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 ultimate 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).

Prior to January 1, 2017, we held a 10.37% ownership interest in WPSI which held an approximate 34% 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. Effective January 1, 2017, we transferred our $67.2 million ownership interest in WPSI to another subsidiary of Integrys. In addition, during 2017 we transferred $41.9 million of related deferred income tax liabilities. 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. We are also required to pay the cost of needed transmission infrastructure upgrades for new generation projects while the projects are under construction. ATC reimburses us for these costs when the new generation is placed in service.

We provide services to WRPC under an operating agreement approved by the PSCW. We are also under a service agreement with WRPC where we are billed for services provided by WRPC. Services are billed to and from WRPC under these agreements at a fully allocated cost.

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



(in millions)	December 31, 2019		December 31, 2018
Accounts receivable
Service provided to ATC	$	1.9	$	1.2
Amounts due from ATC for transmission infrastructure upgrades	2.8		—
Accounts payable
Services received from ATC	9.1		8.8

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



(in millions)	2019	2018			2017
Transactions with WE
Natural gas related sales to WE ⁽¹⁾	2.0	1.9			1.6
Billings to WE ⁽²⁾	9.3	10.9			4.5
Billings from WE ⁽²⁾	13.2	17.8			28.2
Transactions with WBS
Billings to WBS ⁽²⁾	32.5	17.0			174.9	⁽⁷⁾
Billings from WBS ⁽²⁾	87.0	111.0	⁽⁶	⁾	132.9	⁽⁶⁾
Transactions with UMERC
Electric sales to UMERC ⁽³⁾	4.5	15.8			16.2
Natural gas related sales to UMERC ⁽¹⁾	2.8	2.7			2.5
Billings to UMERC	4.2	2.9			—
Transactions with Bluewater ⁽⁴⁾
Storage service fees	11.2	4.7			0.3
Natural gas related sales to Bluewater ⁽¹⁾	1.1	—			—
Transactions related to ATC
Charges to ATC for services and construction	11.0	7.9			6.2
Charges from ATC for network transmission services	107.8	106.1			107.8
Refund from ATC related to a FERC audit	—	6.6			—
Refund from ATC per FERC ROE order	—	—			8.9
Transactions with WRPC
Rental payments to WRPC ⁽⁵⁾	1.9	1.3			1.3
Purchases of energy from WRPC ⁽⁵⁾	—	—			0.5
Charges from WRPC for services	2.5	2.4			2.2
Charges to WRPC for operations	0.8	1.2			0.9


⁽¹⁾	Includes amounts related to the sale of natural gas and/or pipeline capacity.


⁽²⁾	Includes amounts billed for services, pass through costs, asset and liability transfers, and other items in accordance with 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⁾	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.


⁽⁴⁾	WEC Energy Group's acquisition of Bluewater was completed on June 30, 2017. See below for more information.


⁽⁵⁾	In March 2017, we terminated our purchased power agreement with WRPC and entered into an agreement with WRPC to rent 50% of its hydroelectric power generation facilities.


⁽⁶⁾	Includes $30.0 million and $10.1 million for the transfer of certain software assets from WBS for the years ended December 31, 2018 and 2017, respectively.

⁽⁷⁾

Includes $157.8 million of net cash received related to our transfer of pension trust assets in conjunction with the Integrys pension plan split. Effective January 1, 2017, the Integrys Energy Group Retirement Plan was split into six separate plans. As a result, we now have our own pension plan. While the split did not impact our pension benefit obligation, federal regulations required a different allocation of assets among the new plans. Assets were transferred out of our plan in January 2017.

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

In June 2017, WEC Energy Group 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 22, Regulatory Environment, for more information.

Upper Michigan Energy Resources Corporation

In December 2016, both the Michigan Public Service Commission 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 9,000 retail electric customers and 5,300 natural gas customers to UMERC, along with approximately 600 miles of electric distribution lines and approximately 100 miles of natural gas distribution mains. 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 $20.6 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 WE.