Fair Value of Financial Instruments (Tables)
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6 Months Ended |
Jun. 30, 2018 |
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| Fair Value Disclosures [Abstract] |
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| Estimated Fair Market Value of Financial Instruments |
The estimated fair market value of financial instruments are as follows: | | | June 30, 2018 | | December 31, 2017 | | | (In thousands) | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | | | MGE Energy | | | | | | | | | | | Assets: | | | | | | | | | | | Cash and cash equivalents | $ | 95,579 | $ | 95,579 | $ | 107,952 | $ | 107,952 | | | Liabilities: | | | | | | | | | | | Short-term debt - commercial paper | | 28,200 | | 28,200 | | 4,000 | | 4,000 | | | Long-term debt(a) | | 424,670 | | 464,428 | | 426,883 | | 475,282 | | | | | | | | | | | | | | MGE | | | | | | | | | | | Assets: | | | | | | | | | | | Cash and cash equivalents | $ | 3,128 | $ | 3,128 | $ | 5,951 | $ | 5,951 | | | Liabilities: | | | | | | | | | | | Short-term debt - commercial paper | | 28,200 | | 28,200 | | 4,000 | | 4,000 | | | Long-term debt(a) | | 424,670 | | 464,428 | | 426,883 | | 475,282 | | | | | | | | | | | | | | (a) Includes long-term debt due within one year. Excludes debt issuance costs and unamortized discount of | | $4.1 million and $4.3 million at June 30, 2018, and December 31, 2017, respectively. |
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| Assets and Liabilities Measured at Fair Value on a Recurring Basis |
The following table presents the balances of assets and liabilities measured at fair value on a recurring basis. | | | Fair Value as of June 30, 2018 | | | (In thousands) | | Total | | Level 1 | | Level 2 | | Level 3 | | | MGE Energy | | | | | | | | | | | Assets: | | | | | | | | | | | Derivatives, net | $ | 2,121 | $ | 502 | $ | - | $ | 1,619 | | | Exchange-traded investments | | 902 | | 902 | | - | | - | | | Total Assets | $ | 3,023 | $ | 1,404 | $ | - | $ | 1,619 | | | Liabilities: | | | | | | | | | | | Derivatives, net | $ | 39,045 | $ | 94 | $ | - | $ | 38,951 | | | Deferred compensation | | 3,065 | | - | | 3,065 | | - | | | Total Liabilities | $ | 42,110 | $ | 94 | $ | 3,065 | $ | 38,951 | | | | | | | | | | | | | | MGE | | | | | | | | | | | Assets: | | | | | | | | | | | Derivatives, net | $ | 2,121 | $ | 502 | $ | - | $ | 1,619 | | | Exchange-traded investments | | 77 | | 77 | | - | | - | | | Total Assets | $ | 2,198 | $ | 579 | $ | - | $ | 1,619 | | | Liabilities: | | | | | | | | | | | Derivatives, net | $ | 39,045 | $ | 94 | $ | - | $ | 38,951 | | | Deferred compensation | | 3,065 | | - | | 3,065 | | - | | | Total Liabilities | $ | 42,110 | $ | 94 | $ | 3,065 | $ | 38,951 | | | | | | | | | | | | |
| | | Fair Value as of December 31, 2017 | | | (In thousands) | | Total | | Level 1 | | Level 2 | | Level 3 | | | MGE Energy | | | | | | | | | | | Assets: | | | | | | | | | | | Derivatives, net | $ | 1,005 | $ | 278 | $ | - | $ | 727 | | | Exchange-traded investments | | 792 | | 792 | | - | | - | | | Total Assets | $ | 1,797 | $ | 1,070 | $ | - | $ | 727 | | | Liabilities: | | | | | | | | | | | Derivatives, net(b) | $ | 42,963 | $ | 210 | $ | - | $ | 42,753 | | | Deferred compensation | | 3,065 | | - | | 3,065 | | - | | | Total Liabilities | $ | 46,028 | $ | 210 | $ | 3,065 | $ | 42,753 | | | | | | | | | | | | | | MGE | | | | | | | | | | | Assets: | | | | | | | | | | | Derivatives, net | $ | 1,005 | $ | 278 | $ | - | $ | 727 | | | Exchange-traded investments | | 64 | | 64 | | - | | - | | | Total Assets | $ | 1,069 | $ | 342 | $ | - | $ | 727 | | | Liabilities: | | | | | | | | | | | Derivatives, net(b) | $ | 42,963 | $ | 210 | $ | - | $ | 42,753 | | | Deferred compensation | | 3,065 | | - | | 3,065 | | - | | | Total Liabilities | $ | 46,028 | $ | 210 | $ | 3,065 | $ | 42,753 | | | | | | | | | | | | | | (b) These amounts are shown gross and exclude $0.1 million of collateral that was posted against derivative | | | positions with counterparties as of December 31, 2017. | |
