Exhibit 99.3

AMERICAN TRANSMISSION COMPANY, LLC

Financial Statements as of December 31, 2014 and 2013 and

for the Years Ended December 31, 2014, 2013 and 2012 and

Independent Auditors’ Report

American Transmission Company, LLC

Table of Contents

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INDEPENDENT AUDITORS’ REPORT

To the Board of Directors of ATC Management Inc.,

Corporate Manager of American Transmission Company, LLC

Pewaukee, Wisconsin

We have audited the accompanying financial statements of American Transmission Company, LLC (the “Company”), which comprise the balance sheets as of December 31, 2014 and 2013, and the related statements of operations, changes in members’ equity, and cash flows for the three years in the period ended December 31, 2014, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of American Transmission Company, LLC as of December 31, 2014 and 2013, and the results of their operations and their cash flows for the three years in the period ended December, 31, 2014 in accordance with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

Milwaukee, Wisconsin

February 2, 2015

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American Transmission Company, LLC

Statements of Operations

For the Years Ended December 31, 2014, 2013 and 2012

(In Thousands)

The accompanying notes are an integral part of these financial statements.

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American Transmission Company, LLC

Balance Sheets

As of December 31, 2014 and 2013

(In Thousands)

The accompanying notes are an integral part of these financial statements.

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American Transmission Company, LLC

Statements of Cash Flows

For the Years Ended December 31, 2014, 2013 and 2012

(In Thousands)

The accompanying notes are an integral part of these financial statements.

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American Transmission Company, LLC

Statements of Changes in Members’ Equity

For the Years Ended December 31, 2014, 2013 and 2012

(In Thousands)

The accompanying notes are an integral part of these financial statements.

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American Transmission Company, LLC

Notes to Financial Statements as of December 31, 2014 and 2013 and for the Years Ended

December 31, 2014, 2013 and 2012

(1)         Nature of Operations and Summary of Significant Accounting Policies

(a)         General

American Transmission Company, LLC (the “Company”) was organized, as a limited liability company under the Wisconsin Limited Liability Company Act, as a single-purpose, for-profit electric transmission company.  The Company’s purpose is to plan, construct, operate, own and maintain electric transmission facilities to provide an adequate and reliable transmission system that meets the needs of all users on the system and supports equal access to a competitive, wholesale, electric energy market.

The Company currently owns and operates the electric transmission system, under the direction of the Midcontinent Independent System Operator, Inc. (MISO), in parts of Wisconsin, Illinois, Minnesota and the Upper Peninsula of Michigan.  The Company is subject to regulation by the Federal Energy Regulatory Commission (FERC) as to rates, terms of service and financing, and by state regulatory commissions as to other aspects of business, including the construction of electric transmission assets.

The Company’s five largest customers are also members and account for approximately 80% of the Company’s operating revenues.  The rates for these transmission services are subject to review and approval by FERC.  In addition, several members provide operations, maintenance and construction services to the Company.  The agreements under which these services are provided are subject to review and approval by the Public Service Commission of Wisconsin (PSCW).  See Note (8) for details of the various transactions between the Company and its members.

The Company evaluated potential subsequent events through February 2, 2015, which is the date these statements were available to be issued.

(b)         Corporate Manager

The Company is managed by a corporate manager, ATC Management Inc. (“Management Inc.”).  The Company and Management Inc. have common ownership and operate as a single functional unit.  Under the Company’s operating agreement, Management Inc. has complete discretion over the business of the Company and provides all management services to the Company at cost.  The Company itself has no employees and no governance structure

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separate from Management Inc.  The Company’s operating agreement establishes that all expenses of Management Inc. are the responsibility of the Company.  These expenses consist primarily of payroll, benefits, payroll-related taxes and other employee-related expenses.  All such expenses are recorded in the Company’s accounts as if they were direct expenses of the Company.

As of December 31, the following net payables to Management Inc. were included in the Company’s balance sheets (in thousands):

Amounts included in other accrued liabilities are primarily payroll- and benefit-related accruals.  Amounts included in other long-term liabilities relate primarily to certain long-term compensation arrangements covering Management Inc. employees, as described in Note (2), offset by a $14.3 million and $14.5 million receivable as of December 31, 2014 and 2013, respectively, for income taxes paid on Management Inc.’s behalf by the Company.  The income taxes paid are due to temporary differences relating to the tax deductibility of certain employee-related costs.  As these temporary differences reverse in future years, Management Inc. will receive cash tax benefits and will then repay the advances from the Company.

