|
☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Commission
File Number
|
|
Registrant; State of Incorporation;
Address; and Telephone Number
|
|
IRS Employer
Identification No.
|
|
|
|
|
|
001-01245
|
|
WISCONSIN ELECTRIC POWER COMPANY
|
|
39-0476280
|
Serial Preferred Stock, 3.60% Series, $100 Par Value
|
||
Six Per Cent. Preferred Stock, $100 Par Value
|
|
Large accelerated filer
|
☐
|
|
Accelerated filer
|
☐
|
|
|
Non-accelerated filer
|
☒
|
|
Smaller reporting company
|
☐
|
|
|
|
|
|
Emerging growth company
|
☐
|
|
State the aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant.
|
|
|
Number of shares outstanding of each class of common stock, as of
|
|
|
January 31, 2020
|
|
|
|
|
|
|
|
Page
|
|
|||||
|
|||||
|
|||||
|
|||||
|
|||||
|
|||||
|
|||||
|
|||||
|
|||||
|
|||||
|
|||||
|
|||||
|
|||||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
2019 Form 10-K
|
i
|
Wisconsin Electric Power Company
|
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
|
|
|||
2019 Form 10-K
|
ii
|
Wisconsin Electric Power Company
|
Subsidiaries and Affiliates
|
|
|
ATC
|
|
American Transmission Company LLC
|
Bluewater
|
|
Bluewater Natural Gas Holding, LLC
|
Bostco
|
|
Bostco LLC
|
UMERC
|
|
Upper Michigan Energy Resources Corporation
|
WBS
|
|
WEC Business Services LLC
|
WE
|
|
Wisconsin Electric Power Company
|
We Power
|
|
W.E. Power, LLC
|
WEC Energy Group
|
|
WEC Energy Group, Inc.
|
WG
|
|
Wisconsin Gas LLC
|
Wispark
|
|
Wispark LLC
|
WPS
|
|
Wisconsin Public Service Corporation
|
|
|
|
Federal and State Regulatory Agencies
|
||
EPA
|
|
United States Environmental Protection Agency
|
FERC
|
|
Federal Energy Regulatory Commission
|
IRS
|
|
United States Internal Revenue Service
|
MPSC
|
|
Michigan Public Service Commission
|
PSCW
|
|
Public Service Commission of Wisconsin
|
SEC
|
|
Securities and Exchange Commission
|
WDNR
|
|
Wisconsin Department of Natural Resources
|
|
|
|
Accounting Terms
|
||
AFUDC
|
|
Allowance for Funds Used During Construction
|
ARO
|
|
Asset Retirement Obligation
|
ASC
|
|
Accounting Standards Codification
|
ASU
|
|
Accounting Standards Update
|
CWIP
|
|
Construction Work in Progress
|
FASB
|
|
Financial Accounting Standards Board
|
GAAP
|
|
Generally Accepted Accounting Principles
|
OPEB
|
|
Other Postretirement Employee Benefits
|
SAB
|
|
Staff Accounting Bulletin
|
|
|
|
Environmental Terms
|
||
ACE
|
|
Affordable Clean Energy
|
Act 141
|
|
2005 Wisconsin Act 141
|
BATW
|
|
Bottom Ash Transport Water
|
BSER
|
|
Best System of Emission Reduction
|
BTA
|
|
Best Technology Available
|
CAA
|
|
Clean Air Act
|
CO2
|
|
Carbon Dioxide
|
ELG
|
|
Steam Electric Effluent Limitation Guidelines
|
FGD
|
|
Flue Gas Desulfurization
|
GHG
|
|
Greenhouse Gas
|
MATS
|
|
Mercury and Air Toxics Standards
|
NAAQS
|
|
National Ambient Air Quality Standards
|
NOx
|
|
Nitrogen Oxide
|
RTR
|
|
Risk and Technology Review
|
SO2
|
|
Sulfur Dioxide
|
|
|
|
2019 Form 10-K
|
iii
|
Wisconsin Electric Power Company
|
Measurements
|
|
|
Dth
|
|
Dekatherm
|
MW
|
|
Megawatt
|
MWh
|
|
Megawatt-hour
|
|
|
|
Other Terms and Abbreviations
|
||
AIA
|
|
Affiliated Interest Agreement
|
AMI
|
|
Advanced Metering Infrastructure
|
ARR
|
|
Auction Revenue Right
|
Badger Hollow II
|
|
Badger Hollow Solar Farm II
|
CFR
|
|
Code of Federal Regulations
|
Compensation Committee
|
|
Compensation Committee of the Board of Directors of WEC Energy Group, Inc.
|
D.C. Circuit Court of Appeals
|
|
United States Court of Appeals for the District of Columbia Circuit
|
ERGS
|
|
Elm Road Generating Station
|
ER 1
|
|
Elm Road Generating Station Unit 1
|
ER 2
|
|
Elm Road Generating Station Unit 2
|
ERP
|
|
Enterprise Resource Planning
|
Exchange Act
|
|
Securities Exchange Act of 1934, as amended
|
FTR
|
|
Financial Transmission Right
|
GCRM
|
|
Gas Cost Recovery Mechanism
|
LIBOR
|
|
London Interbank Offered Rate
|
LMP
|
|
Locational Marginal Price
|
LNG
|
|
Liquefied Natural Gas
|
MISO
|
|
Midcontinent Independent System Operator, Inc.
|
MISO Energy Markets
|
|
MISO Energy and Operating Reserves Market
|
NYMEX
|
|
New York Mercantile Exchange
|
OCPP
|
|
Oak Creek Power Plant
|
OC 5
|
|
Oak Creek Power Plant Unit 5
|
OC 6
|
|
Oak Creek Power Plant Unit 6
|
OC 7
|
|
Oak Creek Power Plant Unit 7
|
OC 8
|
|
Oak Creek Power Plant Unit 8
|
Omnibus Stock Incentive Plan
|
|
WEC Energy Group 1993 Omnibus Stock Incentive Plan, Amended and Restated Effective as of January 1, 2016
|
PIPP
|
|
Presque Isle Power Plant
|
Point Beach
|
|
Point Beach Nuclear Power Plant
|
PWGS
|
|
Port Washington Generating Station
|
PWGS 1
|
|
Port Washington Generating Station Unit 1
|
PWGS 2
|
|
Port Washington Generating Station Unit 2
|
ROE
|
|
Return on Equity
|
RTO
|
|
Regional Transmission Organization
|
SOX
|
|
Section 404 of the Sarbanes-Oxley Act
|
SSR
|
|
System Support Resource
|
Tax Legislation
|
|
Tax Cuts and Jobs Act of 2017
|
Tilden
|
|
Tilden Mining Company
|
VAPP
|
|
Valley Power Plant
|
2019 Form 10-K
|
iv
|
Wisconsin Electric Power Company
|
•
|
Factors affecting utility operations such as catastrophic weather-related damage, environmental incidents, unplanned facility outages and repairs and maintenance, and electric transmission or natural gas pipeline system constraints;
|
•
|
Factors affecting the demand for electricity and natural gas, including political developments, unusual weather, changes in economic conditions, customer growth and declines, commodity prices, energy conservation efforts, and continued adoption of distributed generation by customers;
|
•
|
The timing, resolution, and impact of rate cases and negotiations, including recovery of deferred and current costs and the ability to earn a reasonable return on investment, and other regulatory decisions impacting our regulated operations;
|
•
|
The impact of recent and future federal, state, and local legislative and/or regulatory changes, including changes in rate-setting policies or procedures, deregulation and restructuring of the electric and/or natural gas utility industries, transmission or distribution system operation, the approval process for new construction, reliability standards, pipeline integrity and safety standards, allocation of energy assistance, energy efficiency mandates, and tax laws, including the Tax Legislation as well as those that affect our ability to use production tax credits and investment tax credits;
|
•
|
Federal and state legislative and regulatory changes relating to the environment, including climate change and other environmental regulations impacting generation facilities and renewable energy standards, the enforcement of these laws and regulations, changes in the interpretation of regulations or permit conditions by regulatory agencies, and the recovery of associated remediation and compliance costs;
|
•
|
The ability to obtain and retain customers, including wholesale customers, due to increased competition in our electric and natural gas markets from retail choice and alternative electric suppliers, and continued industry consolidation;
|
•
|
The timely completion of capital projects within budgets and the ability to recover the related costs through rates;
|
•
|
Factors affecting the implementation of WEC Energy Group's generation reshaping plan, including related regulatory decisions, the cost of materials, supplies, and labor, and the feasibility of competing projects;
|
•
|
The financial and operational feasibility of taking more aggressive action to further reduce GHG emissions in order to limit future global temperature increases;
|
•
|
The risks associated with changing commodity prices, particularly natural gas and electricity, and the availability of sources of fossil fuel, natural gas, purchased power, materials needed to operate environmental controls at our electric generating facilities, or water supply due to high demand, shortages, transportation problems, nonperformance by electric energy or natural gas suppliers under existing power purchase or natural gas supply contracts, or other developments;
|
2019 Form 10-K
|
1
|
Wisconsin Electric Power Company
|
•
|
Changes in credit ratings, interest rates, and our ability to access the capital markets, caused by volatility in the global credit markets, our capitalization structure, and market perceptions of the utility industry or us;
|
•
|
Changes in the method of determining LIBOR or the replacement of LIBOR with an alternative reference rate;
|
•
|
Costs and effects of litigation, administrative proceedings, investigations, settlements, claims, and inquiries;
|
•
|
The direct or indirect effect on our business resulting from terrorist attacks and cyber security intrusions, as well as the threat of such incidents, including the failure to maintain the security of personally identifiable information, the associated costs to protect our utility assets, technology systems, and personal information, and the costs to notify affected persons to mitigate their information security concerns and to comply with state notification laws;
|
•
|
The risk of financial loss, including increases in bad debt expense, associated with the inability of our customers, counterparties, and affiliates to meet their obligations;
|
•
|
Changes in the creditworthiness of the counterparties with whom we have contractual arrangements, including participants in the energy trading markets and fuel suppliers and transporters;
|
•
|
The investment performance of our employee benefit plan assets, as well as unanticipated changes in related actuarial assumptions, which could impact future funding requirements;
|
•
|
Factors affecting the employee workforce, including loss of key personnel, internal restructuring, work stoppages, and collective bargaining agreements and negotiations with union employees;
|
•
|
Advances in technology, and related legislation or regulation supporting the use of that technology, that result in competitive disadvantages and create the potential for impairment of existing assets;
|
•
|
Potential business strategies to acquire and dispose of assets, which cannot be assured to be completed timely or within budgets;
|
•
|
The timing and outcome of any audits, disputes, and other proceedings related to taxes;
|
•
|
The ability to maintain effective internal controls in accordance with SOX, while both integrating and continuing to consolidate WEC Energy Group's enterprise systems with those of its other utilities;
|
•
|
The effect of accounting pronouncements issued periodically by standard-setting bodies; and
|
•
|
Other considerations disclosed elsewhere herein and in other reports we file with the SEC or in other publicly disseminated written documents.
|
2019 Form 10-K
|
2
|
Wisconsin Electric Power Company
|
(in millions)
|
|
2017
|
||
Operating revenues
|
|
|
||
Residential
|
|
$
|
1,178.4
|
|
Small commercial and industrial
|
|
1,015.9
|
|
|
Large commercial and industrial
|
|
657.3
|
|
|
Other
|
|
21.2
|
|
|
Total retail revenues
|
|
2,872.8
|
|
|
Wholesale
|
|
118.8
|
|
|
Resale
|
|
238.0
|
|
|
Steam
|
|
23.3
|
|
|
Other operating revenues *
|
|
83.3
|
|
|
Total operating revenues
|
|
$
|
3,336.2
|
|
*
|
Includes SSR revenues, rent income, and ancillary revenues, partially offset by revenues from Tilden that were addressed in our December 2019 Wisconsin rate order.
|
2019 Form 10-K
|
3
|
Wisconsin Electric Power Company
|
|
|
Year Ended December 31
|
|||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2017
|
|||
Electric customers – end of year
|
|
|
|
|
|
|
|||
Residential
|
|
1,022.0
|
|
|
1,016.3
|
|
|
1,009.1
|
|
Small commercial and industrial
|
|
116.3
|
|
|
115.3
|
|
|
114.5
|
|
Large commercial and industrial
|
|
0.7
|
|
|
0.6
|
|
|
0.7
|
|
Wholesale and other
|
|
2.6
|
|
|
2.6
|
|
|
2.5
|
|
Total electric customers – end of year
|
|
1,141.6
|
|
|
1,134.8
|
|
|
1,126.8
|
|
|
|
|
|
|
|
|
|||
Steam customers – end of year
|
|
0.4
|
|
|
0.4
|
|
|
0.4
|
|
2019 Form 10-K
|
4
|
Wisconsin Electric Power Company
|
|
|
Estimate (1)
|
|
Actual
|
||||||||
|
|
2020
|
|
2019
|
|
2018
|
|
2017
|
||||
Company-owned or leased generation units:
|
|
|
|
|
|
|
|
|
||||
Coal
|
|
35.6
|
%
|
|
36.3
|
%
|
|
45.5
|
%
|
|
50.8
|
%
|
Natural gas:
|
|
|
|
|
|
|
|
|
||||
Combined cycle
|
|
23.1
|
%
|
|
25.1
|
%
|
|
17.7
|
%
|
|
14.7
|
%
|
Steam turbine
|
|
1.4
|
%
|
|
1.2
|
%
|
|
0.8
|
%
|
|
1.1
|
%
|
Natural gas/oil peaking units
|
|
0.2
|
%
|
|
0.6
|
%
|
|
0.8
|
%
|
|
0.5
|
%
|
Renewables (2)
|
|
4.1
|
%
|
|
4.0
|
%
|
|
3.7
|
%
|
|
3.8
|
%
|
Total company-owned or leased generation units
|
|
64.4
|
%
|
|
67.2
|
%
|
|
68.5
|
%
|
|
70.9
|
%
|
Power purchase contracts:
|
|
|
|
|
|
|
|
|
||||
Nuclear
|
|
29.0
|
%
|
|
28.8
|
%
|
|
27.1
|
%
|
|
25.2
|
%
|
Natural gas
|
|
4.2
|
%
|
|
2.7
|
%
|
|
2.3
|
%
|
|
1.8
|
%
|
Renewables (2)
|
|
1.1
|
%
|
|
0.7
|
%
|
|
1.3
|
%
|
|
1.8
|
%
|
Total power purchase contracts
|
|
34.3
|
%
|
|
32.2
|
%
|
|
30.7
|
%
|
|
28.8
|
%
|
Purchased power from MISO
|
|
1.3
|
%
|
|
0.6
|
%
|
|
0.8
|
%
|
|
0.3
|
%
|
Total purchased power
|
|
35.6
|
%
|
|
32.8
|
%
|
|
31.5
|
%
|
|
29.1
|
%
|
Total electric utility supply
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
(1)
|
The values included in the forecast assume a natural gas price based on the February 2020 NYMEX.
|
(2)
|
Includes hydroelectric, biomass, and wind generation.
|
2019 Form 10-K
|
5
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
6
|
Wisconsin Electric Power Company
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Coal
|
|
$
|
22.05
|
|
|
$
|
22.39
|
|
|
$
|
22.26
|
|
Natural gas combined cycle
|
|
19.35
|
|
|
22.05
|
|
|
22.85
|
|
|||
Natural gas/oil peaking units
|
|
53.66
|
|
|
63.29
|
|
|
60.44
|
|
|||
Biomass
|
|
102.99
|
|
|
97.33
|
|
|
118.76
|
|
|||
Purchased power
|
|
46.90
|
|
|
45.66
|
|
|
45.50
|
|
(in thousands)
|
|
Annual Tonnage
|
|
2020
|
|
6,570
|
|
2021
|
|
3,200
|
|
2022
|
|
1,500
|
|
2019 Form 10-K
|
7
|
Wisconsin Electric Power Company
|
(in millions)
|
|
2017
|
||
Operating revenues
|
|
|
||
Residential
|
|
$
|
249.0
|
|
Commercial and industrial
|
|
114.3
|
|
|
Total retail revenues
|
|
363.3
|
|
|
Transport
|
|
13.7
|
|
|
Other operating revenues *
|
|
(1.5
|
)
|
|
Total operating revenues
|
|
$
|
375.5
|
|
*
|
Includes amounts refunded to customers for purchased gas adjustment costs.
|
2019 Form 10-K
|
8
|
Wisconsin Electric Power Company
|
|
|
Year Ended December 31
|
|||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2017
|
|||
Customers – end of year
|
|
|
|
|
|
|
|||
Residential
|
|
452.9
|
|
|
449.4
|
|
|
445.9
|
|
Commercial and industrial
|
|
40.1
|
|
|
39.9
|
|
|
39.6
|
|
Transport
|
|
0.9
|
|
|
0.8
|
|
|
0.8
|
|
Total customers
|
|
493.9
|
|
|
490.1
|
|
|
486.3
|
|
2019 Form 10-K
|
9
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
10
|
Wisconsin Electric Power Company
|
Regulated Rates
|
|
Regulatory Commission
|
Retail electric, natural gas, and steam
|
|
PSCW
|
Retail electric
|
|
MPSC *
|
Wholesale power
|
|
FERC
|
*
|
Tilden, an iron-ore mine in the Upper Peninsula of Michigan, was our customer through March 31, 2019. Tilden became a customer of UMERC when UMERC's new natural gas-fired generation in the Upper Peninsula began commercial operation. As a result, we no longer have any retail customers in Michigan and our retail electric rates were not regulated by the MPSC after March 31, 2019.
