PROPERTY, PLANT, AND EQUIPMENT

9 Months Ended

Sep. 30, 2019

Property, Plant and Equipment [Abstract]

Presque Isle Power Plant

Pursuant to MISO's April 2018 approval of the retirement of the PIPP, these units were retired on March 31, 2019. As a result of the retirement of the plant, the net book value was reclassified as a regulatory asset on our balance sheet. In the second quarter of 2019, $12.5 million of the regulatory asset, along with the related deferred taxes and a portion of the cost of removal reserve, was transferred to UMERC for recovery from its retail customers. At September 30, 2019, the remaining carrying value of the PIPP was $152.9 million. This amount included the net book value of $163.9 million, which was classified as a regulatory asset. In addition, an $11.0 million cost of removal reserve related to the PIPP remained classified as a regulatory liability at September 30, 2019. We continue to amortize this regulatory asset on a straight-line basis using the composite depreciation rates approved by the PSCW before the units were retired. Amortization is included in depreciation and amortization in the income statement. We have FERC approval to continue to collect the carrying value of the PIPP using the approved composite depreciation rates, in addition to a return on the remaining carrying value. However, this approval is subject to refund pending the outcome of settlement proceedings.

Pleasant Prairie Power Plant

We have FERC approval to continue to collect the carrying value of the Pleasant Prairie power plant using the approved composite depreciation rates, in addition to a return on the remaining carrying value. Collection of the return on and of the carrying value is no longer subject to refund as the FERC completed its prudency review and concluded that the retirement of this plant was prudent.

2019 Rate Application

We will address the accounting and regulatory treatment related to the retirement of the Pleasant Prairie power plant and the PIPP with the PSCW in conjunction with our 2019 rate case. See Note 18, Regulatory Environment, for more information.

Severance Liability for Plant Retirements

We have evaluated future plans for our older and less efficient fossil fuel generating units and have retired the PIPP and the Pleasant Prairie power plant within the utility segment. A severance liability was recorded in other current liabilities on our balance sheets related to these plant retirements.



(in millions)
Severance liability at December 31, 2018	$	12.9
Severance payments	(5.7		)
Other	(1.8		)
Total severance liability at September 30, 2019	$	5.4