(c)          Revenue Recognition

Wholesale electric transmission service for utilities, municipalities, municipal electric companies, electric cooperatives and other eligible entities is provided through the Company’s facilities under the MISO Open Access Transmission, Energy and Operating Reserve Markets Tariff (“MISO Tariff”) regulated by FERC. The Company charges for these services under FERC-approved rates.  The MISO Tariff specifies the general terms and conditions of service on the transmission system and the approved rates set forth the calculation of the amounts to be paid for those services.  The Company does not take ownership of the electricity that it transmits.

The Company’s FERC-approved formula rate tariff (“Company’s Tariff”) for the revenue requirement determined under Attachment O of the MISO Tariff includes a true-up provision that meets the requirements of an alternative revenue program as defined in the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) Topic 980, “Regulated Operations.”  Accordingly, revenue is recognized for transmission system access the Company provided during the reporting period based on the revenue requirement formula in the Company’s Tariff.  Annually, the Company prepares a forecast for the upcoming rate year of total operating expenses, projected rate base resulting from planned construction and other capital expenditures, and projected amounts to be received from MISO.  From this forecast, the Company computes an annual projected total revenue requirement for

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the reporting period.  Based on the criteria in the MISO Tariff, the Company also calculates its regional cost-sharing revenue requirements which, in addition to other forecasted revenues from MISO and other sources, are subtracted from the total revenue requirement to determine the Company’s annual network revenue requirement.  The annual network revenue requirement is billed to and collected from network transmission customers in equal monthly installments throughout the rate year.  Subsequent to the rate year, the Company compares actual results from the rate year to the forecast to determine any under- or over-collection of revenue from network and regional customers.  In accordance with ASC Topic 980, the Company accrues or defers revenues that are higher or lower, respectively, than the amounts collected during the reporting period.  An accumulated over-collected true-up balance is classified as a regulatory liability in the balance sheets and an accumulated under-collected true-up balance is classified as a regulatory asset in the balance sheets.  The Company is required to refund any over-collected network amounts, plus interest, within two years subsequent to the rate year, with the option to accelerate all or a portion of any such refund, and is permitted to include any under-collected network amounts, plus interest, in annual network billings two fiscal years subsequent to the rate year.  Under these true-up provisions, the Company refunded to network customers, through their monthly bills, a net amount of $10.4 million in 2014, and $1.3 million and $8.0 million in 2013 and 2012, respectively.  The Company also has FERC-approved true-up provisions for MISO regionally cost-shared revenues to refund over-collections or receive under-collections in the second year following the rate year.  The Company collected, inclusive of interest, a net amount of $2.8 million from regional customers in 2014 and refunded, inclusive of interest, $6.3 million and $5.5 million to regional customers in 2013 and 2012, respectively.  See Note 1(h) for more information on the Company’s true-up provisions.

The Company records a reserve for revenue subject to refund when such refund is probable and can be reasonably estimated.

The Company is currently operating under a settlement agreement approved by FERC in 2004 which limits the rights of interested parties to challenge, through a FERC Section 206 proceeding, the provisions noted above for the term of the agreement.  Certain provisions of the settlement agreement terminated on December 31, 2012; as such, the Company may elect to change, or intervenors may request a change to, the Company’s revenue requirement formula.  A change to the revenue requirement formula could result in lowered rates and have an adverse effect on the Company’s financial position, results of operations and cash flows.  If no filings are made by either the Company or other parties, the current terms of the settlement agreement will continue in effect.

