10-K

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended:

December 31, 2014

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _______________ to _______________

Commission File No.	Name of Registrant, State of Incorporation, Address of Principal Executive Offices, and Telephone No.	IRS Employer Identification No.
000-49965	MGE Energy, Inc. (a Wisconsin Corporation) 133 South Blair Street Madison, Wisconsin 53788 (608) 252-7000 mgeenergy.com	39-2040501
000-1125	Madison Gas and Electric Company (a Wisconsin Corporation) 133 South Blair Street Madison, Wisconsin 53788 (608) 252-7000 mge.com	39-0444025

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

	Title of Class	Name of Each Exchange on which Registered
MGE Energy, Inc.	Common Stock, $1 Par Value Per Share	The Nasdaq Stock Market

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

	Title of Class
Madison Gas and Electric Company	Common Stock, $1 Par Value Per Share

Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

MGE Energy, Inc.	Yes [X] No [   ]
Madison Gas and Electric Company	Yes [X] No [   ]

Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

MGE Energy, Inc.	Yes [  ] No [X]
Madison Gas and Electric Company	Yes [  ] No [X]

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Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports) and (2) have been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web sites, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files): Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants' knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark if the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act:

	Large Accelerated Filer	Accelerated Filer	Non-accelerated Filer	Smaller Reporting Company
MGE Energy, Inc.	X
Madison Gas and Electric Company			X

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

MGE Energy, Inc.	Yes [  ] No [X]
Madison Gas and Electric Company	Yes [  ] No [X]

The aggregate market value of the voting and nonvoting common equity held by nonaffiliates of each registrant as of June 30, 2014, was as follows:

MGE Energy, Inc.	$1,365,673,259
Madison Gas and Electric Company	$0

The number of shares outstanding of each registrant's common stock as of February 1, 2015, were as follows:

MGE Energy, Inc.	34,668,370
Madison Gas and Electric Company	17,347,894

DOCUMENTS INCORPORATED BY REFERENCE

Portions of MGE Energy, Inc.'s definitive proxy statement to be filed on or before March 27, 2015, relating to its annual meeting of shareholders, are incorporated by reference into Part III of this annual report on Form 10-K.

Madison Gas and Electric Company meets the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K and is therefore omitting (i.) the information otherwise required by Item 601 of Regulation S-K relating to a list of subsidiaries of the registrant as permitted by General Instruction (I)(2)(b), (ii.) the information otherwise required by Item 6 relating to Selected Financial Data as permitted by General Instruction (I)(2)(a), (iii.) the information otherwise required by Item 10 relating to Directors and Executive Officers as permitted by General Instruction (I)(2)(c), (iv.) the information otherwise required by Item 11 relating to executive compensation as permitted by General Instruction (I)(2)(c), (v.) the information otherwise required by Item 12 relating to Security Ownership of Certain Beneficial Owners and Management as permitted by General Instruction (I)(2)(c), and (vi.) the information otherwise required by Item 13 relating to Certain Relationships and Related Transactions as permitted by General Instruction (I)(2)(c).

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Table of Contents

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Filing Format

This combined Form 10-K is being filed separately by MGE Energy, Inc. (MGE Energy) and Madison Gas and Electric Company (MGE). MGE is a wholly owned subsidiary of MGE Energy and represents a majority of its assets, liabilities, revenues, expenses, and operations. Thus, all information contained in this report relates to, and is filed by, MGE Energy. Information that is specifically identified in this report as relating solely to MGE Energy, such as its financial statements and information relating to its nonregulated business, does not relate to, and is not filed by, MGE. MGE makes no representation as to that information. The terms "we" and "our," as used in this report, refer to MGE Energy and its consolidated subsidiaries, unless otherwise indicated.

Forward-Looking Statements

This report, and other documents filed by MGE Energy and MGE with the Securities and Exchange Commission (SEC) from time to time, contain forward-looking statements that reflect management's current assumptions and estimates regarding future performance and economic conditions—especially as they relate to economic conditions, future load growth, revenues, expenses, capital expenditures, financial resources, regulatory matters, and the scope and expense associated with future environmental regulation. These forward-looking statements are made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. Words such as "believe," "expect," "anticipate," "estimate," "could," "should," "intend," "will," and other similar words generally identify forward-looking statements. Both MGE Energy and MGE caution investors that these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from those projected, expressed, or implied.

The factors that could cause actual results to differ materially from the forward-looking statements made by a registrant include (a) those factors discussed in Item 1A. Risk Factors, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, and Item 8. Financial Statements and Supplementary Data, Footnote 18. Commitments and Contingencies, and (b) other factors discussed herein and in other filings made by that registrant with the SEC.

Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this report. MGE Energy and MGE undertake no obligation to release publicly any revision to these forward-looking statements to reflect events or circumstances after the date of this report.

Where to Find More Information

The public may read and copy any reports or other information that MGE Energy and MGE file with the SEC at the SEC's public reference room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. These documents also are available to the public from commercial document retrieval services, the website maintained by the SEC at sec.gov, MGE Energy's website at mgeenergy.com, and MGE's website at mge.com. Copies may be obtained from our websites free of charge. Information contained on MGE Energy's and MGE's websites shall not be deemed incorporated into, or to be a part of, this report.

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Definitions, Abbreviations, and Acronyms Used in the Text and Notes of this Report

Abbreviations, acronyms, and definitions used in the text and notes of this report are defined below.

MGE Energy and Subsidiaries:
CWDC	Central Wisconsin Development Corporation
MAGAEL	MAGAEL, LLC
MGE	Madison Gas and Electric Company
MGE Energy	MGE Energy, Inc.
MGE Power	MGE Power, LLC
MGE Power Elm Road	MGE Power Elm Road, LLC
MGE Power West Campus	MGE Power West Campus, LLC
MGE State Energy Services	MGE State Energy Services, LLC
MGE Transco	MGE Transco Investment, LLC
NGV Fueling Services	NGV Fueling Services, LLC
North Mendota	North Mendota Energy & Technology Park, LLC
Other Defined Terms:
AFUDC	Allowance for Funds Used During Construction
Alliant	Alliant Energy Corporation
ANR	ANR Pipeline Company
ARO	Asset Retirement Obligation
ATC	American Transmission Company LLC
BART	Best Available Retrofit Technology
Bechtel	Bechtel Power Corporation
Blount	Blount Station
CAA	Clean Air Act
CAIR	Clean Air Interstate Rule
CAVR	Clean Air Visibility Rule
CO2	Carbon Dioxide
Codification	Financial Accounting Standards Board Accounting Standards Codification
Columbia	Columbia Energy Center
Cooling degree days	Measure of the extent to which the average daily temperature is above 65 degrees Fahrenheit, which is considered an indicator of possible increased demand for energy to provide cooling
COSO	Committee of Sponsoring Organizations
CSAPR	Cross-State Air Pollution Rule
CWA	Clean Water Act
Dth	Dekatherms
EEI	Edison Electric Institute
EGUs	Electric Generating Units
Elm Road Units	Elm Road Generating Station
EPA	United States Environmental Protection Agency
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
FTR	Financial Transmission Rights
GAAP	Generally Accepted Accounting Principles
GHG	Greenhouse Gas
HAPs	Hazardous Air Pollutants
Heating degree days (HDD)	Measure of the extent to which the average daily temperature is below 65 degrees Fahrenheit, which is considered an indicator of possible increased demand for energy to provide heating
ICF	Insurance Continuance Fund
IRS	Internal Revenue Service
kVA	Kilovolt Ampere
kWh	Kilowatt-hour
LIBOR	London Inter Bank Offer Rate

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MACT	Maximum Achievable Control Technology
MATS	Mercury and Air Toxins Standards
MISO	Midcontinent Independent System Operator Inc. (a regional transmission organization)
MW	Megawatt
MWh	Megawatt-hour
NAAQS	National Ambient Air Quality Standards
Nasdaq	The Nasdaq Stock Market
NERC	North American Electric Reliability Corporation
NNG	Northern Natural Gas Company
NOV	Notice of Violation
NOx	Nitrogen Oxides
NSPS	New Source Performance Standards
NYSE	New York Stock Exchange
OPRB	Other Postretirement Benefits
PCBs	Polychlorinated Biphenyls
PGA	Purchased Gas Adjustment clause
PJM	PJM Interconnection, LLC (a regional transmission organization)
PM	Particulate Matter
PPA	Purchased power agreement
PPACA	Patient Protection and Affordable Care Act
PSCW	Public Service Commission of Wisconsin
PSD	Prevention of Significant Deterioration
REC	Renewable Energy Credit
RICE	Reciprocating Internal Combustion Engine
RTO	Regional Transmission Organization
SCR	Selective Catalytic Reduction
SEC	Securities and Exchange Commission
SIP	State Implementation Plan
SO2	Sulfur Dioxide
the State	State of Wisconsin
Stock Plan	Direct Stock Purchase and Dividend Reinvestment Plan of MGE Energy
UW	University of Wisconsin at Madison
VIE	Variable Interest Entity
WCCF	West Campus Cogeneration Facility
WDNR	Wisconsin Department of Natural Resources
WEPCO	Wisconsin Electric Power Company
Working capital	Current assets less current liabilities
WPDES	Wisconsin Pollutant Discharge Elimination System
WPL	Wisconsin Power and Light Company
WPSC	Wisconsin Public Service Corporation
WRERA	Worker, Retiree and Employer Recovery Act of 2008
XBRL	eXtensible Business Reporting Language

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PART I.

Item 1. Business.

MGE Energy operates in the following business segments:

·

Regulated electric utility operations – generating, purchasing, and distributing electricity through MGE.

·

Regulated gas utility operations – purchasing and distributing natural gas through MGE.

·

Nonregulated energy operations – owning and leasing electric generating capacity that assists MGE through MGE Energy's wholly owned subsidiaries MGE Power Elm Road and MGE Power West Campus.

·

Transmission investments – representing our investment in American Transmission Company LLC, a company engaged in the business of providing electric transmission services primarily in Wisconsin.

·

All other – investing in companies and property that relate to the regulated operations and financing the regulated operations, through its wholly owned subsidiaries CWDC, MAGAEL, MGE State Energy Services, NGV Fueling Services, and Corporate functions.

MGE's utility operations represent a majority of the assets, liabilities, revenues, expenses, and operations of MGE Energy. MGE Energy's nonregulated energy operations currently include an undivided interest in two coal-fired generating units located in Oak Creek, Wisconsin, which we refer to as the Elm Road Units, and an undivided interest in a cogeneration facility located on the Madison campus of the University of Wisconsin, which we refer to as the West Campus Cogeneration Facility or WCCF.

As a public utility, MGE is subject to regulation by the PSCW and the FERC. The PSCW has authority to regulate most aspects of MGE's business including rates, accounts, issuance of securities, and plant siting. The PSCW also has authority over certain aspects of MGE Energy as a holding company of a public utility. FERC has jurisdiction, under the Federal Power Act, over certain accounting practices and certain other aspects of MGE's business.

MGE Energy's subsidiaries are also subject to regulation under local, state, and federal laws regarding air and water quality and solid waste disposal. See "Environmental" below.

MGE Energy was organized as a Wisconsin corporation in 2001. MGE was organized as a Wisconsin corporation in 1896. Their principal offices are located at 133 South Blair Street, Madison, Wisconsin 53788, and their telephone number is (608) 252-7000.

Electric Utility Operations

MGE distributes electricity in a service area covering a 316 square-mile area of Dane County, Wisconsin. The service area includes the city of Madison, Wisconsin. It owns or leases ownership interests in electric generation facilities located in Wisconsin and Iowa.

At December 31, 2014, MGE supplied electric service to approximately 143,000 customers, with approximately 90% located in the cities of Fitchburg, Madison, Middleton, and Monona and 10% in adjacent areas. Of the total number of customers, approximately 86% were residential and 14% were commercial or industrial. Electric retail revenues for 2014, 2013, and 2012 were comprised of the following:

	Year Ended December 31,
	2014	2013	2012
Residential	33.3%	33.2%	32.9%
Commercial	52.8%	52.4%	52.4%
Industrial	4.8%	4.8%	4.9%
Public authorities (including the UW)	9.1%	9.6%	9.8%
Total	100.0%	100.0%	100.0%

Electric operations accounted for approximately 64.0%, 69.0%, and 73.7% of MGE's total 2014, 2013, and 2012 regulated revenues, respectively.

See Item 2. Properties for a description of MGE's electric utility plant.

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MGE is registered with a regional entity, The Midwest Reliability Organization. The essential purposes of this entity are the development and implementation of regional and NERC reliability standards; and determining compliance with those standards, including enforcement mechanisms.

Transmission

American Transmission Company LLC (ATC) is owned by the utilities that contributed facilities or capital to it in accordance with Wisconsin law. ATC's purpose is to provide reliable, economic transmission service to all customers in a fair and equitable manner. ATC plans, constructs, operates, maintains, and expands transmission facilities that it owns to provide adequate and reliable transmission of power. ATC is regulated by FERC for all rate terms and conditions of service and is a transmission-owning member of the MISO.

Regional Transmission Organizations

MISO

MGE is a nontransmission owning member of the MISO. MISO, a FERC approved RTO, is responsible for monitoring the electric transmission system that delivers power from generating plants to wholesale power transmitters. MISO's role is to ensure equal access to the transmission system and to maintain or improve electric system reliability in the Midwest.

MISO maintains a bid-based energy market. MGE offers substantially all of its generation on the MISO market and purchases much of its load requirement from the MISO market in accordance with the MISO Tariff. MGE participates in the ancillary services market operated by MISO. That market is an extension of the existing energy market in which MISO assumes the responsibility of maintaining sufficient generation reserves. In the ancillary services market, MISO provides the reserves for MGE's load, and MGE may offer to sell reserves from its generating units.

MGE participates in the voluntary capacity auction, which provides an optional monthly forum for buyers and sellers of aggregate planning resource credits to interact. Load serving entities, such as MGE, may participate in the voluntary capacity auction potentially to obtain the necessary aggregate planning resource credits needed to meet their planning reserve margin requirement established by the PSCW. Generator owners may participate to sell any excess aggregate planning resource credits that are not needed by them.

PJM

MGE is a member of PJM. PJM, an RTO, is a neutral and independent party that coordinates and directs the operation of the transmission grid within its area of coverage, administers a competitive wholesale electricity market, and plans regional transmission expansion improvements to maintain grid reliability and relieve congestion.

Fuel supply and generation

MGE satisfies its customers' electric demand with internal generation and purchased power. During the years ended December 31, 2014, 2013, and 2012, MGE's electric energy delivery requirements were satisfied by the following sources:

	Year Ended December 31,
	2014	2013	2012
Coal	47.8%	54.1%	50.1%
Natural gas	3.2%	5.8%	8.7%
Fuel oil	0.1%	0.1%	0.1%
Renewable sources	3.1%	2.9%	2.7%
Purchased power
Renewable	8.7%	7.6%	8.4%
Other	37.1%	29.5%	30.0%
Total	100.0%	100.0%	100.0%

Sources used depend on market prices, generating unit availability, weather, and customer demand.

Generation Sources

MGE receives electric generation supply from coal-fired, gas-fired and renewable energy sources. These sources include owned facilities as well as facilities leased from affiliates and accounted for under our nonregulated energy operations. See Item 2. Properties for more information regarding these generation sources, including location, capacity, ownership or lease arrangement, and fuel source. See Nonregulated Operations below for more information regarding generating capacity leased to MGE by nonregulated subsidiaries.

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Purchased power

MGE enters into short and long-term purchase power commitments with third parties to meet a portion of its anticipated electric energy supply needs. The following table identifies purchase power commitments at December 31, 2014, with unaffiliated parties for the next five years.

(Megawatts)	2015	2016	2017	2018	2019
Purchase Power Commitments	162.4	162.4	152.5	152.5	98.5

Gas Utility Operations

MGE transports and distributes natural gas in a service area covering 1,678 square miles in seven south-central Wisconsin counties. The service area includes the city of Madison, Wisconsin and surrounding areas.

At December 31, 2014, MGE supplied natural gas service to approximately 149,000 customers in the cities of Elroy, Fitchburg, Lodi, Madison, Middleton, Monona, Prairie du Chien, Verona, and Viroqua; 24 villages; and all or parts of 47 townships. Of the total number of customers, approximately 89% were residential and 11% were commercial or industrial. Gas revenues for 2014, 2013, and 2012 were comprised of the following:

	Year Ended December 31,
	2014	2013	2012
Residential	53.0%	54.3%	56.1%
Commercial	34.3%	33.4%	32.9%
Industrial	11.0%	10.3%	8.9%
Transportation service and other	1.7%	2.0%	2.1%
Total	100.0%	100.0%	100.0%

Gas operations accounted for approximately 36.0%, 31.0%, and 26.3% of MGE's total 2014, 2013, and 2012 regulated revenues, respectively.

MGE can curtail gas deliveries to its interruptible customers. Approximately 17% of retail gas deliveries in 2014 and 20% in 2013 were to interruptible customers.

Gas supply

MGE has physical interconnections with ANR and NNG. MGE's primary service territory, which includes Madison and the surrounding area, receives deliveries at one NNG and four ANR gate stations. MGE also receives deliveries at NNG gate stations located in Elroy, Prairie du Chien, Viroqua, and Crawford County. Interconnections with two major pipelines provide competition in interstate pipeline service and a more reliable and economical gas supply mix, which includes gas from Canada and from the mid-continent and Gulf/offshore regions in the United States.

During the winter months, when customer demand is high, MGE is primarily concerned with meeting its obligation to firm customers. MGE meets customer demand by using firm supplies under contracts finalized before the heating season, supplies in storage (injected during the summer), and other firm supplies purchased during the winter period.

By contract, a total of 5,940,536 Dth of gas can be injected into ANR's storage fields in Michigan from April 1 through October 31. These gas supplies are then available for withdrawal during the subsequent heating season, November 1 through March 31. Using storage allows MGE to buy gas supplies during the summer season, when prices are normally lower, and withdraw these supplies during the winter season, when prices are typically higher. Storage also gives MGE more flexibility in meeting daily load fluctuations.

MGE's contracts for firm transportation service of gas include winter maximum daily quantities of:

•

162,150 Dth (including 106,078 Dth of storage withdrawals) on ANR.

•

65,108 Dth on NNG.

Nonregulated Energy Operations

MGE Energy, through its subsidiaries, has developed generation sources that assist MGE in meeting the electricity needs of its customers. These sources consist of the Elm Road Units and the WCCF, which are leased by MGE Power Elm Road and MGE Power West Campus, respectively, to MGE. See Item 2. Properties for a description of these facilities, their joint owners, and the related lease arrangements.

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Transmission Investments

American Transmission Company owns and operates electric transmission facilities primarily in Wisconsin. MGE received an interest in ATC when it, like other Wisconsin electric utilities, contributed its electric transmission facilities to ATC as required by Wisconsin law. That interest is presently held by MGE Transco, which is jointly owned by MGE Energy and MGE. At December 31, 2014, MGE Transco held a 3.6% ownership interest in ATC.

In 2011, ATC and Duke Energy announced the creation of a joint venture, Duke-American Transmission Company, that seeks to build, own, and operate new electric transmission infrastructure in North America to address increasing demand for affordable, reliable transmission capacity.

Environmental

MGE Energy and MGE are subject to frequently changing local, state, and federal regulations concerning air quality, water quality, land use, threatened and endangered species, hazardous materials handling, and solid waste disposal. These regulations affect the manner in which they conduct their operations, the costs of those operations, as well as capital and operating expenditures. Regulatory initiatives, proposed rules, and court challenges to adopted rules, have the potential to have a material effect on our capital expenditures and operating costs. In addition to the regulations discussed below, MGE continues to track state and federal initiatives such as potential changes to regulations governing polychlorinated biphenyl (PCB), potential changes to regulations governing coal-combustion byproducts, and potential climate change legislation.

Energy Efficiency and Renewables

The Wisconsin Energy Efficiency and Renewables Act requires that, by 2015, 10% of the state's electricity be generated from renewable resources. As of December 31, 2014, MGE is in compliance with the 2015 requirement. The costs to comply with the Act and its accompanying regulations are being recovered in rates.

Water Quality

EPA Cooling Water Intake Rules (Section 316(b))

Section 316(b) of the CWA requires that the cooling water intake structures at electric power plants meet best available technology standards so that mortality from entrainment (drawing aquatic life into a plant's cooling system) and impingement (trapping aquatic life on screens) are reduced. The EPA finalized its 316(b) rule for existing facilities in 2014; however, the rule is the subject of a pending legal challenge. Section 316(b) requirements are implemented in Wisconsin through modifications to plants' WPDES permits, which govern plant water discharges. WDNR is developing rules to implement the EPA 316(b) rule.

Existing facilities under the 316(b) rule (for MGE that includes our Blount, WCCF, and Columbia plants) will need to meet impingement and entrainment reduction standards or take one of seven actions to meet the reduction requirements. Compliance with 316(b) requirements will coincide with permit renewals.

MGE has studied its options and expects that it will meet requirements at its affected facilities with minimal cost. Our WCCF facility already employs a "closed cycle" cooling (CCC) system as defined under the rule. The Columbia plant may need to address multiple intake structures. Our Blount plant has conducted studies regarding options for compliance with the rule. The exact requirements, however, will not be known until those facilities' WPDES permits are modified to account for this rule. Nonetheless, MGE expects that the 316(b) rule will not have material effects on its existing plants.

Air Quality

Air quality regulations promulgated by the U.S. Environmental Protection Agency (EPA) and Wisconsin Department of Natural Resources (WDNR) in accordance with the Federal Clean Air Act and the Clean Air Act Amendments of 1990 impose restrictions on emission of particulates, sulfur dioxide (SO₂), nitrogen oxides (NO_x), hazardous air pollutants and other pollutants, and require permits for operation of emission sources. These permits must be renewed periodically. Various newly enacted and/or proposed federal and state initiatives are expected to result in additional operating and capital expenditure costs for fossil-fueled electric generating units.

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EPA's Cross-State Air Pollution Rule

The EPA's Cross-State Air Pollution Rule (CSAPR) is an interstate air pollution transport rule designed to reduce ozone and fine particulate (PM2.5) air levels in areas that the EPA has determined are being affected by pollution from neighboring and upwind states. The EPA has identified 27 eastern states that are contributing to pollution in other states. CSAPR aims to achieve ozone and PM2.5 reductions by reducing NOx and/or SO₂ air emissions, which contribute to ozone and PM2.5, from qualifying electric power plants in the 27 "contributing" states. The rule has been designed so that qualifying power plants will be allocated NOx and SO2 allowances in two phases, with the second phase including further emissions reductions. These plants will need to reduce their emissions and/or purchase allocations from the marketplace to meet their obligations.

CSAPR, as well as its precursor rules, the Clean Air Interstate Rule (CAIR) and the NOx SIP Call, have been subject to litigation. EPA rule adjustments and several court rulings, including recent court and EPA actions, continue to impart a level of uncertainty heading into 2015. See below for additional information on recent developments and uncertainties associated with this rule.

In July 2011, the EPA finalized CSAPR as a court-ordered replacement rule for its CAIR that had been remanded in 2008. The D.C. Circuit Court of Appeals stayed CSAPR in December 2011, then vacated CSAPR and conditionally reinstated CAIR in August 2012. The U.S. Supreme Court issued a decision in April 2014, reversing the D.C. Circuit Court's vacature of CSAPR and remanded the matter back to the D.C. Circuit for further proceedings. In October 2014, the D.C. Circuit lifted its stay of CSAPR and set a briefing schedule for remaining litigation issues that were not resolved by the Supreme Court's decision. The briefing schedule with oral arguments is planned for 2015. Additionally, the State of Wisconsin has filed pleadings with the D.C. Circuit Court reiterating its contention that Wisconsin be removed from CSAPR.

The EPA has interpreted the October 2014 lifting of the stay by the D.C. Circuit as granting the EPA the ability to reset deadlines that have since passed (CSAPR was originally designed to begin in 2012). The EPA instituted an interim final rule effective January 1, 2015, that tolls the CSAPR's deadlines by three years. The tolling of three years under the interim final rule introduces Phase I of CSAPR in 2015, and Phase II of CSAPR in 2017. The EPA is accepting comments on other aspects of the rule through February 2015.

The ongoing litigation in the D.C. Circuit, including the EPA's interpretation of tolling rule deadlines and the State of Wisconsin's arguments to be removed from the rule, leaves unresolved issues that may affect whether, when, and how MGE's facilities will need to comply with this rule. We have worked to achieve compliance with Phase I requirements, should those requirements be confirmed as being effective as of January 1, 2015, while monitoring the court proceedings, which will extend into 2015, as well as any additional actions taken by the EPA in response to its request for comments on the reinstated rule. Further, MGE expects to be able to meet CSAPR requirements by applying reductions achieved from recent pollution control installations at Columbia and early reduction efforts at Blount. We will continue to monitor and evaluate the D.C. Circuit Court remand proceedings and the implementation of the interim rule by the EPA.

Clean Air Visibility Rule (CAVR)

Air modeling indicates that SO₂ and NO_x emissions from Columbia may impair visibility at certain Class I Scenic Areas. Columbia may, therefore, be subject to the best available retrofit technology (BART) regulations, a subsection of the EPA's Clean Air Visibility Rule (CAVR), which may require pollution control retrofits. The EPA has issued rules directing that compliance with emissions limitations in the CSAPR could also serve as compliance with the BART for SO₂ and NO_x emissions at electric plants such as Columbia. However, these rules are subject to a legal challenge pending before the D.C. Circuit. In addition, an environmental group had sought, then dismissed without prejudice to refile, a federal appellate court review of Wisconsin's implementation plan for the BART portion of CAVR. These BART rules remain uncertain while subject to the pending legal challenges and while regulatory uncertainty surrounds the CSAPR. Thus, at this time, the BART regulatory obligations, compliance strategies, and costs remain uncertain.

Global climate change

MGE is a producer of GHG emissions, primarily from the fossil fuel generating facilities it uses to meet customers' energy needs, as well as from its natural gas pipeline system and fleet vehicles. Climate change and the regulatory response to it could significantly affect our operations in a number of ways, including increased operating costs and capital expenditures, restrictions on energy supply options, operational limits on our coal plants, permitting difficulties, and emission limits. MGE management would expect to seek and receive rate recovery of such compliance costs, if and when required. MGE continues to monitor proposed climate change legislation and regulation.

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MGE has taken steps to address GHG emissions through voluntary actions. In 2005, MGE announced its Energy 2015 Plan, which commits to ensuring a balanced, economic energy supply with reduced environmental emissions. The Plan emphasizes increased renewable energy, energy efficiency, and new cleaner generation – three strategies that reduce GHG emissions. Under MGE's Energy 2015 Plan and other actions, our CO₂ emissions are currently projected to decline from 2005 to 2015 even though total system energy is estimated to increase.

Climate Change Legislation

Federal Legislative Actions on Climate Change

Several bills and/or actions related to GHG regulation, including those to limit, prevent or delay the EPA's regulation of GHGs under the current Clean Air Act, have been proposed in both the House and the Senate. It is not anticipated that Congress will enact broad GHG reduction legislation in 2015.

State and Regional Legislative Actions on Climate Change

It is not expected that the Wisconsin Legislature will enact broad GHG regulation in 2015. MGE continues to monitor legislative developments.

Greenhouse Gas Regulation

President Obama's Executive Order Regarding Climate Change and his Directive to the EPA Regarding Power Sector Pollution Standards

In June 2013, President Obama introduced his "National Climate Action Plan." The plan consists of planned federal actions and directives to several federal agencies, including the EPA, on a range of activities and policies designed to reduce greenhouse gas emissions in the United States.

EPA's Greenhouse Gas Reduction Guidelines under the Clean Air Act 111d Rule

In June 2014, the EPA developed a proposed rule called the Clean Power Plan that set guidelines for states to use in developing plans to control GHG emissions from existing fossil fuel fired electric generating units (EGUs). The EPA's proposal seeks to reduce GHG emissions from EGUs by a national average of 30% by 2030 as measured from a 2012 baseline. Each state is given its own emission reduction targets to meet this goal. These targets are expressed as a "rate-based" emission average to be achieved by the combined fleet of EGUs within the state. States would be expected to make "meaningful progress" towards these reductions by 2020 and to meet their respective targets by 2030.

The EPA's proposal establishes guidelines for states and encourages the use of four "building blocks" for achieving these reductions. These "building blocks" are: (1) increasing the efficiency of EGUs; (2) re-dispatching of gas-fired generation in lieu of coal; (3) expanding the use of low and no carbon power sources, such as wind, nuclear and solar; and (4) improving demand side energy efficiency to reduce electric use.

MGE has been studying the EPA's proposed rule to determine what compliance in Wisconsin would look like. MGE has also participated in discussions on the proposed rule with the WDNR, PSCW, Wisconsin utilities, and industry experts. The rule is expected to be finalized mid-summer 2015. States will then have up to two years to prepare compliance plans. While there is currently no certainty regarding the terms of the final rule, it is reasonable to assume that this rule will have a material impact on MGE. The parameters of the final rule, however, will determine the extent to which this rule will affect MGE.

Solid Waste

EPA's Coal Combustion Residuals Rule

In December 2014, the EPA finalized its Disposal of Coal Combustion Residuals from Electric Utilities rule. The rule will go into effect six months after it is published in the Federal Register. The rule provides that coal ash will be regulated as a special waste rather than a hazardous waste and more strictly defines what ash use activities would be exempt from solid waste disposal and considered beneficial use of coal ash. The rule also regulates landfills, ash ponds, and other surface impoundments for coal combustion residuals (CCRS or coal ash) by regulating their design, location, monitoring, and operation.

The final rule is intended to reduce the risk of structural failure of impoundments (ash ponds) and protect groundwater from both impoundment and landfill operations by setting new standards. The rule requires closure of active coal ash ponds and landfills that do not upgrade to meet these standards. Facilities with landfills and/or surface impoundments will be subject to various timeframes for meeting new regulatory requirements depending on the type of landfill or surface impoundment onsite, whether the site has failed any required integrity testing, and whether the facility intends to

12

upgrade to meet regulatory requirements or begin closure proceedings. Timeframes to meet various compliance parameters can vary from 18 months to over 5 years.

The Columbia and Elm Road Units co-owners and plant operators are evaluating the final rule to determine what changes may be necessary at those facilities and the associated timeframes. We anticipate that some design and operational changes may need to be made at these facilities; however, evaluation of this rule is not completed so we are unable to estimate with any certainty the costs to MGE operations at this time. Management believes any compliance costs will be recovered in future rates.

Columbia

Columbia is a coal-fired generating station operated by WPL in which WPL, WPSC, and MGE have ownership interests. In December 2009, the EPA sent a Notice of Violation (NOV) to MGE as one of the co-owners of Columbia. The NOV alleged that WPL and the Columbia co-owners failed to comply with appropriate pre-construction review and permitting requirements and, as a result, violated the Prevention of Significant Deterioration program requirements, Title V Operating Permit requirements of the CAA, and the Wisconsin SIP. In April 2013, the EPA filed a lawsuit against the co-owners of Columbia asserting similar allegations. In September 2010 and April 2013, the Sierra Club filed civil lawsuits against WPL alleging violations of the CAA at Columbia and other Wisconsin facilities operated by WPL. In June 2013, the court approved and entered a consent decree entered by the EPA, Sierra Club, and the co-owners of Columbia to resolve these claims, while admitting no liability. One of the requirements of the consent decree requires installation of a SCR system at Columbia Unit 2 by December 31, 2018. Installation of the SCR has been approved by the PSCW. MGE's share of the projected cost for the SCR system is approximately $30-$40 million. See Footnote 18.d. of the Notes to Consolidated Financial Statements for additional information regarding this matter.

Employees

As of December 31, 2014, MGE had 699 employees. MGE employs 218 employees who are covered by a collective bargaining agreement with Local Union 2304 of the International Brotherhood of Electrical Workers and 92 employees who are covered by a collective bargaining agreement with Local Union No. 39 of the Office and Professional Employees International Union. Both of these collective bargaining agreements expire on April 30, 2015. There are also 5 employees covered by a collective bargaining agreement with Local Union No. 2006, Unit 6 of the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial, and Service Workers International Union. This collective bargaining agreement expires on October 31, 2015.

Financial Information About Segments

See Footnote 22 of the Notes to the Consolidated Financial Statements for financial information relating to MGE Energy's and MGE's business segments.

Executive Officers of the Registrants

Executive	Title	Effective Date	Service Years as an Officer
Gary J. Wolter(a) Age: 60	Chairman of the Board, President and Chief Executive Officer	02/01/2002	25
Lynn K. Hobbie(b) Age: 56	Senior Vice President	02/01/2000	20
Scott A. Neitzel(b, c) Age: 54	Senior Vice President Vice President – Energy Supply	01/01/2012 09/01/2006	17
Kristine A. Euclide(b) Age: 62	Vice President and General Counsel	11/15/2001	13
Craig A. Fenrick(b) Age: 55	Vice President – Electric Transmission and Distribution Assistant VP – Electric Transmission and Distribution	01/01/2012 09/01/2006	8
Jeffrey C. Newman(a) Age: 52	Vice President, Chief Financial Officer, Secretary and Treasurer	01/01/2009	17
Peter J. Waldron(b) Age: 57	Vice President and Chief Information Officer Vice President and Operations Officer	01/01/2012 09/01/2006	18

Note: Ages, years of service, and positions as of December 31, 2014.

(a)

Executive officer of MGE Energy and MGE.

(b)

Executive officer of MGE.

(c)

Resigned as of February 13, 2015.

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Item 1A. Risk Factors.

MGE Energy and its subsidiaries, including MGE, operate in a market environment that involves significant risks, many of which are beyond their control. The following risk factors may adversely affect their results of operations, cash flows and market price for their publicly traded securities. While MGE Energy and MGE believe they have identified and discussed below the key risk factors affecting their business, there may be additional risks and uncertainties that are not presently known or that are not currently believed to be significant that may adversely affect their performance or financial condition in the future.

Regulatory Risk

We are subject to extensive government regulation in our business, which affects our costs and responsiveness to changing events and circumstances.

Our business is subject to regulation at the State and Federal levels. We are subject to regulation as a holding company by the PSCW. MGE is regulated by the PSCW as to its rates, terms and conditions of service; various business practices and transactions; financing; and transactions between it and its affiliates, including MGE Energy. MGE is also subject to regulation by the FERC, which regulates certain aspects of its business. The regulations adopted by the State and Federal agencies affect the manner in which we do business, our ability to undertake specified actions since pre-approval or authorization may be required, the costs of operations, and the level of rates charged to recover such costs. Our ability to attract capital is also dependent, in part, upon our ability to obtain a fair return from the PSCW.

We could be subject to higher costs and potential penalties resulting from mandatory reliability standards.

MGE must adhere to mandatory reliability standards for its electric distribution system established by NERC. These standards cover areas such as critical infrastructure protection, emergency preparedness, facility design, and transmission operations, among others. The critical infrastructure protection standards focus on physical and access security of cyber assets, as well as incident response and recovery planning. MGE could be subject to higher operating costs in order to maintain compliance with the mandatory reliability standards, and any noncompliance could result in sanctions including monetary penalties.

We face risk for the recovery of fuel and purchased power costs.

MGE has price risk exposure with respect to the price of natural gas, electricity, coal, emission credits, and oil. MGE burns natural gas in several of its peak electric generation facilities, and in many cases, the cost of purchased power is tied to the cost of natural gas. Under the electric fuel rules, MGE would defer electric fuel-related costs that fall outside a symmetrical cost tolerance band that is currently plus or minus 2% around the amount approved in its most recent rate order. Any over/under recovery of the actual costs is determined on an annual basis and will be adjusted in future billings to its electric retail customers. Under the electric fuel rules, MGE is required to defer the benefit of lower costs, if its actual fuel costs fall outside the lower end of the range, and would defer costs, less any excess revenues, if its actual fuel costs exceeded the upper end of the range. Excess revenues are defined as revenues in the year in question that provide MGE with a greater return on common equity than authorized by the PSCW in MGE's latest rate order. MGE assumes the risks and benefits of variances that are within the cost tolerance band.

We are subject to changing environmental laws and regulations that may affect our costs and business plans.

Our subsidiaries are subject to environmental laws and regulations that affect the manner in which they conduct business, including capital expenditures, operating costs and potential liabilities. Changes and developments in these laws and regulations may alter or limit our business plans, make them more costly, or expose us to liabilities for past or current operations.

Numerous environmental laws and regulations govern many aspects of our present and future operations, including air emissions, water quality, wastewater discharges, solid waste, threatened and endangered species, and hazardous waste. These evolving regulations can introduce uncertainty with respect to capital expenditures and operational planning, and can introduce costly delays if previous decisions need to be revisited as a result of judicial mandate or regulatory change. These regulations generally require us to obtain and comply with a wide variety of environmental permits and approvals, and can result in increased capital, operating, and other costs and operating restrictions, particularly with regard to enforcement efforts focused on obligations under existing regulations with respect to power plant emissions and compliance costs associated with regulatory requirements. These effects can be seen not only with respect to new construction but could also require the installation of additional control equipment or other compliance measures such as altered operating conditions at existing facilities.

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In addition, we may be a responsible party for environmental clean-up at current or future sites identified as containing hazardous materials or to which waste was sent that is subsequently determined to be hazardous. It is difficult to predict the costs potentially associated with a site clean-up due to the potential joint and several liability for all potentially responsible parties, the nature of the clean-up required, and the availability of recovery from other potentially responsible parties.

Additionally, depending on their form and phase-in provisions, GHG emission restrictions could have the potential for a significant financial impact on MGE, including the cost to purchase allowances or do fuel switching.

Operating Risk

We are affected by weather, which affects customer demand and can affect the operation of our facilities.

The demand for electricity and gas is affected by weather. Very warm and very cold temperatures, especially for prolonged periods, can dramatically increase the demand for electricity and gas for cooling and heating, respectively, as opposed to the softening effect of more moderate temperatures. Our electric revenues are sensitive to the summer cooling season and, to a lesser extent, the winter heating season. Similarly, very cold temperatures can dramatically increase the demand for gas for heating. A significant portion of our gas system demand is driven by heating. Extreme summer conditions or storms may stress electric transmission and distribution systems, resulting in increased maintenance costs and limiting the ability to meet peak customer demand.

We could be adversely affected by changes in the development, and utilization by our customers, of power generation and storage technology.

Developments in power generation and storage could affect our revenues and the timing of the recovery of our costs. Advancements in power generation technology, including commercial and residential solar generation installations and commercial micro turbine installations, are improving the cost-effectiveness of customer self-supply of electricity. Improvements in energy storage technology, including batteries and fuel cells, could also better position customers to meet their around-the-clock electricity requirements. Such developments could reduce customer purchases of electricity, but may not necessarily reduce our investment and operating requirements due to our obligation to serve customers, including those self-supply customers whose equipment has failed for any reason to provide the power they need. In addition, since a portion of our costs are recovered through charges based upon the volume of power delivered, reductions in electricity deliveries will affect the timing of our recovery of those costs and may require changes to our rate structures.

We are affected by economic activity within our service area.

Higher levels of development and business activity generally increase the numbers of customers and their use of electricity and gas. Likewise, periods of recessionary economic conditions generally adversely affect our results of operations.

Our ability to obtain an adequate supply of coal could limit our ability to operate our coal-fired facilities.

The availability of coal and the means to transport coal could:

·

Affect our operating costs due to increased costs associated with lower levels of generation or the need for alternate supply or alternate transportation,

·

Limit our ability to generate electricity if we are unable to arrange adequate deliveries of coal, and

·

Result in potentially higher costs for replacement purchased power as well as potential lost market sales opportunities.

A significant portion of our electric generating capacity is dependent on coal. Increased oil exploration and production in the United States has increased the amount of oil being transported by railroad, which has affected the availability and scheduling of trains to transport coal. Demand for coal has also been impacted by prevailing prices for natural gas and may affect mine performance. Consequently, we are exposed to the risk that counterparties to these contracts will not be able to fulfill their obligations. Disruption in the delivery of fuel, including disruptions as a result of transportation delays, weather, labor relations, force majeure events, or environmental regulations affecting any of these fuel suppliers, could limit our ability to generate electricity at our facilities at the desired level. Should counterparties fail to perform, or other unplanned disruptions occur, we may be forced to replace the underlying commitment at higher

15

prices, or we may be forced to reduce generation at our coal units and replace this lost generation through additional power purchases from third parties. These factors may also affect the terms under which any of our existing coal supply or transportation agreements are renewed or replaced upon the expiration of their current terms.

Our ability to manage our purchased power costs is influenced by a number of uncontrollable factors.

We are exposed to additional purchased power costs to the extent that our power needs cannot be fully covered by the supplies available from our existing facilities and contractual arrangements. Those needs, and our costs, could be affected by:

·

Increased demand due to, for example, abnormal weather, customer growth, or customer obligations,

·

The inability to transmit our contracted power from its generation source to our customers due to transmission line constraints, outages, or equipment failures,

·

Reductions in the availability of power from our owned or contracted generation sources due to equipment failures, shortages of fuel or environmental limitations on operations, and

·

Failure to perform on the part of any party from which we purchase capacity or energy, whether due to equipment failures or other causes.

An unexpected change in demand or the availability of generation or transmission facilities can expose us to increased costs of sourcing electricity in the short-term market where pricing may be more volatile.

The equipment and facilities in our operational system are subject to risks which may adversely affect our financial performance.

Weather conditions, accidents, and catastrophic events, including terrorism and acts of sabotage or war, can result in damage or failures of equipment or facilities and disrupt or limit our ability to generate, transmit, transport, purchase, or distribute electricity and gas. Efforts to repair or replace equipment and facilities may take prolonged periods or may be unsuccessful, or we may be unable to make the necessary improvements to our operational system, causing service interruptions. The resulting interruption of services would result in lost revenues and additional costs. We are also exposed to the risk of accidents or other incidents that could result in damage to or destruction of our facilities or damage to persons or property. Such issues could adversely affect revenues or increase costs to repair and maintain our systems.

We rely on the performance of our information technology systems, the failure of which could have an adverse effect on our business and performance.

We operate in a highly engineered industry that requires the continued operation of sophisticated information technology systems and network infrastructure to manage our finances, to operate our control facilities, to provide electric and gas service to our customers, and to enable compliance with applicable regulatory requirements. Our computer-based systems are vulnerable to interruption or failure due to the age of certain systems, the introduction of viruses, malware, security breaches, fire, power loss, system malfunction, network outages and other events, which may be beyond our control. System interruptions or failures, whether isolated or more widespread, could impact our ability to provide service to our customers, which could have a material adverse effect on our operations and financial performance.

Our operations and confidential information are subject to the risk of cyber-attacks.

Our operations rely on sophisticated information technology systems and networks. Cyber-attacks targeting our electronic control systems used at our generating facilities and for electric and gas distribution systems, could result in a full or partial disruption of our operations. Any disruption of these operations could result in a loss of service to customers and loss of revenue, as well as significant expense to repair system damage and remedy security breaches.

Our business requires the collection and retention of personally identifiable information of our customers, shareholders, and employees, who expect that we will adequately protect such information. A significant theft, loss, or fraudulent use of personally identifiable information may cause our business reputation to be adversely impacted and could lead to potentially large costs to notify and protect the impacted persons. The occurrence of such an event may cause us to become subject to legal claims, fines, or penalties, any of which could adversely impact our results of operations.

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The safeguards we have may not always be effective due to the evolving nature of cyber-attacks. We cannot guarantee that such protections will be completely successful in the event of a cyber-attack. If the technology systems were to fail or be breached by a cyber-attack, and not be recovered in a timely fashion, we may be unable to fulfill critical business functions and confidential data could be compromised, adversely impacting our financial condition and results of operations.

Failure to attract and retain an appropriately qualified workforce could affect our operations.

Events such as an aging workforce and retirement of key employees without appropriate replacements may lead to operating challenges and increased costs. Some of the challenges include lack of resources, loss of knowledge, and length of time period associated with skill development. Failure to identify qualified replacement employees could result in decreased productivity and increased safety costs. If we are unable to attract and retain an appropriately qualified workforce, our operations could be negatively affected.

Financial Risk

We are exposed to commodity price risk relating to our purchases of natural gas, electricity, coal and oil.

We face commodity price risk exposure with respect to our purchases of natural gas, electricity, coal and oil, SO₂ allowances and risk through our use of derivatives, such as futures, forwards and swaps, to manage that commodity price risk. We could experience increased costs as a result of volatility in the market values of those commodities. We could also experience losses on our derivative contracts as a result of that market value volatility or if a counterparty fails to perform under a contract. In the absence of actively quoted market prices and pricing information from external sources, the valuation of these derivative contracts involves our exercise of judgment and use of estimates. As a result, changes in the underlying assumptions or use of alternative valuation methods could affect the reported fair value of these contracts.

We are exposed to interest rate risk.

We are exposed to interest rate risk on our variable rate financing. MGE Energy and MGE had $7.0 million of variable-rate debt outstanding at December 31, 2014. Borrowing levels under commercial paper arrangements vary from period to period depending upon capital investments and other factors. Such interest rate risk means that we are exposed to increased financing costs and associated cash payments as a result of changes in the short-term interest rates.

Interest rate movements and market performance affects our employee benefit plan costs.

Prevailing interest rates affect our assessment and determination of discount rates that are a key assumption in the determination of the costs and funding of our defined benefit pension plans and may impact the amount of expense and timing of contributions to those plans. The performance of the capital markets affects the values of the assets that are held in trust to satisfy the future obligations under our pension and postretirement benefit plans. We have significant obligations in these areas and hold significant assets in these trusts. A decline in the market value of those assets may increase our current and longer-term funding requirements for these obligations. Changes in the value of trust fund assets may affect the level of required contributions to these trusts to meet benefit obligations. Reduced benefit plan assets could result in increased benefit costs in future years and may increase the amount and accelerate the timing of required future funding contributions.

We are exposed to credit risk primarily through our regulated energy business.

Credit risk is the loss that may result from counterparty nonperformance. We face credit risk primarily through MGE's regulated energy business. Failure of contractual counterparties to perform their obligations under purchase power agreements, commodity supply arrangements or other agreements may result in increased expenses for MGE as a result of being forced to cover the shortfall in the spot or short-term market, where prices may be more volatile.

As a holding company, we are dependent on upstream cash flows from our subsidiaries for the payment of dividends on our common stock.

As a holding company, we have no operations of our own, and our ability to pay dividends on our common stock is dependent on the earnings and cash flows of our operating subsidiaries and their ability to pay upstream dividends or to repay funds to us. Prior to funding us, our subsidiaries have financial obligations that must be satisfied, including among others, debt service and obligations to trade creditors, and are subject to contractual and regulatory restrictions on the payment of dividends.

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Disruptions in the financial markets or changes to our credit ratings may affect our ability to finance at a reasonable cost and in accordance with our planned schedule.

The credit markets have experienced disruption and uncertainty in recent years. To the extent that such issues affect the ability or willingness of credit providers or investors to participate in the credit markets or particular types of investments, or affect their perception of the risk associated with particular types of investments, our cost of borrowing could be affected. We also rely on our strong credit ratings to access the credit markets. If our credit ratings are downgraded for any reason, borrowing costs could increase, potential investors could decrease, or we could be required to provide additional credit assurance, including cash collateral, to contract counterparties.

General economic conditions may affect our operating revenues and our counterparty risks.

Operational

MGE Energy's and MGE's operations are affected by local, national and worldwide economic conditions. The consequences of a prolonged period of reduced economic activity may include lower demand for energy, uncertainty regarding energy prices and the capital and commodity markets, and increased credit risk. A decline in energy consumption may adversely affect our revenues and future growth. Increased credit risk reflects the risk that our retail customers will not pay their bills in a timely manner or at all, which may lead to a reduction in liquidity and an eventual increase in bad debt expense.

Counterparty creditworthiness

Credit risk also includes the risk that trading counterparties that owe us money or product will breach their obligations. MGE's risk management policy is to limit transactions to a group of high quality counterparties. Should the counterparties to these arrangements fail to perform, we may be forced to enter into alternative arrangements. In that event, our financial results could be adversely affected and we could incur losses.

Item 1B. Unresolved Staff Comments.

MGE Energy and MGE

None.

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Item 2. Properties.

Electric Generation

Net summer rated capacity in service at December 31, 2014, was as follows:

Plants	Location	Commercial Operation Date	Fuel	Net Summer Rated Capacity (MW)(1)	No. of Units
Steam plants:
Columbia	Portage, WI	1975 & 1978	Low-sulfur coal	239(2,3)	2
Blount	Madison, WI	1957 & 1961	Gas	102(7)	2
WCCF	Madison, WI	2005	Gas/oil	126(4)	2
Elm Road Units	Oak Creek, WI	2010 & 2011	Coal	106(2,5)	2
Combustion turbines	Madison, WI	1964-2000	Gas/oil	156(6)	6
	Marinette, WI
Portable generators	Madison, WI	1998-2001	Diesel	50(7)	54
Wind turbines	Townships of Lincoln
	and Red River, WI	1999	Wind	1(7,8)	17
	Township of
	Brookfield, IA	2008	Wind	3(7,9)	18
Total				783

(1)

Net summer rated capacity is determined by annual testing and may vary from year to year due to, among other things, the operating and physical conditions of the units.

(2)

Baseload generation.

(3)

MGE's share. See "Columbia" below.

(4)

Facility is jointly owned. Based on the terms of the joint plant agreement between MGE and the UW, the UW has the ability to reduce net capability of these units by approximately 17 MW in the summer. The net summer rated capacity shown reflects this decrease. See "WCCF" below.

(5)

MGE's share. See "Elm Road" below.

(6)

Three facilities are owned by MGE and three facilities are leased.

(7)

These facilities are owned by MGE.

(8)

Nameplate capacity rating is 11 MW.

(9)

Nameplate capacity rating is 30 MW.

Columbia

MGE and two other utilities jointly own Columbia, a coal-fired generating facility consisting of two 512 MW units, which accounts for 31% of MGE's net summer rated capacity. Power from this facility is shared in proportion to each owner's ownership interest. MGE has a 22% ownership interest in Columbia. The other owners are WPL (a subsidiary of Alliant), which operates Columbia, and WPSC. The Columbia units burn low-sulfur coal obtained from the Powder River Basin coal fields located in Wyoming. The coal inventory supply for the Columbia units increased from approximately 28 days on December 31, 2013, to approximately 48 days on December 31, 2014.

Elm Road Units

MGE Power Elm Road and two other owners own undivided interests in the Elm Road Units, consisting of two 615 MW units, which account for 14% of MGE's net summer rated capacity. Power from these units is shared in proportion to each owner's ownership interest. MGE Power Elm Road owns an 8.33% ownership interest in the Elm Road Units, and its interest in the Elm Road Units is leased to MGE. The other owners are Wisconsin Energy Corporation, which operates the Units, and WPPI Energy, Inc. The Elm Road Units burn bituminous coal obtained from

19

northern West Virginia and southwestern Pennsylvania, and Powder River Basin coal from Wyoming. MGE's share of the coal inventory supply for the Elm Road Units increased from approximately 40 days on December 31, 2013, to approximately 53 days on December 31, 2014.

MGE leases MGE Power Elm Road's ownership interest in the Elm Road Units pursuant to two separate facility leases. The financial terms of each facility lease include a capital structure of 55% equity and 45% long-term debt, return on equity of 12.7%, and a lease term of 30 years. At the end of the respective lease terms, MGE may, at its option, renew the facility lease for an additional term, purchase the leased ownership interest at fair market value or allow the lease to end. The Unit 1 and Unit 2 leases commenced with the commercial operation of each respective unit.

WCCF

MGE Power West Campus and the UW jointly own undivided interests in a natural gas-fired cogeneration facility on the UW campus. The facility has the capacity to produce 20,000 tons of chilled water, 500,000 pounds per hour of steam, and approximately 150 MW of electricity. The UW owns 45% of the facility, which represents its interest in the chilled-water and steam assets. These assets are used to meet a part of the UW's need for air-conditioning and steam-heat capacity. MGE Power West Campus owns 55% of the facility, which represents its interest in the electric generating assets. These assets are used to provide electricity to MGE's customers. The UW's share of the plant and portion of the earnings from the WCCF are not reflected in the consolidated financial statements of MGE Energy or MGE. MGE Power West Campus' share of the cost of this project is reflected in property, plant, and equipment on MGE Energy's and MGE's consolidated balance sheets.

MGE leases the electric generating assets owned by MGE Power West Campus and is responsible for operating the entire facility. The financial terms of the facility lease include a capital structure of 53% equity and 47% long-term debt, return on equity of 12.1%, and a lease term of 30 years. At the end of the lease term in 2035, MGE may, at its option, renew the facility lease for an additional term, purchase the generating facility at fair market value or allow the lease contract to end.

Electric and Gas Distribution Facilities

At December 31, 2014, MGE owned 885 miles of overhead electric distribution line and 1,187 miles of underground electric distribution cable, all of which are located in Wisconsin. These electric distribution facilities are connected by approximately 54 substations, installed with a capacity of 1,274,300 kVA. MGE's gas facilities include 2,603 miles of distribution mains, which are all owned by MGE.

A significant portion of MGE's electric and gas distribution facilities are located above or underneath highways, streets, other public places or property that others own. MGE believes that it has satisfactory rights to use those places or property in the form of permits, grants, easements, and licenses; however, it has not necessarily undertaken to examine the underlying title to the land upon which the rights rest.

Encumbrances

The principal plants and properties of MGE are subject to the lien of its Indenture of Mortgage and Deed of Trust dated as of January 1, 1946, as amended and supplemented, under which MGE's first mortgage bonds are issued. As of December 31, 2014, there were $1.2 million of first mortgage bonds outstanding. See Footnote 9 of the Notes to Consolidated Financial Statements for additional information regarding MGE's first mortgage bonds.

MGE Power Elm Road has collaterally assigned its right to lease payments from MGE for the Elm Road Units in order to secure the repayment of $68.0 million of senior secured notes issued by MGE Power Elm Road. See Footnote 9 of the Notes to Consolidated Financial Statements for additional information regarding these senior notes.

MGE Power West Campus has collaterally assigned its right to lease payments from MGE for the WCCF in order to secure the repayment of $48.2 million of senior secured notes issued by MGE Power West Campus. See Footnote 9 of the Notes to Consolidated Financial Statements for additional information regarding these senior notes.

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Item 3. Legal Proceedings.

MGE Energy and MGE

MGE Energy and its subsidiaries, including MGE, from time to time are involved in various legal proceedings that are handled and defended in the ordinary course of business.

See "Environmental" under Item 1. Business, and Footnote 18.d. of the Notes to Consolidated Financial Statements for a description of several environmental proceedings involving MGE. See Footnote 18.e. of the Notes to Consolidated Financial Statements for a description of other legal matters.

Item 4. Mine Safety Disclosures.

MGE Energy and MGE

Not applicable.

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PART II.

Item 5. Market for Registrants' Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.

Market for Common Equity

MGE Energy

MGE Energy common stock is traded on Nasdaq under the symbol MGEE. On February 1, 2015, there were approximately 37,637 shareholders of record. The following table shows high and low sale prices for the common stock on Nasdaq for each quarter over the past two years.

		Common stock price range
		2014				2013
		High		Low		High		Low
Fourth quarter	$	48.00	$	37.25	$	38.94	$	34.98
Third quarter	$	40.85	$	37.25	$	40.46	$	33.39
Second quarter	$	39.68	$	36.30	$	38.63	$	34.75
First quarter	$	40.71	$	35.66	$	37.25	$	33.93

MGE

As of February 1, 2015, there were 17,347,894 outstanding shares of common stock, all of which were held by MGE Energy. There is no market for shares of common stock of MGE.

Dividends

MGE Energy

The following table sets forth MGE Energy's quarterly cash dividends per share declared during 2014 and 2013:

(Per share)		2014		2013
Fourth quarter	$	0.283	$	0.272
Third quarter	$	0.283	$	0.272
Second quarter	$	0.272	$	0.263
First quarter	$	0.272	$	0.263

MGE

The following table sets forth MGE's quarterly cash dividends declared during 2014 and 2013:

(In thousands)		2014		2013
Fourth quarter	$	-	$	25,000
Third quarter	$	9,750	$	-
Second quarter	$	9,750	$	-
First quarter	$	7,000	$	-

See discussion below as well as "Liquidity and Capital Resources - Financing Activities" under Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, for a description of restrictions applicable to dividend payments by MGE.

Dividend Restrictions

Dividend payments by MGE to MGE Energy are subject to restrictions arising under a PSCW rate order and, to a lesser degree, MGE's first mortgage bonds. The PSCW order restricts any dividends that MGE may pay MGE Energy if its common equity ratio, calculated in the manner used in the rate proceeding, is less than 55%. MGE's thirteen month rolling average common equity ratio at December 31, 2014, is 56.9%, as determined under the calculation used in the rate proceeding. MGE paid cash dividends of $26.5 million to MGE Energy in 2014. The rate proceeding calculation

22

includes as indebtedness imputed amounts for MGE's outstanding purchase power capacity payments and other PSCW adjustments, but does not include the indebtedness associated with MGE Power Elm Road and MGE Power West Campus, which are consolidated into MGE's financial statements but are not direct obligations of MGE.

MGE has covenanted with the holders of its first mortgage bonds not to declare or pay any dividend or make any other distribution on or purchase any shares of its common stock unless, after giving effect thereto, the aggregate amount of all such dividends and distributions and all amounts applied to such purchases, after December 31, 1945, shall not exceed the earned surplus (retained earnings) accumulated subsequent to December 31, 1945. As of December 31, 2014, approximately $334.8 million was available for the payment of dividends under this covenant.

