REGULATORY ENVIRONMENT	9 Months Ended
Sep. 30, 2013
Regulated Operations [Abstract]
REGULATORY ENVIRONMENT	REGULATORY ENVIRONMENT Wisconsin 2014 Rate Case In March 2013, we filed an application with the PSCW to increase retail electric and natural gas rates $71.1 million and $19.0 million, respectively, with rates proposed to be effective January 1, 2014. The filing includes a request for a 10.75% return on common equity and a common equity ratio of 51.11% in our regulatory capital structure. The proposed retail electric rate increase is primarily driven by the purchase and operation of the Fox Energy Center, the completion of a one-time fuel refund to customers in 2013, increased electric transmission costs, additional construction related to the installation of environmental controls and the improvement of electric reliability, the recovery of pension and other employee benefit costs deferred in 2013 rates, and general inflation. Partially offsetting these increases are lower purchased power capacity costs and a refund to customers resulting from our decoupling mechanism. The proposed retail natural gas rate increase is generally the result of the recovery of amounts related to decoupling, increased costs of inspecting natural gas lines for safety, the recovery of pension and other employee benefit costs deferred in 2013 rates, and general inflation. In August 2013, the PSCW Staff submitted testimony and recommended rate increases of $9.3 million and $7.8 million for retail electric and natural gas, respectively, reflecting a 10.20% return on common equity. Their recommendation also included a common equity ratio of 50.14% in our regulatory capital structure. The PSCW held both technical and public hearings in September 2013. In October 2013, we issued an initial brief revising our requested retail electric and natural gas rate increases to approximately $60 million and approximately $14 million, respectively, including a reduced return on common equity of 10.60%. Included in these revised amounts, is our request for recovery of $1.7 million for the Wisconsin retail allocation of environmental remediation capital and operating costs related to our Consent Decree with the EPA. See Note 9, "Commitments and Contingencies," for more information. Finally, we requested the removal of the annual caps associated with the decoupling mechanism that is currently in place. Our revised request is a result of our current position on contested issues. New rates are expected to be effective January 1, 2014. 2013 Rates In December 2012, the PSCW issued an order approving a settlement agreement, effective January 1, 2013. The settlement agreement included a $28.5 million imputed retail electric rate increase, partially offset by the actual 2012 fuel refund of $20.5 million. The difference between the 2012 fuel refund and the rate increase is being deferred for recovery in a future rate proceeding. As a result, there was no change to customers' 2013 retail electric rates. The settlement agreement also included a $3.4 million retail natural gas rate decrease, which included a deferral of $2.1 million of pension and other employee benefit costs that will be recovered in a future rate proceeding. The 2013 electric and natural gas rates were reduced based on updated December 31, 2012, pension and other employee benefit cost estimates, which were filed with the PSCW in March 2013. The settlement agreement reflected a 10.30% return on common equity and a common equity ratio of 51.61% in our regulatory capital structure. In addition, we were authorized recovery of $5.9 million related to income tax amounts previously expensed due to the Federal Health Care Reform Act. As a result, this amount was recorded as a regulatory asset in 2012, and recovery from customers began in 2013. The settlement agreement also authorized the recovery of direct Cross State Air Pollution Rule (CSAPR) costs incurred through the end of 2012. Lastly, the settlement agreement authorized us to switch from production tax credits to Section 1603 Grants for the Crane Creek Wind Project. A new decoupling mechanism for natural gas and electric residential and small commercial and industrial customers was approved as part of the settlement agreement on a pilot basis for 2013. The mechanism is based on total rate case-approved margins, rather than being calculated on a per-customer basis. The mechanism does not cover all customer classes, and it continues to include an annual $14.0 million cap for electric service and an annual $8.0 million cap for natural gas service. Amounts recoverable from or refundable to customers are subject to these caps and are included in rates upon approval in a rate proceeding. 2012 Rates In December 2011, the PSCW issued a final written order, effective January 1, 2012. It authorized an electric rate increase of $8.1 million and required a natural gas rate decrease of $7.2 million. The electric rate increase was driven by projected increases in fuel and purchased power costs. However, to the extent that actual fuel and purchased power costs exceeded a 2% price variance from costs included in rates, they were deferred for recovery or refund in a future rate proceeding. The rate order allowed for the netting of the 2010 electric decoupling under-collection with the 2011 electric decoupling over-collection and reflected reduced contributions to the Focus on Energy Program. The rate order also allowed for the deferral of direct CSAPR compliance costs, including carrying costs.

