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Regulatory Matters | 3 Months Ended
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Mar. 31, 2019
Regulated Operations [Abstract] |
Regulatory Matters [Text Block] | REGULATORY MATTERS Regulatory matters are summarized in Note 4. Regulatory Matters to the Consolidated Financial Statements in our 2018 Form 10‑K, with additional disclosure provided in the following paragraphs. Electric Rates. Entities within our Regulated Operations segment file for periodic rate revisions with the MPUC, PSCW or FERC. As authorized by the MPUC, Minnesota Power also recognizes revenue under cost recovery riders for transmission, renewable, and environmental investments and expenditures. Revenue from cost recovery riders was $7.4 million for the three months ended March 31, 2019 ($24.1 million for three months ended March 31, 2018). With the implementation of final rates in Minnesota Power’s general rate case, certain revenue previously recognized under cost recovery riders was incorporated into base rates. (See 2016 Minnesota General Rate Case.) 2016 Minnesota General Rate Case. The MPUC issued an order dated March 12, 2018, in Minnesota Power’s general rate case approving a return on common equity of 9.25 percent and a 53.81 percent equity ratio. Final rates went into effect on December 1, 2018, which is expected to result in additional revenue of approximately $13 million on an annualized basis. Interim rates were collected from January 1, 2017, through November 30, 2018, which were fully offset by the recognition of a corresponding reserve. Minnesota Power has recorded a reserve for an interim rate refund, net of discounts provided to EITE customers, of $40.6 million as of March 31, 2019 ($40.0 million as of December 31, 2018), which is expected to be refunded in the second quarter of 2019. 2018 Wisconsin General Rate Case. In an order dated December 20, 2018, the PSCW approved a rate increase for SWL&P including a return on equity of 10.4 percent and a 55.0 percent equity ratio. Final rates went into effect January 1, 2019, which is expected to result in additional revenue of approximately $1.3 million on an annualized basis. NOTE 2. REGULATORY MATTERS (Continued) Integrated Resource Plan. In a 2016 order, the MPUC approved Minnesota Power’s 2015 IRP with modifications. The order accepted Minnesota Power’s plans for the economic idling of Taconite Harbor Units 1 and 2 and the ceasing of coal-fired operations at Taconite Harbor in 2020, directed Minnesota Power to retire Boswell Units 1 and 2 no later than 2022, required an analysis of generation and demand response alternatives to be filed with a natural gas resource proposal, and required Minnesota Power to conduct request for proposals for additional wind, solar and demand response resource additions subject to further MPUC approvals. Minnesota Power retired Boswell Units 1 and 2 in the fourth quarter of 2018. Minnesota Power’s next IRP filing is due October 1, 2020. In 2017, Minnesota Power submitted a resource package to the MPUC requesting approval of PPAs for the output of a 250 MW wind energy facility and a 10 MW solar energy facility as well as approval of a 250 MW natural gas capacity dedication agreement. These agreements were subject to MPUC approval of the construction of NTEC, a 525 MW to 550 MW combined-cycle natural gas‑fired generating facility which will be jointly owned by Dairyland Power Cooperative and a subsidiary of ALLETE. Minnesota Power would purchase approximately 50 percent of the facility's output starting in 2025. In an order dated January 24, 2019, the MPUC approved Minnesota Power’s request for approval of the NTEC natural gas capacity dedication agreement. Separately, the MPUC required a baseload retirement evaluation in Minnesota Power’s next IRP filing analyzing its existing fleet, including potential early retirement scenarios of Boswell Units 3 and 4, as well as a securitization plan. On January 8, 2019, an application for a certificate of public convenience and necessity for NTEC was submitted to the PSCW. A decision on the application is expected in 2020. Regulatory Assets and Liabilities. Our regulated utility operations are subject to accounting guidance for the effect of certain types of regulation. Regulatory assets represent incurred costs that have been deferred as they are probable for recovery in customer rates. Regulatory liabilities represent obligations to make refunds to customers and amounts collected in rates for which the related costs have not yet been incurred. The Company assesses quarterly whether regulatory assets and liabilities meet the criteria for probability of future recovery or deferral. With the exception of the regulatory asset for Boswell Units 1 and 2 net plant and equipment, no other regulatory assets are currently earning a return. The recovery, refund or credit to rates for these regulatory assets and liabilities will occur over the periods either specified by the applicable regulatory authority or over the corresponding period related to the asset or liability. NOTE 2. REGULATORY MATTERS (Continued)
Regulatory Assets and Liabilities | March 31, 2019 |  |  | December 31, 2018 |
Millions |  |  |
Non-Current Regulatory Assets |  |  |
Defined Benefit Pension and Other Postretirement Benefit Plans |  | $218.0 |  |  |  | $218.5 |
Income Taxes | 103.2 |  |  | 105.5 |
Asset Retirement Obligations | 32.4 |  |  | 32.6 |
Boswell 1 and 2 Net Plant and Equipment | 14.8 |  |  | 16.3 |
Manufactured Gas Plant | 8.1 |  |  | 8.0 |
PPACA Income Tax Deferral | 4.9 |  |  | 5.0 |
Other | 3.7 |  |  | 3.6 |
Total Non-Current Regulatory Assets |  | $385.1 |  |  |  | $389.5 |
Current Regulatory Liabilities (a) |  |  |
Provision for Interim Rate Refund (b) |  | $40.6 |  |  |  | $40.0 |
Transmission Formula Rates Refund | 3.3 |  |  | 4.4 |
Provision for Tax Reform Refund (c) | 0.5 |  |  | 10.7 |
Total Current Regulatory Liabilities | 44.4 |  |  | 55.1 |
Non-Current Regulatory Liabilities |  |  |
Income Taxes | 389.4 |  |  | 396.4 |
Wholesale and Retail Contra AFUDC | 67.3 |  |  | 64.4 |
Plant Removal Obligations | 26.8 |  |  | 25.1 |
North Dakota Investment Tax Credits | 12.3 |  |  | 14.7 |
Conservation Improvement Program | 5.2 |  |  | 1.5 |
Transmission Formula Rates Refund | 1.6 |  |  | 1.6 |
Cost Recovery Riders | — |  |  | 6.9 |
Other | 1.5 |  |  | 1.5 |
Total Non-Current Regulatory Liabilities | 504.1 |  |  | 512.1 |
Total Regulatory Liabilities |  | $548.5 |  |  |  | $567.2 |
(a) | Current regulatory liabilities are presented within Other Current Liabilities on the Consolidated Balance Sheet.
(b) | This amount is expected to be refunded to Minnesota Power’s regulated retail customers in the second quarter of 2019.
(c) Provision for Tax Reform Refund related to the income tax benefits of the TCJA in 2018 was refunded to Minnesota Power customers in the first quarter of 2019 and will be refunded to SWL&P customers in 2019 and 2020.

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