|
Regulatory Commission
|
|
Website
|
PSCW
|
|
https://psc.wi.gov/
|
FERC
|
|
http://www.ferc.gov/
|
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
(in millions)
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|||||||||
Electric
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Wisconsin
|
|
$
|
2,840.7
|
|
|
91.7
|
%
|
|
$
|
2,876.8
|
|
|
89.4
|
%
|
|
$
|
2,901.2
|
|
|
87.0
|
%
|
Michigan *
|
|
26.1
|
|
|
0.9
|
%
|
|
83.8
|
|
|
2.6
|
%
|
|
78.2
|
|
|
2.3
|
%
|
|||
FERC – Wholesale *
|
|
229.9
|
|
|
7.4
|
%
|
|
258.2
|
|
|
8.0
|
%
|
|
356.8
|
|
|
10.7
|
%
|
|||
Total
|
|
3,096.7
|
|
|
100.0
|
%
|
|
3,218.8
|
|
|
100.0
|
%
|
|
3,336.2
|
|
|
100.0
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Natural Gas – Wisconsin
|
|
400.0
|
|
|
100.0
|
%
|
|
406.2
|
|
|
100.0
|
%
|
|
375.5
|
|
|
100.0
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total utility operating revenues
|
|
$
|
3,496.7
|
|
|
|
|
|
$
|
3,625.0
|
|
|
|
|
|
$
|
3,711.7
|
|
|
|
|
*
|
Tilden was our customer through March 31, 2019. Tilden became a customer of UMERC when UMERC's new natural gas-fired generation in the Upper Peninsula of Michigan began commercial operation. Prior to its new generating units achieving commercial operation, UMERC purchased
|
2019 Form 10-K
|
11
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
12
|
Wisconsin Electric Power Company
|
|
|
Number of Employees
|
|
Expiration Date of Current Labor Agreement
|
|
Local 2150 of International Brotherhood of Electrical Workers
|
|
1,547
|
|
|
August 15, 2020
|
Local 420 of International Union of Operating Engineers
|
|
351
|
|
|
September 30, 2021
|
Local 2006 Unit 1 of United Steel Workers of America
|
|
103
|
|
|
October 31, 2021
|
Local 510 of International Brotherhood of Electrical Workers
|
|
4
|
|
|
October 31, 2020
|
Total
|
|
2,005
|
|
|
|
2019 Form 10-K
|
13
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
14
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
15
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
16
|
Wisconsin Electric Power Company
|
•
|
Fluctuations in customer growth and general economic conditions in our service areas. Customer growth and energy use can be negatively impacted by population declines as well as economic factors in our service territories, including workforce reductions, stagnant wage growth, changing levels of support from state and local government for economic development, business closings, and reductions in the level of business investment. We are impacted by economic cycles and the competitiveness of the commercial and industrial customers we serve. Any economic downturn, disruption of financial markets, or reduced incentives by state government for economic development could adversely affect the financial condition of our customers and demand for their products or services. These risks could directly influence the demand for electricity and natural gas as well as the need for
|
2019 Form 10-K
|
17
|
Wisconsin Electric Power Company
|
•
|
Weather conditions. Demand for electricity is greater in the summer and winter months when cooling and heating is necessary. In addition, demand for natural gas peaks in the winter heating season. As a result, our overall results may fluctuate substantially on a seasonal basis. In addition, milder temperatures during the summer cooling season and during the winter heating season may result in lower revenues and net income.
|
•
|
Our customers' continued focus on energy conservation. Our customers' use of electricity and natural gas has decreased as a result of continued individual conservation efforts, including the use of more energy efficient technologies. Customers could also voluntarily reduce their consumption of energy in response to decreases in their disposable income and increases in energy prices. Conservation of energy can be influenced by certain federal and state programs that are intended to influence how consumers use energy. For example, several states, including Wisconsin, have adopted energy efficiency targets to reduce energy consumption by certain dates.
|
2019 Form 10-K
|
18
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
19
|
Wisconsin Electric Power Company
|
•
|
A rating downgrade;
|
•
|
An economic downturn or uncertainty;
|
2019 Form 10-K
|
20
|
Wisconsin Electric Power Company
|
•
|
Prevailing market conditions and rules;
|
•
|
Concerns over foreign economic conditions;
|
•
|
Changes in tax policy;
|
•
|
Changes in investment criteria of institutional investors;
|
•
|
War or the threat of war;
|
•
|
The overall health and view of the utility and financial institution industries; and
|
•
|
Changes in the method of determining LIBOR or the replacement of LIBOR with an alternative reference rate.
|
•
|
Increase borrowing costs under our existing credit facility;
|
•
|
Require the payment of higher interest rates in future financings and possibly reduce the pool of creditors;
|
•
|
Decrease funding sources by limiting our access to the commercial paper market;
|
•
|
Limit the availability of adequate credit support for our operations; and
|
•
|
Trigger collateral requirements in various contracts.
|
•
|
Higher working capital requirements, particularly related to natural gas inventory, accounts receivable, and cash collateral postings;
|
2019 Form 10-K
|
21
|
Wisconsin Electric Power Company
|
•
|
Reduced profitability to the extent that lower revenues, increased bad debt, and interest expense are not recovered through rates;
|
•
|
Higher rates charged to our customers, which could impact our competitive position;
|
•
|
Reduced demand for energy, which could impact revenues and operating expenses; and
|
•
|
Shutting down of generation facilities if the cost of generation exceeds the market price for electricity.
|
2019 Form 10-K
|
22
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
23
|
Wisconsin Electric Power Company
|
Name
|
|
Location
|
|
Fuel
|
|
Number of Generating Units
|
|
Rated Capacity In MW (1)
|
|
||
Coal-fired plants
|
|
|
|
|
|
|
|
|
|
||
ERGS
|
|
Oak Creek, WI
|
|
Coal
|
|
2
|
|
|
1,054
|
|
(2)
|
OCPP
|
|
Oak Creek, WI
|
|
Coal
|
|
4
|
|
|
1,075
|
|
|
Total coal-fired plants
|
|
|
|
|
|
6
|
|
|
2,129
|
|
|
Natural gas-fired plants
|
|
|
|
|
|
|
|
|
|
||
Concord Combustion Turbines
|
|
Watertown, WI
|
|
Natural Gas/Oil
|
|
4
|
|
|
361
|
|
|
Germantown Combustion Turbines
|
|
Germantown, WI
|
|
Natural Gas/Oil
|
|
5
|
|
|
273
|
|
|
Paris Combustion Turbines
|
|
Union Grove, WI
|
|
Natural Gas/Oil
|
|
4
|
|
|
358
|
|
|
PWGS
|
|
Port Washington, WI
|
|
Natural Gas
|
|
2
|
|
|
1,228
|
|
|
VAPP
|
|
Milwaukee, WI
|
|
Natural Gas
|
|
2
|
|
|
265
|
|
|
Total natural gas-fired plants
|
|
|
|
|
|
17
|
|
|
2,485
|
|
|
Renewables
|
|
|
|
|
|
|
|
|
|
||
Hydro Plants (13 in number)
|
|
WI and MI
|
|
Hydro
|
|
30
|
|
|
51
|
|
(3)
|
Rothschild Biomass Plant
|
|
Rothschild, WI
|
|
Biomass
|
|
1
|
|
|
46
|
|
(4)
|
Wind Sites (3 in number)
|
|
WI
|
|
Wind
|
|
198
|
|
|
43
|
|
|
Total renewables
|
|
|
|
|
|
229
|
|
|
140
|
|
|
Total system
|
|
|
|
|
|
252
|
|
|
4,754
|
|
|
(1)
|
Capacity for our electric generation facilities is based on rated capacity, which is the net power output under average operating conditions with equipment in an average state of repair as of a given month in a given year. Values are primarily based on the net dependable expected capacity ratings for summer 2020 established by tests and may change slightly from year to year. The summer period is the most relevant for capacity planning purposes. This is a result of continually reaching demand peaks in the summer months, primarily due to air conditioning demand.
|
(2)
|
This facility is jointly owned by We Power and two other unaffiliated entities. Our share of capacity is equal to We Power's ownership interest of 83.34%.
|
(3)
|
All of our hydroelectric facilities follow FERC guidelines and/or regulations.
|
(4)
|
We have a biomass power plant that uses wood waste and wood shavings to produce electric power as well as steam to support the paper mill's operations. Fuel for the power plant is supplied by both the paper mill and through contracts with biomass suppliers. The plant also has the ability to burn natural gas if wood waste and wood shavings are not available.
|
•
|
Approximately 11,800 miles of natural gas distribution mains,
|
•
|
Approximately 415,800 natural gas lateral services,
|
•
|
Approximately 30 gas distribution gate stations, and
|
2019 Form 10-K
|
24
|
Wisconsin Electric Power Company
|
•
|
LNG storage plant with a total send-out capability of 70,000 Dth per day.
|
2019 Form 10-K
|
25
|
Wisconsin Electric Power Company
|
•
|
WEC Energy Group — Director and Chief Executive Officer since February 2019. President since October 2018.
|
•
|
WE — Chairman of the Board and Chief Executive Officer since February 2019. Director since June 2015. President from May 2016 to November 2018. Executive Vice President - Customer Service and Operations from June 2015 to April 2016. Senior Vice President - Customer Operations from October 2011 to June 2015.
|
•
|
WEC Energy Group — Executive Vice President - External Affairs since June 2015. Senior Vice President - External Affairs from April 2011 to June 2015.
|
•
|
WE — Executive Vice President - External Affairs since June 2015. Senior Vice President - External Affairs from April 2011 to June 2015.
|
•
|
WEC Energy Group — Controller since October 2015. Vice President since June 2015.
|
•
|
WE — Vice President and Controller since October 2015.
|
•
|
Integrys Energy Group — Vice President and Treasurer from December 2010 to June 2015.
|
•
|
WEC Energy Group — Executive Vice President, Corporate Secretary and General Counsel since January 2018. Executive Vice President from September 2017 to January 2018.
|
•
|
WE — Executive Vice President, Corporate Secretary and General Counsel since January 2018. Director since January 2018.
|
•
|
Modine Manufacturing Company – General Counsel, Corporate Secretary, and Vice President - Legal from April 2008 to August 2017. Vice President - Corporate Communications from April 2014 to August 2017.
|
•
|
WEC Energy Group — Senior Executive Vice President and Chief Financial Officer since October 2019. Senior Executive Vice President, Chief Financial Officer and Treasurer from February 2019 to October 2019. Executive Vice President, Chief Financial Officer and Treasurer from October 2018 to February 2019. Executive Vice President and Chief Financial Officer from April 2016 to October 2018. Vice President and Treasurer from February 2013 to March 2016.
|
•
|
WE — Executive Vice President and Chief Financial Officer since October 2019, and from April 2016 to October 2018. Director since April 2016. Executive Vice President, Chief Financial Officer and Treasurer from October 2018 to October 2019. Vice President and Treasurer from February 2013 to March 2016.
|
•
|
WE — President since November 2018. Director since January 2018. Executive Vice President - Generation from April 2016 to November 2018. Senior Vice President - Power Generation from January 2014 to March 2016.
|
•
|
WEC Energy Group — Vice President and Treasurer since October 2019.
|
•
|
WE — Vice President and Treasurer since October 2019.
|
•
|
Controller - Illinois from September 2015 to September 2019. Manager - Financial Planning and Analysis from May 2011 to September 2015.
|
2019 Form 10-K
|
26
|
Wisconsin Electric Power Company
|
As of or for Year Ended December 31
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(in millions)
|
|
2019
|
|
2018
|
|
2017 *
|
|
2016
|
|
2015
|
||||||||||
Operating revenues
|
|
$
|
3,496.7
|
|
|
$
|
3,625.0
|
|
|
$
|
3,711.7
|
|
|
$
|
3,792.8
|
|
|
$
|
3,854.1
|
|
Net income attributed to common shareholder
|
|
362.1
|
|
|
358.3
|
|
|
335.6
|
|
|
364.3
|
|
|
375.7
|
|
|||||
Total assets
|
|
13,360.8
|
|
|
13,538.3
|
|
|
13,121.6
|
|
|
13,371.5
|
|
|
13,139.6
|
|
|||||
Long-term debt and finance and capital lease obligations (excluding current portion)
|
|
5,542.3
|
|
|
5,266.8
|
|
|
5,236.1
|
|
|
5,417.6
|
|
|
5,351.3
|
|
*
|
Reflects the impact of the transfer of our investment in ATC to another subsidiary of WEC Energy Group and the transfer of net assets to UMERC in 2017. See Note 3, Related Parties for more information on these transactions.
|
2019 Form 10-K
|
27
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
28
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
29
|
Wisconsin Electric Power Company
|
|
|
Year Ended December 31
|
||||||||||||||||||||||
(in millions)
|
|
2019
|
|
2018
|
|
B (W)
|
|
Change Related to Flow Through of Tax Repairs
|
|
Change Related to Adoption of New Lease Guidance (Topic 842)
|
|
Remaining Change
B (W) |
||||||||||||
Operating revenues
|
|
$
|
3,496.7
|
|
|
$
|
3,625.0
|
|
|
$
|
(128.3
|
)
|
|
$
|
(13.7
|
)
|
|
$
|
—
|
|
|
$
|
(114.6
|
)
|
Cost of sales
|
|
1,190.7
|
|
|
1,262.1
|
|
|
71.4
|
|
|
—
|
|
|
8.2
|
|
|
63.2
|
|
||||||
Other operation and maintenance
|
|
1,053.1
|
|
|
1,502.4
|
|
|
449.3
|
|
|
10.6
|
|
|
363.3
|
|
|
75.4
|
|
||||||
Depreciation and amortization
|
|
384.4
|
|
|
348.1
|
|
|
(36.3
|
)
|
|
—
|
|
|
(20.6
|
)
|
|
(15.7
|
)
|
||||||
Property and revenue taxes
|
|
108.3
|
|
|
109.9
|
|
|
1.6
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
||||||
Operating income
|
|
760.2
|
|
|
402.5
|
|
|
357.7
|
|
|
(3.1
|
)
|
|
350.9
|
|
|
9.9
|
|
||||||
Other income, net
|
|
22.7
|
|
|
20.2
|
|
|
2.5
|
|
|
—
|
|
|
—
|
|
|
2.5
|
|
||||||
Interest expense
|
|
477.4
|
|
|
120.1
|
|
|
(357.3
|
)
|
|
—
|
|
|
(350.9
|
)
|
|
(6.4
|
)
|
||||||
Income before income taxes
|
|
305.5
|
|
|
302.6
|
|
|
2.9
|
|
|
(3.1
|
)
|
|
—
|
|
|
6.0
|
|
||||||
Income tax benefit
|
|
(57.8
|
)
|
|
(56.9
|
)
|
|
0.9
|
|
|
3.1
|
|
|
—
|
|
|
(2.2
|
)
|
||||||
Preferred stock dividend requirements
|
|
1.2
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net income attributed to common shareholder
|
|
$
|
362.1
|
|
|
$
|
358.3
|
|
|
$
|
3.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.8
|
|
2019 Form 10-K
|
30
|
Wisconsin Electric Power Company
|
|
|
Year Ended December 31
|
||||||||||
(in millions)
|
|
2019
|
|
2018
|
|
B (W)
|
||||||
Electric revenues
|
|
$
|
3,096.7
|
|
|
$
|
3,218.8
|
|
|
$
|
(122.1
|
)
|
Fuel and purchased power
|
|
949.7
|
|
|
1,010.1
|
|
|
60.4
|
|
|||
Total electric margins
|
|
2,147.0
|
|
|
2,208.7
|
|
|
(61.7
|
)
|
|||
|
|
|
|
|
|
|
||||||
Natural gas revenues
|
|
400.0
|
|
|
406.2
|
|
|
(6.2
|
)
|
|||
Cost of natural gas sold
|
|
241.0
|
|
|
252.0
|
|
|
11.0
|
|
|||
Total natural gas margins
|
|
159.0
|
|
|
154.2
|
|
|
4.8
|
|
|||
|
|
|
|
|
|
|
||||||
Total electric and natural gas margins
|
|
2,306.0
|
|
|
2,362.9
|
|
|
(56.9
|
)
|
|||
|
|
|
|
|
|
|
||||||
Other operation and maintenance
|
|
1,053.1
|
|
|
1,502.4
|
|
|
449.3
|
|
|||
Depreciation and amortization
|
|
384.4
|
|
|
348.1
|
|
|
(36.3
|
)
|
|||
Property and revenue taxes
|
|
108.3
|
|
|
109.9
|
|
|
1.6
|
|
|||
Operating income
|
|
$
|
760.2
|
|
|
$
|
402.5
|
|
|
$
|
357.7
|
|
|
|
Year Ended December 31
|
||||||||||
(in millions)
|
|
2019
|
|
2018
|
|
B (W)
|
||||||
Operation and maintenance not included in line items below
|
|
$
|
381.5
|
|
|
$
|
442.7
|
|
|
$
|
61.2
|
|
We Power (1)
|
|
140.9
|
|
|
506.9
|
|
|
366.0
|
|
|||
Transmission (2)
|
|
254.8
|
|
|
265.1
|
|
|
10.3
|
|
|||
Transmission expense related to the flow through of tax repairs (3)
|
|
67.2
|
|
|
77.8
|
|
|
10.6
|
|
|||
Transmission expense related to Tax Legislation (4)
|
|
65.2
|
|
|
67.7
|
|
|
2.5
|
|
|||
Regulatory amortizations and other pass through expenses (5)
|
|
98.2
|
|
|
98.1
|
|
|
(0.1
|
)
|
|||
Earnings sharing mechanism (6)
|
|
38.6
|
|
|
37.2
|
|
|
(1.4
|
)
|
|||
Other
|
|
6.7
|
|
|
6.9
|
|
|
0.2
|
|
|||
Total other operation and maintenance
|
|
$
|
1,053.1
|
|
|
$
|
1,502.4
|
|
|
$
|
449.3
|
|
(1)
|
Represents costs associated with the We Power generation units, including operating and maintenance costs we incurred. During 2018, the amount also included the lease payments that were billed from We Power to us and then recovered in our rates. We adopted ASU 2016-02, Leases (Topic 842), effective January 1, 2019, which revised the previous guidance regarding the accounting for leases. As a result of this adoption, during 2019, $363.3 million of lease expense related to the We Power leases was no longer classified within other operation and maintenance, but was instead recorded as $15.8 million and $347.5 million of depreciation and amortization and interest expense, respectively, in accordance with Topic 842.
