COVER PAGE
COVER PAGE | 6 Months Ended |
Jun. 30, 2020shares | |
Cover [Abstract] | |
Document type | 10-Q |
Document Quarterly Report | true |
Document period end date | Jun. 30, 2020 |
Document Transition Report | false |
Entity File Number | 001-03016 |
Entity registrant name | WISCONSIN PUBLIC SERVICE CORPORATION |
Entity Tax Identification Number | 39-0715160 |
Entity Incorporation, State or Country Code | WI |
Entity Address, Address Line One | 700 North Adams Street |
Entity Address, Address Line Two | P.O. Box 19001 |
Entity Address, City or Town | Green Bay |
Entity Address, State or Province | WI |
Entity Address, Postal Zip Code | 54307-9001 |
City Area Code | 800 |
Local Phone Number | 450-7260 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity filer category | Non-accelerated Filer |
Small business | false |
Emerging growth company | false |
Entity Shell Company | false |
Entity common stock, shares outstanding | 23,896,962 |
Entity central index key | 0000107833 |
Amendment flag | false |
Current fiscal year end date | --12-31 |
Document fiscal year focus | 2020 |
Document fiscal period focus | Q2 |
CONDENSED INCOME STATEMENTS
CONDENSED INCOME STATEMENTS - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Operating revenues | $ 312.8 | $ 320.9 | $ 682.2 | $ 716.7 |
Operating expenses | ||||
Cost of sales | 93.3 | 113.3 | 225 | 293.6 |
Other operation and maintenance | 99.3 | 96.9 | 191.1 | 201.3 |
Depreciation and amortization | 43.2 | 40.8 | 86.2 | 81.1 |
Property and revenue taxes | 9.6 | 10.1 | 19.6 | 20.3 |
Total operating expenses | 245.4 | 261.1 | 521.9 | 596.3 |
Operating income | 67.4 | 59.8 | 160.3 | 120.4 |
Other income, net | 8.4 | 9.9 | 16.7 | 19.2 |
Interest expense | 16 | 15.3 | 32.3 | 31.4 |
Other expense | (7.6) | (5.4) | (15.6) | (12.2) |
Income before income taxes | 59.8 | 54.4 | 144.7 | 108.2 |
Income tax expense | 12.1 | 12.9 | 28.8 | 25.8 |
Net income | $ 47.7 | $ 41.5 | $ 115.9 | $ 82.4 |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 0.8 | $ 2.3 |
Accounts receivable and unbilled revenues, net of reserves of $10.0 and $4.2, respectively | 187.3 | 210 |
Accounts receivable from related parties | 16 | 38.7 |
Materials, supplies, and inventories | 99.4 | 106.4 |
Prepaid taxes | 47.6 | 63.4 |
Other | 9.3 | 11.2 |
Current assets | 360.4 | 432 |
Long-term assets | ||
Property, plant, and equipment, net of accumulated depreciation and amortization of $1,730.3 and $1,672.1, respectively | 4,672.4 | 4,544.5 |
Regulatory assets | 430.7 | 437.9 |
Goodwill | 36.4 | 36.4 |
Pension and OPEB assets | 159.9 | 148.3 |
Other | 36.7 | 42.5 |
Long-term assets | 5,336.1 | 5,209.6 |
Total assets | 5,696.5 | 5,641.6 |
Current liabilities | ||
Short-term debt | 16.5 | 91.5 |
Accounts payable | 146.6 | 176.9 |
Accounts payable to related parties | 36.2 | 68.5 |
Accrued payroll and benefits | 23.5 | 26.5 |
Customer credit balances | 15.1 | 17.3 |
Other | 36 | 38.4 |
Current liabilities | 273.9 | 419.1 |
Long-term liabilities | ||
Long-term debt | 1,643.5 | 1,642.8 |
Deferred income taxes | 664.3 | 654.6 |
Deferred investment tax credits | 24.9 | 6.1 |
Regulatory liabilities | 773.4 | 782.5 |
Environmental remediation liabilities | 83.8 | 83.8 |
Pension and OPEB obligations | 18 | 18.6 |
Other | 93.8 | 94.3 |
Long-term liabilities | 3,301.7 | 3,282.7 |
Commitments and contingencies (Note 15) | ||
Shareholder's equity | ||
Common stock – $4 par value; 32,000,000 shares authorized; 23,896,962 shares issued and outstanding | 95.6 | 95.6 |
Additional paid in capital | 1,426.3 | 1,221.1 |
Retained earnings | 599 | 623.1 |
Common shareholders' equity | 2,120.9 | 1,939.8 |
Total liabilities and equity | $ 5,696.5 | $ 5,641.6 |
CONDENSED BALANCE SHEETS (PAREN
CONDENSED BALANCE SHEETS (PARENTHETICAL) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, reserves (in dollars) | $ 10 | $ 4.2 |
Property, plant, and equipment, accumulated depreciation (in dollars) | $ 1,730.3 | $ 1,672.1 |
Common stock, par value (in dollars per share) | $ 4 | $ 4 |
Common stock, shares authorized | 32,000,000 | 32,000,000 |
Common stock, shares, issued | 23,896,962 | 23,896,962 |
Common stock, shares outstanding | 23,896,962 | 23,896,962 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Operating activities | ||
Net income | $ 115.9 | $ 82.4 |
Reconciliation to cash provided by operating activities | ||
Depreciation and amortization | 86.2 | 81.1 |
Deferred income taxes and investment tax credits, net | 17.1 | 44.3 |
Change in – | ||
Accounts receivable and unbilled revenues | 41.7 | 35.3 |
Materials, supplies, and inventories | 7 | (2.5) |
Prepaid taxes | 15.8 | (16.1) |
Other current assets | 4.8 | (1.2) |
Accounts payable | (52.1) | (42.7) |
Accrued taxes | 2 | (8.5) |
Other current liabilities | (8.9) | (6.2) |
Other, net | 3.1 | (8.5) |
Net cash provided by operating activities | 232.6 | 157.4 |
Investing activities | ||
Capital expenditures | (232.8) | (186.2) |
Proceeds from cash surrender value of life insurance | 7.1 | 6.6 |
Other, net | 1.6 | 1.4 |
Net cash used in investing activities | (224.1) | (178.2) |
Financing activities | ||
Change in short-term debt | (75) | (19.1) |
Payment of dividends to parent | (140) | (60) |
Equity contribution from parent | 205 | 105 |
Other, net | 0 | (0.2) |
Net cash (used in) provided by financing activities | (10) | 25.7 |
Net change in cash and cash equivalents | (1.5) | 4.9 |
Cash and cash equivalents at beginning of period | 2.3 | 8.9 |
Cash and cash equivalents at end of period | $ 0.8 | $ 13.8 |
CONDENSED STATEMENTS OF EQUITY
CONDENSED STATEMENTS OF EQUITY - USD ($) $ in Millions | Total | Total common shareholder's equity | Common stock | Additional paid in capital | Retained earnings |
Balance at Dec. 31, 2018 | $ 1,769.9 | $ 95.6 | $ 1,115.9 | $ 558.4 | |
Statements of equity | |||||
Net income | 40.9 | 0 | 0 | 40.9 | |
Equity contribution from parent | 105 | 0 | 105 | 0 | |
Payment of dividends to parent | (30) | 0 | 0 | (30) | |
Balance at Mar. 31, 2019 | 1,885.8 | 95.6 | 1,220.9 | 569.3 | |
Balance at Dec. 31, 2018 | 1,769.9 | 95.6 | 1,115.9 | 558.4 | |
Statements of equity | |||||
Net income | $ 82.4 | ||||
Equity contribution from parent | 105 | ||||
Balance at Jun. 30, 2019 | 1,897.4 | 95.6 | 1,221 | 580.8 | |
Balance at Mar. 31, 2019 | 1,885.8 | 95.6 | 1,220.9 | 569.3 | |
Statements of equity | |||||
Net income | 41.5 | 41.5 | 0 | 0 | 41.5 |
Payment of dividends to parent | (30) | 0 | 0 | (30) | |
Stock-based compensation and other | 0.1 | 0 | 0.1 | 0 | |
Balance at Jun. 30, 2019 | 1,897.4 | 95.6 | 1,221 | 580.8 | |
Balance at Dec. 31, 2019 | 1,939.8 | 95.6 | 1,221.1 | 623.1 | |
Statements of equity | |||||
Net income | 68.2 | 0 | 0 | 68.2 | |
Equity contribution from parent | 100 | 0 | 100 | 0 | |
Payment of dividends to parent | (30) | 0 | 0 | (30) | |
Stock-based compensation and other | 0.1 | 0 | 0.1 | 0 | |
Balance at Mar. 31, 2020 | 2,078.1 | 95.6 | 1,321.2 | 661.3 | |
Balance at Dec. 31, 2019 | 1,939.8 | 95.6 | 1,221.1 | 623.1 | |
Statements of equity | |||||
Net income | 115.9 | ||||
Equity contribution from parent | 205 | ||||
Balance at Jun. 30, 2020 | 2,120.9 | 95.6 | 1,426.3 | 599 | |
Balance at Mar. 31, 2020 | 2,078.1 | 95.6 | 1,321.2 | 661.3 | |
Statements of equity | |||||
Net income | $ 47.7 | 47.7 | 0 | 0 | 47.7 |
Equity contribution from parent | 105 | 0 | 105 | 0 | |
Payment of dividends to parent | (110) | 0 | 0 | (110) | |
Stock-based compensation and other | 0.1 | 0 | 0.1 | 0 | |
Balance at Jun. 30, 2020 | $ 2,120.9 | $ 95.6 | $ 1,426.3 | $ 599 |
GENERAL INFORMATION
GENERAL INFORMATION | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GENERAL INFORMATION | GENERAL INFORMATION Wisconsin Public Service Corporation serves approximately 450,800 electric customers and 333,700 natural gas customers. As used in these notes, the term "financial statements" refers to the condensed financial statements. This includes the income statements, balance sheets, statements of cash flows, and statements of equity, unless otherwise noted. In this report, when we refer to "the Company," "us," "we," "our," or "ours," we are referring to Wisconsin Public Service Corporation. 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 financial statements and footnotes in our Annual Report on Form 10-K for the year ended December 31, 2019. 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 and six months ended June 30, 2020 are not necessarily indicative of expected results for 2020 due to seasonal variations and other factors, including any continuing financial impacts from the COVID-19 pandemic. In management's opinion, we have included all adjustments, normal and recurring in nature, necessary for a fair presentation of our financial results. |
OPERATING REVENUES
OPERATING REVENUES | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
OPERATING REVENUES | OPERATING REVENUES For more information about our operating revenues, see Note 1(d), Operating Revenues, in our 2019 Annual Report on Form 10-K. Disaggregation of Operating Revenues The following tables present our operating revenues disaggregated by revenue source for our utility segment. We do not have any revenues associated with our other segment. We disaggregate revenues into categories that depict how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors. Revenues are further disaggregated by electric and natural gas operations and then by customer class. Each customer class within our electric and natural gas operations have different expectations of service, energy and demand requirements, and can be impacted differently by regulatory activities within their jurisdictions. Wisconsin Public Service Corporation Three Months Ended June 30 Six Months Ended June 30 (in millions) 2020 2019 2020 2019 Electric utility $ 265.0 $ 264.6 $ 536.3 $ 541.6 Natural gas utility 49.3 56.4 146.2 174.0 Total revenues from contracts with customers 314.3 321.0 682.5 715.6 Other operating revenues (1.5) (0.1) (0.3) 1.1 Total operating revenues $ 312.8 $ 320.9 $ 682.2 $ 716.7 Revenues from Contracts with Customers Electric Utility Operating Revenues The following table disaggregates electric utility operating revenues into customer class: Electric Utility Operating Revenues Three Months Ended June 30 Six Months Ended June 30 (in millions) 2020 2019 2020 2019 Residential $ 98.4 $ 82.7 $ 199.5 $ 177.7 Small commercial and industrial 80.7 85.3 164.0 169.4 Large commercial and industrial 51.1 57.7 102.3 109.2 Other 2.1 2.1 4.2 4.2 Total retail revenues 232.3 227.8 470.0 460.5 Wholesale 23.1 24.2 45.5 53.6 Resale 5.3 6.9 10.6 16.4 Other utility revenues 4.3 5.7 10.2 11.1 Total electric utility operating revenues $ 265.0 $ 264.6 $ 536.3 $ 541.6 Natural Gas Utility Operating Revenues The following table disaggregates natural gas utility operating revenues into customer class: Natural Gas Utility Operating Revenues Three Months Ended June 30 Six Months Ended June 30 (in millions) 2020 2019 2020 2019 Residential $ 29.0 $ 30.7 $ 87.4 $ 104.4 Commercial and industrial 13.0 16.0 46.1 62.3 Total retail revenues 42.0 46.7 133.5 166.7 Transport 4.2 3.9 10.2 9.2 Other utility revenues (1) 3.1 5.8 2.5 (1.9) Total natural gas utility operating revenues $ 49.3 $ 56.4 $ 146.2 $ 174.0 (1) Includes amounts collected from (refunded to) customers for purchased gas adjustment costs. Other Operating Revenues Other operating revenues consist primarily of the following: Three Months Ended June 30 Six Months Ended June 30 (in millions) 2020 2019 2020 2019 Alternative revenues (1) $ (1.6) $ (1.0) $ (1.4) $ (0.8) Late payment charges (2) — 0.8 1.0 1.8 Other 0.1 0.1 0.1 0.1 Total other operating revenues $ (1.5) $ (0.1) $ (0.3) $ 1.1 (1) 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 wholesale customers subject to true-up, as discussed in Note 1(d), Operating Revenues, in our 2019 Annual Report on Form 10-K. (2) The reduction in late payment charges is a result of a regulatory order from the PSCW in response to the COVID-19 pandemic, which includes the suspension of late payment charges during a designated time period. See Note 17, Regulatory Environment, for more information. |
CREDIT LOSSES
CREDIT LOSSES | 6 Months Ended |
Jun. 30, 2020 | |
Credit Loss [Abstract] | |
