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CREDIT LOSSES | 9 Months Ended
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Sep. 30, 2021
Credit Loss [Abstract] |
CREDIT LOSSES | CREDIT LOSSES 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. 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. 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 22, Regulatory Environment, for information on certain regulatory actions that were and/or 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 tables below that show our gross third-party receivable balances and the related allowance for credit losses at September 30, 2021 and December 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
September 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts receivable and unbilled revenues |  | $ | 927.9 |  |  | $ | 316.6 |  |  | $ | 45.2 |  |  | $ | 1,289.7 |  |  | $ | 9.4 |  |  | $ | 4.4 |  |  | $ | 1,303.5 |
Allowance for credit losses |  | 76.4 |  |  | 114.7 |  |  | 8.6 |  |  | 199.7 |  |  | — |  |  | — |  |  | 199.7 |
Accounts receivable and unbilled revenues, net (1) |  | $ | 851.5 |  |  | $ | 201.9 |  |  | $ | 36.6 |  |  | $ | 1,090.0 |  |  | $ | 9.4 |  |  | $ | 4.4 |  |  | $ | 1,103.8 |
Total accounts receivable, net – past due greater than 90 days (1) |  | $ | 51.9 |  |  | $ | 26.4 |  |  | $ | 8.9 |  |  | $ | 87.2 |  |  | $ | — |  |  | $ | — |  |  | $ | 87.2 |
Past due greater than 90 days – collection risk mitigated by regulatory mechanisms (1) |  | 96.5 | % |  | 100.0 | % |  | — | % |  | 87.7 | % |  | — | % |  | — | % |  | 87.7 | %
(in millions) |  | Wisconsin |  | Illinois |  | Other States |  | Total Utility Operations |  | Non-Utility Energy Infrastructure |  | Corporate and Other |  | WEC Energy Group Consolidated
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts receivable and unbilled revenues |  | $ | 899.8 |  |  | $ | 393.9 |  |  | $ | 79.8 |  |  | $ | 1,373.5 |  |  | $ | 45.0 |  |  | $ | 4.4 |  |  | $ | 1,422.9 |
Allowance for credit losses |  | 102.1 |  |  | 111.6 |  |  | 6.4 |  |  | 220.1 |  |  | — |  |  | — |  |  | 220.1 |
Accounts receivable and unbilled revenues, net (1) |  | $ | 797.7 |  |  | $ | 282.3 |  |  | $ | 73.4 |  |  | $ | 1,153.4 |  |  | $ | 45.0 |  |  | $ | 4.4 |  |  | $ | 1,202.8 |
Total accounts receivable, net – past due greater than 90 days (1) |  | $ | 84.8 |  |  | $ | 34.5 |  |  | $ | 3.5 |  |  | $ | 122.8 |  |  | $ | — |  |  | $ | — |  |  | $ | 122.8 |
Past due greater than 90 days – collection risk mitigated by regulatory mechanisms (1) |  | 97.6 | % |  | 100.0 | % |  | — | % |  | 95.5 | % |  | — | % |  | — | % |  | 95.5 | %
(1)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, WPS, and WG 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 September 30, 2021, $527.5 million, or 47.8%, of our net accounts receivable and unbilled revenues balance had regulatory protections in place to mitigate the exposure to credit losses. In addition, we have received specific orders related to the deferral of certain costs (including credit losses) incurred as a result of the COVID-19 pandemic. The additional protections related to our accounts receivable and unbilled revenue balances provided by these orders are subject to prudency reviews and are still being assessed. They are not reflected in the percentages in the above table or this note. See Note 22, Regulatory Environment, for more information on these orders. A rollforward of the allowance for credit losses by reportable segment for the three and nine months ended September 30, 2021 and 2020 is included below:
Three Months Ended September 30, 2021 (in millions) |  | Wisconsin |  | Illinois |  | Other States |  | Total Utility Operations |  | Corporate and Other |  | WEC Energy Group Consolidated
Balance at June 30, 2021 |  | $ | 114.4 |  |  | $ | 109.0 |  |  | $ | 8.3 |  |  | $ | 231.7 |  |  | $ | — |  |  | $ | 231.7 |
Provision for credit losses |  | 10.7 |  |  | 4.4 |  |  | 0.8 |  |  | 15.9 |  |  | — |  |  | 15.9 |
Provision for credit losses deferred for future recovery or refund |  | (38.2) |  |  | 26.5 |  |  | — |  |  | (11.7) |  |  | — |  |  | (11.7) |
Write-offs charged against the allowance |  | (16.2) |  |  | (29.9) |  |  | (0.7) |  |  | (46.8) |  |  | — |  |  | (46.8) |
Recoveries of amounts previously written off |  | 5.7 |  |  | 4.7 |  |  | 0.2 |  |  | 10.6 |  |  | — |  |  | 10.6 |