On November 12, 2013, MISO, the Company and numerous other MISO transmission owners were named as respondents in a complaint filed at FERC, pursuant to Section 206 of the Federal Power Act (FPA), by several customer groups located within the MISO service area.  The complaint claims that the respondents’ transmission rates are no longer just and reasonable and seeks, among other things, to reduce the MISO base return on equity (ROE).  The Company and the other MISO transmission owners responded to the complaint with a motion to dismiss and answer objecting to the claims of the complainants.  On October 16, 2014, FERC determined that the complaint raises issues of material fact that cannot be resolved with the information in the record at this point.  As a result,

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FERC put the matter of whether the MISO transmission owner base ROE is unjust and unreasonable to hearing and settlement procedures and established a refund date of November 12, 2013.   However, the settlement process was terminated in December 2014.  FERC ordered hearing proceedings to begin, and an initial decision in the complaint is expected by November 30, 2015.  Further details related to this complaint are discussed in Note 7(a).

(d)         Transmission and General Plant and Related Depreciation

Transmission plant is recorded at the original cost of construction.  Assets transferred to the Company primarily by its members, which include investor-owned utilities, municipalities, municipal electric companies and electric cooperatives, have been recorded at their original cost in property, plant and equipment with the related reserves for accumulated depreciation also recorded.

The original cost of construction includes materials, construction overhead and outside contractor costs.  Additions to, and significant replacements of, transmission assets are charged to property, plant and equipment at cost; replacements of minor items are charged to maintenance expense.  The cost of transmission plant is charged to accumulated depreciation when an asset is retired.

The provision for depreciation of transmission assets is an integral part of the Company’s cost of service under FERC-approved rates.  Depreciation rates include estimates for future removal costs and salvage value.  Amounts collected in depreciation rates for future non-legal removal costs are included in regulatory liabilities in the balance sheets, as described in Note 1(h).  Removal costs incurred are charged against the regulatory liability.  Depreciation expense, including a provision for removal costs, as a percentage of average transmission plant was 2.74%, 2.73% and 2.75% in 2014, 2013 and 2012, respectively.

General plant, which includes buildings, office furniture and equipment, and computer hardware and software, is recorded at cost.  Depreciation is recorded at straight-line rates over the estimated useful lives of the assets, which range from five to 60 years.

(e)          Asset Retirement Obligations

Consistent with ASC Topic 410, “Asset Retirement and Environmental Obligations,” the Company records a liability at fair value for a legal asset retirement obligation (ARO) in the period in which it is incurred.  When a new legal obligation is recorded, the costs of the liability are capitalized by increasing the carrying amount of the related long-lived asset.  The liability is accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related asset.  In accordance with ASC Topic 980, the Company recognizes regulatory assets or liabilities, as described in Note 1(h), for the timing differences between when it recovers the ARO in rates and when it

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recognizes these costs under ASC Topic 410.  At the end of the asset’s useful life, the Company settles the obligation for its recorded amount and records the gain or loss in the appropriate regulatory account.

The Company has recognized AROs primarily related to asbestos, lead-based paint and polychlorinated biphenyls contained in its electrical equipment.  AROs are recorded as other long-term liabilities in the balance sheets.  The following table describes all changes to AROs for the years ended December 31, 2014 and 2013 (in thousands):

(f)           Interconnection Agreements

The Company has entered into interconnection agreements with entities planning to build generation facilities.  The Company will construct the interconnection facilities; however, the generator will finance and bear all financial risk of constructing the interconnection facilities under these agreements.  The Company will own and operate the interconnection facilities when the generation facilities become operational and will reimburse the generator for construction costs, plus interest.  If the generation facilities do not become operational, the Company has no obligation to reimburse the generator for costs incurred during construction.

In cases in which the Company is contractually obligated to construct the interconnection facilities, the Company receives cash advances for construction costs from the generators.  During construction, the Company includes actual costs incurred in construction work in progress (CWIP) and records liabilities for the cash advances from the generators, along with accruals for interest.  The accruals for interest are capitalized and included in CWIP.  The construction costs and accrued interest related to interconnection agreements that are included in CWIP are not included as a component of the Company’s rate base until the generation facilities become operational and the Company has reimbursed the generator.

At December 31, 2014 and 2013 the Company had no active projects related to these agreements.  Therefore, at December 31, 2014 and 2013 there were no amounts included in CWIP or liabilities related to cash advances from generator interconnection agreements.

(g)          Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

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The Company paid cash for interest of $85.6 million, $83.5 million and $80.0 million during 2014, 2013 and 2012, respectively.