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| Significant Unobservable Inputs |
The following table presents the significant unobservable inputs used in the pricing model. | | | Model Input | | Significant Unobservable Inputs | | June 30, 2018 | | December 31, 2017 | | Basis adjustment: | | | | | | On peak | | 91.1% | | 92.3% | | Off peak | | 93.1% | | 94.1% | | Counterparty fuel mix: | | | | | | Internal generation | | 50% - 75% | | 55% - 75% | | Purchased power | | 50% - 25% | | 45% - 25% |
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| Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis |
The following table summarizes the changes in Level 3 commodity derivative assets and liabilities measured at fair value on a recurring basis. | | Three Months Ended | | Six Months Ended | | | June 30, | | June 30, | | (In thousands) | | 2018 | | 2017 | | 2018 | | 2017 | | Beginning balance | $ | (41,463) | $ | (48,354) | $ | (42,026) | $ | (50,305) | | Realized and unrealized gains (losses): | | | | | | | | | | Included in regulatory assets | | 4,130 | | 2,748 | | 4,693 | | 4,701 | | Included in other comprehensive income | | - | | - | | - | | - | | Included in earnings | | 82 | | (550) | | (460) | | (1,136) | | Included in current assets | | (297) | | (222) | | (470) | | (97) | | Purchases | | 6,032 | | 6,186 | | 11,866 | | 12,182 | | Sales | | - | | - | | - | | - | | Issuances | | - | | - | | - | | - | | Settlements | | (5,816) | | (5,413) | | (10,935) | | (10,950) | | Transfers in and/or out of Level 3 | | - | | - | | - | | - | | Balance as of June 30, | $ | (37,332) | $ | (45,605) | $ | (37,332) | $ | (45,605) | | Total gains (losses) included in earnings attributed to | | | | | | | | | | the change in unrealized gains (losses) related to | | | | | | | | | | assets and liabilities held at June 30,(c) | $ | - | $ | - | $ | - | $ | - |
(c) MGE's exchange-traded derivative contracts, over-the-counter party transactions, purchased power agreement, and FTRs are subject to regulatory deferral. These derivatives are therefore marked to fair value and are offset in the financial statements with a corresponding regulatory asset or liability. |
| Gains and Losses Included in Income for Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis |
The following table presents total realized and unrealized gains (losses) included in income for Level 3 assets and liabilities measured at fair value on a recurring basis (c). | | | Three Months Ended | | Six Months Ended | | | | | June 30, | | June 30, | | | (In thousands) | | 2018 | | 2017 | | 2018 | | 2017 | | | Purchased Power Expense | $ | 60 | $ | (487) | $ | (663) | $ | (918) | | | Cost of Gas Sold Expense | | 22 | | (63) | | 203 | | (218) | | | Total | $ | 82 | $ | (550) | $ | (460) | $ | (1,136) | |
(c) MGE's exchange-traded derivative contracts, over-the-counter party transactions, purchased power agreement, and FTRs are subject to regulatory deferral. These derivatives are therefore marked to fair value and are offset in the financial statements with a corresponding regulatory asset or liability. |