CREDIT LOSSES | CREDIT LOSSES Effective January 1, 2020, we adopted FASB ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, using the modified retrospective transition method. This ASU amends the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables. The amendment requires entities to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of loss. The cumulative effect of adopting this standard was not significant to our financial statements. Our exposure to credit losses is related to our accounts receivable and unbilled revenue balances, which are generated from the sale of electricity and natural gas by our regulated utility operations. Our regulated utility operations are included in our utility segment. No accounts receivable and unbilled revenue balances were reported in the other segment at June 30, 2020. We evaluate the collectability of our accounts receivable and unbilled revenue balances considering a combination of factors. For some of our larger customers and also in circumstances where we become aware of a specific customer's inability to meet its financial obligations to us, we record a specific allowance for credit losses against amounts due in order to reduce the net recognized receivable to the amount we reasonably believe will be collected. For all other customers, we use the accounts receivable aging method to calculate an allowance for credit losses. Using this method, we classify accounts receivable into different aging buckets and calculate a reserve percentage for each aging bucket based upon historical loss rates. The calculated reserve percentages are updated on at least an annual basis, in order to ensure recent macroeconomic, political, and regulatory trends are captured in the calculation, to the extent possible. Risks identified that we do not believe are reflected in the calculated reserve percentages, are assessed on a quarterly basis to determine whether further adjustments are required. The increase recorded to our allowance for credit losses at June 30, 2020, specific to the economic risks associated with the COVID-19 pandemic not already reflected in our calculated reserve, was not significant. We will continue to monitor the economic impacts of COVID-19 and the resulting effects that these impacts may have on the ability of our customers to pay their energy bills. We monitor our ongoing credit exposure through active review of counterparty accounts receivable balances against contract terms and due dates. Our activities include timely account reconciliation, dispute resolution and payment confirmation. To the extent possible, we work with customers with past due balances to negotiate payment plans, but will disconnect customers for non-payment as allowed by our regulators if necessary, and employ collection agencies and legal counsel to pursue recovery of defaulted receivables. For our larger customers, detailed credit review procedures may be performed in advance of any sales being made. We sometimes require letters of credit, parental guarantees, prepayments or other forms of credit assurance from our larger customers to mitigate credit risk. See Note 17, Regulatory Environment, for information on certain regulatory actions that were and/or are being taken for the purpose of ensuring that essential utility services are available to our customers during the COVID-19 pandemic. We have included a table below that shows our gross third-party receivable balances and related allowance for credit losses. (in millions) June 30, 2020 Accounts receivable and unbilled revenues $ 197.3 Allowance for credit losses 10.0 Accounts receivable and unbilled revenues, net (1) $ 187.3 Total accounts receivable, net – past due greater than 90 days (1) $ 11.2 Past due greater than 90 days – collection risk mitigated by regulatory mechanisms (1) 89.5 % (1) Our exposure to credit losses for certain regulated utility customers is mitigated by a regulatory mechanism we have in place. Specifically, our residential tariffs include a mechanism for cost recovery or refund of uncollectible expense based on the difference between actual uncollectible write-offs and the amounts recovered in rates. As a result, at June 30, 2020, $65.4 million, or 34.9%, of our net accounts receivable and unbilled revenues balance had regulatory protections in place to mitigate the exposure to credit losses. In addition, in its March 24, 2020 order, the PSCW authorized the deferral of credit losses for our commercial and industrial customers, to the extent these losses exceed the amount included in rates, as a result of the COVID-19 pandemic and the related actions we have been required to take to ensure essential utility services are available to customers during this public health emergency. As a result, our exposure to credit losses related to certain commercial and industrial accounts receivable and unbilled revenue balances were also mitigated by regulatory protections at June 30, 2020, but are not included in the percentages in the above table or this note as we continue to assess the impacts of the order. See Note 17, Regulatory Environment, for more information. A rollforward of the allowance for credit losses is included below: (in millions) Six Months Ended June 30, 2020 Balance at December 31, 2019 $ 4.2 Provision for credit losses 5.2 Provision for credit losses deferred for future recovery or refund 3.3 Write-offs charged against the allowance (4.6) Recoveries of amounts previously written off 1.9 Balance at June 30, 2020 $ 10.0 The increase in the allowance for credit losses was driven by an increase in past due accounts receivable balances from December 31, 2019 to June 30, 2020. This is a trend we generally see over the winter moratorium months, when we are not allowed to disconnect customer service as a result of non-payment. In Wisconsin, the winter moratorium begins on November 1 and ends on April 15. However, as a result of the COVID-19 pandemic, we are still unable to disconnect any of our customers. See Note 17, Regulatory Environment, for more information. |
REGULATORY ASSETS AND LIABILITI
REGULATORY ASSETS AND LIABILITIES | 6 Months Ended |
Jun. 30, 2020 | |
Regulatory Assets and Liabilities Disclosure [Abstract] | |
REGULATORY ASSETS AND LIABILITIES | REGULATORY ASSETS AND LIABILITIES The following regulatory assets and liabilities were reflected on our balance sheets at June 30, 2020 and December 31, 2019. For more information on our regulatory assets and liabilities, see Note 5, Regulatory Assets and Liabilities, in our 2019 Annual Report on Form 10-K. (in millions) June 30, 2020 December 31, 2019 Regulatory assets Pension and OPEB costs $ 142.5 $ 151.8 Environmental remediation costs 112.8 113.5 Plant retirements 55.6 55.3 Income tax related items 42.3 38.9 ReACT™ 19.5 20.8 Asset retirement obligations 16.2 8.4 Forward Wind Energy Center 14.1 17.9 Termination of a tolling agreement with Fox Energy Company LLC 7.2 9.9 Other, net 20.5 21.4 Total regulatory assets $ 430.7 $ 437.9 (in millions) June 30, 2020 December 31, 2019 Regulatory liabilities Income tax related items $ 405.9 $ 416.7 Removal costs 196.9 201.8 Pension and OPEB benefits 99.2 100.5 Earnings sharing mechanism 37.0 42.0 Energy costs refundable through rate adjustments 21.8 20.0 Electric transmission costs 11.8 3.7 Other, net 11.7 11.5 Total regulatory liabilities $ 784.3 $ 796.2 Balance sheet presentation Other current liabilities $ 10.9 $ 13.7 Regulatory liabilities 773.4 782.5 Total regulatory liabilities $ 784.3 $ 796.2 |
COMMON EQUITY
COMMON EQUITY | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
COMMON EQUITY | COMMON EQUITY Various financing arrangements and regulatory requirements impose certain restrictions on our ability to transfer funds to the sole holder of our common stock, Integrys, in the form of cash dividends, loans, or advances. In addition, Wisconsin law prohibits us from making loans to or guaranteeing obligations of WEC Energy Group, Integrys, or their subsidiaries. See Note 10, Common Equity, in our 2019 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. |
SHORT-TERM DEBT AND LINES OF CR
SHORT-TERM DEBT AND LINES OF CREDIT | 6 Months Ended |
Jun. 30, 2020 | |
Short-term Debt [Abstract] | |
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: (in millions, except percentages) June 30, 2020 December 31, 2019 Commercial paper Amount outstanding $ 16.5 $ 91.5 Weighted-average interest rate on amounts outstanding 0.15 % 1.91 % Our average amount of commercial paper borrowings based on daily outstanding balances during the six months ended June 30, 2020 was $77.4 million with a weighted-average interest rate during the period of 1.04%. The information in the table below relates to our revolving credit facility used to support our commercial paper borrowing program, including available capacity under this facility: (in millions) Maturity June 30, 2020 Revolving credit facility October 2022 $ 400.0 Less: Letters of credit issued inside credit facility $ 1.3 Commercial paper outstanding 16.5 Available capacity under existing credit facility $ 382.2 |
MATERIALS, SUPPLIES, AND INVENT
MATERIALS, SUPPLIES, AND INVENTORIES | 6 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
MATERIALS, SUPPLIES, AND INVENTORIES | MATERIALS, SUPPLIES, AND INVENTORIES Our inventory consisted of: (in millions) June 30, 2020 December 31, 2019 Materials and supplies $ 51.9 $ 50.1 Fossil fuel 34.8 36.1 Natural gas in storage 12.7 20.2 Total $ 99.4 $ 106.4 Substantially all materials and supplies, fossil fuel inventories, and natural gas in storage are recorded using the weighted-average cost method of accounting. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The provision for income taxes 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: Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 (in millions) Amount Effective Tax Rate Amount Effective Tax Rate Statutory federal income tax $ 12.6 21.0 % $ 11.4 21.0 % State income taxes net of federal tax benefit 3.6 6.0 % 3.3 6.1 % Federal excess deferred tax amortization – Wisconsin unprotected (2.7) (4.6) % — — % Federal excess deferred tax amortization (1.1) (1.9) % (1.2) (2.2) % Other (0.3) (0.3) % (0.6) (1.2) % Total income tax expense $ 12.1 20.2 % $ 12.9 23.7 % Six months ended June 30, 2020 Six months ended June 30, 2019 (in millions) Amount Effective Tax Rate Amount Effective Tax Rate Statutory federal income tax $ 30.4 21.0 % $ 22.7 21.0 % State income taxes net of federal tax benefit 8.8 6.1 % 6.7 6.2 % Federal excess deferred tax amortization – Wisconsin unprotected (6.7) (4.7) % — — % Federal excess deferred tax amortization (2.7) (1.9) % (2.5) (2.3) % Other (1.0) (0.6) % (1.1) (1.1) % Total income tax expense $ 28.8 19.9 % $ 25.8 23.8 % The effective tax rates of 20.2% and 19.9% for the three and six months ended June 30, 2020, respectively, differ from the United States statutory federal income tax rate of 21%, primarily due to the recognition of certain unprotected deferred tax benefits created as a result of the Tax Legislation. In accordance with the rate order received from the PSCW in December 2019, we are amortizing the unprotected deferred tax benefits over periods ranging from two years to four years, to reduce near-term rate impacts to our customers. In addition, as discussed in more detail below, the impact of the protected benefits associated with the Tax Legislation drove a decrease in the effective tax rate. These items were partially offset by state income taxes. The effective tax rates of 23.7% and 23.8% for the three and six months ended June 30, 2019, respectively, differ from the United States statutory federal income tax rate of 21%, primarily due to state income taxes, partially offset by the impact of the protected benefits associated with the Tax Legislation, which is discussed in more detail below. The Tax Legislation, signed into law in December 2017, required us to remeasure the deferred income taxes at our utility segment and we began to amortize the resulting excess protected deferred income taxes beginning in 2018 in accordance with normalization requirements (see federal excess deferred tax amortization line above). See Note 17, Regulatory Environment, for more information. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2020 | |