Stock Split

On December 20, 2013, MGE Energy's Board of Directors declared a three-for-two stock split of MGE Energy's outstanding shares of common stock, effective in the form of a stock dividend. Shareholders of record at the close of business on January 24, 2014, received one additional share of MGE Energy common stock for every two shares of common stock owned on that date. The additional shares were distributed on February 7, 2014. Shareholders received cash in lieu of any fractional shares of common stock they otherwise would have received in connection with the dividend. All share and per share data provided in this report give effect to this stock split.

Issuer Purchases of Equity Securities

MGE Energy

Period	Total Number of Shares Purchased		Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs*	Maximum number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs*
October 1-31, 2014	42,174	$	39.59	-	-
November 1-30, 2014	27,975		44.56	-	-
December 1-31, 2014	75,703		45.34	-	-
Total	145,852	$	43.53	-	-

*Under the MGE Energy, Inc. Direct Stock Purchase and Dividend Reinvestment Plan (Stock Plan), common stock shares deliverable to plan participants may be either newly issued shares or shares purchased on the open market, as determined from time to time by MGE Energy. MGE Energy uses open market purchases to provide shares to meet obligations to participants in the Stock Plan. The shares are purchased on the open market through a securities broker-dealer and then are reissued under the Stock Plan as needed to meet share delivery requirements. The volume and timing of share repurchases in the open market depends upon the level of dividend reinvestment and optional share purchases being made from time to time by plan participants. As a result, there is no specified maximum number of shares to be repurchased and no specified termination date for the repurchases. All shares issued through the Stock Plan, whether newly issued or reissued following open market purchases, are issued and sold by MGE Energy pursuant to a registration statement that was filed with the SEC and is currently effective.

MGE

None.

23

Stock Performance Graph

The performance graph below illustrates a five-year comparison of cumulative total returns based on an initial investment of $1,000 in MGE Energy common stock, as compared with the Russell 2000 and the EEI Index for the period 2010 through 2014. The EEI Index reflects the consolidated performance of Edison Electric Institute investor-owned electric utilities.

 

Value of Investment at December 31,

		2009		2010		2011		2012		2013		2014
MGEE	$	1,000	$	1,246	$	1,413	$	1,590	$	1,855	$	2,261
Russell 2000		1,000		1,269		1,216		1,414		1,963		2,059
EEI Index		1,000		1,070		1,284		1,311		1,482		1,910

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Item 6. Selected Financial Data.

MGE Energy

(In thousands, except per share amounts)

		For the years ended December 31,
		2014		2013		2012		2011		2010
Summary of Operations
Operating revenues:
Regulated electric	$	394,849	$	403,957	$	392,365	$	375,858	$	360,729
Regulated gas		221,720		181,462		139,727		165,271		165,915
Nonregulated		3,283		5,468		9,231		5,253		5,947
Total operating revenues		619,852		590,887		541,323		546,382		532,591
Operating expenses		462,102		444,293		410,200		421,170		418,931
Other general taxes		19,652		18,607		18,360		17,344		17,058
Operating income		138,098		127,987		112,763		107,868		96,602
Other income, net		10,079		10,701		10,069		9,214		11,093
Interest expense, net		(19,673)		(18,924)		(19,467)		(20,162)		(16,157)
Income before taxes		128,504		119,764		103,365		96,920		91,538
Income tax provision		(48,185)		(44,859)		(38,919)		(35,992)		(33,820)
Net income	$	80,319	$	74,905	$	64,446	$	60,928	$	57,718
Average shares outstanding		34,668		34,668		34,668		34,668		34,668
Basic and diluted earnings per share	$	2.32	$	2.16	$	1.86	$	1.76	$	1.66
Dividends declared per share	$	1.11	$	1.07	$	1.04	$	1.01	$	0.99
Assets
Electric	$	948,241	$	899,257	$	888,444	$	794,738	$	721,721
Gas		308,499		265,694		285,468		285,702		257,505
Assets not allocated		41,346		19,853		18,559		32,882		22,079
Nonregulated energy operations		281,410		288,116		323,216		299,421		300,862
Transmission investments		67,697		64,504		61,064		57,006		54,241
All others		441,109		431,436		413,291		401,862		376,219
Eliminations		(390,636)		(389,800)		(403,118)		(412,729)		(414,734)
Total assets	$	1,697,666	$	1,579,060	$	1,586,924	$	1,458,882	$	1,317,893
Capitalization including Short-Term Debt
Common shareholders' equity	$	659,401	$	617,510	$	579,429	$	550,952	$	525,080
Long-term debt*		399,438		403,516		361,504		363,570		336,018
Short-term debt		7,000		-		-		-		22,500
Total capitalization and short-term debt	$	1,065,839	$	1,021,026	$	940,933	$	914,522	$	883,598
*Includes current maturities

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

General

MGE Energy is an investor-owned public utility holding company operating through subsidiaries in five business segments:

·

Regulated electric utility operations, conducted through MGE,

·

Regulated gas utility operations, conducted through MGE,

·

Nonregulated energy operations, conducted through MGE Power and its subsidiaries,

·

Transmission investments, representing our equity investment in ATC, and

·

All other, which includes corporate operations and services.

Our principal subsidiary is MGE, which generates and distributes electric energy, distributes natural gas, and represents a majority portion of our assets, liabilities, revenues, and expenses. MGE generates and distributes electricity to approximately 143,000 customers in Dane County, Wisconsin, including the city of Madison, and purchases and distributes natural gas to approximately 149,000 customers in the Wisconsin counties of Columbia, Crawford, Dane, Iowa, Juneau, Monroe, and Vernon.

Our nonregulated energy operations own interests in electric generating capacity that is leased to MGE. The ownership/leasing structure was adopted under applicable state regulatory guidelines for MGE's participation in these generation facilities, consisting principally of a stable return on the equity investment in the new generation facilities over the term of the related leases. The nonregulated energy operations include an ownership interest in two coal-fired generating units in Oak Creek, Wisconsin and a partial ownership of a cogeneration project on the UW-Madison campus. A third party operates the units in Oak Creek, and MGE operates the cogeneration project. Due to the nature of MGE's participation in these facilities, the results of our nonregulated operations are also consolidated into MGE's consolidated financial position and results of operations under applicable accounting standards.

Executive Overview

Our primary focus today and for the foreseeable future is our core utility customers at MGE as well as creating long-term value for our shareholders. MGE continues to face the challenge of providing its customers with reliable power at competitive prices. MGE meets this challenge by investing in more efficient generation projects, including renewable energy sources. MGE will continue to focus on growing earnings while controlling operating and fuel costs. MGE maintains safe and efficient operations in addition to providing customer value. We believe it is critical to maintain a strong credit standing consistent with financial strength in MGE as well as the parent company in order to accomplish these goals.

We earn our revenue and generate cash from operations by providing electric and natural gas utility services, including electric power generation and electric power and gas distribution. The earnings and cash flows from the utility business are sensitive to various external factors, including:

·

Weather, and its impact on customer sales,

·

Economic conditions, including current business activity and employment and their impact on customer demand,

·

Regulation and regulatory issues, and their impact on the timing and recovery of costs,

·

Energy commodity prices,

·

Equity price risk pertaining to pension related assets,

·

Credit market conditions, including interest rates and our debt credit rating,

·

Environmental laws and regulations, including adopted and pending environmental rule changes,

and other factors listed in Item 1A. Risk Factors.

For the year ended December 31, 2014, MGE Energy's earnings were $80.3 million or $2.32 per share compared to $74.9 million or $2.16 per share for the same period in the prior year. MGE's earnings for the year ended December 31, 2014, were $55.6 million compared to $49.0 million for the same period in the prior year.

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MGE Energy's net income was derived from our business segments as follows:

(In millions)		Year Ended December 31,
Business Segment:		2014		2013		2012
Electric Utility	$	41.4	$	36.7	$	36.7
Gas Utility		15.8		13.4		5.1
Nonregulated Energy		19.3		20.7		18.1
Transmission Investments		5.5		5.6		5.4
All Other		(1.7)		(1.5)		(0.9)
Net Income	$	80.3	$	74.9	$	64.4

Our net income during 2014 compared to 2013 primarily reflects the effects of the following factors:

·

Electric net income increased compared to the prior period primarily related to ongoing efforts to manage electric operating and maintenance expenditures.

·

Gas net income increased due to a 4.8% increase in gas retail sales reflecting higher customer demand due to a colder winter. The average temperatures in January and February 2014 were 11.5 degrees and 12.5 degrees, respectively, compared to 21.8 degrees and 21.3 degrees in the prior year. During 2014, heating degree days (a measure for determining the impact of weather during the heating season) increased by 3.4% compared to the prior year. In addition, gas operating and maintenance expenditures decreased over the prior year.

·

In 2013, the PSCW approved recovery of the force majeure costs incurred during construction of the Elm Road Units. The higher non-regulated revenue in 2013 reflects the one-time adjustment for the carrying costs incurred in the prior periods on the force majeure costs.

Our net income during 2013 compared to 2012 primarily reflects the effects of the following factors:

·

Retail electric sales decreased 0.8% driven by a return to more normal weather in 2013 compared to unusually warm weather in 2012. The average temperature in July 2013 was 71.9 degrees compared to 79.7 degrees in July 2012. The decrease in sales was partially offset by $2.7 million (after tax) recognized in AFUDC equity related to the Columbia environmental project for the year ended December 31, 2013.

·

Gas net income increased due to a 25.7% increase in gas sales reflecting higher customer demand due to a colder winter. Heating degree days increased by 27.9% compared to the prior period. In addition, operating and maintenance expenditures decreased over the prior period.

·

Higher non-regulated revenues in 2013 due to the previously mentioned one-time adjustment for force majeure costs associated with the Elm Road Units.

During 2014, the following events occurred:

Columbia Environmental Project: In early 2011, the PSCW authorized the construction of air emission reduction systems and associated equipment on Columbia Units 1 and 2. These systems and equipment for Unit 2 and Unit 1 were placed into service in April 2014 and July 2014, respectively. As of December 31, 2014, $129.0 million of the capitalized project (excluding carrying costs) was transferred from Construction work in progress to Property, plant, and equipment on MGE's balance sheet related to Unit 1 and Unit 2 being placed into service. MGE has incurred $8.1 million of capital expenditures and recognized $3.0 million (after tax) in AFUDC equity related to this project for the year ended December 31, 2014.

During 2015, several items may affect us, including:

2015 Rate Filing: In December 2014, the PSCW authorized MGE to increase 2015 rates for retail electric customers by 3.8% and to decrease rates for gas customers by 2.0 %. The increase in retail electric rates cover costs associated with the construction of emission-reduction equipment at Columbia, improvements and reliability of the state's electric transmission system, fuel and purchased power related to coal delivery costs, partially offset by lower cost as a result of market conditions for pension and post-retirement benefit costs.

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The PSCW approved a change in the electric and gas rate design as part of the recent rate order. The new rate design better aligns the related fixed costs of providing gas and electric services. For example, the change will lower the gas distribution variable rate (excluding purchased gas) by approximately two-thirds and increase the fixed customer charge. Thus, gas earnings will be less sensitive to weather as a result of the change in rate design. Also, gas earnings will be more evenly spread throughout the year rather than being predominantly recognized in the winter months. A similar, but much smaller rate design shift was also approved for electric rates.

Environmental Initiatives: There are proposed legislation, rules, and initiatives involving matters related to air emissions, water effluent, hazardous materials, and greenhouse gases, all of which affect generation plant capital expenditures and operating costs as well as future operational planning. Such legislation and rulemaking could significantly affect the costs of owning and operating fossil-fueled generating plants, such as Columbia and the Elm Road Units, from which we derive approximately 45% of our electric generating capacity. We would expect to seek and receive recovery of any such costs in rates; however, it is difficult to estimate the amount of such costs due to the uncertainty as to the timing and form of the legislation and rules, and the scope and time of the recovery of costs in rates, which may lag the incurrence of those costs. In addition, the Columbia owners, including MGE, resolved claims surrounding the alleged failure, among other things, to obtain necessary air permits and implement necessary emission controls associated with past activities at Columbia, which will require the installation of additional emission controls at Columbia. See Columbia discussion in Footnote 18.d. in the Notes to Consolidated Financial Statements.

Pension and Other Post-Retirement Benefit Costs: Costs for pension and other post-retirement benefits are affected by actual investment returns on the assets held for those benefits and by the discount rate, which is sensitive to interest rates, used to calculate those benefits. Interest rates have experienced volatility since the end of the year which could affect the value of the pension and post-retirement benefit obligations. The changes in the discount rates are not expected to have an impact on the income statement for 2015. However, these changes may affect benefit costs in future years. MGE expects any changes in the cost for employee benefit plans will be factored into future rate actions.

ATC Return on Equity: Several parties have filed a complaint with FERC seeking to reduce the base return on equity (ROE) of MISO and numerous other MISO transmission owners, including ATC, "due to changes in the capital markets." The complaint alleges that the MISO ROE should not exceed 9.15%, the equity components of hypothetical capital structures should be restricted to 50%, and the relevant incentive ROE adders should be discontinued. FERC denied the portion of the complaint seeking to restrict the use of capital structures that include more than 50% common equity and also denied the portion of the complaint requesting the termination of the incentive ROE adders used by certain transmission owners. MISO's base ROE is 12.38% and ATC's base ROE is 12.2%. FERC ordered formal hearing proceedings to begin, and an initial decision in the complaint is expected by November 30, 2015. ATC provided MGE its 2014 earnings reflecting an adjustment for this matter representing ATC's estimate of its refund liability for the period of November 2013 through December 2014. We derived approximately 6.7% of our net income for the year ended December 31, 2014, from our investment in ATC.

General Economic Conditions: Economic conditions both inside and outside our service area are expected to continue to affect the level of demand for our utility services and may affect the collection of our accounts receivable and the creditworthiness of counterparties with whom we do business. We have in place lines of credit aggregating $150 million for MGE Energy (including MGE) and $100 million for MGE to address our liquidity needs. As of December 31, 2014, there was $7.0 million of commercial paper outstanding.

The following discussion is based on the business segments as discussed in Footnote 22 of the Notes to Consolidated Financial Statements.

28

Results of Operations

Year Ended December 31, 2014, Versus the Year Ended December 31, 2013

Electric Utility Operations - MGE Energy and MGE

Electric sales and revenues

The following table compares MGE's electric revenues and electric kWh sales by customer class for each of the periods indicated:

		Revenues				Sales (kWh)
(In thousands, except cooling degree days)		2014		2013	% Change	2014	2013	% Change
Residential	$	132,359	$	135,597	(2.4)%	807,265	819,012	(1.4)%
Commercial		210,141		214,033	(1.8)%	1,834,473	1,821,966	0.7 %
Industrial		19,163		19,872	(3.6)%	246,267	250,229	(1.6)%
Other-retail/municipal		36,281		39,143	(7.3)%	409,737	423,261	(3.2)%
Total retail		397,944		408,645	(2.6)%	3,297,742	3,314,468	(0.5)%
Sales to the market		2,547		1,134	124.6 %	68,727	50,606	35.8 %
Other revenues		1,489		1,312	13.5 %	-	-	- %
Adjustments to revenues		(7,131)		(7,134)	- %	-	-	- %
Total	$	394,849	$	403,957	(2.3)%	3,366,469	3,365,074	- %
Cooling degree days (normal 665)						620	709	(12.6)%

Electric operating revenues decreased $9.1 million or 2.3% for the year ended December 31, 2014, due to the following:

(In millions)
Fuel credit	$	(6.5)
Other		(2.2)
Volume		(1.8)
Sales to the market		1.4
Total	$	(9.1)

In July 2013, the PSCW authorized MGE to freeze 2014 rates at 2013 levels for retail electric customers.

·

Fuel Credit. During the year ended December 31, 2014, customers received a fuel credit on their bill related to the 2013 fuel savings of $6.5 million, which decreased electric revenues when compared to the same period in the prior year.

·

Other. During the year ended December 31, 2014, other items affecting electric operating revenues decreased $2.2 million primarily attributable to a decrease in demand charges, lower monthly on-peak sales, and a shift in commercial customer rate classes.

·

Volume. During the year ended December 31, 2014, there was a 0.5% decrease in total retail sales volumes compared to the same period in the prior year driven by cooler than normal weather.

·

Sales to the market. Sales to the market represent wholesale sales made to third parties who are not ultimate users of the electricity. These sales may include spot market transactions on the markets operated by MISO and PJM. These sales may also include bilateral sales to other utilities or power marketers. Generating units are dispatched by MISO based on cost considerations as well as reliability of the system. Sales to the market typically occur when MGE has more generation and purchases online than are needed for its own system demand. The excess electricity is then sold to others in the market. For the year ended December 31, 2014, market volumes increased compared to the same period in the prior year, reflecting increased opportunities for sales. In addition, market settlement resulted in higher revenue per kWh for the year ended December 31, 2014, reflecting higher market prices.

29

Electric fuel and purchased power

Electric fuel and purchased power costs reflect a decrease in internal generation volumes partially offset by an increase in the volume of purchased power when compared to the prior period. Adjustments related to the regulatory recovery for fuel costs, known as fuel rules, moderated the effects of that increased volume. These items are explained below.

Fuel for electric generation

The expense for fuel for internal electric generation decreased $3.2 million during the year ended December 31, 2014, compared to the same period in the prior year, due to the following:

(In millions)
Decrease in volume	$	(6.8)
Increase in per-unit cost		3.6
Total	$	(3.2)

This decrease in expense reflects a 13.7% decrease in internal generated volume delivered to the system primarily as a result of reduced generation at Columbia to reduce coal use in order to maintain inventory levels, partially offset by a 7.7% increase in per-unit cost of internal electric generation.

Purchased power

Purchased power expense decreased $7.6 million during the year ended December 31, 2014, compared to the same period in the prior year, due to the following:

(In millions)
Increase in volume	$	17.3
Decrease in per-unit cost		(5.4)
Fuel Rules Adjustments
Decrease in recorded fuel rule credit		(6.7)
Amortization of 2012 fuel rule credits		(6.3)
Return of 2013 fuel rule credits		(6.5)
Total	$	(7.6)

The decrease in expense reflects a 5.9% decrease in the per-unit cost of purchased power and a 23.4% increase in the volume of power purchased from third parties primarily as a result of the reduced generation at Columbia.

Under fuel rules, MGE is required to defer electric fuel-related costs that fall outside a 2% cost tolerance band around the amount used in the most recent rate proceeding. Any fuel rules adjustments are reflected in purchased power expense. Cost savings that may be returned to customers are recorded as an increase to purchased power expense, and higher costs that MGE is entitled to recover, after adjustment for excess revenues, are recorded as a reduction to purchased power expense. Any over/under recovery of the deferred costs is determined on an annual basis and adjusted in future billings to customers. During the year ended December 31, 2014, as part of its rate freeze, MGE was allowed to amortize $6.3 million of the 2012 fuel rule credit against purchased power costs. In addition, MGE returned $6.5 million on customer bills in October 2014 related to the 2013 fuel rules credit.

Electric operating and maintenance expenses

Electric operating and maintenance expenses decreased $8.1 million during the year ended December 31, 2014, compared to the same period in 2013. The following changes contributed to the net change:

(In millions)
Decreased administrative and general costs	$	(5.9)
Decreased customer service costs		(0.8)
Decreased distribution costs		(0.7)
Decreased production costs		(0.4)
Decreased customer accounts costs		(0.2)
Decreased transmission costs		(0.1)
Total	$	(8.1)

For the year ended December 31, 2014, decreased administrative and general costs are primarily due to decreased pension and other postretirement benefits costs predominantly driven by a change in the discount rate.

30

Electric depreciation expense

Electric depreciation expense increased $1.2 million for the year ended December 31, 2014, compared to the same period in the prior year. This increase was a result of Columbia assets going in to service in April and July 2014.

Gas Utility Operations - MGE Energy and MGE

Gas deliveries and revenues

The following table compares MGE's gas revenues and gas therms delivered by customer class during each of the periods indicated:

(In thousands, except HDD and average rate per therm of retail customer)		Revenues				Therms Delivered
		2014		2013	% Change	2014	2013	% Change
Residential	$	117,523	$	98,578	19.2 %	110,422	102,599	7.6 %
Commercial/Industrial		100,338		79,344	26.5 %	138,151	134,619	2.6 %
Total retail		217,861		177,922	22.4 %	248,573	237,218	4.8 %
Gas transportation		3,373		3,025	11.5 %	46,905	37,778	24.2 %
Other revenues		486		515	(5.6)%	-	-	- %
Total	$	221,720	$	181,462	22.2 %	295,478	274,996	7.4 %
Heating degree days (normal 7,047)						7,887	7,628	3.4 %
Average rate per therm of retail customer	$	0.876	$	0.750	16.8 %

Gas revenues increased $40.3 million or 22.2% for the year ended December 31, 2014. These changes are related to the following factors:

(In millions)
Rate/PGA changes	$	31.4
Volume		8.5
Transportation and other effects		0.4
Total	$	40.3

·

Rate/PGA changes. The average retail rate per therm for the year ended December 31, 2014, increased 16.8% compared to the same period in 2013, reflecting higher natural gas commodity costs. MGE recovers the cost of natural gas in its gas segment through the purchased gas adjustment clause (PGA). Under the PGA, MGE is able to pass through to its gas customers the cost of gas. Changes in PGA recoveries affect revenues, but do not impact net income.

·

Volume. For the year ended December 31, 2014, retail gas deliveries increased 4.8% compared to the same period in 2013, as a result of colder weather during the winter months compared to milder weather in the prior year.

Cost of gas sold

For the year ended December 31, 2014, cost of gas sold increased by $36.3 million, compared to the same period in the prior year. The cost per therm of natural gas increased 27.5%, which resulted in $31.0 million of increased expense. In addition, the volume of purchased gas increased 5.0%, which resulted in $5.3 million of increased expense.

Gas operating and maintenance expenses

Gas operating and maintenance expenses decreased $1.6 million for the year ended December 31, 2014, compared to the same period in 2013. The following changes contributed to the net change.

(In millions)
Decreased administrative and general costs	$	(2.5)
Decreased customer service costs		(0.4)
Increased distribution costs		0.7
Increased customer accounts costs		0.6
Total	$	(1.6)

31

For the year ended December 31, 2014, decreased administrative and general costs are primarily due to decreased pension and other postretirement benefit costs predominantly driven by a change in the discount rate.

Nonregulated Energy Operations - MGE Energy and MGE

For the years ended December 31, 2014 and 2013, net income at the nonregulated energy operations segment was $19.3 million and $20.7 million, respectively. The nonregulated energy operations are conducted through MGE Energy's subsidiaries: MGE Power Elm Road and MGE Power West Campus, which have been formed to own and lease electric generating capacity to assist MGE.

In December 2012, as part of WEPCO's (the operator and primary owner of the Elm Road Units) 2013 Wisconsin rate case, the PSCW determined that 100% of the construction costs for the Elm Road Units were prudently incurred, and approved the recovery in rates of more than 99.5% of the force majeure costs. The recovery of the force majeure costs began in 2013, including a one-time cumulative adjustment pertaining to affected periods prior to the PSCW order. The portion pertaining to prior periods was fully reflected in 2013 results.

Transmission Investment Operations - MGE Energy and MGE

Transmission investment other income

For the years ended December 31, 2014 and 2013, other income at the transmission investment segment was $9.2 million and $9.4 million, respectively. The transmission investment segment holds our interest in ATC, and its income reflects our equity in the earnings of ATC. See Footnote 4.b. of the Notes to Consolidated Financial Statements and Other Matters below for additional information concerning ATC and summarized financial information regarding ATC.

Consolidated Income Taxes - MGE Energy and MGE

Both MGE Energy's and MGE's effective income tax rate for the years ended December 31, 2014 and 2013, was 37.5%.

Consolidated Other General Taxes

MGE Energy's and MGE's other general taxes increased $1.0 million or 5.6% for the year ended December 31, 2014, when compared to the same period in 2013, due in part to increased Wisconsin license fee tax. The annual license fee tax expense is based on the prior year's adjusted operating revenues. Tax rates have not changed.

Noncontrolling Interest, Net of Tax - MGE

The noncontrolling interest, net of tax, reflects the accounting required for MGE Energy's interest in MGE Power Elm Road (the Elm Road Units) and MGE Power West Campus (WCCF). MGE Energy owns 100% of MGE Power Elm Road and MGE Power West Campus; however, due to the contractual agreements for these projects with MGE, the entities are considered VIEs and their results are consolidated with those of MGE, the primary beneficiary of the VIEs. Also included in noncontrolling interest, net of tax, is MGE Energy's interest in MGE Transco, which holds our investment in ATC. The following table shows MGE Energy's noncontrolling interest, net of tax, reflected on MGE's consolidated statement of income:

		Year Ended December 31,
(In millions)		2014		2013
MGE Power Elm Road	$	16.2	$	17.4
MGE Power West Campus	$	7.7	$	7.7
MGE Transco	$	2.4	$	2.4

32

Results of Operations

Year Ended December 31, 2013, Versus the Year Ended December 31, 2012

Electric Utility Operations - MGE Energy and MGE

Electric sales and revenues

The following table compares MGE's electric revenues and electric kWh sales by customer class for each of the periods indicated:

		Revenues				Sales (kWh)
(In thousands, except cooling degree days)		2013		2012	% Change	2013	2012	% Change
Residential	$	135,597	$	130,581	3.8 %	819,012	826,766	(0.9)%
Commercial		214,033		207,574	3.1 %	1,821,966	1,825,701	(0.2)%
Industrial		19,872		19,437	2.2 %	250,229	247,179	1.2 %
Other-retail/municipal		39,143		38,805	0.9 %	423,261	442,906	(4.4)%
Total retail		408,645		396,397	3.1 %	3,314,468	3,342,552	(0.8)%
Sales to the market		1,134		991	14.4 %	50,606	31,588	60.2 %
Other revenues		1,312		1,811	(27.6)%	-	-	-%
Adjustments to revenues		(7,134)		(6,834)	(4.4)%	-	-	-%
Total	$	403,957	$	392,365	3.0 %	3,365,074	3,374,140	(0.3)%
Cooling degree days (normal 663)						709	1,068	(33.6)%

Electric operating revenues increased $11.6 million or 3.0% for the year ended December 31, 2013, due to the following:

(In millions)
Rate changes	$	15.6
Sales to the market		0.1
Volume		(3.3)
Other revenues		(0.5)
Adjustments to revenues		(0.3)
Total	$	11.6

·

Rates changes. Rate changes resulted in $15.6 million of additional revenue in 2013 compared to the same period in the prior year. The change primarily reflects an electric retail rate increase, which was authorized by the PSCW. Effective January 1, 2013, the retail rate increased 3.8% or $14.9 million for electric retail customers. The increase in retail electric rates was driven by costs for new environmental equipment at Columbia, final construction costs for the Elm Road Units, transmission reliability enhancements, and purchased power costs.

·

Volume. During the year ended December 31, 2013, there was a 0.8% decrease in total retail sales volumes compared to the same period in the prior year driven by a return to more normal weather in 2013 compared to unusually warm weather in 2012.

·

Adjustments to revenues. The adjustments to revenues amount includes the elimination of carrying costs for the Elm Road Units and the WCCF that were collected in electric rates, which are recognized as nonregulated energy operating revenues in our Nonregulated Energy Operations segment.

Electric fuel and purchased power

The expense for fuel for electric generation decreased $0.4 million or 0.9% during the year ended December 31, 2013, compared to the same period in the prior year. Internal electric generation costs decreased $1.1 million as a result of a 2.5% decrease in the per-unit cost (largely due to lower Elm Road coal costs). Internal electric generated volume delivered to the system increased 1.6%, which resulted in $0.7 million of increased expense.

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Excluding the fuel rules adjustments discussed below, purchased power expense increased $6.5 million during the year ended December 31, 2013, compared to the same period in the prior year. This increase in expense reflects an $8.9 million or 13.6% increase in per-unit cost of purchased power, partially offset by a $2.4 million or 3.6% decrease in the volume of power purchased from third parties.

Based on PSCW fuel rules, MGE is required to defer electric fuel-related costs that fall outside a 2% cost tolerance band around the amount used in the most recent rate proceeding. Any fuel rules adjustments are reflected in purchased power expense. During the years ended December 31, 2013 and 2012, MGE's actual fuel costs fell below the lower end of this tolerance band, which resulted in MGE deferring $6.7 million and $6.2 million, respectively, in fuel-related cost savings to be returned to customers and MGE recording a corresponding increase in purchased power costs. Any over/under recovery of the deferred costs is determined on an annual basis and adjusted in future billings to customers. After combining the fuel rules adjustments with the actual savings discussed above, purchased power expense increased $7.0 million ($6.5 million increase discussed above plus $0.5 million fuel rules difference) during the year ended December 31, 2013, compared to the prior year.

Electric operating and maintenance expenses

Electric operating and maintenance expenses increased $1.2 million during the year ended December 31, 2013, compared to the same period in 2012. The following changes contributed to the net change:

(In millions)
Increased transmission costs	$	3.4
Increased production costs		1.1
Increased distribution costs		1.0
Increased customer accounts costs		0.1
Decreased administrative and general costs		(3.6)
Decreased customer service costs		(0.8)
Total	$	1.2

For the year ended December 31, 2013, increased transmission costs were primarily due to an increase in transmission reliability enhancements, increased production costs were primarily due to increased costs at Columbia, and increased distribution costs were primarily due to increased conversion and overhead line maintenance expenses. The increase in costs was partially offset by decreased administrative and general costs which were primarily due to decreased pension costs.

Gas Utility Operations - MGE Energy and MGE

Gas deliveries and revenues

The following table compares MGE's gas revenues and gas therms delivered by customer class during each of the periods indicated:

(In thousands, except HDD and average rate per therm of retail customer)		Revenues				Therms Delivered
		2013		2012	% Change	2013	2012	% Change
Residential	$	98,578	$	78,411	25.7 %	102,599	79,936	28.4 %
Commercial/Industrial		79,344		58,374	35.9 %	134,619	106,653	26.2 %
Total retail		177,922		136,785	30.1 %	237,218	186,589	27.1 %
Gas transportation		3,025		2,465	22.7 %	37,778	32,202	17.3 %
Other revenues		515		477	8.0 %	-	-	- %
Total	$	181,462	$	139,727	29.9 %	274,996	218,791	25.7 %
Heating degree days (normal 7,024)						7,628	5,964	27.9 %
Average rate per therm of retail customer	$	0.750	$	0.733	2.3 %

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Gas revenues increased $41.7 million or 29.9% for the year ended December 31, 2013. These changes are related to the following factors:

(In millions)
Volume	$	37.1
Rate/PGA changes		4.0
Transportation and other effects		0.6
Total	$	41.7

·

Volume. For the year ended December 31, 2013, retail gas deliveries increased 27.1% compared to the same period in 2012, as a result of colder weather during the winter months compared to milder weather in the prior year.

·

Rate/PGA changes. The average retail rate per therm for the year ended December 31, 2013, increased 2.3% compared to the same period in 2012, reflecting higher natural gas commodity costs. MGE recovers the cost of natural gas in its gas segment through the PGA. Under the PGA, MGE is able to pass through to its gas customers the cost of gas. Changes in PGA recoveries affect revenues, but do not impact net income.

Cost of gas sold

For the year ended December 31, 2013, cost of gas sold increased by $29.2 million, compared to the same period in the prior year. The volume of purchased gas increased 27.4%, which resulted in $21.4 million of increased expense. In addition, the cost per therm of natural gas increased 7.8%, which resulted in $7.8 million of increased expense.

Gas operating and maintenance expenses

Gas operating and maintenance expenses decreased $2.7 million for the year ended December 31, 2013, compared to the same period in 2012. The following changes contributed to the net change.

(In millions)
Decreased administrative and general costs	$	(2.0)
Decreased customer service costs		(1.3)
Increased distribution costs		0.4
Increased customer accounts costs		0.2
Total	$	(2.7)

For the year ended December 31, 2013, decreased administrative and general costs were primarily due to decreased pension costs, and decreased customer service costs were primarily due to lower energy conservation spending.

Other Income (Deductions), Net - MGE Energy and MGE

For the year ended December 31, 2013, other income, net for the electric and gas segments increased by $1.7 million, compared to the same period in the prior year related to AFUDC equity recognized on the Columbia environmental project.

Nonregulated Energy Operations - MGE Energy and MGE

For the years ended December 31, 2013 and 2012, net income at the nonregulated energy operations segment was $20.7 million and $18.1 million, respectively. The nonregulated energy operations are conducted through MGE Energy's subsidiaries: MGE Power Elm Road and MGE Power West Campus, which have been formed to own and lease electric generating capacity to assist MGE.

Results reflect the recovery of force majeure costs associated with the construction of the Elm Road Units. In December 2012, as part of WEPCO's (the operator and primary owner of the Elm Road Units) 2013 Wisconsin rate case, the PSCW determined that 100% of the construction costs for the Elm Road Units were prudently incurred, and approved the recovery in rates of more than 99.5% of the force majeure costs. The recovery of the force majeure costs began in 2013, including a one-time cumulative adjustment pertaining to affected periods prior to the PSCW order. The portion pertaining to prior periods was fully reflected in 2013 results.

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Transmission Investment Operations - MGE Energy and MGE

Transmission investment other income

For the years ended December 31, 2013 and 2012, other income at the transmission investment segment was $9.4 million and $9.1 million, respectively. The transmission investment segment holds our interest in ATC, and its income reflects our equity in the earnings of ATC. See Footnote 4.b. of the Notes to Consolidated Financial Statements for additional information concerning ATC and summarized financial information regarding ATC.

Consolidated Income Taxes - MGE Energy and MGE

Both MGE Energy's and MGE's effective income tax rate for the years ended December 31, 2013 and 2012, was 37.5% and 37.7%, respectively.

For 2011 tax return purposes, MGE Energy and MGE changed their income tax method of accounting for electric transmission and distribution repairs and accounting for depreciation. The 2012 financial statement impact pertaining to finalization of the electric transmission and distribution repairs is an increase to deferred tax expense and a corresponding decrease in the current tax provision in the amount of $4.8 million. The 2012 financial statement impact pertaining to finalization of the depreciation adjustment is an increase to deferred tax expense and a corresponding decrease in the current tax provision in the amount of $38.6 million.

Noncontrolling Interest, Net of Tax - MGE

The noncontrolling interest, net of tax, reflects the accounting required for MGE Energy's interest in MGE Power Elm Road (the Elm Road Units) and MGE Power West Campus (WCCF). MGE Energy owns 100% of MGE Power Elm Road and MGE Power West Campus; however, due to the contractual agreements for these projects with MGE, the entities are considered VIEs and their results are consolidated with those of MGE, the primary beneficiary of the VIEs. Also included in noncontrolling interest, net of tax, is MGE Energy's interest in MGE Transco, which holds our investment in ATC. The following table shows MGE Energy's noncontrolling interest, net of tax, reflected on MGE's consolidated statement of income:

		Year Ended December 31,
(In millions)		2013		2012
MGE Power Elm Road	$	17.4	$	14.8
MGE Power West Campus	$	7.7	$	7.5
MGE Transco	$	2.4	$	2.1

Liquidity and Capital Resources

MGE Energy and MGE have adequate liquidity to fund future operations and capital expenditures. Available resources include cash and cash equivalents, operating cash flows, liquid assets, borrowing capacity under revolving credit facilities, and access to equity and debt capital markets.

Cash Flows

The following summarizes cash flows for MGE Energy and MGE during the years ended 2014, 2013, and 2012:

		MGE Energy						MGE
(In thousands)		2014		2013		2012		2014		2013		2012
Cash provided by/(used for):
Operating activities	$	128,762	$	140,267	$	146,004	$	128,538	$	138,684	$	138,772
Investing activities		(96,158)		(121,922)		(101,353)		(95,597)		(120,597)		(101,083)
Financing activities		(35,662)		4,111		(39,463)		(43,187)		(9,629)		(45,237)

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Cash Provided by Operating Activities

MGE Energy

MGE Energy's consolidated net cash provided by operating activities is derived mainly from the electric and gas operations of its principal subsidiary, MGE.

2014 vs. 2013

Cash provided by operating activities for the year ended December 31, 2014, was $128.8 million, a decrease of $11.5 million when compared to the same period in the prior year, primarily related to increased taxes paid.

MGE Energy's net income increased $5.4 million for the year ended December 31, 2014, when compared to the same period in the prior year.

MGE Energy's federal and state taxes paid increased $12.2 million during the year ended December 31, 2014, when compared to the same period in the prior year, primarily due to federal tax payments made in 2014. In December 2014, bonus depreciation was extended for the current year. Tax payments were made earlier in the year before the additional depreciation deduction was known. In 2013, the NOL from a prior year was fully utilized.

Working capital accounts (excluding prepaid and accrued taxes) resulted in $14.8 million in cash used for operating activities for the year ended December 31, 2014, primarily due to increased gas inventories, increased other current assets, and decreased current liabilities, partially offset by increased accounts payable. The decrease in current liabilities includes a fuel credit of $6.5 million that customers received on their bill in October 2014 related to the 2013 fuel savings. Working capital accounts (excluding prepaid and accrued taxes) resulted in $4.5 million in cash provided by operating activities for the year ended December 31, 2013, primarily due to increased other current liabilities, decreased gas inventories, and decreased receivable – margin account, partially offset by increased receivables and increased unbilled revenues.

A decrease in pension contribution resulted in an additional $31.4 million in cash provided by operating activities for the year ended December 31, 2014, when compared to the same period in the prior year. Pension contributions reflect amounts required by law and discretionary amounts. See Footnote 13 of Notes to Consolidated Financial Statements for further discussion of MGE's pension and other postretirement benefits.

For the year ended December 31, 2013, MGE paid a make-whole premium equal to $6.8 million related to the redemption of $40 million of long-term debt.

2013 vs. 2012

Cash provided by operating activities for the year ended December 31, 2013, was $140.3 million, a decrease of $5.7 million when compared to the same period in the prior year, primarily related to the debt make-whole premium paid in 2013.

MGE Energy's net income increased $10.5 million for the year ended December 31, 2013, when compared to the same period in the prior year.

Working capital accounts (excluding prepaid and accrued taxes) resulted in $4.5 million in cash provided by operating activities for the year ended December 31, 2013, primarily due to increased other current liabilities, decreased gas inventories, and decreased receivable – margin account, partially offset by increased receivables and increased unbilled revenues. Working capital accounts (excluding prepaid and accrued taxes) resulted in $3.4 million in cash used for operating activities for the year ended December 31, 2012, primarily due to increased accounts receivable and increased unbilled revenues, partially offset by a decreased receivable – margin account and decreased gas inventories.

An increase in pension contribution resulted in an additional $5.9 million in cash used for operating activities for the year ended December 31, 2013, when compared to the same period in the prior year. These contributions reflect amounts required by law and discretionary amounts. See Footnote 13 of Notes to Consolidated Financial Statements for further discussion of MGE Energy's pension and other postretirement benefits.

For the year ended December 31, 2013, MGE paid a make-whole premium equal to $6.8 million related to the redemption of $40 million of long-term debt.

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MGE

2014 vs. 2013

Cash provided by operating activities for the year ended December 31, 2014, was $128.5 million, a decrease of $10.1 million when compared to the same period in the prior year, primarily related to increased taxes paid.

Net income increased $5.5 million for the year ended December 31, 2014, when compared to the same period in the prior year.

MGE's federal and state taxes paid increased $13.8 million during the year ended December 31, 2014, when compared to the same period in the prior year, primarily due to federal tax payments made in 2014. In December 2014, bonus depreciation was extended for the current year. Tax payments were made earlier in the year before the additional depreciation deduction was known. In 2013, the NOL from a prior year was fully utilized.

Working capital accounts (excluding prepaid and accrued taxes) resulted in $20.9 million in cash used for operating activities for the year ended December 31, 2014, primarily due to increased gas inventories, increased receivables, and decreased current liabilities, partially offset by increased accounts payable. The decrease in current liabilities includes a fuel credit of $6.5 million that customers received on their bill in October 2014 related to the 2013 fuel savings. Working capital accounts (excluding prepaid and accrued taxes) resulted in $2.0 million in cash provided by operating activities for the year ended December 31, 2013, primarily due to increased other current liabilities, decreased gas inventories, and decreased receivable – margin account, partially offset by increased receivables and increased unbilled revenues.

A decrease in pension contribution resulted in an additional $31.4 million in cash provided by operating activities for the year ended December 31, 2014, when compared to the same period in the prior year. These contributions reflect amounts required by law and discretionary amounts. See Footnote 13 of Notes to Consolidated Financial Statements for further discussion of MGE's pension and other postretirement benefits.

For the year ended December 31, 2013, MGE paid a make-whole premium equal to $6.8 million related to the redemption of $40 million of long-term debt.

2013 vs. 2012

Cash provided by operating activities for the year ended December 31, 2013, was $138.7 million, a decrease of $0.1 million when compared to the same period in the prior year, primarily related to the debt make-whole premium paid in 2013.

Net income increased $11.1 million for the year ended December 31, 2013, when compared to the same period in the prior year.

Working capital accounts (excluding prepaid and accrued taxes) resulted in $2.0 million in cash provided by operating activities for the year ended December 31, 2013, primarily due to primarily due to increased other current liabilities, decreased gas inventories, and decreased receivable – margin account, partially offset by increased receivables and increased unbilled revenues. Working capital accounts (excluding prepaid and accrued taxes) resulted in $6.7 million in cash used for operating activities for the year ended December 31, 2012, primarily due to increased accounts receivable, increased unbilled revenues, and decreased accounts payable, partially offset by decreased receivable – margin account and decreased gas inventories.

An increase in pension contribution resulted in an additional $5.9 million in cash used for operating activities for the year ended December 31, 2013, when compared to the same period in the prior year. These contributions reflect amounts required by law and discretionary amounts. See Footnote 13 of Notes to Consolidated Financial Statements for further discussion of MGE's pension and other postretirement benefits.

For the year ended December 31, 2013, MGE paid a make-whole premium equal to $6.8 million related to the redemption of $40 million of long-term debt.

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Capital Requirements and Investing Activities

MGE Energy

2014 vs. 2013

MGE Energy's cash used for investing activities decreased $25.8 million for the year ended December 31, 2014, when compared to the same period in the prior year.

Capital expenditures for the year ended December 31, 2014, were $92.7 million. This amount represents a decrease of $26.4 million from the expenditures made in the same period in the prior year. The decrease primarily reflects $45.0 million of lower expenditures on the Columbia environmental project in 2014 versus 2013, offset by increased expenditures in electric and gas distribution assets.

2013 vs. 2012

MGE Energy's cash used for investing activities increased $20.6 million for the year ended December 31, 2013, when compared to the same period in the prior year.

Capital expenditures for the year ended December 31, 2013, were $119.0 million. This amount represents a $20.6 million increase from the expenditures made in the same period in the prior year. This increase is due to increased expenditures on the Columbia environmental project.

MGE

2014 vs. 2013

MGE's cash used for investing activities decreased $25.0 million for the year ended December 31, 2014, when compared to the same period in the prior year.

Capital expenditures for the year ended December 31, 2014, were $92.7 million. This amount represents a decrease of $26.4 million from the expenditures made in the same period in the prior year. The decrease primarily reflects $45.0 million of lower expenditures on the Columbia environmental project in 2014 versus 2013, offset by increased expenditures in electric and gas distribution assets.

2013 vs. 2012

MGE's cash used for investing activities increased $19.5 million for the year ended December 31, 2013, when compared to the same period in the prior year.

Capital expenditures for the year ended December 31, 2013, were $119.0 million. This amount represents a $20.6 million increase from the expenditures made in the same period in the prior year. This increase is due to increased expenditures on the Columbia environmental project.

Capital expenditures

The following table shows MGE Energy's budgeted capital expenditures for 2015 and actual capital expenditures for both 2014 and 2013:

(In thousands)		2015		2014		2013
For the years ended December 31,		(Budget)		(Actual)		(Actual)
Electric	$	61,615	$	68,067	$	100,146
Gas		21,885		22,104		15,554
Utility plant total		83,500		90,171		115,700
Nonregulated		3,150		2,505		3,347
MGE Energy total	$	86,650	$	92,676	$	119,047

In early 2011, the PSCW authorized the construction of air emission reduction systems and associated equipment on Columbia Units 1 and 2. For the year ended December 31, 2014, MGE had incurred $16.2 million (excluding carrying costs) in construction expenditures at Columbia related to the project.

39

MGE Energy used funds received as dividend payments from MGE Power West Campus and MGE Power Elm Road, internally generated cash, and short-term external financing to meet its 2014 capital requirements and cash obligations, including dividend payments. External financing included short-term financing under existing lines of credit.

Financing Activities

MGE Energy

2014 vs. 2013

Cash used for MGE Energy's financing activities was $35.7 million for the year ended December 31, 2014, compared to $4.1 million of cash provided by the year ended December 31, 2013.

For the year ended December 31, 2014, dividends paid were $38.4 million compared to $37.1 million in the prior year. This increase was a result of a higher dividend per share ($1.11 vs. $1.07).

During the year ended December 31, 2013, MGE issued $85.0 million of long-term debt, which was used to retire $40.0 million of long-term debt and to assist with the funding for the Columbia environmental project.

For the year ended December 31, 2014, short-term borrowings were $7.0 million.

2013 vs. 2012

Cash provided by MGE Energy's financing activities was $4.1 million for the year ended December 31, 2013, compared to $39.5 million of cash used for the year ended December 31, 2012.

For the year ended December 31, 2013, dividends paid were $37.1 million compared to $36.0 million in the prior year. This increase was a result of a higher dividend per share ($1.07 vs. $1.04).

During the year ended December 31, 2013, MGE issued $85.0 million of long-term debt, which was used to retire $40.0 million of long-term debt and to assist with the funding for the Columbia environmental project. During the year ended December 31, 2012, MGE issued and retired $28.0 million of long-term debt.

MGE

2014 vs. 2013

During the year ended December 31, 2014, cash used for MGE's financing activities was $43.2 million compared to $9.6 million of cash used for MGE's financing activities in the prior year.

Dividends paid from MGE to MGE Energy were $26.5 million for the year ended December 31, 2014, compared to $25.0 million in the prior year.  

During the year ended December 31, 2013, MGE issued $85.0 million of long-term debt, which was used to retire $40.0 million of long-term debt and to assist with the funding for the Columbia environmental project.

Distributions to parent from noncontrolling interest, which represent distributions from MGE Power Elm Road and MGE Power West Campus, were $21.4 million for the year ended December 31, 2014, compared to $27.4 million in the prior year.

For the year ended December 31, 2014, short-term borrowings were $7.0 million.

2013 vs. 2012

During the year ended December 31, 2013, cash used for MGE's financing activities was $9.6 million compared to $45.2 million of cash used for MGE's financing activities in the prior year.

Dividends paid from MGE to MGE Energy were $25.0 million for the year ended December 31, 2013, compared to $20.4 million in the prior year.

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During the year ended December 31, 2013, MGE issued $85.0 million of long-term debt, which was used to retire $40.0 million of long-term debt and to assist with the funding for the Columbia environmental project. During the year ended December 31, 2012, MGE issued and retired $28.0 million of long-term debt.

Distributions to parent from noncontrolling interest, which represent distributions from MGE Power Elm Road and MGE Power West Campus, were $27.4 million for the year ended December 31, 2013, compared to $23.5 million in the prior year.

Dividend Restrictions

Dividend payments by MGE to MGE Energy are subject to restrictions arising under a PSCW rate order and, to a lesser degree, MGE's first mortgage bonds. The PSCW order restricts any dividends that MGE may pay MGE Energy if its common equity ratio, calculated in the manner used in the rate proceeding, is less than 55%. MGE's thirteen month rolling average common equity ratio at December 31, 2014, is 56.9% as determined under the calculation used in the rate proceeding. MGE was not restricted from paying cash dividends in 2014. Cash dividends of $26.5 million and $25.0 million were paid by MGE to MGE Energy in 2014 and 2013, respectively. The rate proceeding calculation includes as indebtedness imputed amounts for MGE's outstanding purchase power capacity payments and other PSCW adjustments, but does not include the indebtedness associated with MGE Power Elm Road and MGE Power West Campus, which are consolidated into MGE's financial statements but are not direct obligations of MGE.

MGE has covenanted with the holders of its first mortgage bonds not to declare or pay any dividend or make any other distribution on or purchase any shares of its common stock unless, after giving effect thereto, the aggregate amount of all such dividends and distributions and all amounts applied to such purchases, after December 31, 1945, shall not exceed the earned surplus (retained earnings) accumulated subsequent to December 31, 1945. As of December 31, 2014, approximately $334.8 million was available for the payment of dividends under this covenant.

Credit Facilities

At December 31, 2014, MGE Energy and MGE had the following aggregate bank commitments and available capacity under their credit agreements and the indicated amounts of outstanding commercial paper:

Borrower		Aggregate Bank Commitments		Outstanding Commercial Paper		Outstanding Borrowings		Available Capacity	Expiration Date
		(Dollars in millions)
MGE Energy	$	50.0	$	-	$	-	$	50.0	July 31, 2017
MGE	$	100.0	$	7.0	$	-	$	93.0	July 31, 2017

Borrowings under each credit agreement may bear interest at a rate that floats daily based upon a prime rate or at a rate fixed for a specified interest period based upon a LIBOR-based index, plus an adder. In the case of the LIBOR-based rates, the adder is based upon the senior unsecured credit rating for MGE and does not exceed 0.75%.

The agreements require the borrower to maintain a ratio of consolidated debt to consolidated total capitalization not to exceed a maximum of 65%. The ratio calculation excludes assets, liabilities, revenues, and expenses included in MGE's financial statements as a result of the consolidation of VIEs, such as MGE Power Elm Road and MGE Power West Campus. At December 31, 2014, the ratio of consolidated debt to consolidated total capitalization for each of MGE Energy and MGE, as calculated under the credit agreements' covenant, were 38.1% and 37.4%, respectively. See Footnote 10 of Notes to Consolidated Financial Statements for additional information regarding the credit facilities.

Capitalization Ratios

MGE Energy's capitalization ratios were as follows:

	MGE Energy
	2014	2013
Common shareholders' equity	61.9 %	60.5 %
Long-term debt*	37.5 %	39.5 %
Short-term debt	0.6 %	- %
*Includes the current portion of long-term debt.

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Credit Ratings

MGE Energy's and MGE's access to the capital markets, including, in the case of MGE, the commercial paper market, and their respective financing costs in those markets, may depend on the credit ratings of the entity that is accessing the capital markets.

None of MGE Energy's or MGE's borrowing is subject to default or prepayment as a result of a downgrading of credit ratings, although a downgrading of MGE's credit ratings could increase fees and interest charges under both MGE Energy's and MGE's credit agreements.

Contractual Obligations and Commercial Commitments for MGE Energy and MGE

MGE Energy's and MGE's contractual obligations as of December 31, 2014, representing cash obligations that are considered to be firm commitments, are as follows:

				Payment due within:						Due after
(In thousands)		Total		1 Year		2-3 Years		4-5 Years		5 Years
MGE Energy
Long-term debt(a)	$	399,690	$	4,182	$	38,626	$	29,005	$	327,877
Short-term debt(b)		7,000		7,000		-		-		-
Interest expense(c)		297,169		19,611		37,053		33,052		207,453
Operating leases(d)		12,386		1,553		2,218		677		7,938
Purchase obligations(e)		509,989		122,841		142,237		99,188		145,723
Other obligations(f)		15,202		3,652		3,538		1,488		6,524
Total MGE Energy contractual obligations	$	1,241,436	$	158,839	$	223,672	$	163,410	$	695,515
MGE
Long-term debt(a)	$	399,690	$	4,182	$	38,626	$	29,005	$	327,877
Short-term debt(b)		7,000		7,000		-		-		-
Interest expense(c)		297,169		19,611		37,053		33,052		207,453
Operating leases(d)		12,386		1,553		2,218		677		7,938
Purchase obligations(e)		509,989		122,841		142,237		99,188		145,723
Other obligations(f)		13,553		2,003		3,538		1,488		6,524
Total MGE contractual obligations	$	1,239,787	$	157,190	$	223,672	$	163,410	$	695,515

(a)

Long-term debt consisting of secured first mortgage bonds, unsecured medium-term notes, Industrial Development Revenue Bonds issued by MGE, and private placement debt issued by MGE, MGE Power Elm Road, and MGE Power West Campus.

(b)

Short-term debt consisting of commercial paper for MGE. See Footnote 10 of the Notes to Consolidated Financial Statements.

(c)

Amount represents interest expense on long-term debt. See Footnote 9 of the Notes to Consolidated Financial Statements for further discussion of the long-term debt outstanding at December 31, 2014.

(d)

Operating leases. See Footnote 18.c. of the Notes to Consolidated Financial Statements.

(e)

Purchase obligations for MGE Energy and MGE consist primarily of the purchase of electricity and natural gas, electric transmission, natural gas storage capacity, natural gas pipeline transportation, and the purchase and transport of coal. See Footnote 18.a. of the Notes to Consolidated Financial Statements.

(f)

Other obligations are primarily related to investment commitments, easements, green energy projects, environmental projects, fuel credit, and uncertain tax positions.

The above amounts do not include any contributions for MGE's pension and postretirement plans. Contributions to the qualified plans for 2015 are expected to be $10 million, which was paid in January 2015. MGE does not expect to make contributions to the plans for 2016. The contributions for years after 2016 are not yet currently estimated. Due to uncertainties in the future economic performance of plan assets, discount rates, and other key assumptions, estimated contributions are subject to change. MGE may also elect to make additional discretionary contributions. These contributions reflect amounts required by law and discretionary amounts.

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The above amounts do not include future voluntary capital calls to ATC. On January 30, 2015, MGE Transco made a voluntary $0.2 million capital contribution to ATC. The amount and timing of future voluntary capital calls is uncertain and primarily dependent on the operations and expansion of ATC.

MGE Energy's and MGE's commercial commitments as of December 31, 2014, representing commitments triggered by future events and including financing arrangements to secure obligations of MGE Energy and MGE, and guarantees by MGE, are as follows:

				Expiration within:						Due after
(In thousands)		Total		1 Year		2-3 Years		4-5 Years		5 Years
MGE Energy
Available Lines of Credit(a)	$	150,000	$	-	$	150,000	$	-	$	-
Guarantees(b)		4,416		906		1,366		830		1,314
MGE
Available Lines of Credit(c)	$	100,000	$	-	$	100,000	$	-	$	-
Guarantees(b)		4,416		906		1,366		830		1,314

(a)

Amount includes the facility discussed in (c) plus an additional line of credit. MGE Energy has available at any time a $50 million committed revolving credit agreement, expiring in July 2017. At December 31, 2014, MGE Energy had no borrowings under this credit facility; however, there was $7.0 million of commercial paper outstanding.

(b)

MGE has guaranteed repayment of certain receivables it sold to a financial institution under a chattel paper agreement. See Footnote 18.b. of the Notes to Consolidated Financial Statements.

(c)

Amount includes a $100 million committed revolving credit agreement expiring in July 2017. This credit facility is used to support commercial paper issuances. At December 31, 2014, no borrowings were outstanding under this facility.

Other Matters

Elm Road

During 2013, WEPCO and Bechtel (the construction contractor for the Elm Road Units) were working through the outstanding warranty claims. The warranty claim for the costs incurred to repair steam turbine corrosion damage identified on both units was resolved through a binding arbitration in June 2013. Final acceptance of the Elm Road Units occurred in June 2013 after all requirements stated in the contract with Bechtel were satisfied. All warranty claims between WEPCO and Bechtel have now been resolved, none of which had a material impact on our financial statements.

ATC

Several parties have filed a complaint with FERC seeking to reduce the base return on equity (ROE) of MISO and numerous other MISO transmission owners, including ATC, "due to changes in the capital markets." The complaint alleges that the MISO ROE should not exceed 9.15%, the equity components of hypothetical capital structures should be restricted to 50%, and the relevant incentive ROE adders should be discontinued. FERC denied the portion of the complaint seeking to restrict the use of capital structures that include more than 50% common equity and also denied the portion of the complaint requesting the termination of the incentive ROE adders used by certain transmission owners. MISO's base ROE is 12.38% and ATC's base ROE is 12.2%. FERC ordered formal hearing proceedings to begin, and an initial decision in the complaint is expected by November 30, 2015. ATC provided MGE its 2014 earnings reflecting an adjustment for this matter representing ATC's estimate of its refund liability for the period of November 2013 through December 2014. We derived approximately 6.7% of our net income for the year ended December 31, 2014, from our investment in ATC.

Joint Venture

MGE Energy has entered into a joint venture with Wisconsin Energy Corporation to evaluate the advisability and feasibility of potentially bidding on generating assets owned by the State of Wisconsin, which might include the University of Wisconsin's interest in the WCCF, which the Company co-owns and operates.

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Should the State determine that the assets be sold, the joint venture would decide on a case-by-case basis whether to submit a bid. If the bid is successful, the joint venture would finance the acquisition and would own and manage the acquired assets. If those acquired assets include the State's interest in the WCCF, MGE would continue to operate the WCCF as it does currently.

Critical Accounting Estimates - MGE Energy and MGE

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to unbilled revenues, allowance for doubtful accounts, pension obligations, income taxes, derivatives, and regulatory assets and liabilities. We base our estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Those values may differ from these estimates under different assumptions or conditions. We believe the following critical accounting estimates affect our more significant judgments used in the preparation of our consolidated financial statements.

