Fair Value Measurements

12 Months Ended

Dec. 31, 2022

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:


	December 31, 2022
(in millions)	Level 1		Level 2		Level 3		Total
Derivative assets
Natural gas contracts	$	16.3	$	16.2	$	—	$	32.5
FTRs	—		—		7.8		7.8
Coal contracts	—		34.5		—		34.5
Total derivative assets	$	16.3	$	50.7	$	7.8	$	74.8

Investments held in rabbi trust	$	50.9	$	—	$	—	$	50.9

Derivative liabilities
Natural gas contracts	$	81.4	$	15.2	$	—	$	96.6


	December 31, 2021
(in millions)	Level 1		Level 2		Level 3		Total
Derivative assets
Natural gas contracts	$	46.4	$	18.2	$	—	$	64.6
FTRs	—		—		2.4		2.4
Coal contracts	—		53.0		—		53.0
Total derivative assets	$	46.4	$	71.2	$	2.4	$	120.0

Investments held in rabbi trust	$	79.6	$	—	$	—	$	79.6

Derivative liabilities
Natural gas contracts	$	8.4	$	6.7	$	—	$	15.1

The derivative assets and liabilities listed in the tables above include options, 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 at our electric utilities and certain of our non-utility wind parks to manage electric transmission congestion costs in the MISO Energy Markets. During 2022, we also held TCRs, which were used at certain of our non-utility wind parks to manage electric transmission congestion costs in the SPP Integrated Marketplace, but these TCRs settled prior to December 31, 2022.

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 These investments are restricted as they can only be withdrawn from the trust to fund participants' benefits under the Integrys deferred compensation plan and certain Integrys non-qualified pension plans. These investments are included in other long-term assets on our balance sheets. We recorded $12.7 million of net unrealized losses in earnings related to the investments held at the end of the period during the year ended December 31, 2022. For the years ended December 31, 2021 and 2020, the net unrealized gains included in earnings related to the investments held at the end of the period were $16.0 million and $6.3 million, respectively.

The following table summarizes the changes to derivatives classified as Level 3 in the fair value hierarchy at December 31:


(in millions)	2022		2021		2020
Balance at the beginning of the period	$	2.4	$	2.4	$	3.1
Purchases	23.7		6.1		7.6
Realized and unrealized gains included in earnings (1)	0.5		—		—
Settlements	(18.8)		(6.1)		(8.3)
Balance at the end of the period	$	7.8	$	2.4	$	2.4
Losses included in earnings attributable to the change in unrealized losses of Level 3 derivatives held at the end of the reporting period (1)	$	(0.4)	$	—	$	—

(1)Amounts relate to FTRs and TCRs acquired by certain wind generating facilities included in our non-utility energy infrastructure segment. These realized and unrealized gains and losses are recorded in operating revenues on our income statements.

Fair Value of Financial Instruments

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


	2022				2021
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Preferred stock of subsidiary	$	30.4	$	22.7	$	30.4	$	30.3
Long-term debt, including current portion (1)	15,464.2		13,921.3		13,563.4		14,819.4

(1) The carrying amount of long-term debt excludes finance lease obligations of $183.2 million and $129.7 million at December 31, 2022 and 2021, respectively.

The fair values of our long-term debt and preferred stock are categorized within Level 2 of the fair value hierarchy.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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