LEASES (Notes)

9 Months Ended

Sep. 30, 2019

Lessee, Lease, Description [Line Items]

Leases of Lessee Disclosure [Text Block]

6.

LEASES

A lease is a contract that conveys the right to control the use and obtain substantially all the economic benefits from the use of an identified asset for a period of time in exchange for consideration. We determine if an arrangement is a lease at inception and, if so, whether the arrangement is an operating lease or a finance lease. We identify a lease as a finance lease if the agreement includes any of the following criteria: transfer of ownership by the end of the lease term; an option to purchase the underlying asset that the lessee is reasonably certain to exercise; a lease term that represents 75 percent or more of the remaining economic life of the underlying asset; a present value of lease payments and any residual value guaranteed by the lessee that equals or exceeds 90 percent of the fair value of the underlying asset; or an underlying asset that is so specialized in nature that there is no expected alternative use to the lessor at the end of the lease term. A lease that does not meet any of these criteria is considered an operating lease.

Lease right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the commencement date of a lease based on the present value of lease payments over the lease term. Our lease terms may include options to extend or terminate the lease. We include these extension or termination options in the determination of the lease term when it is reasonably certain that we will exercise that option. We have lease agreements with lease and non-lease components, which are accounted for separately. Additionally, for certain office equipment leases, we apply a portfolio approach to effectively account for the operating lease right-of-use assets and liabilities. We do not recognize leases having a term of less than one year in our consolidated balance sheets.

For purposes of determining the present value of the lease payments, we use a lease’s implicit interest rate when readily determinable. As most of our leases do not provide an implicit interest rate, we use a discount rate commensurate with borrowing rates for defined terms that are reviewed annually on December 31st. Lease cost for operating leases is recognized on a straight-line basis over the lease term.

We have operating leases for office facilities, gas storage facilities, information technology equipment and right-of-way contracts. Our leases have remaining lease terms of 1 year to 15 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within specified time frames. We have not entered into any finance leases.

Our right-of-use asset is $35.8 million as of September 30, 2019, and is reported within other assets in our consolidated balance sheets. Current operating lease liabilities are reported within our other current liabilities and other liabilities in our consolidated

balance sheets. Total operating lease cost including immaterial amounts attributable to short-term operating leases was $2.1 million and $6.3 million for the three and nine months ended September 30, 2019, respectively.

	Nine Months Ended
	September 30,
Other information related to operating leases	2019
	(Millions of dollars)
Weighted-average remaining lease term	7 years
Weighted-average discount rate	3.65%
Supplemental cash flows information
Lease payments	$	(6.6	)
Right-of-use assets obtained in exchange for lease obligations	$	9.3

	September 30,
Future minimum lease payments under non-cancellable operating leases	2019
	(Millions of dollars)
2019 (excluding the nine months ended September 30, 2019)	$	1.7
2020	7.5
2021	7.1
2022	6.9
2023	5.8
Thereafter	11.6
Total future minimum lease payments	$	40.6
Imputed interest	(4.9		)
Total operating lease liability	$	35.7
Consolidated balance sheets as of September 30, 2019
Current operating lease liability	$	6.2
Long-term operating lease liability	29.5
Total operating lease liability	$	35.7

The following table sets forth the required disclosures under the new lease accounting standard described in Note 1, as reported in Note 15 of our Notes to Consolidated Financial Statements in our Annual Report:

	December 31,
Future minimum lease payments under non-cancellable operating leases	2018
	(Millions of dollars)
2019	$	6.3
2020	5.1
2021	4.5
2022	4.3
2023	4.2
Thereafter	3.8
Total future minimum lease payments	$	28.2