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Long-Term Debt and Capital Lease Obligations | 12 Months Ended
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Dec. 31, 2018
Long-term Debt and Capital Lease Obligations [Abstract] |
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS | LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS See our statements of capitalization for details on our long-term debt. WEC Energy Group, Inc. In July 2018, we executed two interest rate swaps with a combined notional value of $250.0 million to hedge the variable interest rate risk associated with our 2007 Junior Notes. The swaps will provide a fixed interest rate of 4.9765% on $250.0 million of the $500.0 million outstanding of 2007 Junior Notes through November 15, 2021. In June 2018, we issued $600.0 million of 3.375% Senior Notes due June 15, 2021. We used the net proceeds to repay short-term debt, including short-term debt used to redeem at par all $114.9 million outstanding principal amount of Integrys's 2006 Junior Notes, to repay all $300.0 million of our 1.65% Senior Notes that matured in June 2018, and for working capital and general corporate purposes. Wisconsin Electric Power Company In October 2018, WE issued $300.0 million of 4.30% Debentures due October 15, 2048, and used the net proceeds to repay short-term debt and for working capital and other corporate purposes. In July 2018, WE redeemed all $80.0 million of its series of tax-exempt pollution control refunding bonds. From August 2009 until they were called, the bonds were not reported in our long-term debt because they were previously repurchased by WE. In June 2018, WE's $250.0 million of 1.70% Debentures matured, and the outstanding principal was paid with proceeds received from issuing commercial paper. Integrys Holding, Inc. In May 2018, Integrys redeemed at par all $114.9 million outstanding of its 2006 Junior Notes. Wisconsin Public Service Corporation In November 2018, WPS issued $400.0 million of 3.35% Senior Notes due November 21, 2021. WPS used the net proceeds to pay all $250.0 million outstanding principal amount of its 1.65% Senior Notes at maturity in December 2018, to repay short-term debt, and for working capital and other corporate purposes. The Peoples Gas Light and Coke Company In November 2018, PGL issued $150.0 million of 3.87% Series FFF Bonds due November 1, 2028. The net proceeds were used for general corporate purposes, including funding capital expenditures and the refinancing of short-term debt. In November 2018, PGL's $5.0 million of 8.00% Series TT Bonds matured, and the outstanding principal was repaid with proceeds from issuing commercial paper. North Shore Gas Company In November 2018, NSG issued $50.0 million of 3.87% Series R Bonds due November 1, 2028. The net proceeds were used for general corporate purposes, including funding capital expenditures and the refinancing of short-term debt. ATC Holding LLC In December 2018, ATC Holding issued $240.0 million of senior notes. The senior notes were issued in three tranches: $85.0 million of 4.18% Senior Notes due December 20, 2025; $56.5 million of 4.37% Senior Notes due December 20, 2028; and $98.5 million of 4.47% Senior Notes due December 20, 2030. Net proceeds were used to make a special distribution to WEC Energy Group in order to balance ATC Holding's capital structure. Bluewater Gas Storage, LLC The long-term debt of Bluewater Gas Storage, a wholly owned subsidiary of Bluewater, amortizes on a mortgage-style basis. During 2019, $2.4 million of Bluewater Gas Storage's outstanding $122.7 million of 3.76% Senior Notes will mature. As a result, this balance was included in the current portion of long-term debt on our balance sheet at December 31, 2018. W.E. Power, LLC We Power's outstanding long-term debt below amortizes on a mortgage-style basis. During 2019, $6.2 million of We Power's outstanding $95.1 million of 4.91% secured notes will mature. As a result, this balance was included in the current portion of long-term debt on our balance sheet at December 31, 2018. During 2019, $5.2 million of We Power's outstanding $116.6 million of 6.00% secured notes will mature. As a result, this balance was included in the current portion of long-term debt on our balance sheet at December 31, 2018. During 2019, $12.0 million of We Power's outstanding $182.7 million of 5.209% secured notes will mature. As a result, this balance was included in the current portion of long-term debt on our balance sheet at December 31, 2018. During 2019, $9.3 million of We Power's outstanding $153.5 million of 4.673% secured notes will mature. As a result, this balance was included in the current portion of long-term debt on our balance sheet at December 31, 2018. Bonds and Notes The following table shows the future maturities of our long-term debt outstanding (excluding obligations under capital leases) as of December 31, 2018:
(in millions) |  | Payments
2019 |  | $ | 360.1 |
2020 |  | 686.9 |
