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Leases | 12 Months Ended
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Dec. 31, 2022
Leases [Abstract] |
LEASES | LEASES Obligations Under Operating Leases We have recorded right of use assets and lease liabilities associated with the following operating leases. •Leases of office space, primarily related to several floors we are leasing in the Aon Center office building in Chicago, Illinois, though April 2029. •Land we are leasing related to our Rothschild biomass plant through June 2051. •Land we are leasing related to our Solar Now projects. The operating leases generally require us to pay property taxes, insurance premiums, and operating and maintenance costs associated with the leased property. Certain of our leases contain options for early termination or to renew past the initial term, as set forth in the lease agreements. These options are not included in our calculation of the lease obligations, as it is not reasonably certain that they will be exercised. Obligations Under Finance Leases In accordance with ASC Subtopic 980-842, Regulated Operations – Leases, the expense recognition pattern of our finance leases at our regulated entities resembles that of an operating lease. The difference between the minimum lease payments and the sum of imputed interest and unadjusted amortization costs calculated under Topic 842 is deferred as a regulatory asset on our balance sheets in accordance with Subtopic 980-842. Power Purchase Commitment In 1997, WE entered into a 25-year PPA with LSP-Whitewater Limited Partnership. The contract, for 236.5 MW of firm capacity from a natural gas-fired cogeneration facility, included zero minimum energy requirements. The PPA expired on May 31, 2022; however, in November 2021, WE entered into a tolling agreement with LSP-Whitewater Limited Partnership that commenced on June 1, 2022. Concurrent with the execution of the tolling agreement, WE and WPS entered into an asset purchase agreement to acquire the natural gas-fired cogeneration facility for $72.7 million, which excludes working capital and transaction costs. This asset purchase agreement was approved by the PSCW in December 2022, and the acquisition closed effective January 1, 2023. Land Leases – Utility Solar Generation WE and WPS, along with an unaffiliated utility, have entered into various land leases related to their investment in utility-scale solar generation. Each lease has an initial term and one or more optional extensions. We expect the optional extensions to be exercised, and, as a result, all of the land leases are being amortized over an extended term of approximately 50 years. Once a solar project achieves commercial operation, the lease liability is remeasured to reflect the final total acres being leased. Our payments related to these leases are being recovered through rates. Amounts Recognized in the Financial Statements and Other Information The components of lease expense and supplemental cash flow information related to our leases for the years ended December 31 are as follows:
(in millions) |  | 2022 |  | 2021 |  | 2020
Finance lease expense |  |  |  |  |  |
Amortization of right of use assets (1) |  | $ | 6.0 |  |  | $ | 8.1 |  |  | $ | 6.3 |
Interest on lease liabilities (2) |  | 0.9 |  |  | 1.6 |  |  | 2.5 |
Operating lease expense (3) |  | 6.1 |  |  | 3.4 |  |  | 5.4 |
Short-term lease expense (3) |  | 0.9 |  |  | 0.2 |  |  | 0.3 |
Total lease expense |  | $ | 13.9 |  |  | $ | 13.3 |  |  | $ | 14.5 |
Other information |  |  |  |  |  |
Cash paid for amounts included in the measurement of lease liabilities |  |  |  |  |  |
Operating cash flows from finance leases |  | $ | 0.9 |  |  | $ | 1.6 |  |  | $ | 2.5 |
Operating cash flows from operating leases |  | $ | 5.7 |  |  | $ | 5.3 |  |  | $ | 6.7 |
Financing cash flows from finance leases |  | $ | 6.0 |  |  | $ | 8.1 |  |  | $ | 6.3 |
Non-cash activities: |  |  |  |  |  |
Right of use assets obtained in exchange for finance lease liabilities |  | $ | 57.6 |  |  | $ | 73.6 |  |  | $ | 22.8 |