|
(2)
|
Represents transmission expense that we are authorized to collect in rates, in accordance with the PSCW's approval of escrow accounting for our ATC and MISO network transmission expenses. As a result, we defer as a regulatory asset or liability the differences between actual transmission costs and those included in rates until recovery or refund is authorized in a future rate proceeding. During 2019 and 2018, $329.4 million and $286.3 million, respectively, of costs were billed to us by transmission providers.
|
(3)
|
Represents additional transmission expense associated with the flow through of tax benefits of our repair-related deferred tax liabilities starting in 2018, in accordance with a settlement agreement with the PSCW, to maintain certain regulatory asset balances at their December 31, 2017 levels. See Note 21, Regulatory Environment, for more information. The decrease in transmission expense associated with the flow through of tax benefits is offset in income taxes.
|
(4)
|
Represents additional transmission expense associated with the May 2018 PSCW order requiring us to use 80% of our current 2018 tax benefit, including the amortization associated with the revaluation of deferred taxes, to reduce our transmission regulatory asset balance. See Note 21, Regulatory Environment, for more information.
|
2019 Form 10-K
|
31
|
Wisconsin Electric Power Company
|
(5)
|
Regulatory amortizations and other pass through expenses are substantially offset in margins and therefore do not have a significant impact on operating income.
|
(6)
|
See Note 21, Regulatory Environment, for more information about our earnings sharing mechanism.
|
|
|
Year Ended December 31
|
|||||||
|
|
MWh (in thousands)
|
|||||||
Electric Sales Volumes
|
|
2019
|
|
2018
|
|
B (W)
|
|||
Customer class
|
|
|
|
|
|
|
|||
Residential
|
|
7,818.1
|
|
|
8,025.1
|
|
|
(207.0
|
)
|
Small commercial and industrial
|
|
8,701.4
|
|
|
8,920.6
|
|
|
(219.2
|
)
|
Large commercial and industrial
|
|
7,221.8
|
|
|
8,457.9
|
|
|
(1,236.1
|
)
|
Other
|
|
134.8
|
|
|
138.7
|
|
|
(3.9
|
)
|
Total retail
|
|
23,876.1
|
|
|
25,542.3
|
|
|
(1,666.2
|
)
|
Wholesale
|
|
1,298.4
|
|
|
1,688.5
|
|
|
(390.1
|
)
|
Resale
|
|
5,213.8
|
|
|
4,931.9
|
|
|
281.9
|
|
Total sales in MWh
|
|
30,388.3
|
|
|
32,162.7
|
|
|
(1,774.4
|
)
|
|
|
Year Ended December 31
|
|||||||
|
|
Therms (in millions)
|
|||||||
Natural Gas Sales Volumes
|
|
2019
|
|
2018
|
|
B (W)
|
|||
Customer class
|
|
|
|
|
|
|
|||
Residential
|
|
404.7
|
|
|
383.2
|
|
|
21.5
|
|
Commercial and industrial
|
|
224.6
|
|
|
217.9
|
|
|
6.7
|
|
Total retail
|
|
629.3
|
|
|
601.1
|
|
|
28.2
|
|
Transport
|
|
343.4
|
|
|
339.2
|
|
|
4.2
|
|
Total sales in therms
|
|
972.7
|
|
|
940.3
|
|
|
32.4
|
|
|
|
Year Ended December 31
|
|||||||
|
|
Degree Days
|
|||||||
Weather *
|
|
2019
|
|
2018
|
|
B (W)
|
|||
Heating (6,556 normal)
|
|
6,835
|
|
|
6,685
|
|
|
2.2
|
%
|
Cooling (739 normal)
|
|
727
|
|
|
929
|
|
|
(21.7
|
)%
|
*
|
Normal degree days are based on a 20-year moving average of monthly temperatures from Mitchell International Airport in Milwaukee, Wisconsin.
|
•
|
A $40.9 million decrease in margins related to lower sales volumes, primarily driven by cooler summer weather during 2019 compared with 2018. As measured by cooling degree days, 2019 was 21.7% cooler than 2018.
|
•
|
A $13.7 million decrease in margins associated with the flow through of tax benefits of our repair-related deferred tax liabilities starting in 2018 in accordance with a settlement agreement with the PSCW to maintain certain regulatory assets at their December 31, 2017 levels. This decrease in margins was offset in income taxes. See Note 21, Regulatory Environment, for more information.
|
2019 Form 10-K
|
32
|
Wisconsin Electric Power Company
|
•
|
An $11.3 million decrease in margins related to Tilden, who owns an iron ore mine in the Upper Peninsula of Michigan. Tilden, who was our customer, became a customer of UMERC after UMERC's new natural gas-fired generating units began commercial operation on March 31, 2019.
|
•
|
A $363.3 million decrease in other operation and maintenance expense resulting from the adoption of the new lease guidance. As discussed under the other operation and maintenance table above, the adoption of Topic 842, effective January 1, 2019, required us to change the income statement classification of our lease payments related to the We Power leases. During 2019, the lease expense related to the We Power leases was no longer classified within other operation and maintenance, but was instead recorded as a component of depreciation and amortization and interest expense in accordance with Topic 842.
|
•
|
A $70.0 million decrease in other operation and maintenance expense related to our power plants, driven by lower maintenance and labor costs associated with our 2019 and 2018 plant retirements, and increases to certain plant-related regulatory assets resulting from decisions included in our December 2019 Wisconsin rate order. Plant retirements included the 2019 retirement of the PIPP and the 2018 retirement of the Pleasant Prairie power plant. See Note 6, Property, Plant, and Equipment, for more information on the plant retirements. See Note 21, Regulatory Environment, for more information on our Wisconsin rate order.
|
•
|
A $10.6 million decrease in transmission expense in 2019 related to the flow through of tax repairs, as discussed in the other operation and maintenance table above. This decrease in transmission expense was offset in income taxes.
|
•
|
A $10.3 million decrease in transmission expense in 2019 related to Tilden. Tilden, who was our customer, became a customer of UMERC after UMERC's natural gas-fired generating units began commercial operation on March 31, 2019.
|
•
|
A $36.3 million increase in depreciation and amortization, driven by assets being placed into service as we continue to execute on our capital plan and additional expense recognized related to the adoption of Topic 842, as discussed in the other operation and maintenance table above.
|
•
|
A $14.4 million net increase in benefit costs, primarily related to higher deferred compensation costs in 2019.
|
|
|
Year Ended December 31
|
||||||||||
(in millions)
|
|
2019
|
|
2018
|
|
B (W)
|
||||||
AFUDC – Equity
|
|
$
|
3.7
|
|
|
$
|
3.9
|
|
|
$
|
(0.2
|
)
|
Non-service components of net periodic benefit costs
|
|
9.2
|
|
|
5.7
|
|
|
3.5
|
|
|||
Interest income
|
|
2.2
|
|
|
2.2
|
|
|
—
|
|
|||
Other, net
|
|
7.6
|
|
|
8.4
|
|
|
(0.8
|
)
|
|||
Other income, net
|
|
$
|
22.7
|
|
|
$
|
20.2
|
|
|
$
|
2.5
|
|
2019 Form 10-K
|
33
|
Wisconsin Electric Power Company
|
|
|
Year Ended December 31
|
||||||||||
(in millions)
|
|
2019
|
|
2018
|
|
B(W)
|
||||||
Interest expense
|
|
$
|
477.4
|
|
|
$
|
120.1
|
|
|
$
|
(357.3
|
)
|
|
|
Year Ended December 31
|
|||||||
|
|
2019
|
|
2018
|
|
B (W)
|
|||
Effective tax rate
|
|
(18.9
|
)%
|
|
(18.8
|
)%
|
|
0.1
|
%
|
(in millions)
|
|
2019
|
|
2018
|
|
Change in 2019 Over 2018
|
||||||
Cash provided by (used in):
|
|
|
|
|
|
|
||||||
Operating activities
|
|
$
|
854.4
|
|
|
$
|
962.2
|
|
|
$
|
(107.8
|
)
|
Investing activities
|
|
(576.9
|
)
|
|
(640.4
|
)
|
|
63.5
|
|
|||
Financing activities
|
|
(278.6
|
)
|
|
(313.9
|
)
|
|
35.3
|
|
2019 Form 10-K
|
34
|
Wisconsin Electric Power Company
|
•
|
A $109.1 million decrease in cash related to lower overall collections from customers, primarily due to lower sales volumes driven by cooler summer weather during 2019, compared with 2018. Also contributing to this decrease was the transfer of a customer to UMERC. Tilden, the owner of an iron ore mine in the Upper Peninsula of Michigan, became a customer of UMERC on April 1, 2019.
|
•
|
A $38.2 million decrease in cash due to higher collateral requirements in 2019, compared with 2018, driven by funding for both open natural gas contracts and settled natural gas contracts. See Note 15, Derivative Instruments, for more information.
|
•
|
A $28.1 million decrease in cash related to an increase in cash paid for income taxes during 2019, compared with 2018. This decrease in cash was primarily due to the utilization of fewer than expected wind production tax credits in our 2018 federal income tax return, which we filed during 2019.
|
•
|
A $50.5 million increase in cash related to a change in the cash flow classification of our principal payments for finance lease obligations due to our adoption of Topic 842. Under Topic 842, our principal payments for finance lease obligations were no longer classified as cash outflows from operating activities during 2019, but were instead classified as cash outflows from financing activities. See Note 12, Leases, for more information on Topic 842 and our finance lease obligations.
|
•
|
A $26.7 million increase in cash primarily related to lower payments for fuel and purchased power during 2019, compared with 2018. Our payments for fuel and purchased power decreased due to the cooler summer weather during 2019 and due to the retirements of the Pleasant Prairie power plant in April 2018 and the PIPP in March 2019.
|
•
|
Net payments of $51.0 million to affiliates during 2018 related to transfers of an ERP system, other software, and equipment.
|
•
|
A $12.6 million decrease in cash paid for capital expenditures during 2019, compared with 2018, which is discussed in more detail below.
|
(in millions)
|
|
2019
|
|
2018
|
|
Change in 2019 Over 2018
|
||||||
Capital expenditures
|
|
$
|
590.6
|
|
|
$
|
603.2
|
|
|
$
|
(12.6
|
)
|
2019 Form 10-K
|
35
|
Wisconsin Electric Power Company
|
•
|
A $77.0 million increase in equity contributions received from our parent during 2019, compared with 2018, to balance our capital structure.
|
•
|
A $56.6 million increase in cash related to lower net repayments of commercial paper during 2019, compared with 2018.
|
•
|
A $50.5 million decrease in cash related to a change in the cash flow classification of our principal payments for finance lease obligations due to our adoption of Topic 842, as discussed above.
|
•
|
A $50.0 million decrease in cash due to higher dividends paid to our parent during 2019, compared with 2018, to balance our capital structure.
|
2019 Form 10-K
|
36
|
Wisconsin Electric Power Company
|
|
|
Payments Due by Period (1)
|
||||||||||||||||||
(in millions)
|
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
Long-term debt obligations (2)
|
|
$
|
5,246.0
|
|
|
$
|
118.7
|
|
|
$
|
526.0
|
|
|
$
|
519.5
|
|
|
$
|
4,081.8
|
|
Finance lease obligations (3)
|
|
7,225.7
|
|
|
401.7
|
|
|
799.2
|
|
|
785.0
|
|
|
5,239.8
|
|
|||||
Operating lease obligations (4)
|
|
18.0
|
|
|
2.6
|
|
|
1.2
|
|
|
1.0
|
|
|
13.2
|
|
|||||
Energy and transportation purchase obligations (5)
|
|
9,627.8
|
|
|
782.3
|
|
|
1,517.8
|
|
|
1,360.0
|
|
|
5,967.7
|
|
|||||
Purchase orders (6)
|
|
378.8
|
|
|
161.9
|
|
|
114.7
|
|
|
49.6
|
|
|
52.6
|
|
|||||
Pension and OPEB funding obligations (7)
|
|
11.0
|
|
|
3.8
|
|
|
7.2
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations
|
|
$
|
22,507.3
|
|
|
$
|
1,471.0
|
|
|
$
|
2,966.1
|
|
|
$
|
2,715.1
|
|
|
$
|
15,355.1
|
|
(1)
|
The amounts included in the table are calculated using current market prices, forward curves, and other estimates.
|
(2)
|
Principal and interest payments on long-term debt (excluding finance lease obligations).
|
(3)
|
Finance lease obligations for power purchase commitments and the leases with We Power. See Note 12, Leases, for more information.
|
(4)
|
Operating lease obligations for land and rail car leases. See Note 12, Leases, for more information.
|
(5)
|
Energy and transportation purchase obligations under various contracts for the procurement of fuel, power, gas supply, and associated transportation related to utility operations.
|
(6)
|
Purchase obligations related to normal business operations, information technology, and other services.
|
2019 Form 10-K
|
37
|
Wisconsin Electric Power Company
|
(7)
|
Obligations for pension and OPEB plans cannot reasonably be estimated beyond 2022.
