Pension Plans and Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Schedule of Benefit Obligations and Change in Plan Assets

a.Benefit Obligations and Plan Assets.

(In thousands)	Pension Benefits						Other Postretirement Benefits
Change in Benefit Obligations:	2022			2021			2022			2021
Net benefit obligation as of January 1,	$	460,666		$	461,215		$	84,526		$	86,360
Service cost		5,064			5,730			1,293			1,448
Interest cost		11,161			9,109			1,940			1,549
Plan participants' contributions		—			—			986			992
Actuarial loss (gain)(a)		(120,166	)		3,871			(19,484	)		(685	)
Gross benefits paid		(21,437	)		(19,259	)		(5,725	)		(5,405	)
Less: federal subsidy on benefits paid(b)		—			—			292			267
Benefit obligation as of December 31,	$	335,288		$	460,666		$	63,828		$	84,526
Change in Plan Assets:
Fair value of plan assets as of January 1,	$	473,953		$	429,538		$	54,844		$	51,735
Actual return on plan assets		(84,562	)		61,487			(8,958	)		6,814
Employer contributions		2,217			2,187			720			708
Plan participants' contributions		—			—			986			992
Gross benefits paid		(21,437	)		(19,259	)		(5,725	)		(5,405	)
Fair value of plan assets at end of year		370,171			473,953			41,867			54,844
Funded Status as of December 31,	$	34,883		$	13,287		$	(21,961	)	$	(29,682	)

(a)In 2022, higher discount rates were the primary driver of the actuarial gain.

(b)In 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 was signed into law authorizing Medicare to provide prescription drug benefits to retirees. For both the years ended December 31, 2022 and 2021, the subsidy due to MGE was $0.3 million.

Schedule of Amounts Recognized in the Consolidated Balance Sheet

The amounts recognized in the consolidated balance sheets to reflect the funded status of the plans as of December 31 are as follows:

	Pension Benefits						Other Postretirement Benefits
(In thousands)	2022			2021			2022			2021
Long-term asset	$	68,872		$	58,757		$	—		$	—
Current liability		(2,408	)		(2,342	)		—			—
Long-term liability		(31,581	)		(43,128	)		(21,961	)		(29,682	)
Net asset (liability)	$	34,883		$	13,287		$	(21,961	)	$	(29,682	)

Amounts Recognized in Regulatory Asset

The following table shows the amounts that have not yet been recognized in our net periodic benefit cost as of December 31 and are recorded as regulatory assets in the consolidated balance sheets:

	Pension Benefits					Other Postretirement Benefits
(In thousands)	2022		2021			2022			2021
Net actuarial loss (gain)	$	51,148	$	57,777		$	(1,085	)	$	6,256
Prior service benefit		—		(20	)		—			(297	)
Transition obligation		—		—			9			12
Total	$	51,148	$	57,757		$	(1,076	)	$	5,971

Schedule of Projected Benefit Obligations in Excess of Plan Assets

The projected benefit obligation and fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets as of December 31 are as follows:

(In thousands)	Pension Benefits
Projected Benefit Obligation in Excess of Plan Assets	2022		2021
Projected benefit obligation, end of year	$	33,989	$	45,470
Fair value of plan assets, end of year		—		—

Schedule of Accumulated Benefit Obligations in Excess of Plan Assets

The accumulated benefit obligation and fair value of plan assets with an accumulated benefit obligation in excess of plan assets as of December 31 are as follows:

(In thousands)	Pension Benefits				Other Postretirement Benefits
Accumulated Benefit Obligation in Excess of Plan Assets	2022		2021		2022		2021
Accumulated benefit obligation, end of year	$	33,211	$	43,831	$	63,828	$	84,526
Fair value of plan assets, end of year		—		—		41,867		54,844

Net Periodic Benefit Costs

(In thousands)	Pension Benefits									Other Postretirement Benefits
Components of Net Periodic Benefit Cost:	2022(a)			2021(a)			2020(a)			2022(a)			2021(a)			2020(a)
Service cost	$	5,064		$	5,730		$	5,296		$	1,293		$	1,448		$	1,264
Interest cost		11,161			9,109			12,210			1,940			1,549			2,278
Expected return on assets		(31,391	)		(29,487	)		(27,229	)		(3,365	)		(3,277	)		(3,154	)
Amortization of:
Transition obligation		—			—			—			3			3			3
Prior service (credit) cost		(20	)		(124	)		(114	)		(297	)		(1,518	)		(2,669	)
Actuarial loss		2,416			6,646			5,357			145			493			217
Net periodic benefit cost (credit)	$	(12,770	)	$	(8,126	)	$	(4,480	)	$	(281	)	$	(1,302	)	$	(2,061	)

