RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2013

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

Related Party Transactions

We and our subsidiary, WPS Leasing, routinely enter into transactions with related parties, including Integrys Energy Group, its subsidiaries, and other entities in which we have material interests.

We provide and receive services, property, and other items of value to and from our parent, Integrys Energy Group, and other subsidiaries of Integrys Energy Group. All such transactions are made pursuant to an affiliated interest agreement ("Regulated Agreement") approved by the PSCW. MERC, MGU, NSG, PGL, and UPPCO (together with us, the "regulated subsidiaries") were parties to the Regulated Agreement and, like us, could also provide and receive services, property, and other items of value to and from their parent, Integrys Energy Group, and other regulated subsidiaries of Integrys Energy Group. We were also a party to an agreement with Integrys Energy Group and Integrys Energy Group's nonregulated subsidiaries. This affiliated interest agreement ("Nonregulated Agreement") was also approved by the PSCW. The other regulated subsidiaries were not parties to the Nonregulated Agreement. The Regulated Agreement required that all services are provided at cost. The Nonregulated Agreement provided that we must receive payment equal to the higher of our cost or fair value for services, property, and other items of value that we provided to Integrys Energy Group or its other nonregulated subsidiaries, and that we must make payments equal to the lower of the provider's cost or fair value for services, property, and other items of value that Integrys Energy Group or its other nonregulated subsidiaries provided to us. Modification or amendment to these agreements require the approval of the PSCW.

IBS provides 15 categories of services (including financial, human resource, and administrative services) to us pursuant to an affiliated interest agreement (IBS AIA), which has been approved, or from which we have been granted appropriate waivers, by the appropriate regulators, including the PSCW. As required by FERC regulations for centralized service companies, IBS renders services at cost. The PSCW must be notified prior to making changes to the services offered under and the allocation methods specified in the IBS AIA. Other modifications or amendments to the IBS AIA would require PSCW approval. Recovery of allocated costs is addressed in our rate cases.

Effective January 1, 2014, after approval by the PSCW and other state commissions, a new affiliated interest agreement (Non-IBS AIA) replaced the Nonregulated Agreement and the Regulated Agreement. It governs the provision and receipt of services by Integrys Energy Group subsidiaries, except that IBS will continue to provide services only under the IBS AIA. Services under the Non-IBS AIA are subject to various pricing methodologies . All services provided by any regulated subsidiary to another regulated subsidiary are priced at cost. All services provided by any regulated subsidiary to any nonregulated subsidiary is priced at the greater of cost or fair market value. All services provided by any nonregulated subsidiaries to any regulated subsidiaries are priced at the lesser of cost or fair market value. All services provided by either any regulated or nonregulated subsidiary to IBS is priced at cost.

We provide services to ATC for its transmission facilities under several agreements approved by the PSCW. Services are billed to ATC under this agreement at our fully allocated cost.

We provide services to WRPC under an operating agreement approved by the PSCW. We are also under a service agreement with WRPC under which either party may be a service provider. Services are billed to WRPC under these agreements at our fully allocated cost.

The table below includes information summarizing transactions entered into with related parties as of:

(Millions)	December 31, 2013		December 31, 2012
Notes payable *
Integrys Energy Group	$	6.3	$	7.2
Accounts Payable
ATC	10.4		9.2
Liability related to income tax allocation
Integrys Energy Group	6.7		7.4

* WPS Leasing, our consolidated subsidiary, has a note payable to our parent company, Integrys Energy Group.

In addition to the above transactions, $22.6 million was repaid to related parties during 2012 for amounts previously paid to us for the unfunded nonqualified retirement plan.

The following table shows activity associated with related party transactions:

(Millions)	2013		2012		2011
Electric transactions
Sales to UPPCO	$	22.8	$	22.2	$	22.6
Natural gas transactions
Sales to Integrys Energy Services	0.5		0.6		0.4
Purchases from Integrys Energy Services	0.9		0.7		1.1
Interest expense (1)
Integrys Energy Group	0.5		0.5		0.7
Transactions with equity-method investees
Charges from ATC for network transmission services	98.4		94.2		96.6
Charges to ATC for services and construction	9.5		10.4		11.4
Net proceeds from WRPC sales of energy to MISO	—		2.9		4.7
Purchases of energy from WRPC	3.7		5.0		4.9
Charges to WRPC for operations	0.9		0.8		0.7
Equity earnings from WPS Investments, LLC (2)	10.2		10.2		9.8

⁽¹⁾  WPS Leasing, our consolidated subsidiary, has a note payable to our parent company, Integrys Energy Group.

⁽²⁾  WPS Investments, LLC is a consolidated subsidiary of Integrys Energy Group that is jointly owned by Integrys Energy Group, UPPCO, and us. At December 31, 2013, we had an 11.36% interest in WPS Investments accounted for under the equity method. Our ownership percentage has continued to decrease as additional equity contributions are made by Integrys Energy Group to WPS Investments.