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Fair Value | 9 Months Ended
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Sep. 30, 2015
Fair Value [Abstract] |
Fair Value [Text Block] | FAIR VALUE Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. We primarily apply the market approach for recurring fair value measurements and endeavor to utilize the best available information. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs, which are used to measure fair value, are prioritized through the fair value hierarchy. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). Descriptions of the three levels of the fair value hierarchy are discussed in Note 10. Fair Value to the Consolidated Financial Statements in our 2014 Form 10-K. The following tables set forth by level within the fair value hierarchy our assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2015, and December 31, 2014. Each asset and liability is classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of these assets and liabilities and their placement within the fair value hierarchy levels. The estimated fair value of Cash and Cash Equivalents listed on the Consolidated Balance Sheet approximates the carrying amount and therefore is excluded from the recurring fair value measures in the tables below. NOTE 6. FAIR VALUE (Continued)
| Fair Value as of September 30, 2015
Recurring Fair Value Measures | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Millions |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |
Investments (a) |  |  |  |  |  |  |
Available-for-sale – Equity Securities |  | $7.3 |  |  | — |  |  | — |  |  |  | $7.3 |
Available-for-sale – Corporate Debt Securities | — |  |  |  | $11.2 |  |  | — |  |  | 11.2 |
Cash Equivalents | 2.6 |  |  | — |  |  | — |  |  | 2.6 |
Total Fair Value of Assets |  | $9.9 |  |  |  | $11.2 |  |  | — |  |  |  | $21.1 |
Liabilities: |  |  |  |  |  |  |
Deferred Compensation (b) | — |  |  |  | $15.9 |  |  | — |  |  |  | $15.9 |
Derivatives – Interest Rate Swap (c) | — |  |  | 4.8 |  |  | — |  |  | 4.8 |
U.S. Water Services Contingent Consideration (b) | — |  |  | — |  |  |  | $37.4 |  |  | 37.4 |
Total Fair Value of Liabilities | — |  |  |  | $20.7 |  |  |  | $37.4 |  |  |  | $58.1 |
Total Net Fair Value of Assets (Liabilities) |  | $9.9 |  |  | $(9.5) |  | $(37.4) |  | $(37.0)
(a) | Included in Other Investments on the Consolidated Balance Sheet.
(b) | Included in Other Non-Current Liabilities on the Consolidated Balance Sheet.
(c) | Included in Current Liabilities - Other and Other Non-Current Liabilities on the Consolidated Balance Sheet.
| Fair Value as of December 31, 2014
Recurring Fair Value Measures | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Millions |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |
Investments (a) |  |  |  |  |  |  |
Available-for-sale – Equity Securities |  | $8.1 |  |  | — |  |  | — |  |  |  | $8.1 |
Available-for-sale – Corporate Debt Securities | — |  |  |  | $10.8 |  |  | — |  |  | 10.8 |
Cash Equivalents | 2.9 |  |  | — |  |  | — |  |  | 2.9 |
Total Fair Value of Assets |  | $11.0 |  |  |  | $10.8 |  |  | — |  |  |  | $21.8 |
Liabilities: |  |  |  |  |  |  |
Deferred Compensation (b) | — |  |  |  | $16.2 |  |  | — |  |  |  | $16.2 |
Derivatives – Interest Rate Swap (c) | — |  |  | 0.3 |  |  | — |  |  | 0.3 |
Total Fair Value of Liabilities | — |  |  |  | $16.5 |  |  | — |  |  |  | $16.5 |
Total Net Fair Value of Assets (Liabilities) |  | $11.0 |  |  | $(5.7) |  | — |  |  |  | $5.3 |
(a) | Included in Other Investments on the Consolidated Balance Sheet.
(b) | Included in Other Non-Current Liabilities on the Consolidated Balance Sheet.
(c) | Included in Current Liabilities - Other on the Consolidated Balance Sheet.
NOTE 6. FAIR VALUE (Continued) The following table provides a reconciliation of the beginning and ending balances of the U.S. Water Services Contingent Consideration measured at fair value using Level 3 measurements as of September 30, 2015. The acquisition contingent consideration was recorded at the acquisition date at its estimated fair value. The acquisition date fair value is measured based on the consideration expected to be transferred, discounted to present value. The discount rate is determined at the time of measurement in accordance with generally accepted valuation methods. The fair value of the acquisition contingent consideration is remeasured to arrive at estimated fair value each reporting period with the change in fair value recognized as income or expense in our Consolidated Statement of Income. Changes to the fair value of the acquisition contingent consideration can result from changes in discount rates, or in the timing and amount of earnings estimates. Using different valuation assumptions, including earnings projections or discount rates, may result in different fair value measurements and expense (or income) in future periods. The acquisition contingent consideration was measured at $37.4 million as of September 30, 2015.