REGULATORY ENVIRONMENT

Wisconsin

2014 Rate Case

In March 2013, we filed an application with the PSCW to increase retail electric and natural gas rates $71.1 million and $19.0 million, respectively, with rates proposed to be effective January 1, 2014. The filing includes a request for a 10.75% return on common equity and a common equity ratio of 51.11% in our regulatory capital structure. The proposed retail electric rate increase is primarily driven by the purchase and operation of the Fox Energy Center, the completion of a one-time fuel refund to customers in 2013, increased electric transmission costs, additional construction related to the installation of environmental controls and the improvement of electric reliability, the recovery of pension and other employee benefit costs deferred in 2013 rates, and general inflation. Partially offsetting these increases are lower purchased power capacity costs and a refund to customers resulting from our decoupling mechanism. The proposed retail natural gas rate increase is generally the result of the recovery of amounts related to decoupling, increased costs of inspecting natural gas lines for safety, the recovery of pension and other employee benefit costs deferred in 2013 rates, and general inflation.

In August 2013, the PSCW Staff submitted testimony and recommended rate increases of $9.3 million and $7.8 million for retail electric and natural gas, respectively, reflecting a 10.20% return on common equity. Their recommendation also included a common equity ratio of 50.14% in our regulatory capital structure. The PSCW held both technical and public hearings in September 2013. In October 2013, we issued an initial brief revising our requested retail electric and natural gas rate increases to approximately $60 million and approximately $14 million, respectively, including a reduced return on common equity of 10.60%. Included in these revised amounts, is our request for recovery of $1.7 million for the Wisconsin retail allocation of environmental remediation capital and operating costs related to our Consent Decree with the EPA. See Note 9, "Commitments and Contingencies," for more information. Finally, we requested the removal of the annual caps associated with the decoupling mechanism that is currently in place. Our revised request is a result of our current position on contested issues. New rates are expected to be effective January 1, 2014.

2013 Rates

In December 2012, the PSCW issued an order approving a settlement agreement, effective January 1, 2013. The settlement agreement included a $28.5 million imputed retail electric rate increase, partially offset by the actual 2012 fuel refund of $20.5 million. The difference between the 2012 fuel refund and the rate increase is being deferred for recovery in a future rate proceeding. As a result, there was no change to customers' 2013 retail electric rates. The settlement agreement also included a $3.4 million retail natural gas rate decrease, which included a deferral of $2.1 million of pension and other employee benefit costs that will be recovered in a future rate proceeding. The 2013 electric and natural gas rates were reduced based on updated December 31, 2012, pension and other employee benefit cost estimates, which were filed with the PSCW in March 2013. The settlement agreement reflected a 10.30% return on common equity and a common equity ratio of 51.61% in our regulatory capital structure. In addition, we were authorized recovery of $5.9 million related to income tax amounts previously expensed due to the Federal Health Care Reform Act. As a result, this amount was recorded as a regulatory asset in 2012, and recovery from customers began in 2013. The settlement agreement also authorized the recovery of direct Cross State Air Pollution Rule (CSAPR) costs incurred through the end of 2012. Lastly, the settlement agreement authorized us to switch from production tax credits to Section 1603 Grants for the Crane Creek Wind Project.

A new decoupling mechanism for natural gas and electric residential and small commercial and industrial customers was approved as part of the settlement agreement on a pilot basis for 2013. The mechanism is based on total rate case-approved margins, rather than being calculated on a per-customer basis. The mechanism does not cover all customer classes, and it continues to include an annual $14.0 million cap for electric service and an annual $8.0 million cap for natural gas service. Amounts recoverable from or refundable to customers are subject to these caps and are included in rates upon approval in a rate proceeding.

2012 Rates

In December 2011, the PSCW issued a final written order, effective January 1, 2012. It authorized an electric rate increase of $8.1 million and required a natural gas rate decrease of $7.2 million. The electric rate increase was driven by projected increases in fuel and purchased power costs. However, to the extent that actual fuel and purchased power costs exceeded a 2% price variance from costs included in rates, they were deferred for recovery or refund in a future rate proceeding. The rate order allowed for the netting of the 2010 electric decoupling under-collection with the 2011 electric decoupling over-collection and reflected reduced contributions to the Focus on Energy Program. The rate order also allowed for the deferral of direct CSAPR compliance costs, including carrying costs.