(a)As approved by the PSCW, MGE is allowed to defer differences between actual employee benefit plan costs and costs reflected in current rates. The deferred costs may be recovered or refunded in MGE's next rate filing. For the years ended December 31, 2022, 2021, and 2020 MGE recovered approximately $1.0 million, $4.3 million, and $0.9 million, respectively, of pension and other postretirement costs. The recovery of these costs reduced the amount previously deferred and has not been reflected in the table above. See Footnote 8 for further information.

For the years ended December 31, 2022 and 2021, MGE deferred and recorded as a regulatory liability $1.5 million and $8.1 million, respectively, of savings from employee benefit plan costs. For the year ended December 31, 2022, MGE refunded in rates $4.2 million of savings from 2021 employee benefit plan costs. The deferred savings has not been reflected in the table above. See Footnote 8 for additional information.

Plan Assumptions

c.Plan Assumptions.

The weighted-average assumptions used to determine the benefit obligations were as follows for the years ended December 31:

	Pension Benefits						Other Postretirement Benefits
	2022			2021			2022			2021
Discount rate		5.47	%		2.94	%		5.45	%		2.85	%
Rate of compensation increase		3.21	%		3.19	%	N/A			N/A
Assumed health care cost trend rates:
Health care cost trend rate assumed for next year	N/A			N/A				7.00	%		5.75	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	N/A			N/A				4.75	%		4.75	%
Year that the rate reaches the ultimate trend rate	N/A			N/A			2032			2027

MGE uses individual spot rates, instead of a weighted average of the yield curve spot rates, for measuring the service cost and interest cost components of net periodic benefit cost.

The weighted-average assumptions used to determine the net periodic cost were as follows for the years ended December 31:

	Pension Benefits									Other Postretirement Benefits
	2022			2021			2020			2022			2021			2020
Discount rate		2.94	%		2.70	%		3.42	%		2.85	%		2.52	%		3.30	%
Expected rate of return on plan assets		6.75	%		7.00	%		7.20	%		6.40	%		6.61	%		6.75	%
Rate of compensation increase		3.24	%		3.23	%		3.26	%	N/A			N/A			N/A

Fair Value of Plan Assets by Asset Category

The asset allocation for MGE's pension plans as of December 31, 2022 and 2021, and the target allocation for 2023, by asset category, follows:

	Target			Percentage of Plan Assets at Year End
	Allocation			2022			2021
Equity securities(a)		63.0	%		65.0	%		65.0	%
Fixed income securities		30.0	%		26.0	%		29.0	%
Real estate		7.0	%		9.0	%		6.0	%
Total		100.0	%		100.0	%		100.0	%

(a)Target allocations for equity securities are broken out as follows: 45.5% United States equity and 17.5% non-United States equity.

The fair values of MGE's plan assets by asset category as of December 31 are as follows:

(In thousands)	2022		2021
Cash and Cash Equivalents	$	1,715	$	1,428
Equity Securities:
U.S. Large Cap		121,884		162,060
U.S. Mid Cap		28,392		38,755
U.S. Small Cap		35,372		47,657
International Blend		75,843		87,781
Fixed Income Securities:
Short-Term Fund		3,807		5,222
High Yield Bond		17,895		25,190
Long Duration Bond		85,767		119,867
Real Estate		38,418		37,170
Insurance Continuance Fund		1,613		1,599
Fixed Rate Fund		1,332		2,068
Total	$	412,038	$	528,797

Benefit Payments, Fiscal Year Maturity

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:

	Pension		Other Postretirement Benefits
(In thousands)	Pension Benefits		Gross Postretirement Benefits		Expected Medicare Part D Subsidy			Net Postretirement Benefits
2023	$	20,715	$	5,051	$	(332	)	$	4,719
2024		21,304		5,363		(365	)		4,998
2025		21,864		5,637		(400	)		5,237
2026		22,305		5,544		(447	)		5,097
2027		22,789		5,560		(483	)		5,077
2028 - 2032		117,798		27,199		(2,833	)		24,366