Unbilled Revenues

Revenues from the sale of electricity and gas to customers are recorded when electricity/gas is delivered to those customers. The quantity of those sales is measured by customers' meters. Due to the large volume of those meters, it is impractical to read all of them at month end. Meters are read on a systematic basis throughout the month based on established meter-reading schedules. Consequently, at the end of any month, there exists a quantity of electricity and gas that has been delivered to customers but has not been captured by the meter readings. As a result, management must estimate revenue related to electricity and gas delivered to customers between their meter-read dates and the end of the period. These estimates include:

·

The amount of electricity expected to be lost in the process of its transmission and distribution to customers (line loss) and the amount of electricity actually delivered to customers.

·

The amount of gas expected to be lost in the process of its distribution to customers and the amount of gas actually delivered to customers.

·

The mix of sales between customer rate classes, which is based upon historical utilization assumptions.

MGE monitors the reasonableness of the unbilled revenue estimate through the review of ratios such as unbilled electric consumption compared to billed electric sales. In the case of unbilled gas, the estimated unbilled consumption is compared to various other statistics, including percent of gas available for sale, change in unbilled month to month and change in unbilled compared to the prior year in order to confirm its reasonableness.

Allowance for Doubtful Accounts

MGE maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. It determines the allowance based on historical write-off experience, regional economic data, and review of the accounts receivable aging. MGE reviews its allowance for doubtful accounts monthly. Although management believes that the allowance for doubtful accounts is MGE's best estimate of the amount of probable credit losses, if the financial condition of MGE's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Pension and Other Postretirement Benefit Plans

MGE provides employees with certain retirement (pension) and postretirement (health care and life insurance) benefits. In order to measure the expense and obligations associated with these benefits, management must make a variety of estimates, including discount rates used to value certain liabilities, the expected return on plan assets set aside to fund these costs, the rate of compensation increase, employee turnover rates, retirement rates, health care trends, mortality rates, and other factors. These accounting estimates bear the risk of change due to the uncertainty attached to the estimate as well as the fact that these estimates are difficult to measure. Different estimates used by us could result in recognizing different amounts of expense over different periods of time and recovery in rates is expected.

44

We use third-party specialists to assist us in evaluating our assumptions as well as appropriately measure the costs and obligations associated with these retirement benefits. The discount rate and expected return on plan assets are based primarily on available investment yields and the historical performance of our plan assets. They are critical accounting estimates because they are subject to management's judgment and can materially affect net income.

·

Assumed return on assets. This assumption represents the rate of return on plan assets reflecting the average rate of earnings expected on the funds invested (or to be invested) to provide for the benefits included in the projected benefit obligation. For 2014, MGE used an assumed return on assets of 8.10% for pension and 7.07% for other postretirement benefits. In 2015, the pension asset assumption will decrease from 8.10% to 7.80%. MGE will decrease the postretirement benefit assumption from 7.07% to 7.01% in 2015. The annual expected rate of return is based on projected long-term equity and bond returns, maturities and asset allocations. Holding other assumptions constant, for every 1% reduction in the expected rate of return on plan assets, annual pension and other postretirement cost would increase by approximately $3.1 million, before taxes.

·

Discount rate. The discount rate represents the rate at which pension obligations could effectively be settled on a present-value basis. MGE uses high-grade bond yields as a benchmark for determining the appropriate discount rate.

·

Medical trend assumptions. The health care cost trend rate is the assumed rate of increase in per-capita health care charges.

·

Mortality rate assumption. Expected mortality rates are used in the valuation to determine the expected duration of future benefit payments to the plan participants. In October 2014, the Society of Actuaries released new mortality tables and projection scales. At December 31, 2014, the Company adopted a modified version of these tables that were developed by a third party actuary.

See Footnote 13 of the Notes to Consolidated Financial Statements for additional discussion of these plans.

Income Tax Provision

MGE Energy's and MGE's income tax provisions, including both current and deferred components, are based on estimates, assumptions, calculations, and interpretation of tax statutes for the current and future years. Determination of current-year federal and state income tax will not be settled for years.

Management regularly makes assessments of tax return outcomes relative to financial statement tax provisions and adjusts the tax provisions in the period when facts become final.

Additionally, in determining our current income tax provision we assess temporary differences resulting from differing treatments of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are recorded in our balance sheets. When we maintain deferred tax assets, we assess the likelihood that these assets will be recovered through adjustments to future taxable income. To the extent we believe recovery is not more likely than not, we establish a valuation allowance. We record an allowance reducing the asset to a value we believe will be recoverable based on our expectation of future taxable income. We believe the accounting estimate related to the valuation allowance is a critical accounting estimate because it is highly susceptible to change from period to period as it requires management to make assumptions about our future income over the lives of the deferred tax assets, and the impact of increasing or decreasing the valuation allowance is potentially material to our results of operations.

Accounting for uncertainty in income taxes applies to all tax positions and requires a recognition threshold and measurement standard for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in an income tax return. The threshold is defined for recognizing tax return positions in the financial statements as "more likely than not" that the position is sustainable, based on its merits. Subsequent recognition, derecognition, and measurement is based on management's best judgment given the facts, circumstances and information available at the reporting date.

Accounting for Derivative Instruments

MGE accounts for derivative financial instruments, except those qualifying for the normal purchase normal sale exception, at their fair value on the balance sheet. Fair value is determined using current quoted market prices, except for the ten-year PPA which is valued utilizing an internally-developed pricing model. This model includes observable and unobservable inputs.

45

MGE received approval from the PSCW to establish a regulatory asset or liability for the deferral of the effects of mark-to-market accounting on contracts related to MGE's regulated operations.

Regulatory Assets/Liabilities

Regulatory assets represent costs that have been deferred to future periods when it is probable that the regulator will allow future recovery of those costs through rates. MGE bases its assessment of recovery on precedents established by the regulatory body. Regulatory liabilities represent previous collections from customers that are expected to be refunded to customers in future periods. Regulatory assets and regulatory liabilities typically include deferral of energy costs, the normalization of income taxes, the deferral of certain operating expenses, and non-ARO removal costs. The accounting for these regulatory assets and liabilities is in accordance with regulatory accounting standards.

MGE continually assesses whether the regulatory assets and liabilities meet the criteria for probability of future recovery or deferral. This assessment considers factors such as changes in the regulatory environment, recent rate orders to other regulated entities under the same jurisdiction, and the status of any pending or potential deregulation legislation. If future recovery of costs becomes no longer probable, the assets and liabilities would be recognized as current-period revenues or expenses.

Amortization of regulatory assets and liabilities is provided over the recovery or deferral period as allowed in the related regulatory agreement.

Adoption of Accounting Principles and Recently Issued Accounting Pronouncements - MGE Energy and MGE

See Footnote 21 of the Notes to Consolidated Financial Statements for discussion of new accounting pronouncements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

MGE Energy and MGE are potentially exposed to market risk associated with interest rates, commodity prices, and equity returns. MGE currently has no exposure to foreign currency risk. MGE manages some risk exposure through risk management policies and the use of derivative instruments. MGE's risk management policy prohibits speculative trading transactions.

Commodity Price Risk

MGE has commodity price risk exposure with respect to the price of natural gas, electricity, coal, emission credits, and oil. MGE's electric operations burn natural gas in several of its peaking power plants and, in many cases, the cost of purchased power is tied to the cost of natural gas. MGE employs established policies and procedures to reduce the market risks associated with changing commodity prices. MGE's commodity risks are somewhat mitigated by the current ratemaking process in place for recovering electric fuel cost, purchased energy costs, and the cost of natural gas.

MGE's electric fuel costs are subject to fuel rules established by the PSCW. The fuel rules require the PSCW and Wisconsin utilities to defer electric fuel-related costs that fall outside a symmetrical cost tolerance band. Any over/under recovery of the actual costs is determined on an annual basis and is adjusted in future billings to electric retail customers. Under the electric fuel rules, MGE is required to defer the benefit of lower costs if the actual electric fuel costs fall outside the lower end of the range and is required to defer costs, less any excess revenues, if the actual electric fuel costs exceed the upper end of the range. Excess revenues are defined as revenues in the year in question that provide MGE with a greater return on common equity than authorized by the PSCW in MGE's latest rate order. The range is defined by the PSCW and has been modified throughout the years based on market conditions and other relevant factors. Currently, MGE is subject to a plus or minus 2% range. MGE assumes the risks and benefits of variances that are within the cost tolerance band. For 2015, fuel and purchased power costs included in MGE's base fuel rates are $123.0 million. See Footnote 17 of the Notes to Consolidated Financial Statements for additional information.

MGE recovers the cost of natural gas in its gas segment through the purchased gas adjustment clause (PGA). Under the PGA, MGE is able to pass through to its gas customers the cost of gas.

MGE also reduces price risk caused by market fluctuations via physical contracts and financial derivative contracts, including futures, swaps, options, forwards, and other contractual commitments. The maximum length of time over which cash flows related to energy commodities can be hedged under applicable PSCW approvals is four years.

46

MGE has financial gas and electric commodity contracts to hedge commodity price risk in the gas and electric segments. These contracts are primarily comprised of exchange-traded option and future contracts. MGE also holds FTRs, which are used to hedge the risk of increased transmission congestion charges. At December 31, 2014, the cost basis of these instruments exceeded their fair value by $1.6 million. Under the PGA clause and electric fuel rules, MGE may include in the costs of fuel (natural gas or power) the costs and benefits of the aforementioned fuel price risk management tools. Because these costs/benefits are recoverable, the related unrealized loss/gain has been deferred on the consolidated balance sheet as a regulatory asset/liability.

MGE has also entered into a ten-year purchased power agreement that provides MGE with firm capacity and energy that began on June 1, 2012, and ends on May 31, 2022 (the "base term"). The agreement also allows MGE an option to extend the contract after the base term. The agreement is considered a derivative contract and is recognized at its fair value on the consolidated balance sheet. However, the derivative qualifies for regulatory deferral and is recognized with a corresponding regulatory asset or liability depending on whether the fair value is in a loss or gain position. The fair value of the contract at December 31, 2014, reflects a loss position of $53.4 million.

Interest Rate Risk

Both MGE Energy and MGE may have short-term borrowings at varying interest rates. MGE issues commercial paper for its short-term borrowings, while MGE Energy draws from its current credit facility to meet its short-term borrowing needs. Borrowing levels vary from period to period depending upon capital investments and other factors. Future short-term interest expense and payments will reflect both future short-term interest rates and borrowing levels. MGE Energy and MGE manage interest rate risk by limiting their variable rate exposure and continually monitoring the effects of market changes on interest rates. MGE is not exposed to changes in interest rates on a substantial portion of its long-term debt until that debt matures and is refinanced at market rates. Assuming the current level of variable rate borrowings and assuming a 1% change in the 2014 average interest rate under these borrowings, it is estimated that our 2014 interest expense and net income would have changed less than $0.1 million for both MGE Energy and MGE.

Equity Price Risk - Pension-Related Assets

MGE currently funds its liabilities related to employee benefits through trust funds. These funds, which include investments in debt and equity securities, are managed by various investment managers. Changes in market value of these investments can have an impact on the future expenses related to these liabilities. Holding other assumptions constant, for every 1% reduction in the expected rate of return on plan assets, annual pension and other postretirement cost would increase by approximately $3.1 million, before taxes. MGE's risk of expense and annuity payments, as a result of changes in the market value of the trust funds, is mitigated in part through future rate actions by the PSCW. The value of employee benefit plans trusts' assets have increased in value by approximately 8.04% during the year ended December 31, 2014, and 19.4% during the year ended December 31, 2013.

Credit Risk - Counterparty

Credit risk is the loss that may result from counterparty nonperformance. MGE is exposed to credit risk primarily through its merchant energy business. MGE uses credit policies to manage its credit risk, which include utilizing an established credit approval process, monitoring counterparty limits, employing credit mitigation measures such as collateral or prepayment arrangements, and using netting agreements.

Due to the possibility of extreme volatility in the prices of energy commodities and derivatives, the market value of contractual positions with individual counterparties could exceed established credit limits or collateral provided by those counterparties. If such a counterparty were then to fail to perform its obligations under its contract (for example, fail to deliver the electricity MGE originally contracted for), MGE could sustain a loss that could have a material impact on its financial results.

Additionally, if a counterparty were to default and MGE were to liquidate all contracts with that entity, MGE's credit loss would include the loss in value of mark-to-market contracts; the amount owed for settled transactions; and additional payments, if any, to settle unrealized losses on accrual contracts. As of December 31, 2014, no counterparties have defaulted.

MGE is obligated to provide service to all electric and gas customers within its respective franchised territories. MGE's franchised electric territory includes a 316 square-mile area in Dane County, Wisconsin, and MGE's franchised gas territory includes a service area covering 1,649 square miles in Wisconsin. Based on results for the year ended December 31, 2014, no one customer constituted more than 10% of total operating revenues for MGE Energy and

47

MGE. Credit risk for electric and gas is managed by MGE's credit and collection policies, which are consistent with state regulatory requirements.

Cash, cash equivalents, and customer accounts receivable are the financial instruments that potentially subject MGE Energy and MGE to concentrations of credit risk. MGE Energy and MGE place their cash and cash equivalents with high credit-quality financial institutions. MGE has limited concentrations of credit risk from customer accounts receivable because of the large number of customers and relatively strong economy in its service territory.

48

Item 8. Financial Statements and Supplementary Data.

MGE Energy

Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment under the framework in the Internal Control - Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31, 2014.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The effectiveness of MGE Energy's internal control over financial reporting as of December 31, 2014, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

February 26, 2015

MGE

Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment under the framework in the Internal Control - Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31, 2014.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

February 26, 2015

49

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of MGE Energy, Inc.:

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of MGE Energy, Inc. and its subsidiaries at December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the index appearing under Item 15(a)(2) present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedules, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedules, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

February 26, 2015

50

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholder of Madison Gas and Electric Company:

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Madison Gas and Electric Company and its subsidiaries at December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

February 26, 2015

51

MGE Energy, Inc.

Consolidated Statements of Income

(In thousands, except per share amounts)

		For the years ended December 31,
		2014		2013		2012
Operating Revenues:
Regulated electric revenues	$	394,849	$	403,957	$	392,365
Regulated gas revenues		221,720		181,462		139,727
Nonregulated revenues		3,283		5,468		9,231
Total Operating Revenues		619,852		590,887		541,323
Operating Expenses:
Fuel for electric generation		42,828		46,062		46,499
Purchased power		73,232		80,830		73,842
Cost of gas sold		143,644		107,315		78,156
Other operations and maintenance		161,703		171,248		172,996
Depreciation and amortization		40,695		38,838		38,707
Other general taxes		19,652		18,607		18,360
Total Operating Expenses		481,754		462,900		428,560
Operating Income		138,098		127,987		112,763
Other income, net		10,079		10,701		10,069
Interest expense, net		(19,673)		(18,924)		(19,467)
Income before income taxes		128,504		119,764		103,365
Income tax provision		(48,185)		(44,859)		(38,919)
Net Income	$	80,319	$	74,905	$	64,446
Earnings Per Share of Common Stock
(basic and diluted)	$	2.32	$	2.16	$	1.86
Dividends per share of common stock	$	1.11	$	1.07	$	1.04
Weighted Average Shares Outstanding
(basic and diluted)		34,668		34,668		34,668
The accompanying notes are an integral part of the above consolidated financial statements.

MGE Energy, Inc.

Consolidated Statements of Comprehensive Income

(In thousands)

		For the years ended December 31,
		2014		2013		2012
Net Income	$	80,319	$	74,905	$	64,446
Other comprehensive income, net of tax:
Unrealized gain (loss) on available-for-sale securities, net of
tax (($54), ($189), and $12)		81		283		(18)
Comprehensive Income	$	80,400	$	75,188	$	64,428
The accompanying notes are an integral part of the above consolidated financial statements.

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MGE Energy, Inc.

Consolidated Statements of Cash Flows

(In thousands)

		For the years ended December 31,
		2014		2013		2012
Operating Activities:
Net income	$	80,319	$	74,905	$	64,446
Items not affecting cash:
Depreciation and amortization		40,695		38,838		38,707
Deferred income taxes		49,884		38,365		44,797
Provision for doubtful receivables		1,898		2,448		2,498
Employee benefit plan expenses		(1,080)		13,303		18,353
Equity earnings in ATC		(9,150)		(9,434)		(9,079)
Other items		729		117		1,283
Changes in working capital items:
Trade and other receivables		2,115		(3,827)		(6,208)
Inventories		(10,399)		2,488		1,457
Unbilled revenues		720		(3,720)		(2,508)
Prepaid taxes		(19,804)		414		2,731
Other current assets		(5,693)		2,514		4,093
Accounts payable		2,756		858		(272)
Other current liabilities		(4,195)		6,271		425
Dividend income from ATC		7,740		7,404		7,146
Cash contributions to pension and other postretirement plans		(3,321)		(34,765)		(28,857)
Debt make-whole premium		-		(6,757)		-
Other noncurrent items, net		(4,452)		10,845		6,992
Cash Provided by Operating Activities		128,762		140,267		146,004
Investing Activities:
Capital expenditures		(92,676)		(119,047)		(98,435)
Capital contributions to investments		(2,185)		(1,660)		(2,419)
Purchase of investment - land		-		(10)		(3)
Other		(1,297)		(1,205)		(496)
Cash Used for Investing Activities		(96,158)		(121,922)		(101,353)
Financing Activities:
Cash dividends paid on common stock		(38,429)		(37,107)		(35,951)
Repayment of long-term debt		(4,103)		(43,012)		(30,668)
Issuance of long-term debt		-		85,000		28,000
Increase in short-term debt		7,000		-		-
Other		(130)		(770)		(844)
Cash (Used for) Provided by Financing Activities		(35,662)		4,111		(39,463)
Change in Cash and Cash Equivalents:		(3,058)		22,456		5,188
Cash and cash equivalents at beginning of period		68,813		46,357		41,169
Cash and cash equivalents at end of period	$	65,755	$	68,813	$	46,357
Supplemental disclosures of cash flow information:
Interest paid	$	20,478	$	17,991	$	19,499
Income taxes paid	$	19,579	$	8,046	$	3,544
Income taxes received	$	(644)	$	(1,339)	$	(12,536)
Significant noncash investing activities:
Accrued capital expenditures	$	1,569	$	9,892	$	10,317
The accompanying notes are an integral part of the above consolidated financial statements.

53

MGE Energy, Inc.

Consolidated Balance Sheets

(In thousands)

		At December 31,
ASSETS		2014		2013
Current Assets:
Cash and cash equivalents	$	65,755	$	68,813
Accounts receivable, less reserves of $4,329 and $4,219, respectively		41,614		44,890
Other accounts receivable, less reserves of $420 and $750, respectively		7,610		5,352
Unbilled revenues		31,262		31,982
Materials and supplies, at average cost		17,121		16,662
Fossil fuel		8,098		5,206
Stored natural gas, at average cost		21,036		13,988
Prepaid taxes		38,910		19,106
Regulatory assets - current		8,360		6,377
Deferred income taxes		3,482		-
Other current assets		10,711		8,225
Total Current Assets		253,959		220,601
Other long-term receivables		2,181		2,193
Regulatory assets		156,823		107,166
Pension and other postretirement benefits		-		15,071
Other deferred assets and other		4,837		5,853
Property, Plant, and Equipment:
Property, plant, and equipment, net		1,189,077		1,018,809
Construction work in progress		19,029		141,415
Total Property, Plant, and Equipment		1,208,106		1,160,224
Investments		71,760		67,952
Total Assets	$	1,697,666	$	1,579,060
LIABILITIES AND CAPITALIZATION
Current Liabilities:
Long-term debt due within one year	$	4,182	$	4,102
Short-term debt		7,000		-
Accounts payable		41,655		43,684
Accrued interest and taxes		5,086		5,661
Accrued payroll related items		11,241		10,731
Deferred income taxes		-		1,711
Regulatory liabilities - current		-		13,538
Derivative liabilities		6,901		7,750
Other current liabilities		13,931		9,489
Total Current Liabilities		89,996		96,666
Other Credits:
Deferred income taxes		342,045		284,791
Investment tax credit - deferred		1,223		1,413
Regulatory liabilities		22,715		19,792
Accrued pension and other postretirement benefits		90,201		49,184
Derivative liabilities		46,560		57,930
Other deferred liabilities and other		50,269		52,360
Total Other Credits		553,013		465,470
Capitalization:
Common shareholders' equity:
Common Stock - $1 par value - 75,000 and 50,000 shares, respectively, authorized;
34,668 shares issued and outstanding		34,668		34,668
Additional paid-in capital		316,268		316,268
Retained earnings		308,007		266,197
Accumulated other comprehensive income, net of tax		458		377
Total Common Shareholders' Equity		659,401		617,510
Long-term debt		395,256		399,414
Total Capitalization		1,054,657		1,016,924
Commitments and contingencies (see Footnote 18)		-		-
Total Liabilities and Capitalization	$	1,697,666	$	1,579,060
The accompanying notes are an integral part of the above consolidated financial statements.

54

MGE Energy, Inc.

Consolidated Statements of Common Equity

(In thousands, except per share amounts)

									Accumulated
					Additional				Other
	Common Stock				Paid-in		Retained		Comprehensive
	Shares		Value		Capital		Earnings		(Loss)/Income		Total
2012
Beginning balance - December 31, 2011	34,668	$	34,668	$	316,268	$	199,904	$	112	$	550,952
Net income							64,446				64,446
Other comprehensive loss									(18)		(18)
Common stock dividends declared
($1.04 per share)							(35,951)				(35,951)
Ending balance - December 31, 2012	34,668	$	34,668	$	316,268	$	228,399	$	94	$	579,429
2013
Net income							74,905				74,905
Other comprehensive income									283		283
Common stock dividends declared
($1.07 per share)							(37,107)				(37,107)
Ending balance - December 31, 2013	34,668	$	34,668	$	316,268	$	266,197	$	377	$	617,510
2014
Net income							80,319				80,319
Other comprehensive income									81		81
Common stock dividends declared
($1.11 per share)							(38,429)				(38,429)
Cash in lieu of fractional shares related to stock split							(80)				(80)
Ending balance - December 31, 2014	34,668	$	34,668	$	316,268	$	308,007	$	458	$	659,401
The accompanying notes are an integral part of the above consolidated financial statements.

55

Madison Gas and Electric Company

Consolidated Statements of Income

(In thousands)

		For the years ended December 31,
		2014		2013		2012
Operating Revenues:
Regulated electric revenues	$	394,871	$	403,980	$	392,365
Regulated gas revenues		221,741		181,477		139,727
Nonregulated revenues		3,283		5,468		9,231
Total Operating Revenues		619,895		590,925		541,323
Operating Expenses:
Fuel for electric generation		42,836		46,070		46,499
Purchased power		73,245		80,844		73,842
Cost of gas sold		143,665		107,330		78,156
Other operations and maintenance		160,831		170,498		171,965
Depreciation and amortization		40,648		38,834		38,707
Other general taxes		19,652		18,607		18,360
Income tax provision		45,090		41,519		35,334
Total Operating Expenses		525,967		503,702		462,863
Operating Income		93,928		87,223		78,460
Other Income and Deductions:
AFUDC - equity funds		3,466		3,140		1,731
Equity in earnings in ATC		9,150		9,434		9,079
Income tax provision		(4,055)		(4,303)		(4,101)
Other deductions, net		(704)		(18)		(263)
Total Other Income and Deductions		7,857		8,253		6,446
Income before interest expense		101,785		95,476		84,906
Interest Expense:
Interest on long-term debt		20,927		20,087		20,386
Other interest, net		62		(21)		(82)
AFUDC - borrowed funds		(1,142)		(1,035)		(704)
Net Interest Expense		19,847		19,031		19,600
Net Income	$	81,938	$	76,445	$	65,306
Less Net Income Attributable to Noncontrolling Interest, net of tax		(26,310)		(27,438)		(24,489)
Net Income Attributable to MGE	$	55,628	$	49,007	$	40,817
The accompanying notes are an integral part of the above consolidated financial statements.

Madison Gas and Electric Company

Consolidated Statements of Comprehensive Income

(In thousands)

		For the years ended December 31,
		2014		2013		2012
Net Income	$	81,938	$	76,445	$	65,306
Other comprehensive income, net of tax:
Unrealized (loss) gain on available-for-sale securities, net of
tax ($33, ($126), and $29)		(48)		188		(43)
Comprehensive Income	$	81,890	$	76,633	$	65,263
Less: Comprehensive Income Attributable to Noncontrolling
Interest, net of tax		(26,310)		(27,438)		(24,489)
Comprehensive Income Attributable to MGE	$	55,580	$	49,195	$	40,774
The accompanying notes are an integral part of the above consolidated financial statements.

56

Madison Gas and Electric Company

Consolidated Statements of Cash Flows

(In thousands)

		For the years ended December 31,
		2014		2013		2012
Operating Activities:
Net income	$	81,938	$	76,445	$	65,306
Items not affecting cash:
Depreciation and amortization		40,648		38,834		38,707
Deferred income taxes		49,603		37,462		44,112
Provision for doubtful receivables		1,898		2,448		2,498
Employee benefit plan expenses		(1,080)		13,303		18,353
Equity earnings in ATC		(9,150)		(9,434)		(9,079)
Other items		1,280		651		1,813
Changes in working capital items:
Trade and other receivables		(4,455)		(3,699)		(7,219)
Inventories		(10,398)		2,488		1,457
Unbilled revenues		720		(3,720)		(2,508)
Prepaid taxes		(15,169)		(373)		(1,584)
Other current assets		(5,693)		2,518		4,092
Accounts payable		2,741		126		(1,658)
Accrued interest and taxes		(1,001)		2,065		211
Other current liabilities		(3,144)		2,975		(714)
Dividend income from ATC		7,740		7,404		7,146
Cash contributions to pension and other postretirement plans		(3,321)		(34,765)		(28,857)
Debt make-whole premium		-		(6,757)		-
Other noncurrent items, net		(4,619)		10,713		6,696
Cash Provided by Operating Activities		128,538		138,684		138,772
Investing Activities:
Capital expenditures		(92,676)		(119,047)		(98,435)
Capital contributions to investments		(1,775)		(1,420)		(2,140)
Other		(1,146)		(130)		(508)
Cash Used for Investing Activities		(95,597)		(120,597)		(101,083)
Financing Activities:
Cash dividends paid to parent by MGE		(26,500)		(25,000)		(20,404)
Distributions to parent from noncontrolling interest		(21,359)		(27,365)		(23,500)
Equity contribution received by noncontrolling interest		1,775		1,420		2,130
Repayment of long-term debt		(4,103)		(43,012)		(30,668)
Issuance of long-term debt		-		85,000		28,000
Increase in short-term debt		7,000		-		-
Other		-		(672)		(795)
Cash Used for Financing Activities		(43,187)		(9,629)		(45,237)
Change in Cash and Cash Equivalents:		(10,246)		8,458		(7,548)
Cash and cash equivalents at beginning of period		14,808		6,350		13,898
Cash and cash equivalents at end of period	$	4,562	$	14,808	$	6,350
Supplemental disclosures of cash flow information:
Interest paid	$	20,478	$	17,991	$	19,499
Income taxes paid	$	67	$	144	$	44
Income taxes received	$	(644)	$	-	$	(448)
Significant noncash investing activities:
Accrued capital expenditures	$	1,569	$	9,892	$	10,317
The accompanying notes are an integral part of the above consolidated financial statements.

57

Madison Gas and Electric Company

Consolidated Balance Sheets

(In thousands)

		At December 31,
ASSETS		2014		2013
Current Assets:
Cash and cash equivalents	$	4,562	$	14,808
Accounts receivable, less reserves of $4,329 and $4,219, respectively		41,614		44,890
Affiliate receivables		7,112		534
Other accounts receivable, less reserves of $420 and $750, respectively		7,524		5,274
Unbilled revenues		31,262		31,982
Materials and supplies, at average cost		17,121		16,662
Fossil fuel		8,098		5,206
Stored natural gas, at average cost		21,035		13,988
Prepaid taxes		39,103		23,934
Regulatory assets - current		8,360		6,377
Deferred income taxes		1,271		-
Other current assets		10,683		8,197
Total Current Assets		197,745		171,852
Affiliate receivable long-term		5,295		5,825
Regulatory assets		156,823		107,166
Pension and other postretirement benefits		-		15,071
Other deferred assets and other		4,977		6,138
Property, Plant, and Equipment:
Property, plant, and equipment, net		1,188,351		1,017,877
Construction work in progress		19,029		141,415
Total Property, Plant, and Equipment		1,207,380		1,159,292
Investments		68,402		65,299
Total Assets	$	1,640,622	$	1,530,643
LIABILITIES AND CAPITALIZATION
Current Liabilities:
Long-term debt due within one year	$	4,182	$	4,102
Short-term debt		7,000		-
Accounts payable		41,654		43,684
Accrued interest and taxes		5,039		6,040
Accrued payroll related items		11,241		10,731
Deferred income taxes		-		2,723
Regulatory liabilities - current		-		13,538
Derivative liabilities		6,901		7,750
Other current liabilities		11,350		6,446
Total Current Liabilities		87,367		95,014
Other Credits:
Deferred income taxes		334,773		279,085
Investment tax credit - deferred		1,223		1,413
Regulatory liabilities		22,715		19,792
Accrued pension and other postretirement benefits		90,201		49,184
Derivative liabilities		46,560		57,930
Other deferred liabilities and other		50,267		52,357
Total Other Credits		545,739		459,761
Capitalization:
Common shareholder's equity:
Common Stock - $1 par value - 50,000 shares authorized; 17,348 shares outstanding		17,348		17,348
Additional paid-in capital		192,417		192,417
Retained earnings		276,662		247,534
Accumulated other comprehensive income, net of tax		144		192
Total Common Shareholder's Equity		486,571		457,491
Noncontrolling interest		125,689		118,963
Total Equity		612,260		576,454
Long-term debt		395,256		399,414
Total Capitalization		1,007,516		975,868
Commitments and contingencies (see Footnote 18)		-		-
Total Liabilities and Capitalization	$	1,640,622	$	1,530,643
The accompanying notes are an integral part of the above consolidated financial statements.

58

Madison Gas and Electric Company

Consolidated Statements of Common Equity

(In thousands)

								Accumulated
					Additional				Other		Non-
	Common Stock				Paid-in		Retained	Comprehensive			Controlling
	Shares		Value		Capital		Earnings	(Loss)/Income			Interest		Total
2012
Beginning balance - December 31, 2011	17,348	$	17,348	$	192,417	$	203,114	$	47	$	114,351	$	527,277
Net income							40,817				24,489		65,306
Other comprehensive loss									(43)				(43)
Cash dividends paid to parent by MGE							(20,404)						(20,404)
Equity contribution received by
noncontrolling interest											2,130		2,130
Distributions to parent from
noncontrolling interest											(23,500)		(23,500)
Ending balance - December 31, 2012	17,348	$	17,348	$	192,417	$	223,527	$	4	$	117,470	$	550,766
2013
Net income							49,007				27,438		76,445
Other comprehensive income									188				188
Cash dividends paid to parent by MGE							(25,000)						(25,000)
Equity contribution received by
noncontrolling interest											1,420		1,420
Distributions to parent from
noncontrolling interest											(27,365)		(27,365)
Ending balance - December 31, 2013	17,348	$	17,348	$	192,417	$	247,534	$	192	$	118,963	$	576,454
2014
Net income							55,628				26,310		81,938
Other comprehensive loss									(48)				(48)
Cash dividends paid to parent by MGE							(26,500)						(26,500)
Equity contribution received by
noncontrolling interest											1,775		1,775
Distributions to parent from
noncontrolling interest											(21,359)		(21,359)
Ending balance - December 31, 2014	17,348	$	17,348	$	192,417	$	276,662	$	144	$	125,689	$	612,260
The accompanying notes are an integral part of the above consolidated financial statements.

59

Notes to Consolidated Financial Statements

December 31, 2014, 2013, and 2012

This report is a combined report of MGE Energy and MGE. The notes to the consolidated financial statements that follow include consolidated MGE Energy footnotes and certain footnotes related to MGE as signified below.

1.

Summary of Significant Accounting Policies.

a.

Basis of Presentation - MGE Energy and MGE.

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which give recognition to the rate making accounting policies for regulated operations prescribed by the regulatory authorities having jurisdiction, principally the PSCW and FERC. MGE's accounting records conform to the FERC uniform system of accounts.

b.

Principles of Consolidation - MGE Energy and MGE.

MGE, a wholly owned subsidiary of MGE Energy, is a regulated electric and gas utility headquartered in Madison, Wisconsin. MGE Energy and MGE consolidate all majority owned subsidiaries in which it has controlling influence. MGE is the majority owner of MGE Transco. MGE Transco is a nonregulated entity formed to manage the investment in ATC.

Wholly owned subsidiaries of MGE Energy include CWDC, MAGAEL, MGE Power, MGE State Energy Services, and NGV Fueling Services. MGE Power owns 100% of MGE Power Elm Road and MGE Power West Campus. MGE Power and its subsidiaries are part of MGE Energy's nonregulated energy operations, which were formed to own and lease electric generation projects to assist MGE.

MGE Energy and MGE consolidate variable interest entities (VIEs) for which it is the primary beneficiary. Variable interest entities are legal entities that possess any of the following characteristics: equity investors who have an insufficient amount of equity at risk to finance their activities, equity owners who do not have the power to direct the significant activities of the entity (or have voting rights that are disproportionate to their ownership interest), or equity holders who do not receive expected losses or returns significant to the VIE. If MGE Energy or MGE is not the primary beneficiary and an ownership interest is held, the VIE is accounted for under the equity method of accounting. When assessing the determination of the primary beneficiary, all relevant facts and circumstances are considered, including: the power, through voting or similar rights, to direct the activities of the VIE that most significantly impact the VIE's economic performance and the obligation to absorb the expected losses and/or the right to receive the expected returns of the VIE. Ongoing reassessments of all VIEs are performed to determine if the primary beneficiary status has changed. MGE has consolidated MGE Power Elm Road and MGE Power West Campus. Both entities are VIEs. MGE is considered the primary beneficiary of these entities as a result of contractual agreements. See Footnote 2 for more discussion of these entities.

The consolidated financial statements reflect the application of certain accounting policies described in this note. All significant intercompany accounts and transactions have been eliminated in consolidation.

c.

Use of Estimates - MGE Energy and MGE.

In order to prepare consolidated financial statements in conformity with GAAP, management must make estimates and assumptions. These estimates could affect reported amounts of assets, liabilities, and disclosures at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from management's estimates.

d.

Cash Equivalents and Restricted Cash - MGE Energy and MGE.

MGE Energy and MGE consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

MGE has certain cash accounts that are restricted to uses other than current operations and designated for a specific purpose. MGE's restricted cash accounts include cash held by trustees for certain employee benefits. These are included in other current assets.

60

e.

Receivable – Margin Account - MGE Energy and MGE.

Cash amounts held by counterparties as margin for certain financial transactions are recorded as receivable – margin account in other current assets on the consolidated balance sheet. As of December 31, 2014 and 2013, the receivable – margin account balance of $2.2 million and $0.5 million, respectively, is shown net of any collateral posted against derivative positions. As of December 31, 2014 and 2013, there was $2.2 million and $0.2 million, respectively, of collateral posted against derivative positions. Changes in this cash account are considered cash flows from operating activities to match with the costs being hedged. The costs being hedged are fuel for electric generation, purchased power, and cost of gas sold.

f.

Trade Receivables, Allowance for Doubtful Accounts, and Concentration Risk - MGE Energy and MGE.

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. However, a 1% late payment charge is recorded on all receivables unpaid after the due date. The allowance for doubtful accounts associated with these receivables represents our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine our allowance for doubtful accounts based on historical write-off experience, regional economic data, and review of the accounts receivable aging.

MGE is obligated to provide service to all electric and gas customers within its franchised territories. MGE's franchised electric territory includes a 316 square-mile area in Dane County, Wisconsin, and MGE's franchised gas territory includes a service area covering 1,678 square-miles in Wisconsin. MGE manages this concentration and the related credit risk through its credit and collection policies, which are consistent with state regulatory requirements.

g.

Inventories - MGE Energy and MGE.

Inventories consist of natural gas in storage, fossil fuels, materials and supplies, SO₂ allowances, and renewable energy credits (RECs). MGE values natural gas in storage, fossil fuels, and materials and supplies using average cost.

SO₂ emission allowances are included in material and supplies on the consolidated balance sheet and are recorded at weighted average cost. These allowances are charged to fuel expense as they are used in operations. MGE's emission allowance balance was $0.1 million as of December 31, 2014 and 2013.

REC allowances are included in materials and supplies on the consolidate balance sheet and are recorded based on specific identification. These allowances are charged to purchase power expense as they are used in operations. MGE's REC allowance balances as of December 31, 2014 and 2013, were $0.8 million and $0.6 million, respectively.

h.

Regulatory Assets and Liabilities - MGE Energy and MGE.

Regulatory assets and regulatory liabilities are recorded consistent with regulatory treatment. Regulatory assets represent costs which are deferred due to the probable future recovery from customers through regulated rates. Regulatory liabilities represent the excess recovery of costs or accrued credits which were deferred because MGE believes it is probable such amounts will be returned to customers through future regulated rates. Regulatory assets and liabilities are amortized in the consolidated statements of income consistent with the recovery or refund included in customer rates. MGE believes that it is probable that its recorded regulatory assets and liabilities will be recovered and refunded, respectively, in future rates. See Footnote 6 for further information.

i.

Debt Issuance Costs - MGE Energy and MGE.

Premiums, discounts, and expenses incurred with the issuance of outstanding long-term debt are amortized over the life of the debt issue. Any call premiums or unamortized expenses associated with refinancing higher-cost debt obligations used to finance utility-regulated assets and operations are amortized consistent with regulatory treatment of those items.

61

j.

Property, Plant, and Equipment - MGE Energy and MGE.

Property, plant, and equipment is recorded at original cost. Cost includes indirect costs consisting of payroll taxes, pensions, postretirement benefits, other fringe benefits, and administrative and general costs. Also, included in the cost is AFUDC for utility property and capitalized interest for nonregulated property. Additions for significant replacements of property are charged to property, plant, and equipment at cost; and minor items are charged to maintenance expense. Depreciation rates on utility property are approved by the PSCW, based on the estimated economic lives of property, and include estimates for salvage value and removal costs. Removal costs of utility property, less any salvage value, are adjusted through regulatory liabilities. Depreciation rates on nonregulated property are based on the estimated economic lives of the property. See Footnote 3 for further information.

Provisions at composite straight-line depreciation rates approximate the following percentages for the cost of depreciable property:

	2014	2013	2012
Electric	2.6 %	2.7 %	2.9 %
Gas	1.7 %	1.7 %	1.7 %
Nonregulated	2.4 %	2.3 %	2.3 %

k.

Asset Retirement Obligations - MGE Energy and MGE.

MGE Energy and MGE are required to record a liability for the fair value of an ARO to be recognized in the period in which it is incurred if it can be reasonably estimated. The offsetting associated asset retirement costs are capitalized as a long-lived asset and depreciated over the asset's useful life. The expected present value technique used to calculate the fair value of ARO liabilities includes assumptions about costs, probabilities, settlement dates, interest accretion, and inflation. Revisions to the assumptions, including the timing or amount of expected asset retirement costs, could result in increases or decreases to the AROs. All asset retirement obligations are recorded as other long-term liabilities on our balance sheets. MGE has regulatory treatment and recognizes regulatory assets or liabilities for the timing differences between when we recover legal AROs in rates and when we would recognize these costs. See Footnote 19 for further information.

l.

Repairs and Maintenance Expense - MGE Energy and MGE.

MGE utilizes the direct expensing method for planned major maintenance projects. Under this method, MGE expenses all costs associated with major planned maintenance activities as incurred.

m.

Purchased Gas Adjustment Clause - MGE Energy and MGE.

MGE's natural gas rates are subject to a fuel adjustment clause designed to recover or refund the difference between the actual cost of purchased gas and the amount included in rates. Differences between the amounts billed to customers and the actual costs recoverable are deferred and recovered or refunded in future periods by means of prospective monthly adjustments to rates. At December 31, 2014 and 2013, MGE had over collected $1.2 million and $1.7 million, respectively. These amounts are included in other current liabilities on the consolidated balance sheet.

n.

Revenue Recognition - MGE Energy and MGE.

Operating revenues are recorded as service is rendered or energy is delivered to customers. Meters are read on a systematic basis throughout the month based on established meter-reading schedules. At the end of the month, MGE accrues an estimate for the unbilled amount of energy delivered to customers. The unbilled revenue estimate is based on daily system demand volumes, weather factors, estimated line losses, estimated customer usage by class, and applicable customer rates.

o.

Utility Cost Recovery - MGE Energy and MGE.

MGE's rates include a provision for fuel costs. The PSCW allows Wisconsin utilities to defer electric fuel-related costs, less excess revenues, that fall outside a symmetrical cost tolerance band. Any over/under recovery of the actual costs is determined on an annual basis and will be adjusted in future billings to electric retail customers. Such deferred amounts will be recognized in "Purchased Power Expense" in MGE Energy's

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and MGE's income statement each period. The cumulative effects of these deferred amounts will be recorded in "Regulatory assets" or "Regulatory liabilities" on MGE Energy's and MGE's consolidated balance sheets until they are reflected in future billings to customers. See Footnote 17.b. for further information regarding the regulatory rules applicable to the recovery of electric fuel costs.

p.

Allowance for Funds Used During Construction - MGE Energy and MGE.

Allowance for funds used during construction is included in utility plant accounts and represents the cost of borrowed funds used during plant construction and a return on shareholders' capital used for construction purposes. In the consolidated income statements, the cost of borrowed funds (AFUDC-debt) is presented as an offset to interest expense and the return on shareholders' capital (AFUDC-equity funds) is shown as an item within other income. For both 2014 and 2013, as approved by the PSCW, MGE capitalized AFUDC-debt and equity on 50% of applicable average construction work in progress at 8.21%. For 2012, MGE capitalized AFUDC-debt and equity on 50% of applicable average construction work in progress at 8.36%. For both 2014 and 2012, MGE received specific approval to recover 100% AFUDC on certain environmental costs for Columbia and 50% in 2013. Although the allowance does not represent current cash income, it is recovered under the ratemaking process over the service lives of the related properties. See Footnote 20 for further information regarding Columbia AFUDC.

q.

Investments - MGE Energy and MGE.

Investments in limited liability companies that have specific ownership accounts in which MGE Energy or MGE's ownership interest is more than minor and are considered to have significant influence are accounted for using the equity method. All other investments are carried at fair value or at cost, as appropriate. See Footnote 4 for further information.

r.

Capitalized Software Costs - MGE Energy and MGE.

Property, plant, and equipment includes the net book value of capitalized costs of internal use software totaling $8.4 million and $9.0 million at December 31, 2014 and 2013, respectively. During 2014, 2013, and 2012, MGE recorded $1.6 million, $1.5 million, and $1.3 million, respectively, of amortization expense related to these costs. These costs are amortized on a straight-line basis over the estimated useful lives of the assets. For internal use software, the useful lives range from five to ten years.

s.

Impairment of Long-Lived Assets - MGE Energy and MGE.

MGE reviews plant and equipment and other property for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. MGE's policy for determining when long-lived assets are impaired is to recognize an impairment loss if the sum of the expected future cash flows (undiscounted and without interest charges) from an asset are less than the carrying amount of that asset. If an impairment loss is recognized, the amount that will be recorded will be measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. There is no impairment of long-lived assets at December 31, 2014, 2013, and 2012.

t.

Income Taxes and Excise Taxes - MGE Energy and MGE.

Income taxes

Under the liability method, income taxes are deferred for all temporary differences between pretax financial and taxable income and between the book and tax basis of assets and liabilities using the tax rates scheduled by law to be in effect when the temporary differences reverse. Future tax benefits are recognized to the extent that realization of such benefits is more likely than not. A valuation allowance is recorded for those benefits that do not meet this criterion.

Accounting for uncertainty in income taxes applies to all tax positions and requires a recognition threshold and measurement standard for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in an income tax return. The threshold is defined for recognizing tax return positions in the financial statements as "more likely than not" that the position is sustainable, based on its merits. Subsequent recognition, derecognition, and measurement is based on management's best judgment given the facts, circumstances, and information available at the reporting date.

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Regulatory and accounting principles have resulted in a regulatory liability related to income taxes. Excess deferred income taxes result from past taxes provided at rates higher than current rates. The income tax regulatory liability and deferred investment tax credit reflect the revenue requirement associated with the return of these tax benefits to customers.

Investment tax credits from regulated operations are amortized over related property service lives.

Excise taxes

MGE Energy, through its utility operations, pays a state license fee tax in lieu of property taxes on property used in utility operations. License fee tax is calculated as a percentage of adjusted operating revenues of the prior year. The electric tax rate is 3.19% for retail sales and 1.59% for sales of electricity for resale by the purchaser. The tax rate on sales of natural gas is 0.97%. The tax is required to be estimated and prepaid in the year prior to its computation and expensing. License fee tax expense, included in other general taxes, was $14.6 million, $13.8 million, and $13.5 million for the years ended December 31, 2014, 2013, and 2012, respectively.

Operating income taxes, including tax credits and license fee tax, are included in rates for utility related items.

u.

Share-Based Compensation - MGE Energy and MGE.

Under two separate incentive plans, eligible participants, including employees and non-employee directors, may receive performance units that entitle the holder to receive a cash payment equal to the value of a designated number of shares of MGE Energy's common stock, plus dividend equivalent payments thereon, at the end of the set performance period. Under the plans, these awards are subject to a prescribed vesting schedule and must be settled in cash. Accordingly, no new shares of common stock are issued in connection with the plans.

MGE Energy and MGE initially measure the cost of the employee or director services received in exchange for a performance unit award based on the current market value of MGE Energy common stock. The fair value of the award is subsequently re-measured at each reporting date through the settlement date. Changes in fair value during the requisite period are recognized as compensation cost over that period.

See Footnote 14 for additional information regarding the plans.

v.

Treasury Stock - MGE Energy.

Treasury shares are recorded at cost. Any shares of common stock repurchased are held as treasury shares unless cancelled or reissued. No treasury shares are held as of December 31, 2014 and 2013.

w.

Comprehensive Income - MGE Energy and MGE.

Total comprehensive income includes all changes in equity during a period except those resulting from investments by and distributions to shareholders. Comprehensive income is reflected in the consolidated statements of comprehensive income.

x.

Derivative and Hedging Instruments - MGE Energy and MGE.

As part of regular operations, MGE enters into contracts, including options, swaps, futures, forwards, and other contractual commitments, to manage its exposure to commodity prices and gas revenues. MGE recognizes all derivatives in the consolidated balance sheets at fair value, with changes in the fair value of derivative instruments to be recorded in current earnings or deferred in accumulated other comprehensive income (loss), depending on whether a derivative is designated as, and is effective as, a hedge and on the type of hedge transaction. Derivative activities are in accordance with the company's risk management policy.

If the derivative qualifies for regulatory deferral, the derivatives are marked to fair value and any resulting loss or gain is offset with a corresponding regulatory asset or liability. Cash flows from such derivative instruments are classified on a basis consistent with the nature of the underlying hedged item.

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2.

Variable Interest Entities - MGE Energy and MGE.

a.

MGE Power Elm Road.

MGE Power Elm Road is not a subsidiary of MGE; however, it has been consolidated in the financial statements of MGE. MGE Power Elm Road was created for the purpose of owning new generating assets. Its sole principal assets are an undivided ownership interest in two coal-fired generating plants located in Oak Creek, Wisconsin, which it leases to MGE pursuant to long-term leases. Based on the nature and terms of the contractual agreements, MGE is expected to absorb a majority of the expected losses, residual value, or both, associated with the ownership of MGE Power Elm Road and therefore holds a variable interest in MGE Power Elm Road, even though it has no equity interest in MGE Power Elm Road. MGE Energy and MGE consolidate VIEs for which they are the primary beneficiary. MGE has the power to direct the activities that most significantly impact the Elm Road Units' economic performance and is also the party most closely associated with MGE Power Elm Road. As a result, MGE is the primary beneficiary. At December 31, MGE has included the following significant accounts on its consolidated balance sheet related to its interest in this VIE:

(In thousands)		2014		2013
Property, plant, and equipment, net	$	179,620	$	182,657
Construction work in progress		1,976		1,115
Affiliate receivables		1,742		-
Deferred income tax asset - current		-		219
Deferred income tax liability		40,044		34,141
Long-term debt		67,972		70,639
Noncontrolling interest		72,537		69,876

Long-term debt consists of $68.0 million of senior secured notes that require that MGE Power Elm Road maintain a projected and actual debt service coverage ratio at the end of any calendar quarter of not less than 1.25 to 1.00 for the trailing 12-month period. The debt is secured by a collateral assignment of lease payments that MGE is making to MGE Power Elm Road for use of the Elm Road Units pursuant to the related long-term leases. As of December 31, 2014, MGE Power Elm Road is in compliance with the covenant requirements.

MGE has been and will continue to recover in rates the lease payments made to MGE Power Elm Road. MGE received approval from the PSCW to collect in rates the carrying costs incurred by MGE Power Elm Road. The total carrying costs on the Elm Road Units is $62.5 million. MGE is collecting carrying costs in rates over a six year period that began in 2010. Of these costs, $17.0 million relates to the capitalized interest and the debt portion of the units. These costs will be recognized over the period in which the generating units will be depreciated. The remaining $45.5 million represents the equity portion and is being recognized over the period allowed for recovery in rates.

b.

MGE Power West Campus.

MGE Power West Campus is not a subsidiary of MGE; however, it has been consolidated in the financial statements of MGE. MGE Power West Campus was created for the purpose of owning new generating assets. Its sole principal asset is the WCCF, which it leases to MGE pursuant to a long-term lease. MGE is responsible for operation of the plant during the term of the lease. Based on the nature and terms of these contractual relationships, MGE absorbs a majority of the expected losses, residual value, or both, associated with the ownership and operation of the WCCF and therefore holds a variable interest in MGE Power West Campus, even though it has no equity interest in MGE Power West Campus. MGE has the power to direct the activities that most significantly impact WCCF's economic performance and is also the party most closely associated with MGE Power West Campus.

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As a result, MGE is the primary beneficiary. At December 31, MGE has included the following significant accounts on its consolidated balance sheet related to its interest in this VIE:

(In thousands)		2014		2013
Property, plant, and equipment, net	$	86,763	$	89,564
Affiliate receivables		5,862		6,767
Accrued interest and taxes		569		4,888
Deferred income taxes		23,813		23,154
Long-term debt		48,218		49,653
Noncontrolling interest		30,755		29,089

Long-term debt consists of $48.2 million of senior secured notes that require that MGE Power West Campus maintain a projected debt service coverage ratio of not less than 1.25 to 1.00 and debt to total capitalization ratio of not more than 0.65 to 1.00. The debt is secured by a collateral assignment of lease payments that MGE is making to MGE Power West Campus for use of the cogeneration facility pursuant to the long-term lease. As of December 31, 2014, MGE Power West Campus is in compliance with the covenant requirements.

MGE has been and will continue to recover lease payments made to MGE Power West Campus in rates. Also, MGE received approval from the PSCW to collect approximately $12.1 million in carrying costs incurred by MGE Power West Campus during construction of the facility. The carrying costs are being recovered in rates over a 10 year period that started in 2005.

c.

Other Variable Interest Entities.

MGE has a variable interest in entities through purchase power agreements relating to purchased energy from the facilities. As of December 31, 2014 and 2013, MGE had 61 megawatts of capacity available under these agreements. MGE evaluated the variable interest entities for possible consolidation. The interest holder is considered the primary beneficiary of the entity and is required to consolidate the entity if the interest holder has the power to direct the activities that most significantly impact the economics of the variable interest entity. MGE examined qualitative factors such as the length of the remaining term of the contracts compared with the remaining lives of the plants, who has the power to direct the operations and maintenance of the facilities, and other factors, and determined MGE is not the primary beneficiary of the variable interest entities. There is not a significant potential exposure to loss as a result of involvement with these variable interest entities.

3.

Property, Plant, and Equipment - MGE Energy and MGE.

Property, plant, and equipment consisted of the following at December 31:

		MGE Energy				MGE
(In thousands)		2014		2013		2014		2013
Utility:
Electric	$	1,110,953	$	953,290	$	1,110,970	$	953,307
Gas		369,975		351,694		369,987		351,705
Total utility plant		1,480,928		1,304,984		1,480,957		1,305,012
Less: Accumulated depreciation and amortization		559,615		560,066		559,615		560,066
In-service utility plant, net		921,313		744,918		921,342		744,946
Nonregulated:
Nonregulated		313,152		311,742		312,314		310,745
Less: Accumulated depreciation and amortization		45,388		37,851		45,305		37,814
In-service nonregulated plant, net		267,764		273,891		267,009		272,931
Construction work in progress:
Utility construction work in progress		16,988		140,301		16,988		140,301
Nonregulated construction work in progress		2,041		1,114		2,041		1,114
Total property, plant, and equipment	$	1,208,106	$	1,160,224	$	1,207,380	$	1,159,292

MGE's utility plant is subject to the lien of its Indenture of Mortgage and Deed of Trust. As of December 31, 2014 and 2013, there was $1.2 million of bonds outstanding under that indenture. See Footnote 9 for further discussion of the mortgage indenture.

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4.

Investments - MGE Energy and MGE.

a.

Equity Method Investments, Available for Sale Securities, and Other Investments.

		MGE Energy				MGE
(In thousands)		2014		2013		2014		2013
Available for sale securities:
Cost basis	$	1,964	$	1,736	$	489	$	490
Gross unrealized gains		765		629		240		321
Fair value		2,729		2,365		729		811
Equity method investments:
ATC		67,673		64,488		67,673		64,488
Other		1,199		1,099		-		-
Total equity method investments		68,872		65,587		67,673		64,488
Other investments		159		-		-		-
Total	$	71,760	$	67,952	$	68,402	$	65,299

MGE Energy's and MGE's available for sale securities represent publicly traded securities and private equity investments in common stock of companies in various industries.

During the years ended December 31, 2014 and 2013, certain investments were liquidated. As a result of these liquidations, MGE Energy and MGE received the following:

		MGE Energy						MGE
(In thousands)		2014		2013		2012		2014		2013		2012
Cash proceeds	$	38	$	39	$	-	$	-	$	16	$	-
Gain (loss) on sale		21		2		-		-		(3)		-

b.

ATC.

ATC owns and operates electric transmission facilities primarily in Wisconsin. MGE received an interest in ATC when it, like other Wisconsin electric utilities, contributed its electric transmission facilities to ATC as required by Wisconsin law. That interest is presently held by MGE Transco, which is jointly owned by MGE Energy and MGE.

MGE Transco has accounted for its investment in ATC under the equity method of accounting. For the years ended December 31, 2014, 2013, and 2012, MGE Transco recorded the following:

(In thousands)		2014		2013		2012
Equity in earnings from investment in ATC	$	9,150	$	9,434	$	9,079
Dividends received from ATC		7,740		7,404		7,146
Capital contributions to ATC		1,775		1,420		2,131

On January 30, 2015, MGE Transco made a $0.2 million capital contribution to ATC.

At December 31, 2014 and 2013, MGE Transco held a 3.6% ownership interest in ATC. MGE Transco's investment balance is different from the amount of the underlying equity in the net assets of ATC. This difference is attributable to the allocation of certain tax impacts related to the initial asset transfer.

At December 31, 2014 and 2013, MGE is the majority owner, and MGE Energy, the holding company, is the minority owner of MGE Transco. MGE Energy's proportionate share of the equity and net income of MGE Transco is classified within the MGE financial statements as noncontrolling interest.

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ATC's summarized financial data for the years ended December 31, 2014, 2013, and 2012 is as follows:

(In thousands)
Income statement data for the year ended December 31,		2014		2013		2012
Operating revenues	$	635,033	$	626,336	$	603,254
Operating expenses		(307,451)		(295,069)		(280,999)
Other income (expense)		117		831		(2,533)
Interest expense, net		(88,970)		(84,484)		(82,296)
Earnings before members' income taxes	$	238,729	$	247,614	$	237,426
Balance sheet data as of December 31,		2014		2013		2012
Current assets	$	66,410	$	80,715	$	63,134
Noncurrent assets		3,728,675		3,509,517		3,274,704
Total assets	$	3,795,085	$	3,590,232	$	3,337,838
Current liabilities	$	313,065	$	381,467	$	251,541
Long-term debt		1,701,000		1,550,000		1,550,000
Other noncurrent liabilities		163,818		126,167		95,829
Members' equity		1,617,202		1,532,598		1,440,468
Total members' equity and liabilities	$	3,795,085	$	3,590,232	$	3,337,838

5.

Joint Plant Ownership - MGE Energy and MGE.

a.

Columbia.

MGE and two other utilities jointly own Columbia, a coal-fired generating facility located in Portage, Wisconsin, which accounts for 31% (239 MW) of MGE's net summer rated capacity. Power from this facility is shared in proportion to each company's ownership interest. MGE has a 22% ownership interest in Columbia. The other owners are WPL, which operates Columbia, and WPSC. MGE's share of fuel, operating, and maintenance expenses for Columbia were $28.1 million, $37.5 million, and $36.3 million for the years ended December 31, 2014, 2013, and 2012, respectively. See Footnote 20 for discussion of MGE's future capital commitments in respect to the environmental projects at Columbia as a result of this ownership interest.

