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Fair Value of Financial Instruments (Tables)
 3 Months Ended
Mar. 31, 2023
Fair Value Disclosures [Abstract]  
Estimated Fair Market Value of Financial Instruments The estimated fair market value of financial instruments are as follows:

 

 

 

March 31, 2023

 

 

December 31, 2022

 

(In thousands)

 

Carrying Amount

 

 

Fair Value

 

 

Carrying Amount

 

 

Fair Value

 

Long-term debt(a)

 

$

692,319

 

 

$

639,555

 

 

$

643,560

 

 

$

571,374

 

 

(a)
Includes long-term debt due within one year. Excludes debt issuance costs and unamortized discount of $4.5 million and $4.0 million as of March 31, 2023, and December 31, 2022, 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 March 31, 2023

 

(In thousands)

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

MGE Energy

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives, net(b)

 

$

1,043

 

 

$

794

 

 

$

—

 

 

$

249

 

Exchange-traded investments

 

 

1,659

 

 

 

1,659

 

 

 

—

 

 

 

—

 

Total Assets

 

$

2,702

 

 

$

2,453

 

 

$

—

 

 

$

249

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives, net(b)

 

$

8,856

 

 

$

4,867

 

 

$

—

 

 

$

3,989

 

Deferred compensation

 

 

4,759

 

 

 

—

 

 

 

4,759

 

 

 

—

 

Total Liabilities

 

$

13,615

 

 

$

4,867

 

 

$

4,759

 

 

$

3,989

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MGE

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives, net(b)

 

$

1,043

 

 

$

794

 

 

$

—

 

 

$

249

 

Exchange-traded investments

 

 

130

 

 

 

130

 

 

 

—

 

 

 

—

 

Total Assets

 

$

1,173

 

 

$

924

 

 

$

—

 

 

$

249

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives, net(b)

 

$

8,856

 

 

$

4,867

 

 

$

—

 

 

$

3,989

 

Deferred compensation

 

 

4,759

 

 

 

—

 

 

 

4,759

 

 

 

—

 

Total Liabilities

 

$

13,615

 

 

$

4,867

 

 

$

4,759

 

 

$

3,989

 

 

 

 

Fair Value as of December 31, 2022

 

(In thousands)

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

MGE Energy

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives, net(b)

 

$

3,069

 

 

$

1,353

 

 

$

—

 

 

$

1,716

 

Exchange-traded investments

 

 

1,516

 

 

 

1,516

 

 

 

—

 

 

 

—

 

Total Assets

 

$

4,585

 

 

$

2,869

 

 

$

—

 

 

$

1,716

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives, net(b)

 

$

8,163

 

 

$

5,581

 

 

$

—

 

 

$

2,582

 

Deferred compensation

 

 

4,743

 

 

 

—

 

 

 

4,743

 

 

 

—

 

Total Liabilities

 

$

12,906

 

 

$

5,581

 

 

$

4,743

 

 

$

2,582

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MGE

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives, net(b)

 

$

3,069

 

 

$

1,353

 

 

$

—

 

 

$

1,716

 

Exchange-traded investments

 

 

115

 

 

 

115

 

 

 

—

 

 

 

—

 

Total Assets

 

$

3,184

 

 

$

1,468

 

 

$

—

 

 

$

1,716

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives, net(b)

 

$

8,163

 

 

$

5,581

 

 

$

—

 

 

$

2,582

 

Deferred compensation

 

 

4,743

 

 

 

—

 

 

 

4,743

 

 

 

—

 

Total Liabilities

 

$

12,906

 

 

$

5,581

 

 

$

4,743

 

 

$

2,582

 

 

(b)
As of March 31, 2023, and December 31, 2022, collateral of $7.8 million and $5.2 million, respectively, was posted against and netted with derivative liability positions on the consolidated balance sheets. The fair value of the derivative liability disclosed in this table has not been reduced for the collateral posted.
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

 

 

March 31,

(In thousands)

 

2023

 

2022

Beginning balance

 

$

(866)

 

$

178

Realized and unrealized gains (losses):

 

 

 

 

 

 

Included in regulatory assets

 

 

(2,874)

 

 

—

Included in regulatory liability

 

 

—

 

 

6,600

Included in other comprehensive income

 

 

—

 

 

—

Included in earnings

 

 

(4,671)

 

 

855

Included in current assets

 

 

—

 

 

73

Purchases

 

 

—

 

 

7,026

Sales

 

 

—

 

 

—

Issuances

 

 

—

 

 

—

Settlements

 

 

4,671

 

 

(7,953)

Balance as of March 31,

 

$

(3,740)

 

$

6,779

Total gains (losses) included in earnings attributed to
   the change in unrealized gains (losses) related to
   assets and liabilities held as of March 31,(c)

 

$

—

 

$

—
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

 

 

March 31,

(In thousands)

 

2023

 

2022

Purchased power expense

 

$

(4,671)

 

$

973

Cost of gas sold expense

 

 

—

 

 

(118)

Total

 

$

(4,671)

 

$

855

 

(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.