Investment in ATC

6 Months Ended

Jun. 30, 2016

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENT IN ATC

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. We account for our investment in ATC under the equity method of accounting. As of June 30, 2016, our equity investment in ATC was $129.0 million ($124.5 million at December 31, 2015). In the first six months of 2016, we invested $1.6 million in ATC, and on July 29, 2016, we invested an additional $1.9 million. We expect to make additional investments of approximately $2.7 million in 2016.



ALLETE’s Investment in ATC
Millions
Equity Investment Balance as of December 31, 2015		$124.5
Cash Investments	1.6
Equity in ATC Earnings	8.9
Distributed ATC Earnings	(6.0		)
Equity Investment Balance as of June 30, 2016		$129.0

NOTE 7. INVESTMENT IN ATC (Continued)

Our equity earnings in ATC continue to be impacted by reductions for estimated refunds related to complaints filed with the FERC by several customer groups located within the MISO service area. (See Note 6. Regulatory Matters.) ATC's current authorized return on equity is 12.2 percent. We own approximately 8 percent of ATC and estimate that for every 50 basis point reduction in ATC’s allowed return on equity our equity earnings in ATC would be impacted annually by approximately $0.5 million after-tax ($0.9 million pre-tax).