Right of use assets obtained in exchange for operating lease liabilities |  | $ | — |  |  | $ | 0.5 |  |  | $ | — |
Weighted-average remaining lease term – finance leases |  | 30.0 years |  | 20.5 years |  | 41.5 years
Weighted-average remaining lease term – operating leases |  | 12.0 years |  | 12.5 years |  | 13.0 years
Weighted-average discount rate – finance lease (4) |  | 3.9 | % |  | 2.4 | % |  | 4.9 | %
Weighted average discount rate – operating leases (4) |  | 3.4 | % |  | 3.4 | % |  | 3.4 | %
(1) Amortization of right of use assets was included as a component of depreciation and amortization expense. (2) Interest on lease liabilities was included as a component of interest expense. (3) Operating and short-term lease expense were included as a component of operation and maintenance expense. (4) Because our 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. The following table summarizes our finance and operating lease right of use assets and obligations at December 31:
(in millions) |  | 2022 |  | 2021 |  | Balance Sheet Location
Right of use assets |  |  |  |  |  |
Operating lease right of use assets, net |  | $ | 15.7 |  |  | $ | 19.5 |  |  | Other long-term assets
Finance lease right of use assets, net |  |  |  |  |  |
Power purchase commitment |  | $ | 71.8 |  |  | $ | 76.7 |  |  |
Land leases – utility solar generation |  | $ | 102.4 |  |  | $ | 47.0 |  |  |
Other |  | $ | 1.1 |  |  | $ | 0.3 |  |  |
Total finance lease right of use assets, net (1) |  | $ | 175.3 |  |  | $ | 124.0 |  |  | Property, plant, and equipment, net
Lease obligations |  |  |  |  |  |
Current operating lease liabilities |  | $ | 4.0 |  |  | $ | 3.7 |  |  | Other current liabilities
Long-term operating lease liabilities |  | $ | 25.4 |  |  | $ | 29.1 |  |  | Other long-term liabilities
Current finance lease liabilities |  |  |  |  |  |
Power purchase commitment |  | $ | 72.7 |  |  | $ | 78.4 |  |  | Current portion of long-term debt
Long-term finance lease liabilities |  |  |  |  |  |
Land leases – utility solar generation |  | $ | 109.3 |  |  | $ | 51.0 |  |  |
Other |  | $ | 1.2 |  |  | $ | 0.3 |  |  |
Total long-term finance lease liabilities |  | $ | 110.5 |  |  | $ | 51.3 |  |  | Long-term debt
(1) Amounts are net of accumulated amortization of $146.3 million and $139.7 million at December 31, 2022 and 2021, respectively. Future minimum lease payments under our operating and finance leases and the present value of our net minimum lease payments as of December 31, 2022, were as follows:
(in millions) |  | Total Operating Leases |  | Power Purchase Commitment |  | Land Leases - Utility Solar Generation |  | Other |  | Total Finance Leases
2023 |  | $ | 4.9 |  |  | $ | 72.7 |  |  | $ | 3.6 |  |  | $ | — |  |  | $ | 76.3 |
2024 |  | 4.3 |  |  | — |  |  | 3.9 |  |  | 0.1 |  |  | 4.0 |
2025 |  | 3.8 |  |  | — |  |  | 4.0 |  |  | 0.1 |  |  | 4.1 |
2026 |  | 3.9 |  |  | — |  |  | 4.0 |  |  | 0.1 |  |  | 4.1 |
2027 |  | 4.0 |  |  | — |  |  | 4.1 |  |  | 0.1 |  |  | 4.2 |
Thereafter |  | 16.6 |  |  | — |  |  | 304.1 |  |  | 2.7 |  |  | 306.8 |
Total minimum lease payments |  | 37.5 |  |  | 72.7 |  |  | 323.7 |  |  | 3.1 |  |  | 399.5 |
Less: Interest |  | (8.1) |  |  | — |  |  | (214.4) |  |  | (1.9) |  |  | (216.3) |
Present value of minimum lease payments |  | 29.4 |  |  | 72.7 |  |  | 109.3 |  |  | 1.2 |  |  | 183.2 |
Less: Short-term lease liabilities |  | (4.0) |  |  | (72.7) |  |  | — |  |  | — |  |  | (72.7) |
Long-term lease liabilities |  | $ | 25.4 |  |  | $ | — |  |  | $ | 109.3 |  |  | $ | 1.2 |  |  | $ | 110.5 |
As of February 23, 2023, we have not entered into any material leases that have not yet commenced.

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- Definition The entire disclosure for finance and operating leases of a lessee. Includes, but is not limited to, a description of the lessee's finance and operating leases and a maturity analysis of the lessee's finance and operating lease liabilities. + References No definition available. + Details
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