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 price 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 derivative 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. 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: June 30, 2020 (in millions) Level 1 Level 2 Level 3 Total Derivative assets Natural gas contracts $ 1.3 $ 0.3 $ — $ 1.6 FTRs — — 3.4 3.4 Coal contracts — 0.2 — 0.2 Total derivative assets $ 1.3 $ 0.5 $ 3.4 $ 5.2 Derivative liabilities Natural gas contracts $ 2.0 $ 0.2 $ — $ 2.2 Coal contracts — 0.2 — 0.2 Total derivative liabilities $ 2.0 $ 0.4 $ — $ 2.4 December 31, 2019 (in millions) Level 1 Level 2 Level 3 Total Derivative assets Natural gas contracts $ 0.2 $ 0.2 $ — $ 0.4 FTRs — — 1.3 1.3 Coal contracts — 0.4 — 0.4 Total derivative assets $ 0.2 $ 0.6 $ 1.3 $ 2.1 Derivative liabilities Natural gas contracts $ 3.0 $ 0.2 $ — $ 3.2 Coal contracts — 0.1 — 0.1 Total derivative liabilities $ 3.0 $ 0.3 $ — $ 3.3 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 to manage electric transmission congestion costs in the MISO Energy and Operating Reserves Markets. The following table summarizes the changes to derivatives classified as Level 3 in the fair value hierarchy: Three Months Ended June 30 Six Months Ended June 30 (in millions) 2020 2019 2020 2019 Balance at the beginning of the period $ 0.5 $ 1.1 $ 1.3 $ 3.0 Purchases 4.0 5.4 4.0 5.4 Settlements (1.1) (1.9) (1.9) (3.8) Balance at the end of the period $ 3.4 $ 4.6 $ 3.4 $ 4.6 Fair Value of Financial Instruments The following table shows the financial instruments included on our balance sheets that were not recorded at fair value: June 30, 2020 December 31, 2019 (in millions) Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt (1) $ 1,612.8 $ 1,881.4 $ 1,612.1 $ 1,793.5 (1) The carrying amount of long-term debt excludes finance lease obligations of $30.7 million at both June 30, 2020 and December 31, 2019. The fair value of our long-term debt is categorized within Level 2 of the fair value hierarchy. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 6 Months Ended |
Jun. 30, 2020 | |
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. Our approach is non-speculative and designed to mitigate risk. Our regulated hedging programs are approved by the PSCW. 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, the PSCW allows the effects of fair value accounting to be offset to regulatory assets and liabilities. The following table shows our derivative assets and derivative liabilities, along with their classification on our balance sheets. None of our derivatives are designated as hedging instruments. June 30, 2020 December 31, 2019 (in millions) Derivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities Other current Natural gas contracts $ 1.3 $ 2.2 $ 0.4 $ 3.1 FTRs 3.4 — 1.3 — Coal contracts 0.1 0.1 0.2 — Total other current (1) 4.8 2.3 1.9 3.1 Other long-term Natural gas contracts 0.3 — — 0.1 Coal contracts 0.1 0.1 0.2 0.1 Total other long-term (1) 0.4 0.1 0.2 0.2 Total $ 5.2 $ 2.4 $ 2.1 $ 3.3 (1) 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. Realized gains (losses) on derivatives are primarily recorded in cost of sales on the income statements. Our estimated notional sales volumes and realized gains (losses) were as follows: Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 (in millions) Volumes Gains (Losses) Volumes Gains (Losses) Natural gas contracts 8.5 Dth $ (2.7) 8.7 Dth $ (0.7) FTRs 2.0 MWh 0.1 2.4 MWh 2.5 Total $ (2.6) $ 1.8 Six months ended June 30, 2020 Six months ended June 30, 2019 (in millions) Volumes Gains (Losses) Volumes Gains (Losses) Natural gas contracts 21.2 Dth $ (7.1) 20.8 Dth $ (1.2) FTRs 3.9 MWh 0.5 5.0 MWh 3.2 Total $ (6.6) $ 2.0 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 June 30, 2020 and December 31, 2019, we had posted cash collateral of $2.8 million and $4.8 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: June 30, 2020 December 31, 2019 (in millions) Derivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities Gross amount recognized on the balance sheet $ 5.2 $ 2.4 $ 2.1 $ 3.3 Gross amount not offset on the balance sheet (1.3) (2.0) (1) (0.3) (3.1) (2) Net amount $ 3.9 $ 0.4 $ 1.8 $ 0.2 (1) Includes cash collateral posted of $0.7 million. (2) Includes cash collateral posted of $2.8 million. |
GUARANTEES
GUARANTEES | 6 Months Ended |
Jun. 30, 2020 | |
Guarantees [Abstract] | |
GUARANTEES | GUARANTEESAs of June 30, 2020, we had $20.6 million of standby letters of credit issued by financial institutions for the benefit of third parties that extended credit to us which automatically renew each year unless proper termination notice is given. These amounts are not reflected on our balance sheets. |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 6 Months Ended |
Jun. 30, 2020 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFITS | EMPLOYEE BENEFITS The following tables show the components of net periodic benefit cost (credit) for our benefit plans. Pension Benefits Three Months Ended June 30 Six Months Ended June 30 (in millions) 2020 2019 2020 2019 Service cost $ 2.3 $ 2.0 $ 4.9 $ 4.3 Interest cost 6.4 7.0 12.6 14.1 Expected return on plan assets (12.2) (12.0) (24.3) (24.0) Amortization of net actuarial loss 6.1 4.5 11.9 8.9 Net periodic benefit cost $ 2.6 $ 1.5 $ 5.1 $ 3.3 OPEB Benefits Three Months Ended June 30 Six Months Ended June 30 (in millions) 2020 2019 2020 2019 Service cost $ 1.0 $ 1.0 $ 2.2 $ 2.1 Interest cost 1.3 1.7 2.6 3.3 Expected return on plan assets (4.5) (4.2) (9.1) (8.3) Amortization of prior service credit (2.7) (2.8) (5.3) (5.7) Amortization of net actuarial (gain) loss (0.4) 0.4 (0.7) 0.8 Net periodic benefit credit $ (5.3) $ (3.9) $ (10.3) $ (7.8) During the six months ended June 30, 2020, we made contributions and payments of $0.3 million related to our pension plans and an insignificant amount related to our OPEB plans. We expect to make contributions and payments of $0.4 million related to our pension plans and $0.1 million related to our OPEB plans during the remainder of 2020, dependent upon various factors affecting us, including our liquidity position and possible tax law changes. |
GOODWILL
GOODWILL | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILLGoodwill represents the excess of the cost of an acquisition over the fair value of the identifiable net assets acquired. We had no changes to the carrying amount of goodwill during the six months ended June 30, 2020. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION We use operating income to measure segment profitability and to allocate resources to our businesses. At June 30, 2020, we reported two segments, which are described below. Our utility segment includes our electric and natural gas utility operations, which serve customers in northeastern and central Wisconsin. Our electric utility operations are engaged in the generation, distribution, and sale of electricity. Our natural gas utility operations are engaged in the purchase, distribution, and sale of natural gas as well as the transportation of customer-owned natural gas. Our other segment primarily consists of equity earnings from our investment in Wisconsin River Power Company. The following tables show summarized financial information for the three and six months ended June 30, 2020 and 2019, related to our reportable segments: (in millions) Utility Other Wisconsin Public Service Corporation Three Months Ended June 30, 2020 Operating revenues $ 312.8 $ — $ 312.8 Other operation and maintenance 99.3 — 99.3 Depreciation and amortization 43.2 — 43.2 Operating income 67.4 — 67.4 Other income, net 8.0 0.4 8.4 Interest expense 16.0 — 16.0 (in millions) Utility Other Wisconsin Public Service Corporation Three Months Ended June 30, 2019 Operating revenues $ 320.9 $ — $ 320.9 Other operation and maintenance 96.9 — 96.9 Depreciation and amortization 40.8 — 40.8 Operating income 59.8 — 59.8 Other income, net 9.5 0.4 9.9 Interest expense 15.3 — 15.3 (in millions) Utility Other Wisconsin Public Service Corporation Six months ended June 30, 2020 Operating revenues 682.2 $ — $ 682.2 Other operation and maintenance 191.1 — 191.1 Depreciation and amortization 86.2 — 86.2 Operating income 160.3 — 160.3 Other income, net 15.9 0.8 16.7 Interest Expense 32.3 — 32.3 (in millions) Utility Other Wisconsin Public Service Corporation Six months ended June 30, 2019 Operating revenues $ 716.7 $ — $ 716.7 Other operation and maintenance 201.3 — 201.3 Depreciation and amortization 81.1 — 81.1 Operating income 120.4 — 120.4 Other income, net 18.5 0.7 19.2 Interest expense 31.4 — 31.4 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES We 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 We have obligations to distribute and sell electricity and natural gas to our customers and 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 June 30, 2020, were approximately $0.8 billion. 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; management of coal combustion products such as fly ash; and remediation of impacted properties, including former manufactured gas plant sites. Air Quality 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 National Ambient Air Quality Standards. The EPA issued final nonattainment area designations in April 2018. The following counties within our service territory were designated as partial nonattainment with the 2015 standard: Door and Manitowoc. A decision was issued in July 2020 remanding the rule to the EPA for further evaluation. We expect that any subsequent EPA re-designation, if necessary, would take place in 2021. 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. The State of Wisconsin is currently working with stakeholders, including us, in developing regulations for inclusion in the state implementation plan required by the 2015 rule. Mercury and Air Toxics Standards In May 2020, the EPA finalized revisions to the Supplemental Cost Finding for the MATS rule as well as the CAA required RTR. The EPA was required by the United States Supreme Court to review both costs and benefits of complying with the MATS rule. After its review of costs, the EPA determined that it is not appropriate and necessary to regulate hazardous air pollutant emissions from power plants under Section 112 of the CAA. As a result, under the final rule, the emission standards and other requirements of the MATS rule first enacted in 2012 remain in place. The EPA did not remove coal- and oil-fired power plants from the list of sources that are regulated under Section 112. The EPA also determined that no revisions to MATS are warranted based on the results of the RTR. As a result, we do not expect the rule to have a material impact on our financial condition or results of operations. Climate Change The ACE rule became effective in September 2019. This rule provides existing coal-fired generating units with standards for achieving GHG emission reductions. The rule was finalized in conjunction with two other separate and distinct rulemakings, (1) the repeal of the Clean Power Plan, and (2) revised implementing regulations for ACE, ongoing emissions guidelines, and all future emission guidelines for existing sources issued under CAA section 111(d). Every state's plan to implement ACE is required to focus on reducing GHG emissions by improving the efficiency of fossil-fueled power plants. The rule is being litigated in challenges brought in the United States Court of Appeals for the District of Columbia Circuit by 22 states (including Wisconsin), local governments, and certain nongovernmental organizations. Final briefs in this litigation are scheduled to be filed in August 2020, with oral arguments expected to follow. The Wisconsin Department of Natural Resources is working with state utilities and has begun the process of developing the implementation plan with respect to the ACE rule. In December 2018, the EPA proposed to revise the New Source Performance Standards for GHG emissions from new, modified, and reconstructed fossil-fueled power plants. The EPA determined that the BSER for new, modified, and reconstructed coal units is highly efficient generation that would be equivalent to supercritical steam conditions for larger units and subcritical steam conditions for smaller units. This proposed BSER would replace the determination from the previous rule, which identified BSER as partial carbon capture and storage. The EPA has reviewed comments and intends to take final action on the proposed rule later in 2020. WEC Energy Group continues to evaluate opportunities and actions that preserve fuel diversity, lower costs for our customers, and contribute toward long-term GHG emissions reductions. In 2019, WEC Energy Group met and exceeded its 2030 goal of reducing CO 2 emissions by 40% below 2005 levels. WEC