60 and a weighted-average grant date fair value of $7.71 per option. |
(2) | Restricted shares awarded had a weighted-average grant date fair value of $64.20 per share. |
(in millions, except percentages) | March 31, 2018 | December 31, 2017 | ||||||
Commercial paper | ||||||||
Amount outstanding | $ | 1,200.3 | $ | 1,444.6 | ||||
Weighted-average interest rate on amounts outstanding | 2.24 | % | 1.77 | % |
03/31/2018 Form 10-Q | 13 | WEC Energy Group, Inc. |
(in millions) | Maturity | March 31, 2018 | ||||
WEC Energy Group | October 2022 | $ | 1,200.0 | |||
WE | October 2022 | 500.0 | ||||
WPS | October 2022 | 400.0 | ||||
WG | October 2022 | 350.0 | ||||
PGL | October 2022 | 350.0 | ||||
Total short-term credit capacity | $ | 2,800.0 | ||||
Less: | ||||||
Letters of credit issued inside credit facilities | $ | 1.2 | ||||
Commercial paper outstanding | 1,200.3 | |||||
Available capacity under existing agreements | $ | 1,598.5 |
(in millions) | March 31, 2018 | December 31, 2017 | ||||||
Natural gas in storage | $ | 34.8 | $ | 209.0 | ||||
Materials and supplies | 213.7 | 211.2 | ||||||
Fossil fuel | 127.5 | 118.8 | ||||||
Total | $ | 376.0 | $ | 539.0 |
Amount | Effective Tax Rate | ||||||
Statutory federal income tax | $ | 100.5 | 21.0 | % | |||
State income taxes net of federal tax benefit | 29.9 | 6.2 | % | ||||
Federal tax reform | (15.5 | ) | (3.2 | )% | |||
Tax repairs | (25.5 | ) | (5.3 | )% | |||
Other | (1.1 | ) | (0.3 | )% | |||
Total income tax expense | $ | 88.3 | 18.4 | % |
03/31/2018 Form 10-Q | 14 | WEC Energy Group, Inc. |
03/31/2018 Form 10-Q | 15 | WEC Energy Group, Inc. |
March 31, 2018 | ||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Derivative assets | ||||||||||||||||
Natural gas contracts | $ | 1.7 | $ | 0.5 | $ | — | $ | 2.2 | ||||||||
Petroleum products contracts | 0.6 | — | — | 0.6 | ||||||||||||
FTRs | — | — | 1.5 | 1.5 | ||||||||||||
Coal contracts | — | 1.1 | — | 1.1 | ||||||||||||
Total derivative assets | $ | 2.3 | $ | 1.6 | $ | 1.5 | $ | 5.4 | ||||||||
Investments held in rabbi trust | $ | 103.6 | $ | — | $ | — | $ | 103.6 | ||||||||
Derivative liabilities | ||||||||||||||||
Natural gas contracts | $ | 3.4 | $ | 1.4 | $ | — | $ | 4.8 | ||||||||
Coal contracts | — | 0.3 | — | 0.3 | ||||||||||||
Total derivative liabilities | $ | 3.4 | $ | 1.7 | $ | — | $ | 5.1 |
December 31, 2017 | ||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Derivative assets | ||||||||||||||||
Natural gas contracts | $ | 1.8 | $ | 3.9 | $ | — | $ | 5.7 | ||||||||
Petroleum products contracts | 1.2 | — | — | 1.2 | ||||||||||||
FTRs | — | — | 4.4 | 4.4 | ||||||||||||
Coal contracts | — | 1.1 | — | 1.1 | ||||||||||||
Total derivative assets | $ | 3.0 | $ | 5.0 | $ | 4.4 | $ | 12.4 | ||||||||
Investments held in rabbi trust | $ | 120.7 | $ | — | $ | — | $ | 120.7 | ||||||||
Derivative liabilities | ||||||||||||||||
Natural gas contracts | $ | 7.0 | $ | 3.8 | $ | — | $ | 10.8 | ||||||||
Coal contracts | — | 0.8 | — | 0.8 | ||||||||||||
Total derivative liabilities | $ | 7.0 | $ | 4.6 | $ | — | $ | 11.6 |
Three Months Ended March 31 | ||||||||
(in millions) | 2018 | 2017 | ||||||
Balance at the beginning of the period | $ | 4.4 | $ | 5.1 | ||||
Settlements | (2.9 | ) | (3.4 | ) | ||||
Balance at the end of the period | $ | 1.5 | $ | 1.7 |
03/31/2018 Form 10-Q | 16 | WEC Energy Group, Inc. |
March 31, 2018 | December 31, 2017 | |||||||||||||||
(in millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Preferred stock | $ | 30.4 | $ | 29.1 | $ | 30.4 | $ | 30.5 | ||||||||
Long-term debt, including current portion * | 9,549.3 | 10,054.5 | 9,561.7 | 10,341.9 |
* | The carrying amount of long-term debt excludes capital lease obligations of $26.1 million and $27.0 million at March 31, 2018 and December 31, 2017, respectively. |
March 31, 2018 | December 31, 2017 | |||||||||||||||
(in millions) | Derivative Assets | Derivative Liabilities | Derivative Assets | Derivative Liabilities | ||||||||||||
Other current | ||||||||||||||||
Natural gas contracts | $ | 2.2 | $ | 3.7 | $ | 5.6 | $ | 9.4 | ||||||||
Petroleum products contracts | 0.6 | — | 1.2 | — | ||||||||||||
FTRs | 1.5 | — | 4.4 | — | ||||||||||||
Coal contracts | 0.8 | 0.3 | 0.6 | 0.6 | ||||||||||||
Total other current * | $ | 5.1 | $ | 4.0 | $ | 11.8 | $ | 10.0 | ||||||||
Other long-term | ||||||||||||||||
Natural gas contracts | $ | — | $ | 1.1 | $ | 0.1 | $ | 1.4 | ||||||||
Coal contracts | 0.3 | — | 0.5 | 0.2 | ||||||||||||
Total other long-term * | $ | 0.3 | $ | 1.1 | $ | 0.6 | $ | 1.6 | ||||||||
Total | $ | 5.4 | $ | 5.1 | $ | 12.4 | $ | 11.6 |
* | 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, 2018 | Three Months Ended March 31, 2017 | |||||||||||
(in millions) | Volumes | Gains (Losses) | Volumes | Gains (Losses) | ||||||||
Natural gas contracts | 48.1 Dth | $ | (5.2 | ) | 34.1 Dth | $ | (0.3 | ) | ||||
Petroleum products contracts | 2.1 gallons | 0.5 | 4.9 gallons | (0.5 | ) | |||||||
FTRs | 8.2 MWh | 3.7 | 9.2 MWh | 3.0 | ||||||||
Total | $ | (1.0 | ) | $ | 2.2 |
03/31/2018 Form 10-Q | 17 | WEC Energy Group, Inc. |
March 31, 2018 | December 31, 2017 | ||||||||||||||||
(in millions) | Derivative Assets | Derivative Liabilities | Derivative Assets | Derivative Liabilities | |||||||||||||
Gross amount recognized on the balance sheet | $ | 5.4 | $ | 5.1 | $ | 12.4 | $ | 11.6 | |||||||||
Gross amount not offset on the balance sheet | (2.1 | ) | (3.7 | ) | (1) | (4.9 | ) | (9.0 | ) | (2) | |||||||
Net amount | $ | 3.3 | $ | 1.4 | $ | 7.5 | $ | 2.6 |
(1) | Includes cash collateral posted of $1.6 million. |
(2) | Includes cash collateral posted of $4.1 million. |
Expiration | ||||||||||||||||
(in millions) | Total Amounts Committed at March 31, 2018 | Less Than 1 Year | 1 to 3 Years | Over 3 Years | ||||||||||||
Guarantees | ||||||||||||||||
Guarantees supporting commodity transactions of subsidiaries (1) | $ | 8.1 | $ | 8.1 | $ | — | $ | — | ||||||||
Standby letters of credit (2) | 71.4 | 46.0 | 25.4 | — | ||||||||||||
Surety bonds (3) | 9.8 | 9.7 | 0.1 | — | ||||||||||||
Other guarantees (4) | 11.1 | 0.5 | — | 10.6 | ||||||||||||
Total guarantees | $ | 100.4 | $ | 64.3 | $ | 25.5 | $ | 10.6 |
(1) | Consists of $8.1 million to support the business operations of Bluewater. |
(2) | 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. |
(3) | 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. |
(4) | Consists of $11.1 million related to other indemnifications, for which a liability of $10.6 million related to workers compensation coverage was recorded on our balance sheets. |
03/31/2018 Form 10-Q | 18 | WEC Energy Group, Inc. |
Pension Costs | ||||||||
Three Months Ended March 31 | ||||||||
(in millions) | 2018 | 2017 | ||||||
Service cost | $ | 12.0 | $ | 11.7 | ||||
Interest cost | 28.3 | 31.2 | ||||||
Expected return on plan assets | (49.6 | ) | (49.6 | ) | ||||
Loss on plan settlement | 0.4 | — | ||||||
Amortization of prior service cost | 0.7 | 0.7 | ||||||
Amortization of net actuarial loss | 23.1 | 21.9 | ||||||
Net periodic benefit cost | $ | 14.9 | $ | 15.9 |
OPEB Costs | ||||||||
Three Months Ended March 31 | ||||||||
(in millions) | 2018 | 2017 | ||||||
Service cost | $ | 6.2 | $ | 6.3 | ||||
Interest cost | 7.5 | 8.5 | ||||||
Expected return on plan assets | (14.9 | ) | (13.7 | ) | ||||
Amortization of prior service credit | (3.8 | ) | (2.8 | ) | ||||
Amortization of net actuarial loss | 0.3 | 1.5 | ||||||
Net periodic benefit credit | $ | (4.7 | ) | $ | (0.2 | ) |
Year Ended December 31, 2017 | Year Ended December 31, 2016 | Year Ended December 31, 2015 | ||||||||||||||||||||||||||||||||||
(in millions) | Form 10-K Income Statement | Impact of ASU 2017-07 | Income Statement After Adoption | Form 10-K Income Statement | Impact of ASU 2017-07 | Income Statement After Adoption | Form 10-K Income Statement | Impact of ASU 2017-07 | Income Statement After Adoption | |||||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||||||||||
Other operation and maintenance | $ | 2,047.0 | $ | 9.1 | $ | 2,056.1 | $ | 2,185.5 | $ | (14.2 | ) | $ | 2,171.3 | $ | 1,709.3 | $ | 1.4 | $ | 1,710.7 | |||||||||||||||||
Other expense | ||||||||||||||||||||||||||||||||||||
Other income, net | 64.6 | 9.1 | 73.7 | 80.8 | (14.2 | ) | 66.6 | 58.9 | 1.4 | 60.3 |
03/31/2018 Form 10-Q | 19 | WEC Energy Group, Inc. |
(in millions) | Wisconsin | Illinois | Other States | Non-Utility Energy Infrastructure | Total | |||||||||||||||
Goodwill balance as of January 1, 2018 | $ | 2,104.3 | $ | 758.7 | $ | 183.2 | $ | 7.3 | $ | 3,053.5 | ||||||||||
Adjustment to Bluewater purchase price allocation (1) | — | — | — | (0.7 | ) | (0.7 | ) | |||||||||||||
Goodwill balance as of March 31, 2018 (2) | $ | 2,104.3 | $ | 758.7 | $ | 183.2 | $ | 6.6 | $ | 3,052.8 |
(1) | See Note 2, Acquisitions, for more information on the acquisition of Bluewater. |
(2) | We had no accumulated impairment losses related to our goodwill as of March 31, 2018. |
Three Months Ended March 31, 2018 | ||||||||||||
(in millions) | ATC | ATC Holdco | Total | |||||||||
Balance at beginning of period * | $ | 1,515.8 | $ | 37.6 | $ | 1,553.4 | ||||||
Add: Earnings (loss) from equity method investment | 33.4 | (0.6 | ) | 32.8 | ||||||||
Add: Capital contributions | 12.0 | 0.8 | 12.8 | |||||||||
Less: Other | 0.1 | — | 0.1 | |||||||||
Balance at end of period | $ | 1,561.1 | $ | 37.8 | $ | 1,598.9 |
* | Distributions of $39.9 million, received in the first quarter of 2018, were approved and recorded as a receivable from ATC in other current assets at December 31, 2017. |
Three Months Ended March 31, 2017 | ||||||||||||
(in millions) | ATC | ATC Holdco | Total | |||||||||
Balance at beginning of period * | $ | 1,443.9 | $ | — | $ | 1,443.9 | ||||||
Add: Earnings (loss) from equity method investment | 47.7 | (5.8 | ) | 41.9 | ||||||||
Add: Capital contributions | 24.1 | 3.5 | 27.6 | |||||||||
Less: Other | 0.1 | — | 0.1 | |||||||||
Balance at end of period | $ | 1,515.6 | $ | (2.3 | ) | $ | 1,513.3 |
* | Distributions of $35.2 million, received in the first quarter of 2017, were approved and recorded as a receivable from ATC in other current assets at December 31, 2016. |
03/31/2018 Form 10-Q | 20 | WEC Energy Group, Inc. |
Three Months Ended March 31 | ||||||||
(in millions) | 2018 | 2017 | ||||||
Charges to ATC for services and construction | $ | 4.6 | $ | 4.2 | ||||
Charges from ATC for network transmission services | 84.5 | 87.3 | ||||||
Refund from ATC per FERC ROE order | — | 28.3 |
(in millions) | March 31, 2018 | December 31, 2017 | ||||||
Accounts receivable | ||||||||
Services provided to ATC | $ | 1.8 | $ | 1.5 | ||||
Other current assets | ||||||||
Dividends receivable from ATC | — | 39.9 | ||||||
Accounts payable | ||||||||
Services received from ATC | 24.0 | 31.2 |
Three Months Ended March 31 | ||||||||
(in millions) | 2018 | 2017 | ||||||
Income statement data | ||||||||
Operating revenues | $ | 165.4 | $ | 174.7 | ||||
Operating expenses | 84.9 | 82.7 | ||||||
Other expense, net | 27.6 | 26.1 | ||||||
Net income | $ | 52.9 | $ | 65.9 |
(in millions) | March 31, 2018 | December 31, 2017 | ||||||
Balance sheet data | ||||||||
Current assets | $ | 84.7 | $ | 87.7 | ||||
Noncurrent assets | 4,681.7 | 4,598.9 | ||||||
Total assets | $ | 4,766.4 | $ | 4,686.6 | ||||
Current liabilities | $ | 473.3 | $ | 767.2 | ||||
Long-term debt | 2,065.3 | 1,790.6 | ||||||
Other noncurrent liabilities | 266.4 | 240.3 | ||||||
Shareholders' equity | 1,961.4 | 1,888.5 | ||||||
Total liabilities and shareholders' equity | $ | 4,766.4 | $ | 4,686.6 |
• | The Wisconsin segment includes the electric and natural gas utility operations of WE, WG, WPS, and UMERC. |