At December 31, 2014, 2013 and 2012, construction costs funded through accounts payable and accrued liabilities were $24.8 million, $33.8 million and $25.5 million, respectively.  Accordingly, these noncash investing activities are not reported in the statements of cash flows until the period in which the payables are paid.

(h)         Regulatory Accounting

The Company’s accounting policies conform to ASC Topic 980.  Accordingly, assets and liabilities that result from the regulated ratemaking process are recorded that would otherwise not be recorded under accounting principles generally accepted in the United States of America for non-regulated companies.  Certain costs are recorded as regulatory assets as incurred and are recognized in the statements of operations at the time they are reflected in rates.  As such, regulatory assets are not included as a component of rate base and do not earn a current return.  Regulatory liabilities represent amounts that have been collected in current rates to recover costs that are expected to be incurred, or refunded to customers, in future periods.

In accordance with ASC Topic 715, “Compensation — Retirement Benefits,” the Company recognizes the funded status of its postretirement benefit plan, measured as the amount by which its accumulated postretirement benefit obligation is less than or greater than the fair value of the assets that fund its plan.  Since the Company expects to refund or recover these amounts in future rates, a regulatory liability or asset has been established for an amount equal to the ASC Topic 715 asset or liability.

In accordance with ASC Topic 980, an accumulated over-collected revenue true-up balance is classified as a regulatory liability in the balance sheets and an accumulated under-collected revenue true-up balance is classified as a regulatory asset in the balance sheets.

The Company recognizes a regulatory asset or liability for the cumulative difference between amounts recognized for AROs under ASC Topic 410 and amounts recovered through depreciation rates related to these obligations.

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As of December 31, regulatory assets included the following amounts (in thousands):

As of December 31, these amounts were classified in the balance sheets as follows (in thousands):

As described in Note 1(d), the Company’s depreciation rates include an estimate for future asset removal costs which do not represent AROs.  The cumulative amounts that have been collected for future asset removal costs are reflected as regulatory liabilities.

The Company recorded a regulatory liability of $18.3 million related to the MISO transmission owner complaint discussed in Notes 1(c) and 7(a).

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As of December 31, regulatory liabilities included the following amounts (in thousands):

As of December 31, these amounts were classified in the balance sheets as follows (in thousands):

The Company continually assesses whether regulatory assets continue to meet the criteria for probability of future recovery. This assessment includes consideration of factors such as changes in the regulatory environment, recent rate orders to other regulated entities under the same jurisdiction and the status of any pending or potential deregulation legislation.  If the likelihood of future recovery of any regulatory asset becomes less than probable, the affected assets would be written off in the period in which such determination is made.

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(i)             Other Assets

As of December 31, other assets included the following (in thousands):

Deferred project costs are expenditures directly attributable to the construction of transmission assets.  These costs are recorded as other assets in the balance sheets until all required regulatory approvals are obtained and construction begins, at which time the costs are transferred to CWIP.  In accordance with its FERC-approved settlement agreement, the Company is allowed to expense and recover in rates, in the year incurred, certain preliminary survey and investigation costs related to study and planning work performed in the early stages of construction projects.  Other costs, such as advance equipment purchases, continue to be deferred as described above.  Approximately $15.5 million, $19.0 million and $14.9 million of preliminary survey and investigation costs were included in operations and maintenance expense for 2014, 2013 and 2012, respectively.

(j)            Impairment of Long-lived Assets

The Company reviews the carrying values of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying values may not be recoverable under ASC Topic 360, “Property, Plant and Equipment.”  Impairment would be determined based upon a comparison of the undiscounted future operating cash flows to be generated during the remaining life of the assets to their carrying amounts.  An impairment loss would be measured as the amount that an asset’s carrying amount exceeds its fair value.  As long as its assets continue to be recovered through the ratemaking process, the Company believes that such impairment is unlikely.

(k)         Income Taxes

The Company is a limited liability company that has elected to be treated as a partnership under the Internal Revenue Code and applicable state statutes.  The Company’s members (except certain tax-exempt members) report their share of the Company’s earnings, gains, losses, deductions and tax credits on their respective federal and state income tax returns.  Earnings before members’ income taxes reported in the statements of operations are the net income of the Company.  Accordingly, these financial statements do not include a provision for federal or state income tax expense.  See Note (6) for further discussion of income taxes.

