Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2018

Our inventory as of December 31 consisted of:



(in millions)	2018		2017
Natural gas in storage	$	232.9	$	209.0
Materials and supplies	226.6		211.2
Fossil fuel	88.7		118.8
Total	$	548.2	$	539.0

Schedule of annual utility composite depreciation rates

Annual utility composite depreciation rates are shown below:



Annual Utility Composite Depreciation Rates	2018	2017	2016
WE	3.18%	2.95%	3.00%
WPS	2.50%	2.55%	2.58%
WG	2.30%	2.30%	2.34%
UMERC ⁽¹⁾	2.50%	2.46%	N/A
PGL	3.25%	3.29%	3.31%
NSG	2.45%	2.43%	2.44%
MERC ⁽²⁾	1.95%	2.51%	2.53%
MGU	2.61%	2.61%	2.63%


⁽¹⁾	UMERC became operational effective January 1, 2017. See Note 1(a), Nature of Operations, for more information.


⁽²⁾	The 2018 rate reflects the impact of a new depreciation study approved by the MPUC in May 2018. The rates approved were effective retroactive to January 2017. An approximate $1.4 million reduction in depreciation expense was recorded in 2018 related to this depreciation study.

Schedule of public utilities allowance for funds used during construction

Average AFUDC rates are shown below:



	2018
	Average AFUDC Retail Rate	Average AFUDC Wholesale Rate
WE	8.45%	3.63%
WPS	7.72%	1.96%
WBS	7.72%	N/A
WG	8.33%	N/A
UMERC	6.28%	N/A

Allowance for funds used during construction

Our regulated utilities and WBS recorded the following AFUDC for the years ended December 31:



(in millions)	2018		2017		2016
AFUDC – Debt
WE	$	1.5	$	1.2	$	1.7
WPS	1.9		1.6		8.1
WBS	0.2		1.1		0.3
WG	0.2		0.3		0.2
UMERC	2.4		0.1		N/A
Other	0.7		0.6		0.6
Total AFUDC – Debt	$	6.9	$	4.9	$	10.9

AFUDC – Equity
WE	$	3.9	$	3.1	$	4.2
WPS	4.6		4.1		19.5
WBS	0.6		3.0		0.9
WG	0.6		0.9		0.5
UMERC	5.4		0.2		N/A
Other	0.1		0.1		—
Total AFUDC – Equity	$	15.2	$	11.4	$	25.1

Schedule of assumptions used to estimate the fair value of stock options granted

The following table shows the estimated weighted-average fair value per stock option granted along with the weighted-average assumptions used in the valuation models:



	2018			2017			2016
Stock options granted	710,710			552,215			794,764

Estimated weighted-average fair value per stock option	$	7.71		$	7.45		$	5.14

Assumptions used to value the options:
Risk-free interest rate	1.6% – 2.8%			0.7% – 2.5%			0.4% – 2.2%
Dividend yield	3.5		%	3.5		%	4.0		%
Expected volatility	18.0		%	19.0		%	18.1		%
Expected life (years)	5.9			6.8			6.1