INVESTMENTS

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 December 31, 2018, our equity investment in ATC was $128.1 million ($118.7 million as of December 31, 2017). On January 31, 2019, we invested an additional $0.4 million in ATC. In total, we expect to invest approximately $8.5 million in 2019.



ALLETE’s Investment in ATC
Year Ended December 31	2018			2017
Millions
Equity Investment Beginning Balance		$118.7			$135.6
Cash Investments	6.2			7.8
Equity in ATC Earnings	17.5			22.5
Distributed ATC Earnings	(15.2		)	(19.3		)
Remeasurement of Deferred Income Taxes (a)	—			(27.9		)
Amortization of the Remeasurement of Deferred Income Taxes	0.9			—
Equity Investment Ending Balance		$128.1			$118.7


(a)	Impact of the remeasurement of deferred income tax assets and liabilities resulting from the TCJA.



ATC Summarized Financial Data
Balance Sheet Data
As of December 31	2018		2017
Millions
Current Assets		$87.2		$87.7
Non-Current Assets	4,928.8		4,598.9
Total Assets		$5,016.0		$4,686.6
Current Liabilities		$640.0		$767.2
Long-Term Debt	2,014.0		1,790.6
Other Non-Current Liabilities	295.3		240.3
Members’ Equity	2,066.7		1,888.5
Total Liabilities and Members’ Equity		$5,016.0		$4,686.6



Income Statement Data
Year Ended December 31	2018		2017		2016
Millions
Revenue		$690.5		$721.6		$650.8
Operating Expense	358.7		344.9		322.5
Other Expense	108.3		104.1		95.5
Net Income		$223.5		$272.6		$232.8
ALLETE’s Equity in Net Income		$17.5		$22.5		$18.5

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.

NOTE 5. EQUITY INVESTMENTS (Continued)

Investment in Nobles 2. On December 27, 2018, our wholly-owned subsidiary, ALLETE South Wind, entered into a partnership agreement with Tenaska to purchase a 49 percent equity interest in Nobles 2, the entity that will own and operate a 250 MW wind energy facility in southwestern Minnesota pursuant to a 20-year PPA with Minnesota Power. The wind energy facility will be built in Nobles County, Minnesota and is expected to be completed in late 2020, with an estimated total project cost of approximately $350 million to $400 million of which our portion is expected to be approximately $170 million to $200 million. We expect to utilize tax equity to finance a portion of our project costs, with an ALLETE expected equity investment of approximately $60 million to $70 million. We account for our investment in Nobles 2 under the equity method of accounting. As of December 31, 2018, our equity investment in Nobles 2 was $33.0 million.