Derivative and Hedging Instruments (Tables)

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Gross Notional Volume of Open Derivatives

The gross notional volume of open derivatives is as follows:

	September 30, 2014	December 31, 2013
Commodity derivative contracts	447,570 MWh	458,660 MWh
Commodity derivative contracts	6,555,000 Dth	3,750,000 Dth
FTRs	3,104 MW	1,984 MW

Fair Value of Derivative Instruments on the Balance Sheet

The following table summarizes the fair value of the derivative instruments on the consolidated balance sheet. All derivative instruments in this table are presented on a gross basis and are calculated prior to the netting of instruments with the same counterparty under a master netting agreement as well as the netting of collateral. For financial statement purposes, MGE Energy and MGE have netted instruments with the same counterparty under a master netting agreement as well as the netting of collateral. At September 30,2014, MGE Energy and MGE had the right to reclaim collateral (a receivable) of $0.6 million.

	Asset Derivatives			Liability Derivatives
(In thousands)	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
September 30, 2014
Commodity derivative contracts	Other current assets	$	1,507	Derivative liability (current)	$	532
Commodity derivative contracts	Other deferred charges		48	Derivative liability (long-term)		4
FTRs	Other current assets		1,237	Derivative liability (current)		-
Ten-year PPA	N/A		N/A	Derivative liability (current)		7,120
Ten-year PPA	N/A		N/A	Derivative liability (long-term)		47,820
December 31, 2013
Commodity derivative contracts	Other current assets	$	1,356	Derivative liability (current)	$	51
Commodity derivative contracts	Other deferred charges		167	Derivative liability (long-term)		48
FTRs	Other current assets		363	Derivative liability (current)		-
Ten-year PPA	N/A		N/A	Derivative liability (current)		7,750
Ten-year PPA	N/A		N/A	Derivative liability (long-term)		57,930

Offsetting Assets

The following tables show the effect of netting arrangements for recognized derivative assets and liabilities that are subject to a master netting arrangement or similar arrangement on the balance sheet.

Offsetting of Derivative Assets
(In thousands)		Gross amounts		Gross amounts offset in balance sheet		Collateral posted against derivative positions		Net amount presented in balance sheet
September 30, 2014
Commodity derivative contracts	$	1,555	$	(525)	$	-	$	1,030
FTRs		1,237		-		-		1,237
December 31, 2013
Commodity derivative contracts	$	1,523	$	(99)	$	(175)	$	1,249
FTRs		363		-		-		363

Offsetting Liabilities

Offsetting of Derivative Liabilities
(In thousands)		Gross amounts		Gross amounts offset in balance sheet		Collateral posted against derivative positions		Net amount presented in balance sheet
September 30, 2014
Commodity derivative contracts	$	536	$	(525)	$	-	$	11
Ten-year PPA		54,940		-		-		54,940
December 31, 2013
Commodity derivative contracts	$	99	$	(99)	$	-	$	-
Ten-year PPA		65,680		-		-		65,680

Derivative Gains and Losses in Balance Sheet

The following tables summarize the unrealized and realized gains (losses) related to the derivative instruments on the consolidated balance sheet at September 30,2014 and 2013, and the consolidated income statement for the three and nine months endedSeptember 30,2014 and 2013.

		2014				2013
(In thousands)		Current and long-term regulatory asset		Other current assets		Current and long-term regulatory asset		Other current assets
Three Months Ended September 30:
Balance at July 1,	$	48,853	$	676	$	66,649	$	658
Change in unrealized loss		5,329		-		2,330		-
Realized gain (loss) reclassified to a deferred
account		(314)		314		(275)		275
Realized gain (loss) reclassified to income
statement		(1,184)		(249)		(621)		(111)
Balance at September 30,	$	52,684	$	741	$	68,083	$	822
Nine Months Ended September 30:
Balance at January 1,	$	63,893	$	411	$	72,329	$	574
Change in unrealized gain		(18,090)		-		(1,330)		-
Realized gain (loss) reclassified to a deferred
account		1,120		(1,120)		(953)		953
Realized gain (loss) reclassified to income
statement		5,761		1,450		(1,963)		(705)
Balance at September 30,	$	52,684	$	741	$	68,083	$	822

Derivative Gains and Losses in Income Statement

		Realized losses (gains)
		2014				2013
(In thousands)		Fuel for electric generation/ purchased power		Cost of gas sold		Fuel for electric generation/ purchased power		Cost of gas sold
Three Months Ended September 30:
Commodity derivative contracts	$	480	$	(18)	$	(7)	$	-
FTRs		(97)		-		(387)		-
Ten-year PPA		1,068		-		1,126		-
Nine Months Ended September 30:
Commodity derivative contracts	$	(5,376)	$	(1,367)	$	(523)	$	608
FTRs		(929)		-		(896)		-
Ten-year PPA		461		-		3,479		-