Related Parties

12 Months Ended

Dec. 31, 2019

We routinely enter into transactions with related parties, including WEC Energy Group, its other subsidiaries, ATC, and other affiliated entities.

We provide and receive services, property, and other items of value to and from our parent, WEC Energy Group, and other subsidiaries of WEC Energy Group pursuant to an AIA that became effective January 1, 2017. The AIA was approved by the appropriate regulators, including the PSCW. During 2017, all of the applicable state commissions approved modifications to the AIA to incorporate WEC Energy Group's acquisition of Bluewater. See below for more information on the acquisition. In accordance with the AIA, WBS provides several categories of services to us (including financial, human resource, and administrative services).

In March 2017, we sold the remaining real estate holdings of Bostco. Wispark, a subsidiary of WEC Energy Group, provided $7.0 million of financing to the buyer and established a corresponding note receivable. The financing resulted in Bostco having a $7.0 million related party receivable from Wispark, which was paid in April 2017. See Note 2, Disposition, for more information on the real estate sale.

Prior to January 1, 2017, we held a 23% ownership interest in ATC, a for-profit, transmission-only company regulated by the FERC for cost of service and certain state regulatory commissions for routing and siting of transmission projects. On January 1, 2017, we transferred our $402.0 million investment in ATC, and the $13.4 million related receivable for distributions approved and recorded in December 2016, to another subsidiary of WEC Energy Group. In addition, during 2017 we transferred $186.8 million of related deferred income tax liabilities to another subsidiary of WEC Energy Group. These transactions were non-cash equity transfers recorded to additional paid in capital between entities under common control, and therefore, did not result in the recognition of a gain or loss.

We pay ATC for transmission and other related services it provides. In addition, we provide a variety of operational, maintenance, and project management work for ATC, which is reimbursed by ATC. Services are billed to and from ATC under agreements approved by the PSCW, at each of our fully allocated costs.

Our balance sheets included the following receivables and payables related to transactions entered into with ATC:



(in millions)	2019		2018
Accounts receivable
Services provided to ATC	$	1.7	$	2.2
Accounts payable
Services received from ATC	19.9		19.4

The following table shows activity associated with our related party transactions for the years ended December 31:



(in millions)	2019		2018			2017
Lease agreements
Lease payments to We Power ⁽¹⁾	$	393.2	$	373.7		$	420.5
CWIP billed to We Power	35.1		39.5			57.3
Transactions with WBS
Billings to WBS ⁽²⁾	102.6		61.5			255.7
Billings from WBS ⁽²⁾	205.3		243.4		⁽⁶⁾	215.4
Transactions with WPS
Natural gas related purchases from WPS ⁽³⁾	2.0		1.9			1.6
Billings to WPS ⁽²⁾	13.2		17.8			28.2
Billings from WPS ⁽²⁾	9.3		10.9			4.5
Transactions with WG
Natural gas related purchases from WG ⁽³⁾	5.4		5.3			5.3
Billings to WG ⁽²⁾	41.1		59.0		⁽⁷⁾	64.0
Billings from WG ⁽²⁾	30.1		32.6			23.1
Transactions with UMERC
Electric sales to UMERC ⁽⁴⁾	7.9		29.6			30.8
Billings to UMERC ⁽²⁾	10.5		15.8			125.5
Transactions with Bluewater ⁽⁵⁾
Storage service fees	14.2		15.0			2.7
Natural gas related sales to Bluewater ⁽³⁾	2.3		—			—
Transactions with ATC
Charges to ATC for services and construction	14.9		13.9			10.9
Charges from ATC for network transmission services	230.6		232.0			241.4
Refund from ATC related to a FERC audit	—		15.4			—
Refund from ATC per FERC ROE order	—		—			19.4


⁽¹⁾	We make lease payments to We Power, another subsidiary of WEC Energy Group, for PWGS Units 1 and 2 and ERGS Units 1 and 2. Lease payments were reduced in 2018 as a result of tax savings related to the Tax Legislation.


⁽²⁾	Includes amounts billed for services, pass through costs, asset and liability transfers, and other items in accordance with the approved AIAs. As required by FERC regulations for centralized service companies, WBS renders services at cost. In addition, all services provided by any regulated subsidiary to another regulated subsidiary or WBS are priced at cost.


⁽³⁾	Includes amounts related to the purchase or sale of natural gas and/or pipeline capacity.


⁽⁴⁾	On March 31, 2019, UMERC's new natural gas-fired generation in the Upper Peninsula of Michigan began commercial operation. Prior to its generating units achieving commercial operation, UMERC purchased a portion of its power from us. See below for more information on UMERC.


⁽⁵⁾	WEC Energy Group's acquisition of Bluewater was completed on June 30, 2017. See below for more information.


⁽⁶⁾	Includes $10.0 million for the transfer of certain benefit-related liabilities to WBS and $59.8 million for the transfer of certain software assets from WBS.


⁽⁷⁾	Includes $5.3 million for the transfer of certain software assets to WG.

Parent Company's Acquisition of Natural Gas Storage Facilities in Michigan

In June 2017, our parent company completed its acquisition of Bluewater for $226.0 million. Bluewater owns natural gas storage facilities in Michigan that provide a portion of the current storage needs for our natural gas utility operations. In September 2017, we entered into a long-term service agreement with a wholly owned subsidiary of Bluewater to take a portion of the storage, which was then approved by the PSCW in November 2017. See Note 21, Regulatory Environment, for more information.

Upper Michigan Energy Resources Corporation

In December 2016, both the MPSC and the PSCW approved the operation of UMERC as a stand-alone utility in the Upper Peninsula of Michigan. UMERC, a subsidiary of WEC Energy Group, became operational effective January 1, 2017, and we transferred customers and property, plant, and equipment as of that date. We transferred approximately 27,500 retail electric customers and 50 electric distribution-only customers to UMERC, along with approximately 2,500 miles of electric distribution lines. We also transferred the related electric distribution substations in the Upper Peninsula of Michigan and all property rights for the distribution assets to UMERC. The book value of the net assets, including the related deferred income tax liabilities, transferred to UMERC from us in 2017, was $61.1 million. This transaction was a non-cash equity transfer recorded to additional paid in capital between entities under common control, and therefore, did not result in the recognition of a gain or loss.

On March 31, 2019, UMERC began generating electricity when its new 187 MW natural gas-fired generation achieved commercial operation. Prior to its generating units achieving commercial operation, UMERC met its market obligations through power purchase agreements with us and WPS.

We retired the PIPP generating units on March 31, 2019. As a result, the net book value of the PIPP 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. See Note 6, Property, Plant, and Equipment, for more information on the retirement of the PIPP.