Investment in Transmission Affiliates

12 Months Ended

Dec. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

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 corporate managers for ATC and ATC Holdco each have a ten-member board of directors. We have one representative on each board. Each member of the board has only one vote. Due to voting requirements, each individual board member has 10% of the voting control. The following tables provide a reconciliation of the changes in our investments in ATC and ATC Holdco:



	2019
(in millions)	ATC		ATC Holdco			Total
Balance at January 1	$	1,625.3	$	40.0		$	1,665.3
Add: Earnings (loss) from equity method investment *	132.8		(5.2		)	127.6
Add: Capital contributions	51.3		1.3			52.6
Less: Distributions	124.7		—			124.7
Balance at December 31	$	1,684.7	$	36.1		$	1,720.8

In November 2019, the FERC issued an order that addressed the complaints related to ATC's allowed ROE. Due to the numerous rehearing requests filed related to this order, our financials continue to include a $41.9 million liability for potential future refunds that ATC may be required to provide, resulting in reduced equity earnings from ATC. This liability reflects a 10.38% ROE for all periods covered by the complaints.



	2018
(in millions)	ATC		ATC Holdco			Total
Balance at January 1	$	1,515.8	$	37.6		$	1,553.4
Add: Earnings (loss) from equity method investment	139.6		(2.9		)	136.7
Add: Capital contributions	48.2		5.3			53.5
Less: Distributions	78.2		—			78.2
Less: Other	0.1		—			0.1
Balance at December 31	$	1,625.3	$	40.0		$	1,665.3



	2017
(in millions)	ATC			ATC Holdco			Total
Balance at January 1	$	1,443.9	⁽¹⁾	$	—		$	1,443.9
Add: Earnings (loss) from equity method investment	166.0			(11.7		)	154.3
Add: Capital contributions	60.3			49.3			109.6
Less: Distributions	154.2		⁽²⁾	—			154.2
Less: Other	0.2			—			0.2
Balance at December 31	$	1,515.8		$	37.6		$	1,553.4


⁽¹⁾	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.


⁽²⁾	Of this amount, $39.9 million was recorded as a receivable from ATC in other current assets at December 31, 2017.

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 during the years ended December 31:



(in millions)	2019		2018		2017
Charges to ATC for services and construction	$	25.9	$	21.8	$	17.1
Charges from ATC for network transmission services	348.1		338.1		349.3
Refund from ATC related to a FERC audit	—		22.0		—
Refund from ATC per FERC ROE order	—		—		28.3

As of December 31, 2019 and 2018, our balance sheets included the following receivables and payables for services received from or provided to ATC:



(in millions)	2019			2018
Accounts receivable for services provided to ATC	$	3.5		$	3.4
Accounts payable for services received from ATC	29.0			28.2
Amounts due from ATC for transmission infrastructure upgrades	2.8		⁽¹⁾	29.4		⁽²⁾


⁽¹⁾	In connection with WPS's construction of its two new solar projects, Badger Hollow I and Two Creeks, WPS was required to initially fund the construction of the transmission infrastructure upgrades needed for the new generation. ATC owns these transmission assets and will reimburse WPS for these costs after the new generation has been placed in service.


⁽²⁾	In connection with UMERC's construction of the new natural gas-fired generation in the Upper Peninsula of Michigan, UMERC was required to initially fund the construction of the transmission infrastructure upgrades owned by ATC that were needed for the new generation. In the second quarter of 2019, ATC fully reimbursed UMERC for these costs.

Summarized financial data for ATC is included in the tables below:



	Year Ended December 31
(in millions)	2019		2018		2017
Income statement data
Operating revenues	$	744.4	$	690.5	$	721.7
Operating expenses	373.5		358.7		345.0
Other expense, net	110.5		108.3		104.1
Net income	$	260.4	$	223.5	$	272.6



(in millions)	December 31, 2019		December 31, 2018
Balance sheet data
Current assets	$	84.7	$	87.2
Noncurrent assets	5,244.2		4,928.8
Total assets	$	5,328.9	$	5,016.0

Current liabilities	$	502.6	$	640.0
Long-term debt	2,312.8		2,014.0
Other noncurrent liabilities	298.9		295.3
Shareholders' equity	2,214.6		2,066.7
Total liabilities and shareholders' equity	$	5,328.9	$	5,016.0