• | 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, transmission-only company regulated by the FERC for cost of service and certain state regulatory commissions for routing and siting of transmission projects, and our approximate 75% ownership interest in ATC Holdco, which invests in transmission-related projects outside of ATC's traditional footprint. |
03/31/2018 Form 10-Q | 21 | WEC Energy Group, Inc. |
• | The non-utility energy infrastructure segment includes We Power, which owns and leases generating facilities to WE, and Bluewater, which owns underground natural gas storage facilities in Michigan. |
• | 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 LLC, Wisconsin Energy Capital Corporation, WBS, and WPS Power Development LLC. In the first quarter of 2017, we sold substantially all of the remaining assets of Bostco. See Note 3, Disposition, for more information on this sale. |
Utility Operations | ||||||||||||||||||||||||||||||||||||
(in millions) | Wisconsin | Illinois | Other States | Total Utility Operations | Electric Transmission | Non-Utility Energy Infrastructure | Corporate and Other | Reconciling Eliminations | WEC Energy Group Consolidated | |||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||||||
March 31, 2018 | ||||||||||||||||||||||||||||||||||||
External revenues | $ | 1,589.1 | $ | 507.3 | $ | 169.9 | $ | 2,266.3 | $ | — | $ | 18.8 | $ | 1.4 | $ | — | $ | 2,286.5 | ||||||||||||||||||
Intersegment revenues | — | — | — | — | — | 99.3 | — | (99.3 | ) | — | ||||||||||||||||||||||||||
Other operation and maintenance | 468.5 | 112.2 | 26.6 | 607.3 | — | 1.7 | (0.3 | ) | (96.8 | ) | 511.9 | |||||||||||||||||||||||||
Depreciation and amortization | 135.1 | 40.9 | 6.6 | 182.6 | — | 18.3 | 7.7 | — | 208.6 | |||||||||||||||||||||||||||
Operating income (loss) | 273.7 | 147.6 | 36.2 | 457.5 | — | 93.0 | (5.4 | ) | — | 545.1 | ||||||||||||||||||||||||||
Equity in earnings of transmission affiliates | — | — | — | — | 32.8 | — | — | — | 32.8 | |||||||||||||||||||||||||||
Interest expense | 49.4 | 12.3 | 2.1 | 63.8 | — | 16.1 | 28.0 | (1.2 | ) | 106.7 |
Utility Operations | ||||||||||||||||||||||||||||||||||||
(in millions) | Wisconsin | Illinois | Other States | Total Utility Operations | Electric Transmission | Non-Utility Energy Infrastructure | 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 * | 465.7 | 119.6 | 28.2 | 613.5 | — | 0.4 | (0.4 | ) | (109.0 | ) | 504.5 | |||||||||||||||||||||||||
Depreciation and amortization | 129.3 | 36.2 | 6.0 | 171.5 | — | 17.5 | 5.6 | — | 194.6 | |||||||||||||||||||||||||||
Operating income (loss) * | 329.5 | 156.7 | 33.5 | 519.7 | — | 97.4 | (2.4 | ) | — | 614.7 | ||||||||||||||||||||||||||
Equity in earnings of transmission affiliates | — | — | — | — | 41.9 | — | — | — | 41.9 | |||||||||||||||||||||||||||
Interest expense | 48.7 | 11.1 | 2.3 | 62.1 | — | 15.3 | 29.1 | (1.8 | ) | 104.7 |
* | Includes the retroactive restatement impacts of the implementation of ASU 2017-07. See Note 14, Employee Benefits, for more information on this new standard. |
03/31/2018 Form 10-Q | 22 | WEC Energy Group, Inc. |
03/31/2018 Form 10-Q | 23 | WEC Energy Group, Inc. |
03/31/2018 Form 10-Q | 24 | WEC Energy Group, Inc. |
03/31/2018 Form 10-Q | 25 | WEC Energy Group, Inc. |
03/31/2018 Form 10-Q | 26 | WEC Energy Group, Inc. |
(in millions) | March 31, 2018 | December 31, 2017 | ||||||
Regulatory assets | $ | 668.2 | $ | 676.6 | ||||
Reserves for future remediation | 617.2 | 617.2 |
Three Months Ended March 31 | ||||||||
(in millions) | 2018 | 2017 | ||||||
Cash (paid) for interest, net of amount capitalized | $ | (68.5 | ) | $ | (56.6 | ) | ||
Cash received for income taxes, net | 0.3 | 8.9 | ||||||
Significant non-cash transactions | ||||||||
Accounts payable related to construction costs | 74.9 | 116.4 | ||||||
Portion of Bostco real estate holdings sale financed with note receivable * | — | 7.0 | ||||||
Amortization of deferred revenue | 6.3 | 6.2 |
* | See Note 3, Disposition, for more information on this sale. |
03/31/2018 Form 10-Q | 27 | WEC Energy Group, Inc. |
(in millions) | 2018 | 2017 | ||||||
Cash and cash equivalents | $ | 48.1 | $ | 45.7 | ||||
Restricted cash included in other current assets | — | 0.8 | ||||||
Restricted cash included in other long term assets | 23.6 | 26.9 | ||||||
Cash, cash equivalents, and restricted cash | $ | 71.7 | $ | 73.4 |
Year Ended December 31, 2017 | Year Ended December 31, 2016 | Year Ended December 31, 2015 | ||||||||||||||||||||||||||||||||||
(in millions) | 2017 Form 10-K Cash Flows | Impact of ASU 2016-18 | Cash Flows After Adoption | 2017 Form 10-K Cash Flows | Impact of ASU 2016-18 | Cash Flows After Adoption | 2017 Form 10-K Cash Flows | Impact of ASU 2016-18 | Cash Flows After Adoption | |||||||||||||||||||||||||||
Operating Activities | ||||||||||||||||||||||||||||||||||||
Change in – | ||||||||||||||||||||||||||||||||||||
Other current assets | $ | (6.0 | ) | $ | (1.1 | ) | $ | (7.1 | ) | $ | 103.1 | $ | 0.1 | $ | 103.2 | $ | (27.2 | ) | $ | — | $ | (27.2 | ) | |||||||||||||
Other, net | (197.5 | ) | 0.1 | (197.4 | ) | (53.8 | ) | 0.2 | (53.6 | ) | (209.1 | ) | 1.5 | (207.6 | ) | |||||||||||||||||||||
Net cash provided by operating activities | 2,079.6 | (1.0 | ) | 2,078.6 | 2,103.5 | 0.3 | 2,103.8 | 1,293.6 | 1.5 | 1,295.1 | ||||||||||||||||||||||||||
Investing Activities | ||||||||||||||||||||||||||||||||||||
Withdrawal of restricted cash from rabbi trust for qualifying payments | 19.5 | (19.5 | ) | — | 26.6 | (26.6 | ) | — | 1.4 | (1.4 | ) | — | ||||||||||||||||||||||||
Proceeds from the sale of investments held in rabbi trust | — | 8.7 | 8.7 | — | 1.7 | 1.7 | — | 126.9 | 126.9 | |||||||||||||||||||||||||||
Purchase of investments held in rabbi trust | — | (3.7 | ) | (3.7 | ) | — | (59.2 | ) | (59.2 | ) | — | (60.2 | ) | (60.2 | ) | |||||||||||||||||||||
Integrys acquisition, net of cash acquired | — | — | — | — | — | — | (1,329.9 | ) | 30.8 | (1,299.1 | ) | |||||||||||||||||||||||||
Other, net | 12.0 | — | 12.0 | 3.0 | — | 3.0 | 57.0 | (1.2 | ) | 55.8 | ||||||||||||||||||||||||||
Net cash used in investing activities | (2,239.6 | ) | (14.5 | ) | (2,254.1 | ) | (1,270.1 | ) | (84.1 | ) | (1,354.2 | ) | (2,517.5 | ) | 94.9 | (2,422.6 | ) | |||||||||||||||||||
Financing Activities | ||||||||||||||||||||||||||||||||||||
Other, net | (6.5 | ) | — | (6.5 | ) | (13.6 | ) | — | (13.6 | ) | (18.9 | ) | 22.6 | 3.7 | ||||||||||||||||||||||
Net cash provided by (used in) financing activities | 161.4 | — | 161.4 | (845.7 | ) | — | (845.7 | ) | 1,211.8 | 22.6 | 1,234.4 | |||||||||||||||||||||||||
Net change in cash, cash equivalents, and restricted cash | 1.4 | (15.5 | ) | (14.1 | ) | (12.3 | ) | (83.8 | ) | (96.1 | ) | (12.1 | ) | 119.0 | 106.9 | |||||||||||||||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 37.5 | 35.2 | 72.7 | 49.8 | 119.0 | 168.8 | 61.9 | — | 61.9 | |||||||||||||||||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 38.9 | $ | 19.7 | $ | 58.6 | $ | 37.5 | $ | 35.2 | $ | 72.7 | $ | 49.8 | $ | 119.0 | $ | 168.8 |
03/31/2018 Form 10-Q | 28 | WEC Energy Group, Inc. |
03/31/2018 Form 10-Q | 29 | WEC Energy Group, Inc. |
03/31/2018 Form 10-Q | 30 | WEC Energy Group, Inc. |
03/31/2018 Form 10-Q | 31 | WEC Energy Group, Inc. |
03/31/2018 Form 10-Q | 32 | WEC Energy Group, Inc. |
• | Upper Michigan Energy Resources Corporation (UMERC), our Michigan electric and natural gas utility, is moving forward with its long-term generation solution for electric reliability in the Upper Peninsula of Michigan. The plan calls for UMERC to construct and operate approximately 180 MW of natural gas-fueled generation located in the Upper Peninsula. The new generation is expected to achieve commercial operation by mid-2019 and provide the region with affordable, reliable electricity that generates less emissions than the Presque Isle power plant (PIPP). In accordance with a written approval letter received from the Midcontinent Independent System Operator, we must retire PIPP by May 31, 2019. |
• | The Peoples Gas Light and Coke Company continues to work on its Natural Gas System Modernization Program, which primarily involves replacing old cast and ductile iron pipes and facilities in Chicago’s natural gas delivery system with modern polyethylene pipes to reinforce the long-term safety and reliability of the system. |
• | Wisconsin Public Service Corporation (WPS) continues work on its System Modernization and Reliability Project, which involves modernizing parts of its electric distribution system, including burying or upgrading lines. The project focuses on constructing |
03/31/2018 Form 10-Q | 33 | WEC Energy Group, Inc. |
• | See Note 2, Acquisitions, for information about our acquisitions of natural gas storage facilities in Michigan and a portion of a wind energy generation facility in Wisconsin. |
• | See Note 3, Disposition, for information on the sale of Bostco LLC's real estate holdings. |
03/31/2018 Form 10-Q | 34 | WEC Energy Group, Inc. |
Three Months Ended March 31 | ||||||||||||||||||||||||
(in millions, except per share data) | 2018 | 2017 | B (W) | Change Related to Flow Through of Tax Repairs | Change Related to Tax Legislation | Remaining Change B (W) | ||||||||||||||||||
Wisconsin | $ | 273.7 | $ | 329.5 | $ | (55.8 | ) | $ | (35.1 | ) | $ | (50.9 | ) | $ | 30.2 | |||||||||
Illinois | 147.6 | 156.7 | (9.1 | ) | — | (15.9 | ) | 6.8 | ||||||||||||||||
Other states | 36.2 | 33.5 | 2.7 | — | (5.5 | ) | 8.2 | |||||||||||||||||
Non-utility energy infrastructure | 93.0 | 97.4 | (4.4 | ) | — | (12.6 | ) | 8.2 | ||||||||||||||||
Corporate and other | (5.4 | ) | (2.4 | ) | (3.0 | ) | — | — | (3.0 | ) | ||||||||||||||
Total operating income | 545.1 | 614.7 | (69.6 | ) | (35.1 | ) | (84.9 | ) | 50.4 | |||||||||||||||
Equity in earnings of transmission affiliates | 32.8 | 41.9 | (9.1 | ) | — | (10.7 | ) | 1.6 | ||||||||||||||||
Other income, net | 7.5 | 18.3 | (10.8 | ) | — | — | (10.8 | ) | ||||||||||||||||
Interest expense | 106.7 | 104.7 | (2.0 | ) | — | — | (2.0 | ) | ||||||||||||||||
Income before income taxes | 478.7 | 570.2 | (91.5 | ) | (35.1 | ) | (95.6 | ) | 39.2 | |||||||||||||||
Income tax expense | 88.3 | 213.3 | 125.0 | 35.1 | 92.0 | (2.1 | ) | |||||||||||||||||
Preferred stock dividends of subsidiary | 0.3 | 0.3 | — | — | — | — | ||||||||||||||||||
Net income attributed to common shareholders | $ | 390.1 | $ | 356.6 | $ | 33.5 | $ | — | $ | (3.6 | ) | $ | 37.1 | |||||||||||
Diluted earnings per share | $ | 1.23 | $ | 1.12 | $ | 0.11 |
• | A $30.2 million pre-tax ($21.9 million after tax) remaining increase in operating income at the Wisconsin segment. The increase was driven by higher electric and natural gas margins, which were primarily due to higher sales volumes as a result of the colder winter weather. Also contributing to the increase were lower operating expenses during the first quarter of 2018. |
• | An $8.2 million pre-tax ($6.0 million after tax) remaining increase in operating income at the other states segment. The increase was driven by higher natural gas margins, which were primarily due to higher sales volumes as a result of the colder winter weather during the first quarter of 2018. |
• | An $8.2 million pre-tax ($6.0 million after tax) remaining increase in operating income at the non-utility energy infrastructure segment, primarily driven by the inclusion of the operations of Bluewater following its acquisition on June 30, 2017. |
• | A $6.8 million pre-tax ($4.9 million after tax) remaining 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 the SMP project under its QIP rider. |
03/31/2018 Form 10-Q | 35 | WEC Energy Group, Inc. |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2018 | 2017 | B (W) | |||||||||
