XML 63 R14.htm IDEA: XBRL DOCUMENT
v3.20.1

CREDIT LOSSES | 3 Months Ended
--- | ---
Mar. 31, 2020
Credit Loss [Abstract] |
CREDIT LOSSES | CREDIT LOSSES Effective January 1, 2020, we adopted FASB ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, using the modified retrospective transition method. This ASU amends the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables. The amendment requires entities to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of loss. The cumulative effect of adopting this standard was not significant to our financial statements. Our exposure to credit losses is related to our accounts receivable and unbilled revenue balances, which are primarily generated from the sale of electricity and natural gas by our regulated utility operations. Credit losses associated with our utility operations are analyzed at the reportable segment level as we believe contract terms, political and economic risks, and the regulatory environment are similar at this level as our reportable segments are generally based on the geographic location of the underlying utility operations. We have an accounts receivable and unbilled revenue balance associated with our non-utility energy infrastructure segment, related to the sale of electricity from our majority-owned wind generating facilities through agreements with several large high credit quality counterparties. At the corporate and other segment, the accounts receivable and unbilled revenue balance is related to the remaining PDL residential solar business. We evaluate the collectability of our accounts receivable and unbilled revenue balances considering a combination of factors. For some of our larger customers and also in circumstances where we become aware of a specific customer's inability to meet its financial obligations to us, we record a specific allowance for credit losses against amounts due in order to reduce the net recognized receivable to the amount we reasonably believe will be collected. For all other customers, we use the accounts receivable aging method to calculate an allowance for credit losses. Using this method, we classify accounts receivable into different aging buckets and calculate a reserve percentage for each aging bucket based upon historical loss rates. The calculated reserve percentages are updated on at least an annual basis, in order to ensure recent macroeconomic, political, and regulatory trends are captured in the calculation, to the extent possible. Risks identified that we do not believe are reflected in the calculated reserve percentages, are assessed on a quarterly basis to determine whether further adjustments are required. At March 31, 2020, we recorded a $2.7 million increase to our allowance for credit losses specific to the economic risks associated with the COVID-19 pandemic, which continues to evolve. We will continue to monitor the economic impacts of COVID-19 and the resulting effect that these impacts may have on the ability of our customers to pay their energy bills. We monitor our ongoing credit exposure through active review of counterparty accounts receivable balances against contract terms and due dates. Our activities include timely account reconciliation, dispute resolution and payment confirmation. To the extent possible, we work with customers with past due balances to negotiate payment plans, but will disconnect customers for non-payment as allowed by our regulators if necessary, and employ collection agencies and legal counsel to pursue recovery of defaulted receivables. For our larger customers, detailed credit review procedures may be performed in advance of any sales being made. We sometimes require letters of credit, parental guarantees, prepayments or other forms of credit assurance from our larger customers to mitigate credit risk. See Note 21, Regulatory Environment, for information on certain regulatory actions that are being taken for the purpose of ensuring that essential utility services are available to our customers during the COVID-19 pandemic. We have included a table below that shows our gross third-party receivable balances and the related allowance for credit losses at March 31, 2020 by reportable segment.
