XML 40 R24.htm IDEA: XBRL DOCUMENT v3.8.0.1
Fair Value Measurements
 12 Months Ended
Dec. 31, 2017
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS

The following tables summarize our financial assets and liabilities that were accounted for at fair value on a recurring basis, categorized by level within the fair value hierarchy:
 
 
December 31, 2017
(in millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
Derivative assets
 
 
 
 
 
 
 
 
Natural gas contracts
 
$
1.8

 
$
3.9

 
$
—

 
$
5.7

Petroleum products contracts
 
1.2

 
—

 
—

 
1.2

FTRs
 
—

 
—

 
4.4

 
4.4

Coal contracts
 
—

 
1.1

 
—

 
1.1

Total derivative assets
 
$
3.0

 
$
5.0

 
$
4.4

 
$
12.4

 
 
 
 
 
 
 
 
 
Investments held in rabbi trust
 
$
120.7

 
$
—

 
$
—

 
$
120.7

 
 
 
 
 
 
 
 
 
Derivative liabilities
 
 
 
 
 
 
 
 
Natural gas contracts
 
$
7.0

 
$
3.8

 
$
—

 
$
10.8

Coal contracts
 
—

 
0.8

 
—

 
0.8

Total derivative liabilities
 
$
7.0

 
$
4.6

 
$
—

 
$
11.6


 
 
December 31, 2016
(in millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
Derivative assets
 
 
 
 
 
 
 
 
Natural gas contracts
 
$
10.1

 
$
24.2

 
$
—

 
$
34.3

Petroleum products contracts
 
0.2

 
—

 
—

 
0.2

FTRs
 
—

 
—

 
5.1

 
5.1

Coal contracts
 
—

 
2.0

 
—

 
2.0

Total derivative assets
 
$
10.3

 
$
26.2

 
$
5.1

 
$
41.6

 
 
 
 
 
 
 
 
 
Investments held in rabbi trust
 
$
103.9

 
$
—

 
$
—

 
$
103.9

 
 
 
 
 
 
 
 
 
Derivative liabilities
 
 
 
 
 
 
 
 
Natural gas contracts
 
$
0.2

 
$
0.2

 
$
—

 
$
0.4

Petroleum products contracts
 
0.1

 
—

 
—

 
0.1

Coal contracts
 
—

 
1.9

 
—

 
1.9

Total derivative liabilities
 
$
0.3

 
$
2.1

 
$
—

 
$
2.4



The derivative assets and liabilities listed in the tables above include options, swaps, futures, physical commodity contracts, and other instruments used to manage market risks related to changes in commodity prices. They also include FTRs, which are used to manage electric transmission congestion costs in the MISO Energy Markets. See Note 15, Derivative Instruments, for more information.

The following table summarizes the changes to derivatives classified as Level 3 in the fair value hierarchy at December 31:
(in millions)
 
2017
 
2016
 
2015
Balance at the beginning of the period
 
$
5.1

 
$
3.6

 
$
7.0

Realized and unrealized (losses) gains
 
—

 
(0.2
)
 
1.3

Purchases
 
13.8

 
15.2

 
3.9

Sales
 
—

 
(0.2
)
 
(0.1
)
Settlements
 
(14.5
)
 
(13.3
)
 
(11.9
)
Acquisition of Integrys
 
—

 
—

 
(1.3
)
Transfers out of level 3
 
—

 
—

 
4.7

Balance at the end of the period
 
$
4.4

 
$
5.1

 
$
3.6


Unrealized gains and losses on Level 3 derivatives are deferred as regulatory assets or liabilities. Therefore, these fair value measurements have no impact on earnings. Realized gains and losses on these instruments flow through cost of sales on the income statements.

Fair Value of Financial Instruments

The following table shows the financial instruments included on our balance sheets that are not recorded at fair value at December 31:
 
 
2017
 
2016
(in millions)
 
Carrying Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
Preferred stock
 
$
30.4

 
$
30.5

 
$
30.4

 
$
28.8

Long-term debt, including current portion *
 
9,561.7

 
10,341.9

 
9,285.8

 
9,818.2



*
The carrying amount of long-term debt excludes capital lease obligations of $27.0 million and $29.6 million at December 31, 2017 and
December 31, 2016, respectively.