Electric revenues | $ | 1,069.1 | $ | 1,115.3 | $ | (46.2 | ) | |||||
Fuel and purchased power | 352.3 | 350.5 | (1.8 | ) | ||||||||
Total electric margins | 716.8 | 764.8 | (48.0 | ) | ||||||||
Natural gas revenues | 520.0 | 496.8 | 23.2 | |||||||||
Cost of natural gas sold | 319.7 | 296.6 | (23.1 | ) | ||||||||
Total natural gas margins | 200.3 | 200.2 | 0.1 | |||||||||
Total electric and natural gas margins | 917.1 | 965.0 | (47.9 | ) | ||||||||
Other operation and maintenance | 468.5 | 465.7 | (2.8 | ) | ||||||||
Depreciation and amortization | 135.1 | 129.3 | (5.8 | ) | ||||||||
Property and revenue taxes | 39.8 | 40.5 | 0.7 | |||||||||
Operating income | $ | 273.7 | $ | 329.5 | $ | (55.8 | ) |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2018 | 2017 | B (W) | |||||||||
Operation and maintenance not included in line items below | $ | 177.0 | $ | 189.7 | $ | 12.7 | ||||||
We Power (1) | 127.2 | 127.6 | 0.4 | |||||||||
Transmission (2) | 104.7 | 103.9 | (0.8 | ) | ||||||||
Transmission expense related to the flow through of tax repairs (3) | 14.7 | — | (14.7 | ) | ||||||||
Regulatory amortizations and other pass through expenses (4) | 44.9 | 44.5 | (0.4 | ) | ||||||||
Total other operation and maintenance | $ | 468.5 | $ | 465.7 | $ | (2.8 | ) |
(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, 2018 and 2017, $110.5 million and $124.7 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, either deferred or deducted from the regulatory asset. |
03/31/2018 Form 10-Q | 36 | WEC Energy Group, Inc. |
(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, 2018 and 2017, $94.3 million and $82.9 million, respectively, of costs were billed by transmission providers to our electric utilities. |
(3) | Represents additional transmission expense associated with WE's flow through of tax benefits of its repair-related deferred tax liabilities starting in 2018, in accordance with a settlement agreement with the PSCW, to maintain certain regulatory asset balances at their December 31, 2017 levels. See Note 21, Regulatory Environment, for more information. |
(4) | 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 | |||||||||
MWh (in thousands) | |||||||||
Electric Sales Volumes | 2018 | 2017 | B (W) | ||||||
Customer Class | |||||||||
Residential | 2,716.9 | 2,598.3 | 118.6 | ||||||
Small commercial and industrial * | 3,194.3 | 3,192.6 | 1.7 | ||||||
Large commercial and industrial * | 3,113.4 | 3,080.4 | 33.0 | ||||||
Other | 46.2 | 47.2 | (1.0 | ) | |||||
Total retail * | 9,070.8 | 8,918.5 | 152.3 | ||||||
Wholesale | 856.9 | 942.9 | (86.0 | ) | |||||
Resale | 2,443.6 | 2,277.1 | 166.5 | ||||||
Total sales in MWh * | 12,371.3 | 12,138.5 | 232.8 |
* | 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 | 2018 | 2017 | B (W) | ||||||
Customer Class | |||||||||
Residential | 524.3 | 467.5 | 56.8 | ||||||
Commercial and industrial | 316.8 | 280.8 | 36.0 | ||||||
Total retail | 841.1 | 748.3 | 92.8 | ||||||
Transport | 413.0 | 382.7 | 30.3 | ||||||
Total sales in therms | 1,254.1 | 1,131.0 | 123.1 |
Three Months Ended March 31 | |||||||||
Degree Days | |||||||||
Weather | 2018 | 2017 | B(W) | ||||||
WE and WG (1) | |||||||||
Heating (3,255 normal) | 3,225 | 2,849 | 376 | ||||||
WPS (2) | |||||||||
Heating (3,624 normal) | 3,636 | 3,273 | 363 | ||||||
UMERC (3) | |||||||||
Heating (3,931 normal) | 4,036 | 3,662 | 374 |
(1) | Normal degree days are based on a 20-year moving average of monthly temperatures from Mitchell International Airport in Milwaukee, Wisconsin. |
(2) | Normal degree days are based on a 20-year moving average of monthly temperatures from the Green Bay, Wisconsin weather station. |
(3) | Normal degree days are based on a 20-year moving average of monthly temperatures from the Iron Mountain, Michigan weather station. |
03/31/2018 Form 10-Q | 37 | WEC Energy Group, Inc. |
• | A $33.8 million decrease in margins related to amounts expected to be returned to customers through refunds, bill credits, or reductions in other regulatory assets, driven by the Tax Legislation signed into law in December 2017. See Note 10, Income Taxes, and Note 21, Regulatory Environment, for more information. |
• | A $20.4 million decrease in margins related to a settlement agreement with the PSCW to flow through WE's tax benefit of its repair-related deferred tax liabilities through reductions in certain regulatory assets, as discussed in the table above and in Note 21, Regulatory Environment. |
• | A $3.6 million decrease in wholesale margins driven both by reduced capacity rates reflecting the Tax Legislation signed into law in December 2017 as well as lower sales volumes at WPS. |
• | A $14.7 million increase in transmission expense related to the flow through of tax repairs, as discussed in the table above. |
• | A $5.8 million increase in depreciation and amortization driven by an overall increase in utility plant in service, WBS's transfer of an information technology project to WPS in June 2017, and the implementation of an enterprise resource planning system in January 2018. |
• | A $4.9 million decrease in benefit costs. |
• | A $4.1 million decrease in expenses at our plants, primarily related to the winding down of operations in anticipation of expected plant retirements. This resulted in lower maintenance and labor costs during the first quarter of 2018. See Note 5, Property, Plant, and Equipment, for more information on the plant retirements. |
• | A $2.0 million decrease in electric and natural gas distribution expenses, primarily related to lower storm damage. |
03/31/2018 Form 10-Q | 38 | WEC Energy Group, Inc. |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2018 | 2017 | B (W) | |||||||||
Natural gas revenues | $ | 507.3 | $ | 525.3 | $ | (18.0 | ) | |||||
Cost of natural gas sold | 201.7 | 207.7 | 6.0 | |||||||||
Total natural gas margins | 305.6 | 317.6 | (12.0 | ) | ||||||||
Other operation and maintenance | 112.2 | 119.6 | 7.4 | |||||||||
Depreciation and amortization | 40.9 | 36.2 | (4.7 | ) | ||||||||
Property and revenue taxes | 4.9 | 5.1 | 0.2 | |||||||||
Operating income | $ | 147.6 | $ | 156.7 | $ | (9.1 | ) |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2018 | 2017 | B (W) | |||||||||
Operation and maintenance not included in the line items below | $ | 73.7 | $ | 76.5 | $ | 2.8 | ||||||
Riders * | 38.5 | 42.3 | 3.8 | |||||||||
Regulatory amortizations * | (0.3 | ) | 0.7 | 1.0 | ||||||||
Other | 0.3 | 0.1 | (0.2 | ) | ||||||||
Total other operation and maintenance | $ | 112.2 | $ | 119.6 | $ | 7.4 |
* | These 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 | 2018 | 2017 | B (W) | ||||||
Customer Class | |||||||||
Residential | 428.6 | 349.4 | 79.2 | ||||||
Commercial and industrial | 168.4 | 143.3 | 25.1 | ||||||
Total retail | 597.0 | 492.7 | 104.3 | ||||||
Transport | 356.6 | 326.0 | 30.6 | ||||||
Total sales in therms | 953.6 | 818.7 | 134.9 |
Three Months Ended March 31 | |||||||||
Degree Days | |||||||||
Weather * | 2018 | 2017 | B (W) | ||||||
Heating (3,137 Normal) | 3,113 | 2,661 | 452 |
* | Normal heating degree days are based on a 12-year moving average of monthly temperatures from Chicago's O'Hare Airport. |
03/31/2018 Form 10-Q | 39 | WEC Energy Group, Inc. |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2018 | 2017 | B (W) | |||||||||
Natural gas revenues | $ | 169.9 | $ | 157.9 | $ | 12.0 | ||||||
Cost of natural gas sold | 96.4 | 86.4 | (10.0 | ) | ||||||||
Total natural gas margins | 73.5 | 71.5 | 2.0 | |||||||||
Other operation and maintenance | 26.6 | 28.2 | 1.6 | |||||||||
Depreciation and amortization | 6.6 | 6.0 | (0.6 | ) | ||||||||
Property and revenue taxes | 4.1 | 3.8 | (0.3 | ) | ||||||||
Operating income | $ | 36.2 | $ | 33.5 | $ | 2.7 |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2018 | 2017 | B (W) | |||||||||
Operation and maintenance not included in line item below | $ | 17.4 | $ | 19.4 | $ | 2.0 | ||||||
Regulatory amortizations and other pass through expenses * | 9.2 | 8.8 | (0.4 | ) | ||||||||
Total other operation and maintenance | $ | 26.6 | $ | 28.2 | $ | 1.6 |
* | 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 | 2018 | 2017 | B (W) | ||||||
Customer Class | |||||||||
Residential | 170.4 | 133.8 | 36.6 | ||||||
Commercial and industrial | 103.8 | 83.9 | 19.9 | ||||||
Total retail | 274.2 | 217.7 | 56.5 | ||||||
Transport | 224.2 | 191.4 | 32.8 | ||||||
Total sales in therms | 498.4 | 409.1 | 89.3 |
Three Months Ended March 31 | |||||||||
Degree Days | |||||||||
Weather * | 2018 | 2017 | B (W) | ||||||
MERC | |||||||||
Heating (3,872 Normal) | 4,085 | 3,550 | 535 | ||||||
MGU | |||||||||
Heating (3,184 Normal) | 3,135 | 2,717 | 418 |
* | 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. |
03/31/2018 Form 10-Q | 40 | WEC Energy Group, Inc. |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2018 | 2017 | B (W) | |||||||||
Operating income | $ | 93.0 | $ | 97.4 | $ | (4.4 | ) |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2018 | 2017 | B (W) | |||||||||
Operating loss | $ | (5.4 | ) | $ | (2.4 | ) | $ | (3.0 | ) |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2018 | 2017 | B (W) | |||||||||
Equity in earnings of transmission affiliates | $ | 32.8 | $ | 41.9 | $ | (9.1 | ) |
03/31/2018 Form 10-Q | 41 | WEC Energy Group, Inc. |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2018 | 2017 | B (W) | |||||||||
AFUDC – Equity | $ | 3.3 | $ | 2.4 | $ | 0.9 | ||||||
Other, net | 4.2 | 15.9 | (11.7 | ) | ||||||||
Other income, net | $ | 7.5 | $ | 18.3 | $ | (10.8 | ) |
Three Months Ended March 31 | ||||||||||||
(in millions) | 2018 | 2017 | B (W) | |||||||||
Interest expense | $ | 106.7 | $ | 104.7 | $ | (2.0 | ) |
Three Months Ended March 31 | |||||||||
2018 | 2017 | B (W) | |||||||
Effective tax rate | 18.4 | % | 37.4 | % | 19.0 | % |
(in millions) | 2018 | 2017 | Change in 2018 Over 2017 | |||||||||
Cash provided by (used in): | ||||||||||||
Operating activities | $ | 894.0 | $ | 714.6 | $ | 179.4 | ||||||
Investing activities | (435.8 | ) | (333.1 | ) | (102.7 | ) | ||||||
Financing activities | (445.1 | ) | (380.8 | ) | (64.3 | ) |
• | A $100.7 million increase in cash due to lower contributions and payments to our pension and OPEB plans during the first quarter of 2018, compared with the same period in 2017. |
• | A $100.3 million increase in cash related to higher overall collections from customers, primarily due to colder weather during the first quarter of 2018, compared with the same period in 2017. |
03/31/2018 Form 10-Q | 42 | WEC Energy Group, Inc. |
• | A $17.9 million increase in cash from lower payments for operating and maintenance costs. During the first quarter of 2018, our payments related to employee benefits, plant operating and maintenance costs, and electric and natural gas distribution decreased. |
• | A $109.9 million increase in cash paid for capital expenditures during the first quarter of 2018, compared with the same period in 2017, which is discussed in more detail below. |
• | A $12.3 million decrease in the proceeds received from the sale of assets and businesses during the first quarter of 2018, compared with the same period in 2017. See Note 3, Disposition, for more information. |
Reportable Segment (in millions) | 2018 | 2017 | Change in 2018 Over 2017 | |||||||||
Wisconsin | $ | 284.1 | $ | 199.0 | $ | 85.1 | ||||||
Illinois | 114.6 | 97.5 | 17.1 | |||||||||
Other states | 17.0 | 12.6 | 4.4 | |||||||||
Non-utility energy infrastructure | 3.9 | 5.2 | (1.3 | ) | ||||||||
Corporate and other | 20.0 | 15.4 | 4.6 | |||||||||
Total capital expenditures | $ | 439.6 | $ | 329.7 | $ | 109.9 |