Each owner provides its own financing and reflects its respective portion of facilities and operating costs in its financial statements. MGE's interest in Columbia, included in its gross utility plant in service, and the related accumulated depreciation reserves at December 31 were as follows:

(In thousands)		2014		2013
Utility plant	$	268,597	$	123,097
Accumulated depreciation		(80,645)		(78,880)
Property, plant, and equipment, net		187,952		44,217
Construction work in progress		6,941		120,858
Total property, plant, and equipment	$	194,893	$	165,075

b.

Elm Road.

MGE Power Elm Road owns an 8.33% ownership interest in each of two 615 MW coal-fired generating units in Oak Creek, Wisconsin, which accounts for 14% (106 MW) of MGE's net summer rated capacity. Unit 1 entered commercial operation on February 2, 2010. Unit 2 entered commercial operation on January 12, 2011. MGE Power Elm Road's sole principal asset is that ownership interest in those generating units. MGE Power Elm Road's interest in the Elm Road Units is leased to MGE pursuant to long-term leases.

The remainder of the ownership interest in the Elm Road Units is held by two other entities, one of which is also responsible for the Units' operation. Each owner provides its own financing and reflects its respective portion of the facility and costs in its financial statements. MGE's share of fuel, operating, and maintenance expenses for the Elm Road Units were $20.3 million, $13.4 million, and $13.2 million for the years ended December 31, 2014, 2013, and 2012, respectively.

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MGE Power Elm Road's interest in the portion of the Elm Road Units in-service and the related accumulated depreciation reserves at December 31 were as follows:

(In thousands)		2014		2013
Nonregulated plant	$	199,582	$	198,198
Accumulated depreciation		(19,962)		(15,541)
Property, plant, and equipment, net		179,620		182,657
Construction work in progress		1,976		1,115
Total property, plant, and equipment	$	181,596	$	183,772

c.

WCCF.

MGE Power West Campus and the UW jointly own the West Campus Cogeneration Facility located on the UW campus in Madison, Wisconsin. MGE Power West Campus owns 55% of the facility and the UW owns 45% of the facility. The UW owns a controlling interest in the chilled-water and steam plants, which are used to meet the growing needs for air-conditioning and steam-heat capacity for the UW campus. MGE Power West Campus owns a controlling interest in the electric generation plant, which is leased and operated by MGE.

Each owner provides its own financing and reflects its respective portion of the facility and operating costs in its financial statements. MGE Power West Campus' interest in WCCF and the related accumulated depreciation reserves at December 31 were as follows:

(In thousands)		2014		2013
Nonregulated plant	$	111,453	$	111,268
Accumulated depreciation		(24,691)		(21,704)
Property, plant, and equipment, net	$	86,762	$	89,564

Operating charges are allocated to the UW based on formulas contained in the operating agreement. Under the provisions of this arrangement, the UW is required to reimburse MGE for their allocated portion of fuel and operating expenses. For the year ended December 31, 2014, the UW allocated share of fuel and operating costs was $2.8 million. For the years ended December 31, 2013 and 2012, the UW allocated share of fuel and operating costs was $4.9 million.

6.

Regulatory Assets and Liabilities - MGE Energy and MGE.

The following regulatory assets and liabilities are reflected in MGE's consolidated balance sheet as of December 31:

(In thousands)		2014		2013
Regulatory Assets
Asset retirement obligation	$	4,532	$	4,863
Debt related costs		11,133		11,786
Derivatives		54,998		63,893
Environmental costs		700		920
Tax recovery related to AFUDC equity		8,821		6,956
Unfunded pension and other postretirement liability		84,551		24,591
Other		448		534
Total regulatory assets	$	165,183	$	113,543
Regulatory Liabilities
Conservation costs	$	680	$	455
Deferred fuel savings		755		13,386
Elm Road		1,497		607
Income taxes		1,794		2,082
Non-ARO removal costs		16,129		15,182
Renewable energy credits		753		574
Other		1,107		1,044
Total regulatory liabilities	$	22,715	$	33,330

MGE expects to recover its regulatory assets and return its regulatory liabilities through rates charged to customers based on PSCW decisions made during the ratemaking process or based on PSCW long-standing policies and guidelines. The adjustments to rates for these regulatory assets and liabilities will occur over the periods either specified by the PSCW or over the corresponding period related to the asset or liability. We believe

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it is probable that MGE will continue to recover from customers the regulatory assets described above based on prior and current ratemaking treatment for such costs. All regulatory assets for which a cash outflow had been made are earning a return, except for amounts expended for environmental costs.

Asset Retirement Obligation

See Footnote 19 for further discussion.

Debt Related Costs

This balance includes debt issuance costs of extinguished debt and other debt related expenses. The PSCW has allowed rate recovery on unamortized issuance costs for extinguished debt facilities. When the facility replacing the old facility is deemed by the PSCW to be more favorable for the ratepayers, the PSCW will allow rate recovery of any unamortized issuance costs related to the old facility. These amounts are recovered over the term of the new facility.

In 2013, MGE issued long-term debt and used the net proceeds to redeem Medium-Term Notes and partially redeem Senior Notes. Included in the redemption prices were make-whole premiums totalling $6.8 million. The make-whole premiums are treated as a regulatory asset and will be amortized over the life of the long-term debt issued.

Derivatives

MGE has physical and financial contracts that are defined as derivatives. The amounts recorded for the net mark-to-market value of the commodity based contracts is offset with a corresponding regulatory asset or liability because these transactions are part of the PGA or fuel rules clause authorized by the PSCW. A significant portion of the recorded amount is related to a ten-year purchased power agreement that provides MGE with firm capacity and energy during a base term from June 1, 2012, through May 31, 2022. This agreement is accounted for as a derivative contract. See Footnote 16 for further discussion.

Environmental Costs

MGE has been allowed to defer actual costs on certain environmental matters, including clean up of two landfill sites and legal expenditures pertaining to the response to the EPA Clean Air Act enforcement matter at Columbia. For further discussion of the Columbia Clean Air Act litigation, see Footnote 18.d.

Tax Recovery Related to AFUDC Equity

AFUDC equity represents the after-tax equity cost associated with utility plant construction and results in a temporary difference between the book and tax basis of such plant. It is probable under PSCW regulation that MGE will recover in future rates the future increase in taxes payable represented by the deferred income tax liability. The amounts will be recovered in rates over the depreciable life of the asset for which AFUDC was applied. Tax recovery related to AFUDC equity represents the revenue requirement related to recovery of these future taxes payable, calculated at current statutory tax rates.

Unfunded Pension and Other Postretirement Liability

MGE is required to recognize the unfunded status of defined benefit pension and other postretirement pension plans as a net liability or asset on the balance sheet with an offset to a regulatory asset. The unfunded status represents future expenses that are expected to be recovered in rates. See Footnote 13 for further discussion.

Conservation Costs

MGE has received regulatory treatment for certain conservation expenditures. The expenditures are used for Focus on Energy programs, Wisconsin's statewide energy efficiency and renewable resource program, to promote energy efficiency on the customer's premises. Costs for Focus on Energy programs are estimated in MGE's rates utilizing escrow accounting. The escrow accounting allows the utility to true-up its actual costs incurred and reflect the amount of the true-up in its next rate case filing and amortize the amount over the rate case period.

Deferred Fuel Savings

The fuel rules require the PSCW and Wisconsin utilities to defer electric fuel-related costs that fall outside a symmetrical cost tolerance band. Any over/under recovery of the actual costs is determined on an annual basis and is adjusted in future billings to electric retail customers. Under the electric fuel rules, MGE is required to defer the benefit of lower costs if the actual electric fuel costs fall outside the lower end of the range and is required to defer costs, less any excess revenues, if the actual electric fuel costs exceed the upper end of the range. Excess revenues are defined as revenues in the year in question that provide MGE with a greater return on common equity than authorized by the PSCW in MGE's latest rate order. See Footnote 17.b. for further discussion.

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Elm Road

Costs associated with Elm Road are estimated in MGE's rates utilizing escrow accounting and include costs for lease payments, management fees, community impact mitigation, and operating costs. Also, MGE has deferred payments made to MGE Power Elm Road for carrying costs during construction of the facility. MGE is collecting carrying costs in rates over a six year period that began in 2010. All other costs are collected in rates over a one to two year period.

Income Taxes

Excess deferred income taxes result from past taxes provided at rates higher than current rates. The regulatory liability and deferred investment tax credit reflects the revenue requirement associated with the return of these tax benefits to customers.

Non-ARO Removal Costs

In connection with accounting for asset retirement obligations, companies are required to reclassify cumulative collections for non-ARO removal costs as a regulatory liability, with an offsetting entry to accumulated depreciation. Under the current rate structure, these removal costs are being recovered as a component of depreciation expense.

Renewable Energy Credits

MGE receives renewable energy credits from certain purchase power agreements. The value of the credits are recorded as inventory and expensed when the credit is redeemed or expired. A regulatory liability has been established for the value of the renewable energy credits included in inventory. In Wisconsin, renewable energy credits expire four years after the year of acquisition.

7.

Common Equity.

a.

Common Stock - MGE Energy and MGE.

On December 20, 2013, MGE Energy's Board of Directors declared a three-for-two stock split of MGE Energy's outstanding shares of common stock, effective in the form of a stock dividend. Shareholders of record at the close of business on January 24, 2014, received one additional share of MGE Energy common stock for every two shares of common stock owned on that date. The additional shares were distributed on February 7, 2014. Shareholders received cash in lieu of any fractional shares of common stock they otherwise would have received in connection with the dividend. All share and per share data provided in this report give effect to this stock split.

MGE Energy sells shares of its common stock through its Stock Plan. Those shares may be newly issued shares or shares that MGE Energy has purchased in the open market for resale to participants in the Stock Plan. All sales under the stock plan are covered by a shelf registration statement that MGE Energy filed with the SEC. For the years ended December 31, 2014 and 2013, MGE Energy did not issue any new shares of common stock under the Stock Plan.

MGE Energy purchases shares on the open market to provide shares to meet obligations to participants in the Stock Plan. The shares are purchased on the open market through a securities broker-dealer and then are reissued under the Stock Plan as needed to meet share delivery requirements. The volume and timing of share repurchases in the open market depends upon the level of dividend reinvestment and optional share purchases being made from time to time by plan participants. As a result, there is no specific maximum number of shares to be repurchased and no specified termination date for the repurchases.

During the years ended December 31, 2014 and 2013, MGE Energy paid $38.4 million (or $1.11 per share) and $37.1 million (or $1.07 per share), respectively, in cash dividends on its common stock. Dividends on common stock at MGE are subject to restrictions imposed by the PSCW and the covenants of MGE's outstanding first mortgage bonds. See Footnote 9 for further discussion of these covenants. During the years ended December 31, 2014 and 2013, MGE paid $26.5 million and $25.0 million, respectively, in cash dividends to MGE Energy.

b.

Dilutive Shares Calculation - MGE Energy.

MGE Energy does not hold any dilutive securities.

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8.

Noncontrolling Interest - MGE.

The noncontrolling interest on MGE's balance sheet at December 31 was as follows:

(In thousands)		2014		2013
MGE Power Elm Road (a)	$	72,537	$	69,876
MGE Power West Campus (a)		30,755		29,089
MGE Transco (b)		22,397		19,998
Total noncontrolling interest	$	125,689	$	118,963

The net income attributable to noncontrolling interest, net of tax, for the years ended December 31, 2014, 2013, and 2012 was as follows:

(In thousands)		2014		2013		2012
MGE Power Elm Road (a)	$	16,160	$	17,373	$	14,837
MGE Power West Campus (a)		7,666		7,657		7,506
MGE Transco (b)		2,484		2,408		2,146
Net income attributable to noncontrolling interest, net of tax	$	26,310	$	27,438	$	24,489

(a)

MGE Power Elm Road and MGE Power West Campus are not subsidiaries of MGE; however, they have been consolidated in the consolidated financial statements of MGE (see Footnote 2). MGE Power Elm Road and MGE Power West Campus are 100% owned by MGE Power, and MGE Power is 100% owned by MGE Energy. MGE Energy's proportionate share of the equity and net income (through its wholly owned subsidiary MGE Power) of MGE Power Elm Road and MGE Power West Campus is classified within the MGE financial statements as noncontrolling interest.

(b)

At December 31, 2014, MGE is the majority owner, and MGE Energy is the minority owner, of MGE Transco. MGE Energy's proportionate share of the equity and net income of MGE Transco is classified within the MGE financial statements as noncontrolling interest.

9.

Long-Term Debt - MGE Energy and MGE.

a.

Long-Term Debt.

		2014				2013
(In thousands)		MGE Energy		MGE		MGE Energy		MGE
First Mortgage Bonds: (a)
7.70%, 2028 Series	$	1,200	$	1,200	$	1,200	$	1,200
Tax Exempt Debt:
3.45%, 2027 Series,
Industrial Development Revenue Bonds		19,300		19,300		19,300		19,300
Medium-Term Notes: (b)
5.25%, due 2017		30,000		30,000		30,000		30,000
6.12%, due 2028		20,000		20,000		20,000		20,000
7.12%, due 2032		25,000		25,000		25,000		25,000
6.247%, due 2037		25,000		25,000		25,000		25,000
Total Medium-Term Notes		100,000		100,000		100,000		100,000
Other Long-Term Debt: (c)
5.59%, due 2018 (d)		20,000		20,000		20,000		20,000
3.38%, due 2020 (d)		15,000		15,000		15,000		15,000
3.09%, due 2023 (d)		30,000		30,000		30,000		30,000
3.29%, due 2026 (d)		15,000		15,000		15,000		15,000
5.68%, due 2033 (e)		28,954		28,954		29,797		29,797
5.19%, due 2033 (e)		19,264		19,264		19,857		19,857
5.26%, due 2040 (d)		15,000		15,000		15,000		15,000
5.04%, due 2040 (f)		41,805		41,805		43,472		43,472
4.74%, due 2041 (f)		26,167		26,167		27,167		27,167
4.38%, due 2042 (d)		28,000		28,000		28,000		28,000
4.42%, due 2043 (d)		20,000		20,000		20,000		20,000
4.47%, due 2048 (d)		20,000		20,000		20,000		20,000
Total Other Long-Term Debt		279,190		279,190		283,293		283,293
Long-term debt due within one year		(4,182)		(4,182)		(4,102)		(4,102)
Unamortized discount		(252)		(252)		(277)		(277)
Total Long-Term Debt	$	395,256	$	395,256	$	399,414	$	399,414

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(a)

MGE's utility plant is subject to the lien of its Indenture of Mortgage and Deed of Trust, under which its first mortgage bonds are issued. The Mortgage Indenture provides that dividends or any other distribution or purchase of shares may not be made if the aggregate amount thereof since December 31, 1945 would exceed the earned surplus (retained earnings) accumulated subsequent to December 31, 1945. As of December 31, 2014, approximately $334.8 million was available for the payment of dividends under this covenant.

(b)

The indenture under which MGE's Medium-Term notes are issued provides that those notes will be entitled to be equally and ratably secured in the event that MGE issues any additional first mortgage bonds.

(c)

Unsecured notes issued pursuant to various Note Purchase Agreements with one or more purchasers. The notes are not issued under, or governed by, MGE's Indenture dated as of September 1, 1998, which governs MGE's Medium-Term Notes.

(d)

Issued by MGE. Under that Note Purchase Agreement: (i) note holders have the right to require MGE to repurchase their notes at par in the event of an acquisition of beneficial ownership of 30% or more of the outstanding voting stock of MGE Energy, (ii) MGE must maintain a ratio of its consolidated indebtedness to consolidated total capitalization not to exceed a maximum of 65%, and (iii) MGE cannot issue "Priority Debt" in an amount exceeding 20% of its consolidated assets. Priority Debt is defined as any indebtedness of MGE secured by liens other than specified liens permitted by the Note Purchase Agreement and certain unsecured indebtedness of certain subsidiaries. As of December 31, 2014, MGE is in compliance with the covenant requirements.

(e)

Issued by MGE Power West Campus. The Note Purchase Agreements require it to maintain a projected debt service coverage ratio of not less than 1.25 to 1.00, and debt to total capitalization ratio of not more than 0.65 to 1.00. The notes are secured by a collateral assignment of lease payments that MGE is making to MGE Power West Campus for use of its ownership interest in the West Campus Cogeneration Facility pursuant to a long-term lease. As of December 31, 2014, MGE Power West Campus is in compliance with the covenant requirements.

(f)

Issued by MGE Power Elm Road. The Note Purchase Agreement requires MGE Power Elm Road to maintain a projected and actual debt service coverage ratio at the end of any calendar quarter of not less than 1.25 to 1.00 for the trailing 12-month period. The notes are secured by a collateral assignment of lease payments that MGE is making to MGE Power Elm Road for use of its ownership interest in the Elm Road Units pursuant to long-term leases. As of December 31, 2014, MGE Power Elm Road is in compliance with the covenant requirements.

b.

Long-Term Debt Maturities.

Below is MGE Energy's and MGE's aggregate maturities for all long-term debt for years following the December 31, 2014, consolidated balance sheets.

		MGE
(In thousands)		Energy		MGE *
2015	$	4,182	$	4,182
2016		4,268		4,268
2017		34,358		34,358
2018		24,452		24,452
2019		4,553		4,553
Future years		327,877		327,877
Total	$	399,690	$	399,690

*Includes $48.2 million for MGE Power West Campus and $68.0 million for MGE Power Elm Road, all of which are consolidated with MGE's debt (see Footnote 2 for further information).

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10.

Notes Payable to Banks, Commercial Paper, and Lines of Credit.

a.

MGE Energy.

At December 31, 2014, MGE Energy had an unsecured, committed revolving line of credit of $50 million expiring July 31, 2017. At December 31, 2014, no borrowings were outstanding under this facility.

The agreement requires MGE Energy to maintain a ratio of its consolidated indebtedness to consolidated total capitalization not to exceed a maximum of 65%. A change in control constitutes a default under the agreement. Change in control events are defined as (i) a failure by MGE Energy to hold 100% of the outstanding voting equity interest in MGE or (ii) the acquisition of beneficial ownership of 30% or more of the outstanding voting stock of MGE Energy by one person or two or more persons acting in concert. As of December 31, 2014, MGE Energy is in compliance with the covenant requirements.

b.

MGE.

For short-term borrowings, MGE generally issues commercial paper (issued at the prevailing discount rate at the time of issuance), which is supported by unused committed bank lines of credit. At December 31, 2014, MGE had an unsecured, committed revolving line of credit for $100 million expiring July 31, 2017. The agreement requires MGE to have a period of at least one day, during any 365-day period, on which the principal amount of all outstanding loans thereunder shall be zero. At December 31, 2014, no borrowings were outstanding under this facility; however, there was $7.0 million in commercial paper outstanding.

The agreement requires MGE to maintain a ratio of consolidated debt to consolidated total capitalization not to exceed a maximum of 65%. The ratio calculation excludes assets, liabilities, revenues, and expenses included in MGE's financial statements as the result of the consolidation of VIEs, such as MGE Power West Campus and MGE Power Elm Road. A change in control constitutes a default under the agreement. Change in control events are defined as (i) a failure by MGE Energy to hold 100% of the outstanding voting equity interest in MGE or (ii) the acquisition of beneficial ownership of 30% or more of the outstanding voting stock of MGE Energy by one person or two or more persons acting in concert. As of December 31, 2014, MGE is in compliance with the covenant requirements.

c.

MGE Energy and MGE.

Information concerning short-term borrowings for the past three years is shown below:

		As of December 31,
(In thousands)		2014		2013		2012
MGE Energy(a)
Available lines of credit	$	150,000	$	150,000	$	115,000
Short-term debt outstanding	$	7,000	$	-	$	-
Weighted-average interest rate		0.20%		-%		-%
During the year:
Maximum short-term borrowings	$	9,000	$	32,000	$	16,000
Average short-term borrowings	$	182	$	6,992	$	1,154
Weighted-average interest rate		0.24%		0.18%		0.17%
MGE
Available lines of credit	$	100,000	$	100,000	$	75,000
Commercial paper outstanding	$	7,000	$	-	$	-
Weighted-average interest rate		0.20%		-%		-%
During the year:
Maximum short-term borrowings	$	9,000	$	32,000	$	16,000
Average short-term borrowings	$	182	$	6,992	$	1,154
Weighted-average interest rate		0.24%		0.18%		0.17%

(a)

MGE Energy short-term borrowings include MGE Energy and MGE lines of credit and MGE commercial paper.

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11.

Fair Value of Financial Instruments - MGE Energy and MGE.

Fair value is defined as the price that would be received to sell an asset or would be paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The standard clarifies that fair value should be based on the assumptions market participants would use when pricing the asset or liability including assumptions about risk. The standard also establishes a three level fair value hierarchy based upon the observability of the assumptions used and requires the use of observable market data when available. The levels are:

Level 1 - Pricing inputs are quoted prices within active markets for identical assets or liabilities.

Level 2 - Pricing inputs are quoted prices within active markets for similar assets or liabilities; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations that are correlated with or otherwise verifiable by observable market data.

Level 3 - Pricing inputs are unobservable and reflect management's best estimate of what market participants would use in pricing the asset or liability.

a.

Fair Value of Financial Assets and Liabilities Recorded at the Carrying Amount.

At December 31, 2014 and 2013, the carrying amount of cash, cash equivalents, and outstanding commercial paper approximates fair market value due to the short maturity of those investments and obligations. The estimated fair market value of MGE Energy's and MGE long-term debt is based on quoted market prices for similar financial instruments at December 31. Since long-term debt is not traded in an active market, it is classified as Level 2. The estimated fair market value of MGE Energy's and MGE's financial instruments are as follows:

		2014				2013
(In thousands)		Carrying Amount		Fair Value		Carrying Amount		Fair Value
MGE Energy
Assets:
Cash and cash equivalents	$	65,755	$	65,755	$	68,813	$	68,813
Liabilities:
Short-term debt - commercial paper		7,000		7,000		-		-
Long-term debt*		399,690		457,420		403,793		432,010
MGE
Assets:
Cash and cash equivalents	$	4,562	$	4,562	$	14,808	$	14,808
Liabilities:
Short-term debt - commercial paper		7,000		7,000		-		-
Long-term debt*		399,690		457,420		403,793		432,010
*Includes long-term debt due within one year.

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b.

Recurring Fair Value Measurements.

The following table presents the balances of assets and liabilities measured at fair value on a recurring basis for MGE Energy and MGE.

	Fair Value as of December 31, 2014
(In thousands)		Total		Level 1		Level 2		Level 3
MGE Energy
Assets:
Derivatives, net	$	642	$	-	$	-	$	642
Exchange-traded investments		927		927		-		-
Total Assets	$	1,569	$	927	$	-	$	642
Liabilities:
Derivatives, net(a)	$	55,640	$	1,012	$	-	$	54,628
Deferred compensation		2,832		-		2,832		-
Total Liabilities	$	58,472	$	1,012	$	2,832	$	54,628
MGE
Assets:
Derivatives, net	$	642	$	-	$	-	$	642
Exchange-traded investments		350		350		-		-
Total Assets	$	992	$	350	$	-	$	642
Liabilities:
Derivatives, net(a)	$	55,640	$	1,012	$	-	$	54,628
Deferred compensation		2,832		-		2,832		-
Total Liabilities	$	58,472	$	1,012	$	2,832	$	54,628
	Fair Value as of December 31, 2013
(In thousands)		Total		Level 1		Level 2		Level 3
MGE Energy
Assets:
Derivatives, net	$	1,787	$	735	$	-	$	1,052
Exchange-traded investments		792		792		-		-
Total Assets	$	2,579	$	1,527	$	-	$	1,052
Liabilities:
Derivatives, net	$	65,680	$	-	$	-	$	65,680
Deferred compensation		2,364		-		2,364		-
Total Liabilities	$	68,044	$	-	$	2,364	$	65,680
MGE
Assets:
Derivatives, net	$	1,787	$	735	$	-	$	1,052
Exchange-traded investments		431		431		-		-
Total Assets	$	2,218	$	1,166	$	-	$	1,052
Liabilities:
Derivatives, net	$	65,680	$	-	$	-	$	65,680
Deferred compensation		2,364		-		2,364		-
Total Liabilities	$	68,044	$	-	$	2,364	$	65,680

(a)

These amounts are shown gross and exclude $2.2 million and $0.2 million of collateral that was posted against derivative positions with counterparties as of December 31, 2014 and 2013, respectively.

No transfers were made in or out of Level 1 or Level 2 for the year ended December 31, 2014.

Investments include exchange-traded investment securities valued using quoted prices on active exchanges and are therefore classified as Level 1.

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Derivatives include exchange-traded derivative contracts, over-the-counter transactions, a ten-year purchased power agreement, and FTRs. Most exchange-traded derivative contracts are valued based on unadjusted quoted prices in active markets and are therefore classified as Level 1. A small number of exchange-traded derivative contracts are valued using quoted market pricing in markets with insufficient volumes and are therefore considered unobservable and classified as Level 3. Transactions done with an over-the-counter party are on inactive markets and are therefore classified as Level 3. These transactions are valued based on quoted prices from markets with similar exchange traded transactions. FTRs are priced based upon monthly auction results for identical or similar instruments in a closed market with limited data available and are therefore classified as Level 3.

The ten-year purchased power agreement (see Footnote 16) was valued using an internally-developed pricing model and therefore is classified as Level 3. The model projects future market energy prices and compares those prices to the projected power costs to be incurred under the contract. Inputs to the model require significant management judgment and estimation. Future energy prices are based on a forward power pricing curve using exchange-traded contracts in the electric futures market, where such exchange-traded contracts exist, and upon calculations based on forward gas prices, where such exchange-traded contracts do not exist. A basis adjustment is applied to the market energy price to reflect the price differential between the market price delivery point and the counterparty delivery point. The historical relationship between the delivery points is reviewed and a discount (below 100%) or premium (above 100%) is derived. This comparison is done for both peak times when demand is high and off peak times when demand is low. If the basis adjustment is lowered, the fair value measurement will decrease and if the basis adjustment is increased, the fair value measurement will increase.

The projected power costs anticipated to be incurred under the purchased power agreement are determined using many factors, including historical generating costs, future prices, and expected fuel mix of the counterparty. An increase in the projected fuel costs would result in a decrease in the fair value measurement of the purchased power agreement. A significant input that MGE estimates is the counterparty's fuel mix in determining the projected power cost. MGE also considers the assumptions that market participants would use in valuing the asset or liability. This consideration includes assumptions about market risk such as liquidity, volatility, and contract duration. The fair value model uses a discount rate that incorporates discounting, credit, and model risks.

This model is prepared by members of MGE's Energy Accounting group. It is reviewed on a quarterly basis by management in Energy Supply and Finance to review the assumptions, inputs, and fair value measurements.

The following table presents the significant unobservable inputs used in the pricing model as of December 31:

	Model Input
Significant Unobservable Inputs	2014	2013
Basis adjustment:
On peak	98.1%	94.2%
Off peak	95.0%	92.6%
Counterparty fuel mix:
Internal generation	50%-70%	50%-70%
Purchased power	50%-30%	50%-30%

The deferred compensation plan allows participants to defer certain cash compensation into a notional investment account. These amounts are included within other deferred liabilities in the consolidated balance sheets of MGE Energy and MGE. The notional investments earn interest based upon the semiannual rate of U.S. Treasury Bills having a 26 week maturity increased by 1% compounded monthly with a minimum annual rate of 7%, compounded monthly. The notional investments are based upon observable market data, however since the deferred compensation obligations themselves are not exchanged in an active market they are classified as Level 2.

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The following table summarizes the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for both MGE Energy and MGE.

(In thousands)		2014		2013		2012
Balance as of January 1,	$	(64,628)	$	(72,346)	$	(40,661)
Realized and unrealized gains (losses):
Included in regulatory liabilities (assets)		10,642		7,718		(31,685)
Included in other comprehensive income		-		-		-
Included in earnings		5,129		(2,618)		(5,005)
Included in current assets		-		(108)		-
Purchases		26,382		23,726		13,370
Sales		(125)		(2)		92
Issuances		-		-		-
Settlements		(31,386)		(20,998)		(8,457)
Transfers in and/or out of Level 3		-		-		-
Balance as of December 31,	$	(53,986)	$	(64,628)	$	(72,346)
Total gains (losses) included in earnings attributed to the
change in unrealized gains (losses) related to assets and
liabilities held at December 31,(b)	$	-	$	-	$	-

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 for both MGE Energy and MGE (b).

(In thousands)
Year Ended December 31,		2014		2013		2012
Purchased power expense	$	5,137	$	(2,618)	$	(5,005)
Cost of gas sold expense		(8)		-		-
Total	$	5,129	$	(2,618)	$	(5,005)

(b)

MGE's exchange-traded derivative contracts, over-the-counter party transactions, ten-year 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.

12.

Income Taxes.

a.

MGE Energy and MGE Income Taxes.

MGE Energy files a consolidated federal income tax return that includes the operations of all subsidiary companies. The subsidiaries calculate their respective federal income tax provisions as if they were separate taxable entities.

On a consolidated and separate company basis, MGE Energy's and MGE's income tax provision consists of the following provision (benefit) components for the years ended December 31:

		MGE Energy						MGE
(In thousands)		2014		2013		2012		2014		2013		2012
Current payable:
Federal	$	(891)	$	(1,508)	$	(6,053)	$	637	$	(448)	$	(5,030)
State		(589)		8,213		436		(451)		8,322		613
Net-deferred:
Federal		39,284		37,203		37,178		38,553		36,937		36,589
State		10,600		1,163		7,618		10,625		1,223		7,523
Amortized investment tax credits		(219)		(212)		(260)		(219)		(212)		(260)
Total income tax provision	$	48,185	$	44,859	$	38,919	$	49,145	$	45,822	$	39,435

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MGE Energy's and MGE's consolidated income tax provision differs from the amount computed by applying the statutory federal income tax rate to income before income taxes, as follows:

	MGE Energy			MGE
	2014	2013	2012	2014	2013	2012
Statutory federal income tax rate	35.0 %	35.0 %	35.0 %	35.0 %	35.0 %	35.0 %
State income taxes, net of federal benefit	5.1 %	5.1 %	5.0 %	5.1 %	5.1 %	5.0 %
Amortized investment tax credits	(0.2)%	(0.2)%	(0.3)%	(0.2)%	(0.2)%	(0.2)%
Credit for electricity from wind energy	(1.7)%	(1.5)%	(1.6)%	(1.7)%	(1.5)%	(1.5)%
Domestic manufacturing deduction	- %	(0.2)%	0.3 %	- %	(0.2)%	0.3 %
AFUDC equity, net	(0.8)%	(0.7)%	(0.4)%	(0.8)%	(0.7)%	(0.4)%
Other, net, individually insignificant	0.1 %	- %	(0.3)%	0.1 %	- %	(0.5)%
Effective income tax rate	37.5 %	37.5 %	37.7 %	37.5 %	37.5 %	37.7 %

The significant components of deferred tax liabilities (assets) that appear on MGE Energy's and MGE's consolidated balance sheets as of December 31 as follows:

		MGE Energy				MGE
(In thousands)		2014		2013		2014		2013
Property-related	$	312,903	$	263,881	$	312,807	$	263,881
Investment in ATC		36,140		32,696		29,156		27,073
Bond transactions		1,420		1,553		1,420		1,553
Pension and other postretirement benefits		57,847		34,478		57,847		34,478
Derivatives		22,331		26,361		22,331		26,361
Tax deductible prepayments		8,077		7,508		8,077		7,508
Other		10,451		1,995		10,259		1,911
Gross deferred income tax liabilities		449,169		368,472		441,897		362,765
Future tax benefit		(4,092)		-		(4,092)		-
Accrued expenses		(32,091)		(17,195)		(32,091)		(17,195)
Pension and other postretirement benefits		(44,994)		(26,838)		(44,994)		(26,838)
Deferred tax regulatory account		(1,211)		(1,402)		(1,211)		(1,402)
Derivatives		(22,331)		(26,361)		(22,331)		(26,361)
Other		(5,957)		(10,369)		(3,746)		(9,356)
Gross deferred income tax assets		(110,676)		(82,165)		(108,465)		(81,152)
Less valuation allowance		70		195		70		195
Net deferred income tax assets		(110,606)		(81,970)		(108,395)		(80,957)
Deferred income taxes	$	338,563	$	286,502	$	333,502	$	281,808

As of December 31, 2014, MGE Energy and MGE have approximately $16.5 million and $5.4 million of state net operating loss and federal tax carryforwards, respectively. The net operating loss and tax credit carryforwards resulted in deferred tax assets of $0.8 million and $5.4 million, respectively, as of December 31, 2014, that are shown net of $2.0 million of unrecognized tax benefits.

The valuation allowance reduces MGE Energy's and MGE's deferred tax assets for state carryforward losses to estimated realizable value due to the uncertainty of future income estimates in various state tax jurisdictions. For tax purposes, as of December 31, 2014, both MGE Energy and MGE had approximately $1.4 million of state tax net operating loss deductions subject to a valuation allowance that expire between 2020 and 2023 if unused.

b.

Accounting for Uncertainty in Income Taxes - MGE Energy and MGE.

MGE Energy and MGE account for the difference between the tax benefit amount taken on prior year tax returns, or expected to be taken on a current year tax return, and the tax benefit amount recognized in the financial statements as an unrecognized tax benefit.

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A tabular reconciliation of unrecognized tax benefits and interest from January 1, 2012, to December 31, 2014, is as follows:

(In thousands)
Unrecognized tax benefits:		2014		2013		2012
Unrecognized tax benefits, January 1,	$	2,363	$	3,204	$	2,364
Additions based on tax positions related to the current year		610		377		401
Additions based on tax positions related to the prior years		618		424		580
Reductions based on tax positions related to the current year		-		(40)		-
Reductions based on tax positions related to the prior years		(1,226)		(1,602)		(141)
Unrecognized tax benefits, December 31,	$	2,365	$	2,363	$	3,204
(In thousands)
Interest on unrecognized tax benefits:		2014		2013		2012
Accrued interest on unrecognized tax benefits, January 1,	$	101	$	314	$	216
Reduction in interest expense on uncertain tax positions		(97)		(275)		-
Interest expense on uncertain tax positions		88		62		98
Accrued interest on unrecognized tax benefits, December 31,	$	92	$	101	$	314

Unrecognized tax benefits of $0.4 million and $2.4 million are liabilities shown with other deferred liabilities on the December 31, 2014, and December 31, 2013, consolidated balance sheets, respectively. At December 31, 2014, $2.0 of unrecognized tax benefits are netted with deferred tax assets on the consolidated balance sheet. The interest component is offset by a regulatory asset.

During 2013, the IRS issued guidance on the treatment of electric generation repairs. This guidance prompted the reversal of the unrecognized tax benefits for these repairs in 2013. With the adoption of this new guidance in 2014 unrecognized tax benefits related to electric generation were added. At December 31, 2014 and 2012, MGE Energy and MGE have an unrecognized tax benefit primarily related to temporary tax differences associated with the change in income tax method of accounting for electric generation and electric and gas distribution repairs. At December 31, 2013, MGE Energy and MGE had an unrecognized tax benefit primarily related to temporary tax differences associated with the change in income tax method of accounting for electric and gas distribution repairs. There were no unrecognized tax benefits at December 31, 2014, 2013, or 2012 related to federal permanent differences and tax credits.

The unrecognized tax benefits at December 31, 2014, are not expected to significantly increase or decrease within the next twelve months. In addition, statutes of limitations will expire for MGE Energy and MGE tax returns. The impact of the statutes of limitations expiring is not anticipated to be material. The following table shows tax years that remain subject to examination by major jurisdiction:

Taxpayer	Open Years
MGE Energy and consolidated subsidiaries in federal return	2011 through 2014
MGE Energy Wisconsin combined reporting corporation return	2010 through 2014

13.

Pension Plans and Other Postretirement Benefits - MGE Energy and MGE.

MGE maintains qualified and nonqualified pension plans, health care, and life insurance benefits, and defined contribution 401(k) benefit plans for its employees and retirees. MGE's costs for the 401(k) plans were $2.5 million, $2.3 million, and $2.1 million in 2014, 2013, and 2012, respectively. A measurement date of December 31 is utilized for all pension and postretirement benefit plans.

All employees hired after December 31, 2006, have been enrolled in the defined contribution pension plan, rather than the defined benefit pension plan previously in place.

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a.

Benefit Obligations and Plan Assets.

(In thousands)		Pension Benefits				Other Postretirement Benefits
Change in benefit obligations:		2014		2013		2014		2013
Net benefit obligation at beginning of year	$	283,958	$	315,505	$	66,100	$	92,605
Service cost		6,179		7,705		1,339		2,380
Interest cost		13,574		12,656		3,166		3,871
Plan participants' contributions		-		-		708		665
Plan amendments(a)		-		-		-		(20,915)
Actuarial (gain) loss(b)		48,162		(40,335)		10,090		(9,687)
Gross benefits paid		(11,640)		(11,573)		(3,113)		(2,998)
Less: federal subsidy on benefits paid(c)		-		-		188		179
Benefit obligation at end of year	$	340,233	$	283,958	$	78,478	$	66,100
Change in plan assets:
Fair value of plan assets at beginning of year	$	277,398	$	212,277	$	37,602	$	32,124
Actual return on plan assets		21,907		45,816		2,558		5,000
Employer contributions		883		30,878		1,197		2,811
Plan participants' contributions		-		-		708		665
Gross benefits paid		(11,640)		(11,573)		(3,113)		(2,998)
Fair value of plan assets at end of year	$	288,548	$	277,398	$	38,952	$	37,602
Funded Status at December 31	$	(51,685)	$	(6,560)	$	(39,526)	$	(28,498)

(a)

In 2013, MGE capped the amount it pays each year toward retiree medical premiums at 175% of the 2013 employer contribution for qualified employees.

(b)

In 2014, lower discount rates and mortality table updates were the main drivers to the actuarial loss.

(c)

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 the years ended December 31, 2014 and 2013, the subsidy due to MGE was $0.2 million.

The accumulated benefit obligation for the defined benefit pension plans at the end of 2014 and 2013 was $304.0 million and $254.5 million, respectively.

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

		Pension Benefits				Other Postretirement Benefits
(In thousands)		2014		2013		2014		2013
Long-term asset	$	-	$	15,071	$	-	$	-
Current liability		(1,025)		(945)		(65)		(13)
Long-term liability		(50,660)		(20,686)		(39,461)		(28,485)
Net liability	$	(51,685)	$	(6,560)	$	(39,526)	$	(28,498)

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 our consolidated balance sheets:

		Pension Benefits				Other Postretirement Benefits
(In thousands)		2014		2013		2014		2013
Net actuarial loss	$	85,102	$	37,499	$	17,657	$	7,761
Prior service cost		(413)		(209)		(17,827)		(20,495)
Transition obligation		-		-		32		35
Total	$	84,689	$	37,290	$	(138)	$	(12,699)

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

(In thousands)		Pension Benefits
Projected benefit obligation in excess of plan assets		2014		2013
Projected benefit obligation, end of year	$	340,233	$	21,631
Fair value of plan assets, end of year		288,548		-

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets and an accumulated benefit obligation in excess of plan assets were as follows:

(In thousands)		Pension Benefits
Accumulated benefit obligation in excess of plan assets		2014		2013
Projected benefit obligation, end of year	$	340,233	$	21,631
Accumulated benefit obligation, end of year		304,023		19,795
Fair value of plan assets, end of year		288,548		-

b.

Net Periodic Cost.

MGE has elected to recognize the cost of its transition obligation (the accumulated postretirement benefit obligation as of January 1, 1993) by amortizing it on a straight-line basis over 20 years.

(In thousands)		Pension Benefits						Other Postretirement Benefits
Components of net periodic (benefit) cost:		2014		2013		2012		2014		2013		2012
Service cost	$	6,179	$	7,705	$	7,139	$	1,339	$	2,380	$	2,528
Interest cost		13,574		12,656		12,704		3,166		3,871		4,431
Expected return on assets		(22,051)		(19,027)		(15,182)		(2,615)		(2,176)		(1,741)
Amortization of:
Transition obligation		-		-		-		3		3		425
Prior service (benefit) cost		204		314		430		(2,669)		110		110
Actuarial loss		703		8,014		8,288		252		1,236		2,346
Net periodic (benefit) cost	$	(1,391)	$	9,662	$	13,379	$	(524)	$	5,424	$	8,099

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
	2014	2013	2014	2013
Discount rate	4.11%	4.88%	3.96%	4.69%
Rate of compensation increase	3.85%	3.90%	N/A	N/A
Assumed health care cost trend rates:
Health care cost trend rate assumed for next year	N/A	N/A	6.5%	7.0%
Rate to which the cost trend rate is assumed to
decline (the ultimate trend rate)	N/A	N/A	5.0%	5.0%
Year that the rate reaches the ultimate trend rate	N/A	N/A	2021	2018

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
	2014	2013	2012	2014	2013	2012
Discount rate	4.88%	4.09%	4.50%	4.69%	4.14%	4.55%
Expected rate of return on plan assets	8.10%	8.10%	8.10%	7.07%	6.79%	7.26%
Rate of compensation increase	3.93%	4.60%	4.59%	N/A	N/A	N/A

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The assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. The following table shows how an assumed 1% increase or 1% decrease in health care cost trends could impact postretirement benefits in 2014 dollars:

(In thousands)		1% Increase		1% Decrease
Effect on other postretirement benefit obligation	$	1,465	$	(1,852)
Effect on total service and interest cost components		75		(101)

MGE employs a building-block approach in determining the expected long-term rate of return for asset classes. Historical markets are studied and long-term historical relationships among asset classes are analyzed, consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors, such as interest rates and dividend yields, are evaluated before long-term capital market assumptions are determined.

The expected long-term nominal rate of return for plan assets is primarily a function of expected long-term real rates of return for component asset classes and the plan's target asset allocation in conjunction with an inflation assumption. Peer data and historical returns are reviewed to check for appropriateness.

d.

Investment Strategy.

MGE employs a total return investment approach whereby a mix of equities, fixed income, and real estate investments are used to maximize the expected long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan-funded status, and corporate financial condition. The investment portfolio contains a diversified blend of equity, fixed income, and real estate investments. Investment risk is measured and monitored on an ongoing basis through periodic investment portfolio reviews and liability measurements.

The asset allocation for MGE's pension plans at the end of 2014 and 2013, and the target allocation for 2015, by asset category, follows:

	Target Allocation	Percentage of Plan             Assets at Year End
		2014	2013
Equity securities(a)	63.0 %	62.0 %	66.0 %
Fixed income securities	30.0 %	31.0 %	28.0 %
Real estate	7.0 %	7.0 %	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, 17.5% non-United States equity.

The fair value of plan assets for the postretirement benefit plans is $39.0 million and $37.6 million at the end of 2014 and 2013, respectively. Of this amount, $32.8 million and $31.1 million at the end of 2014 and 2013, respectively, were held in the master pension trust and are allocable to postretirement health expenses. The target asset allocation and investment strategy for the portion of assets held in the master pension trust are the same as that explained for MGE's pension plans. The remainder of postretirement benefit assets is held either in an insurance continuance fund for the payment of retiree life benefits or a health benefit trust for payment of retiree health claims. There is no formal target asset allocation for these assets, but the intent is to seek interest income and maintain stability of principal.

e.

Concentrations of Credit Risk.

MGE evaluated its pension and other postretirement benefit plans' asset portfolios for the existence of significant concentrations of credit risk as of December 31, 2014. Types of concentrations that were evaluated include, but are not limited to, investment concentrations in a single entity, type of industry, and foreign country. As of December 31, 2014, there were no significant concentrations (defined as greater than 10 percent of plan assets) of risk in MGE pension and postretirement benefit plan assets.

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f.

Fair Value Measurements of Plan Assets.

Pension and other postretirement benefit plan investments are recorded at fair value. See Footnote 11 for more information regarding the fair value hierarchy.

The following is a description of the valuation methodologies used for assets measured at fair value as of December 31, 2014:

Equity Securities – These securities consist of U.S. and international stock funds. The U.S. stock funds are primarily invested in domestic equities. Securities in these funds are typically priced using the closing price from the applicable exchange, NYSE, NASDAQ, etc. The international funds are composed of international equities. Securities are priced using the closing price from the appropriate local stock exchange.

Fixed Income Securities – These securities consist of U.S. bond funds and short-term funds. U.S. bond funds are priced by a pricing agent using inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. The short-term funds are valued initially at cost and adjusted for amortization of any discount or premium.

Real Estate – The fair value of real estate properties is determined through an external appraisal process.

Insurance Continuance Fund (ICF) – The fair value of the ICF is based on largely unobservable inputs, which are based on a commingled interest.

Fixed Rate Fund – The fair value of the Fixed Rate fund is determined based on the type of assets held. Public market data and GAAP reported market values are used when available. For all other assets, discounted cash flows are calculated using treasury rates and spreads based on the cash flow timing and quality of assets.

The fair value of MGE's plan assets, by asset category are as follows:

	Fair Value as of December 31, 2014
(In thousands)		Total		Level 1		Level 2		Level 3
Equity Securities:
U.S. Large Cap	$	99,256	$	-	$	99,256	$	-
U.S. Mid Cap		22,926		-		22,926		-
U.S. Small Cap		29,353		-		29,353		-
International Blend		47,650		-		47,650		-
Fixed Income Securities:
Short-Term Fund		3,776		-		3,776		-
High Yield Bond		15,492		-		15,492		-
Long Duration Bond		79,603		-		79,603		-
Real Estate		23,480		-		-		23,480
Insurance Continuance Fund		1,518		-		-		1,518
Fixed Rate Fund		4,446		-		-		4,446
Total	$	327,500	$	-	$	298,056	$	29,444
	Fair Value as of December 31, 2013
(In thousands)		Total		Level 1		Level 2		Level 3
Cash and Cash Equivalents	$	5,109	$	5,109	$	-	$	-
Equity Securities:
U.S. Large Cap		96,258		-		96,258		-
U.S. Mid Cap		22,741		-		22,741		-
U.S. Small Cap		28,854		-		28,854		-
International Blend		54,873		-		54,873		-
Fixed Income Securities:
Short-Term Fund		4,789		-		4,789		-
High Yield Bond		15,127		-		15,127		-
Long Duration Bond		66,193		-		66,193		-
Real Estate		19,628		-		-		19,628
Insurance Continuance Fund		1,428		-		-		1,428
Total	$	315,000	$	5,109	$	288,835	$	21,056

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No transfers were made in or out of Level 1 or Level 2 for the year ended December 31, 2014.

The following table summarizes the changes in the fair value of the Level 3 plan assets.

		Level 3 Assets
(In thousands)		Real Estate		Insurance Continuance Fund		Fixed Rate Fund
Balance as of  January 1, 2013	$	17,141	$	1,466	$	-
Actual return on plan assets:
Relating to assets still held at the reporting date		1,565		42		-
Purchases, sales, and settlements		922		(80)		-
Transfers in and/or out of Level 3		-		-		-
Balance as of December 31, 2013		19,628		1,428		-
Actual return on plan assets:
Relating to assets still held at the reporting date		1,561		44		54
Purchases, sales, and settlements		2,291		46		4,392
Transfers in and/or out of Level 3		-		-		-
Balance as of December 31, 2014	$	23,480	$	1,518	$	4,446

g.

Expected Cash Flows.

Contributions to the qualified plans for 2015 are expected to be $10 million, which was paid in January 2015. MGE does not expect to make contributions to the plans for 2016. The contributions for years after 2016 are not yet currently estimated. MGE has adopted the asset smoothing as permitted in accordance with the Pension Protection Act of 2006, including modifications made by WRERA.

Due to uncertainties in the future economic performance of plan assets, discount rates, and other key assumptions, estimated contributions are subject to change. MGE may also elect to make additional discretionary contributions.

In 2014, MGE made $3.3 million in employer contributions to its pension and postretirement plans.

h.

Benefit Payments.

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
2015	$	11,944	$	3,101	$	(211)	$	2,890
2016		12,631		3,338		(237)		3,101
2017		13,408		3,757		(258)		3,499
2018		14,613		4,272		(282)		3,990
2019		15,559		4,776		(306)		4,470
2020 - 2024		92,915		29,871		(2,005)		27,866

14.

Share-Based Compensation - MGE Energy and MGE.

Under MGE Energy's Performance Unit Plan, eligible employees may receive performance units that entitle the holder to receive a cash payment equal to the value of a designated number of shares of MGE Energy's common stock, plus dividend equivalent payments thereon, at the end of the set performance period. In accordance with the plan's provisions, these awards are subject to a prescribed vesting schedule and must be settled in cash. Accordingly, no shares of common stock will be issued in connection with the plan.

85

On the grant date, MGE Energy and MGE measure the cost of the employee services received in exchange for a performance unit award based on the current market value of MGE Energy common stock. The fair value of the awards is re-measured quarterly, including at December 31, 2014, as required by applicable accounting standards. Changes in fair value as well as the original grant are recognized as compensation cost. Since this amount is re-measured throughout the vesting period, the compensation cost is subject to variability. These units are subject to a five year graded vesting schedule.

Grant Date	MGE Energy Units Granted
February 20, 2015	18,948
February 21, 2014	21,991
February 15, 2013	22,884
February 17, 2012	25,040
January 21, 2011	23,483

For nonretirement eligible employees, stock based compensation costs are accrued and recognized using the graded vesting method. Compensation cost for retirement eligible employees or employees that will become retirement eligible during the vesting schedule are recognized on an abridged horizon.

In December 2013, a Director Incentive Plan was approved for the non-employee members of the Board of Directors. This plan is similar to MGE Energy's Performance Unit Plan for eligible employees described above. Under the plan, a non-employee director can receive performance units that entitle the holder to receive a cash payment equal to the value of a designated number of shares of MGE Energy's common stock, plus dividend payments, at the end of the set performance period. The units are subject to a three year graded vesting schedule.

Grant Date	MGE Energy Units Granted
January 16, 2015	3,794
January 17, 2014	4,683

During the years ended December 31, 2014, 2013, and 2012, MGE recorded $2.0 million, $1.5 million, and $1.4 million, respectively, in compensation expense as a result of awards under the plans. In January 2014, cash payments of $1.2 million were distributed relating to awards that were granted in 2009. No forfeitures occurred during the years ended December 31, 2014, 2013, and 2012. At December 31, 2014, $5.2 million of outstanding awards are vested, and of this amount no cash settlements have occurred.

15.

Regional Transmission Organizations - MGE Energy and MGE.

MGE reports on a net basis transactions on the MISO and PJM markets in which it buys and sells power within the same hour to meet electric energy delivery requirements. This treatment resulted in a $91.1 million and $78.0 million reduction to sales to the market and purchase power expense for MISO markets for the years ended December 31, 2014 and 2013, respectively, and a $75.9 million reduction to sales to the market and purchased power expense for MISO and PJM markets for the year ended December 31, 2012.

16.

Derivative and Hedging Instruments - MGE Energy and MGE.

a.

Purpose.

As part of its regular operations, MGE enters into contracts, including options, swaps, futures, forwards, and other contractual commitments, to manage its exposure to commodity prices and gas revenues. To the extent that these contracts are derivatives, MGE assesses whether or not the normal purchases or normal sales exclusion applies. For contracts to which this exclusion cannot be applied, MGE Energy and MGE recognize such derivatives in the consolidated balance sheets at fair value. The majority of MGE's derivative activities are conducted in accordance with its electric and gas risk management program, which is approved by the PSCW and limits the volume MGE can hedge with specific risk management strategies. The maximum length of time over which cash flows related to energy commodities can be hedged is four years. If the derivative qualifies for regulatory deferral, the derivatives are marked to fair value and are offset with a corresponding regulatory asset or liability. The deferred gain or loss is recognized in earnings in the delivery month applicable to the instrument. Gains and losses related to hedges qualifying for regulatory treatment are recoverable in gas rates through the PGA or in electric rates as a component of the fuel rules mechanism.

86

b.

Notional Amounts.

The gross notional volume of open derivatives is as follows:

	December 31, 2014	December 31, 2013
Commodity derivative contracts	448,000 MWh	458,660 MWh
Commodity derivative contracts	4,405,000 Dth	3,750,000 Dth
FTRs	1,854 MW	1,984 MW

c.

Financial Statement Presentation.

MGE purchases and sells exchange-traded and over-the-counter options, swaps, and future contracts. These arrangements are primarily entered into to help stabilize the price risk associated with gas or power purchases. These transactions are employed by both MGE's gas and electric segments. Additionally, as a result of the firm transmission agreements that MGE holds on electricity transmission paths in the MISO market, MGE holds FTRs. An FTR is a financial instrument that entitles the holder to a stream of revenues or charges based on the differences in hourly day-ahead energy prices between two points on the transmission grid. The fair values of these instruments are offset with a corresponding regulatory asset/liability depending on whether they are in a net loss/gain position. Depending on the nature of the instrument, the gain or loss associated with these transactions will be reflected as cost of gas sold, fuel for electric generation, or purchased power expense in the delivery month applicable to the instrument. At December 31, 2014, the cost basis of exchange traded derivatives and FTRs exceeded their fair value by $1.6 million. At December 31, 2013, the fair value of exchange traded derivatives and FTRs exceeded their cost basis by $1.8 million.

MGE is a party to a ten-year purchased power agreement that provides MGE with firm capacity and energy during a base term from June 1, 2012, through May 31, 2022. The agreement also allows MGE an option to extend the contract after the base term. The agreement is accounted for as a derivative contract and is recognized at its fair value on the consolidated balance sheet. However, the derivative qualifies for regulatory deferral and is recognized with a corresponding regulatory asset or liability depending on whether the fair value is in a loss or gain position. The fair value of the contract at December 31, 2014 and 2013, reflects a loss position of $53.4 million and $65.7 million, respectively. The actual fuel cost will be recognized in purchased power expense in the month of purchase and collected in rates.

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 December 31, 2014, MGE Energy and MGE had the right to reclaim collateral (a receivable) of $2.2 million.

	Asset Derivatives			Liability Derivatives
(In thousands)	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
December 31, 2014
Commodity derivative contracts	Other current assets	$	130	Derivative liability (current)	$	2,262
Commodity derivative contracts	Other deferred charges		93	Derivative liability (long-term)		171
FTRs	Other current assets		642	Derivative liability (current)		-
Ten-year PPA	N/A		N/A	Derivative liability (current)		6,870
Ten-year PPA	N/A		N/A	Derivative liability (long-term)		46,560
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

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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
		Gross amounts		Gross amounts offset in balance sheet		Collateral posted against derivative positions		Net amount presented in balance sheet
(In thousands)
December 31, 2014
Commodity derivative contracts	$	223	$	(223)	$	-	$	-
FTRs		642		-		-		642
December 31, 2013
Commodity derivative contracts	$	1,523	$	(99)	$	(175)	$	1,249
FTRs		363		-		-		363

Offsetting of Derivative Liabilities
		Gross amounts		Gross amounts offset in balance sheet		Collateral posted against derivative positions		Net amount presented in balance sheet
(In thousands)
December 31, 2014
Commodity derivative contracts	$	2,433	$	(223)	$	(2,179)	$	31
Ten-year PPA		53,430		-		-		53,430
December 31, 2013
Commodity derivative contracts	$	99	$	(99)	$	-	$	-
Ten-year PPA		65,680		-		-		65,680

The following tables summarize the unrealized and realized gains (losses) related to the derivative instruments on the consolidated balance sheet at December 31, 2014 and 2013, and the consolidated income statement for the year ended December 31, 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
Balance at  January 1,	$	63,893	$	411	$	72,329	$	574
Change in unrealized loss		(14,518)		-		(5,069)		-
Realized  gain (loss) reclassified to a deferred account		595		(595)		(823)		823
Realized gain (loss) reclassified to income statement		5,028		1,185		(2,544)		(986)
Balance at December 31,	$	54,998	$	1,001	$	63,893	$	411

		Realized losses (gains)
		2014				2013
		Fuel for electric generation/ purchased power		Cost of gas sold		Fuel for electric generation/ purchased power		Cost of gas sold
(In thousands)
Year Ended December 31:
Commodity derivative contracts	$	(5,515)	$	(1,103)	$	(564)	$	868
FTRs		(1,110)		-		(983)		-
Ten-year PPA		1,515		-		4,209		-

MGE's commodity derivative contracts, FTRs, and ten-year PPA are subject to regulatory deferral. These derivatives are marked to fair value and are offset with a corresponding regulatory asset or liability. Realized gains and losses are deferred on the consolidated balance sheet and are recognized in earnings in the delivery month applicable to the instrument. As a result of the above described treatment, there are no unrealized gains or losses that flow through earnings.

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The ten-year PPA has a provision that may require MGE to post collateral if MGE's debt rating falls below investment grade (i.e., below BBB-). The amount of collateral that it may be required to post varies from $20.0 million to $40.0 million, depending on MGE's nominated capacity amount. As of December 31, 2014, no collateral has been posted. Certain counterparties extend MGE a credit limit. If MGE exceeds these limits, the counterparties may require collateral to be posted. As of December 31, 2014, certain counterparties were in a net liability of less than $0.1 million. As of December 31, 2013, no counterparties were in a net liability position.

Nonperformance of counterparties to the non-exchange traded derivatives could expose MGE to credit loss. However, MGE enters into transactions only with companies that meet or exceed strict credit guidelines, and it monitors these counterparties on an ongoing basis to mitigate nonperformance risk in its portfolio. As of December 31, 2014, no counterparties have defaulted.

17.

Rate Matters - MGE Energy and MGE.

a.

Rate Proceedings.

On December 23, 2014, the PSCW authorized MGE to increase 2015 rates for retail electric customers by 3.8% or $15.4 million and to decrease gas rates by 2.0% or $3.8 million. The increase in retail electric rates cover costs associated with the construction of emission-reduction equipment at Columbia, improvements and reliability of the state's electric transmission system, fuel and purchased power related to coal delivery costs, partially offset by lower cost as a result of market conditions for pension and post-retirement benefit costs. The authorized return on common stock equity is 10.2%.