Recurring Fair Value Measures |
Activity in Level 3 |
Millions |
Balance as of December 31, 2014 | — |
Recognition of U.S. Water Services Contingent Consideration |  | $35.7 |
Accretion Expense (a) | 1.8 |
Payments (b) | (0.1 | )
Balance as of September 30, 2015 |  | $37.4 |
(a) | Included in Interest Expense on the Consolidated Statement of Income.
(b) | Amounts paid to terminated employees.
The Level 3 activity above is the result of the February 10, 2015, acquisition of U.S. Water Services; there was no activity in Level 3 during the year ended December 31, 2014. For the nine months ended September 30, 2015, and the year ended December 31, 2014, there were no transfers in or out of Levels 1, 2 or 3. Fair Value of Financial Instruments. With the exception of the item listed in the table below, the estimated fair value of all financial instruments approximates the carrying amount. The fair value for the item listed below was based on quoted market prices for the same or similar instruments (Level 2).
Financial Instruments | Carrying Amount |  | Fair Value
Millions |  |  |
Long-Term Debt, Including Current Portion |  |  |
September 30, 2015 | $1,598.1 |  | $1,685.2
December 31, 2014 | $1,373.5 |  | $1,484.5
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis. Non-financial assets such as equity method investments, goodwill, intangible assets, and property, plant and equipment are measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment is recognized. Equity Method Investment. Our wholly-owned subsidiary, ALLETE Transmission Holdings, owns approximately 8 percent of ATC, a Wisconsin-based utility that owns and maintains electric transmission assets in parts of Wisconsin, Michigan, Minnesota and Illinois. (See Note 8. Investment in ATC.) The aggregate carrying amount of the investment was $126.0 million as of September 30, 2015 ($121.1 million as of December 31, 2014). The Company assesses our investment in ATC for impairment whenever events or changes in circumstances indicate that the carrying amount of our investment in ATC may not be recoverable. For the nine months ended September 30, 2015, and the year ended December 31, 2014, there were no indicators of impairment. NOTE 6. FAIR VALUE (Continued) Goodwill. To align with the annual budgeting and forecasting process, the Company assesses the impairment of goodwill annually in the fourth quarter and whenever an event occurs or circumstances change that would indicate that the carrying amount may be impaired. Substantially all of the Company’s goodwill is a result of the U.S. Water Services acquisition on February 10, 2015. The aggregate carrying amount of goodwill was $131.0 million and $2.9 million as of September 30, 2015, and December 31, 2014, respectively. Impairment testing for goodwill is done at the reporting unit level. An impairment loss is recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit. The test for impairment requires us to make several estimates about fair value, most of which are based on projected future cash flows. The Company calculates the excess of each reporting unit's fair value over its carrying amount, including goodwill, utilizing a discounted cash flow analysis. As of September 30, 2015, there have been no events or changes in circumstance which would indicate impairment of our goodwill. Intangible Assets. The Company assesses indefinite-lived intangible assets for impairment annually in the fourth quarter. The Company also assesses indefinite-lived and definite-lived intangible assets whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable. Substantially all of the Company’s intangible assets are a result of the U.S. Water Services acquisition on February 10, 2015. The aggregate carrying amount of intangible assets was $81.9 million as of September 30, 2015 ($1.9 million as of December 31, 2014). When events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable, the Company calculates the excess of an intangible asset's carrying amount over its undiscounted future cash flows. If the carrying amount is not recoverable, an impairment loss is recorded based on the amount by which the carrying amount exceeds the fair value. The inputs used in the fair value analysis fall within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine fair value. As of September 30, 2015, there have been no events or changes in circumstance which would indicate impairment of our intangible assets. Property, Plant and Equipment. The Company assesses the impairment of property, plant, and equipment whenever events or changes in circumstances indicate that the carrying amount of property, plant, and equipment assets may not be recoverable. For the nine months ended September 30, 2015, and the year ended December 31, 2014, there were no indicators of impairment. We believe that long-standing ratemaking practices approved by applicable state and federal regulatory commissions allow for the recovery of the remaining book value of retired plant assets. Minnesota Power retired Taconite Harbor Unit 3 and converted Laskin to natural gas in the second quarter of 2015, which were actions included in our 2013 Integrated Resource Plan approved by the MPUC in a November 2013 order. On September 1, 2015, Minnesota Power filed its 2015 Integrated Resource Plan with the MPUC which contains the next steps its EnergyForward plan, which includes the economic idling of Taconite Harbor Units 1 and 2 in the fall of 2016 and the ceasing of coal-fired operations at Taconite Harbor in 2020. We do not expect to record any impairment charge as a result of the retirement of Taconite Harbor or the conversion of Laskin. In addition, we expect to be able to continue depreciation of these assets over their established remaining useful lives; however we are unable to predict the impact of unanticipated regulatory outcomes resulting in changes to their remaining useful lives. We would seek recovery in a general rate case of additional depreciation expense as a result of material changes in useful lives.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13537-108611 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13504-108611 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13433-108611 + Details
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