• | A $54.5 million increase in net repayments of commercial paper during the first quarter of 2018, compared with the same period in 2017. |
03/31/2018 Form 10-Q | 43 | WEC Energy Group, Inc. |
• | A $10.1 million increase in dividends paid on our common stock during the first quarter of 2018, compared with the same period in 2017. In January 2018, our Board of Directors increased our quarterly dividend by $0.0325 per share effective with the first quarter of 2018 dividend payment. |
(in millions) | Actual | Adjusted | ||||||
Common equity | $ | 9,667.8 | $ | 9,917.8 | ||||
Preferred stock of subsidiary | 30.4 | 30.4 | ||||||
Long-term debt (including current portion) | 9,575.4 | 9,325.4 | ||||||
Short-term debt | 1,200.3 | 1,200.3 | ||||||
Total capitalization | $ | 20,473.9 | $ | 20,473.9 | ||||
Total debt | $ | 10,775.7 | $ | 10,525.7 | ||||
Ratio of debt to total capitalization | 52.6 | % | 51.4 | % |
03/31/2018 Form 10-Q | 44 | WEC Energy Group, Inc. |
(in millions) | 2018 | 2019 | 2020 | |||||||||
Wisconsin | $ | 1,430.1 | $ | 1,152.0 | $ | 1,850.2 | ||||||
Illinois | 633.8 | 629.2 | 676.5 | |||||||||
Other states | 99.6 | 116.1 | 110.6 | |||||||||
Non-utility energy infrastructure | 280.8 | 60.5 | 51.9 | |||||||||
Corporate and other | 20.7 | 13.2 | 0.8 | |||||||||
Total | $ | 2,465.0 | $ | 1,971.0 | $ | 2,690.0 |
03/31/2018 Form 10-Q | 45 | WEC Energy Group, Inc. |
03/31/2018 Form 10-Q | 46 | 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. The total cost of the ReACT™ project, excluding $51 million of AFUDC, is currently estimated to be $342 million. In September 2017, the PSCW approved an extension of this deferral through 2019 as part of a settlement agreement. See Note 21, Regulatory Environment, for more information. WPS will be required to obtain a separate approval for collection of these deferred costs in a future rate case. |
• | 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, 2018, 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 2018, PGL filed its 2017 reconciliation with the ICC, which, along with the 2016 and 2015 reconciliations, are still pending. In February 2018, PGL agreed to a settlement of the 2014 reconciliation, which includes a rate base reduction of $5.4 million and a $4.7 million refund to ratepayers. As of March 31, 2018, there can be no assurance that all costs incurred under the QIP rider during the open reconciliation years will be deemed recoverable by the ICC. |
03/31/2018 Form 10-Q | 47 | WEC Energy Group, Inc. |
03/31/2018 Form 10-Q | 48 | WEC Energy Group, Inc. |
03/31/2018 Form 10-Q | 49 | WEC Energy Group, Inc. |
03/31/2018 Form 10-Q | 50 | WEC Energy Group, Inc. |
03/31/2018 Form 10-Q | 51 | WEC Energy Group, Inc. |
2018 | 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 | 14,385 | $ | 65.70 | — | $ | — | ||||||||
February 1 – February 28 | 5,387 | 61.61 | — | — | ||||||||||
March 1 – March 31 | — | — | — | — | ||||||||||
Total * | 19,772 | $ | 64.59 | — |
* | All shares were surrendered by employees to satisfy tax withholding obligations upon vesting of restricted stock. |
03/31/2018 Form 10-Q | 52 | WEC Energy Group, Inc. |
Number | Exhibit | ||
10 | Material Contracts | ||
12 | Statements re Computation of Ratios | ||
31 | Rule 13a-14(a) / 15d-14(a) Certifications | ||
32 | Section 1350 Certifications | ||
101 | Interactive Data File |
03/31/2018 Form 10-Q | 53 | WEC Energy Group, Inc. |
WEC ENERGY GROUP, INC. | ||
(Registrant) | ||
/s/ WILLIAM J. GUC | ||
Date: | May 4, 2018 | William J. Guc |
Vice President and Controller | ||
(Duly Authorized Officer and Chief Accounting Officer) |
03/31/2018 Form 10-Q | 54 | WEC Energy Group, Inc. |
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Unaudited) | Three Months Ended March 31, 2018 | Twelve Months Ended December 31 | ||||||||||||||||||||||
(in millions, except ratios) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
EARNINGS | ||||||||||||||||||||||||
Pre-tax income * | $ | 445.6 | $ | 1,587.2 | $ | 1,495.2 | $ | 1,063.5 | $ | 942.6 | $ | 902.4 | ||||||||||||
Add: | ||||||||||||||||||||||||
Nonutility amortization of capitalized interest | 1.8 | 7.3 | 7.3 | 7.3 | 7.3 | 7.3 | ||||||||||||||||||
Subtract: | ||||||||||||||||||||||||
Nonutility capitalized interest | (0.3 | ) | (1.7 | ) | (1.0 | ) | (1.2 | ) | (0.7 | ) | (1.7 | ) | ||||||||||||
Preferred stock dividends of subsidiary | (0.3 | ) | (1.4 | ) | (1.6 | ) | (2.6 | ) | (1.6 | ) | (1.6 | ) | ||||||||||||
Earnings before adding fixed charges | 446.8 | 1,591.4 | 1,499.9 | 1,067.0 | 947.6 | 906.4 | ||||||||||||||||||
FIXED CHARGES | ||||||||||||||||||||||||
Interest expense | 106.7 | 415.7 | 402.7 | 331.4 | 240.3 | 250.9 | ||||||||||||||||||
Capitalized interest | 1.5 | 4.9 | 10.9 | 8.6 | 3.0 | 9.4 | ||||||||||||||||||
Estimated interest component of rentals | 1.1 | 5.7 | 16.5 | 19.0 | 15.9 | 15.7 | ||||||||||||||||||
Preferred stock dividends of subsidiary | 0.3 | 1.4 | 1.6 | 2.6 | 1.6 | 1.6 | ||||||||||||||||||
Total fixed charges as defined | 109.6 | 427.7 | 431.7 | 361.6 | 260.8 | 277.6 | ||||||||||||||||||
Total earnings as defined | $ | 556.4 | $ | 2,019.1 | $ | 1,931.6 | $ | 1,428.6 | $ | 1,208.4 | $ | 1,184.0 | ||||||||||||
RATIO OF EARNINGS TO FIXED CHARGES | 5.1x | 4.7x | 4.5x | 4.0x | 4.6x | 4.3x |
* | Pre-tax income consists of income before income taxes less undistributed earnings of equity investees. |
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 4, 2018 | |
/s/ GALE E. KLAPPA | ||
Gale E. Klappa | ||
Chairman and Chief Executive Officer | ||
(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 4, 2018 | |
/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/ GALE E. KLAPPA | |
Gale E. Klappa | |
Chairman of the Board and Chief Executive Officer | |
May 4, 2018 |
(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 4, 2018 |
DOCUMENT AND ENTITY INFORMATION |
3 Months Ended |
---|---|
Mar. 31, 2018
shares
| |
Document 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, 2018 |
Document fiscal year focus | 2018 |
Document fiscal period focus | Q1 |
Amendment flag | false |
Entity common stock, shares outstanding | 315,538,808 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Statement of Other Comprehensive Income [Abstract] | ||
Net income | $ 390.4 | $ 356.9 |
Derivatives accounted for as cash flow hedges | ||
Reclassification of gains to net income, net of tax | (0.2) | (0.3) |
Defined benefit plans | ||
Amortization of pension and OPEB costs included in net periodic benefit cost, net of tax | 1.9 | 0.1 |
Other comprehensive income (loss), net of tax | 1.7 | (0.2) |
Comprehensive income | 392.1 | 356.7 |
Preferred stock dividends of subsidiary | 0.3 | 0.3 |
Comprehensive income attributed to common shareholders | $ 391.8 | $ 356.4 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2018 |
Dec. 31, 2017 |
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Statement of Financial Position [Abstract] | ||
Accounts receivable and accrued unbilled revenues, reserves | $ 160.5 | $ 143.2 |
Property, plant, and equipment, accumulated depreciation | $ 8,819.8 | $ 8,618.5 |
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 | 315,538,808 | 315,574,624 |
GENERAL INFORMATION |
3 Months Ended |
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Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GENERAL INFORMATION | GENERAL INFORMATION WEC Energy Group serves approximately 1.6 million electric customers and 2.9 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, 2017. 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, 2018, are not necessarily indicative of expected results for 2018 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. |
ACQUISITIONS |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||
ACQUISITION | ACQUISITIONS Acquisition of a Wind Energy Generation Facility in Wisconsin On April 2, 2018, WPS, along with two other unaffiliated utilities, completed the purchase of Forward Wind Energy Center, which consists of 86 wind turbines located in Wisconsin with a total capacity of 129 MW. The aggregate purchase price was $173.9 million of which WPS’s proportionate share was 44.6%, or $77.6 million. Since 2008 and up until the acquisition, WPS purchased 44.6% of the facility’s energy output under a power purchase agreement. WPS's proportionate share of the facility will be recorded as property, plant, and equipment on the balance sheet and will be included in rate base. Under a joint ownership agreement with the two other utilities, WPS is entitled to its share of generating capability and output of the facility equal to its ownership interest. WPS will also pay its ownership share of additional construction costs and operating expenses. Acquisition of Natural Gas Storage Facilities in Michigan On June 30, 2017, we completed the acquisition of Bluewater for $226.0 million. Bluewater owns natural gas storage facilities in Michigan that will provide approximately one-third of the current storage needs for our Wisconsin natural gas utilities. In addition, we incurred $4.9 million of acquisition related costs. The table below shows the allocation of the purchase price to the assets acquired and liabilities assumed at the date of the acquisition. The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was recognized as goodwill. Bluewater is included in the non-utility energy infrastructure segment. See Note 17, Segment Information, for more information.
Acquisition of a Wind Energy Generation Facility in Nebraska On April 30, 2018, we signed an agreement for the acquisition of an 80% membership interest in a 202.5 MW wind generating facility currently under construction known as Upstream Wind Energy Center (“Upstream”) for $276.0 million. Upstream is located in Antelope County, Nebraska and will supply energy to the Southwest Power Pool. The transaction is expected to close in the first quarter of 2019, after Upstream achieves commercial operation. Upstream has entered into an energy swap agreement pursuant to which Upstream will receive a fixed payment in exchange for substantially all of the energy output for a period of ten years. In addition, we anticipate Upstream will qualify for both Federal production tax credits at 100% of the published rate and bonus depreciation. |
DISPOSITIONS |
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Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISPOSITION | DISPOSITION 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. |
OPERATING REVENUES |
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OPERATING REVENUES | OPERATING REVENUES Adoption of ASU 2014-09, Revenues from Contracts with Customers On January 1, 2018, we adopted ASU 2014-09, Revenues from Contracts with Customers, and the related amendments. In accordance with the guidance, revenues are recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services. We adopted this standard using the modified retrospective method. Results for reporting periods beginning after January 1, 2018, are presented under the new standard. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. Adoption of the standard did not result in an adjustment to our opening retained earnings balance as of January 1, 2018, and we do not expect the adoption of the standard to have a material impact on our net income in future periods. We adopted the following practical expedients and optional exemptions for the implementation of this standard:
Disaggregation of Operating Revenues The following tables present our operating revenues disaggregated by revenue source. Comparable amounts have not been presented for the three months ended March 31, 2017, due to our adoption of this standard under the modified retrospective method.