(in millions) |  | Wisconsin |  | Illinois |  | Other States |  | Total Utility Operations |  | Non-Utility Energy Infrastructure |  | Corporate and Other |  | WEC Energy Group Consolidated
Accounts receivable and unbilled revenues |  | $ | 849.1 |  |  | $ | 404.7 |  |  | $ | 79.2 |  |  | $ | 1,333.0 |  |  | $ | 5.8 |  |  | $ | 2.9 |  |  | $ | 1,341.7 |
Allowance for credit losses |  | 67.7 |  |  | 93.1 |  |  | 3.9 |  |  | 164.7 |  |  | — |  |  | 0.1 |  |  | 164.8 |
Accounts receivable and unbilled revenues, net |  | $ | 781.4 |  |  | $ | 311.6 |  |  | $ | 75.3 |  |  | $ | 1,168.3 |  |  | $ | 5.8 |  |  | $ | 2.8 |  |  | $ | 1,176.9 |
Total accounts receivable, net – past due greater than 90 days* |  | $ | 57.7 |  |  | $ | 35.9 |  |  | $ | 3.9 |  |  | $ | 97.5 |  |  | $ | — |  |  | $ | — |  |  | $ | 97.5 |
Past due greater than 90 days – collection risk mitigated by regulatory mechanisms* |  | 95.7 | % |  | 100.0 | % |  | — | % |  | 93.4 | % |  | — | % |  | — | % |  | 93.4 | %
* | Our exposure to credit losses for certain regulated utility customers is mitigated by regulatory mechanisms we have in place. Specifically, rates related to all of the customers in our Illinois segment, as well as the residential rates of WE, WG, and WPS in our Wisconsin segment include riders or other mechanisms for cost recovery or refund of uncollectible expense based on the difference between the actual provision for credit losses and the amounts recovered in rates. As a result, at March 31, 2020, $684.6 million, or 58.2%, of our net accounts receivable and unbilled revenues balance had regulatory protections in place to mitigate the exposure to credit losses. In addition, in a March 24, 2020 order, the PSCW authorized the deferral of credit losses at WE, WG, and WPS for commercial and industrial customers, to the extent these losses exceed the amount included in rates, as a result of the COVID-19 pandemic and the actions WE, WG, and WPS have been required to take to ensure
essential utility services are available to customers during the public health emergency. Furthermore, pursuant to an April 15, 2020 order addressing certain impacts of the COVID-19 pandemic, the MPSC authorized all Michigan utilities to defer, for potential future recovery, uncollectible expense incurred on or after March 24, 2020 that exceeds the amounts being recovered in rates. The additional protections related to our March 31, 2020 accounts receivable and unbilled revenue balances provided by these orders are still being assessed and are not reflected in the percentages in the above table or related note. See Note 21, Regulatory Environment, for more information. A rollforward of the allowance for credit losses by reportable segment is included below:
(in millions) |  | Wisconsin |  | Illinois |  | Other States |  | Total Utility Operations |  | Corporate and Other |  | WEC Energy Group Consolidated
Balance at December 31, 2019 |  | $ | 59.9 |  |  | $ | 75.9 |  |  | $ | 4.1 |  |  | $ | 139.9 |  |  | $ | 0.1 |  |  | $ | 140.0 |
Provision for credit losses |  | 13.7 |  |  | 14.4 |  |  | 0.7 |  |  | 28.8 |  |  | — |  |  | 28.8 |
Provision for credit losses deferred for future recovery or refund |  | 3.3 |  |  | 29.5 |  |  | — |  |  | 32.8 |  |  | — |  |  | 32.8 |
Write-offs charged against the allowance |  | (19.7 | ) |  | (31.6 | ) |  | (1.3 | ) |  | (52.6 | ) |  | — |  |  | (52.6 | )
Recoveries of amounts previously written off |  | 10.5 |  |  | 4.9 |  |  | 0.4 |  |  | 15.8 |  |  | — |  |  | 15.8 |
Balance at March 31, 2020 |  | $ | 67.7 |  |  | $ | 93.1 |  |  | $ | 3.9 |  |  | $ | 164.7 |  |  | $ | 0.1 |  |  | $ | 164.8 |
The increase in the allowance for credit losses at our Wisconsin and Illinois reportable segments was driven by an increase in past due accounts receivable balances from December 31, 2019 to March 31, 2020. This is a trend we generally see over the winter moratorium months, when we are not allowed to disconnect customer service as a result of non-payment. In Wisconsin, the winter moratorium begins on November 1 and ends on April 15, and in Illinois the winter moratorium begins on December 1 and ends on March 31. However, as a result of the COVID-19 pandemic, we are still unable to disconnect any of our Wisconsin and Illinois customers, and have also agreed not to disconnect certain of our regulated utility customers in the other states segment. See Note 21, Regulatory Environment, for more information.

X
- References No definition available. + Details
Name: | us-gaap_CreditLossAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for credit loss on financial instrument measured at amortized cost basis, net investment in lease, off-balance sheet credit exposure, and available-for-sale debt security. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 30 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=118955579&loc=SL82922895-210455 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=119407570&loc=SL82919272-210447 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 8 -URI http://asc.fasb.org/extlink&oid=119407570&loc=SL82919236-210447 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 20 -URI http://asc.fasb.org/extlink&oid=119407570&loc=SL82919269-210447 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=118955579&loc=SL82922888-210455 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=119407570&loc=SL82919244-210447 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=119407570&loc=SL82919230-210447 + Details
Name: | us-gaap_CreditLossFinancialInstrumentTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration