ACQUISITIONS

9 Months Ended

Sep. 30, 2022

Asset Acquisition [Abstract]

ACQUISITIONS

ACQUISITIONS

In accordance with Topic 805: Clarifying the Definition of a Business (ASU 2017-01), transactions are evaluated and are accounted for as acquisitions (or disposals) of assets or businesses, and transaction costs are capitalized in asset acquisitions. The purchase price of certain acquisitions below includes intangibles recorded as long-term liabilities related to PPAs. See Note 18, Goodwill and Intangibles, for more information.

Acquisitions of Electric Generation Facilities in Illinois

In October 2022, WECI signed an agreement to acquire an 80% ownership interest in Maple Flats, a 250 MW solar generating facility under construction in Clay County, Illinois, for approximately $360 million. The project has an offtake agreement for all of the energy to be produced by the operation facility for a period of 15 years. The transaction is subject to FERC approval and commercial operational is expected to begin during the first half of 2024, at which time the transaction is expected to close. Maple Flats is expected to qualify for PTCs and will be included in the non-utility energy infrastructure segment.

In June 2021, WECI signed an agreement to acquire a 90% ownership interest in Sapphire Sky, a 250 MW wind generating facility under construction in McLean County, Illinois, for approximately $412 million. Sapphire Sky's PTC percentage is expected to increase to 100%, which will cause the purchase price to increase. The project has an offtake agreement for all of the energy to be produced by the facility for a period of 12 years. The transaction is subject to FERC approval and commercial operation is expected to begin by early 2023, at which time the transaction is expected to close. Sapphire Sky will be included in the non-utility energy infrastructure segment.

Acquisition of Wind Generation Facility in Nebraska

In September 2022, WECI completed the acquisition of a 90% ownership interest in Thunderhead, a 300 MW wind generating facility in Antelope and Wheeler counties in Nebraska. The purchase price was $381.9 million, and included net cash payments of $362.9 million, which included transaction costs and is net of cash acquired. WECI also recorded a $19.0 million payable at closing, related to certain milestones that needed to be achieved. The first milestone payment in the amount of $9.5 million was paid in October 2022, with the remaining $9.5 million expected to be paid upon commercial operation. Thunderhead is expected to become commercially operational by the end of 2022. The project has an offtake agreement for all of the energy to be produced by the facility for a period of 12 years. Thunderhead qualifies for PTCs and is included in the non-utility energy infrastructure segment.

Acquisitions of Electric Generation Facilities in Wisconsin

In January 2022, WPS, along with an unaffiliated utility, received PSCW approval to acquire the Red Barn, a utility-scale wind-powered electric generating facility. The project will be located in Grant County, Wisconsin and once constructed, WPS will own 82 MW of this project. WPS's share of the cost of this project is estimated to be $160 million, with commercial operation expected to begin by early 2023, at which time the transaction is expected to close. Red Barn is expected to qualify for PTCs.

In November 2021, WE and WPS signed an asset purchase agreement to acquire Whitewater, a commercially operational 236.5 MW dual-fueled (natural gas and low sulfur fuel oil) combined-cycle electrical generation facility in Whitewater, Wisconsin, for $72.7 million, which excludes working capital and transaction costs. In December 2021, an application was filed with the PSCW for approval of the acquisition. We expect a decision from the PSCW by the end of 2022, and for the transaction to close in early 2023.

Acquisition of a Wind Energy Generation Facility in Kansas

In February 2021, WECI completed the acquisition of a 90% ownership interest in Jayhawk, a 190 MW wind generating facility in Bourbon and Crawford counties, Kansas, for $119.9 million, which included transaction costs. The project became commercially operational in December 2021. Subsequent to the acquisition, WECI incurred an additional $153.9 million of capital expenditures as of September 30, 2022 for the project for a current total investment of $273.8 million. The project has an offtake agreement for all of the energy produced by the facility for a period of 10 years. Jayhawk qualifies for PTCs. WECI is entitled to 99% of the tax benefits related to this facility for the first 10 years of commercial operation, after which it will be entitled to tax benefits equal to its ownership interest. Jayhawk is included in the non-utility energy infrastructure segment.