Revenues from Contracts with Customers Electric Utility Operating Revenues The following table disaggregates electric utility operating revenues into customer class for the current period:
Electricity sales to residential and commercial and industrial customers are generally accomplished through requirements contracts, which provide for the delivery of as much electricity as the customer needs. These contracts represent discrete deliveries of electricity and consist of one distinct performance obligation satisfied over time, as the electricity is delivered and consumed by the customer simultaneously. For our Wisconsin residential and commercial and industrial customers and the majority of our Michigan residential and commercial and industrial customers, our performance obligation is bundled and consists of both the sale and the delivery of the electric commodity. In our Michigan service territory, a limited number of residential and commercial and industrial customers can purchase the commodity from a third party. In this case, the delivery of the electricity represents our sole performance obligation. The rates, charges, terms, and conditions of service for sales to these customers are included in tariffs that have been approved by state regulators. These rates often have a fixed component customer charge and a usage-based variable component. We recognize revenue for the fixed component customer charge monthly using a time-based output method. We recognize revenue for the usage-based variable component using an output method based on the quantity of electricity delivered each month. Wholesale customers who resell power can choose to either bundle capacity and electricity services together under one contract with a supplier or purchase capacity and electricity separately from multiple suppliers. Furthermore, wholesale customers can choose to have our utilities provide generation to match the customer's load, similar to requirements contracts, or they can purchase specified quantities of electricity and capacity. The rates, charges, terms and conditions of service for sales to wholesale customers are included in tariffs that have been approved by the FERC. Contracts with wholesale customers that include capacity bundled with the delivery of electricity contain two performance obligations, as capacity and electricity are often transacted separately in the marketplace at the wholesale level. When recognizing revenue associated with these contracts, the transaction price is allocated to each performance obligation based on its relative standalone selling price. Revenue is recognized as control of each individual component is transferred to the customer. Electricity is the primary product sold by our electric utilities and represents a single performance obligation satisfied over time through discrete deliveries to a customer. Revenue from electricity sales is generally recognized as units are produced and delivered to the customer within the production month. Capacity represents the reservation of an electric generating facility and conveys the ability to call on a plant to produce electricity when needed by the customer. The nature of our performance obligation as it relates to capacity is to stand ready to deliver power. This represents a single performance obligation transferred over time, which generally represents a monthly obligation. Accordingly, capacity revenue is recognized on a monthly basis. We are an active participant in the MISO Energy Markets, where we bid our generation into the Day Ahead and Real Time markets and procure electricity for our retail and wholesale customers at prices determined by the MISO Energy Markets. Purchase and sale transactions are recorded using settlement information provided by MISO. These purchase and sale transactions are accounted for on a net hourly position. Net purchases in a single hour are recorded as purchased power in cost of sales and net sales in a single hour are recorded as resale revenues. For resale revenues, our performance obligation is created only when electricity is sold into the MISO Energy Markets. For all of our customers, consistent with the timing of when we recognize revenue, customer billings generally occur on a monthly basis, with payments typically due in full within 30 days. For the majority of our wholesale customers, the price billed for energy and capacity is a formula-based rate. Formula-based rates initially set a customer's current year rates based on the previous year’s expenses. This is a predetermined formula derived from the utility's costs and a reasonable rate of return. Because these rates are eventually trued up to reflect actual current year costs, they represent a form of variable consideration in certain circumstances. The variable consideration is estimated and recognized over time as wholesale customers receive and consume the capacity and electricity services. Natural Gas Utility Operating Revenues The following table disaggregates natural gas utility operating revenues into customer class for the current period:
We recognize natural gas utility operating revenues under requirements contracts with residential, commercial and industrial, and transportation customers served under the tariffs of our regulated utilities. Tariffs provide our customers with the standard terms and conditions, including rates, related to the services offered. Requirements contracts provide for the delivery of as much natural gas as the customer needs. These requirements contracts represent discrete deliveries of natural gas and constitute a single performance obligation satisfied over time. Our performance obligation is both created and satisfied with the transfer of control of natural gas upon delivery to the customer. For most of our customers, natural gas is delivered and consumed by the customer simultaneously. A performance obligation can be bundled to consist of both the sale and the delivery of the natural gas commodity. In certain of our service territories, customers can purchase the commodity from a third party. In this case, the performance obligation only includes the delivery of the natural gas to the customer. The transaction price of the performance obligations is valued using rates in the tariffs of our regulated utilities, which have been approved by state regulators. These rates often have a fixed component customer charge and a usage-based variable component. We recognize revenue for the fixed component customer charge monthly using a time-based output method. We recognize revenue for the usage-based variable component using an output method based on natural gas delivered each month. Consistent with the timing of when we recognize revenue, customer billings generally occur on a monthly basis, with payments typically due in full within 30 days. Other Non-Utility Operating Revenues Other non-utility operating revenues consist primarily of the following:
As part of the construction of the We Power electric generating units, we capitalized interest during construction, which is included in property, plant, and equipment. As allowed by the PSCW, we collected these carrying costs from WE's utility customers during construction. The equity portion of these carrying costs was recorded as deferred revenue, and we continually amortize the deferred carrying costs to revenues over the life of the plants to better match the costs of owning the plant while we are providing service to our customers. During the three months ended March 31, 2018, we recorded $6.4 million of revenue related to these deferred carrying costs, which were included in the contract liability balance at the beginning of the period. This contract liability is presented as deferred revenue, net on our balance sheets. Non-utility operating revenues are derived primarily from servicing appliances for customers at MERC. These contracts customarily have a duration of one year or less and consist of a single performance obligation satisfied over time. We use a time-based output method to recognize revenues monthly for the service fee. Revenues from distributed renewable solar projects consist primarily of sales of renewable energy and solar renewable energy certificates (SRECs) generated by WPS Power Development, LLC. The sale of SRECs is a distinct performance obligation as they are often sold separately from the renewable energy generated. Although the performance obligation for the sale of renewable energy is recognized over time and the performance obligation for SRECs is recognized at a point-in-time, the timing of revenue recognition is the same and occurs as renewable energy is generated. Other Operating Revenues Other operating revenues consist primarily of the following:
Alternative Revenues Alternative revenues are created from programs authorized by regulators that allow our utilities to record additional revenues by adjusting rates in the future, usually as a surcharge applied to future billings, in response to past activities or completed events. Alternative revenue programs allow compensation for the effects of weather abnormalities, other external factors, or demand side management initiatives. Alternative revenue programs can also provide incentive awards if the utility achieves certain objectives and in other limited circumstances. We record alternative revenues when the regulator-specified conditions for recognition have been met. We reverse these alternative revenues as the customer is billed, at which time this revenue is presented as revenues from contracts with customers. Below is a summary of the alternative revenue programs at our utilities:
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PROPERTY, PLANT, AND EQUIPMENT |
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Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT, AND EQUIPMENT | PROPERTY, PLANT, AND EQUIPMENT Wisconsin Segment Plant to be Retired We have evaluated future plans for our older and less efficient fossil fuel generating units and have announced the retirement of the plants identified below. The net book value of these plants was classified as plant to be retired within property, plant, and equipment on our balance sheet at March 31, 2018. In addition, severance expense in the amount of $29.4 million was recorded within the Wisconsin segment in 2017 related to these announced plant retirements. Pleasant Prairie Power Plant As a result of a MISO ruling in December 2017, the Pleasant Prairie power plant was retired effective April 10, 2018. Retirement of the Pleasant Prairie power plant was considered probable at March 31, 2018. The net book value of this generating unit was $674.1 million at March 31, 2018, and was classified as plant to be retired within property, plant, and equipment on our balance sheet. This unit is included in rate base, and WE continues to depreciate it on a straight-line basis using the composite depreciation rates approved by the PSCW. The physical dismantlement of the plant will not occur immediately. It may take several years to finalize long-term plans for the site. See Note 19, Commitments and Contingencies, for more information. Presque Isle Power Plant In October 2017, the MPSC approved UMERC’s application to construct and operate approximately 180 MW of natural gas-fired generation in the Upper Peninsula of Michigan. The new units are expected to begin commercial operation by mid-2019. Upon receiving the MPSC's approval, retirement of the PIPP generating units became probable. As a result of a MISO ruling received in April 2018, the PIPP units must be retired no later than May 31, 2019. The net book value of these units was $188.7 million at March 31, 2018, and was classified as plant to be retired within property, plant, and equipment on our balance sheet. These units are included in rate base, and WE continues to depreciate them on a straight-line basis using the composite depreciation rates approved by the PSCW. See Note 19, Commitments and Contingencies, and Note 21, Regulatory Environment, for more information. Pulliam Power Plant WPS anticipates retiring Pulliam generating units 7 and 8 near the end of 2018 when certain transmission lines are completed. Retirement of the Pulliam generating units was probable at March 31, 2018. The net book value of these generating units was $43.6 million at March 31, 2018, and was classified as plant to be retired within property, plant, and equipment on our balance sheet. These units are included in rate base, and WPS continues to depreciate them on a straight-line basis using the composite depreciation rates approved by the PSCW. See Note 19, Commitments and Contingencies, for more information. Edgewater Unit 4 As a result of the continued implementation of the Consent Decree related to the jointly owned Columbia and Edgewater plants, retirement of the Edgewater 4 generating unit was probable at March 31, 2018. The plant must be retired by September 30, 2018. The net book value of WPS's ownership share of this generating unit was $12.7 million at March 31, 2018, and was classified as plant to be retired within property, plant, and equipment on our balance sheet. This unit is included in rate base, and WPS continues to depreciate it on a straight-line basis using the composite depreciation rates approved by the PSCW. See Note 19, Commitments and Contingencies, for more information regarding the Consent Decree. |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||
COMMON EQUITY | COMMON EQUITY Stock-Based Compensation During the first quarter of 2018, the Compensation Committee of our Board of Directors awarded the following stock-based compensation awards to our directors, officers, and certain other key employees:
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 UMERC and MGU, are prohibited from loaning funds to us, either directly or indirectly. See Note 9, Common Equity, in our 2017 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 19, 2018, our Board of Directors declared a quarterly cash dividend of $0.5525 per share, payable on June 1, 2018, to shareholders of record on May 14, 2018. |
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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, 2018, was $1,254.4 million with a weighted-average interest rate during the period of 1.90%. The information in the table below relates to our revolving credit facilities used to support our commercial paper borrowing programs, including available capacity under these facilities:
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LONG TERM DEBT |
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Mar. 31, 2018 | |
Long-term Debt, Unclassified [Abstract] | |
Long Term Debt | LONG-TERM DEBT Integrys Holding, Inc. In April 2018, Integrys issued a notice to redeem at par all $114.9 million outstanding of its 2006 Junior Subordinated Notes due December 1, 2066. The redemption will be effective May 14, 2018. As a result, the $114.9 million outstanding balance was included in the current portion of long-term debt on our balance sheet at March 31, 2018. |
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 costs of natural gas supply purchased. Withdrawals from storage are priced on 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, 2018, we had a temporary LIFO liquidation credit of $35.6 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. |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES The provision for income taxes for the quarter ended March 31, 2018, differs from the amount of income tax determined by applying the applicable United States statutory federal income tax rate to income before income taxes as a result of the following:
The effective tax rate of 18.4% for the first quarter of 2018 differs from the United States statutory federal income tax rate of 21% primarily due to the impact of the Tax Legislation and the flow through of tax repairs in connection with the Wisconsin rate settlement, partially offset by state income taxes. The Tax Legislation, signed into law in December 2017, required our regulated utilities to remeasure their deferred income taxes and begin to amortize the resulting excess deferred income taxes beginning in 2018 in accordance with normalization requirements (see Federal tax reform line above). See Note 21, Regulatory Environment, for more information about the impact of the Tax Legislation and the Wisconsin rate settlement. On December 22, 2017, the SEC staff issued guidance in Staff Accounting Bulletin 118 (SAB 118), Income Tax Accounting Implications of the Tax Cuts and Jobs Act, which provides for a measurement period of up to one year from the enactment date to complete accounting under GAAP for the tax effects of the legislation. Due to the complex and comprehensive nature of the enacted tax law changes, and their application under GAAP, certain amounts related to bonus depreciation and future tax benefit utilization recorded in the financial statements as a result of the Tax Legislation are to be considered "provisional" as discussed in SAB 118 and subject to revision. We are awaiting additional guidance from industry and income tax authorities in order to finalize our 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 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 financial 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 between levels of the fair value hierarchy 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. We hold investments in the Integrys rabbi trust. These investments are restricted as they can only be withdrawn from the trust to fund participants' benefits under the Integrys deferred compensation plan and certain Integrys non-qualified pension plans. As we do not intend to sell the investments in the near term, they are included in other long-term assets on our balance sheets. For the three months ended March 31, 2018 and 2017, the net unrealized (losses) and gains included in earnings related to the investments held at the end of the period were $(3.1) million and $5.2 million, respectively. The following table summarizes the changes to derivatives classified as Level 3 in the fair value hierarchy:
Fair Value of Financial Instruments The following table shows the financial instruments included on our balance sheets that are not recorded at fair value:
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, 2018 and December 31, 2017, we had posted cash collateral of $11.8 million and $16.2 million, respectively, in our margin accounts. These amounts were recorded on our balance sheets in other current assets. 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 $1.1 million and $3.7 million at March 31, 2018 and December 31, 2017, respectively. At March 31, 2018 and December 31, 2017, 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, 2018 and December 31, 2017, we would have been required to post collateral of $1.5 million and $2.7 million, respectively. |
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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Retirement Benefits [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, 2018, we made contributions and payments of $3.7 million related to our pension plans and $1.6 million related to our OPEB plans. We expect to make contributions and payments of $8.5 million related to our pension plans and $7.9 million related to our OPEB plans during the remainder of 2018, dependent upon various factors affecting us, including our liquidity position and the effects of the new Tax Legislation. Effective January 1, 2018, we adopted ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which modifies certain aspects of the accounting for employee benefit costs. Under the new guidance, only the service cost component can be included in total operating expenses. The remaining components of net periodic benefit cost are required to be presented in the income statement separately from the service cost component, outside of operating income. As required, this change was applied retrospectively to all prior periods presented. Accordingly, for the quarters ended March 31, 2018 and 2017, we have presented the service cost component of our retirement benefit plans in other operation and maintenance on the income statements, while presenting the non-service cost components in other income, net. For the quarters ended March 31, 2018 and 2017, the non-service cost components of net benefit cost were in a net credit position, in the amount of $(7.2) million and $(2.6) million, respectively. The $(2.6) million related to the first quarter of 2017 was reclassified from other operation and maintenance to other income, net on our income statements. As required by ASU 2017-07, our income statements for the years ended December 31, 2017, 2016, and 2015 were retroactively restated from what was previously presented in our 2017 Annual Report on Form 10-K. The impacts to our income statements from adoption of this standard are reflected in the table below.