Energy Group has re-evaluated its carbon reduction goals for its electric generation in light of this progress. As strategies to reduce GHG emissions continue to evolve, WEC Energy Group's updated plan, which includes us, is to work with elected officials, regulatory agencies, customers, environmental groups, and other stakeholders to reduce CO 2 emissions from electricity generation by 70% below 2005 levels by 2030. WEC Energy Group's long-term goal calls for its electric generation fleet to be net carbon neutral by 2050. As a result of WEC Energy Group's generation reshaping plan, we retired approximately 300 MW of coal generation in 2018, including the Pulliam power plant and the jointly-owned Edgewater Unit 4 generating units. WEC Energy Group also has a goal to decrease the rate of methane emissions from the natural gas distribution lines in its network by 30% per mile by the year 2030 from a 2011 baseline. WEC Energy Group was over half way toward meeting that goal at the end of 2019. Stationary Combustion Turbine Standards (Combustion Turbine Rule) Effective in March 2020, the EPA issued a final regulation for National Air Standards for Hazardous Air Pollutants for Stationary Combustion Turbines. The Combustion Turbine Rule was issued to complete the RTR required by the CAA every five years, and applies only to combustion turbines constructed or reconstructed after January 14, 2003. The Combustion Turbine Rule clarifies certain performance testing, semi-annual and excess emission reporting requirements, implements electronic reporting requirements, and changes certain requirements applicable during startup, shutdown, and malfunction. We have evaluated the rule and do not expect the rule will have a material impact on our financial condition or results operations. Water Quality Steam Electric Effluent Limitation Guidelines The EPA's final 2015 ELG rule took effect in January 2016. This rule created new requirements for several types of power plant wastewaters. The new requirement that affects us relates to discharge limits for BATW. As a result of past capital investments, we believe our fleet is well positioned to meet the existing ELG regulations. Our power plant facilities already have advanced wastewater treatment technologies installed that meet many of the discharge limits established by this rule. There will, however, need to be modifications to the BATW systems at Weston Unit 3. Based on preliminary engineering, we estimate that compliance with the current rule will require $10 million in capital costs. The ELG requirements for BATW systems are currently being re-evaluated by the EPA. In September 2017, the EPA issued a final rule (Postponement Rule) to postpone the earliest compliance date to November 1, 2020 for the BATW requirements while it reconsiders the ELG rule. The Postponement Rule left unchanged the latest ELG rule compliance date of December 31, 2023. In November 2019, the EPA Administrator signed the proposed ELG Reconsideration Rule to revise the treatment technology requirements related to BATW at existing facilities. The EPA also proposed a provision that exempts facility owners from the new BATW requirements for generating units that are retired by December 31, 2028. We expect the rule to be finalized in late 2020. In the meantime, we are currently evaluating what impact, if any, the proposed rule would have on our estimated compliance cost. Land Quality Manufactured Gas Plant Remediation We have identified sites at which we 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. We 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 for manufactured gas plant sites: (in millions) June 30, 2020 December 31, 2019 Regulatory assets $ 112.8 $ 113.5 Reserves for future environmental remediation 83.8 83.8 Consent Decrees Weston and Pulliam Power Plants In November 2009, the EPA issued an NOV to us, which alleged violations of the CAA's New Source Review requirements relating to certain projects completed at the Weston and Pulliam power plants from 1994 to 2009. 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 Eastern District of Wisconsin in March 2013. With the retirement of Pulliam Units 7 and 8 in October 2018, we completed the mitigation projects required by the Consent Decree and received a completeness letter from the EPA in October 2018. We are working with the EPA on a closeout process for the Consent Decree. Joint Ownership Power Plants – Columbia and Edgewater In December 2009, the EPA issued an 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 us. The NOV alleged violations of the CAA's New Source Review requirements related to certain projects completed at those plants. We, 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, the Edgewater 4 generating unit was retired in September 2018. Enforcement and Litigation Matters We 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 impact on our financial condition or results of operations. |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 6 Months Ended |
Jun. 30, 2020 | |
Supplemental Cash Flow Information [Abstract] | |
SUPPLEMENTAL CASH FLOW INFORMATION | SUPPLEMENTAL CASH FLOW INFORMATION Six Months Ended June 30 (in millions) 2020 2019 Cash paid for interest, net of amount capitalized $ 32.0 $ 30.4 Cash paid for income taxes, net — 9.4 Significant non-cash investing and financing transactions: Accounts payable related to construction costs 33.1 31.3 |
REGULATORY ENVIRONMENT
REGULATORY ENVIRONMENT | 6 Months Ended |
Jun. 30, 2020 | |
Regulated Operations [Abstract] | |
REGULATORY ENVIRONMENT | REGULATORY ENVIRONMENT Coronavirus Disease – 2019 The global outbreak of COVID-19 was declared a pandemic by the WHO and the CDC. COVID-19 has spread globally, including throughout the United States and, in turn, our service territory. In response to the COVID-19 pandemic, Wisconsin declared a public health emergency and issued a shelter-in-place order, which has since been lifted. On March 24, 2020, the PSCW issued two orders regarding certain actions to be taken for purposes of ensuring that essential utility services were, and continue to be, available to our customers. The first order required all public utilities in the state of Wisconsin, including us, to temporarily suspend disconnections, the assessment of late fees, and deposit requirements for all customer classes. In addition, it required utilities to reconnect customers that were previously disconnected, offer deferred payment arrangements to all customers, and streamline the application process for customers applying for utility service. In the second order issued on March 24, 2020, the PSCW authorized Wisconsin utilities to defer expenditures and certain foregone revenues resulting from compliance with the first order, and expenditures as otherwise incurred to ensure safe, reliable, and affordable access to utility services during the declared public health emergency. The PSCW has affirmed that this authorization for deferral includes the incremental increase in uncollectible expense above what is currently being recovered in rates. As we already have a cost recovery mechanism in place to recover uncollectible expense for residential customers, this new deferral will only impact the recovery of uncollectible expense for our commercial and industrial customers. The PSCW will review the recoverability and examine the prudency of any deferred amounts in future rate proceedings. As of June 30, 2020, our deferrals related to the COVID-19 pandemic were not significant. On June 26, 2020, the PSCW issued a written order providing a timeline for the lifting of the temporary provisions required in the initial March 24, 2020 order. Utilities were allowed to disconnect commercial and industrial customers and require deposits for new service as of July 25, 2020 and July 31, 2020, respectively. Additionally, utilities were authorized to reinstate late fees except for the period between the first order and this supplemental order. Utilities can elect to continue to waive all late fees until the end of 2020 or until they are able to implement the changes necessary to prevent late fees from being assessed on past due balances resulting from services provided during the declared health emergency. We are still currently waiving late fees. Utilities will also not be required to offer deferred payment arrangements to all customers after August 15, 2020. On July 24, 2020, the PSCW extended the moratorium on disconnections of residential customers until September 1, 2020. 2020 and 2021 Rates In March 2019, we filed an application with the PSCW to increase our retail electric and natural gas rates, effective January 1, 2020. In August 2019, we filed an application with the PSCW for approval of a settlement agreement entered into with certain intervenors to resolve several outstanding issues in our rate case. In December 2019, the PSCW issued a written order that approved the settlement agreement without material modification and addressed the remaining outstanding issues that were not included in the settlement agreement. The new rates became effective January 1, 2020. The final order reflects the following: 2020 Effective rate increase Electric (1) (2) $ 15.8 million / 1.6% Gas (3) $ 4.3 million / 1.4% ROE 10.0% Common equity component average on a financial basis 52.5% (1) Amount is net of certain deferred tax benefits from the Tax Legislation that were utilized to reduce near-term rate impacts to our customers. The rate order reflects the majority of the unprotected deferred tax benefits from the Tax Legislation being amortized over two years. Approximately $11 million of tax benefits are being amortized in 2020 and approximately $39 million will be amortized in 2021. Unprotected deferred tax benefits by their nature are eligible to be returned to customers in a manner and timeline determined to be appropriate by the PSCW. (2) The rate order is net of $21 million of refunds related to our 2018 earnings sharing mechanism. These refunds will be made to customers evenly over two years, with half being returned in 2020 and the remainder in 2021. (3) Amount is net of certain deferred tax benefits from the Tax Legislation that were utilized to reduce near-term rate impacts to our customers. The rate order reflects all of the unprotected deferred tax benefits from the Tax Legislation being amortized evenly over four years, which results in approximately $5 million of previously deferred tax benefits being amortized each year. Unprotected deferred tax benefits by their nature are eligible to be returned to customers in a manner and timeline determined to be appropriate by the PSCW. Our rate order allows us to collect the previously deferred revenue requirement for ReACT™ costs above the authorized $275.0 million level. The total cost of the ReACT™ project was $342 million. This regulatory asset will be collected from customers over eight years. We will continue having an earnings sharing mechanism through 2021. The earnings sharing mechanism was modified from its previous structure to one that is consistent with other Wisconsin investor-owned utilities. Under the new earnings sharing mechanism, if we earn above our authorized ROE: (i) we retain 100.0% of earnings for the first 25 basis points above the authorized ROE; (ii) 50.0% of the next 50 basis points is refunded to customers; and (iii) 100.0% of any remaining excess earnings is refunded to customers. In addition, the rate order also requires us to maintain residential and small commercial electric and natural gas customer fixed charges at previously authorized rates and to maintain the status quo for our electric market-based rate programs for large industrial customers through 2021. 2018 and 2019 Rates During April 2017, we, along with WE and WG, filed an application with the PSCW for approval of a settlement agreement we made with several of our commercial and industrial customers regarding 2018 and 2019 base rates. In September 2017, the PSCW issued an order that approved the settlement agreement, which froze base rates through 2019 for our electric and natural gas customers. Based on the PSCW order, our authorized ROE remained at 10.0% and our capital cost structure remained unchanged through 2019. In addition to freezing base rates, the settlement agreement extended and expanded the electric real-time market pricing program options for large commercial and industrial customers. Additionally, the agreement allowed us to extend, through 2019, the deferral for the revenue requirement of ReACT™ costs above the authorized $275.0 million and other deferrals related to our electric real-time market pricing program and network transmission expenses. Pursuant to the settlement agreement, we also agreed to adopt, beginning in 2018, the earnings sharing mechanism that had been in place for WE and WG since January 2016, and agreed to keep the mechanism in place through 2019. Under this earnings sharing |