|
2019 Form 10-K
|
38
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
39
|
Wisconsin Electric Power Company
|
(in millions)
|
|
As of December 31, 2019
|
|
Expected Return on Assets in 2020
|
|||
Pension trust funds
|
|
$
|
1,094.6
|
|
|
6.75
|
%
|
OPEB trust funds
|
|
$
|
228.5
|
|
|
7.00
|
%
|
2019 Form 10-K
|
40
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
41
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
42
|
Wisconsin Electric Power Company
|
Actuarial Assumption
(in millions, except percentages)
|
|
Percentage-Point Change in Assumption
|
|
Impact on Projected Benefit Obligation
|
|
Impact on 2019
Pension Cost
|
||||
Discount rate
|
|
(0.5)
|
|
$
|
63.9
|
|
|
$
|
3.5
|
|
Discount rate
|
|
0.5
|
|
(54.8
|
)
|
|
(3.0
|
)
|
||
Rate of return on plan assets
|
|
(0.5)
|
|
N/A
|
|
|
5.1
|
|
||
Rate of return on plan assets
|
|
0.5
|
|
N/A
|
|
|
(5.1
|
)
|
Actuarial Assumption
(in millions, except percentages)
|
|
Percentage-Point Change in Assumption
|
|
Impact on Postretirement
Benefit Obligation
|
|
Impact on 2019 Postretirement
Benefit Cost
|
||||
Discount rate
|
|
(0.5)
|
|
$
|
14.1
|
|
|
$
|
2.1
|
|
Discount rate
|
|
0.5
|
|
(12.2
|
)
|
|
(2.1
|
)
|
||
Health care cost trend rate
|
|
(0.5)
|
|
(6.1
|
)
|
|
(2.0
|
)
|
||
Health care cost trend rate
|
|
0.5
|
|
7.1
|
|
|
2.3
|
|
||
Rate of return on plan assets
|
|
(0.5)
|
|
N/A
|
|
|
1.0
|
|
||
Rate of return on plan assets
|
|
0.5
|
|
N/A
|
|
|
(1.0
|
)
|
2019 Form 10-K
|
43
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
44
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
45
|
Wisconsin Electric Power Company
|
Year Ended December 31
|
|
|
|
|
|
|
||||||
(in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Operating revenues
|
|
$
|
3,496.7
|
|
|
$
|
3,625.0
|
|
|
$
|
3,711.7
|
|
|
|
|
|
|
|
|
||||||
Operating expenses
|
|
|
|
|
|
|
||||||
Cost of sales
|
|
1,190.7
|
|
|
1,262.1
|
|
|
1,286.4
|
|
|||
Other operation and maintenance
|
|
1,053.1
|
|
|
1,502.4
|
|
|
1,352.0
|
|
|||
Depreciation and amortization
|
|
384.4
|
|
|
348.1
|
|
|
331.6
|
|
|||
Property and revenue taxes
|
|
108.3
|
|
|
109.9
|
|
|
109.6
|
|
|||
Total operating expenses
|
|
2,736.5
|
|
|
3,222.5
|
|
|
3,079.6
|
|
|||
|
|
|
|
|
|
|
||||||
Operating income
|
|
760.2
|
|
|
402.5
|
|
|
632.1
|
|
|||
|
|
|
|
|
|
|
||||||
Other income, net
|
|
22.7
|
|
|
20.2
|
|
|
13.2
|
|
|||
Interest expense
|
|
477.4
|
|
|
120.1
|
|
|
117.3
|
|
|||
Other expense
|
|
(454.7
|
)
|
|
(99.9
|
)
|
|
(104.1
|
)
|
|||
|
|
|
|
|
|
|
||||||
Income before income taxes
|
|
305.5
|
|
|
302.6
|
|
|
528.0
|
|
|||
Income tax expense (benefit)
|
|
(57.8
|
)
|
|
(56.9
|
)
|
|
191.2
|
|
|||
Net income
|
|
363.3
|
|
|
359.5
|
|
|
336.8
|
|
|||
|
|
|
|
|
|
|
||||||
Preferred stock dividend requirements
|
|
1.2
|
|
|
1.2
|
|
|
1.2
|
|
|||
Net income attributed to common shareholder
|
|
$
|
362.1
|
|
|
$
|
358.3
|
|
|
$
|
335.6
|
|
2019 Form 10-K
|
46
|
Wisconsin Electric Power Company
|
At December 31
|
|
|
|
|
||||
(in millions, except share and per share amounts)
|
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
|
||||
Current assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
19.1
|
|
|
$
|
20.2
|
|
Accounts receivable and unbilled revenues, net of reserves of $38.1 and $40.9, respectively
|
|
434.6
|
|
|
472.3
|
|
||
Accounts receivable from related parties
|
|
86.5
|
|
|
112.4
|
|
||
Materials, supplies, and inventories
|
|
229.8
|
|
|
241.4
|
|
||
Prepaid taxes
|
|
104.4
|
|
|
138.4
|
|
||
Other
|
|
33.6
|
|
|
31.6
|
|
||
Current assets
|
|
908.0
|
|
|
1,016.3
|
|
||
|
|
|
|
|
||||
Long-term assets
|
|
|
|
|
||||
Property, plant, and equipment, net of accumulated depreciation and amortization of $4,564.0 and $4,505.5, respectively
|
|
9,586.7
|
|
|
9,528.9
|
|
||
Regulatory assets
|
|
2,755.2
|
|
|
2,902.2
|
|
||
Other
|
|
110.9
|
|
|
90.9
|
|
||
Long-term assets
|
|
12,452.8
|
|
|
12,522.0
|
|
||
Total assets
|
|
$
|
13,360.8
|
|
|
$
|
13,538.3
|
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
|
||||
Current liabilities
|
|
|
|
|
||||
Short-term debt
|
|
$
|
115.5
|
|
|
$
|
134.9
|
|
Current portion of long-term debt
|
|
—
|
|
|
250.0
|
|
||
Current portion of finance and capital lease obligations
|
|
57.8
|
|
|
49.9
|
|
||
Accounts payable
|
|
267.6
|
|
|
248.9
|
|
||
Accounts payable to related parties
|
|
184.5
|
|
|
226.0
|
|
||
Accrued payroll and benefits
|
|
51.3
|
|
|
50.4
|
|
||
Accrued taxes
|
|
12.3
|
|
|
13.6
|
|
||
Other
|
|
105.6
|
|
|
103.2
|
|
||
Current liabilities
|
|
794.6
|
|
|
1,076.9
|
|
||
|
|
|
|
|
||||
Long-term liabilities
|
|
|
|
|
||||
Long-term debt
|
|
2,759.2
|
|
|
2,459.6
|
|
||
Finance and capital lease obligations
|
|
2,783.1
|
|
|
2,807.2
|
|
||
Deferred income taxes
|
|
1,347.4
|
|
|
1,298.3
|
|
||
Regulatory liabilities
|
|
1,744.2
|
|
|
2,002.3
|
|
||
Pension and OPEB obligations
|
|
59.8
|
|
|
118.5
|
|
||
Other
|
|
281.0
|
|
|
284.3
|
|
||
Long-term liabilities
|
|
8,974.7
|
|
|
8,970.2
|
|
||
|
|
|
|
|
||||
Commitments and contingencies (Note 19)
|
|
|
|
|
||||
|
|
|
|
|
||||
Common shareholder's equity
|
|
|
|
|
||||
Common stock – $10 par value; 65,000,000 shares authorized; 33,289,327 shares outstanding
|
|
332.9
|
|
|
332.9
|
|
||
Additional paid in capital
|
|
929.5
|
|
|
831.3
|
|
||
Retained earnings
|
|
2,298.7
|
|
|
2,296.6
|
|
||
Common shareholder's equity
|
|
3,561.1
|
|
|
3,460.8
|
|
||
|
|
|
|
|
||||
Preferred stock
|
|
30.4
|
|
|
30.4
|
|
||
Total liabilities and equity
|
|
$
|
13,360.8
|
|
|
$
|
13,538.3
|
|
2019 Form 10-K
|
47
|
Wisconsin Electric Power Company
|
Year Ended December 31
|
|
|
|
|
|
|
||||||
(in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Operating activities
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
363.3
|
|
|
$
|
359.5
|
|
|
$
|
336.8
|
|
Reconciliation to cash provided by operating activities
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
384.4
|
|
|
348.1
|
|
|
331.6
|
|
|||
Deferred income taxes and investment tax credits, net
|
|
(131.2
|
)
|
|
(0.7
|
)
|
|
109.7
|
|
|||
Contributions and payments related to pension and OPEB plans
|
|
(5.5
|
)
|
|
(6.3
|
)
|
|
(8.3
|
)
|
|||
Payments for liabilities transferred to affiliates
|
|
(4.5
|
)
|
|
(10.1
|
)
|
|
(0.3
|
)
|
|||
Change in –
|
|
|
|
|
|
|
||||||
Accounts receivable and unbilled revenues
|
|
60.3
|
|
|
34.8
|
|
|
(64.9
|
)
|
|||
Materials, supplies, and inventories
|
|
11.6
|
|
|
9.3
|
|
|
20.3
|
|
|||
Prepaid taxes
|
|
34.0
|
|
|
(28.3
|
)
|
|
0.5
|
|
|||
Other current assets
|
|
(5.2
|
)
|
|
13.5
|
|
|
(11.8
|
)
|
|||
Accounts payable
|
|
(22.4
|
)
|
|
13.2
|
|
|
45.8
|
|
|||
Accrued taxes
|
|
(1.3
|
)
|
|
(41.1
|
)
|
|
12.8
|
|
|||
Other current liabilities
|
|
(1.1
|
)
|
|
(5.2
|
)
|
|
12.2
|
|
|||
Other, net
|
|
172.0
|
|
|
275.5
|
|
|
(86.4
|
)
|
|||
Net cash provided by operating activities
|
|
854.4
|
|
|
962.2
|
|
|
698.0
|
|
|||
|
|
|
|
|
|
|
||||||
Investing activities
|
|
|
|
|
|
|
||||||
Capital expenditures
|
|
(590.6
|
)
|
|
(603.2
|
)
|
|
(596.1
|
)
|
|||
Proceeds from the sale of assets
|
|
2.0
|
|
|
1.7
|
|
|
22.9
|
|
|||
Proceeds from assets transferred to affiliates
|
|
0.1
|
|
|
8.8
|
|
|
—
|
|
|||
Payments for assets transferred from affiliates
|
|
—
|
|
|
(59.8
|
)
|
|
—
|
|
|||
Other, net
|
|
11.6
|
|
|
12.1
|
|
|
5.0
|
|
|||
Net cash used in investing activities
|
|
(576.9
|
)
|
|
(640.4
|
)
|
|
(568.2
|
)
|
|||
|
|
|
|
|
|
|
||||||
Financing activities
|
|
|
|
|
|
|
||||||
Change in short-term debt
|
|
(19.4
|
)
|
|
(76.0
|
)
|
|
51.9
|
|
|||
Repayment of subsidiary note to parent
|
|
—
|
|
|
—
|
|
|
(18.5
|
)
|
|||
Issuance of long-term debt
|
|
300.0
|
|
|
300.0
|
|
|
—
|
|
|||
Retirement of long-term debt
|
|
(250.0
|
)
|
|
(250.0
|
)
|
|
—
|
|
|||
Payments for finance lease obligations
|
|
(50.5
|
)
|
|
—
|
|
|
—
|
|
|||
Equity contribution from parent
|
|
105.0
|
|
|
28.0
|
|
|
75.0
|
|
|||
Payment of dividends to parent
|
|
(360.0
|
)
|
|
(310.0
|
)
|
|
(240.0
|
)
|
|||
Other, net
|
|
(3.7
|
)
|
|
(5.9
|
)
|
|
(1.3
|
)
|
|||
Net cash used in financing activities
|
|
(278.6
|
)
|
|
(313.9
|
)
|
|
(132.9
|
)
|
|||
|
|
|
|
|
|
|
||||||
Net change in cash and cash equivalents
|
|
(1.1
|
)
|
|
7.9
|
|
|
(3.1
|
)
|
|||
Cash and cash equivalents at beginning of year
|
|
20.2
|
|
|
12.3
|
|
|
15.4
|
|
|||
Cash and cash equivalents at end of year
|
|
$
|
19.1
|
|
|
$
|
20.2
|
|
|
$
|
12.3
|
|
2019 Form 10-K
|
48
|
Wisconsin Electric Power Company
|
|
|
Wisconsin Electric Power Company Common Shareholder's Equity
|
|
|
|
|
||||||||||||||||||
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Total Common Shareholder's Equity
|
|
Preferred Stock
|
|
Total Equity
|
||||||||||||
(in millions)
|
|
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2016
|
|
$
|
332.9
|
|
|
$
|
1,020.1
|
|
|
$
|
2,140.8
|
|
|
$
|
3,493.8
|
|
|
$
|
30.4
|
|
|
$
|
3,524.2
|
|
Net income attributed to common shareholder
|
|
—
|
|
|
—
|
|
|
335.6
|
|
|
335.6
|
|
|
—
|
|
|
335.6
|
|
||||||
Payment of dividends to parent
|
|
—
|
|
|
—
|
|
|
(240.0
|
)
|
|
(240.0
|
)
|
|
—
|
|
|
(240.0
|
)
|
||||||
Cumulative effect adjustment from adoption of ASU 2016-09
|
|
—
|
|
|
—
|
|
|
11.9
|
|
|
11.9
|
|
|
—
|
|
|
11.9
|
|
||||||
Equity contribution from parent
|
|
—
|
|
|
75.0
|
|
|
—
|
|
|
75.0
|
|
|
—
|
|
|
75.0
|
|
||||||
Transfer of net assets to UMERC
|
|
—
|
|
|
(61.1
|
)
|
|
—
|
|
|
(61.1
|
)
|
|
—
|
|
|
(61.1
|
)
|
||||||
Transfer of ATC ownership interest and related taxes
|
|
—
|
|
|
(228.6
|
)
|
|
—
|
|
|
(228.6
|
)
|
|
—
|
|
|
(228.6
|
)
|
||||||
Settlement of a short-term note receivable between Bostco and our parent company
|
|
—
|
|
|
(4.8
|
)
|
|
—
|
|
|
(4.8
|
)
|
|
—
|
|
|
(4.8
|
)
|
||||||
Stock-based compensation and other
|
|
—
|
|
|
2.1
|
|
|
—
|
|
|
2.1
|
|
|
—
|
|
|
2.1
|
|
||||||
Balance at December 31, 2017
|
|
$
|
332.9
|
|
|
$
|
802.7
|
|
|
$
|
2,248.3
|
|
|
$
|
3,383.9
|
|
|
$
|
30.4
|
|
|
$
|
3,414.3
|
|
Net income attributed to common shareholder
|
|
—
|
|
|
—
|
|
|
358.3
|
|
|
358.3
|
|
|
—
|
|
|
358.3
|
|
||||||
Payment of dividends to parent
|
|
—
|
|
|
—
|
|
|
(310.0
|
)
|
|
(310.0
|
)
|
|
—
|
|
|
(310.0
|
)
|
||||||
Equity contribution from parent
|
|
—
|
|
|
28.0
|
|
|
—
|
|
|
28.0
|
|
|
—
|
|
|
28.0
|
|
||||||
Stock-based compensation and other
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
||||||
Balance at December 31, 2018
|
|
$
|
332.9
|
|
|
$
|
831.3
|
|
|
$
|
2,296.6
|
|
|
$
|
3,460.8
|
|
|
$
|
30.4
|
|
|
$
|
3,491.2
|
|
Net income attributed to common shareholder
|
|
—
|
|
|
—
|
|
|
362.1
|
|
|
362.1
|
|
|
—
|
|
|
362.1
|
|
||||||
Payment of dividends to parent
|
|
—
|
|
|
—
|
|
|
(360.0
|
)
|
|
(360.0
|
)
|
|
—
|
|
|
(360.0
|
)
|
||||||
Equity contribution from parent
|
|
—
|
|
|
105.0
|
|
|
—
|
|
|
105.0
|
|
|
—
|
|
|
105.0
|
|
||||||
Transfer of net assets to UMERC
|
|
—
|
|
|
(7.3
|
)
|
|
—
|
|
|
(7.3
|
)
|
|
—
|
|
|
(7.3
|
)
|
||||||
Stock-based compensation and other
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
0.5
|
|
||||||
Balance at December 31, 2019
|
|
$
|
332.9
|
|
|
$
|
929.5
|
|
|
$
|
2,298.7
|
|
|
$
|
3,561.1
|
|
|
$
|
30.4
|
|
|
$
|
3,591.5
|
|
2019 Form 10-K
|
49
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
50
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
51
|
Wisconsin Electric Power Company
|
(in millions)
|
|
2019
|
|
2018
|
||||
Materials and supplies
|
|
$
|
148.3
|
|
|
$
|
146.1
|
|
Fossil fuel
|
|
51.1
|
|
|
58.7
|
|
||
Natural gas in storage
|
|
30.4
|
|
|
36.6
|
|
||
Total
|
|
$
|
229.8
|
|
|
$
|
241.4
|
|
2019 Form 10-K
|
52
|
Wisconsin Electric Power Company
|
(in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
AFUDC – Debt
|
|
$
|
1.5
|
|
|
$
|
1.5
|
|
|
$
|
1.2
|
|
AFUDC – Equity
|
|
3.7
|
|
|
3.9
|
|
|
3.1
|
|
2019 Form 10-K
|
53
|
Wisconsin Electric Power Company
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Stock options granted
|
|
59,404
|
|
|
81,730
|
|
|
80,770
|
|
|||
|
|
|
|
|
|
|
||||||
Estimated weighted-average fair value per stock option
|
|
$
|
8.60
|
|
|
$
|
7.26
|
|
|
$
|
7.12
|
|
|
|
|
|
|
|
|
||||||
Assumptions used to value the options:
|
|
|
|
|
|
|
||||||
Risk-free interest rate
|
|
2.5% – 2.7%
|
|
|
1.6% – 2.5%
|
|
|
0.7% – 2.5%
|
|
|||
Dividend yield
|
|
3.6
|
%
|
|
3.5
|
%
|
|
3.5
|
%
|
|||
Expected volatility
|
|
17.0
|
%
|
|
18.0
|
%
|
|
19.0
|
%
|
|||
Expected life (years)
|
|
8.5
|
|
|
5.1
|
|
|
6.2
|
|
2019 Form 10-K
|
54
|
Wisconsin Electric Power Company
|
•
|
We did not reassess whether any expired or existing contracts were leases or contained leases.
|
•
|
We did not reassess the lease classification for any expired or existing leases (that is, all leases that were classified as operating leases in accordance with Topic 840 continue to be classified as operating leases, and all leases that were classified as capital leases in accordance with Topic 840 are classified as finance leases).
|
•
|
We did not reassess the accounting for initial direct costs for any existing leases.
|
2019 Form 10-K
|
55
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
56
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
57
|
Wisconsin Electric Power Company
|
(in millions)
|
|
2019
|
|
2018
|
||||
Accounts receivable
|
|
|
|
|
||||
Services provided to ATC
|
|
$
|
1.7
|
|
|
$
|
2.2
|
|
Accounts payable
|
|
|
|
|
||||
Services received from ATC
|
|
19.9
|
|
|
19.4
|
|
2019 Form 10-K
|
58
|
Wisconsin Electric Power Company
|
(in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Lease agreements
|
|
|
|
|
|
|
|
|
|
|||
Lease payments to We Power (1)
|
|
$
|
393.2
|
|
|
$
|
373.7
|
|
|
$
|
420.5
|
|
CWIP billed to We Power
|
|
35.1
|
|
|
39.5
|
|
|
57.3
|
|
|||
Transactions with WBS
|
|
|
|
|
|
|
||||||
Billings to WBS (2)
|
|
102.6
|
|
|
61.5
|
|
|
255.7
|
|
|||
Billings from WBS (2)
|
|
205.3
|
|
|
243.4
|
|
(6)
|
215.4
|
|
|||
Transactions with WPS
|
|
|
|
|
|
|
||||||
Natural gas related purchases from WPS (3)
|
|
2.0
|
|
|
1.9
|
|
|
1.6
|
|
|||
Billings to WPS (2)
|
|
13.2
|
|
|
17.8
|
|
|
28.2
|
|
|||
Billings from WPS (2)
|
|
9.3
|
|
|
10.9
|
|
|
4.5
|
|
|||
Transactions with WG
|
|
|
|
|
|
|
||||||
Natural gas related purchases from WG (3)
|
|
5.4
|
|
|
5.3
|
|
|
5.3
|
|
|||
Billings to WG (2)
|
|
41.1
|
|
|
59.0
|
|
(7)
|
64.0
|
|
|||
Billings from WG (2)
|
|
30.1
|
|
|
32.6
|
|
|
23.1
|
|
|||
Transactions with UMERC
|
|
|
|
|
|
|
||||||
Electric sales to UMERC (4)
|
|
7.9
|
|
|
29.6
|
|
|
30.8
|
|
|||
Billings to UMERC (2)
|
|
10.5
|
|
|
15.8
|
|
|
125.5
|
|
|||
Transactions with Bluewater (5)
|
|
|
|
|
|
|
||||||
Storage service fees
|
|
14.2
|
|
|
15.0
|
|
|
2.7
|
|
|||
Natural gas related sales to Bluewater (3)
|
|
2.3
|
|
|
—
|
|
|
—
|
|
|||
Transactions with ATC
|
|
|
|
|
|
|
||||||
Charges to ATC for services and construction
|
|
14.9
|
|
|
13.9
|
|
|
10.9
|
|
|||
Charges from ATC for network transmission services
|
|
230.6
|
|
|
232.0
|
|
|
241.4
|
|
|||
Refund from ATC related to a FERC audit
|
|
—
|
|
|
15.4
|
|
|
—
|
|
|||
Refund from ATC per FERC ROE order
|
|
—
|
|
|
—
|
|
|
19.4
|
|
(1)
|
We make lease payments to We Power, another subsidiary of WEC Energy Group, for PWGS Units 1 and 2 and ERGS Units 1 and 2. Lease payments were reduced in 2018 as a result of tax savings related to the Tax Legislation.