In addition, under ASU 2017-07, only the service cost component of net periodic benefit cost is eligible for capitalization to property, plant, and equipment. In prior periods, a portion of all net benefit cost components was capitalized to property, plant, and equipment. As required, this amendment was applied prospectively, beginning January 1, 2018. As a result of the application of accounting principles for rate regulated entities, the non-service cost components of the net benefit cost that are no longer eligible for capitalization under this standard, but are capitalized under the regulatory framework, will be presented as regulatory assets or liabilities rather than property, plant, and equipment. |
GOODWILL |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL | GOODWILL Goodwill represents the excess of the cost of an acquisition over the fair value of the identifiable net assets acquired. The following table shows changes to our goodwill balances by segment during the three months ended March 31, 2018:
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INVESTMENT IN TRANSMISSION AFFILIATES |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT IN TRANSMISSION AFFILIATES | INVESTMENT IN TRANSMISSION AFFILIATES We own approximately 60% of ATC, a for-profit, transmission-only company regulated by the FERC for cost of service and certain state regulatory commissions for routing and siting of transmission projects. We also own approximately 75% of ATC Holdco, a separate entity formed in December 2016 to invest in transmission-related projects outside of ATC's traditional footprint. The following tables provide a reconciliation of the changes in our investments in ATC and ATC Holdco:
We pay ATC for network transmission and other related services it provides. In addition, we provide a variety of operational, maintenance, and project management work for ATC, which is 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, 2018, 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, 2018 and 2017:
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VARIABLE INTEREST ENTITIES |
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Mar. 31, 2018 | |
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. Investment in Transmission Affiliates 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. The significant assets and liabilities related to ATC recorded on our balance sheets were our equity investment, distributions receivable, and accounts payable. At March 31, 2018 and December 31, 2017, our equity investment was $1,561.1 million and $1,515.8 million, respectively, which approximates our maximum exposure to loss as a result of our involvement with ATC. In addition, we had a receivable of $39.9 million recorded at December 31, 2017 for distributions from ATC. We also had $24.0 million and $31.2 million of accounts payable due to ATC at March 31, 2018 and December 31, 2017, respectively, for network transmission services. We also own approximately 75% of ATC Holdco, a separate entity formed in December 2016 to invest in transmission-related projects outside of ATC's traditional footprint. We have determined that ATC Holdco is a variable interest entity but that consolidation is not required since we are not ATC Holdco'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 Holdco's economic performance. We account for ATC Holdco as an equity method investment. The only significant asset or liability related to ATC Holdco recorded on our balance sheets was our equity investment of $37.8 million and $37.6 million at March 31, 2018 and December 31, 2017, respectively. Our equity investment approximates our maximum exposure to loss as a result of our involvement with ATC Holdco. See Note 16, Investment in Transmission Affiliates, for more information. Purchased Power Agreement We have a purchased power agreement that represents a variable interest. This agreement is for 236 MW 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 four 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 $67.7 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, 2018 and 2017 were $4.7 million and $4.5 million, respectively. Our maximum exposure to loss is limited to the capacity payments under the contract. |
COMMITMENTS AND CONTINGENCIES |
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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, 2018, including those of our subsidiaries, were $11,473.4 million. This amount excludes WPS's purchase obligations under a power purchase agreement with Forward Wind Energy Center, as the agreement was terminated on April 2, 2018, in connection with the acquisition of the facility. See Note 2, Acquisitions, for more information. 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 sulfur dioxide, nitrogen oxide, fine particulates, mercury, and GHGs; water intake and discharges; disposal of coal combustion products such as fly ash; and remediation of impacted properties, including former manufactured gas plant sites. Air Quality 8-Hour Ozone National Ambient Air Quality Standards 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. In December 2017, the EPA informed Wisconsin of its intended area designations of all the counties along Wisconsin's Lake Michigan shoreline, except Brown, Kewaunee, Marinette, and Oconto Counties, as either partial or full nonattainment. Waukesha and Washington counties were also included due to the counties being in the Milwaukee combined statistical area. The EPA issued final nonattainment area designations on May 1, 2018. The final designations differ significantly from the intended nonattainment areas EPA proposed late in December 2017. The following counties were designated as partial nonattainment: Manitowoc, Sheboygan, Northern Milwaukee/Ozaukee shoreline, and Kenosha. Racine, Waukesha, and Washington counties will be designated attainment/unclassifiable. 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 believe we are well positioned to meet the requirements associated with 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, 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. In April 2017, pursuant to motions made by the EPA, the D.C. Circuit Court of Appeals ordered the cases to be held in abeyance. Supplemental briefs were provided addressing whether the cases should be remanded to the EPA rather than held in abeyance. The EPA argued that the cases should continue to be held in abeyance pending the conclusion of the EPA's review of the CPP and any resulting rulemaking. 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 and related GHG regulations for new, reconstructed, or modified fossil-fueled power plants. 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 October 2017, the EPA issued a proposed rulemaking to repeal the CPP. In December 2017 the EPA issued an advanced notice of proposed rulemaking to solicit input on whether it is appropriate to replace the CPP. 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 to implement the CPP. 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 have implemented and 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. As a result of our generation reshaping plan, we expect to retire 1,800 MW of coal generation by 2020, including Pleasant Prairie power plant (now retired), PIPP, Pulliam power plant, and the jointly-owned Edgewater Unit 4 generation units. See Note 5, Property, Plant, and Equipment, for more information. In addition, we are evaluating our goal, and possible subsequent actions, with respect to national and international efforts to reduce future GHG emissions in order to limit future global temperature increases to less than two degrees Celsius. We are required to report our CO2 equivalent emissions from our electric generating facilities under the EPA Greenhouse Gases Reporting Program. For 2017, we reported aggregated CO2 equivalent emissions of 29.2 million metric tonnes to the EPA. The level of CO2 and other GHG emissions varies from year to year and is 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 amounts related to the natural gas that our natural gas utilities distribute and sell. For 2017, we reported aggregated CO2 equivalent emissions of 26.6 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, satisfy the IM BTA requirements. We plan to retire Pulliam Units 7 and 8 as early as late 2018. Therefore, we are not planning to make alterations to the existing water intake at Pulliam Units 7 and 8. Based on the reissued WPDES permit for Weston, 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 Valley Power Plant. There has also been an interim EM BTA determination made by the WDNR as part of the reissued WPDES permit for Weston Units 3 and 4 and we intend to extrapolate these results to assess Weston Unit 2. The entrainment study and other technical information will be used by the DNR to make a final 316(b) determination during the next five year WPDES permit term. At this time, we expect that the WDNR will conclude that the existing cooling tower systems for Weston Units 3 and 4 are BTA for both impingement and entrainment reduction. In addition, the WDNR has initially indicated that based on the low capacity utilization of Weston Unit 2, no impingement mortality reduction technology will be required and further entrainment reduction will not be necessary. Due to our plans to retire Pulliam Units 7 and 8, PIPP, and Pleasant Prairie power plant (now retired), we do not believe that BTA determinations for EM will be necessary for these units. Although we currently believe that existing technologies at PWGS, and OC 5 through OC 8 satisfy the EM BTA requirements, BTA determinations to address EM reduction requirements will not be made until discharge permits are renewed for these units. Until that time, we cannot yet determine what, if any, intake structure or operational modifications will be required to meet the new EM BTA requirements for these units. During 2018, we will continue to evaluate options to address the EM BTA requirements for these units. We have also provided information to the WDNR and the MDEQ about planned unit retirements. Based on discussions with the MDEQ, if we submit a signed certification stating that PIPP will be retired no later than the end of the next permit cycle (assumed to be October 1, 2023), the EM BTA requirements will be waived. We expect to submit the letter identifying the last operating date for PIPP to the MDEQ during 2018, ahead of when the agency begins processing our pending application for the National Pollutant Discharge Elimination System permit reissuance. For Pulliam Units 7 and 8, we submitted our 2016 and 2017 entrainment studies to the WDNR in December 2017, with the application to renew our existing discharge permit. 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 Limitation Guidelines The EPA's final steam electric effluent limitation guidelines (ELG) rule took effect in January 2016. Various petitions challenging the rule were consolidated and are pending in the United States Fifth Circuit Court of Appeals. In April 2017, the EPA issued an administrative stay of certain compliance deadlines while further reviewing the rule. In September 2017, the EPA issued a final rule ("Postponement Rule") to postpone the earliest compliance dates for the bottom ash transport water and wet flue gas desulfurization wastewater requirements. This rule applies to wastewater discharges from our power plant processes in Wisconsin and Michigan. While the ELG compliance deadlines are postponed, the WDNR and the MDEQ have indicated that they will refrain from incorporating certain new requirements into any reissued discharge permits between 2018 and 2023. After a final rule is back in effect, the WDNR and MDEQ have indicated that they will modify the state rules as necessary and incorporate the new requirements into our facility permits, which are renewed every five years. Our power plant facilities already have advanced wastewater treatment technologies installed that meet many of the discharge limits established by this rule. However, as currently constructed, the ELG rule will require additional wastewater treatment retrofits as well as installation of other equipment to minimize process water use. The final rule would phase 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 would require additional zero liquid discharge or other advanced treatment capital improvements for the OCPP and ERGS. The rule also would require 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 would be required at OC 7, OC 8, and Weston Unit 3. We are beginning preliminary engineering for compliance with the rule and estimate approximately $70 million would be required to design and install these advanced treatment and bottom ash transport systems. This estimate reflects the planned retirements of certain of our generation plants as a result of our generation reshaping plan discussed in Climate Change above. 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 Power Plants 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. WPS anticipates retiring Pulliam generating units 7 and 8 near the end of 2018 when certain transmission lines are completed. See Note 5, Property, Plant, and Equipment, for more information about the retirement. 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. As a result of the continued implementation of the Consent Decree related to the jointly owned Columbia and Edgewater plants, retirement of the Edgewater 4 generating unit was probable at March 31, 2018. The plant must be retired by September 30, 2018. See Note 5, Property, Plant, and Equipment, for more information about the retirement. |
SUPPLEMENTAL CASH FLOW INFORMATION |
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Additional Cash Flow Elements and Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | SUPPLEMENTAL CASH FLOW INFORMATION
Effective January 1, 2018, we adopted ASU 2016-18, Restricted Cash. Under this ASU, amounts generally described as restricted cash and restricted cash equivalents are 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. As a result, we no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statements of cash flows. Instead, changes in restricted cash are classified as either operating activities, investing activities or financing activities. The majority of our restricted cash consists of amounts held in the Integrys rabbi trust, which are used to fund participants' benefits under the Integrys deferred compensation plan and certain Integrys non-qualified pension plans. All assets held within the rabbi trust are restricted as they can only be withdrawn from the trust to make qualifying benefit payments. The adoption of ASU 2016-18 resulted in an increase of $7.5 million in net cash flows used by investing activities from what was previously reported for the quarter ended March 31, 2017. See the following table for a reconciliation of cash and cash equivalents and restricted cash reported within the balance sheets to the sum of the total of the same amounts shown in the statements of cash flows at March 31.
Our statements of cash flows for the years ended December 31, 2017, 2016, and 2015 were retroactively restated from what was previously presented in our 2017 Annual Report on Form 10-K to reflect the adoption of ASU 2016-18. The impacts to our statements of cash flows from adoption of this standard are reflected in the table below.
Effective January 1, 2018, we adopted ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. There are eight main provisions of this ASU for which current GAAP either was unclear or did not include specific guidance. The adoption of this guidance had no impact on our financial statements for the quarters ended March 31, 2018 and 2017. ASU 2016-15 provides an accounting policy election for classifying distributions received from equity method investments. We adopted the cumulative earnings approach for classifying distributions received in the statements of cash flows. Under the cumulative earnings approach, we compare the distributions received to cumulative equity method earnings since inception. Any distributions received up to the amount of cumulative equity earnings are considered a return on investment and classified in operating activities. Any excess distributions are considered a return of investment and classified in investing activities. We did not receive any excess distributions for the quarters ended March 31, 2018 and 2017. |
REGULATORY ENVIRONMENT |
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Mar. 31, 2018 | |
Regulated Operations [Abstract] | |
REGULATORY ENVIRONMENT | REGULATORY ENVIRONMENT Tax Cuts and Jobs Act of 2017 WEC Energy Group's regulated utilities deferred for return to ratepayers, through future refunds, bill credits, riders, or reductions in other regulatory assets, the estimated tax benefit of $2,450 million related to the Tax Legislation that was signed into law in December 2017. This tax benefit resulted from the revaluation of deferred taxes in December 2017. The current 2018 tax benefit related to the Tax Legislation, which reduced the corporate federal tax rate from a maximum of 35% to a 21% rate, effective January 1, 2018, is also being deferred for return to ratepayers. We have not received a written order in any of our jurisdictions addressing the refunding of these amounts to date other than the rider approved in Illinois. See Variable Income Tax Adjustment Rider below for more information on this Illinois rider. Our proposed approach for the remaining jurisdictions is outlined below. Wisconsin In April 2018, the PSCW issued a preliminary determination regarding the benefits associated with the Tax Legislation. For our Wisconsin electric utility operations, the PSCW indicated that 80% of the current 2018 and 2019 tax benefits should be used to reduce certain regulatory assets at WE and WPS, with the remaining 20% returned to electric customers in the form of bill credits. For our Wisconsin natural gas utility operations, the PSCW indicated that 100% of current 2018 and 2019 tax benefits should be returned to natural gas customers in the form of bill credits. Regarding the net tax benefit associated with the revaluation of deferred taxes, amortization required in accordance with normalization accounting for our electric utilities should be used to reduce certain regulatory assets, while the timing and method of returning the remaining net tax benefit associated with the revaluation of deferred taxes was not addressed and will be determined in a future rate proceeding. Until we receive the final written order, the specific terms are subject to change. Michigan In February 2018, the MPSC issued an order requiring Michigan utilities to make three filings related to the Tax Legislation. The first of those filings, which was filed in March 2018, prospectively addresses the impact on base rates for the change in tax expense resulting from the federal tax rate reduction from 35% to 21%. For UMERC and MGU, the proposed approach is to provide a volumetric bill credit, subject to reconciliation and true up. The second filing will be due 30 days after the MPSC issues an order on the first filing and is required to address the impact on base rates for the change in tax expense resulting from the federal tax rate reduction from 35% to 21% from January 1, 2018, until the effective date of the initial filing. The third filing, which is due in October 2018, will address the remaining impacts of the Tax Legislation on base rates - most notably the re-measurement of deferred tax balances. UMERC and MGU have not yet made a proposal on the second and third filings. WE, which serves one retail electric customer in Michigan, has reached a settlement with that customer. That settlement has been filed with the MPSC in March 2018 and addresses all base rate impacts of the Tax Legislation. Minnesota MERC is currently in an active rate case for 2018 and expects to address all aspects of the Tax Legislation, including the re-measurement of deferred tax balances, in that rate case. MERC expects that all impacts of the Tax Legislation will be incorporated into base rates when they are approved by the MPUC during the active rate proceeding. 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 September 2017, the PSCW issued an order that approved the settlement agreement, which will freeze base rates through 2019 for electric, gas, and steam customers of WE, WG, and WPS. Based on the PSCW order, the authorized ROE for WE, WG, and WPS remains at 10.2%, 10.3%, and 10.0%, respectively, and the current capital cost structure for all of our Wisconsin utilities will remain unchanged through 2019. Various intervenors had filed requests for rehearing, all of which have been denied. In addition to freezing base rates, the settlement agreement extends and expands the electric real-time market pricing program options for large commercial and industrial customers and mitigates the continued growth of certain escrowed costs at WE during the base rate freeze period by accelerating the recognition of certain tax benefits. WE will flow through the tax benefit of its repair-related deferred tax liabilities in 2018 and 2019, to maintain certain regulatory asset balances at their December 31, 2017 levels. While WE would typically follow the normalization accounting method and utilize the tax benefits of the deferred tax liabilities in rate making as an offset to rate base, benefiting customers over time, the federal tax code does allow for passing these tax repair-related benefits to ratepayers much sooner using the flow through accounting method. The flow through treatment of the repair related deferred tax liabilities offsets the negative income statement impact of holding the regulatory assets level, resulting in no change to net income. 