On July 26, 2013, the PSCW authorized MGE to freeze electric and natural gas rates at 2013 levels for 2014. The order includes authorizing 100% AFUDC on the Columbia scrubber construction project and deferral of increased costs related to ATC and MISO network upgrade fees. As part of the rate freeze plan authorized by the PSCW, effective January 1, 2014, approximately $6.3 million associated with a 2012 fuel rule surplus credit was required to be refunded to customers and was amortized in 2014. The fuel credit accrued interest at MGE's weighted cost of capital. The authorized return on equity remained unchanged at 10.3%.

On December 14, 2012, the PSCW authorized MGE to increase 2013 rates for retail electric customers by 3.8% or $14.9 million and to increase gas rates by 1.0% or $1.6 million. The change in retail electric rates was driven by costs for new environmental equipment at Columbia, final construction costs for the Elm Road Units, transmission reliability enhancements, and purchased power costs. The authorized return on common stock equity remained unchanged at 10.3%.

On December 15, 2011, under a limited reopener of MGE's last rate order, the PSCW authorized MGE to increase 2012 rates for retail electric customers by 4.3% or $15.7 million and to increase gas rates by 0.3% or $0.6 million. The change in retail electric rates was driven by MGE's electric fuel and purchased power costs, increased transmission costs, an update to the Elm Road Units' costs, and an increase for energy efficiency programs. The PSCW also approved deferral of CSAPR costs.

b.

Fuel Rules.

Fuel rules require the PSCW and Wisconsin utilities to defer electric fuel-related costs that fall outside a symmetrical cost tolerance band around the amount approved for a utility in its most recent base rate proceedings. Any over/under recovery of the actual costs is determined on an annual basis and will be adjusted in future billings to electric retail customers. The fuel rules bandwidth is currently set at plus or minus 2%. Under fuel rules, MGE would defer costs, less any excess revenues, if its actual electric fuel costs exceeded 102% of the electric fuel costs allowed in its latest rate order. Excess revenues are defined as revenues in the year in question that provide MGE with a greater return on common equity than authorized by the PSCW in MGE's latest rate order. Conversely, MGE is required to defer the benefit of lower costs if actual electric fuel costs were less than 98% of the electric fuel costs allowed in that order.

As of December 31, 2014, MGE's fuel costs are within the range authorized by the PSCW in the most recent rate order; therefore, no fuel credits or surcharges were necessary. As part of the rate freeze plan authorized by the PSCW for 2014, $6.3 million associated with the 2012 fuel rule credit was amortized against purchased power expense during the year ended December 31, 2014. The 2013 fuel rule credit of $6.5 million was returned to customers in October 2014.

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18.

Commitments and Contingencies.

a.

Purchase Contracts - MGE Energy and MGE.

MGE Energy and MGE have entered into various commodity supply, transportation, and storage contracts to meet their obligations to deliver electricity and natural gas to customers. As of December 31, 2014, the future minimum commitments related to these purchase contracts were as follows:

(In thousands)		2015		2016		2017		2018		2019
Coal(a)	$	22,630	$	16,436	$	10,664	$	6,560	$	3,850
Natural Gas
Transportation and storage(b)		18,074		9,938		273		192		-
Supply(c)		14,971		-		-		-		-
Purchase Power(d)		50,714		51,437		52,043		50,752		37,367
Other		16,452		723		723		324		143
	$	122,841	$	78,534	$	63,703	$	57,828	$	41,360

(a)

Total coal commitments for the Columbia and Elm Road Units, including transportation. Fuel procurement for MGE's jointly owned Columbia and Elm Road Units are handled by WPL and WEPCO, respectively, who are the operators of those facilities. If any minimum purchase obligations must be paid under these contracts, management believes these obligations would be considered costs of service and recoverable in rates.

(b)

MGE's natural gas transportation and storage contracts require fixed monthly payments for firm supply pipeline transportation and storage capacity. The pricing components of the fixed monthly payments for the transportation and storage contracts are established by FERC but may be subject to change.

(c)

These commitments include market-based pricing. Management expects to recover these costs in future customer rates.

(d)

MGE has several purchase power agreements to help meet future electric supply requirements. Management expects to recover these costs in future customer rates. In October 2008, MGE entered into a ten-year purchase power agreement to help meet future electric supply requirements. Under this agreement, MGE has agreed to purchase 50 MW of wind power from Osceola Windpower II, LLC, which is located in Iowa. This facility became operational in October 2008. MGE does not have any capacity payment commitments under this agreement. However, MGE is obligated to purchase its ratable share of the energy produced by the project. MGE's commitment related to its ratable share of energy produced by the project has been estimated and is included in the above numbers.

b.

Chattel Paper Agreement and Other Guarantees - MGE Energy and MGE.

MGE makes available to qualifying customers a financing program for the purchase and installation of energy-related equipment that will provide more efficient use of utility service at the customer's property. MGE is party to a chattel paper purchase agreement with a financial institution under which it can sell or finance an undivided interest with recourse, in up to $10.0 million of the financing program receivables, until July 31, 2015. At December 31, 2014, 2013, and 2012, respectively, MGE had sold a $4.4 million, $5.4 million, and $4.5 million interest in these receivables. MGE retains the servicing responsibility for these receivables.

MGE accounts for servicing rights under the amortization method. Initial determination of the servicing asset fair value is based on the present value of the estimated future cash flows. The discount rate is based on the PSCW authorized weighted cost of capital.

MGE maintains responsibility for collecting and remitting loan payments from customers to the financial institution and does not retain any interest in the assets sold to the financial institution. At December 31, 2014, 2013, and 2012, MGE recorded a servicing asset of $0.2 million, $0.3 million, and $0.2 million, respectively. MGE recognized gains of $0.1 million, $0.2 million, and $0.1 million for the years ended December 31, 2014, 2013, and 2012, respectively, in connection with the sale of loan assets. The servicing asset amount amortized in 2014 was less than $0.1 million. The loan assets are sold to the financial institution at cost, which approximates fair value in view of their market rates of interest. During 2014, 2013, and 2012, MGE received approximately $0.5 million, $1.6 million, and $1.2 million, respectively, from the

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financial institution for the sale of loan assets. During those same years, payments of $1.5 million, $0.8 million, and $1.2 million, respectively, were made by MGE to the financial institution.

MGE would be required to perform under its guarantee if a customer defaulted on its loan. The energy-related equipment installed at the customer sites is used to secure the customer loans. The loan balances outstanding at December 31, 2014, approximate the fair value of the energy-related equipment acting as collateral. The length of the MGE guarantee to the financial institution varies from one to ten years depending on the term of the underlying customer loan. Principal payments for the next five years on the loans are:

(In thousands)		2015		2016		2017		2018		2019
Principal payments	$	906	$	884	$	482	$	420	$	410

c.

Leases - MGE Energy and MGE.

MGE has noncancelable operating leases, primarily for combustion turbines, railcars, and computer equipment. The operating leases generally do not contain renewal options, with the exception of certain railcar operating leases. These leases have a renewal option of one year or less. MGE is required to pay all executory costs such as maintenance and insurance for its leases.

Future minimum rental payments at December 31, 2014, under agreements classified as operating leases with noncancelable terms in excess of one year are as follows:

(In thousands)		2015		2016		2017		2018		2019		Thereafter
Minimum lease payments	$	1,553	$	1,346	$	872	$	419	$	258	$	7,938

Rental expense under operating leases totaled $2.5 million, $2.7 million, and $2.6 million for 2014, 2013, and 2012, respectively.

d.

Environmental - MGE Energy and MGE.

Water Quality

Water quality regulations promulgated by the EPA and WDNR in accordance with the Federal Water Pollution Control Act, or more commonly known as the Clean Water Act (CWA), impose restrictions on discharges of various pollutants into surface waters. The CWA also regulates surface water quality issues that affect aquatic life, such as water temperatures, intake structures, and wetlands filling. The CWA also includes discharge standards, which require the use of effluent-treatment processes equivalent to categorical "best practicable" or "best available" technologies. The CWA regulates discharges from "point sources," such as power plants, through establishing discharge limits in water discharge permits. MGE's power plants operate under Wisconsin Pollution Discharge Elimination System (WPDES) permits to ensure compliance with these discharge limits.

EPA's Proposed Effluent Limitations Guidelines (ELG) and Standards for Steam Electric Power Generating Point Source Category

In June 2013, the EPA published a proposed rule that would amend the current ELG rule and lower the existing permissible water discharge of metals and other pollutants in wastewater from new and existing steam electric generation plants. The proposed rule focuses mainly on water discharges associated with certain air pollution control systems and ash handling systems at coal-burning power plants. Under the proposed rule, the EPA asked for comments on four regulatory options, varying in their compliance stringency and cost. The EPA is under a consent decree to finalize the rule by September 2015. Once finalized, the rule will apply to power plants as they renew their WPDES permits beginning in July 2017.

The ELG rule as proposed would require specific treatments and/or technologies to meet the water discharge requirements. Sites that already have these technologies will be deemed to meet the requirements of the rule. Sites without these technologies would need to install them to be in compliance. The proposed rule as written will likely affect wastewater systems at Columbia and the Elm Road Units. For Columbia, the rule may affect bottom ash handling systems. For the Elm Road Units, the rule may affect its flue gas desulfurization systems.

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Based on our current evaluation of the proposed rule and its alternatives, we may need to add treatment systems or additional equipment at our Elm Road and Columbia facilities. However, MGE cannot estimate those costs with any certainty until we are able to evaluate the final version of this rule further.

EPA Cooling Water Intake Rules (Section 316(b))

Section 316(b) of the CWA requires that the cooling water intake structures at electric power plants meet best available technology standards so that mortality from entrainment (drawing aquatic life into a plant's cooling system) and impingement (trapping aquatic life on screens) are reduced. The EPA finalized its 316(b) rule for existing facilities in 2014; however, the rule is the subject of a pending legal challenge. Section 316(b) requirements are implemented in Wisconsin through modifications to plants' WPDES permits, which govern plant water discharges. WDNR is developing rules to implement the EPA 316(b) rule.

Existing facilities under the 316(b) rule (for MGE that includes our Blount, WCCF, and Columbia plants) will need to meet impingement and entrainment reduction standards or take one of seven actions to meet the reduction requirements. Compliance with 316(b) requirements will coincide with permit renewals.

MGE has studied its options and expects that it will meet requirements at its affected facilities with minimal cost. Our WCCF facility already employs a "closed cycle" cooling (CCC) system as defined under the rule. The Columbia plant may need to address multiple intake structures. Our Blount plant has conducted studies regarding options for compliance with the rule. The exact requirements, however, will not be known until those facilities' WPDES permits are modified to account for this rule. Nonetheless, MGE expects that the 316(b) rule will not have material effects on its existing plants.

Energy Efficiency and Renewables

The Wisconsin Energy Efficiency and Renewables Act requires that, by 2015, 10% of the state's electricity be generated from renewable resources. As of December 31, 2014, MGE is in compliance with the 2015 requirement. The costs to comply with the Act and its accompanying regulations are being recovered in rates.

Air Quality

Federal and state air quality regulations impose restrictions on emission of mercury, particulates (PM), sulfur dioxide (SO₂), nitrogen oxides (NO_x), and other pollutants and require permits for operation of emission sources. These permits have been obtained by MGE and must be renewed periodically. Several EPA initiatives, including the EPA's proposed greenhouse gas regulations, EPA's efforts to regulate methane from natural gas lines, the Cross-State Air Pollution Rule (CSAPR), and revised National Ambient Air Quality Standards (NAAQS) have the potential to result in additional operating and capital expenditure costs for MGE.

EPA's Greenhouse Gas (GHG) Reduction Guidelines under the Clean Air Act 111d Rule

In June 2014, the EPA developed a proposed rule called the Clean Power Plan that set guidelines for states to use in developing plans to control GHG emissions from existing fossil fuel fired electric generating units (EGUs). The EPA's proposal includes reductions in GHG emissions from EGUs by a national average of 30% by 2030 as measured from a 2012 baseline. Each state is given its own emission reduction targets to meet this goal, and States' goals can be higher or lower than the national average. The State of Wisconsin's reduction goal is 34%. These targets are expressed as a "rate-based" emission average to be achieved by the combined fleet of EGUs within the state. States would be expected to make "meaningful progress" towards these reductions by 2020 and to meet their respective targets by 2030.

The EPA's proposal establishes guidelines for states and encourages the use of four "building blocks" for achieving these reductions. These "building blocks" are: (1) increasing the efficiency of EGUs; (2) re-dispatching of gas-fired generation in lieu of coal; (3) expanding the use of low and no carbon power sources, such as wind, nuclear and solar; and (4) improving demand side energy efficiency to reduce electric use.

MGE has been studying the EPA's proposed rule to determine what compliance in Wisconsin would look like. MGE has also participated in discussions on the proposed rule with the Wisconsin Department of Natural Resources, Public Service Commission of Wisconsin, Wisconsin utilities, and industry experts.

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The rule is expected to be finalized mid-summer 2015. States will then have up to two years to prepare compliance plans. While there is currently no certainty regarding the terms of the final rule, it is reasonable to assume that this rule will have a material impact on MGE. The parameters of the final rule, however, will determine the extent to which this rule will affect MGE.

National Ambient Air Quality Standards (NAAQS)

The EPA's NAAQS regulations have been developed to set ambient levels of six pollutants to protect sensitive populations (primary NAAQS) and the environment (secondary NAAQS) from the negative effects of exposure to these pollutants at higher levels. The NAAQS regulations govern that the EPA periodically review, and adjust as necessary, the NAAQS for these six air pollutants. The EPA's NAAQS review can result in a lowering of the allowed ambient levels of a pollutant, a change in how the pollutant is monitored, and/or a change in which sources of that pollutant are regulated. States implement any necessary monitoring and measurement changes and recommend areas for attainment (meets the ambient requirements) or nonattainment (does not meet these standards). The EPA makes the final attainment and nonattainment determinations. States must come up with a state implementation plan (SIP) to get nonattainment areas into attainment and maintain air quality in attainment areas. A company with facilities located in a nonattainment area will be most affected. Their facilities may be subject to additional data submissions and measurement during permitting renewals, their facilities may need to meet new standards set by the SIP (which could result in significant capital expenditures), and the company may have additional expenses and/or difficulties expanding or building new facilities. The process from determining acceptable primary and/or secondary NAAQS to executing SIPs can take years. Nonetheless, because the NAAQS regulations have the potential to affect both existing and new facilities in areas, MGE continuously monitors changes to these rules to evaluate whether changes could impact our operations.

MGE is monitoring developments in the Ozone NAAQS rule. In November 2014, the EPA published proposed regulations to lower the Ozone NAAQS to between 65 to 70 parts per billion (ppb). In this proposed rule, the EPA has stated they are also considering leaving the standard at its current level of 75 ppb, or lowering it further to 60 ppb. EPA is seeking comments on these options. Milwaukee County (where our Elm Road Units are located) and Dane and Columbia Counties (where several of our facilities are located) may not meet the Ozone NAAQS if it is lowered to 70 ppb or below. These counties could then be subject to a SIP that could potentially affect MGE facilities, as described above. The EPA plans to have a final Ozone NAAQS rule completed by October 2015. After the rule is finalized, there are several State and Federal actions that need to take place before the Wisconsin SIP will be implemented. Without a SIP in place, it is too soon to tell how a lowered Ozone NAAQS will affect our facilities. MGE will continue to monitor rule developments and subsequent state actions and implementation plans.

MGE is also monitoring developments in the SO₂ NAAQS rule. The EPA's SO₂ NAAQS rule has been in place for some time and initial attainment/nonattainment designations by states were due in 2013. However, there was no mechanism for determining attainment and thus, the majority of areas across the U.S., including most of Wisconsin, were unable to be classified as either in attainment or nonattainment. In 2014, the EPA proposed a data requirements rule with procedures for states to use to determine attainment and nonattainment areas. The proposed procedures include analyzing a state's highest emitting SO₂ sources to determine through measurement and/or modeling if those sources are contributing to SO₂ NAAQS exceedances. Based on the proposed data requirements rule, the State of Wisconsin will likely include our Columbia plant and may include the Elm Road Units, in the list of larger sources that require further evaluation through modeling and/or monitoring. Both Columbia and the Elm Road Units already have effective SO₂ pollution controls installed and should be in compliance with the final rule, however, we will not know with any certainty if the rule will affect our plants until the State of Wisconsin completes its evaluation. MGE will continue monitoring further actions under this rule to better evaluate the effect it may have on Columbia and the Elm Road Units.

EPA's Cross-State Air Pollution Rule

The EPA's Cross-State Air Pollution Rule (CSAPR) is an interstate air pollution transport rule designed to reduce ozone and fine particulate (PM2.5) air levels in areas that the EPA has determined are being affected by pollution from neighboring and upwind states. The EPA has identified 27 eastern states that are contributing to pollution in other states. CSAPR aims to achieve ozone and PM2.5 reductions by reducing NO_x and/or SO₂ air emissions, which contribute to ozone and PM2.5, from qualifying electric power plants in the 27 "contributing" states. The rule has been designed so that qualifying power plants will be allocated NO_x and SO₂ allowances in two phases, with the second phase including further emissions reductions. These plants will need to reduce their emissions and/or purchase allocations from the marketplace to meet their obligations.

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CSAPR, as well as its precursor rules, the Clean Air Interstate Rule (CAIR) and the NO_x SIP Call, have been subject to litigation. EPA rule adjustments and several court rulings, including recent court and EPA actions, continue to impart a level of uncertainty heading into 2015. See below for additional information on recent developments and uncertainties associated with this rule.

In July 2011, the EPA finalized CSAPR as a court-ordered replacement rule for its CAIR that had been remanded in 2008. The D.C. Circuit Court of Appeals stayed CSAPR in December 2011, then vacated CSAPR and conditionally reinstated CAIR in August 2012. The U.S. Supreme Court issued a decision in April 2014, reversing the D.C. Circuit Court's vacature of CSAPR and remanded the matter back to the D.C. Circuit for further proceedings. In October 2014, the D.C. Circuit lifted its stay of CSAPR and set a briefing schedule for remaining litigation issues that were not resolved by the Supreme Court's decision. The briefing schedule with oral arguments is planned for 2015. Additionally, the State of Wisconsin has filed pleadings with the D.C. Circuit Court reiterating its contention that Wisconsin be removed from CSAPR.

The EPA has interpreted the October 2014 lifting of the stay by the D.C. Circuit as granting the EPA the ability to reset deadlines that have since passed (CSAPR was originally designed to begin in 2012). The EPA instituted an interim final rule effective January 1, 2015, that tolls the CSAPR's deadlines by three years. The tolling of three years under the interim final rule introduces Phase I of CSAPR in 2015, and Phase II of CSAPR in 2017. The EPA is accepting comments on other aspects of the rule through February 2015.

The ongoing litigation in the D.C. Circuit, including the EPA's interpretation of tolling rule deadlines and the State of Wisconsin's arguments to be removed from the rule, leaves unresolved issues that may affect whether, when, and how MGE's facilities will need to comply with this rule. We have worked to achieve compliance with Phase I requirements, should those requirements be confirmed as being effective as of January 1, 2015, while monitoring the court proceedings, which will extend into 2015, as well as any additional actions taken by the EPA in response to its request for comments on the reinstated rule. Further, MGE expects to be able to meet CSAPR requirements by applying reductions achieved from recent pollution control installations at Columbia and early reduction efforts at Blount. We will continue to monitor and evaluate the D.C. Circuit Court remand proceedings and the implementation of the interim rule by the EPA.

Clean Air Visibility Rule (CAVR)

Air modeling indicates that SO₂ and NO_x emissions from Columbia may impair visibility at certain Class I Scenic Areas. Columbia may, therefore, be subject to the best available retrofit technology (BART) regulations, a subsection of the EPA's Clean Air Visibility Rule (CAVR), which may require pollution control retrofits. The EPA has issued rules directing that compliance with emissions limitations in the CSAPR could also serve as compliance with the BART for SO₂ and NO_x emissions at electric plants such as Columbia. However, these rules are subject to a legal challenge pending before the D.C. Circuit. In addition, an environmental group had sought, then dismissed without prejudice to refile, a federal appellate court review of Wisconsin's implementation plan for the BART portion of CAVR. These BART rules remain uncertain while subject to the pending legal challenges and while regulatory uncertainty surrounds the CSAPR. Thus, at this time, the BART regulatory obligations, compliance strategies, and costs remain uncertain.

Solid Waste

EPA's Coal Combustion Residuals Rule

In December 2014, the EPA finalized its Disposal of Coal Combustion Residuals from Electric Utilities rule. The rule will go into effect six months after it is published in the Federal Register. The rule provides that coal ash will be regulated as a special waste rather than a hazardous waste and more strictly defines what ash use activities would be exempt from solid waste disposal and considered beneficial use of coal ash. The rule also regulates landfills, ash ponds, and other surface impoundments for coal combustion residuals (CCRS or coal ash) by regulating their design, location, monitoring, and operation.

The final rule is intended to reduce the risk of structural failure of impoundments (ash ponds) and protect groundwater from both impoundment and landfill operations by setting new standards. The rule requires closure of active coal ash ponds and landfills that do not upgrade to meet these standards. Facilities with landfills and/or surface impoundments will be subject to various timeframes for meeting new regulatory requirements depending on the type of landfill or surface impoundment onsite, whether the site has failed any required integrity testing, and whether the facility intends to upgrade to meet regulatory requirements or begin closure proceedings. Timeframes to meet various compliance parameters can vary from 18 months to over 5 years.

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The Columbia and Elm Road Units co-owners and plant operators are evaluating the final rule to determine what changes may be necessary at those facilities and the associated timeframes. We anticipate that some design and operational changes may need to be made at these facilities; however, evaluation of this rule is not completed so we are unable to estimate with any certainty the costs to MGE operations at this time. Management believes any compliance costs will be recovered in future rates.

Columbia

Based upon current available information, compliance with various environmental requirements and initiatives is expected to result in significant additional operating and capital expenditures at Columbia as noted below.

Columbia Clean Air Act Litigation

In December 2009, the EPA sent a notice of violation (NOV) to MGE and the other co-owners of Columbia. The NOV alleged that WPL, as owner-operator, and the other co-owners failed to comply with appropriate pre-construction review and permitting requirements and, as a result, violated the PSD program requirements, the Title V operating permit requirements of the CAA, and the Wisconsin State Implementation Plan (SIP). In April 2013, the EPA filed a lawsuit against the co-owners of Columbia asserting similar allegations. In September 2010 and April 2013, Sierra Club filed lawsuits against WPL alleging violations of the CAA at Columbia and other WPL-operated Wisconsin facilities.

In April 2013, WPL, as owner-operator, along with the other owners of Columbia, entered into a consent decree with the EPA and the Sierra Club to resolve these claims, while admitting no liability. In June 2013, the consent decree was approved and entered by the Court. The consent decree requires installation of the following emission controls at Columbia: SO₂ scrubbers and baghouses at Columbia Units 1 and 2 by December 31, 2014 (which have now been installed) and an SCR system at Columbia Unit 2 by December 31, 2018. Installation of the SCR was recently authorized by the PSCW. In addition, the consent decree establishes emission rate limits for SO₂, NO_x, and particulate matter for Columbia Units 1 and 2. The consent decree also includes annual plant-wide emission caps for SO₂ and NO_x for Columbia. MGE also paid approximately $0.2 million as its share of a civil penalty and will complete approximately $0.6 million in environmental mitigation projects. MGE intends to seek recovery in rates of the costs associated with its compliance with the terms of the final consent decree and currently expects to recover any material compliance costs.

e.

Legal Matters - MGE Energy and MGE.

MGE is involved in various legal matters that are being defended and handled in the normal course of business. MGE maintains accruals for such costs that are probable of being incurred and subject to reasonable estimation. The accrued amount for these matters is not material to the financial statements.

f.

Elm Road - MGE Energy and MGE.

During 2013, WEPCO and Bechtel (the construction contractor for the Elm Road Units) were working through the outstanding warranty claims. The warranty claim for the costs incurred to repair steam turbine corrosion damage identified on both units was resolved through a binding arbitration in June 2013. Final acceptance of the Elm Road Units occurred in June 2013 after all requirements stated in the contract with Bechtel were satisfied. All warranty claims between WEPCO and Bechtel have now been resolved, none of which had a material impact on our financial statements.

g.

Other Commitments.

MGE Energy holds investments in nonpublic entities. From time to time, these entities require additional capital infusions from their investors. MGE Energy has committed to contribute $1.4 million in capital for such infusions. The timing of these infusions is dependent on the needs of the investee and is therefore uncertain at this time.

In addition, MGE Energy has a three year agreement with a venture debt fund expiring in December 2016. MGE Energy has committed to invest up to a total of $1.0 million into this fund. As of December 31, 2014, MGE Energy has $0.2 million remaining in commitments. The timing of infusions is dependent on the needs of the fund and is therefore uncertain at this time.

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MGE has several other commitments related to various projects. Payments for these commitments are expected to be as follows:

(In thousands)		2015		2016		2017		2018		2019		Thereafter
Other Commitments	$	474	$	475	$	433	$	435	$	437	$	6,524

19.

Asset Retirement Obligations - MGE Energy and MGE.

MGE recorded an obligation for the fair value of its legal liability for asset retirement obligations (AROs) associated with removal of the West Campus Cogeneration Facility and the Elm Road generating units, electric substations, combustion turbine generating units, wind generating facilities, and photovoltaic generating facilities, all of which are located on property not owned by MGE Energy and MGE and would need to be removed upon the ultimate end of the associated leases. The significant conditional AROs identified by MGE included the costs of abandoning in place gas services and mains, the abatement and disposal of equipment and buildings contaminated with asbestos and PCBs, and the proper disposal and removal of tanks, batteries, and underground cable. Changes in management's assumptions regarding settlement dates, settlement methods, or assigned probabilities could have a material effect on the liabilities recorded by MGE at December 31, 2014, as well as the regulatory asset recorded.

MGE also may have AROs relating to the removal of various assets, such as certain electric and gas distribution facilities. These facilities are generally located on property owned by third parties, on which MGE is permitted to operate by lease, permit, easement, license, or service agreement. The asset retirement obligations associated with these facilities cannot be reasonably determined due to the indeterminate life of the related agreements.

The following table shows a rollforward of the AROs from January 1, 2013, to December 31, 2014. Amounts include conditional AROs.

(In thousands)		2014		2013
Balance at January 1,	$	19,359	$	18,768
Liabilities incurred		68		296
Accretion expense		1,077		1,015
Liabilities settled		(343)		(744)
Revisions in estimated cash flows		(417)		24
Balance at December 31,	$	19,744	$	19,359

20.

Columbia Environmental Project Construction - MGE Energy and MGE.

MGE and two other utilities jointly own Columbia, a coal-fired generating facility. WPL is the plant operator and permit holder, and owns 46.2% of Columbia. WPSC owns a 31.8% interest and MGE owns a 22% interest in Columbia. In early 2011, the PSCW issued a Certificate and Order authorizing the construction of scrubbers and baghouses and associated equipment on Columbia Units 1 and 2 to reduce SO₂ and mercury emissions. The modifications to Unit 2 were placed into service in April 2014, and the modifications to Unit 1 were placed into service in July 2014. The scrubbers and baghouses are expected to support compliance obligations for current and anticipated air quality regulations, including CAIR, CSAPR, MATS, and the Wisconsin Mercury Rule. As of December 31, 2014, $138.8 million of the capitalized project was transferred from Construction work in progress to Property, plant, and equipment on MGE's balance sheet related to Units 1 and 2 being placed into service. This total amount consisted of $129.0 million of capital expenditures and $9.8 million of AFUDC. MGE's share of various contractual commitments entered for the project as of December 31, 2014, is $0.5 million. For the years ended December 31, 2014 and 2013, MGE has recognized after tax $3.0 million and $2.7 million, respectively, in AFUDC equity related to this project.

MGE expects that the costs pertaining to this project will be fully recoverable through rates. For 2014, the PSCW authorized MGE 100% AFUDC on this project during construction. For 2013, the PSCW authorized MGE a 50% current return (included in customer rates) and the remaining 50% as AFUDC.

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21.

Adoption of Accounting Principles and Recently Issued Accounting Pronouncements - MGE Energy and MGE.

a.

Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date.

In February 2013, the FASB issued authoritative guidance within the Codification's Balance Sheet topic that provides guidance on the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date. This authoritative guidance became effective January 1, 2014. The authoritative guidance did not have a financial or disclosure impact.

b.

Presentation of an Unrecognized Tax Benefit.

In July 2013, the FASB issued authoritative guidance within the Codification's Income Statement topic that provides guidance on the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The authoritative guidance was issued to eliminate diversity in practice by providing guidance on the presentation of unrecognized tax benefits. This authoritative guidance became effective January 1, 2014. The authoritative guidance will not have a financial statement or disclosure impact, unless MGE Energy or its subsidiaries are in a net operating loss position. MGE Energy or its subsidiaries are currently not in a net operating loss position.

c.

Revenue from Contracts with Customers.

In May 2014, the FASB issued authoritative guidance within the Codification's Revenue Recognition topic that provides guidance on the recognition, measurement, and disclosure of revenue from contracts with customers. This authoritative guidance will become effective January 1, 2017. MGE Energy and MGE are currently assessing the impact this pronouncement will have on their financial statements.

d.

Transfers and Servicing Assets.

In June 2014, the FASB issued authoritative guidance within the Codification's Transfers and Servicing topic that provides guidance on the accounting and disclosures for repurchase-to-maturity transactions, securities lending transactions, and repurchase financings. This authoritative guidance is effective January 1, 2015. The authoritative guidance will change the accounting for the Chattel Paper program. Prior to adoption of the standard, Chattel Paper was treated as an off-balance sheet arrangement. Upon adoption, assets and liabilities will increase approximately $4.4 million and additional disclosures will be required. The cumulative impact of this guidance on our financial statements is not expected to be material.

22.

Segment Information - MGE Energy and MGE.

The electric utility business purchases, generates and distributes electricity, and contracts for transmission service. The gas utility business purchases and distributes natural gas and contracts for the transportation of natural gas. Both the electric and gas segments operate through MGE Energy's principal subsidiary, MGE.

The nonregulated energy operations are conducted through MGE Energy's subsidiaries: MGE Power, MGE Power Elm Road, and MGE Power West Campus. These subsidiaries own and lease electric generating capacity to assist MGE. MGE Power Elm Road has an ownership interest in two coal-fired generating units in Oak Creek, Wisconsin, which are leased to MGE, and MGE Power West Campus owns a controlling interest in the electric generation plant of a natural gas-fired cogeneration facility on the UW campus. MGE Power West Campus's portion is also leased to MGE.

The transmission investment segment invests, through MGE Transco, in ATC, a company that provides electric transmission services primarily in Wisconsin. See Footnote 4 for further discussion of MGE Transco and the investment in ATC.

The "All Others" segment includes: corporate, CWDC, MAGAEL, MGE State Energy Services, and NGV Fueling Services. These entities' operations consist of investing in companies and property which relate to the regulated operations, financing the regulated operations, or owning and operating natural gas compression equipment.

97

General corporate expenses include the cost of executive management, corporate accounting and finance, information technology, risk management, human resources and legal functions, and employee benefits that are allocated to electric and gas segments based on formulas prescribed by the PSCW. Identifiable assets are those used in MGE's operations in each segment. Assets not allocated consist primarily of cash and cash equivalents, restricted cash, investments, other accounts receivable, and prepaid assets.

Sales between our electric and gas segments are based on PSCW approved tariffed rates. Additionally, intersegment operations related to the leasing arrangement between our electric segment and MGE Power Elm Road/MGE Power West Campus are based on terms previously approved by the PSCW. Consistent with internal reporting, management has presented the direct financing capital leases between MGE and MGE Power Elm Road/MGE Power West Campus based on actual lease payments included in rates. Lease payments made by MGE to MGE Power Elm Road and MGE Power West Campus are shown as operating expenses. The lease payments received by MGE Power Elm Road and MGE Power West Campus from MGE are shown as lease income in interdepartmental revenues. The depreciation expense associated with the Elm Road Units and WCCF is reflected in the nonregulated energy segment.

The following table shows segment information for MGE Energy's and MGE's operations:

(In thousands) MGE Energy		Electric		Gas		Non-Regulated Energy		Transmission Investment		All Others		Consolidation/ Elimination Entries		Consolidated  Total
Year Ended December 31, 2014
Operating revenues	$	394,849	$	221,720	$	3,283	$	-	$	-	$	-	$	619,852
Interdepartmental revenues		509		8,366		42,692		-		-		(51,567)		-
Total operating revenues		395,358		230,086		45,975		-		-		(51,567)		619,852
Depreciation and amortization		(26,933)		(6,308)		(7,407)		-		(47)		-		(40,695)
Other operating expenses		(297,409)		(194,203)		(139)		-		(875)		51,567		(441,059)
Operating income (loss)		71,016		29,575		38,429		-		(922)		-		138,098
Other (deductions) income, net		2,847		(86)		-		9,150		(1,832)		-		10,079
Interest (expense) income, net		(10,410)		(3,229)		(6,208)		-		174		-		(19,673)
Income (loss) before taxes		63,453		26,260		32,221		9,150		(2,580)		-		128,504
Income tax (provision) benefit		(22,070)		(10,480)		(12,932)		(3,664)		961		-		(48,185)
Net income (loss)	$	41,383	$	15,780	$	19,289	$	5,486	$	(1,619)	$	-	$	80,319
Year Ended December 31, 2013
Operating revenues	$	403,957	$	181,462	$	5,468	$	-	$	-	$	-	$	590,887
Interdepartmental revenues		537		12,629		42,591		-		-		(55,757)		-
Total operating revenues		404,494		194,091		48,059		-		-		(55,757)		590,887
Depreciation and amortization		(25,780)		(5,898)		(7,156)		-		(4)		-		(38,838)
Other operating expenses		(316,277)		(162,661)		(128)		(1)		(752)		55,757		(424,062)
Operating income (loss)		62,437		25,532		40,775		(1)		(756)		-		127,987
Other (deductions) income, net		3,062		59		-		9,434		(1,854)		-		10,701
Interest (expense) income, net		(9,645)		(2,986)		(6,400)		-		107		-		(18,924)
Income (loss) before taxes		55,854		22,605		34,375		9,433		(2,503)		-		119,764
Income tax (provision) benefit		(19,176)		(9,168)		(13,682)		(3,796)		963		-		(44,859)
Net income (loss)	$	36,678	$	13,437	$	20,693	$	5,637	$	(1,540)	$	-	$	74,905
Year Ended December 31, 2012
Operating revenues	$	392,365	$	139,727	$	9,231	$	-	$	-	$	-	$	541,323
Interdepartmental revenues		487		12,814		34,714		-		-		(48,015)		-
Total operating revenues		392,852		152,541		43,945		-		-		(48,015)		541,323
Depreciation and amortization		(26,031)		(5,569)		(7,107)		-		-		-		(38,707)
Other operating expenses		(300,149)		(136,567)		(121)		-		(1,031)		48,015		(389,853)
Operating income (loss)		66,672		10,405		36,717		-		(1,031)		-		112,763
Other (deductions) income, net		1,145		323		-		9,080		(479)		-		10,069
Interest (expense) income, net		(10,189)		(2,874)		(6,537)		-		133		-		(19,467)
Income (loss) before taxes		57,628		7,854		30,180		9,080		(1,377)		-		103,365
Income tax (provision) benefit		(20,906)		(2,769)		(12,113)		(3,648)		517		-		(38,919)
Net income (loss)	$	36,722	$	5,085	$	18,067	$	5,432	$	(860)	$	-	$	64,446

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(In thousands) MGE		Electric		Gas		Nonregulated Energy		Transmission Investment		Consolidation/ Elimination Entries		Consolidated  Total
Year Ended December 31, 2014
Operating revenues	$	394,871	$	221,741	$	3,283	$	-	$	-	$	619,895
Interdepartmental revenues		487		8,345		42,692		-		(51,524)		-
Total operating revenues		395,358		230,086		45,975		-		(51,524)		619,895
Depreciation and amortization		(26,933)		(6,308)		(7,407)		-		-		(40,648)
Other operating expenses*		(319,175)		(204,597)		(13,071)		-		51,524		(485,319)
Operating income*		49,250		19,181		25,497		-		-		93,928
Other (deductions) income, net*		2,543		(172)		-		5,486		-		7,857
Interest expense, net		(10,410)		(3,229)		(6,208)		-		-		(19,847)
Net income		41,383		15,780		19,289		5,486		-		81,938
Less: Net income attributable to
noncontrolling interest, net of tax		-		-		-		-		(26,310)		(26,310)
Net income attributable to MGE	$	41,383	$	15,780	$	19,289	$	5,486	$	(26,310)	$	55,628
Year Ended December 31, 2013
Operating revenues	$	403,980	$	181,477	$	5,468	$	-	$	-	$	590,925
Interdepartmental revenues		514		12,614		42,591		-		(55,719)		-
Total operating revenues		404,494		194,091		48,059		-		(55,719)		590,925
Depreciation and amortization		(25,780)		(5,898)		(7,156)		-		-		(38,834)
Other operating expenses*		(335,059)		(171,717)		(13,810)		(1)		55,719		(464,868)
Operating income (loss)*		43,655		16,476		27,093		(1)		-		87,223
Other (deductions) income, net*		2,668		(53)		-		5,638		-		8,253
Interest expense, net		(9,645)		(2,986)		(6,400)		-		-		(19,031)
Net income		36,678		13,437		20,693		5,637		-		76,445
Less: net income attributable to
noncontrolling interest, net of tax		-		-		-		-		(27,438)		(27,438)
Net income attributable to MGE	$	36,678	$	13,437	$	20,693	$	5,637	$	(27,438)	$	49,007
Year Ended December 31, 2012
Operating revenues	$	392,365	$	139,727	$	9,231	$	-	$	-	$	541,323
Interdepartmental revenues		487		12,814		34,714		-		(48,015)		-
Total operating revenues		392,852		152,541		43,945		-		(48,015)		541,323
Depreciation and amortization		(26,031)		(5,569)		(7,107)		-		-		(38,707)
Other operating expenses*		(320,701)		(139,236)		(12,234)		-		48,015		(424,156)
Operating income*		46,120		7,736		24,604		-		-		78,460
Other income, net*		791		223		-		5,432		-		6,446
Interest expense, net		(10,189)		(2,874)		(6,537)		-		-		(19,600)
Net income		36,722		5,085		18,067		5,432		-		65,306
Less: Net income attributable to
noncontrolling interest, net of tax		-		-		-		-		(24,489)		(24,489)
Net income attributable to MGE	$	36,722	$	5,085	$	18,067	$	5,432	$	(24,489)	$	40,817
*Amounts are shown net of the related tax expense, consistent with the presentation on the consolidated MGE Income Statement.

99

The following table shows segment information for MGE Energy's and MGE's assets and capital expenditures:
		Utility						Consolidated
(In thousands) MGE Energy		Electric		Gas		Assets not Allocated		Nonregulated Energy		Transmission Investment		All Others		Consolidation/ Elimination Entries		Total
Assets:
December 31, 2014	$	948,241	$	308,499	$	41,346	$	281,410	$	67,697	$	441,109	$	(390,636)	$	1,697,666
December 31, 2013		899,257		265,694		19,853		288,116		64,504		431,436		(389,800)		1,579,060
December 31, 2012		888,444		285,468		18,559		323,216		61,064		413,291		(403,118)		1,586,924
Capital Expenditures:
Year ended Dec. 31, 2014	$	68,067	$	22,104	$	-	$	2,505	$	-	$	-	$	-	$	92,676
Year ended Dec. 31, 2013		100,146		15,554		-		3,347		-		-		-		119,047
Year ended Dec. 31, 2012		81,965		13,812		-		2,658		-		-		-		98,435

		Utility						Consolidated
(In thousands) MGE		Electric		Gas		Assets not Allocated		Nonregulated Energy		Transmission Investment		Consolidation/ Elimination Entries		Total
Assets:
December 31, 2014	$	948,241	$	308,499	$	41,346	$	281,360	$	67,697	$	(6,521)	$	1,640,622
December 31, 2013		899,257		265,694		19,853		288,066		64,504		(6,731)		1,530,643
December 31, 2012		888,444		285,468		18,559		323,166		61,064		(23,050)		1,553,651
Capital Expenditures:
Year ended Dec. 31, 2014	$	68,067	$	22,104	$	-	$	2,505	$	-	$	-	$	92,676
Year ended Dec. 31, 2013		100,146		15,554		-		3,347		-		-		119,047
Year ended Dec. 31, 2012		81,965		13,812		-		2,658		-		-		98,435

23.

Quarterly Summary of Operations - MGE Energy (unaudited).

(In thousands, except per share amounts)		Quarters Ended
2014		March 31		June 30		September 30		December 31
Operating revenues:
Regulated electric revenues	$	98,852	$	96,697	$	112,869	$	86,431
Regulated gas revenues		110,713		31,218		21,404		58,385
Nonregulated revenues		680		850		862		891
Total Operating Revenues		210,245		128,765		135,135		145,707
Operating expenses		166,274		104,324		95,015		116,141
Operating income		43,971		24,441		40,120		29,566
Interest and other income, net		11		(1,320)		(2,505)		(5,780)
Income tax provision		(16,265)		(9,034)		(14,286)		(8,600)
Earnings on common stock	$	27,717	$	14,087	$	23,329	$	15,186
Earnings per common share	$	0.80	$	0.41	$	0.67	$	0.44
Dividends per share	$	0.272	$	0.272	$	0.283	$	0.283
2013
Operating revenues:
Regulated electric revenues	$	93,494	$	96,846	$	119,836	$	93,781
Regulated gas revenues		72,467		30,042		18,864		60,089
Nonregulated revenues		1,276		1,400		1,399		1,393
Total Operating Revenues		167,237		128,288		140,099		155,263
Operating expenses		129,609		103,791		100,199		129,301
Operating income		37,628		24,497		39,900		25,962
Interest and other income, net		(1,366)		(1,946)		(855)		(4,056)
Income tax provision		(13,678)		(8,660)		(14,692)		(7,829)
Earnings on common stock	$	22,584	$	13,891	$	24,353	$	14,077
Earnings per common share	$	0.65	$	0.40	$	0.70	$	0.41
Dividends per share	$	0.263	$	0.263	$	0.272	$	0.272

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Notes:

•

The quarterly results of operations within a year may not be comparable because of seasonal and other factors.

•

The sum of earnings per share of common stock for any four quarters may vary slightly from the earnings per share of common stock for the equivalent twelve-month period due to rounding.

•

MGE Energy's operations are based primarily on its utility subsidiary MGE.

24.

Related Party Transactions - MGE Energy and MGE.

ATC

During 2014, 2013, and 2012, MGE recorded $26.8 million, $27.7 million, and $25.3 million, respectively, for transmission services received from ATC. MGE also provides a variety of operational, maintenance, and project management work for ATC, which is reimbursed by ATC. For the year ended December 31, 2014, MGE had a receivable due from ATC of $0.1 million. For the years ended December 31, 2013 and 2012, MGE had a receivable due from ATC of $0.2 million.

For additional discussion on MGE's relationship with ATC, see Footnote 4.

101

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

MGE Energy and MGE

None.

Item 9A. Controls and Procedures.

MGE Energy and MGE

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

During the fourth quarter of 2014, each registrant's management, including the principal executive officer and principal financial officer, evaluated its disclosure controls and procedures related to the recording, processing, summarization, and reporting of information in its periodic reports that it files with the SEC. These disclosure controls and procedures have been designed to ensure that material information relating to that registrant, including its subsidiaries, is accumulated and made known to that registrant's management, including its principal executive officer and its principal financial officer, by other employees of that registrant and its subsidiaries as appropriate to allow timely decisions regarding required disclosure, and that this information is recorded, processed, summarized, evaluated, and reported, as applicable, within the time periods specified in the SEC's rules and forms. Due to the inherent limitations of control systems, not all misstatements may be detected. These inherent limitations include the realities that judgments in decision making can be faulty and breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Also, the registrants do not control or manage certain of their unconsolidated entities, and thus, their access and ability to apply their procedures to those entities is more limited than is the case for their consolidated subsidiaries.

As of December 31, 2014, the principal executive officer and principal financial officer of each registrant concluded that such registrant's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective to accomplish their objectives. Each registrant intends to strive continually to improve its disclosure controls and procedures to enhance the quality of its financial reporting.

During the quarter ended December 31, 2014, there were no changes in MGE Energy or MGE's internal controls over financial reporting that materially affected, or are reasonably likely to affect materially, MGE Energy or MGE's internal control over financial reporting.

MGE Energy and MGE

Management of MGE Energy and MGE are required to assess and report on the effectiveness of its internal control over financial reporting as of December 31, 2014. As a result of that assessment, management determined that there were no material weaknesses as of December 31, 2014 and, therefore, concluded that MGE Energy and MGE's internal control over financial reporting was effective. Management's Report on Internal Control Over Financial Reporting is included in Item 8. Financial Statements and Supplementary Data.

Item 9B. Other Information.

MGE Energy

None.

102

PART III.

Item 10. Directors, Executive Officers, and Corporate Governance.

MGE Energy

The information required by Item 10 relating to directors and nominees for election as directors at MGE Energy's annual meeting of shareholders is incorporated herein by reference to the information under the heading "ELECTION OF DIRECTORS" in MGE Energy's definitive proxy statement (2015 Proxy Statement) to be filed with the SEC on or before March 27, 2015. Information relating to compliance with Section 16(a) of the Securities Exchange Act of 1934 is incorporated herein by reference to the information under the heading "BENEFICIAL OWNERSHIP - Section 16(a) Beneficial Ownership Reporting Compliance" in the 2015 Proxy Statement.

The information required by Item 10 relating to executive officers is set forth above in Item 1. Business - Executive Officers of the Registrants.

Code of Ethics

MGE Energy has adopted a Code of Ethics applicable to its directors and all of its employees, including its chief executive officer, chief financial officer, and principal accounting officer. The Code of Ethics is available on MGE Energy's website at www.mgeenergy.com.

Item 11. Executive Compensation.

See Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

MGE Energy

The required information for Items 11 and 12 is included in the 2015 Proxy Statement, which will be filed with the SEC on or before March 27, 2015, under the section "EXECUTIVE COMPENSATION," not including "Compensation Committee Report," and "Company Performance," and under the section "BENEFICIAL OWNERSHIP," which is incorporated herein by reference.

MGE Energy does not have or maintain any equity compensation plans.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

MGE Energy

The information required by Item 13 is incorporated by reference herein from the "BOARD OF DIRECTORS INFORMATION" section in the 2015 Proxy Statement, which will be filed with the SEC on or before March 27, 2015.

103

Item 14. Principal Accounting Fees and Services.

MGE Energy

The information required by Item 14 is incorporated herein by reference to the information under the heading "RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM" in the 2015 Proxy Statement, which will be filed with the SEC on or before March 27, 2015.

MGE

Independent Registered Public Accounting Firm Fees Disclosure

		2014		2013
Audit Fees (a)	$	803,913	$	735,399
Audit-Related Fees (b)		50,000		100,000
Tax Fees (c)		204,367		45,413
All Other Fees (d)		69,100		194,172

(a)

Audit Fees were for professional services rendered for the audits of the financial statements, review of the interim financial statements, and services that generally only the independent auditor can reasonably provide, such as comfort letters, statutory audits, consents and assistance with and review of documents filed with the SEC.

(b)

Audit-Related Fees were for professional services rendered in connection with utility commission-mandated obligations and a Department of Energy smart grid grant compliance audit.

(c)

Tax Fees were for review of federal and state income tax returns and tax planning. The increase in 2014 fees reflects services rendered to change the tax method of accounting for repairs and for other tax planning.

(d)

All Other Fees were for generation project advisory services, computer system implementation assurance review, and access to the PwC online accounting standards library.

MGE is a wholly owned subsidiary of MGE Energy and does not have a separate audit committee. Instead, that function is fulfilled for MGE by the MGE Energy Audit Committee. The Audit Committee approves each engagement of the independent registered public accounting firm to render any audit or nonaudit services before the firm is engaged to render those services. The Chair of the Audit Committee or other designated Audit Committee member may represent the entire Audit Committee for purposes of this approval. Any services approved by the Chair or other designated Audit Committee members are reported to the full Audit Committee at the next scheduled Audit Committee meeting. No de minimis exceptions to this approval process are allowed under the Audit Committee Charter; and thus, none of the services described in the preceding table were approved pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X.

104

PART IV.

Item 15. Exhibits and Financial Statement Schedules.

(a) 1. Financial Statements.

MGE Energy
Consolidated Statements of Income for the years ended December 31, 2014, 2013, and 2012	51
Consolidated Statements of Comprehensive Income for the years ended December 31, 2014, 2013, and 2012	51
Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013, and 2012	52
Consolidated Balance Sheets as of December 31, 2014 and 2013	53
Consolidated Statements of Common Equity as of December 31, 2014, 2013, and 2012	54
Notes to Consolidated Financial Statements	59
MGE
Consolidated Statements of Income for the years ended December 31, 2014, 2013, and 2012	55
Consolidated Statements of Comprehensive Income for the years ended December 31, 2014, 2013, and 2012	55
Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013, and 2012	56
Consolidated Balance Sheets as of December 31, 2014 and 2013	57
Consolidated Statements of Common Equity as of December 31, 2014, 2013, and 2012	58
Notes to Consolidated Financial Statements	59

2.

Financial Statement Schedule.

Schedule I - Condensed Parent Company Financial Statements.

Schedule II - Valuation and Qualifying Accounts for MGE Energy, Inc. and Madison Gas and Electric Company.

All other schedules have been omitted because they are not applicable or not required, or because the required information is shown in the consolidated financial statements or notes thereto.

3.

All Exhibits Including Those Incorporated by Reference.

Exhibits. Several of the following exhibits are incorporated herein by reference under Rule 12b-32 of the Securities Exchange Act of 1934, as amended, as indicated by the parenthetical reference. Several other instruments, which would otherwise be required to be listed below, have not been so listed because those instruments do not authorize securities in an amount that exceeds 10% of the total assets of the applicable registrant and its subsidiaries on a consolidated basis. The relevant registrant agrees to furnish a copy of any instrument that was so omitted on that basis to the Commission upon request.

3.1

Amended and Restated Articles of Incorporation of MGE Energy, Inc. (Exhibit 4.1 to MGE Energy's Registration Statement on Form S-3, Registration No. 333-197423.)

3.2

Amended and Restated Bylaws of MGE Energy, Inc. (Exhibit 3.2 to MGE Energy's Registration Statement on Form S-4, Registration No. 333-72694.)

3.3

Restated Articles of Incorporation of Madison Gas and Electric Company as in effect at October 25, 2012. (Exhibit 3.1 to Form 8-K dated October 25, 2012, File No. 0-1125.)

3.4

Amended Bylaws of Madison Gas and Electric Company as in effect at August 16, 2002. (Exhibit 3.4 to Form 10-K for year ended December 31, 2002, File No. 0-1125.)

4.1

Indenture of Mortgage and Deed of Trust between Madison Gas and Electric Company and U.S. Bank, N.A. (successor to First Wisconsin Trust Company), as Trustee, dated as of January 1, 1946. (Exhibit 7-D to Registration Statement, Registration No. 2-6059.)

4.2

Supplemental Indenture dated as of February 1, 1993 to aforementioned Indenture of Mortgage and Deed of Trust. (Exhibit 4F to Form 10-K for year ended December 31, 1992, File No. 0-1125.)

105

4.3

Indenture between Madison Gas and Electric Company and The Bank of New York Mellon Trust Company, N.A. (as successor to Bank One, N.A.), as Trustee, dated as of September 1, 1998. (Exhibit 4B to Form 10-K for year ended December 31, 1999, File No. 0-1125.)

10.1

Credit Agreement dated as of July 30, 2010, among MGE Energy, Inc., the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. (Exhibit 10.1 to Form 10-Q for the quarter ended June 30, 2010, File No. 0-49965.)

10.2

Third Amendment dated as of June 19, 2013, to Credit Agreement dated as of July 30, 2010, among MGE Energy, Inc., various financial institutions, and JPMorgan Chase Bank, N.A., as Administrative Agent. (Exhibit 10.1 to Form 8-K dated June 27, 2013, File No. 0-49965.)

10.3

Credit Agreement dated as of July 30, 2010, among Madison Gas and Electric Company, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. (Exhibit 10.2 to Form 10-Q for the quarter ended June 30, 2010, File No. 0-1125.)

10.4

Third Amendment dated as of June 19, 2013, to Credit Agreement dated as of July 30, 2010, among Madison Gas and Electric Company, various financial institutions, and JPMorgan Chase Bank, N.A., as Administrative Agent. (Exhibit 10.2 to Form 8-K dated June 27, 2013, File No. 0-1125.)

10.5

Copy of Joint Power Supply Agreement with Wisconsin Power and Light Company and Wisconsin Public Service Corporation dated February 2, 1967. (Exhibit 4.09 to Registration Statement, Registration No. 2-27308.)

10.6

Copy of Joint Power Supply Agreement (Exclusive of Exhibits) with Wisconsin Power and Light Company and Wisconsin Public Service Corporation dated July 26, 1973. (Exhibit 5.04A to Registration Statement, Registration No. 2-48781.)

10.7

Copy of Amended and Restated Agreement for Construction and Operation of Columbia Generating Plant dated January 17, 2007. (Exhibit 10.9 to Form 10-K for the year ended December 31, 2006, File No. 0-1125.)

10.8

West Campus Cogeneration Facility Joint Ownership Agreement, dated as of October 13, 2003, among MGE Power West Campus, LLC, The Board of Regents of the University of Wisconsin System, and the State of Wisconsin, as Joint Owners. (Exhibit 10.19 to Form 10-Q for the quarter ended September 30, 2005, File No. 0-1125.)

10.9

West Campus Cogeneration Facility Operation and Maintenance Agreement, dated as of October 13, 2003, among Madison Gas and Electric Company, as Operator, and the Board of Regents of the University of Wisconsin System, as Joint Owner. (Exhibit 10.20 to Form 10-Q for the quarter ended September 30, 2005, File No. 0-1125.)

10.10

West Campus Cogeneration Facility Lease Agreement, dated as of March 18, 2004, among MGE Power West Campus, LLC, as Lessor, and Madison Gas and Electric Company, as Lessee. (Exhibit 10.21 to Form 10-Q for the quarter ended September 30, 2005, File No. 0-1125.)

10.11

West Campus Cogeneration Facility Ground Lease, dated as of July 15, 2002, among MGE Power LLC, as Lessee, and the Board of Regents of the University of Wisconsin System, as Lessor. (Exhibit 10.22 to Form 10-Q for the quarter ended September 30, 2005, File No. 0-1125.)

10.12

West Campus Cogeneration Facility Amendment of Ground Lease, dated as of March 18, 2004, among MGE Power West Campus, LLC, as Lessee, and the Board of Regents of the University of Wisconsin System, as Lessor. (Exhibit 10.23 to Form 10-Q for the quarter ended September 30, 2005, File No. 0-1125.)

10.13

West Campus Cogeneration Facility MGE Ground Sublease, dated as of March 18, 2004, among MGE Power West Campus, LLC, as Lessee, and Madison Gas and Electric Company, as Lessor. (Exhibit 10.24 to Form 10-Q for the quarter ended September 30, 2005, File No. 0-1125.)

106

10.14

Elm Road Generating Station Common Facilities Operating and Maintenance Agreement, dated as of December 17, 2004, among Madison Gas and Electric Company, Wisconsin Electric Power Company, and Wisconsin Public Power Inc., as Lessee/Owner Parties, and Wisconsin Electric Power Company, as Operating Agent. (Exhibit 10.7 to Form 10-Q for the quarter ended September 30, 2005, File No. 0-1125.)

10.15

Elm Road Generating Station New Common Facilities Ownership Agreement, dated as of December 17, 2004, among MGE Power Elm Road, LLC, Elm Road Generating Station Supercritical, LLC, and Wisconsin Public Power Inc., as Joint Owners. (Exhibit 10.8 to Form 10-Q for the quarter ended September 30, 2005, File No. 0-1125.)

10.16

Elm Road Generating Station I Ownership Agreement, dated as of December 17, 2004, among MGE Power Elm Road, LLC, Elm Road Generating Station Supercritical, LLC, and Wisconsin Public Power Inc., as Joint Owners, Elm Road Services, LLC, as Project Manager, and W.E. Power LLC. (Exhibit 10.9 to Form 10-Q for the quarter ended September 30, 2005, File No. 0-1125.)

10.17

Elm Road Generating Station I Facility Lease Agreement, dated as of November 4, 2005, among MGE Power Elm Road, LLC, as Lessor, and Madison Gas and Electric Company, as Lessee. (Exhibit 10.10 to Form 10-Q for the quarter ended September 30, 2005, File No. 0-1125.)

10.18

Elm Road Generating Station I Operating and Maintenance Agreement, dated as of December 17, 2004, among Madison Gas and Electric Company, Wisconsin Electric Power Company, and Wisconsin Public Power Inc., as Lessee/ Owners, and Wisconsin Electric Power Company, as Operating Agent. (Exhibit 10.11 to Form 10-Q for the quarter ended September 30, 2005, File No. 0-1125.)

10.19

Elm Road Generating Station I Easement and Indemnification Agreement, dated as of December 17, 2004, among MGE Power Elm Road, LLC and Wisconsin Public Power Inc., as Grantees, and Wisconsin Electric Power Company, as Grantor. (Exhibit 10.12 to Form 10-Q for the quarter ended September 30, 2005, File No. 0-1125.)