NEW ACCOUNTING PRONOUCEMENTS
NEW ACCOUNTING PRONOUCEMENTS | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS Cloud Computing In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The standard allows entities who are customers in hosting arrangements that are service contracts to apply the existing internal-use software guidance to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The guidance specifies classification for capitalizing implementation costs and related amortization expense within the financial statements and requires additional disclosures. The adoption of ASU 2018-15, effective January 1, 2020, did not have a significant impact on our financial statements and related disclosures. Disclosure Requirements for Defined Benefit Plans In August 2018, the FASB issued ASU 2018-14, Disclosure Framework: Changes to the Disclosure Requirements for Defined Benefit Plans. The pronouncement modifies the disclosure requirements for defined benefit pension and OPEB plans. The guidance removes disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant. The modifications affect annual period disclosures and must be applied on a retrospective basis to all periods presented. The guidance will be effective for annual reporting periods ending after December 15, 2020, with early adoption permitted. We are currently evaluating the effects of this pronouncement on the notes to our financial statements. Simplifying the Accounting for Income Taxes In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. The new standard removes certain exceptions for performing intraperiod allocation and calculating income taxes in interim periods and also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The guidance will be effective for annual and interim periods beginning after December 15, 2020. We plan to adopt the new standard effective January 1, 2021, and do not expect the adoption to have a material impact on our financial statements and related disclosures. Reference Rate Reform In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the impact this guidance may have on our financial statements and related disclosures. |
GENERAL INFORMATION (Policies)
GENERAL INFORMATION (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting policies | |
Basis of accounting | As used in these notes, the term "financial statements" refers to the condensed financial statements. This includes the income statements, balance sheets, statements of cash flows, and statements of equity, unless otherwise noted. In this report, when we refer to "the Company," "us," "we," "our," or "ours," we are referring to Wisconsin Public Service Corporation. 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 financial statements and footnotes in our Annual Report on Form 10-K for the year ended December 31, 2019. 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 and six months ended June 30, 2020 are not necessarily indicative of expected results for 2020 due to seasonal variations and other factors, including any continuing financial impacts from the COVID-19 pandemic. In management's opinion, we have included all adjustments, normal and recurring in nature, necessary for a fair presentation of our financial results. |
Credit losses | Effective January 1, 2020, we adopted FASB ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, using the modified retrospective transition method. This ASU amends the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables. The amendment requires entities to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of loss. The cumulative effect of adopting this standard was not significant to our financial statements. Our exposure to credit losses is related to our accounts receivable and unbilled revenue balances, which are generated from the sale of electricity and natural gas by our regulated utility operations. Our regulated utility operations are included in our utility segment. No accounts receivable and unbilled revenue balances were reported in the other segment at June 30, 2020. We evaluate the collectability of our accounts receivable and unbilled revenue balances considering a combination of factors. For some of our larger customers and also in circumstances where we become aware of a specific customer's inability to meet its financial obligations to us, we record a specific allowance for credit losses against amounts due in order to reduce the net recognized receivable to the amount we reasonably believe will be collected. For all other customers, we use the accounts receivable aging method to calculate an allowance for credit losses. Using this method, we classify accounts receivable into different aging buckets and calculate a reserve percentage for each aging bucket based upon historical loss rates. The calculated reserve percentages are updated on at least an annual basis, in order to ensure recent macroeconomic, political, and regulatory trends are captured in the calculation, to the extent possible. Risks identified that we do not believe are reflected in the calculated reserve percentages, are assessed on a quarterly basis to determine whether further adjustments are required. The increase recorded to our allowance for credit losses at June 30, 2020, specific to the economic risks associated with the COVID-19 pandemic not already reflected in our calculated reserve, was not significant. We will continue to monitor the economic impacts of COVID-19 and the resulting effects that these impacts may have on the ability of our customers to pay their energy bills. |
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 price 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 derivative 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. |
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. Our approach is non-speculative and designed to mitigate risk. Our regulated hedging programs are approved by the PSCW. 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, the PSCW allows the effects of fair value accounting to be offset to regulatory assets and liabilities. |
New accounting pronouncements | Cloud Computing In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The standard allows entities who are customers in hosting arrangements that are service contracts to apply the existing internal-use software guidance to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The guidance specifies classification for capitalizing implementation costs and related amortization expense within the financial statements and requires additional disclosures. The adoption of ASU 2018-15, effective January 1, 2020, did not have a significant impact on our financial statements and related disclosures. Disclosure Requirements for Defined Benefit Plans In August 2018, the FASB issued ASU 2018-14, Disclosure Framework: Changes to the Disclosure Requirements for Defined Benefit Plans. The pronouncement modifies the disclosure requirements for defined benefit pension and OPEB plans. The guidance removes disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant. The modifications affect annual period disclosures and must be applied on a retrospective basis to all periods presented. The guidance will be effective for annual reporting periods ending after December 15, 2020, with early adoption permitted. We are currently evaluating the effects of this pronouncement on the notes to our financial statements. Simplifying the Accounting for Income Taxes In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. The new standard removes certain exceptions for performing intraperiod allocation and calculating income taxes in interim periods and also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The guidance will be effective for annual and interim periods beginning after December 15, 2020. We plan to adopt the new standard effective January 1, 2021, and do not expect the adoption to have a material impact on our financial statements and related disclosures. Reference Rate Reform In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the impact this guidance may have on our financial statements and related disclosures. |
OPERATING REVENUES (Tables)
OPERATING REVENUES (Tables) - Utility segment | 6 Months Ended |
Jun. 30, 2020 | |
Disaggregation of Operating Revenues | |
Operating revenues disaggregated by revenue source | The following tables present our operating revenues disaggregated by revenue source for our utility segment. We do not have any revenues associated with our other segment. We disaggregate revenues into categories that depict how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors. Revenues are further disaggregated by electric and natural gas operations and then by customer class. Each customer class within our electric and natural gas operations have different expectations of service, energy and demand requirements, and can be impacted differently by regulatory activities within their jurisdictions. Wisconsin Public Service Corporation Three Months Ended June 30 Six Months Ended June 30 (in millions) 2020 2019 2020 2019 Electric utility $ 265.0 $ 264.6 $ 536.3 $ 541.6 Natural gas utility 49.3 56.4 146.2 174.0 Total revenues from contracts with customers 314.3 321.0 682.5 715.6 Other operating revenues (1.5) (0.1) (0.3) 1.1 Total operating revenues $ 312.8 $ 320.9 $ 682.2 $ 716.7 |
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: Electric Utility Operating Revenues Three Months Ended June 30 Six Months Ended June 30 (in millions) 2020 2019 2020 2019 Residential $ 98.4 $ 82.7 $ 199.5 $ 177.7 Small commercial and industrial 80.7 85.3 164.0 169.4 Large commercial and industrial 51.1 57.7 102.3 109.2 Other 2.1 2.1 4.2 4.2 Total retail revenues 232.3 227.8 470.0 460.5 Wholesale 23.1 24.2 45.5 53.6 Resale 5.3 6.9 10.6 16.4 Other utility revenues 4.3 5.7 10.2 11.1 Total electric utility operating revenues $ 265.0 $ 264.6 $ 536.3 $ 541.6 |
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: Natural Gas Utility Operating Revenues Three Months Ended June 30 Six Months Ended June 30 (in millions) 2020 2019 2020 2019 Residential $ 29.0 $ 30.7 $ 87.4 $ 104.4 Commercial and industrial 13.0 16.0 46.1 62.3 Total retail revenues 42.0 46.7 133.5 166.7 Transport 4.2 3.9 10.2 9.2 Other utility revenues (1) 3.1 5.8 2.5 (1.9) Total natural gas utility operating revenues $ 49.3 $ 56.4 $ 146.2 $ 174.0 (1) Includes amounts collected from (refunded to) customers for purchased gas adjustment costs. |
Other operating revenues | |
Disaggregation of Operating Revenues | |
Operating revenues disaggregated by revenue source | Other operating revenues consist primarily of the following: Three Months Ended June 30 Six Months Ended June 30 (in millions) 2020 2019 2020 2019 Alternative revenues (1) $ (1.6) $ (1.0) $ (1.4) $ (0.8) Late payment charges (2) — 0.8 1.0 1.8 Other 0.1 0.1 0.1 0.1 Total other operating revenues $ (1.5) $ (0.1) $ (0.3) $ 1.1 (1) 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 wholesale customers subject to true-up, as discussed in Note 1(d), Operating Revenues, in our 2019 Annual Report on Form 10-K. (2) The reduction in late payment charges is a result of a regulatory order from the PSCW in response to the COVID-19 pandemic, which includes the suspension of late payment charges during a designated time period. See Note 17, Regulatory Environment, for more information. |
CREDIT LOSSES (Tables)
CREDIT LOSSES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Credit Loss [Abstract] | |
Schedule of gross receivables and related allowances for credit losses | We have included a table below that shows our gross third-party receivable balances and related allowance for credit losses. (in millions) June 30, 2020 Accounts receivable and unbilled revenues $ 197.3 Allowance for credit losses 10.0 Accounts receivable and unbilled revenues, net (1) $ 187.3 Total accounts receivable, net – past due greater than 90 days (1) $ 11.2 Past due greater than 90 days – collection risk mitigated by regulatory mechanisms (1) 89.5 % |