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, and other deferrals related to WPS's electric real-time market pricing program and network transmission expenses. The total cost of the ReACT™ project, excluding $51 million of AFUDC, is currently estimated to be $342 million. Pursuant to the settlement agreement, WPS also agreed to adopt, beginning in 2018, the earnings sharing mechanism that has been in place for WE and WG since January 2016, 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. Acquisition of a Wind Energy Generation Facility in Wisconsin In October 2017, WPS, along with two other unaffiliated utilities, entered into an agreement to purchase the Forward Wind Energy Center, which consists of 86 wind turbines located in Wisconsin with a total capacity of 129 MW. The FERC approved the transaction in January 2018, and the PSCW approved the transaction in March 2018. The transaction closed on April 2, 2018. See Note 2, Acquisitions, for more information. Natural Gas Storage Facilities in Michigan In January 2017, we signed an agreement for the acquisition of Bluewater. Bluewater owns natural gas storage facilities in Michigan that are providing approximately one-third of the current storage needs for the natural gas operations of 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 facilities. 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 facilities. WE, WG, and WPS also requested approval to amend our Affiliated Interest Agreement to ensure WBS and our other subsidiaries could provide services to the storage facilities. The PSCW granted, subject to various conditions, these declarations and approvals, and we acquired Bluewater on June 30, 2017. In September 2017, WE, WG, and WPS finalized the long-term service agreements for the natural gas storage, which were approved by the PSCW in November 2017. See Note 2, Acquisitions, for more information. The Peoples Gas Light and Coke Company and North Shore Gas Company Illinois Proceedings 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 were completed in March 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, and issued a final order in January 2018. The order did not have a significant impact on PGL's existing SMP design and execution. An appeal related to the final order was filed by the Illinois Attorney General in April 2018. Qualifying Infrastructure Plant Rider In July 2013, Illinois Public Act 98-0057, The Natural Gas Consumer, Safety & Reliability Act, became law. This law 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. In September 2013, PGL filed with the ICC requesting the proposed rider, which was approved in January 2014. PGL's QIP rider is subject to an annual reconciliation whereby costs are reviewed for accuracy and prudency. In March 2018, PGL filed its 2017 reconciliation with the ICC, which, along with the 2016 and 2015 reconciliations, are still pending. In February 2018, PGL agreed to a settlement of the 2014 reconciliation, which includes a rate base reduction of $5.4 million and a $4.7 million refund to ratepayers. As of March 31, 2018, there can be no assurance that all costs incurred under PGL's QIP rider during the open reconciliation years will be deemed recoverable by the ICC. Variable Income Tax Adjustment Rider In April 2018, the ICC approved the VITA proposed by PGL and NSG. The VITA recovers or refunds changes in income tax expense resulting from differences in income tax rates and amortization of deferred tax excesses and deficiencies (in accordance with the Tax Legislation) from the amounts used in the Company's last rate case effective January 25, 2018. See Note 10, Income Taxes, for more information. Minnesota Energy Resources Corporation 2018 Minnesota Rate Case In October 2017, MERC initiated a rate proceeding with the MPUC to increase retail natural gas rates $12.6 million (5.05%). MERC's request reflected a 10.3% ROE and a common equity component average of 50.9%. In November 2017, the MPUC approved an interim rate order, effective January 1, 2018, authorizing a retail natural gas rate increase of $9.5 million (3.78%). In March 2018, to reflect changes in MERC's effective tax rate as a result of the enactment of the Tax Legislation, the MPUC approved a $2.5 million reduction in interim retail natural gas rates to $7.0 million (2.81%), effective April 1, 2018. The interim rates reflect a 9.1% ROE and a common equity component average of 50.9%. The interim rate increase is subject to refund pending the final written rate order, which is expected in the first half of 2019. 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, contingent upon UMERC's construction of approximately 180 MW of natural gas-fired generation in the Upper Peninsula of Michigan. In October 2017, the MPSC approved both the agreement with Tilden and UMERC's application for a certificate of necessity to begin construction of the proposed generation. The estimated cost of this project is $266 million ($277 million with AFUDC), 50% of which is expected to be recovered from Tilden, with the remaining 50% expected to be recovered from UMERC's other utility customers. The new units are expected to begin commercial operation by mid-2019. Upon receiving the MPSC's approval, retirement of the PIPP generating units became probable. As a result of a MISO ruling received in April 2018, the PIPP units must be retired no later than May 31, 2019. Tilden will remain a customer of WE until this new generation begins commercial operation. |
NEW ACCOUNTING PRONOUNCEMENTS |
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Mar. 31, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS 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. |
GENERAL INFORMATION (Policies) |
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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. |
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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, 2017. 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, 2018, are not necessarily indicative of expected results for 2018 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. |
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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 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 financial 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 between levels of the fair value hierarchy at their value as of the end of the reporting period. |
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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. |
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New Accounting Pronouncements | 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. |
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Electric | |||||||||||||
Accounting policies | |||||||||||||
Revenue Recognition | Electricity sales to residential and commercial and industrial customers are generally accomplished through requirements contracts, which provide for the delivery of as much electricity as the customer needs. These contracts represent discrete deliveries of electricity and consist of one distinct performance obligation satisfied over time, as the electricity is delivered and consumed by the customer simultaneously. For our Wisconsin residential and commercial and industrial customers and the majority of our Michigan residential and commercial and industrial customers, our performance obligation is bundled and consists of both the sale and the delivery of the electric commodity. In our Michigan service territory, a limited number of residential and commercial and industrial customers can purchase the commodity from a third party. In this case, the delivery of the electricity represents our sole performance obligation. The rates, charges, terms, and conditions of service for sales to these customers are included in tariffs that have been approved by state regulators. These rates often have a fixed component customer charge and a usage-based variable component. We recognize revenue for the fixed component customer charge monthly using a time-based output method. We recognize revenue for the usage-based variable component using an output method based on the quantity of electricity delivered each month. Wholesale customers who resell power can choose to either bundle capacity and electricity services together under one contract with a supplier or purchase capacity and electricity separately from multiple suppliers. Furthermore, wholesale customers can choose to have our utilities provide generation to match the customer's load, similar to requirements contracts, or they can purchase specified quantities of electricity and capacity. The rates, charges, terms and conditions of service for sales to wholesale customers are included in tariffs that have been approved by the FERC. Contracts with wholesale customers that include capacity bundled with the delivery of electricity contain two performance obligations, as capacity and electricity are often transacted separately in the marketplace at the wholesale level. When recognizing revenue associated with these contracts, the transaction price is allocated to each performance obligation based on its relative standalone selling price. Revenue is recognized as control of each individual component is transferred to the customer. Electricity is the primary product sold by our electric utilities and represents a single performance obligation satisfied over time through discrete deliveries to a customer. Revenue from electricity sales is generally recognized as units are produced and delivered to the customer within the production month. Capacity represents the reservation of an electric generating facility and conveys the ability to call on a plant to produce electricity when needed by the customer. The nature of our performance obligation as it relates to capacity is to stand ready to deliver power. This represents a single performance obligation transferred over time, which generally represents a monthly obligation. Accordingly, capacity revenue is recognized on a monthly basis. We are an active participant in the MISO Energy Markets, where we bid our generation into the Day Ahead and Real Time markets and procure electricity for our retail and wholesale customers at prices determined by the MISO Energy Markets. Purchase and sale transactions are recorded using settlement information provided by MISO. These purchase and sale transactions are accounted for on a net hourly position. Net purchases in a single hour are recorded as purchased power in cost of sales and net sales in a single hour are recorded as resale revenues. For resale revenues, our performance obligation is created only when electricity is sold into the MISO Energy Markets. For all of our customers, consistent with the timing of when we recognize revenue, customer billings generally occur on a monthly basis, with payments typically due in full within 30 days. For the majority of our wholesale customers, the price billed for energy and capacity is a formula-based rate. Formula-based rates initially set a customer's current year rates based on the previous year’s expenses. This is a predetermined formula derived from the utility's costs and a reasonable rate of return. Because these rates are eventually trued up to reflect actual current year costs, they represent a form of variable consideration in certain circumstances. The variable consideration is estimated and recognized over time as wholesale customers receive and consume the capacity and electricity services. |
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Natural gas | |||||||||||||
Accounting policies | |||||||||||||
Revenue Recognition | We recognize natural gas utility operating revenues under requirements contracts with residential, commercial and industrial, and transportation customers served under the tariffs of our regulated utilities. Tariffs provide our customers with the standard terms and conditions, including rates, related to the services offered. Requirements contracts provide for the delivery of as much natural gas as the customer needs. These requirements contracts represent discrete deliveries of natural gas and constitute a single performance obligation satisfied over time. Our performance obligation is both created and satisfied with the transfer of control of natural gas upon delivery to the customer. For most of our customers, natural gas is delivered and consumed by the customer simultaneously. A performance obligation can be bundled to consist of both the sale and the delivery of the natural gas commodity. In certain of our service territories, customers can purchase the commodity from a third party. In this case, the performance obligation only includes the delivery of the natural gas to the customer. The transaction price of the performance obligations is valued using rates in the tariffs of our regulated utilities, which have been approved by state regulators. These rates often have a fixed component customer charge and a usage-based variable component. We recognize revenue for the fixed component customer charge monthly using a time-based output method. We recognize revenue for the usage-based variable component using an output method based on natural gas delivered each month. Consistent with the timing of when we recognize revenue, customer billings generally occur on a monthly basis, with payments typically due in full within 30 days. |
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Other non-utility revenues | |||||||||||||
Accounting policies | |||||||||||||
Revenue Recognition | As part of the construction of the We Power electric generating units, we capitalized interest during construction, which is included in property, plant, and equipment. As allowed by the PSCW, we collected these carrying costs from WE's utility customers during construction. The equity portion of these carrying costs was recorded as deferred revenue, and we continually amortize the deferred carrying costs to revenues over the life of the plants to better match the costs of owning the plant while we are providing service to our customers. During the three months ended March 31, 2018, we recorded $6.4 million of revenue related to these deferred carrying costs, which were included in the contract liability balance at the beginning of the period. This contract liability is presented as deferred revenue, net on our balance sheets. Non-utility operating revenues are derived primarily from servicing appliances for customers at MERC. These contracts customarily have a duration of one year or less and consist of a single performance obligation satisfied over time. We use a time-based output method to recognize revenues monthly for the service fee. Revenues from distributed renewable solar projects consist primarily of sales of renewable energy and solar renewable energy certificates (SRECs) generated by WPS Power Development, LLC. The sale of SRECs is a distinct performance obligation as they are often sold separately from the renewable energy generated. Although the performance obligation for the sale of renewable energy is recognized over time and the performance obligation for SRECs is recognized at a point-in-time, the timing of revenue recognition is the same and occurs as renewable energy is generated. |
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Alternative revenues | |||||||||||||
Accounting policies | |||||||||||||
Revenue Recognition | Alternative Revenues Alternative revenues are created from programs authorized by regulators that allow our utilities to record additional revenues by adjusting rates in the future, usually as a surcharge applied to future billings, in response to past activities or completed events. Alternative revenue programs allow compensation for the effects of weather abnormalities, other external factors, or demand side management initiatives. Alternative revenue programs can also provide incentive awards if the utility achieves certain objectives and in other limited circumstances. We record alternative revenues when the regulator-specified conditions for recognition have been met. We reverse these alternative revenues as the customer is billed, at which time this revenue is presented as revenues from contracts with customers. Below is a summary of the alternative revenue programs at our utilities:
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ACQUISITIONS (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Allocation of purchase price | The table below shows the allocation of the purchase price to the assets acquired and liabilities assumed at the date of the acquisition. The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was recognized as goodwill. Bluewater is included in the non-utility energy infrastructure segment. See Note 17, Segment Information, for more information.
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OPERATING REVENUES (Tables) |
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Disaggregation of Operating Revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating revenues disaggregated by revenue source | The following tables present our operating revenues disaggregated by revenue source. Comparable amounts have not been presented for the three months ended March 31, 2017, due to our adoption of this standard under the modified retrospective method.
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Revenues from contracts with customers | Electric | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Operating Revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating revenues disaggregated by revenue source | The following table disaggregates electric utility operating revenues into customer class for the current period:
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Revenues from contracts with customers | Natural gas | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Operating Revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating revenues disaggregated by revenue source | The following table disaggregates natural gas utility operating revenues into customer class for the current period:
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Revenues from contracts with customers | Other non-utility revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Operating Revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating revenues disaggregated by revenue source | Other non-utility operating revenues consist primarily of the following:
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Other operating revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Operating Revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating revenues disaggregated by revenue source | Other operating revenues consist primarily of the following:
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COMMON EQUITY (Tables) |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||
Schedule of stock-based compensation awards granted | During the first quarter of 2018, 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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SHORT-TERM DEBT AND LINES OF CREDIT (Tables) |
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term Debt [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of short-term borrowings and weighted-average interest rates | 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 available capacity under these facilities:
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MATERIALS, SUPPLIES, AND INVENTORIES (Tables) |
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventory | Our inventory consisted of:
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INCOME TAXES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation | The provision for income taxes for the quarter ended March 31, 2018, differs from the amount of income tax determined by applying the applicable United States statutory federal income tax rate to income before income taxes as a result of the following:
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FAIR VALUE MEASUREMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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DERIVATIVE INSTRUMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantees [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of outstanding guarantees | The following table shows our outstanding guarantees:
|
EMPLOYEE BENEFITS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The following tables show the components of net periodic pension and OPEB costs for our benefit plans.
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Schedule of retroactively restated Income Statement | The impacts to our income statements from adoption of this standard are reflected in the table below.
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GOODWILL (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes to our goodwill balances by segment | The following table shows changes to our goodwill balances by segment during the three months ended March 31, 2018:
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INVESTMENT IN TRANSMISSION AFFILIATES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Transmission Affiliates | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes to our investment in Transmission Affiliates | The following tables provide a reconciliation of the changes in our investments in ATC and ATC Holdco:
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ATC | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Transmission Affiliates | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2018 and 2017:
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COMMITMENTS AND CONTINGENCIES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
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, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional Cash Flow Elements and Supplemental Cash Flow Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of supplemental cash flow information |
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Reconciliation of cash and cash equivalents and restricted cash | See the following table for a reconciliation of cash and cash equivalents and restricted cash reported within the balance sheets to the sum of the total of the same amounts shown in the statements of cash flows at March 31.
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Schedule of retroactively restated statements of cash flows | Our statements of cash flows for the years ended December 31, 2017, 2016, and 2015 were retroactively restated from what was previously presented in our 2017 Annual Report on Form 10-K to reflect the adoption of ASU 2016-18. The impacts to our statements of cash flows from adoption of this standard are reflected in the table below.
