Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Estimated Fair Market Value of Financial Instruments

The estimated fair market value of financial instruments are as follows:

	September 30, 2022				December 31, 2021
(In thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt(a)	$	619,794	$	549,585	$	623,449	$	729,914

(a)Includes long-term debt due within one year. Excludes debt issuance costs and unamortized discount of $3.9 million and $4.3 million as of September 30, 2022, and December 31, 2021, respectively.

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 September 30, 2022
(In thousands)	Total		Level 1		Level 2		Level 3
MGE Energy
Assets:
Derivatives, net(b)	$	9,827	$	5,446	$	—	$	4,381
Exchange-traded investments		1,504		1,504		—		—
Total Assets	$	11,331	$	6,950	$	—	$	4,381
Liabilities:
Derivatives, net(b)	$	4,614	$	4,087	$	—	$	527
Deferred compensation		3,782		—		3,782		—
Total Liabilities	$	8,396	$	4,087	$	3,782	$	527
MGE
Assets:
Derivatives, net(b)	$	9,827	$	5,446	$	—	$	4,381
Exchange-traded investments		99		99		—		—
Total Assets	$	9,926	$	5,545	$	—	$	4,381
Liabilities:
Derivatives, net(b)	$	4,614	$	4,087	$	—	$	527
Deferred compensation		3,782		—		3,782		—
Total Liabilities	$	8,396	$	4,087	$	3,782	$	527

	Fair Value as of December 31, 2021
(In thousands)	Total		Level 1		Level 2		Level 3
MGE Energy
Assets:
Derivatives, net(c)	$	3,606	$	1,170	$	—	$	2,436
Exchange-traded investments		1,296		1,296		—		—
Total Assets	$	4,902	$	2,466	$	—	$	2,436
Liabilities:
Derivatives, net	$	2,989	$	731	$	—	$	2,258
Deferred compensation		3,653		—		3,653		—
Total Liabilities	$	6,642	$	731	$	3,653	$	2,258
MGE
Assets:
Derivatives, net(c)	$	3,606	$	1,170	$	—	$	2,436
Exchange-traded investments		230		230		—		—
Total Assets	$	3,836	$	1,400	$	—	$	2,436
Liabilities:
Derivatives, net	$	2,989	$	731	$	—	$	2,258
Deferred compensation		3,653		—		3,653		—
Total Liabilities	$	6,642	$	731	$	3,653	$	2,258

(b)No collateral was posted against derivative positions as of September 30, 2022.

(c)As of December 31, 2021 MGE received collateral of $1.3 million from counterparties under a master netting agreement for outstanding exchange traded derivative positions. The fair value of the derivative asset disclosed in this table has not been reduced for the collateral received.

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				Nine Months Ended
	September 30,				September 30,
(In thousands)	2022		2021		2022		2021
Beginning balance	$	8,959	$	(4,533)	$	178	$	(14,055)
Realized and unrealized gains (losses):
Included in regulatory liability		(5,105)		8,122		3,675		17,644
Included in other comprehensive income		—		—		—		—
Included in earnings		6,609		2,476		13,607		2,686
Included in current assets		(73)		—		45		175
Purchases		108		6,638		11,911		18,899
Sales		—		—		—		—
Issuances		—		—		—		—
Settlements		(6,644)		(9,114)		(25,562)		(21,760)
Balance as of September 30,	$	3,854	$	3,589	$	3,854	$	3,589
Total gains (losses) included in earnings attributed to    the change in unrealized gains (losses) related to    assets and liabilities held as of September 30,(d)	$	—	$	—	$	—	$	—

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(d).

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2022		2021		2022		2021
Purchased power expense	$	6,644	$	2,476	$	13,805	$	3,113
Cost of gas sold expense		(35)		—		(198)		(427)
Total	$	6,609	$	2,476	$	13,607	$	2,686

(d)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.