Balance at September 30, 2021 |  | $ | 76.4 |  |  | $ | 114.7 |  |  | $ | 8.6 |  |  | $ | 199.7 |  |  | $ | — |  |  | $ | 199.7 |
Nine Months Ended September 30, 2021 (in millions) |  | Wisconsin |  | Illinois |  | Other States |  | Total Utility Operations |  | Corporate and Other |  | WEC Energy Group Consolidated
Balance at December 31, 2020 |  | $ | 102.1 |  |  | $ | 111.6 |  |  | $ | 6.4 |  |  | $ | 220.1 |  |  | $ | — |  |  | $ | 220.1 |
Provision for credit losses |  | 33.8 |  |  | 16.7 |  |  | 3.1 |  |  | 53.6 |  |  | — |  |  | 53.6 |
Provision for credit losses deferred for future recovery or refund |  | (28.1) |  |  | 10.7 |  |  | — |  |  | (17.4) |  |  | — |  |  | (17.4) |
Write-offs charged against the allowance |  | (51.2) |  |  | (36.7) |  |  | (1.8) |  |  | (89.7) |  |  | — |  |  | (89.7) |
Recoveries of amounts previously written off |  | 19.8 |  |  | 12.4 |  |  | 0.9 |  |  | 33.1 |  |  | — |  |  | 33.1 |
Balance at September 30, 2021 |  | $ | 76.4 |  |  | $ | 114.7 |  |  | $ | 8.6 |  |  | $ | 199.7 |  |  | $ | — |  |  | $ | 199.7 |
In total, the allowance for credit losses decreased over both the three and nine month periods ended September 30, 2021. The allowance for credit losses related to our Wisconsin segment decreased, as normal collection practices began in April 2021 for our Wisconsin Utilities, earlier than in our other service territories. Normal collection practices in our Illinois and Other States segments didn't begin until June 30, 2021 and August 2, 2021, respectively. As a result, we continued to see an increase in the allowance for credit losses in these service territories through September 30, 2021, but expect that the allowance for credit losses will decrease as we continue to ramp up our collection efforts. See Note 22, Regulatory Environment, for more information on the impact that the COVID-19 pandemic has had on our allowed collection practices.
Three Months Ended September 30, 2020 (in millions) |  | Wisconsin |  | Illinois |  | Other States |  | Total Utility Operations |  | Corporate and Other |  | WEC Energy Group Consolidated
Balance at June 30, 2020 |  | $ | 77.9 |  |  | $ | 82.7 |  |  | $ | 4.0 |  |  | $ | 164.6 |  |  | $ | 0.1 |  |  | $ | 164.7 |
Provision for credit losses |  | 14.8 |  |  | 6.3 |  |  | 1.0 |  |  | 22.1 |  |  | 0.1 |  |  | 22.2 |
Provision for credit losses deferred for future recovery or refund |  | 2.5 |  |  | (3.2) |  |  | — |  |  | (0.7) |  |  | — |  |  | (0.7) |
Write-offs charged against the allowance |  | (14.5) |  |  | (10.0) |  |  | (0.9) |  |  | (25.4) |  |  | — |  |  | (25.4) |
Recoveries of amounts previously written off |  | 7.8 |  |  | 4.4 |  |  | 0.3 |  |  | 12.5 |  |  | — |  |  | 12.5 |
Balance at September 30, 2020 |  | $ | 88.5 |  |  | $ | 80.2 |  |  | $ | 4.4 |  |  | $ | 173.1 |  |  | $ | 0.2 |  |  | $ | 173.3 |
Nine Months Ended September 30, 2020 (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 |  | 40.8 |  |  | 28.3 |  |  | 2.1 |  |  | 71.2 |  |  | 0.1 |  |  | 71.3 |
Provision for credit losses deferred for future recovery or refund |  | 11.6 |  |  | 22.4 |  |  | — |  |  | 34.0 |  |  | — |  |  | 34.0 |
Write-offs charged against the allowance |  | (52.2) |  |  | (59.5) |  |  | (2.9) |  |  | (114.6) |  |  | — |  |  | (114.6) |
Recoveries of amounts previously written off |  | 28.4 |  |  | 13.1 |  |  | 1.1 |  |  | 42.6 |  |  | — |  |  | 42.6 |
Balance at September 30, 2020 |  | $ | 88.5 |  |  | $ | 80.2 |  |  | $ | 4.4 |  |  | $ | 173.1 |  |  | $ | 0.2 |  |  | $ | 173.3 |
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 September 30, 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 and related regulatory orders we received, we were also unable to disconnect any of our Wisconsin and Illinois customers during the second and third quarters of 2020.

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- 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=124269663&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=124255953&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=124255953&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=124255953&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=124269663&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=124255953&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=124255953&loc=SL82919230-210447 + Details
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