FAIR VALUE (Tables)

3 Months Ended

Mar. 31, 2013

FAIR VALUE

Fair value of assets and liabilities measured on a recurring basis, categorized by level within the fair value hierarchy

	March 31, 2013
(Millions)	Level 1		Level 2		Level 3		Total
Assets
Risk Management Assets
Utility Segments
Natural gas contracts	$	1.2	$	10.5	$	—	$	11.7
Financial transmission rights (FTRs)	—		—		1.0		1.0
Petroleum product contracts	0.1		—		—		0.1
Coal contracts	—		—		0.1		0.1
Nonregulated Segments
Natural gas contracts	10.2		21.2		2.9		34.3
Electric contracts	64.0		107.9		13.7		185.6
Total Risk Management Assets	$	75.5	$	139.6	$	17.7	$	232.8
Investment in exchange-traded funds	$	12.4	$	—	$	—	$	12.4
Liabilities
Risk Management Liabilities
Utility Segments
Natural gas contracts	$	—	$	3.8	$	—	$	3.8
FTRs	—		—		0.1		0.1
Coal contracts	—		0.1		4.7		4.8
Nonregulated Segments
Natural gas contracts	9.0		14.8		1.2		25.0
Electric contracts	78.6		70.3		7.6		156.5
Total Risk Management Liabilities	$	87.6	$	89.0	$	13.6	$	190.2

	December 31, 2012
(Millions)	Level 1		Level 2		Level 3		Total
Assets
Risk Management Assets
Utility Segments
Natural gas contracts	$	0.3	$	3.1	$	—	$	3.4
FTRs	—		—		2.1		2.1
Petroleum product contracts	0.2		—		—		0.2
Coal contracts	—		—		2.5		2.5
Nonregulated Segments
Natural gas contracts	21.4		36.4		5.4		63.2
Electric contracts	48.4		61.3		9.6		119.3
Total Risk Management Assets	$	70.3	$	100.8	$	19.6	$	190.7
Investment in exchange-traded funds	$	11.8	$	—	$	—	$	11.8
Liabilities
Risk Management Liabilities
Utility Segments
Natural gas contracts	$	1.1	$	14.1	$	—	$	15.2
FTRs	—		—		0.1		0.1
Coal contracts	—		—		9.0		9.0
Nonregulated Segments
Natural gas contracts	17.7		36.9		1.5		56.1
Electric contracts	54.9		91.1		13.9		159.9
Total Risk Management Liabilities	$	73.7	$	142.1	$	24.5	$	240.3

Schedule of transfers between the levels of the fair value hierarchy

	Nonregulated Segments — Natural Gas Contracts
	Three Months Ended March 31, 2013						Three Months Ended March 31, 2012
(Millions)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Transfers into Level 1 from	N/A		$	—	$	—	N/A		$	—	$	—
Transfers into Level 2 from	$	—	N/A		—		$	—	N/A		1.3
Transfers into Level 3 from	—		0.2		N/A		—		2.4		N/A

	Nonregulated Segments — Electric Contracts
	Three Months Ended March 31, 2013						Three Months Ended March 31, 2012
(Millions)	Level 1		Level 2		Level 3		Level 1		Level 2			Level 3
Transfers into Level 1 from	N/A		$	—	$	—	N/A		$	—		$	—
Transfers into Level 2 from	$	—	N/A		5.5		$	—	N/A			(0.1		)
Transfers into Level 3 from	—		—		N/A		—		(5.0		)	N/A

Significant internally-developed unobservable inputs used in the valuation of derivatives categorized in Level 3

	Fair Value (Millions)
	Assets		Liabilities		Valuation Technique	Unobservable Input	Average or Range
Utility Segments
FTRs	$	1.0	$	0.1	Market-based	Forward market prices ($/megawatt-month) (1)	203.72
Coal contracts	0.1		4.7		Market-based	Forward market prices ($/ton) (2)	11.64 — 13.90
Nonregulated Segments
Natural gas contracts	2.9		1.2		Market-based	Forward market prices ($/dekatherm) (3)	(0.08) — 1.99
						Probability of default	11.6% — 51.0%
Electric contracts	13.7		7.6		Market-based	Forward market prices ($/megawatt-hours) (3)	(9.55) — 44.03
						Option volatilities (4)	19.0% — 80.0%

⁽¹⁾  Represents forward market prices developed using historical cleared pricing data from MISO used in the valuation of FTRs.

⁽²⁾  Represents third-party forward market pricing used in the valuation of our coal contracts.

⁽³⁾  Represents unobservable basis spreads developed using historical settled prices that are applied to observable market prices at various natural gas and electric locations, as well as unobservable adjustments made to extend observable market prices beyond the quoted period through the end of the transaction term.

⁽⁴⁾  Represents the range of volatilities used in the valuation of options.

Schedule of the reconciliation of changes in Level 3 fair value measurements

Three Months Ended March 31, 2013	Nonregulated Segments						Utility Segments
(Millions)	Natural Gas			Electric			FTRs			Coal Contracts			Total
Balance at the beginning of the period	$	3.9		$	(4.3	)	$	2.0		$	(6.5	)	$	(4.9	)
Net realized and unrealized (losses) gains included in earnings	(1.5		)	15.1			0.3			—			13.9
Net unrealized (losses) gains recorded as regulatory assets or liabilities	—			—			(0.2		)	3.1			2.9
Purchases	—			0.7			—			—			0.7
Settlements	(0.9		)	0.1			(1.2		)	(1.2		)	(3.2		)
Net transfers into Level 3	0.2			—			—			—			0.2
Net transfers out of Level 3	—			(5.5		)	—			—			(5.5		)
Balance at the end of the period	$	1.7		$	6.1		$	0.9		$	(4.6	)	$	4.1
Net unrealized (losses) gains included in earnings related to instruments still held at the end of the period	$	(1.5	)	$	15.1		$	—		$	—		$	13.6

Three Months Ended March 31, 2012	Nonregulated Segments						Utility Segments
(Millions)	Natural Gas			Electric			FTRs			Coal Contract			Total
Balance at the beginning of the period	$	8.3		$	(11.5	)	$	2.2		$	(6.9	)	$	(7.9	)
Net realized and unrealized gains (losses) included in earnings	4.1			(7.7		)	0.5			—			(3.1		)
Net unrealized gains (losses) recorded as regulatory assets or liabilities	—			—			0.1			(5.8		)	(5.7		)
Purchases	—			1.1			—			—			1.1
Sales	—			—			(0.1		)	—			(0.1		)
Settlements	(2.6		)	1.1			(1.8		)	(0.7		)	(4.0		)
Net transfers into Level 3	2.4			(5.0		)	—			—			(2.6		)
Net transfers out of Level 3	(1.3		)	0.1			—			—			(1.2		)
Balance at the end of the period	$	10.9		$	(21.9	)	$	0.9		$	(13.4	)	$	(23.5	)
Net unrealized gains (losses) included in earnings related to instruments still held at the end of the period	$	4.1		$	(7.7	)	$	—		$	—		$	(3.6	)

Schedule of carrying value and estimated fair value of financial instruments

	March 31, 2013				December 31, 2012
(Millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt	$	2,223.2	$	2,376.2	$	2,245.2	$	2,425.8
Preferred stock of subsidiary	51.1		61.7		51.1		52.7