|
(2)
|
Includes amounts billed for services, pass through costs, asset and liability transfers, and other items in accordance with the approved AIAs. As required by FERC regulations for centralized service companies, WBS renders services at cost. In addition, all services provided by any regulated subsidiary to another regulated subsidiary or WBS are priced at cost.
|
(3)
|
Includes amounts related to the purchase or sale of natural gas and/or pipeline capacity.
|
(4)
|
On March 31, 2019, UMERC's new natural gas-fired generation in the Upper Peninsula of Michigan began commercial operation. Prior to its generating units achieving commercial operation, UMERC purchased a portion of its power from us. See below for more information on UMERC.
|
(5)
|
WEC Energy Group's acquisition of Bluewater was completed on June 30, 2017. See below for more information.
|
(6)
|
Includes $10.0 million for the transfer of certain benefit-related liabilities to WBS and $59.8 million for the transfer of certain software assets from WBS.
|
(7)
|
Includes $5.3 million for the transfer of certain software assets to WG.
|
2019 Form 10-K
|
59
|
Wisconsin Electric Power Company
|
|
|
Wisconsin Electric Power Company Consolidated
|
||||||
|
|
Year Ended December 31
|
||||||
(in millions)
|
|
2019
|
|
2018
|
||||
Electric utility
|
|
$
|
3,088.3
|
|
|
$
|
3,212.7
|
|
Natural gas utility
|
|
399.0
|
|
|
405.1
|
|
||
Total revenues from contracts with customers
|
|
3,487.3
|
|
|
3,617.8
|
|
||
Other operating revenues
|
|
9.4
|
|
|
7.2
|
|
||
Total operating revenues
|
|
$
|
3,496.7
|
|
|
$
|
3,625.0
|
|
2019 Form 10-K
|
60
|
Wisconsin Electric Power Company
|
|
|
Electric Utility Operating Revenues
|
||||||
|
|
Year Ended December 31
|
||||||
(in millions)
|
|
2019
|
|
2018
|
||||
Residential
|
|
$
|
1,206.7
|
|
|
$
|
1,220.8
|
|
Small commercial and industrial
|
|
1,010.9
|
|
|
1,020.0
|
|
||
Large commercial and industrial
|
|
583.9
|
|
|
656.6
|
|
||
Other
|
|
20.6
|
|
|
20.7
|
|
||
Total retail revenues
|
|
2,822.1
|
|
|
2,918.1
|
|
||
Wholesale
|
|
93.8
|
|
|
108.5
|
|
||
Resale
|
|
132.7
|
|
|
153.7
|
|
||
Steam
|
|
23.3
|
|
|
24.1
|
|
||
Other utility revenues
|
|
16.4
|
|
|
8.3
|
|
||
Total electric utility operating revenues
|
|
$
|
3,088.3
|
|
|
$
|
3,212.7
|
|
|
|
Natural Gas Utility Operating Revenues
|
||||||
|
|
Year Ended December 31
|
||||||
(in millions)
|
|
2019
|
|
2018
|
||||
Residential
|
|
$
|
261.7
|
|
|
$
|
264.3
|
|
Commercial and industrial
|
|
121.2
|
|
|
126.3
|
|
||
Total retail revenues
|
|
382.9
|
|
|
390.6
|
|
||
Transport
|
|
13.6
|
|
|
13.4
|
|
||
Other utility revenues
|
|
2.5
|
|
|
1.1
|
|
||
Total natural gas utility operating revenues
|
|
$
|
399.0
|
|
|
$
|
405.1
|
|
|
|
Year Ended December 31
|
||||||
(in millions)
|
|
2019
|
|
2018
|
||||
Late payment charges
|
|
$
|
8.2
|
|
|
$
|
8.2
|
|
Leases
|
|
2.9
|
|
|
2.9
|
|
||
Alternative revenues *
|
|
(1.7
|
)
|
|
(3.9
|
)
|
||
Total other operating revenues
|
|
$
|
9.4
|
|
|
$
|
7.2
|
|
*
|
Negative amounts can result from alternative revenues being reversed to revenues from contracts with customers as the customer is billed for these alternative revenues. Negative amounts can also result from revenues to be refunded to customers subject to wholesale true-ups, as discussed in Note 1(d), Operating Revenues.
|
2019 Form 10-K
|
61
|
Wisconsin Electric Power Company
|
(in millions)
|
|
2019
|
|
2018
|
|
See Note
|
||||
Regulatory assets (1) (2)
|
|
|
|
|
|
|
||||
Finance and capital leases
|
|
$
|
930.5
|
|
|
$
|
869.3
|
|
|
12
|
Plant retirements (3)
|
|
788.8
|
|
|
754.1
|
|
|
6
|
||
Pension and OPEB costs (4)
|
|
459.4
|
|
|
490.6
|
|
|
16
|
||
Income tax related items (5)
|
|
403.2
|
|
|
317.9
|
|
|
13
|
||
SSR (6)
|
|
151.5
|
|
|
316.7
|
|
|
21
|
||
Electric transmission costs
|
|
—
|
|
|
57.8
|
|
|
21
|
||
Other, net
|
|
21.8
|
|
|
95.9
|
|
|
|
||
Total regulatory assets
|
|
$
|
2,755.2
|
|
|
$
|
2,902.3
|
|
|
|
|
|
|
|
|
|
|
||||
Balance sheet presentation
|
|
|
|
|
|
|
||||
Other current assets
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
|
Regulatory assets
|
|
2,755.2
|
|
|
2,902.2
|
|
|
|
||
Total regulatory assets
|
|
$
|
2,755.2
|
|
|
$
|
2,902.3
|
|
|
|
(1)
|
Based on prior and current rate treatment, we believe it is probable that we will continue to recover from customers the regulatory assets in this table.
|
(2)
|
As of December 31, 2019, we had $10.0 million of regulatory assets not earning a return, $28.6 million of regulatory assets earning a return based on short-term interest rates, and $151.5 million of regulatory assets earning a return based on long-term interest rates. The regulatory assets not earning a return relate to certain environmental remediation costs, the recovery of which depends on the timing of the actual expenditures. The other regulatory assets in the table either earn a return at our weighted average cost of capital or the cash has not yet been expended, in which case the regulatory assets are offset by liabilities.
|
(3)
|
In accordance with our rate order issued by the PSCW in December 2019, amounts previously collected from customers for the future removal of our recently retired plants were used to reduce our unrecovered plant balances during December 2019. Any additional removal costs that we incur will increase our plant retirement regulatory assets.
|
(4)
|
Primarily represents the unrecognized future pension and OPEB costs related to our defined benefit pension and OPEB plans. We are authorized recovery of these regulatory assets over the average remaining service life of each plan.
|
(5)
|
For information on the flow through of tax repairs and the regulatory treatment of the impacts of the Tax Legislation, see Note 21, Regulatory Environment.
|
(6)
|
As a result of the rate order we received from the PSCW in December 2019, the regulatory liability related to our mines deferral was offset against our SSR regulatory asset during December 2019. The rate order also authorized recovery of our SSR regulatory asset over a 15-year period that began on January 1, 2020.
|
2019 Form 10-K
|
62
|
Wisconsin Electric Power Company
|
(in millions)
|
|
2019
|
|
2018
|
|
See Note
|
||||
Regulatory liabilities
|
|
|
|
|
|
|
||||
Income tax related items (1)
|
|
$
|
888.1
|
|
|
$
|
1,024.8
|
|
|
13
|
Removal costs (2)
|
|
654.7
|
|
|
748.1
|
|
|
|
||
Pension and OPEB benefits (3)
|
|
120.4
|
|
|
74.7
|
|
|
16
|
||
Electric transmission costs (4)
|
|
38.6
|
|
|
—
|
|
|
21
|
||
Uncollectible expense (5)
|
|
28.8
|
|
|
16.4
|
|
|
1(d)
|
||
Energy efficiency programs (6)
|
|
15.8
|
|
|
13.5
|
|
|
|
||
Mines deferral (7)
|
|
—
|
|
|
120.8
|
|
|
|
||
Other, net
|
|
9.8
|
|
|
15.9
|
|
|
|
||
Total regulatory liabilities
|
|
$
|
1,756.2
|
|
|
$
|
2,014.2
|
|
|
|
|
|
|
|
|
|
|
||||
Balance sheet presentation
|
|
|
|
|
|
|
||||
Other current liabilities
|
|
$
|
12.0
|
|
|
$
|
11.9
|
|
|
|
Regulatory liabilities
|
|
1,744.2
|
|
|
2,002.3
|
|
|
|
||
Total regulatory liabilities
|
|
$
|
1,756.2
|
|
|
$
|
2,014.2
|
|
|
|
(1)
|
For information on the regulatory treatment of the impacts of the Tax Legislation, see Note 21, Regulatory Environment.
|
(2)
|
Represents amounts collected from customers to cover the future cost of property, plant, and equipment removals that are not legally required. Legal obligations related to the removal of property, plant, and equipment are recorded as AROs. See Note 7, Asset Retirement Obligations, for more information on our legal obligations.
|
(3)
|
Primarily represents the unrecognized future pension and OPEB benefits related to our defined benefit pension and OPEB plans. We will amortize these regulatory liabilities into net periodic benefit cost over the average remaining service life of each plan.
|
(4)
|
Based on orders received from the PSCW, we were required to apply the refunds due to customers from our earnings sharing mechanism to our electric transmission escrow through 2019. As a result, $38.6 million of our earnings sharing refunds were reflected in our electric transmission regulatory liability at December 31, 2019, and $37.2 million of our earnings sharing refunds were netted against our electric transmission regulatory asset at December 31, 2018.
|
(5)
|
Represents amounts refundable to customers related to our uncollectible expense tracking mechanism. This mechanism allows us to recover or refund the difference between actual uncollectible write-offs and the amounts recovered in rates.
|
(6)
|
Represents amounts refundable to customers related to programs designed to meet energy efficiency standards.
|
(7)
|
Represents the deferral of revenues less the associated cost of sales related to Tilden, which were not included in the PSCW's 2015 rate order. As a result of the rate order we received from the PSCW in December 2019, this regulatory liability was offset against our SSR regulatory asset during December 2019.
|
2019 Form 10-K
|
63
|
Wisconsin Electric Power Company
|
(in millions)
|
|
2019
|
|
2018
|
||||
Electric – generation
|
|
$
|
3,623.4
|
|
|
$
|
3,560.0
|
|
Electric – distribution
|
|
5,086.4
|
|
|
4,837.9
|
|
||
Natural gas – distribution, storage, and transmission
|
|
1,358.0
|
|
|
1,269.6
|
|
||
Property, plant, and equipment to be retired
|
|
—
|
|
|
174.8
|
|
||
Other
|
|
803.2
|
|
|
801.8
|
|
||
Less: Accumulated depreciation
|
|
3,397.0
|
|
|
3,239.4
|
|
||
Net
|
|
7,474.0
|
|
|
7,404.7
|
|
||
CWIP
|
|
190.8
|
|
|
124.7
|
|
||
Net utility property, plant, and equipment
|
|
7,664.8
|
|
|
7,529.4
|
|
||
|
|
|
|
|
||||
Property under finance/capital leases
|
|
3,077.4
|
|
|
3,043.5
|
|
||
Less: Accumulated amortization
|
|
1,167.0
|
|
|
1,055.6
|
|
||
Net leased facilities
|
|
1,910.4
|
|
|
1,987.9
|
|
||
|
|
|
|
|
||||
Non-utility and other property, plant, and equipment
|
|
11.5
|
|
|
11.6
|
|
||
|
|
|
|
|
||||
Total property, plant, and equipment
|
|
$
|
9,586.7
|
|
|
$
|
9,528.9
|
|
2019 Form 10-K
|
64
|
Wisconsin Electric Power Company
|
(in millions)
|
|
2019
|
|
2018
|
||||
Severance liability at January 1
|
|
$
|
12.9
|
|
|
$
|
25.8
|
|
Severance payments
|
|
(5.7
|
)
|
|
(9.9
|
)
|
||
Other
|
|
(5.1
|
)
|
|
(3.0
|
)
|
||
Total severance liability at December 31
|
|
$
|
2.1
|
|
|
$
|
12.9
|
|
(in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Balance as of January 1
|
|
$
|
70.7
|
|
|
$
|
68.3
|
|
|
$
|
61.5
|
|
Accretion
|
|
3.6
|
|
|
3.3
|
|
|
3.2
|
|
|||
Additions and revisions to estimated cash flows
|
|
(8.4
|
)
|
*
|
1.0
|
|
|
5.5
|
|
|||
Liabilities settled
|
|
(0.9
|
)
|
|
(1.9
|
)
|
|
(1.9
|
)
|
|||
Balance as of December 31
|
|
$
|
65.0
|
|
|
$
|
70.7
|
|
|
$
|
68.3
|
|
*
|
AROs decreased $7.3 million due to revisions made to estimated cash flows for the abatement of asbestos.
|
(in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Stock options
|
|
$
|
1.7
|
|
|
$
|
2.0
|
|
|
$
|
1.3
|
|
Restricted stock
|
|
2.7
|
|
|
3.0
|
|
|
0.8
|
|
|||
Performance units
|
|
17.9
|
|
|
9.6
|
|
|
9.9
|
|
|||
Stock-based compensation expense
|
|
$
|
22.3
|
|
|
$
|
14.6
|
|
|
$
|
12.0
|
|
Related tax benefit
|
|
$
|
6.1
|
|
|
$
|
4.0
|
|
|
$
|
4.8
|
|
2019 Form 10-K
|
65
|
Wisconsin Electric Power Company
|
Stock Options
|
|
Number of Options
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Life
(in years)
|
|
Aggregate Intrinsic Value
(in millions)
|
|||||
Outstanding as of January 1, 2019
|
|
698,814
|
|
|
$
|
43.64
|
|
|
|
|
|
||
Granted
|
|
59,404
|
|
|
$
|
68.18
|
|
|
|
|
|
||
Exercised
|
|
(183,459
|
)
|
|
$
|
34.50
|
|
|
|
|
|
||
Transferred
|
|
53,399
|
|
|
$
|
48.30
|
|
|
|
|
|
||
Forfeited
|
|
(1,897
|
)
|
|
$
|
63.86
|
|
|
|
|
|
||
Outstanding as of December 31, 2019
|
|
626,261
|
|
|
$
|
48.98
|
|
|
5.1
|
|
$
|
27.1
|
|
Exercisable as of December 31, 2019
|
|
470,982
|
|
|
$
|
43.85
|
|
|
4.1
|
|
$
|
22.8
|
|
Restricted Shares
|
|
Number of Shares
|
|
Weighted-Average Grant Date Fair Value
|
|||
Outstanding and unvested as of January 1, 2019
|
|
9,851
|
|
|
$
|
60.53
|
|
Granted
|
|
5,181
|
|
|
$
|
68.18
|
|
Released
|
|
(5,220
|
)
|
|
$
|
58.32
|
|
Transferred
|
|
360
|
|
|
$
|
59.94
|
|
Forfeited
|
|
(436
|
)
|
|
$
|
64.52
|
|
Outstanding and unvested as of December 31, 2019
|
|
9,736
|
|
|
$
|
65.58
|
|
2019 Form 10-K
|
66
|
Wisconsin Electric Power Company
|
(in millions, except share and per share amounts)
|
|
Shares Authorized
|
|
Shares Outstanding
|
|
Redemption Price Per Share
|
|
Total
|
||||||
$100 par value, Six Per Cent. Preferred Stock
|
|
45,000
|
|
|
44,498
|
|
|
—
|
|
|
$
|
4.4
|
|
|
$100 par value, Serial Preferred Stock 3.60% Series
|
|
2,286,500
|
|
|
260,000
|
|
|
$
|
101
|
|
|
26.0
|
|
|
$25 par value, Serial Preferred Stock
|
|
5,000,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total
|
|
|
|
|
|
|
|
$
|
30.4
|
|
2019 Form 10-K
|
67
|
Wisconsin Electric Power Company
|
(in millions, except percentages)
|
|
2019
|
|
2018
|
||||
Commercial paper
|
|
|
|
|
||||
Amount outstanding at December 31
|
|
$
|
115.5
|
|
|
$
|
134.9
|
|
Average interest rate on amounts outstanding at December 31
|
|
2.03
|
%
|
|
2.96
|
%
|
(in millions)
|
|
Maturity
|
|
2019
|
||
Revolving credit facility
|
|
October 2022
|
|
$
|
500.0
|
|
|
|
|
|
|
||
Less:
|
|
|
|
|
||
Letters of credit issued inside credit facility
|
|
|
|
$
|
1.0
|
|
Commercial paper outstanding
|
|
|
|
115.5
|
|
|
Available capacity under existing agreement
|
|
|
|
$
|
383.5
|
|
2019 Form 10-K
|
68
|
Wisconsin Electric Power Company
|
(in millions)
|
|
|
|
|
|
2019
|
|
2018
|
||
Long-term debt
|
|
Interest Rate
|
|
Year Due
|
|
|
|
|
||
Debentures (unsecured)
|
|
4.25%
|
|
2019
|
|
—
|
|
|
250.0
|
|
|
|
2.95%
|
|
2021
|
|
300.0
|
|
|
300.0
|
|
|
|
2.05%
|
|
2024
|
|
300.0
|
|
|
—
|
|
|
|
3.10%
|
|
2025
|
|
250.0
|
|
|
250.0
|
|
|
|
6.50%
|
|
2028
|
|
150.0
|
|
|
150.0
|
|
|
|
5.625%
|
|
2033
|
|
335.0
|
|
|
335.0
|
|
|
|
5.70%
|
|
2036
|
|
300.0
|
|
|
300.0
|
|
|
|
3.65%
|
|
2042
|
|
250.0
|
|
|
250.0
|
|
|
|
4.25%
|
|
2044
|
|
250.0
|
|
|
250.0
|
|
|
|
4.30%
|
|
2045
|
|
250.0
|
|
|
250.0
|
|
|
|
4.30%
|
|
2048
|
|
300.0
|
|
|
300.0
|
|
|
|
6.875%
|
|
2095
|
|
100.0
|
|
|
100.0
|
|
Total
|
|
|
|
|
|
2,785.0
|
|
|
2,735.0
|
|
Unamortized debt issuance costs
|
|
|
|
|
|
(8.0
|
)
|
|
(6.0
|
)
|
Unamortized discount, net
|
|
|
|
|
|
(17.8
|
)
|
|
(19.4
|
)
|
Total long-term debt, including current portion
|
|
|
|
|
|
2,759.2
|
|
|
2,709.6
|
|
Current portion of long-term debt
|
|
|
|
|
|
—
|
|
|
(250.0
|
)
|
Total long-term debt
|
|
|
|
|
|
2,759.2
|
|
|
2,459.6
|
|
•
|
Land we are leasing related to our Rothschild biomass plant through June 2051.