2021 |  | 1,338.8 |
2022 |  | 40.8 |
2023 |  | 42.8 |
Thereafter |  | 7,918.2 |
Total |  | $ | 10,387.6 |
We amortize debt premiums, discounts, and debt issuance costs over the life of the debt and we include the costs in interest expense. In connection with our outstanding 2007 Junior Notes, we executed a Replacement Capital Covenant dated May 11, 2007 (RCC), which we amended on June 29, 2015, for the benefit of persons that buy, hold, or sell a specified series of our long-term indebtedness (covered debt). Our 6.20% Senior Notes due April 1, 2033 have been designated as the covered debt under the RCC. The RCC provides that we may not redeem, defease, or purchase, and that our subsidiaries may not purchase, any 2007 Junior Notes on or before May 15, 2037, unless, subject to certain limitations described in the RCC, we have received a specified amount of proceeds from the sale of qualifying securities. Effective August 2023, Integrys's $400.0 million of 2013 6.00% Junior Subordinated Notes due 2073 will bear interest at the three-month LIBOR plus 322 basis points and will reset quarterly. Certain long-term debt obligations contain financial and other covenants. Failure to comply with these covenants could result in an event of default, which could result in the acceleration of outstanding debt obligations. Obligations Under Capital Leases In 1997, WE entered into a 25-year power purchase contract with an unaffiliated independent power producer. The contract, for 236 MW of firm capacity from a natural gas-fired cogeneration facility, includes zero minimum energy requirements. When the contract expires in 2022, WE may, at its option and with proper notice, renew for another 10 years or purchase the generating facility at fair value or allow the contract to expire. We account for this contract as a capital lease and recorded the leased facility and corresponding obligation under the capital lease at the estimated fair value of the plant's electric generating facilities. We are amortizing the leased facility on a straight-line basis over the original 25-year term of the contract. We treat the long-term power purchase contract as an operating lease for rate-making purposes and we record our minimum lease payments as cost of sales on our income statements. We paid a total of $7.7 million, $7.2 million, and $37.6 million in minimum lease payments during 2018, 2017, and 2016, respectively. We record the difference between the minimum lease payments and the sum of imputed interest and amortization costs calculated under capital lease accounting as a deferred regulatory asset on our balance sheets. Minimum lease payments are a function of the 236 MW of firm capacity we receive from the plant and the fixed monthly capacity rate published in the lease. Due to the timing and the amounts of the minimum lease payments, the regulatory asset increased to approximately $78.5 million during 2009, at which time the regulatory asset began to be reduced to zero over the remaining life of the contract. The total obligation under the capital lease was $23.3 million as of December 31, 2018, and will decrease to zero over the remaining life of the contract. For information on how the implementation of ASU 2016-02, Leases (Topic 842), is expected to impact the classification of lease expense effective January 1, 2019, for this capital lease, see Note 27, New Accounting Pronouncements. The following is a summary of our capitalized leased facilities as of December 31:
(in millions) |  | 2018 |  | 2017
Long-term power purchase commitment |  | $ | 140.3 |  |  | $ | 140.3 |
Accumulated amortization |  | (120.9 | ) |  | (115.2 | )
Total leased facilities |  | $ | 19.4 |  |  | $ | 25.1 |
Future minimum lease payments under our capital lease and the present value of our net minimum lease payments as of December 31, 2018 are as follows:
(in millions) |  | Payments
2019 |  | $ | 15.5 |
2020 |  | 16.4 |
2021 |  | 17.2 |
2022 |  | 7.6 |
Thereafter |  | — |
Total minimum lease payments |  | 56.7 |
Less: Estimated executory costs |  | (26.1 | )
Net minimum lease payments |  | 30.6 |
Less: Interest |  | (7.3 | )
Present value of net minimum lease payments |  | 23.3 |
Less: Due currently |  | (4.9 | )
Long-term obligations under capital lease |  | $ | 18.4 |

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- Definition The entire disclosure for debt and capital lease obligations can be reported. Information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. Also includes descriptions and amounts of capital leasing arrangements that consist of direct financing, sales type and leveraged leases. Disclosure may include the effect on the balance sheet and the income statement resulting from a change in lease classification for leases that at inception would have been classified differently had guidance been in effect at the inception of the original lease. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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