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(l)             Construction Agreement

In December 2012, the Company entered into an agreement with the Wisconsin Department of Transportation (WisDOT) to relocate seven overhead 138 kilovolt (kV) transmission lines as part of the WisDOT’s expansion of the interchange between Interstate Highway 894-94 and U.S. Highway 45 in Milwaukee, Wisconsin, known as the Zoo Interchange.  Under the agreement, the WisDOT began making the first of its periodic advances to the Company in January 2013, which the Company used to offset its costs to relocate the seven lines.  The Company received approximately $12.2 million and $32.8 million in advances under the agreement during 2014 and 2013, respectively.  Although the project is ongoing, the Company’s obligation under this agreement is complete and the Company will not receive any additional payments from the WisDOT related to this agreement.

(m)     Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to apply policies and make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Estimates are used for items such as depreciable lives of property, plant and equipment, removal costs associated with asset retirements, tax provisions included in rates, actuarially-determined benefit costs, accruals for construction costs and operations and maintenance expenses.  As additional information becomes available, or actual amounts are determined, the recorded estimates are revised.  Consequently, operating results can be affected by revisions to prior accounting estimates.

(n)         New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. (ASU) 2014-09, Revenue from Contracts with Customers (ASC Topic 606).  The new recognition and measurement rules introduced by ASU 2014-09 will replace nearly all existing revenue guidance, including most industry-specific guidance, and will, with a few exceptions, apply to all contracts with customers.

Under the guidance in ASU 2014-09, the selling entity is required to perform the following recognition and measurement steps in order to recognize revenue:

·                  Identify the contract with a customer

·                  Identify the separate performance obligations within a contract

·                  Determine the transaction price

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·                  Allocate the transaction price to the separate performance obligations, typically on the basis of the relative standalone selling prices of each distinct good or service

·                  Recognize revenue when, or as, each performance obligation is satisfied, either over a period of time or at a point in time.

ASU 2014-09 becomes effective for the Company for the annual reporting period ending December 31, 2018 and interim reporting periods within 2018; but the Company may, at its discretion, adopt ASU 2014-09 effective for the annual reporting period ending December 31, 2017, and interim reporting periods within 2017, in order to align its accounting methods with those of its members who are public companies.  The Company is currently evaluating the impacts of the new standard but does not believe it will have a material impact to its current revenue recognition and measurement practices.

(2)         Benefits

Management Inc. sponsors several benefit plans for its employees.  These plans include certain postretirement medical, dental and life insurance benefits (“postretirement healthcare benefits”).  The weighted-average assumptions related to the postretirement medical benefits, as of the measurement date, are as follows:

The components of Management Inc.’s postretirement healthcare benefit costs for 2014, 2013 and 2012 are as follows (in thousands):

To recognize the funded status of its postretirement healthcare benefit plans in accordance with ASC Topic 715, the Company recorded a long-term liability of $3.0 million at December 31, 2014 and a long-term asset of $4.0 million at December 31, 2013.  In addition, the Company had the following amounts not yet reflected in net periodic benefit cost and

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included in its regulatory accounts, which the Company believes will be recovered as a component of operating expense in future rates, at December 31 (in thousands):

The assumed medical cost trend rates are critical assumptions in determining the service and interest cost and accumulated postretirement healthcare benefit obligation for the Company’s medical and dental plans.

A one-percent change in the medical cost trend rates, holding all other assumptions constant, would have the following effects for 2014 (in thousands):

In 2015, the Company will recognize a $569 thousand prior service credit in its net periodic postretirement healthcare benefit cost.

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The funded status of the Company’s postretirement healthcare benefit plans as of December 31 is as follows (in thousands):

The funded status of the plan decreased as a result of changes in the assumptions used to calculate the benefit obligation and a lower than expected return on plan assets.  Updated mortality tables reflecting longer life expectancy and use of a lower discount rate were the primary drivers of the increase in the benefit obligation as of December 31, 2014.