Rollforward of the allowances for credit losses | A rollforward of the allowance for credit losses is included below: (in millions) Six Months Ended June 30, 2020 Balance at December 31, 2019 $ 4.2 Provision for credit losses 5.2 Provision for credit losses deferred for future recovery or refund 3.3 Write-offs charged against the allowance (4.6) Recoveries of amounts previously written off 1.9 Balance at June 30, 2020 $ 10.0 |
REGULATORY ASSETS AND LIABILI_2
REGULATORY ASSETS AND LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Regulatory Assets and Liabilities Disclosure [Abstract] | |
Schedule of regulatory assets | (in millions) June 30, 2020 December 31, 2019 Regulatory assets Pension and OPEB costs $ 142.5 $ 151.8 Environmental remediation costs 112.8 113.5 Plant retirements 55.6 55.3 Income tax related items 42.3 38.9 ReACT™ 19.5 20.8 Asset retirement obligations 16.2 8.4 Forward Wind Energy Center 14.1 17.9 Termination of a tolling agreement with Fox Energy Company LLC 7.2 9.9 Other, net 20.5 21.4 Total regulatory assets $ 430.7 $ 437.9 |
Schedule of regulatory liabilities | (in millions) June 30, 2020 December 31, 2019 Regulatory liabilities Income tax related items $ 405.9 $ 416.7 Removal costs 196.9 201.8 Pension and OPEB benefits 99.2 100.5 Earnings sharing mechanism 37.0 42.0 Energy costs refundable through rate adjustments 21.8 20.0 Electric transmission costs 11.8 3.7 Other, net 11.7 11.5 Total regulatory liabilities $ 784.3 $ 796.2 Balance sheet presentation Other current liabilities $ 10.9 $ 13.7 Regulatory liabilities 773.4 782.5 Total regulatory liabilities $ 784.3 $ 796.2 |
SHORT-TERM DEBT AND LINES OF _2
SHORT-TERM DEBT AND LINES OF CREDIT (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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: (in millions, except percentages) June 30, 2020 December 31, 2019 Commercial paper Amount outstanding $ 16.5 $ 91.5 Weighted-average interest rate on amounts outstanding 0.15 % 1.91 % |
Schedule of revolving credit facility and remaining available capacity | The information in the table below relates to our revolving credit facility used to support our commercial paper borrowing program, including available capacity under this facility: (in millions) Maturity June 30, 2020 Revolving credit facility October 2022 $ 400.0 Less: Letters of credit issued inside credit facility $ 1.3 Commercial paper outstanding 16.5 Available capacity under existing credit facility $ 382.2 |
MATERIALS, SUPPLIES, AND INVE_2
MATERIALS, SUPPLIES, AND INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Our inventory consisted of: (in millions) June 30, 2020 December 31, 2019 Materials and supplies $ 51.9 $ 50.1 Fossil fuel 34.8 36.1 Natural gas in storage 12.7 20.2 Total $ 99.4 $ 106.4 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of effective income tax rate reconciliation | The provision for income taxes 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: Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 (in millions) Amount Effective Tax Rate Amount Effective Tax Rate Statutory federal income tax $ 12.6 21.0 % $ 11.4 21.0 % State income taxes net of federal tax benefit 3.6 6.0 % 3.3 6.1 % Federal excess deferred tax amortization – Wisconsin unprotected (2.7) (4.6) % — — % Federal excess deferred tax amortization (1.1) (1.9) % (1.2) (2.2) % Other (0.3) (0.3) % (0.6) (1.2) % Total income tax expense $ 12.1 20.2 % $ 12.9 23.7 % Six months ended June 30, 2020 Six months ended June 30, 2019 (in millions) Amount Effective Tax Rate Amount Effective Tax Rate Statutory federal income tax $ 30.4 21.0 % $ 22.7 21.0 % State income taxes net of federal tax benefit 8.8 6.1 % 6.7 6.2 % Federal excess deferred tax amortization – Wisconsin unprotected (6.7) (4.7) % — — % Federal excess deferred tax amortization (2.7) (1.9) % (2.5) (2.3) % Other (1.0) (0.6) % (1.1) (1.1) % Total income tax expense $ 28.8 19.9 % $ 25.8 23.8 % |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of 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: June 30, 2020 (in millions) Level 1 Level 2 Level 3 Total Derivative assets Natural gas contracts $ 1.3 $ 0.3 $ — $ 1.6 FTRs — — 3.4 3.4 Coal contracts — 0.2 — 0.2 Total derivative assets $ 1.3 $ 0.5 $ 3.4 $ 5.2 Derivative liabilities Natural gas contracts $ 2.0 $ 0.2 $ — $ 2.2 Coal contracts — 0.2 — 0.2 Total derivative liabilities $ 2.0 $ 0.4 $ — $ 2.4 December 31, 2019 (in millions) Level 1 Level 2 Level 3 Total Derivative assets Natural gas contracts $ 0.2 $ 0.2 $ — $ 0.4 FTRs — — 1.3 1.3 Coal contracts — 0.4 — 0.4 Total derivative assets $ 0.2 $ 0.6 $ 1.3 $ 2.1 Derivative liabilities Natural gas contracts $ 3.0 $ 0.2 $ — $ 3.2 Coal contracts — 0.1 — 0.1 Total derivative liabilities $ 3.0 $ 0.3 $ — $ 3.3 |
Reconciliation of changes in the 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: Three Months Ended June 30 Six Months Ended June 30 (in millions) 2020 2019 2020 2019 Balance at the beginning of the period $ 0.5 $ 1.1 $ 1.3 $ 3.0 Purchases 4.0 5.4 4.0 5.4 Settlements (1.1) (1.9) (1.9) (3.8) Balance at the end of the period $ 3.4 $ 4.6 $ 3.4 $ 4.6 |
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 were not recorded at fair value: June 30, 2020 December 31, 2019 (in millions) Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt (1) $ 1,612.8 $ 1,881.4 $ 1,612.1 $ 1,793.5 (1) The carrying amount of long-term debt excludes finance lease obligations of $30.7 million at both June 30, 2020 and December 31, 2019. |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of derivative assets and liabilities | The following table shows our derivative assets and derivative liabilities, along with their classification on our balance sheets. None of our derivatives are designated as hedging instruments. June 30, 2020 December 31, 2019 (in millions) Derivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities Other current Natural gas contracts $ 1.3 $ 2.2 $ 0.4 $ 3.1 FTRs 3.4 — 1.3 — Coal contracts 0.1 0.1 0.2 — Total other current (1) 4.8 2.3 1.9 3.1 Other long-term Natural gas contracts 0.3 — — 0.1 Coal contracts 0.1 0.1 0.2 0.1 Total other long-term (1) 0.4 0.1 0.2 0.2 Total $ 5.2 $ 2.4 $ 2.1 $ 3.3 (1) 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. |
Schedule of estimated notional volumes and realized gains (losses) | Realized gains (losses) on derivatives are primarily recorded in cost of sales on the income statements. Our estimated notional sales volumes and realized gains (losses) were as follows: Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 (in millions) Volumes Gains (Losses) Volumes Gains (Losses) Natural gas contracts 8.5 Dth $ (2.7) 8.7 Dth $ (0.7) FTRs 2.0 MWh 0.1 2.4 MWh 2.5 Total $ (2.6) $ 1.8 Six months ended June 30, 2020 Six months ended June 30, 2019 (in millions) Volumes Gains (Losses) Volumes Gains (Losses) Natural gas contracts 21.2 Dth $ (7.1) 20.8 Dth $ (1.2) FTRs 3.9 MWh 0.5 5.0 MWh 3.2 Total $ (6.6) $ 2.0 |
Schedule of net derivative instruments | The following table shows derivative assets and derivative liabilities if derivative instruments by counterparty were presented net on our balance sheets: June 30, 2020 December 31, 2019 (in millions) Derivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities Gross amount recognized on the balance sheet $ 5.2 $ 2.4 $ 2.1 $ 3.3 Gross amount not offset on the balance sheet (1.3) (2.0) (1) (0.3) (3.1) (2) Net amount $ 3.9 $ 0.4 $ 1.8 $ 0.2 (1) Includes cash collateral posted of $0.7 million. (2) Includes cash collateral posted of $2.8 million. |
EMPLOYEE BENEFITS (Tables)
EMPLOYEE BENEFITS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Retirement Benefits [Abstract] | |
Schedule of net benefit cost (credit) | The following tables show the components of net periodic benefit cost (credit) for our benefit plans. Pension Benefits Three Months Ended June 30 Six Months Ended June 30 (in millions) 2020 2019 2020 2019 Service cost $ 2.3 $ 2.0 $ 4.9 $ 4.3 Interest cost 6.4 7.0 12.6 14.1 Expected return on plan assets (12.2) (12.0) (24.3) (24.0) Amortization of net actuarial loss 6.1 4.5 11.9 8.9 Net periodic benefit cost $ 2.6 $ 1.5 $ 5.1 $ 3.3 OPEB Benefits Three Months Ended June 30 Six Months Ended June 30 (in millions) 2020 2019 2020 2019 Service cost $ 1.0 $ 1.0 $ 2.2 $ 2.1 Interest cost 1.3 1.7 2.6 3.3 Expected return on plan assets (4.5) (4.2) (9.1) (8.3) Amortization of prior service credit (2.7) (2.8) (5.3) (5.7) Amortization of net actuarial (gain) loss (0.4) 0.4 (0.7) 0.8 Net periodic benefit credit $ (5.3) $ (3.9) $ (10.3) $ (7.8) |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of information related to reportable segments | The following tables show summarized financial information for the three and six months ended June 30, 2020 and 2019, related to our reportable segments: (in millions) Utility Other Wisconsin Public Service Corporation Three Months Ended June 30, 2020 Operating revenues $ 312.8 $ — $ 312.8 Other operation and maintenance 99.3 — 99.3 Depreciation and amortization 43.2 — 43.2 Operating income 67.4 — 67.4 Other income, net 8.0 0.4 8.4 Interest expense 16.0 — 16.0 (in millions) Utility Other Wisconsin Public Service Corporation Three Months Ended June 30, 2019 Operating revenues $ 320.9 $ — $ 320.9 Other operation and maintenance 96.9 — 96.9 Depreciation and amortization 40.8 — 40.8 Operating income 59.8 — 59.8 Other income, net 9.5 0.4 9.9 Interest expense 15.3 — 15.3 (in millions) Utility Other Wisconsin Public Service Corporation Six months ended June 30, 2020 Operating revenues 682.2 $ — $ 682.2 Other operation and maintenance 191.1 — 191.1 Depreciation and amortization 86.2 — 86.2 Operating income 160.3 — 160.3 Other income, net 15.9 0.8 16.7 Interest Expense 32.3 — 32.3 (in millions) Utility Other Wisconsin Public Service Corporation Six months ended June 30, 2019 Operating revenues $ 716.7 $ — $ 716.7 Other operation and maintenance 201.3 — 201.3 Depreciation and amortization 81.1 — 81.1 Operating income 120.4 — 120.4 Other income, net 18.5 0.7 19.2 Interest expense 31.4 — 31.4 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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 for manufactured gas plant sites: (in millions) June 30, 2020 December 31, 2019 Regulatory assets $ 112.8 $ 113.5 Reserves for future environmental remediation 83.8 83.8 |
SUPPLEMENTAL CASH FLOW INFORM_2
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of supplemental cash flow information | Six Months Ended June 30 (in millions) 2020 2019 Cash paid for interest, net of amount capitalized $ 32.0 $ 30.4 Cash paid for income taxes, net — 9.4 Significant non-cash investing and financing transactions: Accounts payable related to construction costs 33.1 31.3 |
REGULATORY ENVIRONMENT (Tables)
REGULATORY ENVIRONMENT (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Regulated Operations [Abstract] | |
Schedule of decisions in regulatory order | The final order reflects the following: 2020 Effective rate increase Electric (1) (2) $ 15.8 million / 1.6% Gas (3) $ 4.3 million / 1.4% ROE 10.0% Common equity component average on a financial basis 52.5% (1) Amount is net of certain deferred tax benefits from the Tax Legislation that were utilized to reduce near-term rate impacts to our customers. The rate order reflects the majority of the unprotected deferred tax benefits from the Tax Legislation being amortized over two years. Approximately $11 million of tax benefits are being amortized in 2020 and approximately $39 million will be amortized in 2021. Unprotected deferred tax benefits by their nature are eligible to be returned to customers in a manner and timeline determined to be appropriate by the PSCW. (2) The rate order is net of $21 million of refunds related to our 2018 earnings sharing mechanism. These refunds will be made to customers evenly over two years, with half being returned in 2020 and the remainder in 2021. (3) Amount is net of certain deferred tax benefits from the Tax Legislation that were utilized to reduce near-term rate impacts to our customers. The rate order reflects all of the unprotected deferred tax benefits from the Tax Legislation being amortized evenly over four years, which results in approximately $5 million of previously deferred tax benefits being amortized each year. Unprotected deferred tax benefits by their nature are eligible to be returned to customers in a manner and timeline determined to be appropriate by the PSCW. |