|
•
|
Rail cars we are leasing to transport coal to various generating facilities through February 2021.
|
•
|
Various office space leases.
|
2019 Form 10-K
|
69
|
Wisconsin Electric Power Company
|
•
|
We recorded our minimum lease payments under the power purchase contract as purchased power expense in cost of sales on our income statements.
|
•
|
We recorded our minimum lease payments under our leases with We Power as rent expense in other operation and maintenance in our income statements.
|
•
|
We recorded the difference between the minimum lease payments and the sum of imputed interest and amortization costs calculated under finance lease accounting rules as a deferred regulatory asset on our balance sheets.
|
•
|
Effective January 1, 2019, the minimum lease payments under the power purchase contract were no longer classified within cost of sales in our income statements, but were instead recorded as a component of depreciation and amortization and interest expense in accordance with Topic 980-842, Regulated Operations – Leases.
|
•
|
Similarly, the lease payments related to our leases with We Power were no longer classified within other operation and maintenance in our income statements, but were also divided between depreciation and amortization expense and interest expense in accordance with Topic 980-842.
|
•
|
In accordance with Topic 980-842, the timing of lease expense did not change for these finance leases upon adoption of Topic 842, and still resembled the expense recognition pattern of an operating lease, as the amortization of the right of use assets was modified from what would typically be recorded for a finance lease under Topic 842.
|
•
|
We continue to record the difference between the minimum lease payments and the sum of imputed interest and unadjusted amortization costs calculated under the finance lease accounting rules as a deferred regulatory asset on our balance sheets.
|
2019 Form 10-K
|
70
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
71
|
Wisconsin Electric Power Company
|
(in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Long-term power purchase commitment
|
|
$
|
8.2
|
|
|
$
|
7.7
|
|
|
$
|
7.2
|
|
We Power leases
|
|
363.3
|
|
|
363.3
|
|
|
363.3
|
|
|||
Total finance/capital lease expense (1)
|
|
$
|
371.5
|
|
|
$
|
371.0
|
|
|
$
|
370.5
|
|
|
|
|
|
|
|
|
||||||
Operating lease expense (2)
|
|
2.6
|
|
|
2.7
|
|
|
3.7
|
|
|||
Total lease expense
|
|
$
|
374.1
|
|
|
$
|
373.7
|
|
|
$
|
374.2
|
|
|
|
|
|
|
|
|
||||||
Other information
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
|
|
|
|
||||||
Operating cash flows for finance/capital leases (3)
|
|
$
|
350.9
|
|
|
$
|
381.4
|
|
|
$
|
427.7
|
|
Operating cash flows for operating leases
|
|
$
|
2.6
|
|
|
$
|
2.7
|
|
|
$
|
3.5
|
|
Financing cash flows for finance leases (3)
|
|
$
|
50.5
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
||||||
Non-cash activity – right of use assets obtained in exchange for operating lease liabilities
|
|
$
|
13.0
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||||
Weighted-average remaining lease term – finance leases
|
|
18.6 years
|
|
|
|
|
|
|||||
Weighted-average remaining lease term – operating leases
|
|
25.0 years
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
||||||
Weighted-average discount rate – finance leases (4)
|
|
13.9
|
%
|
|
|
|
|
|||||
Weighted average discount rate – operating leases (4)
|
|
4.5
|
%
|
|
|
|
|
(1)
|
For the year ended December 31, 2019, total finance lease expense included amortization of right of use assets in the amount of $20.6 million (included in depreciation and amortization expense), and interest on lease liabilities of $350.9 million (included in interest expense). For the years ended December 31, 2018, and 2017, total capital lease cost related to the long-term power purchase agreement was included in cost of sales and total capital lease cost related to the PWGS and ERGS units was included in other operation and maintenance.
|
(2)
|
Operating lease expense was included as a component of operation and maintenance for the years ended December 31, 2019, 2018, and 2017.
|
(3)
|
Prior to our adoption of Topic 842 on January 1, 2019, all cash flows related to capital leases were recorded as a component of operating cash flows.
|
(4)
|
Because our operating leases do not provide an implicit rate of return, we used the fully collateralized incremental borrowing rates based upon information available for similarly rated companies in determining the present value of lease payments for our operating leases. For our finance leases, the rate implicit in each lease was readily determinable.
|
2019 Form 10-K
|
72
|
Wisconsin Electric Power Company
|
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Long-term power purchase commitment
|
|
|
|
|
||||
Under finance/capital lease
|
|
$
|
140.3
|
|
|
$
|
140.3
|
|
Accumulated amortization
|
|
(126.6
|
)
|
|
(120.9
|
)
|
||
Total long-term power purchase commitment
|
|
$
|
13.7
|
|
|
$
|
19.4
|
|
|
|
|
|
|
||||
PWGS
|
|
|
|
|
||||
Under finance/capital lease
|
|
$
|
742.7
|
|
|
$
|
736.9
|
|
Accumulated amortization
|
|
(367.6
|
)
|
|
(335.9
|
)
|
||
Total PWGS
|
|
$
|
375.1
|
|
|
$
|
401.0
|
|
|
|
|
|
|
||||
ERGS
|
|
|
|
|
||||
Under finance/capital lease
|
|
$
|
2,194.4
|
|
|
$
|
2,166.3
|
|
Accumulated amortization
|
|
(672.8
|
)
|
|
(598.8
|
)
|
||
Total ERGS
|
|
$
|
1,521.6
|
|
|
$
|
1,567.5
|
|
|
|
|
|
|
||||
Total finance lease right of use assets/capital lease assets
|
|
$
|
1,910.4
|
|
|
$
|
1,987.9
|
|
(in millions)
|
|
Total Operating Leases
|
|
Power Purchase Commitment
|
|
PWGS
|
|
ERGS
|
|
Total Finance Leases
|
||||||||||
2020
|
|
$
|
2.6
|
|
|
$
|
8.8
|
|
|
$
|
98.5
|
|
|
$
|
294.4
|
|
|
$
|
401.7
|
|
2021
|
|
0.7
|
|
|
9.4
|
|
|
98.5
|
|
|
294.4
|
|
|
402.3
|
|
|||||
2022
|
|
0.5
|
|
|
4.2
|
|
|
98.5
|
|
|
294.2
|
|
|
396.9
|
|
|||||
2023
|
|
0.5
|
|
|
—
|
|
|
98.5
|
|
|
294.1
|
|
|
392.6
|
|
|||||
2024
|
|
0.5
|
|
|
—
|
|
|
98.4
|
|
|
294.0
|
|
|
392.4
|
|
|||||
Thereafter
|
|
13.2
|
|
|
—
|
|
|
681.7
|
|
|
4,558.1
|
|
|
5,239.8
|
|
|||||
Total minimum lease payments
|
|
18.0
|
|
|
22.4
|
|
|
1,174.1
|
|
|
6,029.2
|
|
|
7,225.7
|
|
|||||
Less: Interest
|
|
(7.4
|
)
|
|
(4.0
|
)
|
|
(556.3
|
)
|
|
(3,824.5
|
)
|
|
(4,384.8
|
)
|
|||||
Present value of minimum lease payments
|
|
10.6
|
|
|
18.4
|
|
|
617.8
|
|
|
2,204.7
|
|
|
2,840.9
|
|
|||||
Less: Short-term lease liabilities
|
|
(2.2
|
)
|
|
(6.3
|
)
|
|
(25.4
|
)
|
|
(26.1
|
)
|
|
(57.8
|
)
|
|||||
Long-term lease liabilities
|
|
$
|
8.4
|
|
|
$
|
12.1
|
|
|
$
|
592.4
|
|
|
$
|
2,178.6
|
|
|
$
|
2,783.1
|
|
(in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Current tax expense (benefit)
|
|
$
|
73.4
|
|
|
$
|
(56.2
|
)
|
|
$
|
81.5
|
|
Deferred income tax expense (benefit), net
|
|
(128.9
|
)
|
|
0.1
|
|
|
110.6
|
|
|||
Investment tax credit, net
|
|
(2.3
|
)
|
|
(0.8
|
)
|
|
(0.9
|
)
|
|||
Total income tax expense (benefit)
|
|
$
|
(57.8
|
)
|
|
$
|
(56.9
|
)
|
|
$
|
191.2
|
|
2019 Form 10-K
|
73
|
Wisconsin Electric Power Company
|
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
(in millions)
|
|
Amount
|
|
Effective Tax Rate
|
|
Amount
|
|
Effective Tax Rate
|
|
Amount
|
|
Effective Tax Rate
|
|||||||||
Statutory federal income tax
|
|
$
|
63.9
|
|
|
21.0
|
%
|
|
$
|
63.3
|
|
|
21.0
|
%
|
|
$
|
184.4
|
|
|
35.0
|
%
|
State income taxes net of federal tax benefit
|
|
20.2
|
|
|
6.6
|
%
|
|
19.6
|
|
|
6.5
|
%
|
|
27.9
|
|
|
5.3
|
%
|
|||
Tax repairs *
|
|
(122.9
|
)
|
|
(40.1
|
)%
|
|
(120.7
|
)
|
|
(39.9
|
)%
|
|
—
|
|
|
—
|
%
|
|||
Federal excess amortization
|
|
(16.1
|
)
|
|
(5.3
|
)%
|
|
(15.5
|
)
|
|
(5.1
|
)%
|
|
—
|
|
|
—
|
%
|
|||
Wind production tax credits
|
|
(9.3
|
)
|
|
(3.0
|
)%
|
|
(9.4
|
)
|
|
(3.1
|
)%
|
|
(17.6
|
)
|
|
(3.3
|
)%
|
|||
Investment tax credit restored
|
|
(2.3
|
)
|
|
(0.8
|
)%
|
|
(0.8
|
)
|
|
(0.3
|
)%
|
|
(0.9
|
)
|
|
(0.2
|
)%
|
|||
AFUDC – Equity
|
|
(0.8
|
)
|
|
(0.3
|
)%
|
|
(0.8
|
)
|
|
(0.3
|
)%
|
|
(1.1
|
)
|
|
(0.2
|
)%
|
|||
Domestic production activities deferral (deduction)
|
|
6.1
|
|
|
2.0
|
%
|
|
6.1
|
|
|
2.0
|
%
|
|
(7.8
|
)
|
|
(1.5
|
)%
|
|||
Other, net
|
|
3.4
|
|
|
1.0
|
%
|
|
1.3
|
|
|
0.4
|
%
|
|
6.3
|
|
|
1.1
|
%
|
|||
Total income tax expense (benefit)
|
|
$
|
(57.8
|
)
|
|
(18.9
|
)%
|
|
$
|
(56.9
|
)
|
|
(18.8
|
)%
|
|
$
|
191.2
|
|
|
36.2
|
%
|
*
|
In accordance with a 2017 settlement agreement with the PSCW, we flowed through the tax benefit of our repair related deferred tax liabilities in 2018 and 2019, to maintain certain regulatory asset balances at their December 31, 2017 levels. The flow through treatment of the repair related deferred tax liabilities offset the negative income statement impact of holding the regulatory assets level, resulting in no change to net income. See Note 21, Regulatory Environment, for more information about the impact of the Tax Legislation and the Wisconsin rate order.
|
2019 Form 10-K
|
74
|
Wisconsin Electric Power Company
|
(in millions)
|
|
2019
|
|
2018
|
||||
Deferred tax assets
|
|
|
|
|
||||
Tax gross up – regulatory items
|
|
$
|
152.7
|
|
|
$
|
203.0
|
|
Deferred revenues
|
|
126.8
|
|
|
129.3
|
|
||
Future tax benefits
|
|
41.0
|
|
|
15.9
|
|
||
Regulatory deferrals
|
|
1.3
|
|
|
97.3
|
|
||
Other
|
|
63.2
|
|
|
59.3
|
|
||
Total deferred tax assets
|
|
$
|
385.0
|
|
|
$
|
504.8
|
|
|
|
|
|
|
||||
Deferred tax liabilities
|
|
|
|
|
||||
Property-related
|
|
$
|
1,368.9
|
|
|
$
|
1,365.9
|
|
Deferred costs – Plant retirements
|
|
215.5
|
|
|
176.0
|
|
||
Employee benefits and compensation
|
|
55.8
|
|
|
55.9
|
|
||
Deferred costs – SSR
|
|
51.1
|
|
|
110.7
|
|
||
Other
|
|
41.1
|
|
|
94.6
|
|
||
Total deferred tax liabilities
|
|
1,732.4
|
|
|
1,803.1
|
|
||
Deferred tax liability, net
|
|
$
|
1,347.4
|
|
|
$
|
1,298.3
|
|
2019
(in millions)
|
|
Gross Value
|
|
Deferred Tax Effect
|
|
Earliest Year of Expiration
|
||||
Future tax benefits as of December 31, 2019
|
|
|
|
|
|
|
||||
Federal tax credit
|
|
$
|
—
|
|
|
$
|
37.1
|
|
|
2037
|
State net operating loss
|
|
52.4
|
|
|
3.3
|
|
|
2035
|
||
Other state benefits
|
|
—
|
|
|
0.6
|
|
|
2019
|
||
Balance as of December 31, 2019
|
|
$
|
52.4
|
|
|
$
|
41.0
|
|
|
|
2018
(in millions)
|
|
Gross Value
|
|
Deferred Tax Effect
|
|
Earliest Year of Expiration
|
||||
Future tax benefits as of December 31, 2018
|
|
|
|
|
|
|
||||
Federal tax credit
|
|
$
|
—
|
|
|
$
|
11.6
|
|
|
2038
|
State net operating loss
|
|
68.7
|
|
|
4.3
|
|
|
2035
|
||
Balance as of December 31, 2018
|
|
$
|
68.7
|
|
|
$
|
15.9
|
|
|
|
2019 Form 10-K
|
75
|
Wisconsin Electric Power Company
|
|
|
December 31, 2019
|
||||||||||||||
(in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Derivative assets
|
|
|
|
|
|
|
|
|
||||||||
Natural gas contracts
|
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
FTRs
|
|
—
|
|
|
—
|
|
|
1.5
|
|
|
1.5
|
|
||||
Coal contracts
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
||||
Total derivative assets
|
|
$
|
0.4
|
|
|
$
|
0.1
|
|
|
$
|
1.5
|
|
|
$
|
2.0
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
|
|
|
|
|
|
|
|
|
||||||||
Natural gas contracts
|
|
$
|
5.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5.2
|
|
Coal contracts
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
||||
Total derivative liabilities
|
|
$
|
5.2
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
5.4
|
|
|
|
December 31, 2018
|
||||||||||||||
(in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Derivative assets
|
|
|
|
|
|
|
|
|
||||||||
Natural gas contracts
|
|
$
|
0.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.7
|
|
FTRs
|
|
—
|
|
|
—
|
|
|
4.4
|
|
|
4.4
|
|
||||
Total derivative assets
|
|
$
|
0.7
|
|
|
$
|
—
|
|
|
$
|
4.4
|
|
|
$
|
5.1
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
|
|
|
|
|
|
|
|
|
||||||||
Natural gas contracts
|
|
$
|
1.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.2
|
|
Coal contracts
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
||||
Total derivative liabilities
|
|
$
|
1.2
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
1.3
|
|
(in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at the beginning of the period
|
|
$
|
4.4
|
|
|
$
|
2.4
|
|
|
$
|
3.1
|
|
Purchases
|
|
6.8
|
|
|
9.4
|
|
|
6.9
|
|
|||
Settlements
|
|
(9.7
|
)
|
|
(7.4
|
)
|
|
(7.6
|
)
|
|||
Balance at the end of the period
|
|
$
|
1.5
|
|
|
$
|
4.4
|
|
|
$
|
2.4
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||
(in millions)
|
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
||||||||
Preferred stock
|
|
$
|
30.4
|
|
|
$
|
29.5
|
|
|
$
|
30.4
|
|
|
$
|
28.3
|
|
Long-term debt, including current portion
|
|
2,759.2
|
|
|
3,209.5
|
|
|
2,709.6
|
|
|
2,881.6
|
|
2019 Form 10-K
|
76
|
Wisconsin Electric Power Company
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||
(in millions)
|
|
Derivative Assets
|
|
Derivative Liabilities
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||
Other current
|
|
|
|
|
|
|
|
|
||||||||
Natural gas contracts
|
|
$
|
0.4
|
|
|
$
|
5.1
|
|
|
$
|
0.7
|
|
|
$
|
1.2
|
|
FTRs
|
|
1.5
|
|
|
—
|
|
|
4.4
|
|
|
—
|
|
||||
Coal contracts
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.1
|
|
||||
Total other current
|
|
1.9
|
|
|
5.3
|
|
|
5.1
|
|
|
1.3
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other long-term
|
|
|
|
|
|
|
|
|
||||||||
Natural gas contracts
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
||||
Coal contracts
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total other long-term
|
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
2.0
|
|
|
$
|
5.4
|
|
|
$
|
5.1
|
|
|
$
|
1.3
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
(in millions)
|
|
Volume
|
|
Gains (Losses)
|
|
Volume
|
|
Gains
|
|
Volume
|
|
Gains (Losses)
|
||||||
Natural gas contracts
|
|
61.6 Dth
|
|
$
|
(11.3
|
)
|
|
53.4 Dth
|
|
$
|
9.7
|
|
|
26.9 Dth
|
|
$
|
(1.0
|
)
|
Petroleum products contracts
|
|
— gallons
|
|
—
|
|
|
4.2 gallons
|
|
1.2
|
|
|
16.7 gallons
|
|
(1.4
|
)
|
|||
FTRs
|
|
21.7 MWh
|
|
8.7
|
|
|
21.2 MWh
|
|
3.4
|
|
|
27.1 MWh
|
|
7.6
|
|
|||
Total
|
|
|
|
$
|
(2.6
|
)
|
|
|
|
$
|
14.3
|
|
|
|
|
$
|
5.2
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
|||||||||||||
(in millions)
|
|
Derivative Assets
|
|
Derivative Liabilities
|
|
Derivative Assets
|
|
Derivative Liabilities
|
|
||||||||
Gross amount recognized on the balance sheet
|
|
$
|
2.0
|
|
|
$
|
5.4
|
|
|
$
|
5.1
|
|
|
$
|
1.3
|
|
|
Gross amount not offset on the balance sheet
|
|
(0.4
|
)
|
|
(5.2
|
)
|
(1)
|
(0.6
|
)
|
|
(1.3
|
)
|
(2)
|
||||
Net amount
|
|
$
|
1.6
|
|
|
$
|
0.2
|
|
|
$
|
4.5
|
|
|
$
|
—
|
|
|
(1)
|
Includes cash collateral posted of $4.8 million.