The Company anticipates contributing $1.0 million to the plan for postretirement healthcare benefit obligations during 2015.

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The Company anticipates net retiree healthcare benefit payments for the next 10 years to be as follows (in thousands):

To fund postretirement healthcare benefit obligations, the Company periodically contributes to its Voluntary Employees’ Beneficiary Association (VEBA) trust.  The VEBA trust, along with the 401(h) trust previously established by the Company to fund postretirement healthcare benefits, are discretionary trusts with a long-term investment objective to preserve and enhance the post inflation value of the trusts’ assets, subject to cash flow requirements, while maintaining an acceptable level of volatility.

The composition of the fair value of total plan assets held in the trusts as of December 31, along with targeted allocation percentages for each major category of plan assets in the trusts, is as follows:

The Company appoints a trustee to maintain investment discretion over trust assets.  The trustee is responsible for holding and investing plan assets in accordance with the terms of the Company’s trust agreement, including investing within the targeted allocation percentages.  In late 2014, the Company updated the targeted allocation percentages for the plan assets.  As of December 31, 2014, the trustee was in the process of updating the portfolio to reflect these new targets.  The Company expects that the funds will be within range of the new targets during 2015.

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The asset classes designated above and described below serve as guides for the selection of individual investment vehicles by the trustee:

·                  U.S. Equities — Strategy of achieving long-term growth of capital and dividend income through investing primarily in common stock of companies in the U.S. stock market with the Wilshire 5000 Index (or a comparable broad U.S. stock index) as the investment benchmark.

·                  Non-U.S. Equities — Strategy of achieving long-term growth of capital and dividend income through investing primarily in common stock of companies in the non-U.S. stock markets with the Morgan Stanley Capital Index All Country World ex-U.S Index (or a comparable broad non-U.S. stock index) as the investment benchmark.

·                  Fixed Income — Strategy of achieving total return from current income and capital appreciation by investing in a diversified portfolio of fixed-income securities with the Barclays Capital Aggregate Index (or a comparable broad bond index) as the investment benchmark.

The objective of the investment vehicles is to minimize risk of large losses by effective diversification.  The investment vehicles will attempt to rank better than the median vehicle in their respective peer group.  However, these investments are intended to be viewed over the long term; during the short term, there will be fluctuations in rates of return characteristic of the securities markets.

The Company measures its plan assets at fair value according to the hierarchy set forth in ASC Topic 715.  The three levels of the fair value hierarchy under ASC Topic 715 are:

Level 1                    Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company’s postretirement healthcare benefit plans have the ability to access.

Level 2                    Inputs to the valuation methodology include:

·                  Quoted prices for similar assets or liabilities in active markets

·                  Quoted prices for identical or similar assets or liabilities in inactive markets

·                  Inputs other than quoted prices that are observable for the asset or liability

·                  Inputs that are derived principally from, or corroborated by, observable market data by correlation or other means

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3                    Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.  Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

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At December 31, 2014 and 2013, a description of the valuation methodologies used for investments measured at fair value is as follows:

·                  Money Market Fund:  Valued at cost plus accrued interest, which approximates the fair value of the net asset value of the shares held by the plan at year-end.

·                  Mutual Funds: Valued at the net asset value of shares held by the plan at year-end.

The following table contains, by level within the fair value hierarchy, the Company’s postretirement healthcare benefit account investments at fair value as of December 31 (in thousands):

During 2014 and 2013, the Company had no transfers between Level 1 and Level 2 measurements and no transfers into or out of Level 3 measurements.  Measurements for the Company’s Level 2 inputs are based on inputs other than quoted prices that are observable for these assets.

Management Inc. sponsors a defined contribution money-purchase pension plan, in which substantially all employees participate, and makes contributions to the plan for each participant based on several factors.  Contributions made by Management Inc. to the plan and charged to expense totaled $3.3 million, $3.1 million and $2.8 million in 2014, 2013 and 2012, respectively.

Management Inc. also provides a deferred compensation plan for certain employees.  The plan allows for the elective deferral of a portion of an employee’s base salary and incentive compensation and also contains a supplemental retirement and 401(k) component.  Deferred amounts are taxable to the employee when paid, but the Company

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recognizes compensation expense in the period earned.  As of December 31, 2014 and 2013, $17.7 million and $16.4 million, respectively, were included in other long-term liabilities related to this deferred compensation plan.  Amounts charged to expense, including interest accruals, were $2.0 million, $2.1 million and $2.0 million in 2014, 2013 and 2012, respectively.