GENERAL INFORMATION - GENERAL (
GENERAL INFORMATION - GENERAL (Details) | Jun. 30, 2020customer |
Electric | |
Product Information [Line Items] | |
Number Of Customers | 450,800 |
Natural gas | |
Product Information [Line Items] | |
Number Of Customers | 333,700 |
OPERATING REVENUES (Details)
OPERATING REVENUES (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Operating Revenues | ||||
Operating revenues | $ 312.8 | $ 320.9 | $ 682.2 | $ 716.7 |
Utility segment | ||||
Disaggregation of Operating Revenues | ||||
Operating revenues | 312.8 | 320.9 | 682.2 | 716.7 |
Utility segment | Other operating revenues | ||||
Disaggregation of Operating Revenues | ||||
Other operating revenues | (1.5) | (0.1) | (0.3) | 1.1 |
Utility segment | Transferred over time | Revenues from contracts with customers | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | 314.3 | 321 | 682.5 | 715.6 |
Utility segment | Electric | Transferred over time | Revenues from contracts with customers | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | 265 | 264.6 | 536.3 | 541.6 |
Utility segment | Natural gas | Transferred over time | Revenues from contracts with customers | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | $ 49.3 | $ 56.4 | $ 146.2 | $ 174 |
OPERATING REVENUES ELECTRIC UTI
OPERATING REVENUES ELECTRIC UTILITY OPERATING REVENUES (Details) - Revenues from contracts with customers - Utility segment - Transferred over time - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | $ 314.3 | $ 321 | $ 682.5 | $ 715.6 |
Electric | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | 265 | 264.6 | 536.3 | 541.6 |
Electric | Total retail | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | 232.3 | 227.8 | 470 | 460.5 |
Electric | Residential | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | 98.4 | 82.7 | 199.5 | 177.7 |
Electric | Small commercial and industrial | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | 80.7 | 85.3 | 164 | 169.4 |
Electric | Large commercial and industrial customers | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | 51.1 | 57.7 | 102.3 | 109.2 |
Electric | Other | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | 2.1 | 2.1 | 4.2 | 4.2 |
Electric | Wholesale | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | 23.1 | 24.2 | 45.5 | 53.6 |
Electric | Resale | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | 5.3 | 6.9 | 10.6 | 16.4 |
Electric | Other utility | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | $ 4.3 | $ 5.7 | $ 10.2 | $ 11.1 |
OPERATING REVENUES NATURAL GAS
OPERATING REVENUES NATURAL GAS UTILITY OPERATING REVENUES (Details) - Revenues from contracts with customers - Utility segment - Transferred over time - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | $ 314.3 | $ 321 | $ 682.5 | $ 715.6 |
Natural gas | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | 49.3 | 56.4 | 146.2 | 174 |
Natural gas | Total retail | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | 42 | 46.7 | 133.5 | 166.7 |
Natural gas | Residential | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | 29 | 30.7 | 87.4 | 104.4 |
Natural gas | Commercial and industrial | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | 13 | 16 | 46.1 | 62.3 |
Natural gas | Transport | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | 4.2 | 3.9 | 10.2 | 9.2 |
Natural gas | Other utility | ||||
Disaggregation of Operating Revenues | ||||
Revenues from contracts with customers | $ 3.1 | $ 5.8 | $ 2.5 | $ (1.9) |
OPERATING REVENUES OTHER OPERAT
OPERATING REVENUES OTHER OPERATING REVENUES (Details) - Utility segment - Other operating revenues - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Operating Revenues | ||||
Other operating revenues | $ (1.5) | $ (0.1) | $ (0.3) | $ 1.1 |
Alternative revenues | ||||
Disaggregation of Operating Revenues | ||||
Other operating revenues | (1.6) | (1) | (1.4) | (0.8) |
Late payment charges | ||||
Disaggregation of Operating Revenues | ||||
Other operating revenues | 0 | 0.8 | 1 | 1.8 |
Other | ||||
Disaggregation of Operating Revenues | ||||
Other operating revenues | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 |
CREDIT LOSSES - GROSS RECEIVABL
CREDIT LOSSES - GROSS RECEIVABLES AND RELATED ALLOWANCES (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Utility segment | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable and unbilled revenues | $ 197.3 | |
Allowance for credit losses | 10 | $ 4.2 |
Accounts receivable and unbilled revenues, net | 187.3 | |
Total accounts receivable, net - past due greater than 90 days | $ 11.2 | |
Past due greater than 90 days - collection risk mitigated by regulatory mechanisms | 89.50% | |
Amount of net accounts receivable with regulatory protections | $ 65.4 | |
Percent of net accounts receivable with regulatory protections | 34.90% | |
Other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable and unbilled revenues | $ 0 |
CREDIT LOSSES - ROLLFORWARD OF
CREDIT LOSSES - ROLLFORWARD OF ALLOWANCES (Details) - Utility segment $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance at December 31, 2019 | $ 4.2 |
Provision for credit losses | 5.2 |
Provision for credit losses deferred for future recovery or refund | 3.3 |
Write-offs charged against the allowance | (4.6) |
Recovery of amounts previously written off | 1.9 |
Balance at June 30, 2020 | $ 10 |
REGULATORY ASSETS AND LIABILI_3
REGULATORY ASSETS AND LIABILITIES - REGULATORY ASSETS (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Regulatory assets | ||
Regulatory assets | $ 430.7 | $ 437.9 |
Pension and OPEB costs | ||
Regulatory assets | ||
Regulatory assets | 142.5 | 151.8 |
Environmental remediation costs | ||
Regulatory assets | ||
Regulatory assets | 112.8 | 113.5 |
Plant retirements | ||
Regulatory assets | ||
Regulatory assets | 55.6 | 55.3 |
Income tax related items | ||
Regulatory assets | ||
Regulatory assets | 42.3 | 38.9 |
ReACT | ||
Regulatory assets | ||
Regulatory assets | 19.5 | 20.8 |
Asset retirement obligations | ||
Regulatory assets | ||
Regulatory assets | 16.2 | 8.4 |
Forward Wind Energy Center | ||
Regulatory assets | ||
Regulatory assets | 14.1 | 17.9 |
Termination of a tolling agreement with Fox Energy Company LLC | ||
Regulatory assets | ||
Regulatory assets | 7.2 | 9.9 |
Other, net | ||
Regulatory assets | ||
Regulatory assets | $ 20.5 | $ 21.4 |
REGULATORY ASSETS AND LIABILI_4
REGULATORY ASSETS AND LIABILITIES - REGULATORY LIABILITIES (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Regulatory liabilities | ||
Other current liabilities | $ 10.9 | $ 13.7 |
Regulatory liabilities | 773.4 | 782.5 |
Total regulatory liabilities | 784.3 | 796.2 |
Income tax related items | ||
Regulatory liabilities | ||
Total regulatory liabilities | 405.9 | 416.7 |
Removal costs | ||
Regulatory liabilities | ||
Total regulatory liabilities | 196.9 | 201.8 |
Pension and OPEB benefits | ||
Regulatory liabilities | ||
Total regulatory liabilities | 99.2 | 100.5 |
Earnings sharing mechanism | ||
Regulatory liabilities | ||
Total regulatory liabilities | 37 | 42 |
Energy costs refundable through rate adjustments | ||
Regulatory liabilities | ||
Total regulatory liabilities | 21.8 | 20 |
Electric transmission costs | ||
Regulatory liabilities | ||
Total regulatory liabilities | 11.8 | 3.7 |
Other, net | ||
Regulatory liabilities | ||
Total regulatory liabilities | $ 11.7 | $ 11.5 |
SHORT-TERM DEBT AND LINES OF _3
SHORT-TERM DEBT AND LINES OF CREDIT - SHORT-TERM BORROWINGS (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Short-term borrowings | ||
Commercial paper outstanding | $ 16.5 | $ 91.5 |
Commercial paper | ||
Short-term borrowings | ||
Commercial paper outstanding | $ 16.5 | $ 91.5 |
Weighted-average interest rate on amounts outstanding | 0.15% | 1.91% |
Average amount outstanding during the period | $ 77.4 | |
Weighted-average interest rate during the period | 1.04% |
SHORT-TERM DEBT AND LINES OF _4
SHORT-TERM DEBT AND LINES OF CREDIT - REVOLVING CREDIT FACILITIES (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Revolving credit facility | ||
Letters of credit issued inside credit facility | $ 1.3 | |
Commercial paper outstanding | 16.5 | $ 91.5 |
Available capacity under existing credit facility | 382.2 | |
Revolving credit facility maturing October 2022 | ||
Revolving credit facility | ||
Revolving credit facility | 400 | |
Commercial paper | ||
Revolving credit facility | ||
Commercial paper outstanding | $ 16.5 | $ 91.5 |
MATERIALS, SUPPLIES, AND INVE_3
MATERIALS, SUPPLIES, AND INVENTORIES (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Materials and supplies | $ 51.9 | $ 50.1 |
Fossil fuel | 34.8 | 36.1 |
Natural gas in storage | 12.7 | 20.2 |
Total | $ 99.4 | $ 106.4 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Effective Income Tax Rate Reconciliation, Amount | ||||
Statutory federal income tax, amount | $ 12.6 | $ 11.4 | $ 30.4 | $ 22.7 |
State income taxes net of federal tax benefit,amount | 3.6 | 3.3 | 8.8 | 6.7 |
Federal excess deferred tax amortization - Wisconsin unprotected, amount | (2.7) | 0 | (6.7) | 0 |
Federal excess deferred tax amortization, amount | (1.1) | (1.2) | (2.7) | (2.5) |
Other, amount | (0.3) | (0.6) | (1) | (1.1) |
Total income tax expense | $ 12.1 | $ 12.9 | $ 28.8 | $ 25.8 |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||||
Statutory federal income tax, percent | 21.00% | 21.00% | 21.00% | 21.00% |
State income taxes net of federal tax benefit, percent | 6.00% | 6.10% | 6.10% | 6.20% |
Federal excess deferred tax amortization - WI Unprotected, percent | (4.60%) | 0.00% | (4.70%) | 0.00% |
Federal excess deferred tax amortization, percent | (1.90%) | (2.20%) | (1.90%) | (2.30%) |
Other, percent | (0.30%) | (1.20%) | (0.60%) | (1.10%) |
Total income tax expense, percent | 20.20% | 23.70% | 19.90% | 23.80% |
INCOME TAXES - WI 2020 AND 2021
INCOME TAXES - WI 2020 AND 2021 RATES (Details) - Public Service Commission of Wisconsin (PSCW) - 2020 and 2021 rates - Tax Cuts and Jobs Act of 2017 | 1 Months Ended |
Dec. 31, 2019 | |
Electric rates | |
Income Taxes [Line Items] | |
Amortization period | 2 years |
Natural gas rates | |
Income Taxes [Line Items] | |
Amortization period | 4 years |
FAIR VALUE MEASUREMENTS - ASSET
FAIR VALUE MEASUREMENTS - ASSETS AND LIABILITIES MEASURED ON A RECURRING BASIS (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Derivative assets | $ 5.2 | $ 2.1 |
Liabilities | ||
Derivative liabilities | 2.4 | 3.3 |
Fair value measurements on a recurring basis | ||
Assets | ||
Derivative assets | 5.2 | 2.1 |
Liabilities | ||
Derivative liabilities | 2.4 | 3.3 |
Fair value measurements on a recurring basis | Level 1 | ||
Assets | ||
Derivative assets | 1.3 | 0.2 |
Liabilities | ||
Derivative liabilities | 2 | 3 |
Fair value measurements on a recurring basis | Level 2 | ||
Assets | ||
Derivative assets | 0.5 | 0.6 |
Liabilities | ||
Derivative liabilities | 0.4 | 0.3 |
Fair value measurements on a recurring basis | Level 3 | ||
Assets | ||
Derivative assets | 3.4 | 1.3 |
Liabilities | ||
Derivative liabilities | 0 | 0 |
Fair value measurements on a recurring basis | Natural gas contracts | ||
Assets | ||
Derivative assets | 1.6 | 0.4 |
Liabilities | ||
Derivative liabilities | 2.2 | 3.2 |
Fair value measurements on a recurring basis | Natural gas contracts | Level 1 | ||
Assets | ||
Derivative assets | 1.3 | 0.2 |
Liabilities | ||
Derivative liabilities | 2 | 3 |
Fair value measurements on a recurring basis | Natural gas contracts | Level 2 | ||
Assets | ||
Derivative assets | 0.3 | 0.2 |
Liabilities | ||
Derivative liabilities | 0.2 | 0.2 |
Fair value measurements on a recurring basis | Natural gas contracts | Level 3 | ||
Assets | ||
Derivative assets | 0 | 0 |
Liabilities | ||
Derivative liabilities | 0 | 0 |
Fair value measurements on a recurring basis | FTRs | ||
Assets | ||
Derivative assets | 3.4 | 1.3 |
Fair value measurements on a recurring basis | FTRs | Level 1 | ||
Assets | ||
Derivative assets | 0 | 0 |
Fair value measurements on a recurring basis | FTRs | Level 2 | ||
Assets | ||
Derivative assets | 0 | 0 |
Fair value measurements on a recurring basis | FTRs | Level 3 | ||
Assets | ||
Derivative assets | 3.4 | 1.3 |
Fair value measurements on a recurring basis | Coal contracts | ||
Assets | ||
Derivative assets | 0.2 | 0.4 |
Liabilities | ||
Derivative liabilities | 0.2 | 0.1 |