|
(2)
|
Includes cash collateral posted of $0.7 million.
|
2019 Form 10-K
|
77
|
Wisconsin Electric Power Company
|
|
|
Pension Benefits
|
|
OPEB Benefits
|
|
||||||||||||
(in millions)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
||||||||
Change in benefit obligation
|
|
|
|
|
|
|
|
|
|
||||||||
Obligation at January 1
|
|
$
|
1,099.4
|
|
|
$
|
1,193.9
|
|
|
$
|
227.7
|
|
|
$
|
303.5
|
|
|
Service cost
|
|
12.6
|
|
|
13.2
|
|
|
4.5
|
|
|
6.9
|
|
|
||||
Interest cost
|
|
45.2
|
|
|
42.3
|
|
|
9.5
|
|
|
11.1
|
|
|
||||
Participant contributions
|
|
—
|
|
|
—
|
|
|
6.1
|
|
|
7.6
|
|
|
||||
Plan amendments
|
|
—
|
|
|
—
|
|
|
2.7
|
|
|
—
|
|
|
||||
Net transfer to affiliates
|
|
(5.3
|
)
|
(1)
|
(4.5
|
)
|
(1)
|
—
|
|
|
—
|
|
|
||||
Actuarial loss (gain)
|
|
81.5
|
|
|
(62.7
|
)
|
|
(29.8
|
)
|
|
(86.2
|
)
|
|
||||
Benefit payments
|
|
(85.1
|
)
|
|
(82.8
|
)
|
|
(16.2
|
)
|
|
(22.8
|
)
|
|
||||
Federal subsidy on benefits paid
|
|
N/A
|
|
|
N/A
|
|
|
1.1
|
|
|
0.9
|
|
|
||||
Transfer
|
|
—
|
|
|
—
|
|
|
1.7
|
|
(2)
|
6.7
|
|
(2)
|
||||
Obligation at December 31
|
|
$
|
1,148.3
|
|
|
$
|
1,099.4
|
|
|
$
|
207.3
|
|
|
$
|
227.7
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Change in fair value of plan assets
|
|
|
|
|
|
|
|
|
|
||||||||
Fair value at January 1
|
|
$
|
1,019.8
|
|
|
$
|
1,134.1
|
|
|
$
|
201.5
|
|
|
$
|
220.1
|
|
|
Actual return on plan assets
|
|
156.7
|
|
|
(31.0
|
)
|
|
35.4
|
|
|
(5.7
|
)
|
|
||||
Employer contributions
|
|
3.8
|
|
|
4.0
|
|
|
1.7
|
|
|
2.3
|
|
|
||||
Participant contributions
|
|
—
|
|
|
—
|
|
|
6.1
|
|
|
7.6
|
|
|
||||
Net transfer to affiliates
|
|
(0.6
|
)
|
(1)
|
(4.5
|
)
|
(1)
|
—
|
|
|
—
|
|
|
||||
Benefit payments
|
|
(85.1
|
)
|
|
(82.8
|
)
|
|
(16.2
|
)
|
|
(22.8
|
)
|
|
||||
Fair value at December 31
|
|
$
|
1,094.6
|
|
|
$
|
1,019.8
|
|
|
$
|
228.5
|
|
|
$
|
201.5
|
|
|
Funded status at December 31
|
|
$
|
(53.7
|
)
|
|
$
|
(79.6
|
)
|
|
$
|
21.2
|
|
|
$
|
(26.2
|
)
|
|
(1)
|
Benefit obligations and plan assets were moved along with our employees who were transferred to/from affiliated entities. See Note 3, Related Parties, for more information.
|
(2)
|
Represents a premium medical account that was transferred into the OPEB benefit obligation.
|
|
|
Pension Benefits
|
|
OPEB Benefits
|
||||||||||||
(in millions)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Other long-term assets
|
|
$
|
6.1
|
|
|
$
|
12.7
|
|
|
$
|
21.2
|
|
|
$
|
—
|
|
Pension and OPEB obligations
|
|
59.8
|
|
|
92.3
|
|
|
—
|
|
|
26.2
|
|
||||
Total net (liabilities) assets
|
|
$
|
(53.7
|
)
|
|
$
|
(79.6
|
)
|
|
$
|
21.2
|
|
|
$
|
(26.2
|
)
|
(in millions)
|
|
2019
|
|
2018
|
||||
Projected benefit obligation
|
|
$
|
1,040.7
|
|
|
$
|
997.0
|
|
Accumulated benefit obligation
|
|
1,039.5
|
|
|
995.5
|
|
||
Fair value of plan assets
|
|
980.9
|
|
|
904.7
|
|
2019 Form 10-K
|
78
|
Wisconsin Electric Power Company
|
|
|
Pension Benefits
|
|
OPEB Benefits
|
||||||||||||
(in millions)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net regulatory assets (liabilities)
|
|
|
|
|
|
|
|
|
||||||||
Net actuarial loss (gain)
|
|
$
|
460.1
|
|
|
$
|
491.0
|
|
|
$
|
(115.3
|
)
|
|
$
|
(66.6
|
)
|
Prior service credits
|
|
(2.3
|
)
|
|
(1.8
|
)
|
|
(1.5
|
)
|
|
(6.1
|
)
|
||||
Total
|
|
$
|
457.8
|
|
|
$
|
489.2
|
|
|
$
|
(116.8
|
)
|
|
$
|
(72.7
|
)
|
(in millions)
|
|
Pension Benefits
|
|
OPEB Benefits
|
||||
Net actuarial loss (gain)
|
|
$
|
36.6
|
|
|
$
|
(9.5
|
)
|
Prior service credits
|
|
(0.1
|
)
|
|
(0.6
|
)
|
||
Total 2020 – estimated amortization
|
|
$
|
36.5
|
|
|
$
|
(10.1
|
)
|
|
|
Pension Benefits
|
|
OPEB Benefits
|
||||||||||||||||||||
(in millions)
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
Service cost
|
|
$
|
12.6
|
|
|
$
|
13.2
|
|
|
$
|
12.2
|
|
|
$
|
4.5
|
|
|
$
|
6.9
|
|
|
$
|
7.0
|
|
Interest cost
|
|
45.2
|
|
|
42.3
|
|
|
47.0
|
|
|
9.5
|
|
|
11.1
|
|
|
12.1
|
|
||||||
Expected return on plan assets
|
|
(72.4
|
)
|
|
(75.2
|
)
|
|
(76.6
|
)
|
|
(14.3
|
)
|
|
(15.5
|
)
|
|
(14.7
|
)
|
||||||
Plan settlement
|
|
—
|
|
|
—
|
|
|
4.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service cost (credit)
|
|
0.5
|
|
|
0.8
|
|
|
1.1
|
|
|
(1.9
|
)
|
|
(2.2
|
)
|
|
(1.4
|
)
|
||||||
Amortization of net actuarial loss (gain)
|
|
28.0
|
|
|
38.0
|
|
|
35.4
|
|
|
(2.1
|
)
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit cost (credit)
|
|
$
|
13.9
|
|
|
$
|
19.1
|
|
|
$
|
23.2
|
|
|
$
|
(4.3
|
)
|
|
$
|
0.3
|
|
|
$
|
3.0
|
|
|
|
Pension Benefits
|
|
OPEB Benefits
|
||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Discount rate
|
|
3.39%
|
|
4.30%
|
|
3.40%
|
|
4.30%
|
Rate of compensation increase
|
|
4.00%
|
|
3.40%
|
|
N/A
|
|
N/A
|
Assumed medical cost trend rate (Pre 65)
|
|
N/A
|
|
N/A
|
|
6.00%
|
|
6.25%
|
Ultimate trend rate (Pre 65)
|
|
N/A
|
|
N/A
|
|
5.00%
|
|
5.00%
|
Year ultimate trend rate is reached (Pre 65)
|
|
N/A
|
|
N/A
|
|
2028
|
|
2024
|
Assumed medical cost trend rate (Post 65)
|
|
N/A
|
|
N/A
|
|
6.04%
|
|
6.12%
|
Ultimate trend rate (Post 65)
|
|
N/A
|
|
N/A
|
|
5.00%
|
|
5.00%
|
Year ultimate trend rate is reached (Post 65)
|
|
N/A
|
|
N/A
|
|
2028
|
|
2028
|
|
|
Pension Benefits
|
||||
|
|
2019
|
|
2018
|
|
2017
|
Discount rate
|
|
4.30%
|
|
3.65%
|
|
4.12%
|
Expected return on plan assets
|
|
7.00%
|
|
7.00%
|
|
7.00%
|
Rate of compensation increase
|
|
3.40%
|
|
3.40%
|
|
3.20%
|
2019 Form 10-K
|
79
|
Wisconsin Electric Power Company
|
|
|
OPEB Benefits
|
||||
|
|
2019
|
|
2018
|
|
2017
|
Discount rate
|
|
4.30%
|
|
3.65%
|
|
4.10%
|
Expected return on plan assets
|
|
7.25%
|
|
7.25%
|
|
7.25%
|
Assumed medical cost trend rate (Pre 65)
|
|
6.25%
|
|
6.50%
|
|
7.00%
|
Ultimate trend rate (Pre 65)
|
|
5.00%
|
|
5.00%
|
|
5.00%
|
Year ultimate trend rate is reached (Pre 65)
|
|
2024
|
|
2024
|
|
2021
|
Assumed medical cost trend rate (Post 65)
|
|
6.12%
|
|
6.18%
|
|
7.00%
|
Ultimate trend rate (Post 65)
|
|
5.00%
|
|
5.00%
|
|
5.00%
|
Year ultimate trend rate is reached (Post 65)
|
|
2028
|
|
2028
|
|
2021
|
(in millions)
|
|
1% Increase
|
|
1% Decrease
|
||||
Effect on total of service and interest cost components of net periodic postretirement health care benefit cost
|
|
$
|
1.7
|
|
|
$
|
(1.4
|
)
|
Effect on the health care component of the accumulated postretirement benefit obligation
|
|
14.4
|
|
|
(12.0
|
)
|
2019 Form 10-K
|
80
|
Wisconsin Electric Power Company
|
|
|
December 31, 2019
|
||||||||||||||||||||||||||||||
|
|
Pension Plan Assets
|
|
OPEB Assets
|
||||||||||||||||||||||||||||
(in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Asset Class
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Unites States equity
|
|
$
|
103.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
103.3
|
|
|
$
|
27.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27.9
|
|
International equity
|
|
98.4
|
|
|
—
|
|
|
—
|
|
|
98.4
|
|
|
28.5
|
|
|
—
|
|
|
—
|
|
|
28.5
|
|
||||||||
Fixed income securities: *
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
United States bonds
|
|
49.1
|
|
|
438.9
|
|
|
—
|
|
|
488.0
|
|
|
23.1
|
|
|
52.6
|
|
|
—
|
|
|
75.7
|
|
||||||||
International bonds
|
|
27.7
|
|
|
29.2
|
|
|
—
|
|
|
56.9
|
|
|
5.8
|
|
|
2.9
|
|
|
—
|
|
|
8.7
|
|
||||||||
|
|
$
|
278.5
|
|
|
$
|
468.1
|
|
|
$
|
—
|
|
|
$
|
746.6
|
|
|
$
|
85.3
|
|
|
$
|
55.5
|
|
|
$
|
—
|
|
|
$
|
140.8
|
|
Investments measured at net asset value
|
|
|
|
|
|
|
|
$
|
348.0
|
|
|
|
|
|
|
|
|
$
|
87.7
|
|
||||||||||||
Total
|
|
$
|
278.5
|
|
|
$
|
468.1
|
|
|
$
|
—
|
|
|
$
|
1,094.6
|
|
|
$
|
85.3
|
|
|
$
|
55.5
|
|
|
$
|
—
|
|
|
$
|
228.5
|
|
*
|
This category represents investment grade bonds of United States and foreign issuers denominated in United States dollars from diverse industries.
|
|
|
December 31, 2018
|
||||||||||||||||||||||||||||||
|
|
Pension Plan Assets
|
|
OPEB Assets
|
||||||||||||||||||||||||||||
(in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Asset Class
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
United States equity
|
|
$
|
89.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
89.0
|
|
|
$
|
24.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24.6
|
|
International equity
|
|
85.8
|
|
|
—
|
|
|
—
|
|
|
85.8
|
|
|
24.0
|
|
|
—
|
|
|
—
|
|
|
24.0
|
|
||||||||
Fixed income securities: *
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
United States bonds
|
|
66.2
|
|
|
436.5
|
|
|
—
|
|
|
502.7
|
|
|
24.0
|
|
|
48.2
|
|
|
—
|
|
|
72.2
|
|
||||||||
International bonds
|
|
8.3
|
|
|
31.4
|
|
|
—
|
|
|
39.7
|
|
|
1.6
|
|
|
3.0
|
|
|
—
|
|
|
4.6
|
|
||||||||
|
|
$
|
249.3
|
|
|
$
|
467.9
|
|
|
$
|
—
|
|
|
$
|
717.2
|
|
|
$
|
74.2
|
|
|
$
|
51.2
|
|
|
$
|
—
|
|
|
$
|
125.4
|
|
Investments measured at net asset value
|
|
|
|
|
|
|
|
$
|
302.6
|
|
|
|
|
|
|
|
|
$
|
76.1
|
|
||||||||||||
Total
|
|
$
|
249.3
|
|
|
$
|
467.9
|
|
|
$
|
—
|
|
|
$
|
1,019.8
|
|
|
$
|
74.2
|
|
|
$
|
51.2
|
|
|
$
|
—
|
|
|
$
|
201.5
|
|
*
|
This category represents investment grade bonds of United States and foreign issuers denominated in United States dollars from diverse industries.
|
|
|
Private Equity and Real Estate
|
||||||
(in millions)
|
|
Pension
|
|
OPEB
|
||||
Beginning balance at January 1, 2018
|
|
$
|
55.3
|
|
|
$
|
3.8
|
|
Realized and unrealized gains
|
|
4.1
|
|
|
0.8
|
|
||
Purchases
|
|
9.8
|
|
|
0.7
|
|
||
Liquidations
|
|
(1.2
|
)
|
|
(0.1
|
)
|
||
Transfers out of level 3
|
|
(68.0
|
)
|
|
(5.2
|
)
|
||
Ending balance at December 31, 2018
|
|
$
|
—
|
|
|
$
|
—
|
|
2019 Form 10-K
|
81
|
Wisconsin Electric Power Company
|
(in millions)
|
|
Pension Benefits
|
|
OPEB Benefits
|
||||
2020
|
|
$
|
90.6
|
|
|
$
|
11.4
|
|
2021
|
|
88.2
|
|
|
11.4
|
|
||
2022
|
|
83.7
|
|
|
11.6
|
|
||
2023
|
|
82.6
|
|
|
11.8
|
|
||
2024
|
|
80.2
|
|
|
11.7
|
|
||
2025-2029
|
|
350.1
|
|
|
58.3
|
|
•
|
Our electric utility operations are engaged in the generation, distribution, and sale of electricity to customers in southeastern Wisconsin (including metropolitan Milwaukee), east central Wisconsin, and northern Wisconsin. In addition, our steam operations produce, distribute, and sell steam to customers in metropolitan Milwaukee. Prior to April 1, 2019, we also provided electric service to Tilden, who owns an iron ore mine in the Upper Peninsula of Michigan. This customer was transferred to UMERC on April 1, 2019 as UMERC's new natural gas-fired generation in the Upper Peninsula of Michigan is now operational.