(3)        Members’ Equity

The Company’s members include investor-owned utilities, municipalities, municipal electric companies and electric cooperatives.

Distribution of earnings to members is at the discretion of Management Inc.  The operating agreement of the Company established a target for distribution of 80% of annual earnings before members’ income taxes.  During 2014, 2013 and 2012, the Company distributed $204 million, $195 million and $188 million, respectively, of its earnings to its members.  On January 28, 2015, the board of directors of Management Inc. approved a distribution for the fourth quarter of 2014, in the amount of $37.1 million, that was paid on January 30, 2015, bringing the total distributions related to 2014 earnings to 80% of earnings before members’ income taxes.

Each of the Company’s members has the right to require the Company to redeem all or a portion of its membership interests, so long as such interests have been outstanding for at least 12 months.  However, the Company is not required to effect the redemption by non-managing members if Management Inc., in its sole discretion as the corporate manager, elects to purchase, in lieu of redemption, such membership interests for either a specified amount of cash or a specified number of shares of its common stock.  After such purchase, Management Inc. shall be deemed the owner of such membership interests.

During 2014, the Company issued 2,974,510 units to members in exchange for $50.0 million in cash.  During 2013 and 2012 the Company issued members 2,459,468 units for $40.0 million in cash and 3,829,479 units for $60.0 million in cash, respectively.

Management Inc. has issued shares of its common stock to each of the Company’s members or their affiliates in proportion to their ownership interests in the Company.  Holders of Management Inc. common stock have the rights of shareholders under Wisconsin law, including the right to elect directors of the corporate manager.

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(4)         Debt

(a)        Credit Facility

The Company has a $350 million, five-year revolving credit facility, which expires on December 7, 2017.  The facility provides backup liquidity to the Company’s commercial paper program.  While the Company does not intend to borrow under the revolving credit facility, interest rates on outstanding borrowings under the facility would be based on a floating rate plus a margin.  The applicable margin, which is based on the Company’s debt rating of A1/A+ or equivalent, is currently 0.8%.

The revolving credit facility contains restrictive covenants, including restrictions on liens, certain mergers, sales of assets, acquisitions, investments, transactions with affiliates, change of control, conditions on prepayment of other debt and the requirement of the Company to meet certain financial reporting obligations.  The revolving credit facility provides for certain customary events of default, including a targeted total-debt-to-total-capitalization ratio that is not permitted to exceed 65% at any given time.  The Company was not in violation of any financial covenants under its credit facility during the periods covered by these financial statements.

The Company had no outstanding balance under its credit facility as of December 31, 2014 or 2013.

(b)         Commercial Paper

The Company currently has a $350 million unsecured, private placement, commercial paper program.  Investors are limited to qualified institutional buyers and institutional accredited investors.  Maturities may be up to 364 days from date of issue, with proceeds to be used for working capital and other capital expenditures.  Pricing is par, less a discount or, if interest-bearing, at par.  The Company had $120 million of commercial paper outstanding as of December 31, 2014 at an average rate of 0.23% and $280 million of commercial paper outstanding as of December 31, 2013 at an average rate of 0.21%.  Commercial paper is included in Short-term Debt in the balance sheets.  As defined by the commercial paper program, no customary events of default took place during the periods covered by the accompanying financial statements.

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(c)          Long-term Debt

The following table summarizes the Company’s long-term debt outstanding as of December 31 (in thousands):

The senior notes rank equivalent in right of payment with all of the Company’s existing and future unsubordinated, unsecured indebtedness and senior in right of payment to all subordinated indebtedness of the Company.

The senior notes contain restrictive covenants, which include restrictions on liens, certain mergers and sales of assets, and the requirement of the Company to meet certain financial reporting obligations.  The senior notes also provide for certain customary events of default, none of which occurred during the periods covered by the accompanying financial statements.

Future maturities of the Company’s senior notes are as follows (in millions):