10.20

Assignment and Assumption Agreement, dated as of November 4, 2005 between MGE Power Elm Road, LLC and Madison Gas and Electric Company relating to Elm Road Generating Station I Easement and Indemnification Agreement, dated as of December 17, 2004, among MGE Power Elm Road, LLC and Wisconsin Public Power Inc., as Grantees, and Wisconsin Electric Power Company, as Grantor. (Exhibit 10.16 to Form 10-K for the year ended December 31, 2005, File No. 0-1125.)

10.21

Elm Road Generating Station II Ownership Agreement, dated as of December 17, 2004, among MGE Power Elm Road, LLC, Elm Road Generating Station Supercritical, LLC, and Wisconsin Public Power Inc., as Joint Owners, Elm Road Services, LLC, as Project Manager, and W.E. Power LLC. (Exhibit 10.13 to Form 10-Q for the quarter ended September 30, 2005, File No. 0-1125.)

10.22

Elm Road Generating Station II Facility Lease Agreement, dated as of November 4, 2005, among MGE Power Elm Road, LLC, as Lessor, and Madison Gas and Electric Company, as Lessee. (Exhibit 10.14 to Form 10-Q for the quarter ended September 30, 2005, File No. 0-1125.)

10.23

Elm Road Generating Station II Operating and Maintenance Agreement, dated as of December 17, 2004, among Madison Gas and Electric Company, Wisconsin Electric Power Company, and Wisconsin Public Power Inc., as Lessee/ Owners, and Wisconsin Electric Power Company, as Operating Agent. (Exhibit 10.15 to Form 10-Q for the quarter ended September 30, 2005, File No. 0-1125.)

10.24

Elm Road Generating Station II Easement and Indemnification Agreement, dated as of December 17, 2004, among MGE Power Elm Road, LLC and Wisconsin Public Power Inc., as Grantees, and Wisconsin Electric Power Company, as Grantor. (Exhibit 10.16 to Form 10-Q for the quarter ended September 30, 2005, File No. 0-1125.)

10.25

Operating Agreement, dated as of October 28, 2005, among MGE Energy, Inc., Madison Gas and Electric Company, and MGE Transco Investment LLC. (Exhibit 10.17 to Form 10-Q for the quarter ended September 30, 2005, File No. 0-1125.)

107

10.26

Substation and Transformer Shared Use Agreement and Easement Agreement, dated as of September 29, 2006, among Madison Gas and Electric Company and Northern Iowa Windpower II LLC as Joint Owners. (Exhibit 10.6 to Form 10-Q for the quarter ended September 30, 2006, File No. 0-1125.)

10.27

Management and Administration Agreement, dated as of October 13, 2006, among Madison Gas and Electric Company as Owner and Midwest Renewable Energy Resources, LLC as Manager. (Exhibit 10.7 to Form 10-Q for the quarter ended September 30, 2006, File No. 0-1125.)

10.28*

Form of Severance Agreement. (Exhibit 10.37 to Form 10-K for the year ended December 31, 2008, File No. 0-49965.)

10.29*

Form of Amendment to Severance Agreement. (Exhibit 10.29 to Form 10-K for the year ended December 31, 2010, File No. 0-49965.)

10.30*

Form of Deferred Compensation Agreement. (Exhibit 10.38 to Form 10-K for the year ended December 31, 2008, File No. 0-49965.)

10.31*

Form of Amended and Restated Deferred Compensation Agreement. (Exhibit 10.39 to Form 10-K for the year ended December 31, 2008, File No. 0-49965.)

10.32*

Form of Income Continuation Agreement. (Exhibit 10.40 to Form 10-K for the year ended December 31, 2008, File No. 0-49965.)

10.33*

MGE Energy, Inc., 2006 Performance Unit Plan. (Exhibit 10.41 to Form 10-K for the year ended December 31, 2008, File No. 0-49965.)

10.34*

Amendment Number One to MGE Energy, Inc., 2006 Performance Unit Plan, dated March 18, 2011. (Exhibit 10.2 to Form 8-K dated March 24, 2011, File No. 0-49965.)

10.35*

Form of Performance Unit Award Agreement. (Exhibit 10.42 to Form 10-K for the year ended December 31, 2008, File No. 0-49965.)

10.36*    Form of Amendment to Performance Unit Award Agreement. (Exhibit 10.1 to Form 8-K dated April 15, 2011, File No. 0-49965.)

10.37*

MGE Energy, Inc., 2013 Director Incentive Plan. (Exhibit 10.37 to Form 10-K for the year ended December 31, 2013, File No. 0-49965.)

10.38*

Form of 2013 Director Incentive Plan Award Agreement. (Exhibit 10.38 to Form 10-K for the year ended December 31, 2013, File No. 0-49965.)

12

Statements regarding computation of ratio of earnings to fixed charges:

12.1

MGE Energy, Inc.

12.2

Madison Gas and Electric Company

21

Subsidiaries of MGE Energy, Inc.

23

Consent of Independent Registered Public Accounting Firm

23.1

MGE Energy, Inc.

23.2

Madison Gas and Electric Company

31

Certifications Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934 as to the Annual Report on Form 10-K for the year ended December 31, 2014, filed by the following officers for the following companies:

31.1

Filed by Gary J. Wolter for MGE Energy, Inc.

31.2

Filed by Jeffrey C. Newman for MGE Energy, Inc.

31.3

Filed by Gary J. Wolter for Madison Gas and Electric Company

31.4

Filed by Jeffrey C. Newman for Madison Gas and Electric Company

108

32

Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code (Sarbanes-Oxley Act of 2002) as to the Annual Report on Form 10-K for the year ended December 31, 2014, filed by the following officers for the following companies:

32.1

Filed by Gary J. Wolter for MGE Energy, Inc.

32.2

Filed by Jeffrey C. Newman for MGE Energy, Inc.

32.3

Filed by Gary J. Wolter for Madison Gas and Electric Company

32.4

Filed by Jeffrey C. Newman for Madison Gas and Electric Company

101

Interactive Data Files:

101.INS

XBRL Instance

101.SCH

XBRL Taxonomy Extension Schema

101.CAL

XBRL Taxonomy Extension Calculation

101.DEF

XBRL Taxonomy Extension Definition

101.LAB

XBRL Taxonomy Extension Labels

101.PRE

XBRL Taxonomy Extension Presentation

*Indicates a management contract or compensatory plan or arrangement.

109

Schedule I
Condensed Parent Company Financial Statements
MGE Energy, Inc.
Statements of Comprehensive Income
(Parent Company Only)
(In thousands)
		For the years ended December 31,
		2014		2013		2012
Operating Expenses:
Other operations and maintenance	$	689	$	613	$	649
Total Operating Expenses		689		613		649
Operating Loss		(689)		(613)		(649)
Equity in earnings of investments		81,811		76,362		65,132
Other income/(loss), net		(1,879)		(1,863)		(496)
Other interest		93		55		45
Income before income taxes		79,336		73,941		64,032
Income tax provision		983		964		414
Net Income		80,319		74,905		64,446
Other Comprehensive Income, Net of Tax:
Unrealized gain (loss) on available-for-sale securities, net of
tax (($54), ($189), and $12)		81		283		(18)
Comprehensive Income	$	80,400	$	75,188	$	64,428
The accompanying notes are an integral part of the above consolidated financial statements.

MGE Energy, Inc.
Statements of Cash Flows
(Parent Company Only)
(In thousands)
		For the years ended December 31,
		2014		2013		2012
Net Cash Flows Provided by Operating Activities	$	48,165	$	53,952	$	49,819
Investing Activities:
Other investing		(2,422)		(2,425)		(1,558)
Cash Used for Investing Activities		(2,422)		(2,425)		(1,558)
Financing Activities:
Cash dividends paid on common stock		(38,429)		(37,107)		(35,951)
Other financing		(89)		(97)		(49)
Cash Used for Financing Activities		(38,518)		(37,204)		(36,000)
Change in Cash and Cash Equivalents:		7,225		14,323		12,261
Cash and cash equivalents at beginning of period		51,204		36,881		24,620
Cash and cash equivalents at end of period	$	58,429	$	51,204	$	36,881
The accompanying notes are an integral part of the above consolidated financial statements.

110

Schedule I
Condensed Parent Company Financial Statements (continued)
MGE Energy, Inc.
Balance Sheets
(Parent Company Only)
(In thousands)
		At December 31,
ASSETS		2014		2013
Current Assets:
Cash and cash equivalents	$	58,429	$	51,204
Accounts receivable, net:
Accounts receivable from affiliates		64		125
Other current assets		2,809		1,015
Total Current Assets		61,302		52,344
Other deferred assets and other		140		157
Investments:
Investments in affiliates		619,563		583,435
Other investments		1,177		948
Total Investments		620,740		584,383
Total Assets	$	682,182	$	636,884
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable to affiliates	$	7,096	$	530
Accrued taxes		663		4,297
Other current liabilities		2,601		3,076
Total Current Liabilities		10,360		7,903
Other Credits:
Deferred income taxes		7,125		5,646
Accounts payable to affiliates		5,296		5,825
Total Other Credits		12,421		11,471
Shareholders' Equity:
Common shareholders' equity		350,936		350,936
Retained income		308,007		266,197
Other comprehensive income		458		377
Total Shareholders' Equity		659,401		617,510
Commitments and contingencies (see Footnote 3)		-		-
Total Liabilities and Shareholders' Equity	$	682,182	$	636,884
The accompanying notes are an integral part of the above consolidated financial statements.

111

Schedule I

Condensed Parent Company Financial Statements (continued)

Notes to Condensed Financial Statements

(Parent Company Only)

1.

Basis of Presentation.

MGE Energy is a holding company and conducts substantially all of its business operations through its subsidiaries. For Parent Company only presentation, investment in subsidiaries are accounted for using the equity method. These condensed Parent Company financial statements and related notes have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X. These statements should be read in conjunction with the financial statements and the notes in Item 8. Financial Statements and Supplementary Data of the Annual Report on Form 10-K for the year ended December 31, 2014.

2.

Credit Agreements.

As of December 31, 2014, MGE Energy had access to an unsecured, committed credit facility with aggregate bank commitments of $50.0 million. At December 31, 2014, no borrowings were outstanding under this facility.

See Footnote 10 of the Notes to Consolidated Financial Statements for further information regarding MGE Energy's credit agreements.

3.

Commitments and Contingencies.

See Footnote 18 of the Notes to Consolidated Financial Statements for commitments and contingencies.

4.

Dividends from Affiliates.

		Dividends from Affiliates
(In thousands)		2014		2013		2012
MGE	$	26,500	$	25,000	$	20,404
MGE Construct		-		-		239
MGE Power Elm Road		13,500		17,300		16,000
MGE Power		-		-		200
MGE Power West Campus		6,000		9,250		7,500
MGE Transco		1,859		816		-
Total	$	47,859	$	52,366	$	44,343

Dividend Restrictions

Dividend payments by MGE to MGE Energy are subject to restrictions arising under a PSCW rate order and, to a lesser degree, MGE's first mortgage bonds. The PSCW order restricts any dividends that MGE may pay MGE Energy if its common equity ratio, calculated in the manner used in the rate proceeding, is less than 55%. MGE's thirteen month rolling average common equity ratio at December 31, 2014, is 56.9% as determined under the calculation used in the rate proceeding. MGE paid cash dividends of $26.5 million to MGE Energy in 2014. The rate proceeding calculation includes as indebtedness imputed amounts for MGE's outstanding purchase power capacity payments and other PSCW adjustments, but does not include the indebtedness associated with MGE Power Elm Road or MGE Power West Campus, which are consolidated into MGE's financial statements but are not direct obligations of MGE.

MGE has covenanted with the holders of its first mortgage bonds not to declare or pay any dividend or make any other distribution on or purchase any shares of its common stock unless, after giving effect thereto, the aggregate amount of all such dividends and distributions and all amounts applied to such purchases, after December 31, 1945, shall not exceed the earned surplus (retained earnings) accumulated subsequent to December 31, 1945. As of December 31, 2014, approximately $334.8 million was available for the payment of dividends under this covenant.

See Footnotes 9 and 10 of the Notes to Consolidated Financial Statement for long-term debt and lines of credit dividend restrictions.

112

Schedule II
MGE Energy, Inc. and Madison Gas and Electric Company
Valuation and Qualifying Accounts
			Additions
		Balance at beginning of period	(1) Charged to costs and expenses	(2) Charged to other accounts	Net Accounts written off		Balance at end of period
Fiscal Year 2012:
Accumulated provision for uncollectibles	$	4,100,333	2,825,300	44,400	(2,153,915)	$	4,816,118
Fiscal Year 2013:
Accumulated provision for uncollectibles	$	4,816,118	2,373,342	37,200	(2,256,949)	$	4,969,711
Fiscal Year 2014:
Accumulated provision for uncollectibles	$	4,969,711	1,898,300	15,092	(2,134,446)	$	4,748,657

113

Signatures - MGE Energy, Inc.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	MGE Energy, Inc.
	(Registrant)
Date: February 26, 2015	/s/ Gary J. Wolter
	Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 26, 2015.

/s/ Gary J. Wolter	Gary J. Wolter Chairman, President and Chief Executive Officer and Director (Principal Executive Officer)
/s/ Jeffrey C. Newman	Jeffrey C. Newman Vice President, Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer and Principal Accounting Officer)
/s/ Mark D. Bugher	Mark D. Bugher, Director
/s/ Londa J. Dewey	Londa J. Dewey, Director
/s/ F. Curtis Hastings	F. Curtis Hastings, Director
/s/ Regina M. Millner	Regina M. Millner, Director
/s/ John R. Nevin	John R. Nevin, Director
/s/ James L. Possin	James L. Possin, Director
/s/ Thomas R. Stolper	Thomas R. Stolper, Director

114

Signatures - Madison Gas and Electric Company

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	Madison Gas and Electric Company
	(Registrant)
Date: February 26, 2015	/s/ Gary J. Wolter
	Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 26, 2015.

/s/ Gary J. Wolter	Gary J. Wolter Chairman, President and Chief Executive Officer and Director (Principal Executive Officer)
/s/ Jeffrey C. Newman	Jeffrey C. Newman Vice President, Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer and Principal Accounting Officer)
/s/ Mark D. Bugher	Mark D. Bugher, Director
/s/ Londa J. Dewey	Londa J. Dewey, Director
/s/ F. Curtis Hastings	F. Curtis Hastings, Director
/s/ Regina M. Millner	Regina M. Millner, Director
/s/ John R. Nevin	John R. Nevin, Director
/s/ James L. Possin	James L. Possin, Director
/s/ Thomas R. Stolper	Thomas R. Stolper, Director

115

EX-12

EXHIBIT 12.1

MGE Energy, Inc.

Ratio of Earnings to Fixed Charges

Twelve Months Ended December 31, 2014

(In thousands)

Earnings
Net income	$80,319
Equity earnings	(9,150)
Income distribution from equity investees	7,740
Federal and state income taxes	48,185
Amortization of capitalized interest	527
Fixed charges	21,638
Total Earnings as Defined	$149,259
Fixed Charges
Interest expense on long-term debt and other	$18,975
Interest on rentals*	823
AFUDC - borrowed funds	1,142
Amortization of debt issuance costs	698
Total Fixed Charges	$21,638
Ratio of Earnings to Fixed Charges	6.90X

*Management believes that using one-third of the total rental expense

gives a reasonable approximation for actual interest on rentals.

EX-12

EXHIBIT 12.2

Madison Gas and Electric Company

Ratio of Earnings to Fixed Charges

Twelve Months Ended December 31, 2014

(In thousands)

Earnings
Net income before minority interest	$81,938
Equity earnings	(9,150)
Income distribution from equity investees	7,740
Minority interest in pretax income	(4,149)
Amortization of capitalized interest	527
Federal and state income taxes	49,145
Fixed charges	21,812
Total Earnings as Defined	$147,863
Fixed Charges
Interest expense on long-term debt and other	$19,149
Interest on rentals*	823
Amortization of debt issuance costs	698
AFUDC - borrowed funds	1,142
Total Fixed Charges	$21,812
Ratio of Earnings to Fixed Charges	6.78X

*Management believes that using one-third of the total rental expense

gives a reasonable approximation for actual interest on rentals.

EX-21

EXHIBIT 21

Subsidiaries of MGE Energy, Inc.

As of December 31, 2014, the company held the following subsidiaries (all of which are formed or organized as Wisconsin entities):

•

Madison Gas and Electric Company – a regulated utility that generates and distributes electricity to approximately 143,000 customers in Dane County, Wisconsin, and purchases and distributes natural gas to approximately 149,000 customers in seven Wisconsin counties.

•

MGE Power LLC – owns MGE Power West Campus, LLC, and MGE Power Elm Road, LLC.

•

MGE Power West Campus, LLC – owns a controlling interest in the electric generating assets related to the West Campus Cogeneration Facility. MGE Power West Campus has leased its share of these assets to Madison Gas and Electric Company through a long-term lease agreement.

•

MGE Power Elm Road, LLC – owns an 8.33% undivided ownership interest in two coal-fired generating units in Oak Creek, Wisconsin. MGE Power Elm Road has leased its share of the generating units to Madison Gas and Electric Company through separate long-term lease agreements.

•

MGE Transco Investment LLC – owns a minority equity interest in American Transmission Company LLC, which owns and operates electric transmission facilities in Wisconsin.

•

Central Wisconsin Development Corporation – assists new and expanding businesses throughout central Wisconsin by participating in planning, financing, property acquisition, joint ventures and associated activities.

•

MAGAEL, LLC – holds title to property for future utility plant expansion and nonutility property.

•

NGV Fueling Services, LLC – owns and maintains natural gas compression equipment to facilitate the use of compressed natural gas in natural gas vehicles.

•

North Mendota Energy & Technology Park, LLC – owns and serves as the development entity for property.

•

MGE State Energy Services, LLC – holds a 50% interest in State Energy Services, LLC, in which a subsidiary of Wisconsin Energy Corporation holds the remaining 50% interest. State Energy Services was formed for the purpose of bidding on certain energy production assets and facilities currently owned by the State of Wisconsin, should the State decide to sell those facilities.

EX-23

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-197423) of MGE Energy, Inc. of our report dated February 26, 2015 relating to the financial statements, financial statement schedules and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

February 26, 2015

EX-23

EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-197423-01) of Madison Gas and Electric Company of our report dated February 26, 2015 relating to the financial statements and financial statement schedule, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

February 26, 2015

EX-31

EXHIBIT 31.1

Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934

I, Gary J. Wolter, certify that:

1.

I have reviewed this annual report on Form 10-K of MGE Energy, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Gary J. Wolter

Gary J. Wolter

Chairman, President and Chief Executive Officer

Date: February 26, 2015

EX-31

EXHIBIT 31.2

Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934

I, Jeffrey C. Newman, certify that:

1.

I have reviewed this annual report on Form 10-K of MGE Energy, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Jeffrey C. Newman

Jeffrey C. Newman

Vice President, Chief Financial Officer,

Secretary and Treasurer

Date: February 26, 2015

EX-31

EXHIBIT 31.3

Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934

I, Gary J. Wolter, certify that:

1.

I have reviewed this annual report on Form 10-K of Madison Gas and Electric Company;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Gary J. Wolter

Gary J. Wolter

Chairman, President and Chief Executive Officer

Date: February 26, 2015

EX-31

EXHIBIT 31.4

Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934

I, Jeffrey C. Newman, certify that:

1.

I have reviewed this annual report on Form 10-K of Madison Gas and Electric Company;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Jeffrey C. Newman

Jeffrey C. Newman

Vice President, Chief Financial Officer,

Secretary and Treasurer

Date: February 26, 2015

EX-32

EXHIBIT 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the annual report on Form 10-K of MGE Energy, Inc. (the "Company"), for the period ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof ("the Report"), I, Gary J. Wolter, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Gary J. Wolter

Gary J. Wolter

Chairman, President and Chief Executive Officer

Date: February 26, 2015

EX-32

EXHIBIT 32.2

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the annual report on Form 10-K of MGE Energy, Inc. (the "Company"), for the period ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof ("the Report"), I, Jeffrey C. Newman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jeffrey C. Newman

Jeffrey C. Newman

Vice President, Chief Financial Officer,

Secretary and Treasurer

Date: February 26, 2015

EX-32

EXHIBIT 32.3

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the annual report on Form 10-K of Madison Gas and Electric Company (the "Company"), for the period ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof ("the Report"), I, Gary J. Wolter, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Gary J. Wolter

Gary J. Wolter

Chairman, President and Chief Executive Officer

Date: February 26, 2015

EX-32

EXHIBIT 32.4

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the annual report on Form 10-K of Madison Gas and Electric Company (the "Company"), for the period ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof ("the Report"), I, Jeffrey C. Newman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jeffrey C. Newman

Jeffrey C. Newman

Vice President, Chief Financial Officer,

Secretary and Treasurer

Date: February 26, 2015

XML

Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2014

Valuation and Qualifying Accounts [Abstract]

Valuation and Qualifying Accounts

Schedule II
MGE Energy, Inc. and Madison Gas and Electric Company
Valuation and Qualifying Accounts
			Additions
		Balance at beginning of period	(1)Charged to costs and expenses	(2)Charged to other accounts	Net Accounts written off		Balance at end of period
Fiscal Year 2012:
Accumulated provision for uncollectibles	$	4,100,333	2,825,300	44,400	(2,153,915)	$	4,816,118
Fiscal Year 2013:
Accumulated provision for uncollectibles	$	4,816,118	2,373,342	37,200	(2,256,949)	$	4,969,711
Fiscal Year 2014:
Accumulated provision for uncollectibles	$	4,969,711	1,898,300	15,092	(2,134,446)	$	4,748,657

XML

Derivative and Hedging Instruments (Tables)

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Gross Notional Volume of Open Derivatives

The gross notional volume of open derivatives is as follows:

	December 31, 2014	December 31, 2013
Commodity derivative contracts	448,000 MWh	458,660 MWh
Commodity derivative contracts	4,405,000 Dth	3,750,000 Dth
FTRs	1,854 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 December 31,2014, MGE Energy and MGE had the right to reclaim collateral (a receivable) of $2.2 million.

	Asset Derivatives			Liability Derivatives
(In thousands)	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
December 31, 2014
Commodity derivative contracts	Other current assets	$	130	Derivative liability (current)	$	2,262
Commodity derivative contracts	Other deferred charges		93	Derivative liability (long-term)		171
FTRs	Other current assets		642	Derivative liability (current)		-
Ten-year PPA	N/A		N/A	Derivative liability (current)		6,870
Ten-year PPA	N/A		N/A	Derivative liability (long-term)		46,560
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
		Gross amounts		Gross amounts offset in balance sheet		Collateral posted against derivative positions		Net amount presented in balance sheet
(In thousands)
December 31, 2014
Commodity derivative contracts	$	223	$	(223)	$	-	$	-
FTRs		642		-		-		642
December 31, 2013
Commodity derivative contracts	$	1,523	$	(99)	$	(175)	$	1,249
FTRs		363		-		-		363

Offsetting Liabilities

Offsetting of Derivative Liabilities
		Gross amounts		Gross amounts offset in balance sheet		Collateral posted against derivative positions		Net amount presented in balance sheet
(In thousands)
December 31, 2014
Commodity derivative contracts	$	2,433	$	(223)	$	(2,179)	$	31
Ten-year PPA		53,430		-		-		53,430
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 December 31,2014 and 2013, and the consolidated income statement for the year ended December 31,2014 and 2013.

		2014				2013
(In thousands)		Current and Long-Term Regulatory Asset		Other Current Assets		Current and Long-Term Regulatory Asset		Other Current Assets
Year Ended December 31:
Balance at January 1,	$	63,893	$	411	$	72,329	$	574
Change in unrealized loss		(14,518)		-		(5,069)		-
Realized gain (loss) reclassified to a deferred account		595		(595)		(823)		823
Realized gain (loss) reclassified to income statement		5,028		1,185		(2,544)		(986)
Balance at December 31,	$	54,998	$	1,001	$	63,893	$	411

Derivative Gains and Losses in Income Statement

		Realized losses (gains)
		2014				2013
		Fuel for electric generation/ purchased power		Cost of gas sold		Fuel for electric generation/ purchased power		Cost of gas sold
(In thousands)
Year Ended December 31:
Commodity derivative contracts	$	(5,515)	$	(1,103)	$	(564)	$	868
FTRs		(1,110)		-		(983)		-
Ten-year PPA		1,515		-		4,209		-

XML

Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

		2014				2013
(In thousands)		MGE Energy		MGE		MGE Energy		MGE
First Mortgage Bonds: (a)
7.70%, 2028 Series	$	1,200	$	1,200	$	1,200	$	1,200
Tax Exempt Debt:
3.45%, 2027 Series,
Industrial Development Revenue Bonds		19,300		19,300		19,300		19,300
Medium-Term Notes: (b)
5.25%, due 2017		30,000		30,000		30,000		30,000
6.12%, due 2028		20,000		20,000		20,000		20,000
7.12%, due 2032		25,000		25,000		25,000		25,000
6.247%, due 2037		25,000		25,000		25,000		25,000
Total Medium-Term Notes		100,000		100,000		100,000		100,000
Other Long-Term Debt: (c)
5.59%, due 2018 (d)		20,000		20,000		20,000		20,000
3.38%, due 2020 (d)		15,000		15,000		15,000		15,000
3.09%, due 2023 (d)		30,000		30,000		30,000		30,000
3.29%, due 2026 (d)		15,000		15,000		15,000		15,000
5.68%, due 2033 (e)		28,954		28,954		29,797		29,797
5.19%, due 2033 (e)		19,264		19,264		19,857		19,857
5.26%, due 2040 (d)		15,000		15,000		15,000		15,000
5.04%, due 2040 (f)		41,805		41,805		43,472		43,472
4.74%, due 2041 (f)		26,167		26,167		27,167		27,167
4.38%, due 2042 (d)		28,000		28,000		28,000		28,000
4.42%, due 2043 (d)		20,000		20,000		20,000		20,000
4.47%, due 2048 (d)		20,000		20,000		20,000		20,000
Total Other Long-Term Debt		279,190		279,190		283,293		283,293
Long-term debt due within one year		(4,182)		(4,182)		(4,102)		(4,102)
Unamortized discount		(252)		(252)		(277)		(277)
Total Long-Term Debt	$	395,256	$	395,256	$	399,414	$	399,414

(a)MGE's utility plant is subject to the lien of its Indenture of Mortgage and Deed of Trust, under which its first mortgage bonds are issued. The Mortgage Indenture provides that dividends or any other distribution or purchase of shares may not be made if the aggregate amount thereof since December 31, 1945 would exceed the earned surplus (retained earnings) accumulated subsequent to December 31, 1945. As of December 31,2014, approximately $334.8 million was available for the payment of dividends under this covenant.

(b)The indenture under which MGE's Medium-Term notes are issued provides that those notes will be entitled to be equally and ratably secured in the event that MGE issues any additional first mortgage bonds.

(c)Unsecured notes issued pursuant to various Note Purchase Agreements with one or more purchasers. The notes are not issued under, or governed by, MGE’s Indenture dated as of September 1, 1998, which governs MGE’s Medium-Term Notes.

(d)Issued by MGE. Under that Note Purchase Agreement: (i) note holders have the right to require MGE to repurchase their notes at par in the event of an acquisition of beneficial ownership of 30% or more of the outstanding voting stock of MGE Energy, (ii) MGE must maintain a ratio of its consolidated indebtedness to consolidated total capitalization not to exceed a maximum of 65%, and (iii) MGE cannot issue "Priority Debt" in an amount exceeding 20% of its consolidated assets. Priority Debt is defined as any indebtedness of MGE secured by liens other than specified liens permitted by the Note Purchase Agreement and certain unsecured indebtedness of certain subsidiaries. As of December 31, 2014, MGE is in compliance with the covenant requirements.

(e)Issued by MGE Power West Campus. The Note Purchase Agreements require it to maintain a projected debt service coverage ratio of not less than 1.25 to 1.00, and debt to total capitalization ratio of not more than 0.65 to 1.00. The notes are secured by a collateral assignment of lease payments that MGE is making to MGE Power West Campus for use of its ownership interest in the West Campus Cogeneration Facility pursuant to a long-term lease.As of December 31, 2014, MGE Power West Campus is in compliance with the covenant requirements.

(f)Issued by MGE Power Elm Road. The Note Purchase Agreement requires MGE Power Elm Road to maintain a projected and actual debt service coverage ratio at the end of any calendar quarter of not less than 1.25 to 1.00 for the trailing 12-month period. The notes are secured by a collateral assignment of lease payments that MGE is making to MGE Power Elm Road for use of its ownership interest in the Elm Road Units pursuant to long-term leases.As of December 31, 2014, MGE Power Elm Road is in compliance with the covenant requirements.

Schedule of Long-Term Debt Maturities

Below is MGE Energy's and MGE's aggregate maturities for all long-term debt for years following the December 31,2014,consolidated balance sheets.

		MGE
(In thousands)		Energy		MGE *
2015	$	4,182	$	4,182
2016		4,268		4,268
2017		34,358		34,358
2018		24,452		24,452
2019		4,553		4,553
Future years		327,877		327,877
Total	$	399,690	$	399,690

*Includes $48.2 million for MGE Power West Campusand $68.0 million for MGE Power Elm Road, all of which are consolidated with MGE's debt (see Footnote 2 for further information).

XML

Notes Payable to Banks, Commercial Paper, and Lines of Credit (Details) (USD $)	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Short-term Debt [Line Items]
Short-term debt outstanding	$ 7,000,000	[1]	$ 0	[1]	$ 0	[1]
Weighted-average interest rate	0.20%	[1]	0.00%	[1]	0.00%	[1]
Maximum short-term borrowings	9,000,000	[1]	32,000,000	[1]	16,000,000	[1]
Average short-term borrowings	182,000	[1]	6,992,000	[1]	1,154,000	[1]
Weighted-average interest rate during the year	0.24%	[1]	0.18%	[1]	0.17%	[1]
Line of Credit [Member]
Short-term Debt [Line Items]
Available lines of credit	150,000,000	[1]	150,000,000	[1]	115,000,000	[1]
MGE [Member]
Short-term Debt [Line Items]
Short-term debt outstanding	7,000,000		0		0
Weighted-average interest rate	0.20%		0.00%		0.00%
Maximum short-term borrowings	9,000,000		32,000,000		16,000,000
Average short-term borrowings	182,000		6,992,000		1,154,000
Weighted-average interest rate during the year	0.24%		0.18%		0.17%
MGE [Member] | Line of Credit [Member]
Short-term Debt [Line Items]
Available lines of credit	100,000,000		100,000,000		75,000,000
MGE [Member] | Line of Credit [Member] | MGE $100 million unsecured committed revolving line of credit
Short-term Debt [Line Items]
Available lines of credit	100,000,000
Line of credit, borrowings outstanding	0
Debt covenant, required parent company ownership of MGE	100.00%
MGE [Member] | Line of Credit [Member] | MGE $100 million unsecured committed revolving line of credit | Minimum [Member]
Short-term Debt [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
MGE [Member] | Line of Credit [Member] | MGE $100 million unsecured committed revolving line of credit | Maximum [Member]
Short-term Debt [Line Items]
Debt to total capitalization ratio	0.65
MGE Energy [Member] | Line of Credit [Member] | MGE Energy $50 million unsecured commiteed revolving line of credit
Short-term Debt [Line Items]
Available lines of credit	50,000,000
Line of credit, borrowings outstanding	$ 0
Debt covenant, required parent company ownership of MGE	100.00%
MGE Energy [Member] | Line of Credit [Member] | MGE Energy $50 million unsecured commiteed revolving line of credit | Minimum [Member]
Short-term Debt [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
MGE Energy [Member] | Line of Credit [Member] | MGE Energy $50 million unsecured commiteed revolving line of credit | Maximum [Member]
Short-term Debt [Line Items]
Debt to total capitalization ratio	0.65

[1] MGE Energy short-term borrowings include MGE Energy and MGE lines of credit and MGE commercial paper.

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Contractual Obligation, Fiscal Year Maturity Schedule

As of December 31,2014, the future minimum commitments related to these purchase contracts were as follows:

(In thousands)		2015		2016		2017		2018		2019
Coal(a)	$	22,630	$	16,436	$	10,664	$	6,560	$	3,850
Natural Gas
Transportation and storage(b)		18,074		9,938		273		192		-
Supply(c)		14,971		-		-		-		-
Purchase Power(d)		50,714		51,437		52,043		50,752		37,367
Other		16,452		723		723		324		143
	$	122,841	$	78,534	$	63,703	$	57,828	$	41,360

(a)Total coal commitments for the Columbia and Elm Road Units, including transportation. Fuel procurement for MGE's jointly owned Columbia and Elm Road Units are handled by WPL and WEPCO, respectively, who are the operators of those facilities. If any minimum purchase obligations must be paid under these contracts, management believes these obligations would be considered costs of service and recoverable in rates.

(b)MGE's natural gas transportation and storage contracts require fixed monthly payments for firm supply pipeline transportation and storage capacity. The pricing components of the fixed monthly payments for the transportation and storage contracts are established by FERC but may be subject to change.

(c)These commitments include market-based pricing. Management expects to recover these costs in future customer rates.

(d)MGE has several purchase power agreements to help meet future electric supply requirements. Management expects to recover these costs in future customer rates. In October 2008, MGE entered into a ten-year purchase power agreement to help meet future electric supply requirements. Under this agreement, MGE has agreed to purchase 50 MW of wind power from Osceola Windpower II, LLC, which is located in Iowa. This facility became operational in October 2008. MGE does not have any capacity payment commitments under this agreement. However, MGE is obligated to purchase its ratable share of the energy produced by the project. MGE's commitment related to its ratable share of energy produced by the project has been estimated and is included in the above numbers.

Guarantor Obligations, Fiscal Year Maturity Schedule

Principal payments for the next five years on the loans are:

(In thousands)		2015		2016		2017		2018		2019
Principal payments	$	906	$	884	$	482	$	420	$	410

Operating Leases, Future Minimum Rental Payments

Future minimum rental payments at December 31,2014, under agreements classified as operating leases with noncancelable terms in excess of one year are as follows:

(In thousands)		2015		2016		2017		2018		2019		Thereafter
Minimum lease payments	$	1,553	$	1,346	$	872	$	419	$	258	$	7,938

Other Commitments

MGE has several other commitments related to various projects. Payments for these commitments are expected to be as follows:

(In thousands)		2015		2016		2017		2018		2019		Thereafter
Other Commitments	$	474	$	475	$	433	$	435	$	437	$	6,524

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Pension Plans and Other Postretirement Benefits (Details-3) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Pension Benefits [Member]
Weighted-average assumptions used to determine benefit obligations:
Discount rate	4.11%	4.88%
Rate of compensation increase	3.85%	3.90%
Weighted-average assumptions used to determine net periodic cost:
Discount rate	4.88%	4.09%	4.50%
Long-term rate of return	8.10%	8.10%	8.10%
Rate of compensation increase	3.93%	4.60%	4.59%
Postretirement Benefits [Member]
Weighted-average assumptions used to determine benefit obligations:
Discount rate	3.96%	4.69%
Assumed health care cost trend rates:
Health care cost trend rate assumed for next year	6.50%	7.00%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	5.00%	5.00%
Year that the rate reaches the ultimate trend rate	2021	2018
Weighted-average assumptions used to determine net periodic cost:
Discount rate	4.69%	4.14%	4.55%
Long-term rate of return	7.07%	6.79%	7.26%
How assumed 1% increase or decrease in health care cost trends could impact postretirement benefits [Abstract]
Effect on other postretirement benefit obligation - 1% increase	1,465
Effect on other postretirement benefit obligation - 1% decrease	(1,852)
Effect on total service and interest cost components - 1% increase	75
Effect on total service and interest cost components - 1% decrease	(101)

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Schedule I - Condensed Parent Company Finanical Statements (Details-Cash Flow Statement) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Condensed Cash Flow Statements, Captions [Line Items]
Net Cash Flows Provided by (Used for) Operating Activities	$ 128,762	$ 140,267	$ 146,004
Investing Activities:
Other investing	(1,297)	(1,205)	(496)
Cash Provided by (Used for) Investing Activities	(96,158)	(121,922)	(101,353)
Financing Activities:
Cash dividends paid on common stock	(38,429)	(37,107)	(35,951)
Change in short-term debt	7,000	0	0
Other financing	(130)	(770)	(844)
Cash Provided by (Used for) Financing Activities	(35,662)	4,111	(39,463)
Change in Cash and Cash Equivalents:	(3,058)	22,456	5,188
Cash and cash equivalents at beginning of period	68,813	46,357	41,169
Cash and cash equivalents at end of period	65,755	68,813	46,357
MGE Energy [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net Cash Flows Provided by (Used for) Operating Activities	48,165	53,952	49,819
Investing Activities:
Other investing	(2,422)	(2,425)	(1,558)
Cash Provided by (Used for) Investing Activities	(2,422)	(2,425)	(1,558)
Financing Activities:
Cash dividends paid on common stock	(38,429)	(37,107)	(35,951)
Other financing	(89)	(97)	(49)
Cash Provided by (Used for) Financing Activities	(38,518)	(37,204)	(36,000)
Change in Cash and Cash Equivalents:	7,225	14,323	12,261
Cash and cash equivalents at beginning of period	51,204	36,881	24,620
Cash and cash equivalents at end of period	$ 58,429	$ 51,204	$ 36,881

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Regulatory Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2014

Regulatory Assets and Liabilities Disclosure [Abstract]

Regulatory Assets and Liabilities

The following regulatory assets and liabilities are reflected in MGE's consolidated balance sheet as of December 31:

(In thousands)		2014		2013
Regulatory Assets
Asset retirement obligation	$	4,532	$	4,863
Debt related costs		11,133		11,786
Derivatives		54,998		63,893
Environmental costs		700		920
Tax recovery related to AFUDC equity		8,821		6,956
Unfunded pension and other postretirement liability		84,551		24,591
Other		448		534
Total regulatory assets	$	165,183	$	113,543
Regulatory Liabilities
Conservation costs	$	680	$	455
Deferred fuel savings		755		13,386
Elm Road		1,497		607
Income taxes		1,794		2,082
Non-ARO removal costs		16,129		15,182
Renewable energy credits		753		574
Other		1,107		1,044
Total regulatory liabilities	$	22,715	$	33,330

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Columbia Environmental Project Construction

12 Months Ended

Dec. 31, 2014

Jointly Owned Utility Plant Interests [Line Items]

Columbia Environmental Project Construction

Joint Plant Ownership - MGE Energy and MGE.

a. Columbia.

MGE and two other utilities jointly own Columbia, a coal-fired generating facility located in Portage,Wisconsin, which accounts for 31% (239 MW) of MGE's net summer rated capacity. Power from this facility is shared in proportion to each company's ownership interest. MGE has a 22% ownership interest in Columbia. The other owners are WPL, which operates Columbia, and WPSC. MGE's share of fuel, operating, and maintenance expenses for Columbia were $28.1 million, $37.5 million, and $36.3 million for the years ended December 31,2014, 2013, and 2012, respectively. See Footnote 20 for discussion of MGE's future capital commitments in respect to the environmental projects at Columbia as a result of this ownership interest.

Each owner provides its own financing and reflects its respective portion of facilities and operating costs in its financial statements. MGE's interest in Columbia, included in its gross utility plant in service, and the related accumulated depreciation reserves at December 31 were as follows:

(In thousands)		2014		2013
Utility plant	$	268,597	$	123,097
Accumulated depreciation		(80,645)		(78,880)
Property, plant, and equipment, net	$	187,952	$	44,217
Construction work in progress		6,941		120,858
Total property, plant, and equipment	$	194,893	$	165,075

b. Elm Road.

MGE Power Elm Road owns an 8.33% ownership interest in each of two 615 MW coal-fired generating units in Oak Creek, Wisconsin, which accounts for 14% (106 MW) of MGE’s net summer rated capacity. Unit 1 entered commercial operation on February 2, 2010. Unit 2 entered commercial operation on January 12, 2011. MGE Power Elm Road's sole principal asset is that ownership interest in those generating units. MGE Power Elm Road’s interest in the Elm Road Units is leased to MGE pursuant to long-term leases.

The remainder of the ownership interest in the Elm Road Units is held by two other entities, one of which is also responsible for the Units’ operation. Each owner provides its own financing and reflects its respective portion of the facility and costs in its financial statements. MGE’s share of fuel, operating, and maintenance expenses for the Elm Road Units were $20.3 million, $13.4 million, and $13.2 million for the years ended December 31,2014,2013, and 2012, respectively.MGE Power Elm Road’s interest in the portion of the Elm Road Units in-service and the related accumulated depreciation reserves at December 31 were as follows:

(In thousands)		2014		2013
Nonregulated plant	$	199,582	$	198,198
Accumulated depreciation		(19,962)		(15,541)
Property, plant, and equipment, net	$	179,620	$	182,657
Construction work in progress		1,976		1,115
Total property, plant, and equipment	$	181,596	$	183,772

c. WCCF.

MGE Power West Campus and the UW jointly own the West Campus Cogeneration Facility located on the UW campus in Madison, Wisconsin. MGE Power West Campus owns 55% of the facility and the UW owns 45% of the facility. The UW owns a controlling interest in the chilled-water and steam plants, which are used to meet the growing needs for air-conditioning and steam-heat capacity for the UW campus. MGE Power West Campus owns a controlling interest in the electric generation plant, which is leased and operated by MGE.

Each owner provides its own financing and reflects its respective portion of the facility and operating costs in its financial statements. MGE Power West Campus' interest in WCCF and the related accumulated depreciation reserves at December 31 were as follows:

(In thousands)		2014		2013
Nonregulated plant	$	111,453	$	111,268
Accumulated depreciation		(24,691)		(21,704)
Property, plant, and equipment, net	$	86,762	$	89,564

Operating charges are allocated to the UW based on formulas contained in the operating agreement. Under the provisions of this arrangement, the UW is required to reimburse MGE for their allocated portion of fuel and operating expenses. For the year endedDecember 31,2014, the UW allocated share of fuel and operating costs was $2.8 million. For the years ended December 31,2013 and 2012, the UW allocated share of fuel and operating costs was $4.9 million.

Columbia Environmental Project [Member]

Jointly Owned Utility Plant Interests [Line Items]

Columbia Environmental Project Construction

Columbia Environmental Project Construction - MGE Energy and MGE.

MGE and two other utilities jointly own Columbia, a coal-fired generating facility. WPL is the plant operator and permit holder, and owns 46.2% of Columbia. WPSC owns a 31.8% interest and MGE owns a 22% interest in Columbia. In early 2011, the PSCW issued a Certificate and Order authorizing the construction of scrubbers and baghouses and associated equipment on Columbia Units 1 and 2 to reduce SO₂ and mercury emissions. The modifications to Unit 2 were placed into service in April 2014, and the modifications to Unit 1 were placed into service in July 2014. The scrubbers and baghouses are expected to support compliance obligations for current and anticipated air quality regulations, including CAIR, CSAPR, MATS, and the Wisconsin Mercury Rule. As of December 31,2014, $138.8 million of the capitalized project was transferred from Construction work in progress to Property, plant, and equipment on MGE's balance sheet related to Units 1 and 2 being placed into service. This total amount consisted of $129.0million of capital expenditures and $9.8million of AFUDC. MGE's share of various contractual commitments entered for the project as of December 31,2014 is $0.5 million. For the years endedDecember 31,2014 and 2013, MGE has recognized after tax $3.0 million and $2.7 million, respectively, in AFUDC equity related to this project.

MGE expects that the costs pertaining to this project will be fully recoverable through rates. For 2014, the PSCW authorized MGE 100% AFUDC on this project during construction. For 2013, the PSCW authorized MGE a 50% current return (included in customer rates) and the remaining 50% as AFUDC.

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Pension Plans and Other Postretirement Benefits (Details-4) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013	Dec. 31, 2012
Other postretirement benefits [Abstract]
Fair value of plan assets	$ 327,500		$ 315,000
Real Estate [Member]
Other postretirement benefits [Abstract]
Fair value of plan assets	23,480		19,628
Pension Benefits [Member]
Defined Benefit Plan, Information about Plan Assets [Abstract]
Target Plan Asset Allocation	100.00%
Actual Plan Asset Allocation	100.00%		100.00%
Other postretirement benefits [Abstract]
Fair value of plan assets	288,548		277,398	212,277
Pension Benefits [Member] | Plan Assets [Member]
Concentration of Credit Risk [Abstract]
Concentration risk, percentage	10.00%
Concentration risk, number of significant concentrations	0
Pension Benefits [Member] | Equity Securities [Member]
Defined Benefit Plan, Information about Plan Assets [Abstract]
Target Plan Asset Allocation	63.00%	[1]
Actual Plan Asset Allocation	62.00%		66.00%
Pension Benefits [Member] | United States Equity Securities [Member]
Defined Benefit Plan, Information about Plan Assets [Abstract]
Target Plan Asset Allocation	45.50%
Pension Benefits [Member] | Non-United States Equity Securities [Member]
Defined Benefit Plan, Information about Plan Assets [Abstract]
Target Plan Asset Allocation	17.50%
Pension Benefits [Member] | Fixed Income Securities [Member]
Defined Benefit Plan, Information about Plan Assets [Abstract]
Target Plan Asset Allocation	30.00%
Actual Plan Asset Allocation	31.00%		28.00%
Pension Benefits [Member] | Real Estate [Member]
Defined Benefit Plan, Information about Plan Assets [Abstract]
Target Plan Asset Allocation	7.00%
Actual Plan Asset Allocation	7.00%		6.00%
Postretirement Benefits [Member]
Other postretirement benefits [Abstract]
Fair value of plan assets	38,952		37,602	32,124
Postretirement Benefits [Member] | Plan Assets [Member]
Concentration of Credit Risk [Abstract]
Concentration risk, percentage	10.00%
Concentration risk, number of significant concentrations	0
Master Pension Trust [Member]
Other postretirement benefits [Abstract]
Fair value of plan assets	$ 32,800		$ 31,100

[1] Target allocations for equity securities are broken out as follows: 45.5% United States equity, 17.5% non-United States equity.

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Fair Value of Financial Instruments (Details-3)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Basis adjustment:
Basis adjustment - on peak	98.10%	94.20%
Basis adjustment - off peak	95.00%	92.60%
US Treasury Bills [Member]
Deferred compensation plan
Investment interest calculation, investment maturity period (26 weeks)	182 days
Investment interest calculation, monthly compounding rate	1.00%
Investment interest calculation, minimum annual rate compounded monthly	7.00%
Minimum [Member]
Counterparty fuel mix:
Internal generation	50.00%	50.00%
Purchased power	30.00%	30.00%
Maximum [Member]
Counterparty fuel mix:
Internal generation	70.00%	70.00%
Purchased power	50.00%	50.00%

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Derivative and Hedging Instruments (Details-5) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Counterparties in net liability position or default [Abstract]
Net liability position of counterparites (less than $0.1 million as of December 31, 2014, $0 as of December 31, 2013)	$ 100,000	$ 0
Number of counterparties in default	0
Commodity Derivative Contracts [Member] | Fuel For Electric Generation Purchased Power [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Realized losses (gains)	(5,515,000)	(564,000)
Commodity Derivative Contracts [Member] | Cost Of Gas Sold Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Realized losses (gains)	(1,103,000)	868,000
Financial Transmission Rights [Member] | Fuel For Electric Generation Purchased Power [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Realized losses (gains)	(1,110,000)	(983,000)
Financial Transmission Rights [Member] | Cost Of Gas Sold Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Realized losses (gains)	0	0
Ten-year PPA [Member]
Derivative collateral required to be posted for ten-year PPA [Abstract]
Minimum collateral that may be required to be posted	20,000,000
Maximum collateral that may be required to be posted	40,000,000
Collateral posted	0
Ten-year PPA [Member] | Fuel For Electric Generation Purchased Power [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Realized losses (gains)	1,515,000	4,209,000
Ten-year PPA [Member] | Cost Of Gas Sold Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Realized losses (gains)	$ 0	$ 0

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Segment Information

The following table shows segment information for MGE Energy's and MGE's operations:

(In thousands)MGE Energy		Electric		Gas		Non-Regulated Energy		Transmission Investment		All Others		Consolidation/ Elimination Entries		Consolidated Total
Year Ended December 31, 2014
Operating revenues	$	394,849	$	221,720	$	3,283	$	-	$	-	$	-	$	619,852
Interdepartmental revenues		509		8,366		42,692		-		-		(51,567)		-
Total operating revenues		395,358		230,086		45,975		-		-		(51,567)		619,852
Depreciation and amortization		(26,933)		(6,308)		(7,407)		-		(47)		-		(40,695)
Other operating expenses		(297,409)		(194,203)		(139)		-		(875)		51,567		(441,059)
Operating income (loss)		71,016		29,575		38,429		-		(922)		-		138,098
Other (deductions) income, net		2,847		(86)		-		9,150		(1,832)		-		10,079
Interest (expense) income, net		(10,410)		(3,229)		(6,208)		-		174		-		(19,673)
Income (loss) before taxes		63,453		26,260		32,221		9,150		(2,580)		-		128,504
Income tax (provision) benefit		(22,070)		(10,480)		(12,932)		(3,664)		961		-		(48,185)
Net income (loss)	$	41,383	$	15,780	$	19,289	$	5,486	$	(1,619)	$	-	$	80,319
Year Ended December 31, 2013
Operating revenues	$	403,957	$	181,462	$	5,468	$	-	$	-	$	-	$	590,887
Interdepartmental revenues		537		12,629		42,591		-		-		(55,757)		-
Total operating revenues		404,494		194,091		48,059		-		-		(55,757)		590,887
Depreciation and amortization		(25,780)		(5,898)		(7,156)		-		(4)		-		(38,838)
Other operating expenses		(316,277)		(162,661)		(128)		(1)		(752)		55,757		(424,062)
Operating income (loss)		62,437		25,532		40,775		(1)		(756)		-		127,987
Other (deductions) income, net		3,062		59		-		9,434		(1,854)		-		10,701
Interest (expense) income, net		(9,645)		(2,986)		(6,400)		-		107		-		(18,924)
Income (loss) before taxes		55,854		22,605		34,375		9,433		(2,503)		-		119,764
Income tax (provision) benefit		(19,176)		(9,168)		(13,682)		(3,796)		963		-		(44,859)
Net income (loss)	$	36,678	$	13,437	$	20,693	$	5,637	$	(1,540)	$	-	$	74,905
Year Ended December 31, 2012
Operating revenues	$	392,365	$	139,727	$	9,231	$	-	$	-	$	-	$	541,323
Interdepartmental revenues		487		12,814		34,714		-		-		(48,015)		-
Total operating revenues		392,852		152,541		43,945		-		-		(48,015)		541,323
Depreciation and amortization		(26,031)		(5,569)		(7,107)		-		-		-		(38,707)
Other operating expenses		(300,149)		(136,567)		(121)		-		(1,031)		48,015		(389,853)
Operating income (loss)		66,672		10,405		36,717		-		(1,031)		-		112,763
Other (deductions) income, net		1,145		323		-		9,080		(479)		-		10,069
Interest (expense) income, net		(10,189)		(2,874)		(6,537)		-		133		-		(19,467)
Income (loss) before taxes		57,628		7,854		30,180		9,080		(1,377)		-		103,365
Income tax (provision) benefit		(20,906)		(2,769)		(12,113)		(3,648)		517		-		(38,919)
Net income (loss)	$	36,722	$	5,085	$	18,067	$	5,432	$	(860)	$	-	$	64,446

(In thousands)MGE		Electric		Gas		Non-Regulated Energy		Transmission Investment		Consolidation/ Elimination Entries		Consolidated Total
Year Ended December 31, 2014
Operating revenues	$	394,871	$	221,741	$	3,283	$	-	$	-	$	619,895
Interdepartmental revenues		487		8,345		42,692		-		(51,524)		-
Total operating revenues		395,358		230,086		45,975		-		(51,524)		619,895
Depreciation and amortization		(26,933)		(6,308)		(7,407)		-		-		(40,648)
Other operating expenses*		(319,175)		(204,597)		(13,071)		-		51,524		(485,319)
Operating income*		49,250		19,181		25,497		-		-		93,928
Other (deductions) income, net*		2,543		(172)		-		5,486		-		7,857
Interest expense, net		(10,410)		(3,229)		(6,208)		-		-		(19,847)
Net income		41,383		15,780		19,289		5,486		-		81,938
Less: Net income attributable to
noncontrolling interest, net of tax		-		-		-		-		(26,310)		(26,310)
Net income attributable to MGE	$	41,383	$	15,780	$	19,289	$	5,486	$	(26,310)	$	55,628
Year Ended December 31, 2013
Operating revenues	$	403,980	$	181,477	$	5,468	$	-	$	-	$	590,925
Interdepartmental revenues		514		12,614		42,591		-		(55,719)		-
Total operating revenues		404,494		194,091		48,059		-		(55,719)		590,925
Depreciation and amortization		(25,780)		(5,898)		(7,156)		-		-		(38,834)
Other operating expenses*		(335,059)		(171,717)		(13,810)		(1)		55,719		(464,868)
Operating income (loss)*		43,655		16,476		27,093		(1)		-		87,223
Other (deductions) income, net*		2,668		(53)		-		5,638		-		8,253
Interest expense, net		(9,645)		(2,986)		(6,400)		-		-		(19,031)
Net income		36,678		13,437		20,693		5,637		-		76,445
Less: net income attributable to
noncontrolling interest, net of tax		-		-		-		-		(27,438)		(27,438)
Net income attributable to MGE	$	36,678	$	13,437	$	20,693	$	5,637	$	(27,438)	$	49,007
Year Ended December 31, 2012
Operating revenues	$	392,365	$	139,727	$	9,231	$	-	$	-	$	541,323
Interdepartmental revenues		487		12,814		34,714		-		(48,015)		-
Total operating revenues		392,852		152,541		43,945		-		(48,015)		541,323
Depreciation and amortization		(26,031)		(5,569)		(7,107)		-		-		(38,707)
Other operating expenses*		(320,701)		(139,236)		(12,234)		-		48,015		(424,156)
Operating income*		46,120		7,736		24,604		-		-		78,460
Other income, net*		791		223		-		5,432		-		6,446
Interest expense, net		(10,189)		(2,874)		(6,537)		-		-		(19,600)
Net income		36,722		5,085		18,067		5,432		-		65,306
Less: Net income attributable to
noncontrolling interest, net of tax		-		-		-		-		(24,489)		(24,489)
Net income attributable to MGE	$	36,722	$	5,085	$	18,067	$	5,432	$	(24,489)	$	40,817
*Amounts are shown net of the related tax expense, consistent with the presentation on the consolidated MGE Income Statement.