Fair value measurements on a recurring basis | Coal contracts | Level 1 | ||
Assets | ||
Derivative assets | 0 | 0 |
Liabilities | ||
Derivative liabilities | 0 | 0 |
Fair value measurements on a recurring basis | Coal contracts | Level 2 | ||
Assets | ||
Derivative assets | 0.2 | 0.4 |
Liabilities | ||
Derivative liabilities | 0.2 | 0.1 |
Fair value measurements on a recurring basis | Coal contracts | Level 3 | ||
Assets | ||
Derivative assets | 0 | 0 |
Liabilities | ||
Derivative liabilities | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - LEVEL
FAIR VALUE MEASUREMENTS - LEVEL 3 RECONCILIATION (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Level 3 rollforward | ||||
Balance at the beginning of the period | $ 0.5 | $ 1.1 | $ 1.3 | $ 3 |
Purchases | 4 | 5.4 | 4 | 5.4 |
Settlements | (1.1) | (1.9) | (1.9) | (3.8) |
Balance at the end of the period | $ 3.4 | $ 4.6 | $ 3.4 | $ 4.6 |
FAIR VALUE MEASUREMENTS - FINAN
FAIR VALUE MEASUREMENTS - FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Carrying amount | ||
Financial instruments | ||
Long-term debt | $ 1,612.8 | $ 1,612.1 |
Finance lease obligations | 30.7 | 30.7 |
Fair value | ||
Financial instruments | ||
Long-term debt | $ 1,881.4 | $ 1,793.5 |
DERIVATIVE INSTRUMENTS - DERIVA
DERIVATIVE INSTRUMENTS - DERIVATIVE ASSETS AND LIABILITIES (Details) $ in Millions | Jun. 30, 2020USD ($)Instruments | Dec. 31, 2019USD ($) |
Derivative assets | ||
Other current derivative assets | $ 4.8 | $ 1.9 |
Other long-term derivative assets | 0.4 | 0.2 |
Total derivative assets | 5.2 | 2.1 |
Derivative liabilities | ||
Other current derivative liabilities | 2.3 | 3.1 |
Other long-term derivative liabilities | 0.1 | 0.2 |
Total derivative liabilities | 2.4 | 3.3 |
Natural gas contracts | ||
Derivative assets | ||
Other current derivative assets | 1.3 | 0.4 |
Other long-term derivative assets | 0.3 | 0 |
Derivative liabilities | ||
Other current derivative liabilities | 2.2 | 3.1 |
Other long-term derivative liabilities | 0 | 0.1 |
FTRs | ||
Derivative assets | ||
Other current derivative assets | 3.4 | 1.3 |
Derivative liabilities | ||
Other current derivative liabilities | 0 | 0 |
Coal contracts | ||
Derivative assets | ||
Other current derivative assets | 0.1 | 0.2 |
Other long-term derivative assets | 0.1 | 0.2 |
Derivative liabilities | ||
Other current derivative liabilities | 0.1 | 0 |
Other long-term derivative liabilities | $ 0.1 | $ 0.1 |
Derivatives designated as hedging instruments | ||
Derivative instruments | ||
Number of derivative instruments | Instruments | 0 |
DERIVATIVE INSTRUMENTS - GAINS
DERIVATIVE INSTRUMENTS - GAINS (LOSSES) AND NOTIONAL VOLUMES (Details) MWh in Millions, MMBTU in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020USD ($)MWhMMBTU | Jun. 30, 2019USD ($)MWhMMBTU | Jun. 30, 2020USD ($)MWhMMBTU | Jun. 30, 2019USD ($)MMBTUMWh | |
Realized gains (losses) | ||||
Gains (losses) | $ (2.6) | $ 1.8 | $ (6.6) | $ 2 |
Natural gas contracts | ||||
Realized gains (losses) | ||||
Gains (losses) | $ (2.7) | $ (0.7) | $ (7.1) | $ (1.2) |
Notional sales volumes | ||||
Notional sales volumes | MMBTU | 8.5 | 8.7 | 21.2 | 20.8 |
FTRs | ||||
Realized gains (losses) | ||||
Gains (losses) | $ 0.1 | $ 2.5 | $ 0.5 | $ 3.2 |
Notional sales volumes | ||||
Notional sales volumes | MWh | 2 | 2.4 | 3.9 | 5 |
DERIVATIVE INSTRUMENTS - BALANC
DERIVATIVE INSTRUMENTS - BALANCE SHEET OFFSETTING (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Cash collateral | ||
Cash collateral posted in margin accounts | $ 2.8 | $ 4.8 |
Offsetting derivative assets | ||
Gross amount recognized on the balance sheet | 5.2 | 2.1 |
Gross amount not offset on the balance sheet | (1.3) | (0.3) |
Net amount | 3.9 | 1.8 |
Offsetting derivative liabilities | ||
Gross amount recognized on balance sheet | 2.4 | 3.3 |
Gross amount not offset on balance sheet | (2) | (3.1) |
Net amount | 0.4 | 0.2 |
Cash collateral posted | $ 0.7 | $ 2.8 |
GUARANTEES (Details)
GUARANTEES (Details) $ in Millions | Jun. 30, 2020USD ($) |
Standby letters of credit | |
Guarantees | |
Guarantees with expiration over 3 years | $ 20.6 |
EMPLOYEE BENEFITS-COSTS AND CON
EMPLOYEE BENEFITS-COSTS AND CONTRIBUTIONS (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Pension Benefits | ||||
Components of net periodic benefit cost | ||||
Service cost | $ 2.3 | $ 2 | $ 4.9 | $ 4.3 |
Interest cost | 6.4 | 7 | 12.6 | 14.1 |
Expected return on plan assets | (12.2) | (12) | (24.3) | (24) |
Amortization of net actuarial (gain) loss | 6.1 | 4.5 | 11.9 | 8.9 |
Net periodic benefit (credit) cost | 2.6 | 1.5 | 5.1 | 3.3 |
Contributions and payments related to pension and OPEB plans | 0.3 | |||
Estimated future employer contributions for the remainder of the year | 0.4 | 0.4 | ||
Other Postretirement Benefits | ||||
Components of net periodic benefit cost | ||||
Service cost | 1 | 1 | 2.2 | 2.1 |
Interest cost | 1.3 | 1.7 | 2.6 | 3.3 |
Expected return on plan assets | (4.5) | (4.2) | (9.1) | (8.3) |
Amortization of prior service credit | (2.7) | (2.8) | (5.3) | (5.7) |
Amortization of net actuarial (gain) loss | (0.4) | 0.4 | (0.7) | 0.8 |
Net periodic benefit (credit) cost | (5.3) | $ (3.9) | (10.3) | $ (7.8) |
Estimated future employer contributions for the remainder of the year | $ 0.1 | $ 0.1 |
GOODWILL (Details)
GOODWILL (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes to the carrying amount of goodwill | $ 0 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)segment | Jun. 30, 2019USD ($) | |
Segment Reporting [Abstract] | ||||
Number of reportable segments | segment | 2 | |||
Segment reporting information | ||||
Operating revenues | $ 312.8 | $ 320.9 | $ 682.2 | $ 716.7 |
Other operation and maintenance | 99.3 | 96.9 | 191.1 | 201.3 |
Depreciation and amortization | 43.2 | 40.8 | 86.2 | 81.1 |
Operating income | 67.4 | 59.8 | 160.3 | 120.4 |
Other income, net | 8.4 | 9.9 | 16.7 | 19.2 |
Interest expense | 16 | 15.3 | 32.3 | 31.4 |
Utility | ||||
Segment reporting information | ||||
Operating revenues | 312.8 | 320.9 | 682.2 | 716.7 |
Other operation and maintenance | 99.3 | 96.9 | 191.1 | 201.3 |
Depreciation and amortization | 43.2 | 40.8 | 86.2 | 81.1 |
Operating income | 67.4 | 59.8 | 160.3 | 120.4 |
Other income, net | 8 | 9.5 | 15.9 | 18.5 |
Interest expense | 16 | 15.3 | 32.3 | 31.4 |
Other | ||||
Segment reporting information | ||||
Operating revenues | 0 | 0 | 0 | 0 |
Other operation and maintenance | 0 | 0 | 0 | 0 |
Depreciation and amortization | 0 | 0 | 0 | 0 |
Operating income | 0 | 0 | 0 | 0 |
Other income, net | 0.4 | 0.4 | 0.8 | 0.7 |
Interest expense | $ 0 | $ 0 | $ 0 | $ 0 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - UNCONDITIONAL PURCHASE OBLIGATIONS (Details) $ in Billions | Jun. 30, 2020USD ($) |
Minimum future commitments for purchase obligations | |
Purchase obligations | $ 0.8 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - ENVIRONMENTAL MATTERS (Details) $ in Millions | 1 Months Ended | 6 Months Ended | 12 Months Ended | 15 Months Ended |
May 31, 2020numberOfRevisions | Jun. 30, 2020USD ($)States | Dec. 31, 2019USD ($) | Mar. 31, 2019MW | |
Manufactured gas plant remediation | ||||
Regulatory assets | $ 430.7 | $ 437.9 | ||
Environmental remediation costs | ||||
Manufactured gas plant remediation | ||||
Regulatory assets | $ 112.8 | $ 113.5 | ||
Mercury and Air Toxics Standards | Electric | ||||
Air quality | ||||
Revisions to mercury and air toxics standards | numberOfRevisions | 0 | |||
Climate Change | Electric | ||||
Air quality | ||||
Number of states challenging the ACE rule | States | 22 | |||
Company goal percentage met in 2019 for carbon dioxide emissions reduction below 2005 levels | 40.00% | |||
Company goal for percentage of carbon dioxide emission reduction below 2005 levels by 2030 | 70.00% | |||
Capacity of coal generation retired, in megawatts | MW | 300 | |||
Climate Change | Natural gas | ||||
Air quality | ||||
Percentage of per mile methane emission reduction by 2030 from a 2011 baseline | 30.00% | |||
Steam Electric Effluent Limitation Guidelines | Electric | ||||
Water quality | ||||
Expected cost to achieve required emissions reduction | $ 10 | |||
Manufactured Gas Plant Remediation | Natural gas | ||||
Manufactured gas plant remediation | ||||
Reserves for future environmental remediation | 83.8 | $ 83.8 | ||
Manufactured Gas Plant Remediation | Natural gas | Environmental remediation costs | ||||
Manufactured gas plant remediation | ||||
Regulatory assets | $ 112.8 | $ 113.5 |
SUPPLEMENTAL CASH FLOW INFORM_3
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Supplemental Cash Flow Information [Abstract] | ||
Cash paid for interest, net of amount capitalized | $ 32 | $ 30.4 |
Cash paid for income taxes, net | 0 | 9.4 |
Significant non-cash investing and financing transactions: | ||
Accounts payable related to construction costs | $ 33.1 | $ 31.3 |
REGULATORY ENVIRONMENT - COVID-
REGULATORY ENVIRONMENT - COVID-19 (Details) | Mar. 24, 2020order |
Public Service Commission of Wisconsin (PSCW) | |
Public Utilities, General Disclosures [Line Items] | |
Number of orders issued in response to COVID-19 | 2 |
REGULATORY ENVIRONMENT - 2020 a
REGULATORY ENVIRONMENT - 2020 and 2021 RATES (Details) - Public Service Commission of Wisconsin (PSCW) - USD ($) $ in Millions | 1 Months Ended | |
Dec. 31, 2019 | Sep. 30, 2017 | |
2020 and 2021 rates | ||
Public Utilities, General Disclosures [Line Items] | ||
Approved return on equity (as a percent) | 10.00% | |
Approved common equity component average (as a percent) | 52.50% | |
Percentage of first 25 basis points of additional earnings retained by the utility | 100.00% | |
Return on equity in excess of authorized amount (as a percent) | 0.25% | |
Percentage of additional earnings between 25 and 75 basis points refunded to customers | 50.00% | |
Return on equity in excess of first 25 basis points above authorized amount (as a percent) | 0.50% | |
Percentage of earnings in excess of 75 basis points refunded to customers | 100.00% | |
Electric rates | 2020 rates | ||
Public Utilities, General Disclosures [Line Items] | ||
Approved rate increase | $ 15.8 | |
Approved rate increase (as a percent) | 1.60% | |
Electric rates | 2020 rates | Tax Cuts and Jobs Act of 2017 | ||
Public Utilities, General Disclosures [Line Items] | ||
Amortization of regulatory liabilities | $ 11 | |
Electric rates | 2021 rates | Tax Cuts and Jobs Act of 2017 | ||
Public Utilities, General Disclosures [Line Items] | ||
Amortization of regulatory liabilities | 39 | |
Electric rates | 2020 and 2021 rates | ||
Public Utilities, General Disclosures [Line Items] | ||
Authorized revenue requirement for ReACT | $ 275 | |
Cost of the ReACT project | $ 342 | |
Electric rates | 2020 and 2021 rates | ReACT | ||
Public Utilities, General Disclosures [Line Items] | ||
Collection of ReACT regulatory asset in years | 8 years | |
Electric rates | 2020 and 2021 rates | Tax Cuts and Jobs Act of 2017 | ||
Public Utilities, General Disclosures [Line Items] | ||
Amortization period | 2 years | |
Electric rates | 2020 and 2021 rates | Earnings sharing mechanisms | ||
Public Utilities, General Disclosures [Line Items] | ||
Amortization of regulatory liabilities | $ 21 | |
Amortization period | 2 years | |
Natural gas rates | 2020 rates | ||
Public Utilities, General Disclosures [Line Items] | ||
Approved rate increase | $ 4.3 | |
Approved rate increase (as a percent) | 1.40% | |
Natural gas rates | 2020 rates | Tax Cuts and Jobs Act of 2017 | ||
Public Utilities, General Disclosures [Line Items] | ||
Amortization of regulatory liabilities | $ 5 | |
Natural gas rates | 2021 rates | Tax Cuts and Jobs Act of 2017 | ||
Public Utilities, General Disclosures [Line Items] | ||
Amortization of regulatory liabilities | $ 5 | |
Natural gas rates | 2020 and 2021 rates | Tax Cuts and Jobs Act of 2017 | ||
Public Utilities, General Disclosures [Line Items] | ||
Amortization period | 4 years |
REGULATORY ENVIRONMENT - 2018 A
REGULATORY ENVIRONMENT - 2018 AND 2019 RATES (Details) - Public Service Commission of Wisconsin (PSCW) - 2018 and 2019 rates $ in Millions | 1 Months Ended |
Sep. 30, 2017USD ($) | |
Public Utilities, General Disclosures [Line Items] | |
Approved return on equity (as a percent) | 10.00% |
Authorized revenue requirement for ReACT | $ 275 |
Percentage of first 50 basis points of additional utility earnings shared with customers | 50.00% |
Return on equity in excess of authorized amount (as a percent) | 0.50% |