|
•
|
Our natural gas utility operations are engaged in the purchase, distribution, and sale of natural gas to retail customers and the transportation of customer-owned natural gas in southeastern, east central, and northern Wisconsin.
|
2019 (in millions)
|
|
Utility
|
|
Other
|
|
Wisconsin Electric Power Company Consolidated
|
||||||
External revenues
|
|
$
|
3,496.7
|
|
|
$
|
—
|
|
|
$
|
3,496.7
|
|
Other operation and maintenance
|
|
1,053.1
|
|
|
—
|
|
|
1,053.1
|
|
|||
Depreciation and amortization
|
|
384.4
|
|
|
—
|
|
|
384.4
|
|
|||
Operating income
|
|
760.2
|
|
|
—
|
|
|
760.2
|
|
|||
Interest expense
|
|
477.4
|
|
|
—
|
|
|
477.4
|
|
|||
Capital expenditures
|
|
590.6
|
|
|
—
|
|
|
590.6
|
|
|||
Total assets
|
|
13,360.8
|
|
|
—
|
|
|
13,360.8
|
|
2019 Form 10-K
|
82
|
Wisconsin Electric Power Company
|
2018 (in millions)
|
|
Utility
|
|
Other
|
|
Wisconsin Electric Power Company Consolidated
|
||||||
External revenues
|
|
$
|
3,625.0
|
|
|
$
|
—
|
|
|
$
|
3,625.0
|
|
Other operation and maintenance
|
|
1,502.4
|
|
|
—
|
|
|
1,502.4
|
|
|||
Depreciation and amortization
|
|
348.1
|
|
|
—
|
|
|
348.1
|
|
|||
Operating income
|
|
402.5
|
|
|
—
|
|
|
402.5
|
|
|||
Interest expense
|
|
120.1
|
|
|
—
|
|
|
120.1
|
|
|||
Capital expenditures
|
|
603.2
|
|
|
—
|
|
|
603.2
|
|
|||
Total assets
|
|
13,538.3
|
|
|
—
|
|
|
13,538.3
|
|
2017 (in millions)
|
|
Utility
|
|
Other
|
|
Wisconsin Electric Power Company Consolidated
|
||||||
External revenues
|
|
$
|
3,711.7
|
|
|
$
|
—
|
|
|
$
|
3,711.7
|
|
Other operation and maintenance
|
|
1,352.0
|
|
|
—
|
|
|
1,352.0
|
|
|||
Depreciation and amortization
|
|
331.6
|
|
|
—
|
|
|
331.6
|
|
|||
Operating income
|
|
632.1
|
|
|
—
|
|
|
632.1
|
|
|||
Interest expense
|
|
117.0
|
|
|
0.3
|
|
|
117.3
|
|
|||
Capital expenditures
|
|
596.1
|
|
|
—
|
|
|
596.1
|
|
|||
Total assets
|
|
13,121.6
|
|
|
—
|
|
|
13,121.6
|
|
2019 Form 10-K
|
83
|
Wisconsin Electric Power Company
|
|
|
|
|
|
|
Payments Due By Period
|
||||||||||||||||||||||||
(in millions)
|
|
Date Contracts Extend Through
|
|
Total Amounts Committed
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Later Years
|
||||||||||||||
Electric utility:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Nuclear
|
|
2033
|
|
$
|
8,319.0
|
|
|
$
|
475.1
|
|
|
$
|
501.1
|
|
|
$
|
531.2
|
|
|
$
|
563.0
|
|
|
$
|
596.8
|
|
|
$
|
5,651.8
|
|
Coal supply and transportation
|
|
2023
|
|
735.9
|
|
|
223.7
|
|
|
196.9
|
|
|
169.6
|
|
|
145.7
|
|
|
—
|
|
|
—
|
|
|||||||
Purchased power
|
|
2043
|
|
78.9
|
|
|
19.4
|
|
|
12.3
|
|
|
10.4
|
|
|
7.6
|
|
|
3.6
|
|
|
25.6
|
|
|||||||
Natural gas utility supply and transportation
|
|
2048
|
|
494.0
|
|
|
64.1
|
|
|
56.5
|
|
|
39.8
|
|
|
25.8
|
|
|
17.5
|
|
|
290.3
|
|
|||||||
Total
|
|
|
|
$
|
9,627.8
|
|
|
$
|
782.3
|
|
|
$
|
766.8
|
|
|
$
|
751.0
|
|
|
$
|
742.1
|
|
|
$
|
617.9
|
|
|
$
|
5,967.7
|
|
•
|
the development of additional sources of renewable electric energy supply;
|
•
|
the addition of improvements for water quality matters such as treatment technologies to meet regulatory discharge limits and improvements to our cooling water intake systems;
|
•
|
the addition of emission control equipment to existing facilities to comply with ambient air quality standards and federal clean air rules;
|
•
|
the protection of wetlands and waterways, threatened and endangered species, and cultural resources associated with utility construction projects;
|
•
|
the retirement of older coal-fired power plants and conversion to modern, efficient, natural gas generation, super-critical pulverized coal generation, and/or replacement with renewable generation;
|
•
|
the beneficial use of ash and other products from coal-fired and biomass generating units; and
|
•
|
the remediation of former manufactured gas plant sites.
|
2019 Form 10-K
|
84
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
85
|
Wisconsin Electric Power Company
|
(in millions)
|
|
2019
|
|
2018
|
||||
Regulatory assets
|
|
$
|
22.1
|
|
|
$
|
24.2
|
|
Reserves for future environmental remediation *
|
|
12.1
|
|
|
13.2
|
|
*
|
Recorded within other long-term liabilities on our balance sheets.
|
2019 Form 10-K
|
86
|
Wisconsin Electric Power Company
|
(in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Cash paid for interest, net of amount capitalized (1)
|
|
$
|
475.2
|
|
|
$
|
115.0
|
|
|
$
|
115.1
|
|
Cash paid for income taxes, net
|
|
45.8
|
|
|
17.7
|
|
|
71.7
|
|
|||
Significant non-cash investing and financing transactions:
|
|
|
|
|
|
|
||||||
Accounts payable related to construction costs
|
|
36.1
|
|
|
14.0
|
|
|
13.2
|
|
|||
Transfer of investment in ATC to another subsidiary of WEC Energy
Group (2) (3)
|
|
—
|
|
|
—
|
|
|
415.4
|
|
|||
Transfer of net assets to UMERC (2)
|
|
—
|
|
|
—
|
|
|
61.1
|
|
|||
Equity settlement of a short-term note receivable between Bostco and our parent company
|
|
—
|
|
|
—
|
|
|
4.8
|
|
(1)
|
On January 1, 2019, we adopted ASU 2016-02, Leases (Topic 842). This ASU required us to prospectively change the classification of our finance lease payments on the income statement. As a result, during 2019, we classified the interest component of our finance lease payments as cash paid for interest since it was included in interest expense on the income statement. However, prior to our adoption of Topic 842, the interest component was not considered cash paid for interest since it was not included in interest expense on the income statement. See Note 12, Leases, for more information on Topic 842 and our finance leases.
|
(2)
|
See Note 3, Related Parties, for more information on these transactions.
|
(3)
|
The amount transferred includes a $13.4 million receivable for distributions approved and recorded in December 2016.
|
2019 Form 10-K
|
87
|
Wisconsin Electric Power Company
|
2020 Effective rate increase
|
|
|
|
|
||
Electric (1)
|
|
$
|
15.3
|
million
|
/
|
0.5%
|
Gas (2)
|
|
$
|
10.4
|
million
|
/
|
2.8%
|
Steam
|
|
$
|
1.9
|
million
|
/
|
8.6%
|
|
|
|
|
|
||
ROE
|
|
10.0%
|
||||
|
|
|
|
|
||
Common equity component average on a financial basis
|
|
52.5%
|
(1)
|
Amount is net of certain deferred tax benefits from the Tax Legislation that were utilized to reduce near-term rate impact. The rate order reflects the majority of the unprotected deferred tax benefits from the Tax Legislation being amortized evenly over two years, which results in approximately $65 million of tax benefits being amortized in each of 2020 and 2021. The unprotected deferred tax benefits related to the unrecovered balances of our recently retired plants and our SSR regulatory asset are being used to reduce the related regulatory asset. Unprotected deferred tax benefits by their nature are eligible to be returned to customers in a manner and timeline determined to be appropriate by the PSCW.
|
(2)
|
Amount includes certain deferred tax expense from the Tax Legislation. The rate order reflects all of the unprotected deferred tax expense from the Tax Legislation being amortized evenly over four years, which results in approximately $5 million of previously deferred tax expense being amortized each year. Unprotected deferred tax expense by its nature is eligible to be recovered from customers in a manner and timeline determined to be appropriate by the PSCW.
|
2019 Form 10-K
|
88
|
Wisconsin Electric Power Company
|
(in millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
AFUDC – Equity
|
|
$
|
3.7
|
|
|
$
|
3.9
|
|
|
$
|
3.1
|
|
Non-service credit (cost) components of net periodic benefit costs
|
|
9.2
|
|
|
5.7
|
|
|
(6.5
|
)
|
|||
Interest income
|
|
2.2
|
|
|
2.2
|
|
|
2.3
|
|
|||
Other, net
|
|
7.6
|
|
|
8.4
|
|
|
14.3
|
|
|||
Other income, net
|
|
$
|
22.7
|
|
|
$
|
20.2
|
|
|
$
|
13.2
|
|
2019 Form 10-K
|
89
|
Wisconsin Electric Power Company
|
(in millions)
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
|
Total
|
||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating revenues
|
|
$
|
960.8
|
|
|
$
|
791.7
|
|
|
$
|
884.1
|
|
|
$
|
860.1
|
|
|
$
|
3,496.7
|
|
Operating income
|
|
222.9
|
|
|
182.6
|
|
|
201.1
|
|
|
153.6
|
|
|
760.2
|
|
|||||
Net income attributed to common shareholder
|
|
114.7
|
|
|
84.9
|
|
|
100.6
|
|
|
61.9
|
|
|
362.1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating revenues
|
|
$
|
941.5
|
|
|
$
|
856.2
|
|
|
$
|
924.0
|
|
|
$
|
903.3
|
|
|
$
|
3,625.0
|
|
Operating income
|
|
136.4
|
|
|
104.5
|
|
|
107.8
|
|
|
53.8
|
|
|
402.5
|
|
|||||
Net income attributed to common shareholder
|
|
105.8
|
|
|
92.8
|
|
|
103.2
|
|
|
56.5
|
|
|
358.3
|
|
2019 Form 10-K
|
90
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
91
|
Wisconsin Electric Power Company
|
2019 Form 10-K
|
92
|
Wisconsin Electric Power Company
|
1.
|
Financial Statements and Report of Independent Registered Public Accounting Firm Included in Part II of This Report
|
|
|
|
|
|
|
|
Description
|
|
Page in 10-K
|
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
2.
|
Financial Statement Schedules Included in Part IV of This Report
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
Other schedules are omitted because of the absence of conditions under which they are required or because the required information is given in the financial statements or notes thereto.
|
|
|
|
|
|
|
3.
|
Exhibits and Exhibit Index
|
|
|
|
|
|
|
|
The following exhibits are filed or furnished with or incorporated by reference in the report with respect to Wisconsin Electric Power Company (File No. 001-01245). An asterisk (*) indicates that the exhibit has previously been filed with the SEC and is incorporated herein by reference. Each management contract and compensatory plan or arrangement required to be filed as an exhibit to this report pursuant to Item 15(b) of Form 10-K is identified below by two asterisks (**) following the description of the exhibit.
|
|
Number
|
|
Exhibit
|
||
|
3
|
|
Articles of Incorporation and By-laws
|
||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
4
|
|
Instruments defining the rights of security holders, including indentures
|
||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
Indentures and Securities Resolutions:
|
||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
2019 Form 10-K
|
93
|
Wisconsin Electric Power Company
|
|
Number
|
|
Exhibit
|
||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
Certain agreements and instruments with respect to unregistered long-term debt not exceeding 10 percent of the total assets of the Registrant and its subsidiary on a consolidated basis have been omitted as permitted by related instructions. The Registrant agrees pursuant to Item 601(b)(4) of Regulation S-K to furnish to the Securities and Exchange Commission, upon request, a copy of all such agreements and instruments.
|
|
|
|
|
|
|
|
|
10
|
|
|
Material Contracts
|
|
|
|
|
|
||
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
2019 Form 10-K
|
94
|
Wisconsin Electric Power Company
|
|
Number
|
|
Exhibit
|
||
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
2019 Form 10-K
|
95
|
Wisconsin Electric Power Company
|
|
Number
|
|
Exhibit
|
||
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
||
|
23
|
|
|
Consents of experts and counsel
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
31
|
|
|
Rule 13a-14(a)/15d-14(a) Certifications
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
32
|
|
|
Section 1350 Certifications
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
101
|
|
|
Interactive Data File
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
|
|
|
|
104
|
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
2019 Form 10-K
|
96
|
Wisconsin Electric Power Company
|
Allowance for Doubtful Accounts
(in millions)
|
|
Balance at Beginning of Period
|
|
Transfer of Net Assets to UMERC (1)
|
|
Expense (2)
|
|
Deferral
|
|
Net
Write-offs (3)
|
|
Balance at End of Period
|
||||||||||||
December 31, 2019
|
|
$
|
40.9
|
|
|
$
|
—
|
|
|
$
|
32.7
|
|
|
$
|
(12.6
|
)
|
|
$
|
(22.9
|
)
|
|
$
|
38.1
|
|
December 31, 2018
|
|
39.5
|
|
|
—
|
|
|
32.3
|
|
|
(9.1
|
)
|
|
(21.8
|
)
|
|
40.9
|
|
||||||
December 31, 2017
|
|
40.9
|
|
|
(0.3
|
)
|
|
31.2
|
|
|
(6.4
|
)
|
|
(25.9
|
)
|
|
39.5
|
|
(1)
|
See Note 3, Related Parties, for more information.
|
(2)
|
Net of recoveries.
|
(3)
|
Represents amounts written off to the reserve, net of adjustments to regulatory assets.
|
2019 Form 10-K
|
97
|
Wisconsin Electric Power Company
|
|
|
WISCONSIN ELECTRIC POWER COMPANY
|
|
|
|
|
By
|
/s/ J. KEVIN FLETCHER
|
Date:
|
February 27, 2020
|
J. Kevin Fletcher
|
|
|
Chairman of the Board and Chief Executive Officer
|
/s/ J. KEVIN FLETCHER
|
|
February 27, 2020
|
J. Kevin Fletcher, Chairman of the Board and Chief Executive
|
|
|
Officer and Director -- Principal Executive Officer
|
|
|
|
|
|
/s/ SCOTT J. LAUBER
|
|
February 27, 2020
|
Scott J. Lauber, Executive Vice President and Chief Financial
|
|
|
Officer and Director -- Principal Financial Officer
|
|
|
|
|
|
/s/ WILLIAM J. GUC
|
|
February 27, 2020
|
William J. Guc, Vice President, Controller, and Assistant
|
|
|
Corporate Secretary -- Principal Accounting Officer
|
|
|
|
|
|
/s/ MARGARET C. KELSEY
|
|
February 27, 2020
|
Margaret C. Kelsey, Director
|
|
|
|
|
|
/s/ GALE E. KLAPPA
|
|
February 27, 2020
|
Gale E. Klappa, Director
|
|
|
|
|
|
/s/ TOM METCALFE
|
|
February 27, 2020
|
Tom Metcalfe, Director
|
|
|
2019 Form 10-K
|
98
|
Wisconsin Electric Power Company
|
•
|
Six Per Cent. Preferred Stock, $100 Par Value; and
|
•
|
Serial Preferred Stock, 3.60% Series, $100 Par Value.
|
•
|
45,000 authorized shares of Six Per Cent. Preferred Stock at $100 Par Value (the “6% Preferred Stock”), of which 45,000 shares were issued and outstanding; and
|
•
|
2,286,500 authorized shares of Serial Preferred Stock, $100 Par Value, of which 260,000 were issued and outstanding and designated as Serial Preferred Stock, 3.60% Series, $100 Par Value (the “3.60% Serial Preferred Stock” and, together with the 6% Preferred Stock, the “Preferred Stock”).
|
•
|
WE’s Net Income (as defined below) for any twelve consecutive calendar months within the fifteen calendar months immediately preceding the month within which the issuance of such additional shares is authorized by the Board shall have been in the aggregate not less than one and one-half times the sum of the interest requirements for one year on all of the indebtedness of WE to be outstanding at the date of such proposed issue and the full dividend requirements for one year on all shares of the Preferred Stock and all other stock, if any, ranking prior to or on parity with the 3.60% Preferred Stock, to be outstanding at the date of such proposed issue, including the shares then proposed to be issued but excluding any such indebtedness and any such shares proposed to be retired in connection with such proposed issue; and
|
•
|
the aggregate of the capital of WE applicable to all stock of any class ranking junior to the Preferred Stock, plus the surplus of WE, shall be not less than the aggregate amount payable upon involuntary liquidation, dissolution or winding up of the affairs of WE to the holders of all shares of the Preferred Stock and of any shares of stock of any class ranking on a parity therewith to be outstanding immediately after such proposed issue, excluding from such computation all indebtedness and stock to be retired through such proposed issue.
|
1.
|
I have reviewed this Annual Report on Form 10-K of Wisconsin Electric Power Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ J. KEVIN FLETCHER
|
J. Kevin Fletcher
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K of Wisconsin Electric Power Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ SCOTT J. LAUBER
|
Scott J. Lauber
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ J. KEVIN FLETCHER
|
J. Kevin Fletcher
Chairman of the Board and Chief Executive Officer
|
February 27, 2020
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ SCOTT J. LAUBER
|
Scott J. Lauber
Executive Vice President and Chief Financial Officer
|
February 27, 2020
|