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GENERAL INFORMATION - GENERAL (Details) customer in Millions |
Mar. 31, 2018
customer
|
---|---|
Electric | |
Product information [Line Items] | |
Number Of Customers | 1.6 |
Natural gas | |
Product information [Line Items] | |
Number Of Customers | 2.9 |
ATC | |
Product information [Line Items] | |
Equity method investment, ownership interest (as a percent) | 60.00% |
ACQUISITIONS - FORWARD ACQUISITION (Details) - Forward Wind Energy Center $ in Millions |
1 Months Ended | ||
---|---|---|---|
Apr. 30, 2018
USD ($)
utility
|
Apr. 02, 2018
wind_turbines
MW
|
Mar. 31, 2018 |
|
WPS | |||
Business Acquisition [Line Items] | |||
Percentage of Forward Wind Energy Center's output purchased by WPS | 44.60% | ||
Subsequent event | |||
Business Acquisition [Line Items] | |||
Number of wind turbines at Forward Wind Energy Center | wind_turbines | 86 | ||
Capacity of Foward Wind Energy Center | MW | 129 | ||
Purchase price | $ 173.9 | ||
Subsequent event | WPS | |||
Business Acquisition [Line Items] | |||
Number of utilities along with WPS that entered in an agreement to purchase Forward Wind Energy Center | utility | 2 | ||
Purchase price | $ 77.6 | ||
WPS's share of Forward Wind Energy Center's purchase price | 44.60% |
ACQUISITIONS - BLUEWATER ACQUISITION - CONSIDERATION TRANSFERRED (Details) - Bluewater - USD ($) $ in Millions |
1 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Mar. 31, 2018 |
|
Business Acquisition [Line Items] | ||
Purchase price | $ 226.0 | |
Percentage of current storage needs provided | 33.00% | |
Acquisition related costs | $ 4.9 |
ACQUISITIONS- BLUEWATER ACQUISITION - PURCHASE PRICE ALLOCATION (Details) - Bluewater $ in Millions |
1 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
| |
Business Acquisition [Line Items] | |
Current assets | $ 2.0 |
Net property, plant, and equipment | 218.3 |
Goodwill | 6.6 |
Current liabilities | (0.9) |
Total purchase price | $ 226.0 |
ACQUISITIONS - UPSTREAM ACQUISITION (Details) - Upstream - Subsequent event $ in Millions |
1 Months Ended |
---|---|
Apr. 30, 2018
USD ($)
MW
| |
Business Acquisition [Line Items] | |
WEC's ownership interest in Upstream Wind Energy Center | 80.00% |
Capacity of Upstream Wind Energy Center | MW | 202.5 |
Acquisition purchase price | $ | $ 276.0 |
Number of years Upstream will receive fixed payment | 10 years |
Federal production tax credit percent of published rate | 100.00% |
OPERATING REVENUES - OTHER OPERATING REVENUES (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Disaggregation of Operating Revenues | ||
Revenues | $ 2,286.5 | $ 2,304.5 |
Other operating revenues | ||
Disaggregation of Operating Revenues | ||
Revenues | (3.5) | |
Other operating revenues | Alternative revenues | ||
Disaggregation of Operating Revenues | ||
Revenues | (16.1) | |
Other operating revenues | Late payment charges | ||
Disaggregation of Operating Revenues | ||
Revenues | 11.4 | |
Other operating revenues | Leases | ||
Disaggregation of Operating Revenues | ||
Revenues | $ 1.2 |
PROPERTY, PLANT, AND EQUIPMENT (Details) $ in Millions |
1 Months Ended | 12 Months Ended | |
---|---|---|---|
Oct. 31, 2017
MW
|
Dec. 31, 2017
USD ($)
|
Mar. 31, 2018
USD ($)
|
|
Edgewater Unit 4 | |||
Property, plant, and equipment | |||
Plant to be retired, net | $ 12.7 | ||
Pleasant Prairie power plant | |||
Property, plant, and equipment | |||
Plant to be retired, net | 674.1 | ||
Presque Isle power plant | |||
Property, plant, and equipment | |||
Plant to be retired, net | 188.7 | ||
Pulliam power plant | |||
Property, plant, and equipment | |||
Plant to be retired, net | $ 43.6 | ||
UMERC | |||
Property, plant, and equipment | |||
Capacity of natural gas-fired generation facility (in megawatts) | MW | 180 | ||
Wisconsin | |||
Property, plant, and equipment | |||
Severance expense | $ 29.4 |
COMMON EQUITY - STOCK-BASED COMPENSATION AWARDS GRANTED (Details) |
3 Months Ended |
---|---|
Mar. 31, 2018
$ / shares
shares
| |
Stock options | |
Stock-based Compensation | |
Stock options granted | shares | 710,710 |
Stock options granted, weighted average exercise price | $ / shares | $ 65.60 |
Stock options granted, weighted-average grant date fair value | $ / shares | $ 7.71 |
Restricted shares | |
Stock-based Compensation | |
Awards granted | shares | 156,340 |
Restricted shares granted, weighted-average grant date fair value | $ / shares | $ 64.20 |
Performance units | |
Stock-based Compensation | |
Awards granted | shares | 217,560 |
COMMON EQUITY - COMMON STOCK DIVIDENDS (Details) - $ / shares |
3 Months Ended | ||
---|---|---|---|
Apr. 19, 2018 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Dividends Payable | |||
Quarterly cash dividend declared (in dollars per share) | $ 0.5525 | $ 0.5200 | |
Subsequent event | |||
Dividends Payable | |||
Quarterly cash dividend declared (in dollars per share) | $ 0.5525 |
SHORT-TERM DEBT AND LINES OF CREDIT - SHORT-TERM BORROWINGS (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Short-term borrowings | ||
Commercial paper outstanding | $ 1,200.3 | $ 1,444.6 |
Commercial paper | ||
Short-term borrowings | ||
Weighted-average interest rate on amounts outstanding | 2.24% | 1.77% |
Average amount outstanding during the period | $ 1,254.4 | |
Weighted-average interest rate during the period | 1.90% |
SHORT-TERM DEBT AND LINES OF CREDIT - REVOLVING CREDIT FACILITIES (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Revolving credit facilities | ||
Short-term credit capacity | $ 2,800.0 | |
Letters of credit issued inside credit facilities | 1.2 | |
Commercial paper outstanding | 1,200.3 | $ 1,444.6 |
Available capacity under existing agreements | 1,598.5 | |
WEC Energy Group | Credit facility maturing during October 2022 | ||
Revolving credit facilities | ||
Short-term credit capacity | 1,200.0 | |
WE | Credit facility maturing during October 2022 | ||
Revolving credit facilities | ||
Short-term credit capacity | 500.0 | |
WPS | Credit facility maturing during October 2022 | ||
Revolving credit facilities | ||
Short-term credit capacity | 400.0 | |
WG | Credit facility maturing during October 2022 | ||
Revolving credit facilities | ||
Short-term credit capacity | 350.0 | |
PGL | Credit facility maturing during October 2022 | ||
Revolving credit facilities | ||
Short-term credit capacity | $ 350.0 |
LONG TERM DEBT (Details) - Integrys Holding - Integrys Junior Notes due 2066 - USD ($) $ in Millions |
May 14, 2018 |
Mar. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Long-term debt, current portion | $ 114.9 | |
Subsequent event | ||
Debt Instrument [Line Items] | ||
Extinguishment of debt | $ 114.9 |
MATERIALS, SUPPLIES, AND INVENTORIES (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Natural gas in storage | $ 34.8 | $ 209.0 |
Materials and supplies | 213.7 | 211.2 |
Fossil fuel | 127.5 | 118.8 |
Total | 376.0 | $ 539.0 |
LIFO cost method | ||
LIFO liquidation balance | $ 35.6 |
INCOME TAXES (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
Dec. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Effective Income Tax Rate Reconciliation, Amount | |||
Statutory federal income tax, amount | $ 100.5 | ||
State income taxes net of federal tax benefit, amount | 29.9 | ||
Federal tax reform, amount | (15.5) | ||
Tax repairs, amount | (25.5) | ||
Other, amount | (1.1) | ||
Total income tax expense, amount | $ 88.3 | $ 213.3 | |
Effective Income Tax Rate Reconciliation, Percent | |||
Statutory federal income tax, percentage | 21.00% | 35.00% | |
State income taxes net of federal tax benefit, percentage | 6.20% | ||
Federal tax reform, percentage | (3.20%) | ||
Tax repairs, percentage | (5.30%) | ||
Other, percentage | (0.30%) | ||
Total income tax expense, percentage | 18.40% | ||
Measurement period to complete accounting related to Tax Cuts and Jobs Act | 1 year |
FAIR VALUE MEASUREMENTS - LEVEL 3 RECONCILIATION (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract] | ||
Balance at the beginning of the period | $ 4.4 | $ 5.1 |
Settlements | (2.9) | (3.4) |
Balance at the end of period | $ 1.5 | $ 1.7 |
FAIR VALUE MEASUREMENTS - FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Financial Instruments | ||
Preferred stock | $ 30.4 | $ 30.4 |
Carrying Amount | ||
Financial Instruments | ||
Preferred stock | 30.4 | 30.4 |
Long-term debt, including current portion | 9,549.3 | 9,561.7 |
Capital lease obligations | 26.1 | 27.0 |
Fair Value | ||
Financial Instruments | ||
Preferred stock | 29.1 | 30.5 |
Long-term debt, including current portion | $ 10,054.5 | $ 10,341.9 |
DERIVATIVE INSTRUMENTS - GAINS (LOSSES) AND NOTIONAL VOLUMES (Details) gal in Millions, MWh in Millions, MMBTU in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018
USD ($)
MMBTU
MWh
gal
|
Mar. 31, 2017
USD ($)
MMBTU
MWh
gal
|
|
Realized Gain (Loss) on Derivatives, Net | ||
Gains (Losses) | $ (1.0) | $ 2.2 |
Natural gas contracts | ||
Realized Gain (Loss) on Derivatives, Net | ||
Gains (Losses) | $ (5.2) | $ (0.3) |
Notional Sales Volumes | ||
Notional sales volumes | MMBTU | 48.1 | 34.1 |
Petroleum products contracts | ||
Realized Gain (Loss) on Derivatives, Net | ||
Gains (Losses) | $ 0.5 | $ (0.5) |
Notional Sales Volumes | ||
Notional sales volumes (gallons) | gal | 2.1 | 4.9 |
FTRs | ||
Realized Gain (Loss) on Derivatives, Net | ||
Gains (Losses) | $ 3.7 | $ 3.0 |
Notional Sales Volumes | ||
Notional sales volumes | MWh | 8.2 | 9.2 |
DERIVATIVE INSTRUMENTS - BALANCE SHEET OFFSETTING (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Cash collateral | ||
Cash collateral in margin account | $ 11.8 | $ 16.2 |
Offsetting Derivative Assets | ||
Gross amount recognized on the balance sheet | 5.4 | 12.4 |
Gross amount not offset on the balance sheet | (2.1) | (4.9) |
Net amount | 3.3 | 7.5 |
Offsetting Derivative Liabilities | ||
Gross amount recognized on the balance sheet | 5.1 | 11.6 |
Gross amount not offset on the balance sheet | (3.7) | (9.0) |
Net amount | 1.4 | 2.6 |
Collateral posted | 1.6 | 4.1 |
Credit Risk Related Contingent Features | ||
Aggregate fair value of all derivative instruments with specific credit risk-related contingent fearures in a net liability position | 1.1 | 3.7 |
Additional collateral that would have been required | $ 1.5 | $ 2.7 |
INVESTMENT IN TRANSMISSION AFFILIATES - RELATED PARTY TRANSACTIONS (Details) - ATC - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Investment in Transmission Affiliates | ||
Charges to ATC for services and construction | $ 4.6 | $ 4.2 |
Charges from ATC for network transmission services | 84.5 | 87.3 |
Refund from ATC per FERC ROE order | $ 0.0 | $ 28.3 |
INVESTMENT IN TRANSMISSION AFFILIATES - RELATED PARTY TRANSACTIONS BALANCE SHEET INFORMATION (Details) - ATC - USD ($) $ in Millions |
Mar. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Investment in Transmission Affiliates | |||
Accounts receivable for services provided to ATC | $ 1.8 | $ 1.5 | |
Dividends receivable from ATC | 0.0 | 39.9 | $ 35.2 |
Accounts payable for services received from ATC | $ 24.0 | $ 31.2 |
INVESTMENT IN TRANSMISSION AFFILIATES - SUMMARIZED FINANCIAL DATA (Details) - ATC - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Income statement data | |||
Operating revenues | $ 165.4 | $ 174.7 | |
Operating expenses | 84.9 | 82.7 | |
Other expense, net | 27.6 | 26.1 | |
Net income | 52.9 | $ 65.9 | |
Balance sheet data | |||
Current assets | 84.7 | $ 87.7 | |
Noncurrent assets | 4,681.7 | 4,598.9 | |
Total assets | 4,766.4 | 4,686.6 | |
Current liabilities | 473.3 | 767.2 | |
Long-term debt | 2,065.3 | 1,790.6 | |
Other noncurrent liabilities | 266.4 | 240.3 | |
Shareholders' equity | 1,961.4 | 1,888.5 | |
Total liabilities and shareholders' equity | $ 4,766.4 | $ 4,686.6 |
COMMITMENTS AND CONTINGENCIES - UNCONDITIONAL PURCHASE OBLIGATIONS (Details) $ in Millions |
Mar. 31, 2018
USD ($)
|
---|---|
Minimum future commitments for purchase obligations | |
Purchase obligations | $ 11,473.4 |
SUPPLEMENTAL CASH FLOW INFORMATION - SUPPLEMENTAL INFORMATION (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Supplemental cash flow information | ||
Cash (paid) for interest, net of amount capitalized | $ (68.5) | $ (56.6) |
Cash received for income taxes, net | 0.3 | 8.9 |
Significant non-cash transactions | ||
Accounts payable related to construction costs | 74.9 | 116.4 |
Portion of Bostco real estate holdings sale financed with note receivable | 0.0 | 7.0 |
Amortization of deferred revenue | $ 6.3 | $ 6.2 |
SUPPLEMENTAL CASH FLOW INFORMATION - RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Dec. 31, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|---|---|
Additional Cash Flow Elements and Supplemental Cash Flow Information [Abstract] | ||||||
Cash and cash equivalents | $ 48.1 | $ 38.9 | $ 45.7 | |||
Restricted cash included in other current assets | 0.0 | 0.8 | ||||
Restricted cash included in other long term assets | 23.6 | 26.9 | ||||
Cash, cash equivalents, and restricted cash | $ 71.7 | $ 58.6 | $ 73.4 | $ 72.7 | $ 168.8 | $ 61.9 |
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