The following table shows segment information for MGE Energy's and MGE's assets and capital expenditures:
		Utility						Consolidated
(In thousands) MGE Energy		Electric		Gas		Assetsnot Allocated		Nonregulated Energy		Transmission Investment		All Others		Consolidation/ Elimination Entries		Total
Assets:
December 31, 2014	$	948,241	$	308,499	$	41,346	$	281,410	$	67,697	$	441,109	$	(390,636)	$	1,697,666
December 31, 2013		899,257		265,694		19,853		288,116		64,504		431,436		(389,800)		1,579,060
December 31, 2012		888,444		285,468		18,559		323,216		61,064		413,291		(403,118)		1,586,924
Capital Expenditures:
Year ended Dec. 31, 2014	$	68,067	$	22,104	$	-	$	2,505	$	-	$	-	$	-	$	92,676
Year ended Dec. 31, 2013		100,146		15,554		-		3,347		-		-		-		119,047
Year ended Dec. 31, 2012		81,965		13,812		-		2,658		-		-		-		98,435

		Utility						Consolidated
(In thousands)MGE		Electric		Gas		Assetsnot Allocated		Nonregulated Energy		Transmission Investment		Consolidation/ Elimination Entries		Total
Assets:
December 31, 2014	$	948,241	$	308,499	$	41,346	$	281,360	$	67,697	$	(6,521)	$	1,640,622
December 31, 2013		899,257		265,694		19,853		288,066		64,504		(6,731)		1,530,643
December 31, 2012		888,444		285,468		18,559		323,166		61,064		(23,050)		1,553,651
Capital Expenditures:
Year ended Dec. 31, 2014	$	68,067	$	22,104	$	-	$	2,505	$	-	$	-	$	92,676
Year ended Dec. 31, 2013		100,146		15,554		-		3,347		-		-		119,047
Year ended Dec. 31, 2012		81,965		13,812		-		2,658		-		-		98,435

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Pension Plans and Other Postretirement Benefits (Details-1) (USD $)	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Defined contribution plans [Abstract]
Defined contribution costs	$ 2,500,000		$ 2,300,000		$ 2,100,000
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	315,000,000
Fair value of plan assets at end of year	327,500,000		315,000,000
Amounts recognized in the consolidated balance sheets to reflect funded status of plans [Abstract]
Long-term asset	0		15,071,000
Long-term liability	(90,201,000)		(49,184,000)
Pension Benefits [Member]
Change in benefit obligations [Roll Forward]
Net benefit obligation at beginning of year	283,958,000		315,505,000
Service cost	6,179,000		7,705,000		7,139,000
Interest cost	13,574,000		12,656,000		12,704,000
Plan participants' contributions	0		0
Plan amendments	0		0
Actuarial (gain) loss	48,162,000	[1]	(40,335,000)	[1]
Gross benefits paid	(11,640,000)		(11,573,000)
Less: federal subsidy on benefits paid	0		0
Benefit obligation at end of year	340,233,000		283,958,000		315,505,000
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	277,398,000		212,277,000
Actual return on plan assets	21,907,000		45,816,000
Employer contributions	883,000		30,878,000
Plan participants' contributions	0		0
Gross benefits paid	(11,640,000)		(11,573,000)
Fair value of plan assets at end of year	288,548,000		277,398,000		212,277,000
Funded Status at December 31	(51,685,000)		(6,560,000)
Accumulated benefit obligation	304,000,000		254,500,000
Amounts recognized in the consolidated balance sheets to reflect funded status of plans [Abstract]
Long-term asset	0		15,071,000
Current liability	(1,025,000)		(945,000)
Long-term liability	(50,660,000)		(20,686,000)
Net asset (liability)	(51,685,000)		(6,560,000)
Amounts recognized in the consolidated balance sheets as regulatory asset [Abstract]
Net actuarial loss	85,102,000		37,499,000
Prior service (credit) cost	(413,000)		(209,000)
Transition obligation	0		0
Total	84,689,000		37,290,000
Projected benefit obligation in excess of plan assets [Abstract]
Projected benefit obligation with projected benefit obligation in excess of plan assets, end of year	340,233,000		21,631,000
Fair value of plan assets with projected benefit obligation in excess of plan assets, end of year	288,548,000		0
Accumulated benefit obligation in excess of plan assets [Abstract]
Projected benefit obligation with accumulated benefit obligation in excess of plan assets, end of year	340,233,000		21,631,000
Accumulated benefit obligation with accumulated benefit obligation in excess of plan assets, end of year	304,023,000		19,795,000
Fair value of plan assets with accumulated benefit obligation in excess of plan assets, end of year	288,548,000		0
Postretirement Benefits [Member]
Change in benefit obligations [Roll Forward]
Net benefit obligation at beginning of year	66,100,000		92,605,000
Service cost	1,339,000		2,380,000		2,528,000
Interest cost	3,166,000		3,871,000		4,431,000
Plan participants' contributions	708,000		665,000
Plan amendments	0		(20,915,000)	[2]
Actuarial (gain) loss	10,090,000	[1]	(9,687,000)	[1]
Gross benefits paid	(3,113,000)		(2,998,000)
Less: federal subsidy on benefits paid	188,000	[3]	179,000	[3]
Benefit obligation at end of year	78,478,000		66,100,000		92,605,000
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	37,602,000		32,124,000
Actual return on plan assets	2,558,000		5,000,000
Employer contributions	1,197,000		2,811,000
Plan participants' contributions	708,000		665,000
Gross benefits paid	(3,113,000)		(2,998,000)
Fair value of plan assets at end of year	38,952,000		37,602,000		32,124,000
Funded Status at December 31	(39,526,000)		(28,498,000)
Plan amendment, maximum percentage of 2013 employer contributions to be paid toward retiree medical premiums			175.00%
Medicare subsidy due to MGE	200,000		200,000
Amounts recognized in the consolidated balance sheets to reflect funded status of plans [Abstract]
Long-term asset	0		0
Current liability	(65,000)		(13,000)
Long-term liability	(39,461,000)		(28,485,000)
Net asset (liability)	(39,526,000)		(28,498,000)
Amounts recognized in the consolidated balance sheets as regulatory asset [Abstract]
Net actuarial loss	17,657,000		7,761,000
Prior service (credit) cost	(17,827,000)		(20,495,000)
Transition obligation	32,000		35,000
Total	$ (138,000)		$ (12,699,000)

[1] In 2014, lower discount rates and mortality table updates were the main drivers to the actuarial loss.

[2] In 2013, MGE capped the amount it pays each year toward retiree medical premiums at 175%of the 2013 employer contribution for qualified employees.

[3] 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 the years ended December 31, 2014 and 2013, the subsidy due to MGE was $0.2 million.

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Derivative and Hedging Instruments (Details-2) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Offsetting Assets [Line Items]
Collateral posted against derivative positions		$ (200)
Commodity Derivative Contracts [Member]
Offsetting Assets [Line Items]
Gross asset	223	1,523
Gross amounts offset in balance sheet	(223)	(99)
Collateral posted against derivative positions	0	(175)
Net amount presented in balance sheet	0	1,249
Financial Transmission Rights [Member]
Offsetting Assets [Line Items]
Gross asset	642	363
Gross amounts offset in balance sheet	0	0
Collateral posted against derivative positions	0	0
Net amount presented in balance sheet	$ 642	$ 363

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Pension Plans and Other Postretirement Benefits (Details-6) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Change in plan assets [Roll Forward]
Fair value of plan assets at end of year	$ 327,500	$ 315,000
Real Estate [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at end of year	23,480	19,628
Insurance Continuance Fund [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at end of year	1,518	1,428
Fixed Rate Fund [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at end of year	4,446
Level 3 [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at end of year	29,444	21,056
Level 3 [Member] | Real Estate [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	19,628	17,141
Actual return on plan assets still held	1,561	1,565
Purchases, sales, and settlements	2,291	922
Transfers in and/or out of Level 3	0	0
Fair value of plan assets at end of year	23,480	19,628
Level 3 [Member] | Insurance Continuance Fund [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	1,428	1,466
Actual return on plan assets still held	44	42
Purchases, sales, and settlements	46	(80)
Transfers in and/or out of Level 3	0	0
Fair value of plan assets at end of year	1,518	1,428
Level 3 [Member] | Fixed Rate Fund [Member]
Change in plan assets [Roll Forward]
Fair value of plan assets at beginning of year	0	0
Actual return on plan assets still held	54	0
Purchases, sales, and settlements	4,392	0
Transfers in and/or out of Level 3	0	0
Fair value of plan assets at end of year	$ 4,446	$ 0

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Derivative and Hedging Instruments (Details-3) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Offsetting Liabilities [Line Items]
Collateral posted against derivative positions	$ (2,200)
Commodity Derivative Contracts [Member]
Offsetting Liabilities [Line Items]
Gross liability	2,433	99
Gross amounts offset in balance sheet	(223)	(99)
Collateral posted against derivative positions	(2,179)	0
Net amount presented in the balance sheet	31	0
Ten-year PPA [Member]
Offsetting Liabilities [Line Items]
Gross liability	53,430	65,680
Gross amounts offset in balance sheet	0	0
Collateral posted against derivative positions	0	0
Net amount presented in the balance sheet	$ 53,430	$ 65,680

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Pension Plans and Other Postretirement Benefits (Details-2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Components of Net Periodic Benefit Cost
Transition obligation straight-line amortization period	20 years
Pension Benefits [Member]
Components of Net Periodic Benefit Cost
Service cost	$ 6,179	$ 7,705	$ 7,139
Interest cost	13,574	12,656	12,704
Expected return on assets	(22,051)	(19,027)	(15,182)
Amortization of:
Transition obligation	0	0	0
Prior service cost	204	314	430
Actuarial loss	703	8,014	8,288
Net periodic benefit cost	(1,391)	9,662	13,379
Postretirement Benefits [Member]
Components of Net Periodic Benefit Cost
Service cost	1,339	2,380	2,528
Interest cost	3,166	3,871	4,431
Expected return on assets	(2,615)	(2,176)	(1,741)
Amortization of:
Transition obligation	3	3	425
Prior service cost	(2,669)	110	110
Actuarial loss	252	1,236	2,346
Net periodic benefit cost	$ (524)	$ 5,424	$ 8,099

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Fair Value of Financial Instruments (Details-1) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Carrying Amount [Member]
Assets:
Cash and cash equivalents	$ 65,755		$ 68,813
Liabilities:
Short-term debt - commercial paper	7,000		0
Long-Term debt	399,690	[1]	403,793	[1]
Fair Value [Member]
Assets:
Cash and cash equivalents	65,755		68,813
Liabilities:
Short-term debt - commercial paper	7,000		0
Long-Term debt	457,420	[1]	432,010	[1]
MGE [Member] | Carrying Amount [Member]
Assets:
Cash and cash equivalents	4,562		14,808
Liabilities:
Short-term debt - commercial paper	7,000		0
Long-Term debt	399,690	[1]	403,793	[1]
MGE [Member] | Fair Value [Member]
Assets:
Cash and cash equivalents	4,562		14,808
Liabilities:
Short-term debt - commercial paper	7,000		0
Long-Term debt	$ 457,420	[1]	$ 432,010	[1]

[1] *Includes long-term debt due within one year.

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Income Taxes

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes.

a. MGE Energy and MGE Income Taxes.

MGE Energy files a consolidated federal income tax return that includes the operations of all subsidiary companies. The subsidiaries calculate their respective federal income tax provisions as if they were separate taxable entities.

On a consolidated and separate company basis, MGE Energy’s and MGE’s income tax provision consists of the following provision (benefit) components for the years endedDecember 31:

		MGE Energy						MGE
(In thousands)		2014		2013		2012		2014		2013		2012
Current payable:
Federal	$	(891)	$	(1,508)	$	(6,053)	$	637	$	(448)	$	(5,030)
State		(589)		8,213		436		(451)		8,322		613
Net-deferred:
Federal		39,284		37,203		37,178		38,553		36,937		36,589
State		10,600		1,163		7,618		10,625		1,223		7,523
Amortized investment tax credits		(219)		(212)		(260)		(219)		(212)		(260)
Total income tax provision	$	48,185	$	44,859	$	38,919	$	49,145	$	45,822	$	39,435

MGE Energy’s and MGE’s consolidated income tax provision differs from the amount computed by applying the statutory federal income tax rate to income before income taxes, as follows:

	MGE Energy			MGE
	2014	2013	2012	2014	2013	2012
Statutory federal income tax rate	35.0 %	35.0 %	35.0 %	35.0 %	35.0 %	35.0 %
State income taxes, net of federal benefit	5.1 %	5.1 %	5.0 %	5.1 %	5.1 %	5.0 %
Amortized investment tax credits	(0.2)%	(0.2)%	(0.3)%	(0.2)%	(0.2)%	(0.2)%
Credit for electricity from wind energy	(1.7)%	(1.5)%	(1.6)%	(1.7)%	(1.5)%	(1.5)%
Domestic manufacturing deduction	-%	(0.2)%	0.3 %	-%	(0.2)%	0.3 %
AFUDC equity, net	(0.8)%	(0.7)%	(0.4)%	(0.8)%	(0.7)%	(0.4)%
Other, net, individually insignificant	0.1 %	-%	(0.3)%	0.1 %	-%	(0.5)%
Effective income tax rate	37.5 %	37.5 %	37.7 %	37.5 %	37.5 %	37.7 %

The significant components of deferred tax liabilities (assets) that appear on MGE Energy’s and MGE’s consolidated balance sheets as of December 31 as follows:

		MGE Energy				MGE
(In thousands)		2014		2013		2014		2013
Property-related	$	312,903	$	263,881	$	312,807	$	263,881
Investment in ATC		36,140		32,696		29,156		27,073
Bond transactions		1,420		1,553		1,420		1,553
Pension and other postretirement benefits		57,847		34,478		57,847		34,478
Derivatives		22,331		26,361		22,331		26,361
Tax deductible prepayments		8,077		7,508		8,077		7,508
Other		10,451		1,995		10,259		1,911
Gross deferred income tax liabilities		449,169		368,472		441,897		362,765
Future tax benefit		(4,092)		-		(4,092)		-
Accrued expenses		(32,091)		(17,195)		(32,091)		(17,195)
Pension and other postretirement benefits		(44,994)		(26,838)		(44,994)		(26,838)
Deferred tax regulatory account		(1,211)		(1,402)		(1,211)		(1,402)
Derivatives		(22,331)		(26,361)		(22,331)		(26,361)
Other		(5,957)		(10,369)		(3,746)		(9,356)
Gross deferred income tax assets		(110,676)		(82,165)		(108,465)		(81,152)
Less valuation allowance		70		195		70		195
Net deferred income tax assets		(110,606)		(81,970)		(108,395)		(80,957)
Deferred income taxes	$	338,563	$	286,502	$	333,502	$	281,808

As of December 31,2014, MGE Energy and MGE have approximately $16.5 million and $5.4million of state net operating loss and federal tax carryforwards, respectively. The net operating loss and tax credit carryforwards resulted in deferred tax assets of $0.8 million and $5.4 million, respectively, as of December 31,2014 that are shown net of $2.0million of unrecognized tax benefits.

The valuation allowance reduces MGE Energy’s and MGE’s deferred tax assets for state carryforward losses to estimated realizable value due to the uncertainty of future income estimates in various state tax jurisdictions.For tax purposes, as of December 31,2014, both MGE Energy and MGE had approximately $1.4million of state tax net operating loss deductions subject to a valuation allowance that expire between 2020 and 2023 if unused.

b. Accounting for Uncertainty in Income Taxes - MGE Energy and MGE.

MGE Energy and MGE account for the difference between the tax benefit amount taken on prior year tax returns, or expected to be taken on a current year tax return, and the tax benefit amount recognized in the financial statements as an unrecognized tax benefit.

A tabular reconciliation of unrecognized tax benefits and interest from January 1, 2012 to December 31, 2014, is as follows:

(In thousands)
Unrecognized tax benefits:		2014		2013		2012
Unrecognized tax benefits, January 1,	$	2,363	$	3,204	$	2,364
Additions based on tax positions related to the current year		610		377		401
Additions based on tax positions related to the prior years		618		424		580
Reductions based on tax positions related to the current year		-		(40)		-
Reductions based on tax positions related to the prior years		(1,226)		(1,602)		(141)
Unrecognized tax benefits, December 31,	$	2,365	$	2,363	$	3,204
(In thousands)
Interest on unrecognized tax benefits:		2014		2013		2012
Accrued interest on unrecognized tax benefits, January 1,	$	101	$	314	$	216
Reduction in interest expense on uncertain tax positions		(97)		(275)		-
Interest expense on uncertain tax positions		88		62		98
Accrued interest on unrecognized tax benefits, December 31,	$	92	$	101	$	314

Unrecognized tax benefits of $0.4 million and $2.4 million are liabilities shown with other deferred liabilities on the December 31,2014 and December 31,2013, consolidated balance sheets, respectively. At December 31,2014, $2.0 of unrecognized tax benefits are netted with deferred tax assets on the consolidated balance sheet. The interest component is offset by a regulatory asset.

During 2013, the IRS issued guidance on the treatment of electric generation repairs. This guidance prompted the reversal of the unrecognized tax benefits for these repairs in 2013. With the adoption of this new guidance in 2014 unrecognized tax benefits related to electric generation were added. At December 31,2014 and 2012, MGE Energy and MGE have an unrecognized tax benefit primarily related to temporary tax differences associated with the change in income tax method of accounting for electric generation and electric and gas distribution repairs. At December 31,2013, MGE Energy and MGE had an unrecognized tax benefit primarily related to temporary tax differences associated with the change in income tax method of accounting for electric and gas distribution repairs. There were no unrecognized tax benefits at December 31,2014, 2013, or 2012 related to federal permanent differences and tax credits.

The unrecognized tax benefits at December 31,2014, are not expected to significantly increase or decrease within the next twelve months. In addition, statutes of limitations will expire for MGE Energy and MGE tax returns. The impact of the statutes of limitations expiring is not anticipated to be material. The following table shows tax years that remain subject to examination by major jurisdiction:

Taxpayer	Open Years
MGE Energy and consolidated subsidiaries in federal return	2011 through 2014
MGE Energy Wisconsin combined reporting corporation return	2010 through 2014

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Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures [Abstract]

Estimated Fair Market Value of Financial Instruments

The estimated fair market value of MGE Energy's and MGE's financial instruments are as follows:

		2014				2013
(In thousands)		Carrying Amount		Fair Value		Carrying Amount		Fair Value
MGE Energy
Assets:
Cash and cash equivalents	$	65,755	$	65,755	$	68,813	$	68,813
Liabilities:
Short-term debt - commercial paper		7,000		7,000		-		-
Long-term debt*		399,690		457,420		403,793		432,010
MGE
Assets:
Cash and cash equivalents	$	4,562	$	4,562	$	14,808	$	14,808
Liabilities:
Short-term debt - commercial paper		7,000		7,000		-		-
Long-term debt*		399,690		457,420		403,793		432,010
*Includes long-term debt due within one year.

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 for MGE Energy and MGE.

	Fair Value as of December 31, 2014
(In thousands)		Total		Level 1		Level 2		Level 3
MGE Energy
Assets:
Derivatives, net	$	642	$	-	$	-	$	642
Exchange-traded investments		927		927		-		-
Total Assets	$	1,569	$	927	$	-	$	642
Liabilities:
Derivatives, net(a)	$	55,640	$	1,012	$	-	$	54,628
Deferred compensation		2,832		-		2,832		-
Total Liabilities	$	58,472	$	1,012	$	2,832	$	54,628
MGE
Assets:
Derivatives, net	$	642	$	-	$	-	$	642
Exchange-traded investments		350		350		-		-
Total Assets	$	992	$	350	$	-	$	642
Liabilities:
Derivatives, net(a)	$	55,640	$	1,012	$	-	$	54,628
Deferred compensation		2,832		-		2,832		-
Total Liabilities	$	58,472	$	1,012	$	2,832	$	54,628
	Fair Value as of December 31, 2013
(In thousands)		Total		Level 1		Level 2		Level 3
MGE Energy
Assets:
Derivatives, net	$	1,787	$	735	$	-	$	1,052
Exchange-traded investments		792		792		-		-
Total Assets	$	2,579	$	1,527	$	-	$	1,052
Liabilities:
Derivatives, net	$	65,680	$	-	$	-	$	65,680
Deferred compensation		2,364		-		2,364		-
Total Liabilities	$	68,044	$	-	$	2,364	$	65,680
MGE
Assets:
Derivatives, net	$	1,787	$	735	$	-	$	1,052
Exchange-traded investments		431		431		-		-
Total Assets	$	2,218	$	1,166	$	-	$	1,052
Liabilities:
Derivatives, net	$	65,680	$	-	$	-	$	65,680
Deferred compensation		2,364		-		2,364		-
Total Liabilities	$	68,044	$	-	$	2,364	$	65,680
(a)     These amounts are shown gross and exclude $2.2 million and $0.2 million of collateral that was
posted against derivative positions with counterparties as of December 31, 2014 and 2013, respectively.

Significant Unobservable Inputs

The following table presents the significant unobservable inputs used in the pricing model as of December 31:

	Model Input
Significant Unobservable Inputs	2014	2013
Basis adjustment:
On peak	98.1%	94.2%
Off peak	95.0%	92.6%
Counterparty fuel mix:
Internal generation	50%-70%	50%-70%
Purchased power	50%-30%	50%-30%

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for both MGE Energy and MGE.

(In thousands)		2014		2013		2012
Balance as of January 1,	$	(64,628)	$	(72,346)	$	(40,661)
Realized and unrealized gains (losses):
Included in regulatory liabilities (assets)		10,642		7,718		(31,685)
Included in other comprehensive income		-		-		-
Included in earnings		5,129		(2,618)		(5,005)
Included in current assets		-		(108)		-
Purchases		26,382		23,726		13,370
Sales		(125)		(2)		92
Issuances		-		-		-
Settlements		(31,386)		(20,998)		(8,457)
Transfers in and/or out of Level 3		-		-		-
Balance as of December 31,	$	(53,986)	$	(64,628)	$	(72,346)
Total gains (losses) included in earnings attributed to the
change in unrealized gains (losses) related to assets and
liabilities held at December 31,(b)	$	-	$	-	$	-

(b)MGE's exchange-traded derivative contracts, over-the-counter party transactions, ten-year 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 for both MGE Energy and MGE(b).

(In thousands)
Year Ended December 31,		2014		2013		2012
Purchased power expense	$	5,137	$	(2,618)	$	(5,005)
Cost of gas sold expense		(8)		-		-
Total	$	5,129	$	(2,618)	$	(5,005)

(b)MGE's exchange-traded derivative contracts, over-the-counter party transactions, ten-year 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.

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Variable Interest Entities (Tables)

12 Months Ended

Dec. 31, 2014

MGE Power Elm Road [Member]

Variable Interest Entity [Line Items]

Variable interest entities significant balance sheet accounts

At December 31, MGE has included the following significant accounts on its consolidated balance sheet related to its interest in this VIE:

(In thousands)		2014		2013
Property, plant, and equipment, net	$	179,620	$	182,657
Construction work in progress		1,976		1,115
Affiliate receivables		1,742		-
Deferred income tax asset - current		-		219
Deferred income tax liability		40,044		34,141
Long-term debt		67,972		70,639
Noncontrolling interest		72,537		69,876

MGE Power West Campus [Member]

Variable Interest Entity [Line Items]

Variable interest entities significant balance sheet accounts

At December 31, MGE has included the following significant accounts on its consolidated balance sheet related to its interest in this VIE:

(In thousands)		2014		2013
Property, plant, and equipment, net	$	86,763	$	89,564
Affiliate receivables		5,862		6,767
Accrued interest and taxes		569		4,888
Deferred income taxes		23,813		23,154
Long-term debt		48,218		49,653
Noncontrolling interest		30,755		29,089

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Income Taxes (Details) (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income tax provision components [Abstract]
Current payable: Federal									$ (891,000)	$ (1,508,000)	$ (6,053,000)
Current payable: State									(589,000)	8,213,000	436,000
Net-deferred: Federal									39,284,000	37,203,000	37,178,000
Net-deferred: State									10,600,000	1,163,000	7,618,000
Amortized investment tax credits									(219,000)	(212,000)	(260,000)
Total income tax provision	8,600,000	14,286,000	9,034,000	16,265,000	7,829,000	14,692,000	8,660,000	13,678,000	48,185,000	44,859,000	38,919,000
Reconciliation of tax provision to statutory federal income tax rate [Abstract]
Statutory federal income tax rate									35.00%	35.00%	35.00%
State income taxes, net of federal benefit									5.10%	5.10%	5.00%
Amortized investment tax credits									(0.20%)	(0.20%)	(0.30%)
Credit for electricity from wind energy									(1.70%)	(1.50%)	(1.60%)
Domestic manufacturing deduction									0.00%	(0.20%)	0.30%
AFUDC Equity, net									(0.80%)	(0.70%)	(0.40%)
Other, net, individually significant									0.10%	0.00%	(0.30%)
Effective income tax rate									37.50%	37.50%	37.70%
Deferred tax liabilities (assets) on balance sheet [Abstract]
Property-related	312,903,000				263,881,000				312,903,000	263,881,000
Investment in ATC	36,140,000				32,696,000				36,140,000	32,696,000
Bond transactions	1,420,000				1,553,000				1,420,000	1,553,000
Pension and other postretirement benefits	57,847,000				34,478,000				57,847,000	34,478,000
Derivatives	22,331,000				26,361,000				22,331,000	26,361,000
Tax deductible prepayments	8,077,000				7,508,000				8,077,000	7,508,000
Other deferred tax liabilities	10,451,000				1,995,000				10,451,000	1,995,000
Gross deferred income tax liabilities	449,169,000				368,472,000				449,169,000	368,472,000
Future tax benefit	(4,092,000)				0				(4,092,000)	0
Accrued expenses	(32,091,000)				(17,195,000)				(32,091,000)	(17,195,000)
Pension and other postretirement benefits	(44,994,000)				(26,838,000)				(44,994,000)	(26,838,000)
Deferred tax regulatory account	(1,211,000)				(1,402,000)				(1,211,000)	(1,402,000)
Derivatives	(22,331,000)				(26,361,000)				(22,331,000)	(26,361,000)
Other deferred tax assets	(5,957,000)				(10,369,000)				(5,957,000)	(10,369,000)
Gross deferred income tax assets	(110,676,000)				(82,165,000)				(110,676,000)	(82,165,000)
Less valuation allowance	70,000				195,000				70,000	195,000
Net deferred income tax assets	(110,606,000)				(81,970,000)				(110,606,000)	(81,970,000)
Deferred income taxes	338,563,000				286,502,000				338,563,000	286,502,000
Operating loss deductions and tax credit carryforwards [Abstract]
State net tax operating loss deductions	1,400,000								1,400,000
Unrecognized tax benefits [Roll Forward]
Unrecognized tax benefits, beginning balance				2,363,000				3,204,000	2,363,000	3,204,000	2,364,000
Additions based on tax positions related to current year									610,000	377,000	401,000
Additions based on tax positions related to prior year									618,000	424,000	580,000
Reductions based on tax positions related to the current year									0	(40,000)	0
Reductions based on tax positions related to prior years									(1,226,000)	(1,602,000)	(141,000)
Unrecognized tax benefits, ending balance	2,365,000				2,363,000				2,365,000	2,363,000	3,204,000
Interest on unrecognized tax benefits [Roll Forward]
Accrued interest on unrecognized tax benefits, beginning balance				101,000				314,000	101,000	314,000	216,000
Reduction in interest expense on uncertain tax positions									(97,000)	(275,000)	0
Interest expense on uncertain tax positions									88,000	62,000	98,000
Accrued interest on unrecognized tax benefits, ending balance	92,000				101,000				92,000	101,000	314,000
Unrecognized Tax Benefits
Unrecognized tax benefits	2,365,000				2,363,000				2,365,000	2,363,000	3,204,000
Unrecognized tax benefits permanent differences	0				0				0	0	0
Other deferred liabilities [Member]
Unrecognized tax benefits [Roll Forward]
Unrecognized tax benefits, ending balance	400,000				2,400,000				400,000	2,400,000
Unrecognized Tax Benefits
Unrecognized tax benefits	400,000				2,400,000				400,000	2,400,000
Deferred tax assets [Member]
Unrecognized tax benefits [Roll Forward]
Unrecognized tax benefits, ending balance	2,000,000								2,000,000
Unrecognized Tax Benefits
Unrecognized tax benefits	2,000,000								2,000,000
State [Member]
Operating loss deductions and tax credit carryforwards [Abstract]
Operating loss carryforward	16,500,000								16,500,000
Operating loss carryforward, deferred tax asset	800,000								800,000
Federal [Member]
Operating loss deductions and tax credit carryforwards [Abstract]
Tax credit carryforward, amount	5,400,000								5,400,000
Tax credit carryforward, deferred tax asset	5,400,000								5,400,000
MGE [Member]
Income tax provision components [Abstract]
Current payable: Federal									637,000	(448,000)	(5,030,000)
Current payable: State									(451,000)	8,322,000	613,000
Net-deferred: Federal									38,553,000	36,937,000	36,589,000
Net-deferred: State									10,625,000	1,223,000	7,523,000
Amortized investment tax credits									(219,000)	(212,000)	(260,000)
Total income tax provision									49,145,000	45,822,000	39,435,000
Reconciliation of tax provision to statutory federal income tax rate [Abstract]
Statutory federal income tax rate									35.00%	35.00%	35.00%
State income taxes, net of federal benefit									5.10%	5.10%	5.00%
Amortized investment tax credits									(0.20%)	(0.20%)	(0.20%)
Credit for electricity from wind energy									(1.70%)	(1.50%)	(1.50%)
Domestic manufacturing deduction									0.00%	(0.20%)	0.30%
AFUDC Equity, net									(0.80%)	(0.70%)	(0.40%)
Other, net, individually significant									0.10%	0.00%	(0.50%)
Effective income tax rate									37.50%	37.50%	37.70%
Deferred tax liabilities (assets) on balance sheet [Abstract]
Property-related	312,807,000				263,881,000				312,807,000	263,881,000
Investment in ATC	29,156,000				27,073,000				29,156,000	27,073,000
Bond transactions	1,420,000				1,553,000				1,420,000	1,553,000
Pension and other postretirement benefits	57,847,000				34,478,000				57,847,000	34,478,000
Derivatives	22,331,000				26,361,000				22,331,000	26,361,000
Tax deductible prepayments	8,077,000				7,508,000				8,077,000	7,508,000
Other deferred tax liabilities	10,259,000				1,911,000				10,259,000	1,911,000
Gross deferred income tax liabilities	441,897,000				362,765,000				441,897,000	362,765,000
Future tax benefit	(4,092,000)				0				(4,092,000)	0
Accrued expenses	(32,091,000)				(17,195,000)				(32,091,000)	(17,195,000)
Pension and other postretirement benefits	(44,994,000)				(26,838,000)				(44,994,000)	(26,838,000)
Deferred tax regulatory account	(1,211,000)				(1,402,000)				(1,211,000)	(1,402,000)
Derivatives	(22,331,000)				(26,361,000)				(22,331,000)	(26,361,000)
Other deferred tax assets	(3,746,000)				(9,356,000)				(3,746,000)	(9,356,000)
Gross deferred income tax assets	(108,465,000)				(81,152,000)				(108,465,000)	(81,152,000)
Less valuation allowance	70,000				195,000				70,000	195,000
Net deferred income tax assets	(108,395,000)				(80,957,000)				(108,395,000)	(80,957,000)
Deferred income taxes	333,502,000				281,808,000				333,502,000	281,808,000
Operating loss deductions and tax credit carryforwards [Abstract]
State net tax operating loss deductions	1,400,000								1,400,000
MGE [Member] | State [Member]
Operating loss deductions and tax credit carryforwards [Abstract]
Operating loss carryforward	16,500,000								16,500,000
Operating loss carryforward, deferred tax asset	800,000								800,000
MGE [Member] | Federal [Member]
Operating loss deductions and tax credit carryforwards [Abstract]
Tax credit carryforward, amount	5,400,000								5,400,000
Tax credit carryforward, deferred tax asset	$ 5,400,000								$ 5,400,000

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Columbia Environmental Project Construction (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Jointly Owned Utility Plant Interests [Line Items]
Property, plant and equipment, total	1,189,077,000	1,018,809,000
PSCW [Member]
Jointly Owned Utility Plant Interests [Line Items]
Authorized AFUDC rate	50.00%	50.00%	50.00%
Columbia Environmental Project [Member] | PSCW [Member]
Jointly Owned Utility Plant Interests [Line Items]
Authorized AFUDC rate	100.00%	50.00%	100.00%
Columbia Units [Member] | WPL [Member]
Jointly Owned Utility Plant Interests [Line Items]
Jointly owned utility plant, ownership interest	46.20%
Columbia Units [Member] | WPSC [Member]
Jointly Owned Utility Plant Interests [Line Items]
Jointly owned utility plant, ownership interest	31.80%
MGE [Member]
Jointly Owned Utility Plant Interests [Line Items]
Property, plant and equipment, total	1,188,351,000	1,017,877,000
AFUDC - equity funds	3,466,000	3,140,000	1,731,000
MGE [Member] | Columbia Environmental Project [Member]
Jointly Owned Utility Plant Interests [Line Items]
Property, plant and equipment, total	138,800,000
Property, plant, and equipment, portion related to capital expenditures	129,000,000
Property, plant, and equipment, portion related to AFUDC	9,800,000
Contractual commitments	500,000
AFUDC - equity funds	3,000,000	2,700,000
MGE [Member] | Columbia Environmental Project [Member] | PSCW [Member]
Jointly Owned Utility Plant Interests [Line Items]
Authorized AFUDC rate	100.00%	50.00%
Authorized rate of return		50.00%
MGE [Member] | Columbia Units [Member]
Jointly Owned Utility Plant Interests [Line Items]
Jointly owned utility plant, ownership interest	22.00%

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Related Party Transactions

12 Months Ended

Dec. 31, 2014

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions - MGE Energy and MGE.

ATC

During 2014, 2013, and 2012, MGE recorded $26.8 million, $27.7 million, and $25.3 million, respectively, for transmission services received from ATC. MGE also provides a variety of operational, maintenance, and project management work for ATC, which is reimbursed by ATC. For the year endedDecember 31,2014, MGE had a receivable due from ATC of $0.1 million. For the years endedDecember 31,2013 and 2012, MGE had a receivable due from ATC of $0.2 million.

For additional discussion on MGE's relationship with ATC, see Footnote 4.

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Pension Plans and Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2014

Compensation and Retirement Disclosure [Abstract]

Schedule of Benefit Obligations and Change in Plan Assets

(In thousands)		Pension Benefits				Other Postretirement Benefits
Change in benefit obligations:		2014		2013		2014		2013
Net benefit obligation at beginning of year	$	283,958	$	315,505	$	66,100	$	92,605
Service cost		6,179		7,705		1,339		2,380
Interest cost		13,574		12,656		3,166		3,871
Plan participants' contributions		-		-		708		665
Plan amendments(a)		-		-		-		(20,915)
Actuarial (gain) loss(b)		48,162		(40,335)		10,090		(9,687)
Gross benefits paid		(11,640)		(11,573)		(3,113)		(2,998)
Less: federal subsidy on benefits paid(c)		-		-		188		179
Benefit obligation at end of year	$	340,233	$	283,958	$	78,478	$	66,100
Change in plan assets:
Fair value of plan assets at beginning of year	$	277,398	$	212,277	$	37,602	$	32,124
Actual return on plan assets		21,907		45,816		2,558		5,000
Employer contributions		883		30,878		1,197		2,811
Plan participants' contributions		-		-		708		665
Gross benefits paid		(11,640)		(11,573)		(3,113)		(2,998)
Fair value of plan assets at end of year	$	288,548	$	277,398	$	38,952	$	37,602
Funded Status at December 31	$	(51,685)	$	(6,560)	$	(39,526)	$	(28,498)

(a) In 2013, MGE capped the amount it pays each year toward retiree medical premiums at 175%of the 2013 employer contribution for qualified employees.

(b) In 2014, lower discount rates and mortality table updates were the main drivers to the actuarial loss.

(c) 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 the years ended December 31, 2014 and 2013, the subsidy due to MGE was $0.2 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 at December 31 are as follows:

		Pension Benefits				Other Postretirement Benefits
(In thousands)		2014		2013		2014		2013
Long-term asset	$	-	$	15,071	$	-	$	-
Current liability		(1,025)		(945)		(65)		(13)
Long-term liability		(50,660)		(20,686)		(39,461)		(28,485)
Net liability	$	(51,685)	$	(6,560)	$	(39,526)	$	(28,498)

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 our consolidated balance sheets:

		Pension Benefits				Other Postretirement Benefits
(In thousands)		2014		2013		2014		2013
Net actuarial loss	$	85,102	$	37,499	$	17,657	$	7,761
Prior service cost		(413)		(209)		(17,827)		(20,495)
Transition obligation		-		-		32		35
Total	$	84,689	$	37,290	$	(138)	$	(12,699)

Scehdule 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 were as follows:

(In thousands)		Pension Benefits
Projected benefit obligation in excess of plan assets		2014		2013
Projected benefit obligation, end of year	$	340,233	$	21,631
Fair value of plan assets, end of year		288,548		-

Schedule of Projected Benefit and Accumulated Benefit Obligations in Excess of Plan Assets

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets and an accumulated benefit obligation in excess of plan assets were as follows:

(In thousands)		Pension Benefits
Accumulated benefit obligation in excess of plan assets		2014		2013
Projected benefit obligation, end of year	$	340,233	$	21,631
Accumulated benefit obligation, end of year		304,023		19,795
Fair value of plan assets, end of year		288,548		-

Net Periodic Benefit Costs

(In thousands)		Pension Benefits						Other Postretirement Benefits
Components of net periodic (benefit) cost:		2014		2013		2012		2014		2013		2012
Service cost	$	6,179	$	7,705	$	7,139	$	1,339	$	2,380	$	2,528
Interest cost		13,574		12,656		12,704		3,166		3,871		4,431
Expected return on assets		(22,051)		(19,027)		(15,182)		(2,615)		(2,176)		(1,741)
Amortization of:
Transition obligation		-		-		-		3		3		425
Prior service (benefit) cost		204		314		430		(2,669)		110		110
Actuarial loss		703		8,014		8,288		252		1,236		2,346
Net periodic (benefit) cost	$	(1,391)	$	9,662	$	13,379	$	(524)	$	5,424	$	8,099

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
	2014	2013	2014	2013
Discount rate	4.11%	4.88%	3.96%	4.69%
Rate of compensation increase	3.85%	3.90%	N/A	N/A
Assumed health care cost trend rates:
Health care cost trend rate assumed for next year	N/A	N/A	6.5%	7.0%
Rate to which the cost trend rate is assumed to
decline (the ultimate trend rate)	N/A	N/A	5.0%	5.0%
Year that the rate reaches the ultimate trend rate	N/A	N/A	2021	2018

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
	2014	2013	2012	2014	2013	2012
Discount rate	4.88%	4.09%	4.50%	4.69%	4.14%	4.55%
Expected rate of return on plan assets	8.10%	8.10%	8.10%	7.07%	6.79%	7.26%
Rate of compensation increase	3.93%	4.60%	4.59%	N/A	N/A	N/A

Effect of 1% Increase or Decrease in Health Care Costs

The following table shows how an assumed 1% increase or 1% decrease in health care cost trends could impact postretirement benefits in 2014 dollars:

(In thousands)		1% Increase		1% Decrease
Effect on other postretirement benefit obligation	$	1,465	$	(1,852)
Effect on total service and interest cost components		75		(101)

Fair Value of Plan Assets by Asset Category

The asset allocation for MGE's pension plans at the end of 2014 and 2013, and the target allocation for 2015, by asset category, follows:

	Target Allocation	Percentage of Plan Assets at Year End
		2014	2013
Equity securities(a)	63.0 %	62.0 %	66.0 %
Fixed income securities	30.0 %	31.0 %	28.0 %
Real estate	7.0 %	7.0 %	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,

17.5% non-United States equity.

The fair value of MGE's plan assets, by asset category are as follows:

	Fair Value as of December 31, 2014
(In thousands)		Total		Level 1		Level 2		Level 3
Equity Securities:
U.S. Large Cap	$	99,256	$	-	$	99,256	$	-
U.S. Mid Cap		22,926		-		22,926		-
U.S. Small Cap		29,353		-		29,353		-
International Blend		47,650		-		47,650		-
Fixed Income Securities:
Short-Term Fund		3,776		-		3,776		-
High Yield Bond		15,492		-		15,492		-
Long Duration Bond		79,603		-		79,603		-
Real Estate		23,480		-		-		23,480
Insurance Continuance Fund		1,518		-		-		1,518
Fixed Rate Fund		4,446		-		-		4,446
Total	$	327,500	$	-	$	298,056	$	29,444
	Fair Value as of December 31, 2013
(In thousands)		Total		Level 1		Level 2		Level 3
Cash and Cash Equivalents	$	5,109	$	5,109	$	-	$	-
Equity Securities:
U.S. Large Cap		96,258		-		96,258		-
U.S. Mid Cap		22,741		-		22,741		-
U.S. Small Cap		28,854		-		28,854		-
International Blend		54,873		-		54,873		-
Fixed Income Securities:
Short-Term Fund		4,789		-		4,789		-
High Yield Bond		15,127		-		15,127		-
Long Duration Bond		66,193		-		66,193		-
Real Estate		19,628		-		-		19,628
Insurance Continuance Fund		1,428		-		-		1,428
Total	$	315,000	$	5,109	$	288,835	$	21,056

Change in Fair Value of Level 3 Plan Assets

The following table summarizes the changes in the fair value of the Level 3 plan assets.

		Level 3 Assets
(In thousands)		Real Estate		Insurance Continuance Fund		Fixed Rate Fund
Balance as of January 1, 2013	$	17,141	$	1,466	$	-
Actual return on plan assets:
Relating to assets still held at the reporting date		1,565		42		-
Purchases, sales, and settlements		922		(80)		-
Transfers in and/or out of Level 3		-		-		-
Balance as of December 31, 2013	$	19,628	$	1,428	$	-
Actual return on plan assets:
Relating to assets still held at the reporting date		1,561		44		54
Purchases, sales, and settlements		2,291		46		4,392
Transfers in and/or out of Level 3		-		-		-
Balance as of December 31, 2014	$	23,480	$	1,518	$	4,446

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
2015	$	11,944	3,101	(211)	2,890
2016		12,631	3,338	(237)	3,101
2017		13,408	3,757	(258)	3,499
2018		14,613	4,272	(282)	3,990
2019		15,559	4,776	(306)	4,470
2020 - 2024		92,915	29,871	(2,005)	27,866

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Common Equity (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	0 Months Ended	3 Months Ended								12 Months Ended
	Dec. 20, 2013	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Class of Stock [Line Items]
Stock split declared December 20, 2013, ratio (3:2)	1.5
Common stock dividends declared										$ 38,429	$ 37,107	$ 35,951
Common stock dividends declared (in dollars per share)		$ 0.283	$ 0.283	$ 0.272	$ 0.272	$ 0.272	$ 0.272	$ 0.263	$ 0.263	$ 1.11	$ 1.07	$ 1.04
MGE [Member]
Class of Stock [Line Items]
Cash dividends paid to parent by MGE										$ 26,500	$ 25,000	$ 20,404

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Property, Plant, and Equipment (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Property, Plant and Equipment [Line Items]
In-service utility plant, net	$ 1,189,077		$ 1,018,809
Construction work in progress	19,029		141,415
Total property, plant, and equipment	1,208,106		1,160,224
First Mortgage Bonds [Member] | 7.70%, 2028 Series
Plant related debt items
Long-term debt, gross	1,200	[1]	1,200	[1]
Regulated [Member]
Property, Plant and Equipment [Line Items]
In-service utility plant, gross	1,480,928		1,304,984
Less: Accumulated depreciation and amortization	559,615		560,066
In-service utility plant, net	921,313		744,918
Construction work in progress	16,988		140,301
Electric [Member] | Regulated [Member]
Property, Plant and Equipment [Line Items]
In-service utility plant, gross	1,110,953		953,290
Gas [Member] | Regulated [Member]
Property, Plant and Equipment [Line Items]
In-service utility plant, gross	369,975		351,694
Non Regulated Energy [Member] | Non-regulated [Member]
Property, Plant and Equipment [Line Items]
In-service utility plant, gross	313,152		311,742
Less: Accumulated depreciation and amortization	45,388		37,851
In-service utility plant, net	267,764		273,891
Construction work in progress	2,041		1,114
MGE [Member]
Property, Plant and Equipment [Line Items]
In-service utility plant, net	1,188,351		1,017,877
Construction work in progress	19,029		141,415
Total property, plant, and equipment	1,207,380		1,159,292
MGE [Member] | First Mortgage Bonds [Member] | 7.70%, 2028 Series
Plant related debt items
Long-term debt, gross	1,200	[1]	1,200	[1]
MGE [Member] | Regulated [Member]
Property, Plant and Equipment [Line Items]
In-service utility plant, gross	1,480,957		1,305,012
Less: Accumulated depreciation and amortization	559,615		560,066
In-service utility plant, net	921,342		744,946
Construction work in progress	16,988		140,301
MGE [Member] | Electric [Member] | Regulated [Member]
Property, Plant and Equipment [Line Items]
In-service utility plant, gross	1,110,970		953,307
MGE [Member] | Gas [Member] | Regulated [Member]
Property, Plant and Equipment [Line Items]
In-service utility plant, gross	369,987		351,705
MGE [Member] | Non Regulated Energy [Member] | Non-regulated [Member]
Property, Plant and Equipment [Line Items]
In-service utility plant, gross	312,314		310,745
Less: Accumulated depreciation and amortization	45,305		37,814
In-service utility plant, net	267,009		272,931
Construction work in progress	$ 2,041		$ 1,114

[1] MGE's utility plant is subject to the lien of its Indenture of Mortgage and Deed of Trust, under which its first mortgage bonds are issued. The Mortgage Indenture provides that dividends or any other distribution or purchase of shares may not be made if the aggregate amount thereof since December 31, 1945 would exceed the earned surplus (retained earnings) accumulated subsequent to December 31, 1945. As of December 31,2014, approximately $334.8 million was available for the payment of dividends under this covenant.

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Noncontrolling Interest (Tables) (MGE [Member])

12 Months Ended

Dec. 31, 2014

MGE [Member]

Noncontrolling Interest [Line Items]

Noncontrolling Interest in Balance Sheet

The noncontrolling interest on MGE’s balance sheet at December 31 was as follows:

(In thousands)		2014		2013
MGE Power Elm Road (a)	$	72,537	$	69,876
MGE Power West Campus (a)		30,755		29,089
MGE Transco (b)		22,397		19,998
Total noncontrolling interest	$	125,689	$	118,963

Net Income Attributable to Noncontrolling Interest, Net of Tax

The net income attributable to noncontrolling interest, net of tax, for the years ended December 31,2014, 2013, and 2012was as follows:

(In thousands)		2014		2013		2012
MGE Power Elm Road (a)	$	16,160	$	17,373	$	14,837
MGE Power West Campus (a)		7,666		7,657		7,506
MGE Transco (b)		2,484		2,408		2,146
Net income attributable to noncontrolling interest, net of tax	$	26,310	$	27,438	$	24,489

(a)MGE Power Elm Road and MGE Power West Campus are not subsidiaries of MGE; however, they have been consolidated in the consolidated financial statements of MGE (see Footnote 2). MGE Power Elm Road and MGE Power West Campus are100% owned by MGE Power, and MGE Power is 100% owned by MGE Energy. MGE Energy's proportionate share of the equity and net income (through its wholly owned subsidiary MGE Power) of MGE Power Elm Road and MGE Power West Campus is classified within the MGE financial statements as noncontrolling interest.

(b)At December 31,2014, MGE is the majority owner, and MGE Energy is the minority owner, of MGE Transco. MGE Energy's proportionate share of the equity and net income of MGE Transco is classified within the MGE financial statements as noncontrolling interest.

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Current Assets:
Cash and cash equivalents	$ 65,755		$ 68,813
Accounts receivable, less reserves	41,614		44,890
Other accounts receivables, less reserves	7,610		5,352
Unbilled revenues	31,262		31,982
Materials and supplies, at average cost	17,121		16,662
Fossil fuel	8,098		5,206
Stored natural gas, at average cost	21,036		13,988
Prepaid taxes	38,910		19,106
Regulatory assets - current	8,360		6,377
Deferred income taxes	3,482		0
Other current assets	10,711		8,225
Total Current Assets	253,959		220,601
Other long-term receivables	2,181		2,193
Regulatory assets	156,823		107,166
Pension and other postretirement benefits	0		15,071
Other deferred assets and other	4,837		5,853
Property, Plant, and Equipment:
Property, plant, and equipment, net	1,189,077		1,018,809
Construction work in progress	19,029		141,415
Total Property, Plant, and Equipment	1,208,106		1,160,224
Investments	71,760		67,952
Total Assets	1,697,666		1,579,060
Current Liabilities:
Long-term debt due within one year	4,182		4,102
Short-term debt	7,000	[1]	0	[1]
Accounts payable	41,655		43,684
Accrued interest and taxes	5,086		5,661
Accrued payroll related items	11,241		10,731
Deferred income taxes	0		1,711
Regulatory liabilities - current	0		13,538
Derivative liabilities	6,901		7,750
Other current liabilities	13,931		9,489
Total Current Liabilities	89,996		96,666
Other Credits:
Deferred income taxes	342,045		284,791
Investment tax credit - deferred	1,223		1,413
Regulatory liabilities	22,715		19,792
Accrued pension and other postretirement benefits	90,201		49,184
Derivative liabilities	46,560		57,930
Other deferred liabilities and other	50,269		52,360
Total Other Credits	553,013		465,470
Common shareholders' equity:
Common stock	34,668		34,668
Additional paid-in capital	316,268		316,268
Retained earnings	308,007		266,197
Accumulated other comprehensive income, net of tax	458		377
Total Common Shareholders' Equity	659,401		617,510
Long-term debt	395,256		399,414
Total Capitalization	1,054,657		1,016,924
Commitments and contingencies (see Footnote 18)	0		0
Total Liabilities and Capitalization	1,697,666		1,579,060
MGE [Member]
Current Assets:
Cash and cash equivalents	4,562		14,808
Accounts receivable, less reserves	41,614		44,890
Affiliate receivables	7,112		534
Other accounts receivables, less reserves	7,524		5,274
Unbilled revenues	31,262		31,982
Materials and supplies, at average cost	17,121		16,662
Fossil fuel	8,098		5,206
Stored natural gas, at average cost	21,035		13,988
Prepaid taxes	39,103		23,934
Regulatory assets - current	8,360		6,377
Deferred income taxes	1,271		0
Other current assets	10,683		8,197
Total Current Assets	197,745		171,852
Affiliate receivable long-term	5,295		5,825
Regulatory assets	156,823		107,166
Pension and other postretirement benefits	0		15,071
Other deferred assets and other	4,977		6,138
Property, Plant, and Equipment:
Property, plant, and equipment, net	1,188,351		1,017,877
Construction work in progress	19,029		141,415
Total Property, Plant, and Equipment	1,207,380		1,159,292
Investments	68,402		65,299
Total Assets	1,640,622		1,530,643
Current Liabilities:
Long-term debt due within one year	4,182		4,102
Short-term debt	7,000		0
Accounts payable	41,654		43,684
Accrued interest and taxes	5,039		6,040
Accrued payroll related items	11,241		10,731
Deferred income taxes	0		2,723
Regulatory liabilities - current	0		13,538
Derivative liabilities	6,901		7,750
Other current liabilities	11,350		6,446
Total Current Liabilities	87,367		95,014
Other Credits:
Deferred income taxes	334,773		279,085
Investment tax credit - deferred	1,223		1,413
Regulatory liabilities	22,715		19,792
Accrued pension and other postretirement benefits	90,201		49,184
Derivative liabilities	46,560		57,930
Other deferred liabilities and other	50,267		52,357
Total Other Credits	545,739		459,761
Common shareholders' equity:
Common stock	17,348		17,348
Additional paid-in capital	192,417		192,417
Retained earnings	276,662		247,534
Accumulated other comprehensive income, net of tax	144		192
Total Common Shareholders' Equity	486,571		457,491
Noncontrolling interest	125,689		118,963
Total Equity	612,260		576,454
Long-term debt	395,256		399,414
Total Capitalization	1,007,516		975,868
Commitments and contingencies (see Footnote 18)	0		0
Total Liabilities and Capitalization	$ 1,640,622		$ 1,530,643

[1] MGE Energy short-term borrowings include MGE Energy and MGE lines of credit and MGE commercial paper.

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Investments (Details-1) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Available-for-sale securities:
Cost basis	$ 1,964	$ 1,736
Gross unrealized gains	765	629
Fair Value	2,729	2,365
Equity method investments:
Equity method investments	68,872	65,587
Other Investments	159	0
Total investments	71,760	67,952
Results of Investment Liquidation [Abstract]
Proceeds from sale of investments	38	39	0
Gain (loss) on sale of investments	21	2	0
ATC [Member]
Equity method investments:
Equity method investments	67,673	64,488
Other Equity Method Investments [Member]
Equity method investments:
Equity method investments	1,199	1,099
MGE [Member]
Available-for-sale securities:
Cost basis	489	490
Gross unrealized gains	240	321
Fair Value	729	811
Equity method investments:
Equity method investments	67,673	64,488
Other Investments	0	0
Total investments	68,402	65,299
Results of Investment Liquidation [Abstract]
Proceeds from sale of investments	0	16	0
Gain (loss) on sale of investments	0	(3)	0
MGE [Member] | ATC [Member]
Equity method investments:
Equity method investments	67,673	64,488
MGE [Member] | Other Equity Method Investments [Member]
Equity method investments:
Equity method investments	$ 0	$ 0

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Property, Plant, and Equipment (Tables)

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant, and Equipment

Property, plant, and equipment consisted of the following at December 31:

		MGE Energy				MGE
(In thousands)		2014		2013		2014		2013
Utility:
Electric	$	1,110,953	$	953,290	$	1,110,970	$	953,307
Gas		369,975		351,694		369,987		351,705
Total utility plant		1,480,928		1,304,984		1,480,957		1,305,012
Less: Accumulated depreciation and amortization		559,615		560,066		559,615		560,066
In-service utility plant, net		921,313		744,918		921,342		744,946
Nonregulated:
Nonregulated		313,152		311,742		312,314		310,745
Less: Accumulated depreciation and amortization		45,388		37,851		45,305		37,814
In-service nonregulated plant, net		267,764		273,891		267,009		272,931
Construction work in progress:
Utility construction work in progress		16,988		140,301		16,988		140,301
Nonregulated construction work in progress		2,041		1,114		2,041		1,114
Total property, plant, and equipment	$	1,208,106	$	1,160,224	$	1,207,380	$	1,159,292

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Derivative and Hedging Instruments

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative and Hedging Instruments

Derivative and Hedging Instruments - MGE Energy and MGE.

a. Purpose.

As part of its regular operations, MGE enters into contracts, including options, swaps, futures, forwards, and other contractual commitments, to manage its exposure to commodity prices and gas revenues. To the extent that these contracts are derivatives, MGE assesses whether or not the normal purchases or normal sales exclusion applies. For contracts to which this exclusion cannot be applied, MGE Energy and MGE recognize such derivatives in the consolidated balance sheets at fair value. The majority of MGE's derivative activities are conducted in accordance with its electric and gas risk management program, which is approved by the PSCW and limits the volume MGE can hedge with specific risk management strategies. The maximum length of time over which cash flows related to energy commodities can be hedged is four years. If the derivative qualifies for regulatory deferral, the derivatives are marked to fair value and are offset with a corresponding regulatory asset or liability. The deferred gain or loss is recognized in earnings in the delivery month applicable to the instrument. Gains and losses related to hedges qualifying for regulatory treatment are recoverable in gas rates through the PGA or in electric rates as a component of the fuel rules mechanism.

b. Notional Amounts.

The gross notional volume of open derivatives is as follows:

	December 31, 2014	December 31, 2013
Commodity derivative contracts	448,000 MWh	458,660 MWh
Commodity derivative contracts	4,405,000 Dth	3,750,000 Dth
FTRs	1,854 MW	1,984 MW

c.Financial Statement Presentation.

MGE purchases and sells exchange-traded and over-the-counter options, swaps, and future contracts. These arrangements are primarily entered into to help stabilize the price risk associated with gas or power purchases. These transactions are employed by both MGE's gas and electric segments. Additionally, as a result of the firm transmission agreements that MGE holds on electricity transmission paths in the MISO market,MGE holdsFTRs. An FTR is a financial instrument that entitles the holder to a stream of revenues or charges based on the differences in hourly day-ahead energy prices between two points on the transmission grid. The fair values of these instruments are offset with a corresponding regulatory asset/liability depending on whether they are in a net loss/gain position. Depending on the nature of the instrument, the gain or loss associated with these transactions will be reflected as cost of gas sold, fuel for electric generation, or purchased power expense in the delivery month applicable to the instrument. AtDecember 31,2014, the cost basis of exchange traded derivatives and FTRs exceeded their fair value by $1.6 million.At December 31,2013, the fair value of exchange traded derivatives and FTRs exceeded their cost basis by $1.8 million.

MGE is a party to a ten-year purchased power agreement that provides MGE with firm capacity and energy during a base term from June 1, 2012 through May 31, 2022. The agreement also allows MGE an option to extend the contract after the base term. The agreement is accounted for as a derivative contract and is recognized at its fair value on the consolidated balance sheet. However, the derivative qualifies for regulatory deferral and is recognized with a corresponding regulatory asset or liability depending on whether the fair value is in a loss or gain position. The fair value of the contract at December 31,2014 and 2013, reflects a loss position of $53.4 million and $65.7 million, respectively. The actual fuel cost will be recognized in purchased power expense in the month of purchase and collected in rates.

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 December 31,2014, MGE Energy and MGE had the right to reclaim collateral (a receivable) of $2.2 million.

	Asset Derivatives			Liability Derivatives
(In thousands)	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
December 31, 2014
Commodity derivative contracts	Other current assets	$	130	Derivative liability (current)	$	2,262
Commodity derivative contracts	Other deferred charges		93	Derivative liability (long-term)		171
FTRs	Other current assets		642	Derivative liability (current)		-
Ten-year PPA	N/A		N/A	Derivative liability (current)		6,870
Ten-year PPA	N/A		N/A	Derivative liability (long-term)		46,560
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

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
		Gross amounts		Gross amounts offset in balance sheet		Collateral posted against derivative positions		Net amount presented in balance sheet
(In thousands)
December 31, 2014
Commodity derivative contracts	$	223	$	(223)	$	-	$	-
FTRs		642		-		-		642
December 31, 2013
Commodity derivative contracts	$	1,523	$	(99)	$	(175)	$	1,249
FTRs		363		-		-		363

Offsetting of Derivative Liabilities
		Gross amounts		Gross amounts offset in balance sheet		Collateral posted against derivative positions		Net amount presented in balance sheet
(In thousands)
December 31, 2014
Commodity derivative contracts	$	2,433	$	(223)	$	(2,179)	$	31
Ten-year PPA		53,430		-		-		53,430
December 31, 2013
Commodity derivative contracts	$	99	$	(99)	$	-	$	-
Ten-year PPA		65,680		-		-		65,680

The following tables summarize the unrealized and realized gains (losses) related to the derivative instruments on the consolidated balance sheet at December 31,2014 and 2013, and the consolidated income statement for the year ended December 31,2014 and 2013.

		2014				2013
(In thousands)		Current and Long-Term Regulatory Asset		Other Current Assets		Current and Long-Term Regulatory Asset		Other Current Assets
Year Ended December 31:
Balance at January 1,	$	63,893	$	411	$	72,329	$	574
Change in unrealized loss		(14,518)		-		(5,069)		-
Realized gain (loss) reclassified to a deferred account		595		(595)		(823)		823
Realized gain (loss) reclassified to income statement		5,028		1,185		(2,544)		(986)
Balance at December 31,	$	54,998	$	1,001	$	63,893	$	411

		Realized losses (gains)
		2014				2013
		Fuel for electric generation/ purchased power		Cost of gas sold		Fuel for electric generation/ purchased power		Cost of gas sold
(In thousands)
Year Ended December 31:
Commodity derivative contracts	$	(5,515)	$	(1,103)	$	(564)	$	868
FTRs		(1,110)		-		(983)		-
Ten-year PPA		1,515		-		4,209		-

MGE's commodity derivative contracts, FTRs, and ten-year PPA are subject to regulatory deferral. These derivatives are marked to fair value and are offset with a corresponding regulatory asset or liability. Realized gains and losses are deferred on the consolidated balance sheet and are recognized in earnings in the delivery month applicable to the instrument. As a result of the above described treatment, there are no unrealized gains or losses that flow through earnings.

