Investment in ATC

6 Months Ended

Jun. 30, 2018

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 portions of Wisconsin, Michigan, Minnesota and Illinois. We account for our investment in ATC under the equity method of accounting. As of June 30, 2018, our equity investment in ATC was $123.6 million ($118.7 million at December 31, 2017). In the first six months of 2018, we invested $3.9 million in ATC, and on July 31, 2018, we invested an additional $1.2 million. We expect to make additional investments of $1.3 million in 2018.



ALLETE’s Investment in ATC
Millions
Equity Investment Balance as of December 31, 2017		$118.7
Cash Investments	3.9
Equity in ATC Earnings	9.0
Distributed ATC Earnings	(8.6		)
Amortization of the Remeasurement of Deferred Income Taxes (a)	0.6
Equity Investment Balance as of June 30, 2018		$123.6

(a) Amortization related to the impact of the remeasurement of deferred income tax assets and liabilities resulting from the TCJA.

NOTE 7. INVESTMENT IN ATC (Continued)

ATC’s authorized return on equity is 10.32 percent, or 10.82 percent including an incentive adder for participation in a regional transmission organization.

In 2016, a federal administrative law judge ruled on a complaint proposing a reduction in the base return on equity to 9.70 percent, or 10.20 percent including an incentive adder for participation in a regional transmission organization, subject to approval or adjustment by the FERC. A final decision from the FERC on the administrative law judge’s recommendation is pending.