The ten-year PPA has a provision that may require MGE to post collateral if MGE's debt rating falls below investment grade (i.e., below BBB-). The amount of collateral that it may be required to post varies from $20.0 million to $40.0 million, depending on MGE's nominated capacity amount. As of December 31,2014, no collateral has been posted. Certain counterparties extend MGE a credit limit. If MGE exceeds these limits, the counterparties may require collateral to be posted. As of December 31,2014, certain counterparties were in a net liability of less than $0.1 million. As of December 31,2013, no counterparties were in a net liability position.

Nonperformance of counterparties to the non-exchange traded derivatives could expose MGE to credit loss. However, MGE enters into transactions only with companies that meet or exceed strict credit guidelines, and it monitors these counterparties on an ongoing basis to mitigate nonperformance risk in its portfolio. As of December 31,2014, no counterparties have defaulted.

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Regional Transmission Organizations

12 Months Ended

Dec. 31, 2014

Regional Transmission Organizations Disclosure [Abstract]

Regional Transmission Organizations

Regional Transmission Organizations - MGE Energy and MGE.

MGE reports on a net basis transactions on the MISO and PJM markets in which it buys and sells power within the same hour to meet electric energy delivery requirements. This treatment resulted in a $91.1 million and $78.0 million reduction to sales to the market and purchase power expense for MISO markets for the years ended December 31,2014 and 2013, respectively, and a $75.9 million reduction to sales to the market and purchased power expense for MISO and PJM markets for the year ended December 31,2012.

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Quarterly Summary of Operations (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Operating Revenues:
Regulated electric revenues	$ 86,431	$ 112,869	$ 96,697	$ 98,852	$ 93,781	$ 119,836	$ 96,846	$ 93,494	$ 394,849	$ 403,957	$ 392,365
Regulated gas revenues	58,385	21,404	31,218	110,713	60,089	18,864	30,042	72,467	221,720	181,462	139,727
Nonregulated revenues	891	862	850	680	1,393	1,399	1,400	1,276	3,283	5,468	9,231
Total Operating Revenues	145,707	135,135	128,765	210,245	155,263	140,099	128,288	167,237	619,852	590,887	541,323
Operating expenses	116,141	95,015	104,324	166,274	129,301	100,199	103,791	129,609	481,754	462,900	428,560
Operating Income (Loss)	29,566	40,120	24,441	43,971	25,962	39,900	24,497	37,628	138,098	127,987	112,763
Interest and other income, net	(5,780)	(2,505)	(1,320)	11	(4,056)	(855)	(1,946)	(1,366)
Income tax provision	(8,600)	(14,286)	(9,034)	(16,265)	(7,829)	(14,692)	(8,660)	(13,678)	(48,185)	(44,859)	(38,919)
Net Income	$ 15,186	$ 23,329	$ 14,087	$ 27,717	$ 14,077	$ 24,353	$ 13,891	$ 22,584	$ 80,319	$ 74,905	$ 64,446
Earnings per common share	$ 0.44	$ 0.67	$ 0.41	$ 0.8	$ 0.41	$ 0.7	$ 0.4	$ 0.65	$ 2.32	$ 2.16	$ 1.86
Dividends per share	$ 0.283	$ 0.283	$ 0.272	$ 0.272	$ 0.272	$ 0.272	$ 0.263	$ 0.263	$ 1.11	$ 1.07	$ 1.04

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Asset Retirement Obligations (Tables)

12 Months Ended

Dec. 31, 2014

Asset Retirement Obligation Disclosure [Abstract]

Change in Asset Retirement Obligations

The following table shows a rollforward of the AROs from January 1,2013 toDecember 31,2014. Amounts include conditional AROs.

(In thousands)		2014		2013
Balance at January 1,	$	19,359	$	18,768
Liabilities incurred		68		296
Accretion expense		1,077		1,015
Liabilities settled		(343)		(744)
Revisions in estimated cash flows		(417)		24
Balance at December 31,	$	19,744	$	19,359

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Investments (Tables)

12 Months Ended

Dec. 31, 2014

Investments Disclosure [Abstract]

Equity Method, Available for Sale Securities, and Other Investments

		MGE Energy				MGE
(In thousands)		2014		2013		2014		2013
Available for sale securities:
Cost basis	$	1,964	$	1,736	$	489	$	490
Gross unrealized gains		765		629		240		321
Fair value	$	2,729	$	2,365	$	729	$	811
Equity method investments:
ATC	$	67,673	$	64,488	$	67,673	$	64,488
Other		1,199		1,099		-		-
Total equity method investments	$	68,872	$	65,587	$	67,673	$	64,488
Other investments		159		-		-		-
Total	$	71,760	$	67,952	$	68,402	$	65,299

During the years endedDecember 31,2014 and 2013,certain investments were liquidated. As a result of these liquidations, MGE Energy and MGE received the following:

		MGE Energy						MGE
(In thousands)		2014		2013		2012		2014		2013		2012
Cash proceeds	$	38	$	39	$	-	$	-	$	16	$	-
Gain (loss) on sale		21		2		-		-		(3)		-

ATC's Summarized Financial Data

For the years endedDecember 31,2014, 2013, and 2012, MGE Transco recorded the following:

(In thousands)		2014		2013		2012
Equity in earnings from investment in ATC	$	9,150	$	9,434	$	9,079
Dividends received from ATC		7,740		7,404		7,146
Capital contributions to ATC		1,775		1,420		2,131

ATC's summarized financial data for the years endedDecember 31,2013, 2012, and 2011 is as follows:

(In thousands)
Income statement data for the year ended December 31,		2014		2013		2012
Operating revenues	$	635,033	$	626,336	$	603,254
Operating expenses		(307,451)		(295,069)		(280,999)
Other income (expense)		117		831		(2,533)
Interest expense, net		(88,970)		(84,484)		(82,296)
Earnings before members' income taxes	$	238,729	$	247,614	$	237,426
Balance sheet data as of December 31,		2014		2013		2012
Current assets	$	66,410	$	80,715	$	63,134
Noncurrent assets		3,728,675		3,509,517		3,274,704
Total assets	$	3,795,085	$	3,590,232	$	3,337,838
Current liabilities	$	313,065	$	381,467	$	251,541
Long-term debt		1,701,000		1,550,000		1,550,000
Other noncurrent liabilities		163,818		126,167		95,829
Members' equity		1,617,202		1,532,598		1,440,468
Total members' equity and liabilities	$	3,795,085	$	3,590,232	$	3,337,838

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Rate Matters

12 Months Ended

Dec. 31, 2014

Regulated Operations [Abstract]

Rate Matters

Rate Matters - MGE Energy and MGE.

a. Rate Proceedings.

On December 23, 2014, the PSCW authorized MGE to increase 2015 rates for retail electric customers by 3.8% or $15.4million and to decrease gas rates by 2.0% or $3.8 million. The increase in retail electric rates cover costs associated with the construction of emission-reduction equipment at Columbia, improvements and reliability of the state's electric transmission system, fuel and purchased power related to coal delivery costs, partially offset by lower cost as a result of market conditions for pension and post-retirement benefit costs. The authorized return on common stock equity is 10.2%.

On July 26, 2013, the PSCW authorized MGE to freeze electric and natural gas rates at 2013 levels for 2014. The order includes authorizing 100% AFUDC on the Columbia scrubber construction project and deferral of increased costs related to ATC and MISO network upgrade fees. As part of the rate freeze plan authorized by the PSCW, effective January 1, 2014, approximately $6.3 million associated with a 2012 fuel rule surplus credit was required to be refunded to customers and was amortized in 2014. The fuel credit accrued interest at MGE's weighted cost of capital. The authorized return on equity remained unchanged at 10.3%.

On December 14, 2012, the PSCW authorized MGE to increase 2013 rates for retail electric customers by 3.8% or $14.9 million and to increase gas rates by 1.0% or $1.6 million. The change in retail electric rates was driven by costs for new environmental equipment at Columbia, final construction costs for the Elm Road Units, transmission reliability enhancements, and purchased power costs. The authorized return on common stock equity remained unchanged at 10.3%.

On December 15, 2011, under a limited reopener of MGE's last rate order, the PSCW authorized MGE to increase 2012 rates for retail electric customers by 4.3% or $15.7 million and to increase gas rates by 0.3% or $0.6 million. The change in retail electric rates was driven by MGE's electric fuel and purchased power costs, increased transmission costs,an update to the Elm Road Units' costs, and an increase for energy efficiency programs. The PSCW also approved deferral of CSAPR costs.

b. Fuel Rules.

Fuel rules require the PSCW and Wisconsin utilities to defer electric fuel-related costs that fall outside a symmetrical cost tolerance band around the amount approved for a utility in its most recent base rate proceedings. Any over/under recovery of the actual costs is determined on an annual basis and will be adjusted in future billings to electric retail customers. The fuel rules bandwidth is currently set at plus or minus 2%. Under fuel rules, MGE would defer costs, less any excess revenues, if its actual electric fuel costs exceeded 102% of the electric fuel costs allowed in its latest rate order. Excess revenues are defined as revenues in the year in question that provide MGE with a greater return on common equity than authorized by the PSCW in MGE's latest rate order. Conversely, MGE is required to defer the benefit of lower costs if actual electric fuel costs were less than 98% of the electric fuel costs allowed in that order.

As of December 31,2014, MGE's fuel costs are within the range authorized by the PSCW in the most recent rate order; therefore, no fuel credits or surcharges were necessary. As part of the rate freeze plan authorized by the PSCW for 2014, $6.3 million associated with the 2012 fuel rule credit was amortized against purchased power expense during the year endedDecember 31,2014. The 2013 fuel rule credit of $6.5 million was returned to customers in October 2014.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies.

a. Purchase Contracts - MGE Energy and MGE.

MGE Energy and MGE have entered into various commodity supply, transportation, and storage contracts to meet their obligations to deliver electricity and natural gas to customers. As of December 31,2014, the future minimum commitments related to these purchase contracts were as follows:

(In thousands)		2015		2016		2017		2018		2019
Coal(a)	$	22,630	$	16,436	$	10,664	$	6,560	$	3,850
Natural Gas
Transportation and storage(b)		18,074		9,938		273		192		-
Supply(c)		14,971		-		-		-		-
Purchase Power(d)		50,714		51,437		52,043		50,752		37,367
Other		16,452		723		723		324		143
	$	122,841	$	78,534	$	63,703	$	57,828	$	41,360

(a)Total coal commitments for the Columbia and Elm Road Units, including transportation. Fuel procurement for MGE's jointly owned Columbia and Elm Road Units are handled by WPL and WEPCO, respectively, who are the operators of those facilities. If any minimum purchase obligations must be paid under these contracts, management believes these obligations would be considered costs of service and recoverable in rates.

(b)MGE's natural gas transportation and storage contracts require fixed monthly payments for firm supply pipeline transportation and storage capacity. The pricing components of the fixed monthly payments for the transportation and storage contracts are established by FERC but may be subject to change.

(c)These commitments include market-based pricing. Management expects to recover these costs in future customer rates.

(d)MGE has several purchase power agreements to help meet future electric supply requirements. Management expects to recover these costs in future customer rates. In October 2008, MGE entered into a ten-year purchase power agreement to help meet future electric supply requirements. Under this agreement, MGE has agreed to purchase 50 MW of wind power from Osceola Windpower II, LLC, which is located in Iowa. This facility became operational in October 2008. MGE does not have any capacity payment commitments under this agreement. However, MGE is obligated to purchase its ratable share of the energy produced by the project. MGE's commitment related to its ratable share of energy produced by the project has been estimated and is included in the above numbers.

b. Chattel Paper Agreement and Other Guarantees - MGE Energy and MGE.

MGE makes available to qualifying customers a financing program for the purchase and installation of energy-related equipment that will provide more efficient use of utility service at the customer's property. MGE is party to a chattel paper purchase agreement with a financial institution under which it can sell or finance an undivided interest with recourse, in up to $10.0 million of the financing program receivables, until July 31, 2015. At December 31,2014, 2013, and 2012, respectively, MGE had sold a $4.4 million, $5.4 million, and $4.5 million interest in these receivables. MGE retains the servicing responsibility for these receivables.

MGE accounts for servicing rights under the amortization method. Initial determination of the servicing asset fair value is based on the present value of the estimated future cash flows. The discount rate is based on the PSCW authorized weighted cost of capital.

MGE maintains responsibility for collecting and remitting loan payments from customers to the financial institution and does not retain any interest in the assets sold to the financial institution. At December 31,2014, 2013, and 2012, MGE recorded a servicing asset of $0.2 million, $0.3 million, and $0.2 million, respectively. MGE recognized gains of $0.1 million, $0.2 million, and $0.1 million for the years endedDecember 31,2014, 2013, and 2012, respectively, in connection with the sale of loan assets.The servicing asset amount amortized in 2014 was less than $0.1 million. The loan assets are sold to the financial institution at cost, which approximates fair value in view of their market rates of interest. During 2014, 2013, and 2012, MGE received approximately $0.5 million, $1.6 million, and $1.2 million, respectively, from the financial institution for the sale of loan assets. During those same years, payments of $1.5 million, $0.8 million, and $1.2 million, respectively, were made by MGE to the financial institution.

MGE would be required to perform under its guarantee if a customer defaulted on its loan. The energy-related equipment installed at the customer sites is used to secure the customer loans. The loan balances outstanding at December 31,2014, approximate the fair value of the energy-related equipment acting as collateral. The length of the MGE guarantee to the financial institution varies from one to ten years depending on the term of the underlying customer loan.Principal payments for the next five years on the loans are:

(In thousands)		2015		2016		2017		2018		2019
Principal payments	$	906	$	884	$	482	$	420	$	410

c. Leases - MGE Energy and MGE.

MGE has noncancelable operating leases, primarily for combustion turbines, railcars, and computer equipment. The operating leases generally do not contain renewal options, with the exception of certain railcar operating leases. These leases have a renewal option of one year or less. MGE is required to pay all executory costs such as maintenance and insurance for its leases.

Future minimum rental payments at December 31,2014, under agreements classified as operating leases with noncancelable terms in excess of one year are as follows:

(In thousands)		2015		2016		2017		2018		2019		Thereafter
Minimum lease payments	$	1,553	$	1,346	$	872	$	419	$	258	$	7,938

Rental expense under operating leases totaled $2.5 million, $2.7 million, and $2.6millionfor 2014, 2013, and 2012, respectively.

d. Environmental - MGE Energy and MGE.

Water Quality

Water quality regulations promulgated by the EPA and WDNR in accordance with the Federal Water Pollution Control Act, or more commonly known as the Clean Water Act (CWA), impose restrictions on discharges of various pollutants into surface waters. The CWA also regulates surface water quality issues that affect aquatic life, such as water temperatures, intake structures, and wetlands filling. The CWA also includes discharge standards, which require the use of effluent-treatment processes equivalent to categorical "best practicable" or "best available" technologies. The CWA regulates discharges from "point sources," such as power plants, through establishing discharge limits in water discharge permits. MGE's power plants operate under Wisconsin Pollution Discharge Elimination System (WPDES) permits to ensure compliance with these discharge limits.

EPA’s Proposed Effluent Limitations Guidelines (ELG) and Standards for Steam Electric Power Generating Point Source Category

In June 2013, the EPA published a proposed rule that would amend the current ELG rule and lower the existing permissible water discharge of metals and other pollutants in wastewater from new and existing steam electric generation plants. The proposed rule focuses mainly on water discharges associated with certain air pollution control systems and ash handling systems at coal-burning power plants. Under the proposed rule, the EPA asked for comments on four regulatory options, varying in their compliance stringency and cost. The EPA is under a consent decree to finalize the rule by September 2015. Once finalized, the rule will apply to power plants as they renew their WPDES permits beginning in July 2017.

The ELG rule as proposed would require specific treatments and/or technologies to meet the water discharge requirements. Sites that already have these technologies will be deemed to meet the requirements of the rule. Sites without these technologies would need to install them to be in compliance. The proposed rule as written will likely affect wastewater systems at Columbia and the Elm Road Units. For Columbia, the rule may affect bottom ash handling systems. For the Elm Road Units, the rule may affect its flue gas desulfurization systems.

Based on our current evaluation of the proposed rule and its alternatives, we may need to add treatment systems or additional equipment at our Elm Road and Columbia facilities. However, MGE cannot estimate those costs with any certainty until we are able to evaluate the final version of this rule further.

EPA Cooling Water Intake Rules (Section 316(b))

Section 316(b) of the CWA requires that the cooling water intake structures at electric power plants meet best available technology standards so that mortality from entrainment (drawing aquatic life into a plant's cooling system) and impingement (trapping aquatic life on screens) are reduced. The EPA finalized its 316(b) rule for existing facilities in 2014; however, the rule is the subject of a pending legal challenge. Section 316(b) requirements are implemented in Wisconsin through modifications to plants' WPDES permits, which govern plant water discharges. WDNR is developing rules to implement the EPA 316(b) rule.

Existing facilities under the 316(b) rule (for MGE that includes our Blount, WCCF, and Columbia plants) will need to meet impingement and entrainment reduction standards or take one of seven actions to meet the reduction requirements. Compliance with 316(b) requirements will coincide with permit renewals.

MGE has studied its options and expects that it will meet requirements at its affected facilities with minimal cost. Our WCCF facility already employs a "closed cycle" cooling (CCC) system as defined under the rule. The Columbia plant may need to address multiple intake structures. Our Blount plant has conducted studies regarding options for compliance with the rule. The exact requirements, however, will not be known until those facilities' WPDES permits are modified to account for this rule. Nonetheless, MGE expects that the 316(b) rule will not have material effects on its existing plants.

Energy Efficiency and Renewables

The Wisconsin Energy Efficiency and Renewables Act requires that, by 2015, 10% of the state's electricity be generated from renewable resources. As of December 31, 2014, MGE is in compliance with the 2015 requirement. The costs to comply with the Act and its accompanying regulations are being recovered in rates.

Air Quality

Federal and state air quality regulations impose restrictions on emission of mercury, particulates (PM), sulfur dioxide (SO₂), nitrogen oxides (NO_x), and other pollutants and require permits for operation of emission sources. These permits have been obtained by MGE and must be renewed periodically. Several EPA initiatives, including the EPA's proposed greenhouse gas regulations, EPA's efforts to regulate methane from natural gas lines, the Cross-State Air Pollution Rule (CSAPR), and revised National Ambient Air Quality Standards (NAAQS) have the potential to result in additional operating and capital expenditure costs for MGE.

EPA's Greenhouse Gas (GHG) Reduction Guidelines under the Clean Air Act 111d Rule

In June 2014, the EPA developed a proposed rule called the Clean Power Plan that set guidelines for states to use in developing plans to control GHG emissions from existing fossil fuel fired electric generating units (EGUs). The EPA's proposal includes reductions in GHG emissions from EGUs by a national average of 30% by 2030 as measured from a 2012 baseline. Each state is given its own emission reduction targets to meet this goal, and States' goals can be higher or lower than the national average. The State of Wisconsin's reduction goal is 34%. These targets are expressed as a "rate-based" emission average to be achieved by the combined fleet of EGUs within the state. States would be expected to make "meaningful progress" towards these reductions by 2020 and to meet their respective targets by 2030.

The EPA's proposal establishes guidelines for states and encourages the use of four "building blocks" for achieving these reductions. These "building blocks" are: (1) increasing the efficiency of EGUs; (2) re-dispatching of gas-fired generation in lieu of coal; (3) expanding the use of low and no carbon power sources, such as wind, nuclear and solar; and (4) improving demand side energy efficiency to reduce electric use.

MGE has been studying the EPA's proposed rule to determine what compliance in Wisconsin would look like. MGE has also participated in discussions on the proposed rule with the Wisconsin Department of Natural Resources, Public Service Commission of Wisconsin, Wisconsin utilities, and industry experts.

The rule is expected to be finalized mid-summer 2015. States will then have up to two years to prepare compliance plans. While there is currently no certainty regarding the terms of the final rule, it is reasonable to assume that this rule will have a material impact on MGE. The parameters of the final rule, however, will determine the extent to which this rule will affect MGE.

National Ambient Air Quality Standards (NAAQS)

The EPA’s NAAQS regulations have been developed to set ambient levels of six pollutants to protect sensitive populations (primary NAAQS) and the environment (secondary NAAQS) from the negative effects of exposure to these pollutants at higher levels. The NAAQS regulations govern that the EPA periodically review, and adjust as necessary, the NAAQS for these six air pollutants. The EPA's NAAQS review can result in a lowering of the allowed ambient levels of a pollutant, a change in how the pollutant is monitored, and/or a change in which sources of that pollutant are regulated. States implement any necessary monitoring and measurement changes and recommend areas for attainment (meets the ambient requirements) or nonattainment (does not meet these standards). The EPA makes the final attainment and nonattainment determinations. States must come up with a state implementation plan (SIP) to get nonattainment areas into attainment and maintain air quality in attainment areas. A company with facilities located in a nonattainment area will be most affected. Their facilities may be subject to additional data submissions and measurement during permitting renewals, their facilities may need to meet new standards set by the SIP (which could result in significant capital expenditures), and the company may have additional expenses and/or difficulties expanding or building new facilities. The process from determining acceptable primary and/or secondary NAAQS to executing SIPs can take years. Nonetheless, because the NAAQS regulations have the potential to affect both existing and new facilities in areas, MGE continuously monitors changes to these rules to evaluate whether changes could impact our operations.

MGE is monitoring developments in the Ozone NAAQS rule. In November 2014, the EPA published proposed regulations to lower the Ozone NAAQS to between 65 to 70 parts per billion (ppb). In this proposed rule, the EPA has stated they are also considering leaving the standard at its current level of 75 ppb, or lowering it further to 60 ppb. EPA is seeking comments on these options. Milwaukee County (where our Elm Road Units are located) and Dane and Columbia Counties (where several of our facilities are located) may not meet the Ozone NAAQS if it is lowered to 70 ppb or below. These counties could then be subject to a SIP that could potentially affect MGE facilities, as described above. The EPA plans to have a final Ozone NAAQS rule completed by October 2015. After the rule is finalized, there are several State and Federal actions that need to take place before the Wisconsin SIP will be implemented. Without a SIP in place, it is too soon to tell how a lowered Ozone NAAQS will affect our facilities. MGE will continue to monitor rule developments and subsequent state actions and implementation plans.

MGE is also monitoring developments in the SO₂ NAAQS rule. The EPA's SO₂ NAAQS rule has been in place for some time and initial attainment/nonattainment designations by states were due in 2013. However, there was no mechanism for determining attainment and thus, the majority of areas across the U.S., including most of Wisconsin, were unable to be classified as either in attainment or nonattainment. In 2014, the EPA proposed a data requirements rule with procedures for states to use to determine attainment and nonattainment areas. The proposed procedures include analyzing a state's highest emitting SO₂ sources to determine through measurement and/or modeling if those sources are contributing to SO₂ NAAQS exceedances. Based on the proposed data requirements rule, the State of Wisconsin will likely include our Columbia plant and may include the Elm Road Units, in the list of larger sources that require further evaluation through modeling and/or monitoring. Both Columbia and the Elm Road Units already have effective SO₂ pollution controls installed and should be in compliance with the final rule, however, we will not know with any certainty if the rule will affect our plants until the State of Wisconsin completes its evaluation. MGE will continue monitoring further actions under this rule to better evaluate the effect it may have on Columbia and the Elm Road Units.

EPA's Cross-State Air Pollution Rule

The EPA's Cross-State Air Pollution Rule (CSAPR) is an interstate air pollution transport rule designed to reduce ozone and fine particulate (PM2.5) air levels in areas that the EPA has determined are being affected by pollution from neighboring and upwind states. The EPA has identified 27 eastern states that are contributing to pollution in other states. CSAPR aims to achieve ozone and PM2.5 reductions by reducing NO_x and/or SO₂ air emissions, which contribute to ozone and PM2.5, from qualifying electric power plants in the 27 "contributing" states. The rule has been designed so that qualifying power plants will be allocated NO_x and SO₂ allowances in two phases, with the second phase including further emissions reductions. These plants will need to reduce their emissions and/or purchase allocations from the marketplace to meet their obligations.

CSAPR, as well as its precursor rules, the Clean Air Interstate Rule (CAIR) and the NO_x SIP Call, have been subject to litigation. EPA rule adjustments and several court rulings, including recent court and EPA actions, continue to impart a level of uncertainty heading into 2015. See below for additional information on recent developments and uncertainties associated with this rule.

In July 2011, the EPA finalized CSAPR as a court-ordered replacement rule for its CAIR that had been remanded in 2008. The D.C. Circuit Court of Appeals stayed CSAPR in December 2011, then vacated CSAPR and conditionally reinstated CAIR in August 2012. The U.S. Supreme Court issued a decision in April 2014, reversing the D.C. Circuit Court's vacature of CSAPR and remanded the matter back to the D.C. Circuit for further proceedings. In October 2014, the D.C. Circuit lifted its stay of CSAPR and set a briefing schedule for remaining litigation issues that were not resolved by the Supreme Court's decision. The briefing schedule with oral arguments is planned for 2015. Additionally, the State of Wisconsin has filed pleadings with the D.C. Circuit Court reiterating its contention that Wisconsin be removed from CSAPR.

The EPA has interpreted the October 2014 lifting of the stay by the D.C. Circuit as granting the EPA the ability to reset deadlines that have since passed (CSAPR was originally designed to begin in 2012). The EPA instituted an interim final rule effective January 1, 2015, that tolls the CSAPR's deadlines by three years. The tolling of three years under the interim final rule introduces Phase I of CSAPR in 2015, and Phase II of CSAPR in 2017. The EPA is accepting comments on other aspects of the rule through February 2015.

The ongoing litigation in the D.C. Circuit, including the EPA's interpretation of tolling rule deadlines and the State of Wisconsin's arguments to be removed from the rule, leaves unresolved issues that may affect whether, when, and how MGE's facilities will need to comply with this rule. We have worked to achieve compliance with Phase I requirements, should those requirements be confirmed as being effective as of January 1, 2015, while monitoring the court proceedings, which will extend into 2015, as well as any additional actions taken by the EPA in response to its request for comments on the reinstated rule. Further, MGE expects to be able to meet CSAPR requirements by applying reductions achieved from recent pollution control installations at Columbia and early reduction efforts at Blount. We will continue to monitor and evaluate the D.C. Circuit Court remand proceedings and the implementation of the interim rule by the EPA.

Clean Air Visibility Rule (CAVR)

Air modeling indicates that SO₂ and NO_x emissions from Columbia may impair visibility at certain Class I Scenic Areas. Columbia may, therefore, be subject to the best available retrofit technology (BART) regulations, a subsection of the EPA's Clean Air Visibility Rule (CAVR), which may require pollution control retrofits. The EPA has issued rules directing that compliance with emissions limitations in the CSAPR could also serve as compliance with the BART for SO₂ and NO_x emissions at electric plants such as Columbia. However, these rules are subject to a legal challenge pending before the D.C. Circuit. In addition, an environmental group had sought, then dismissed without prejudice to refile, a federal appellate court review of Wisconsin's implementation plan for the BART portion of CAVR. These BART rules remain uncertain while subject to the pending legal challenges and while regulatory uncertaintysurrounds the CSAPR. Thus, at this time, the BART regulatory obligations, compliance strategies, and costs remain uncertain.

Solid Waste

EPA’s Coal Combustion Residuals Rule

In December 2014, the EPA finalized its Disposal of Coal Combustion Residuals from Electric Utilities rule. The rule will go into effect six months after it is published in the Federal Register. The rule provides that coal ash will be regulated as a special waste rather than a hazardous waste and more strictly defines what ash use activities would be exempt from solid waste disposal and considered beneficial use of coal ash. The rule also regulates landfills, ash ponds, and other surface impoundments for coal combustion residuals (CCRS or coal ash) by regulating their design, location, monitoring, and operation.

The final rule is intended to reduce the risk of structural failure of impoundments (ash ponds) and protect groundwater from both impoundment and landfill operations by setting new standards. The rule requires closure of active coal ash ponds and landfills that do not upgrade to meet these standards. Facilities with landfills and/or surface impoundments will be subject to various timeframes for meeting new regulatory requirements depending on the type of landfill or surface impoundment onsite, whether the site has failed any required integrity testing, and whether the facility intends to upgrade to meet regulatory requirements or begin closure proceedings. Timeframes to meet various compliance parameters can vary from 18 months to over 5 years.

The Columbia and Elm Road Units co-owners and plant operators are evaluating the final rule to determine what changes may be necessary at those facilities and the associated timeframes. We anticipate that some design and operational changes may need to be made at these facilities; however, evaluation of this rule is not completed so we are unable to estimate with any certainty the costs to MGE operations at this time. Management believes any compliance costs will be recovered in future rates.

Columbia

Based upon current available information, compliance with various environmental requirements and initiatives is expected to result in significant additional operating and capital expenditures at Columbia as noted below.

Columbia Clean Air Act Litigation

In December 2009, the EPA sent a notice of violation (NOV) to MGE and the other co-owners of Columbia. The NOV alleged that WPL, as owner-operator, and the other co-owners failed to comply with appropriate pre-construction review and permitting requirements and, as a result, violated the PSD program requirements, the Title V operating permit requirements of the CAA, and the Wisconsin State Implementation Plan (SIP). In April 2013, the EPA filed a lawsuit against the co-owners of Columbia asserting similar allegations. In September 2010 and April 2013, Sierra Club filed lawsuits against WPL alleging violations of the CAA at Columbia and other WPL-operated Wisconsin facilities.

In April 2013, WPL, as owner-operator, along with the other owners of Columbia, entered into a consent decree with the EPA and the Sierra Club to resolve these claims, while admitting no liability. In June 2013, the consent decree was approved and entered by the Court. The consent decree requires installation of the following emission controls at Columbia: SO₂ scrubbers and baghouses at Columbia Units 1 and 2 by December 31, 2014 (which have now been installed) and an SCR system at Columbia Unit 2 by December 31, 2018. Installation of the SCR was recently authorized by the PSCW. In addition, the consent decree establishes emission rate limits for SO₂, NO_x, and particulate matter for Columbia Units 1 and 2. The consent decree also includes annual plant-wide emission caps for SO₂ and NO_x for Columbia. MGE also paid approximately $0.2 million as its share of a civil penalty and will complete approximately $0.6 million in environmental mitigation projects. MGE intends to seek recovery in rates of the costs associated with its compliance with the terms of the final consent decree and currently expects to recover any material compliance costs.

e.Legal Matters- MGE Energy and MGE.

MGE is involved in various legal matters that are being defended and handled in the normal course of business. MGE maintains accruals for such costs that are probable of being incurred and subject to reasonable estimation. The accrued amount for these matters is not material to the financial statements.

f.Elm Road - MGE Energy and MGE.

During 2013, WEPCO and Bechtel (the construction contractor for the Elm Road Units) were working through theoutstanding warranty claims. The warranty claim for the costs incurred to repair steam turbine corrosion damage identified on both units was resolved through a binding arbitration in June 2013. Final acceptance of the Elm Road Units occurred in June 2013 after all requirements stated in the contract with Bechtel were satisfied. All warranty claims between WEPCO and Bechtel have now been resolved, none of which had a material impact on our financial statements.

g. Other Commitments.

MGE Energy holds investments in nonpublic entities. From time to time, these entities require additional capital infusions from their investors. MGE Energy has committed to contribute $1.4 million in capital for such infusions. The timing of these infusions is dependent on the needs of the investee and is therefore uncertain at this time.

In addition, MGE Energy has a three year agreement with a venture debt fund expiring in December 2016. MGE Energy has committed to invest up to a total of $1.0 million into this fund. As of December 31,2014, MGE Energy has $0.2 million remaining in commitments. The timing of infusions is dependent on the needs of the fund and is therefore uncertain at this time.

MGE has several other commitments related to various projects. Payments for these commitments are expected to be as follows:

(In thousands)		2015		2016		2017		2018		2019		Thereafter
Other Commitments	$	474	$	475	$	433	$	435	$	437	$	6,524

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Madison Gas and Electric Company Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Items not affecting cash:
Depreciation and amortization	$ 40,695	$ 38,838	$ 38,707
Deferred income taxes	49,884	38,365	44,797
Provision for doubtful receivables	1,898	2,448	2,498
Employee benefit plan expenses	(1,080)	13,303	18,353
Equity earnings in ATC	(9,150)	(9,434)	(9,079)
Other items	729	117	1,283
Changes in working capital items:
Trade and other receivables (change)	2,115	(3,827)	(6,208)
Inventories (change)	(10,399)	2,488	1,457
Unbilled revenues (change)	720	(3,720)	(2,508)
Prepaid taxes (change)	(19,804)	414	2,731
Other current assets (change)	(5,693)	2,514	4,093
Accounts payable (change)	2,756	858	(272)
Other current liabilities (change)	(4,195)	6,271	425
Dividend income from ATC	7,740	7,404	7,146
Cash contributions to pension and other postretirement plans	(3,321)	(34,765)	(28,857)
Debt make-whole premium	0	(6,757)	0
Other noncurrent items, net	(4,452)	10,845	6,992
Cash Provided by (Used for) Operating Activities	128,762	140,267	146,004
Investing Activities:
Capital expenditures	(92,676)	(119,047)	(98,435)
Capital contributions to investments	(2,185)	(1,660)	(2,419)
Other investing	(1,297)	(1,205)	(496)
Cash Provided by (Used for) Investing Activities	(96,158)	(121,922)	(101,353)
Financing Activities:
Repayment of long-term debt	(4,103)	(43,012)	(30,668)
Issuance of long-term debt	0	85,000	28,000
Increase in short-term debt	7,000	0	0
Other financing	(130)	(770)	(844)
Cash Provided by (Used for) Financing Activities	(35,662)	4,111	(39,463)
Change in Cash and Cash Equivalents:	(3,058)	22,456	5,188
Cash and cash equivalents at beginning of period	68,813	46,357	41,169
Cash and cash equivalents at end of period	65,755	68,813	46,357
Supplemental disclosures of cash flow information:
Interest paid	20,478	17,991	19,499
Income taxes paid	19,579	8,046	3,544
Income taxes received	(644)	(1,339)	(12,536)
Significant noncash investing activities:
Accrued capital expenditures	1,569	9,892	10,317
MGE [Member]
Operating Activities:
Net Income	81,938	76,445	65,306
Items not affecting cash:
Depreciation and amortization	40,648	38,834	38,707
Deferred income taxes	49,603	37,462	44,112
Provision for doubtful receivables	1,898	2,448	2,498
Employee benefit plan expenses	(1,080)	13,303	18,353
Equity earnings in ATC	(9,150)	(9,434)	(9,079)
Other items	1,280	651	1,813
Changes in working capital items:
Trade and other receivables (change)	(4,455)	(3,699)	(7,219)
Inventories (change)	(10,398)	2,488	1,457
Unbilled revenues (change)	720	(3,720)	(2,508)
Prepaid taxes (change)	(15,169)	(373)	(1,584)
Other current assets (change)	(5,693)	2,518	4,092
Accounts payable (change)	2,741	126	(1,658)
Accrued interest and taxes (change)	(1,001)	2,065	211
Other current liabilities (change)	(3,144)	2,975	(714)
Dividend income from ATC	7,740	7,404	7,146
Cash contributions to pension and other postretirement plans	(3,321)	(34,765)	(28,857)
Debt make-whole premium	0	(6,757)	0
Other noncurrent items, net	(4,619)	10,713	6,696
Cash Provided by (Used for) Operating Activities	128,538	138,684	138,772
Investing Activities:
Capital expenditures	(92,676)	(119,047)	(98,435)
Capital contributions to investments	(1,775)	(1,420)	(2,140)
Other investing	(1,146)	(130)	(508)
Cash Provided by (Used for) Investing Activities	(95,597)	(120,597)	(101,083)
Financing Activities:
Cash dividends paid to parent by MGE	(26,500)	(25,000)	(20,404)
Distributions to parent from noncontrolling interest	(21,359)	(27,365)	(23,500)
Equity contribution received by noncontrolling interest	1,775	1,420	2,130
Repayment of long-term debt	(4,103)	(43,012)	(30,668)
Issuance of long-term debt	0	85,000	28,000
Increase in short-term debt	7,000	0	0
Other financing	0	(672)	(795)
Cash Provided by (Used for) Financing Activities	(43,187)	(9,629)	(45,237)
Change in Cash and Cash Equivalents:	(10,246)	8,458	(7,548)
Cash and cash equivalents at beginning of period	14,808	6,350	13,898
Cash and cash equivalents at end of period	4,562	14,808	6,350
Supplemental disclosures of cash flow information:
Interest paid	20,478	17,991	19,499
Income taxes paid	67	144	44
Income taxes received	(644)	0	(448)
Significant noncash investing activities:
Accrued capital expenditures	$ 1,569	$ 9,892	$ 10,317

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Asset Retirement Obligations

12 Months Ended

Dec. 31, 2014

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligations

Asset Retirement Obligations - MGE Energy and MGE.

MGE recorded an obligation for the fair value of its legal liability for asset retirement obligations (AROs) associated with removal of the West Campus Cogeneration Facility and the Elm Road generating units, electric substations, combustion turbine generating units, wind generating facilities, and photovoltaic generating facilities, all of which are located on property not owned by MGE Energy and MGE and would need to be removed upon the ultimate end of the associated leases. The significant conditional AROs identified by MGE included the costs of abandoning in place gas services and mains, the abatement and disposal of equipment and buildings contaminated with asbestos and PCBs, and the proper disposal and removal of tanks, batteries, and underground cable. Changes in management's assumptions regarding settlement dates, settlement methods, or assigned probabilities could have a material effect on the liabilities recorded by MGE at December 31,2014, as well as the regulatory asset recorded.

MGE also may have AROs relating to the removal of various assets, such as certain electric and gas distribution facilities. These facilities are generally located on property owned by third parties, on which MGE is permitted to operate by lease, permit, easement, license, or service agreement. The asset retirement obligations associated with these facilities cannot be reasonably determined due to the indeterminate life of the related agreements.

The following table shows a rollforward of the AROs from January 1,2013 toDecember 31,2014. Amounts include conditional AROs.

(In thousands)		2014		2013
Balance at January 1,	$	19,359	$	18,768
Liabilities incurred		68		296
Accretion expense		1,077		1,015
Liabilities settled		(343)		(744)
Revisions in estimated cash flows		(417)		24
Balance at December 31,	$	19,744	$	19,359

XML

Share-Based Compensation (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended			1 Months Ended	0 Months Ended		1 Months Ended		0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Jan. 31, 2014	Feb. 21, 2014	Feb. 15, 2013	Feb. 17, 2012	Jan. 21, 2011	Feb. 20, 2015	Jan. 17, 2014	Jan. 16, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 2.0	$ 1.5	$ 1.4
Performance Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cash payments distributed related to awards previously granted and now payable				1.2
Performance Unit Plan [Member] | Performance Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	5 years
Awards granted (in units)					21,991	22,884	25,040	23,483
Awards forfeited during period	0	0	0
Outstanding awards vested during period	$ 5.2
Performance Unit Plan [Member] | Performance Units [Member] | Subsequent Event [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in units)									18,948
Director Incentive Agreement [Member] | Performance Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	3 years
Awards granted (in units)										4,683
Director Incentive Agreement [Member] | Performance Units [Member] | Subsequent Event [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in units)											3,794

XML

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation - MGE Energy and MGE.

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which give recognition to the rate making accounting policies for regulated operationsprescribed by the regulatory authorities having jurisdiction, principally the PSCW and FERC. MGE's accounting records conform to the FERC uniform system of accounts.

Principles of Consolidation

Principles of Consolidation - MGE Energy and MGE.

MGE, a wholly owned subsidiary of MGE Energy, is a regulated electric and gas utility headquartered in Madison, Wisconsin. MGE Energy and MGE consolidate all majority owned subsidiaries in which it has controlling influence. MGE is the majority owner of MGE Transco. MGE Transco is a nonregulated entity formed to manage the investment in ATC.

Wholly owned subsidiaries of MGE Energy include CWDC, MAGAEL, MGE Power, MGE State Energy Services, and NGV Fueling Services. MGE Power owns 100% of MGE Power Elm Road and MGE PowerWest Campus. MGE Power and its subsidiaries are part of MGE Energy's nonregulated energy operations, which were formed to own and lease electric generation projects to assist MGE.

MGE Energy and MGE consolidate variable interest entities (VIEs) for which it is the primary beneficiary. Variable interest entities are legal entities that possess any of the following characteristics: equity investors who have an insufficient amount of equity at risk to finance their activities, equity owners who do not have the power to direct the significant activities of the entity (or have voting rights that are disproportionate to their ownership interest), or equity holders who do not receive expected losses or returns significant to the VIE. If MGE Energy or MGE is not the primary beneficiary and an ownership interest is held, the VIE is accounted for under the equity method of accounting. When assessing the determination of the primary beneficiary, all relevant facts and circumstances are considered, including: the power, through voting or similar rights, to direct the activities of the VIE that most significantly impact the VIE's economic performance and the obligation to absorb the expected losses and/or the right to receive the expected returns of the VIE. Ongoing reassessments of all VIEs are performed to determine if the primary beneficiary status has changed. MGE has consolidated MGE Power Elm Road and MGE PowerWest Campus. Both entities are VIEs. MGE is considered the primary beneficiary of these entities as a result of contractual agreements. See Footnote 2 for more discussion of these entities.

The consolidated financial statements reflect the application of certain accounting policies described in this note. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates - MGE Energy and MGE.

In order to prepare consolidated financial statements in conformity with GAAP, management must make estimates and assumptions. These estimates could affect reported amounts of assets, liabilities, and disclosures at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from management's estimates.

Cash Equivalents and Restricted Cash

Cash Equivalents and Restricted Cash - MGE Energy and MGE.

MGE Energy and MGE consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

MGE has certain cash accounts that are restricted to uses other than current operations and designated for a specific purpose. MGE's restricted cash accounts include cash held by trustees for certain employee benefits. These are included in other current assets.

Receivable Margin Account

Receivable – Margin Account - MGE Energy and MGE.

Cash amounts held by counterparties as margin for certain financial transactions are recorded as receivable – margin account in other current assets on the consolidated balance sheet. As of December 31,2014 and 2013, the receivable – margin account balance of $2.2 million and $0.5 million, respectively, is shown net of any collateral posted against derivative positions. As of December 31,2014 and 2013, there was $2.2 million and $0.2 million, respectively, of collateral posted against derivative positions. Changes in this cash account are considered cash flows from operating activities to match with the costs being hedged. The costs being hedged are fuel for electric generation, purchased power, and cost of gas sold.

Trade Receivables, Allowance for Doubtful Accounts, and Concentration Risk

Trade Receivables, Allowance for Doubtful Accounts, and Concentration Risk - MGE Energy and MGE.

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. However, a 1% late payment charge is recorded on all receivables unpaid after the due date. The allowance for doubtful accounts associated with these receivables represents our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine our allowance for doubtful accounts based on historical write-off experience, regional economic data, and review of the accounts receivable aging.

MGE is obligated to provide service to all electric and gas customers within its franchised territories. MGE's franchised electric territory includes a 316 square-mile area in Dane County, Wisconsin, and MGE's franchised gas territory includes a service area covering 1,678 square-miles in Wisconsin. MGE manages this concentration and the related credit risk through its credit and collection policies, which are consistent with state regulatory requirements.

Inventories

Inventories - MGE Energy and MGE.

Inventories consist of natural gas in storage, fossil fuels, materials and supplies, SO₂ allowances, and renewable energy credits (RECs). MGE values natural gas in storage, fossil fuels, and materials and supplies using average cost.

SO₂ emission allowances are included in material and supplies on the consolidated balance sheet and are recorded at weighted average cost. These allowances are charged to fuel expense as they are used in operations.

REC allowances are included in materials and supplies on the consolidate balance sheet and are recorded based on specific identification. These allowances are charged to purchase power expense as they are used in operations.

Regulatory Assets and Liabilities

Regulatory Assets and Liabilities - MGE Energy and MGE.

Regulatory assets and regulatory liabilities are recorded consistent with regulatory treatment. Regulatory assets represent costs which are deferred due to the probable future recovery from customers through regulated rates. Regulatory liabilities represent the excess recovery of costs or accrued credits which were deferred because MGE believes it is probable such amounts will be returned to customers through future regulated rates. Regulatory assets and liabilities are amortized in the consolidated statements of income consistent with the recovery or refund included in customer rates. MGE believes that it is probable that its recorded regulatory assets and liabilities will be recovered and refunded, respectively, in future rates. See Footnote 6 for further information.

Debt Issuance Costs

Debt Issuance Costs - MGE Energy and MGE.

Premiums, discounts, and expenses incurred with the issuance of outstanding long-term debt are amortized over the life of the debt issue. Any call premiums or unamortized expenses associated with refinancing higher-cost debt obligations used to finance utility-regulated assets and operations are amortized consistent with regulatory treatment of those items.

Property, Plant, and Equipment

Property, Plant, and Equipment - MGE Energy and MGE.

Property, plant, and equipment is recorded at original cost. Cost includes indirect costs consisting of payroll taxes, pensions, postretirement benefits, other fringe benefits, and administrative and general costs. Also, included in the cost is AFUDC for utility property and capitalized interest for nonregulated property. Additions for significant replacements of property are charged to property, plant, and equipment at cost; and minor items are charged to maintenance expense. Depreciation rates on utility property are approved by the PSCW, based on the estimated economic lives of property, and include estimates for salvage value and removal costs. Removal costs of utility property, less any salvage value, are adjusted through regulatory liabilities. Depreciation rates on nonregulated property are based on the estimated economic lives of the property.

	2014	2013	2012
Electric	2.6 %	2.7 %	2.9 %
Gas	1.7 %	1.7 %	1.7 %
Nonregulated	2.4 %	2.3 %	2.3 %

Asset Retirement Obligations Policy

Asset Retirement Obligations - MGE Energy and MGE.

MGE Energy and MGE are required to record a liability for the fair value of an ARO to be recognized in the period in which it is incurred if it can be reasonably estimated. The offsetting associated asset retirement costs are capitalized as a long-lived asset and depreciated over the asset’s useful life. The expected present value technique used to calculate the fair value of ARO liabilities includes assumptions about costs, probabilities, settlement dates, interest accretion, and inflation. Revisions to the assumptions, including the timing or amount of expected asset retirement costs, could result in increases or decreases to the AROs. All asset retirement obligations are recorded as other long-term liabilities on our balance sheets. MGE has regulatory treatment and recognizes regulatory assets or liabilities for the timing differences between when we recover legal AROs in rates and when we would recognize these costs.

Repairs and Maintenance Expense

Repairs and Maintenance Expense - MGE Energy and MGE.

MGE utilizes the direct expensing method for planned major maintenance projects. Under this method, MGE expenses all costs associated with major planned maintenance activities as incurred.

Purchased Gas Adjustment Clause

Purchased Gas Adjustment Clause - MGE Energy and MGE.

MGE's natural gas rates are subject to a fuel adjustment clause designed to recover or refund the difference between the actual cost of purchased gas and the amount included in rates. Differences between the amounts billed to customers and the actual costs recoverable are deferred and recovered or refunded in future periods by means of prospective monthly adjustments to rates.

These amounts are included in other current liabilities on the consolidated balance sheet.

Revenue Recognition

Revenue Recognition - MGE Energy and MGE.

Operating revenues are recorded as service is rendered or energy is delivered to customers. Meters are read on a systematic basis throughout the month based on established meter-reading schedules. At the end of the month, MGE accrues an estimate for the unbilled amount of energy delivered to customers. The unbilled revenue estimate is based on daily system demand volumes, weather factors, estimated line losses, estimated customer usage by class, and applicable customer rates.

Utility Cost Recovery

Utility Cost Recovery - MGE Energy and MGE.

MGE’s rates include a provision for fuel costs. The PSCW allows Wisconsin utilities to defer electric fuel-related costs, less excess revenues, that fall outside a symmetrical cost tolerance band. Any over/under recovery of the actual costs is determined on an annual basis and will be adjusted in future billings to electric retail customers. Such deferred amounts will be recognized in “Purchased Power Expense” in MGE Energy’s and MGE’s income statement each period. The cumulative effects of these deferred amounts will be recorded in “Regulatory assets” or “Regulatory liabilities” on MGE Energy’s and MGE’s consolidated balance sheets until they are reflected in future billings to customers. See Footnote 17.b. for further information regarding the regulatory rules applicable to the recovery of electric fuel costs.

Allowance for Funds Used During Construction Policy

Allowance for Funds Used During Construction - MGE Energy and MGE.

Allowance for funds used during construction is included in utility plant accounts and represents the cost of borrowed funds used during plant construction and a return on shareholders' capital used for construction purposes. In the consolidated income statements, the cost of borrowed funds (AFUDC-debt) is presented as an offset to interest expense and the return on shareholders' capital (AFUDC-equity funds) is shown as an item within other income. For both 2014 and 2013, as approved by the PSCW, MGE capitalized AFUDC-debt and equity on 50% of applicable average construction work in progress at 8.21%. For 2012, MGE capitalized AFUDC-debt and equity on 50% of applicable average construction work in progress at 8.36%. For both 2014 and 2012, MGE received specific approval to recover 100% AFUDC on certain environmental costs for Columbia and 50% in 2013. Although the allowance does not represent current cash income, it is recovered under the ratemaking process over the service lives of the related properties. See Footnote 20 for further information regarding Columbia AFUDC.

Investments

Investments - MGE Energy and MGE.

Investments in limited liability companies that have specific ownership accounts in which MGE Energy or MGE's ownership interest is more than minor and are considered to have significant influence are accounted for using the equity method. All other investments are carried at fair value or at cost, as appropriate. See Footnote 4 for further information.

Capitalized Software Costs

Capitalized Software Costs - MGE Energy and MGE.

Property, plant, and equipment includes the net book value of capitalized costs of internal use software totaling $8.4 million and $9.0 million at December 31,2014 and 2013, respectively. During 2014, 2013, and 2012, MGE recorded $1.6 million, $1.5 million, and $1.3 million, respectively, of amortization expense related to these costs. These costs are amortized on a straight-line basis over the estimated useful lives of the assets. For internal use software, the useful lives range from five to ten years.

Impairment of Long-Lived Assets Policy

Impairment of Long-Lived Assets - MGE Energy and MGE.

MGE reviews plant and equipment and other property for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. MGE's policy for determining when long-lived assets are impaired is to recognize an impairment loss if the sum of the expected future cash flows (undiscounted and without interest charges) from an asset are less than the carrying amount of that asset. If an impairment loss is recognized, the amount that will be recorded will be measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Income Taxes and Excise Taxes

Income Taxes and Excise Taxes - MGE Energy and MGE.

Income taxes

Under the liability method, income taxes are deferred for all temporary differences between pretax financial and taxable income and between the book and tax basis of assets and liabilities using the tax rates scheduled by law to be in effect when the temporary differences reverse. Future tax benefits are recognized to the extent that realization of such benefits is more likely than not. A valuation allowance is recorded for those benefits that do not meet this criterion.

Accounting for uncertainty in income taxes applies to all tax positions and requires a recognition threshold and measurement standard for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in an income tax return. The threshold is defined for recognizing tax return positions in the financial statements as "more likely than not" that the position is sustainable, based on its merits. Subsequent recognition, derecognition, and measurement is based on management's best judgment given the facts, circumstances, and information available at the reporting date.

Regulatory and accounting principles have resulted in a regulatory liability related to income taxes. Excess deferred income taxes result from past taxes provided at rates higher than current rates. The income tax regulatory liability and deferred investment tax credit reflect the revenue requirement associated with the return of these tax benefits to customers.

Investment tax credits from regulated operations are amortized over related property service lives.

Excise taxes

MGE Energy, through its utility operations, pays a state license fee tax in lieu of property taxes on property used in utility operations. License fee tax is calculated as a percentage of adjusted operating revenues of the prior year. The electric tax rate is 3.19% for retail sales and 1.59% for sales of electricity for resale by the purchaser. The tax rate on sales of natural gas is 0.97%. The tax is required to be estimated and prepaid in the year prior to its computation and expensing. License fee tax expense, included in other general taxes, was $14.6 million, $13.8 million, and $13.5 million for the years ended December 31,2014, 2013, and 2012, respectively.

Operating income taxes, including tax credits and license fee tax, are included in rates for utility related items.

Share-based Compensation

Share-Based Compensation - MGE Energy and MGE.

Under two separate incentive plans, eligible participants, including employees and non-employee directors, may receive performance units that entitle the holder to receive a cash payment equal to the value of a designated number of shares of MGE Energy's common stock, plus dividend equivalent payments thereon, at the end of the set performance period. Under the plans, these awards are subject to a prescribed vesting schedule and must be settled in cash. Accordingly, no new shares of common stock are issued in connection with the plans.

MGE Energy and MGE initially measure the cost of the employee or director services received in exchange for a performance unit award based on the current market value of MGE Energy common stock. The fair value of the award is subsequently re-measured at each reporting date through the settlement date. Changes in fair value during the requisite period are recognized as compensation cost over that period.

See Footnote 14 for additional information regarding the plans.

Treasury Stock

Treasury Stock - MGE Energy.

Treasury shares are recorded at cost. Any shares of common stock repurchased are held as treasury shares unless cancelled or reissued.

Comprehensive Income (Loss)

Comprehensive Income - MGE Energy and MGE.

Total comprehensive income includes all changes in equity during a period except those resulting from investments by and distributions to shareholders. Comprehensive income is reflected in the consolidated statements of comprehensive income.

Derivative and Hedging Instruments

Derivative and Hedging Instruments - MGE Energy and MGE.

As part of regular operations, MGE enters into contracts, including options, swaps, futures, forwards, and other contractual commitments, to manage its exposure to commodity prices and gas revenues. MGE recognizes all derivatives in the consolidated balance sheets at fair value, with changes in the fair value of derivative instruments to be recorded in current earnings or deferred in accumulated other comprehensive income (loss), depending on whether a derivative is designated as, and is effective as, a hedge and on the type of hedge transaction. Derivative activities are in accordance with the company's risk management policy.

If the derivative qualifies for regulatory deferral, the derivatives are marked to fair value and any resulting loss or gain is offset with a corresponding regulatory asset or liability. Cash flows from such derivative instruments are classified on a basis consistent with the nature of the underlying hedged item.

Common Equity

Common Stock

MGE Energy sells shares of its common stock through its Stock Plan. Those shares may be newly issued shares or shares that MGE Energy has purchased in the open market for resale to participants in the Stock Plan. All sales under the stock plan are covered by a shelf registration statement that MGE Energy filed with the SEC.

MGE Energy purchases shares on the open market to provide shares to meet obligations to participants in the Stock Plan. The shares are purchased on the open market through a securities broker-dealer and then are reissued under the Stock Plan as needed to meet share delivery requirements. The volume and timing of share repurchases in the open market depends upon the level of dividend reinvestment and optional share purchases being made from time to time by plan participants. As a result, there is no specific maximum number of shares to be repurchased and no specified termination date for the repurchases.

Fair Value of Financial Instruments

Recurring Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or would be paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The standard clarifies that fair value should be based on the assumptions market participants would use when pricing the asset or liability including assumptions about risk. The standard also establishes a three level fair value hierarchy based upon the observability of the assumptions used and requires the use of observable market data when available. The levels are:

Level 1 - Pricing inputs are quoted prices within active markets for identical assets or liabilities.

Level 2 - Pricing inputs are quoted prices within active markets for similar assets or liabilities; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations that are correlated with or otherwise verifiable by observable market data.

Level 3 - Pricing inputs are unobservable and reflect management's best estimate of what market participants would use in pricing the asset or liability.

At December 31,2014 and 2013, the carrying amount of cash, cash equivalents, and outstanding commercial paper approximates fair market value due to the short maturity of those investments and obligations. The estimated fair market value of MGE Energy's and MGE long-term debt is based on quoted market prices for similar financial instruments at December 31. Since long-term debt is not traded in an active market, it is classified as Level 2.

No transfers were made in or out of Level 1 or Level 2 for the year ended December 31, 2014.

Investments include exchange-traded investment securities valued using quoted prices on active exchanges and are therefore classified as Level 1.

Derivatives include exchange-traded derivative contracts, over-the-counter transactions, a ten-year purchased power agreement, and FTRs. Most exchange-traded derivative contracts are valued based on unadjusted quoted prices in active markets and are therefore classified as Level 1. A small number of exchange-traded derivative contracts are valued using quoted market pricing in markets with insufficient volumes and are therefore considered unobservable and classified as Level 3. Transactions done with an over-the-counter party are on inactive markets and are therefore classified as Level 3. These transactions are valued based on quoted prices from markets with similar exchange traded transactions. FTRs are priced based upon monthly auction results for identical or similar instruments in a closed market with limited data available and are therefore classified as Level 3.

The ten-year purchased power agreement (see Footnote 16) was valued using an internally-developed pricing model and therefore is classified as Level 3. The model projects future market energy prices and compares those prices to the projected power costs to be incurred under the contract. Inputs to the model require significant management judgment and estimation. Future energy prices are based on a forward power pricing curve using exchange-traded contracts in the electric futures market, where such exchange-traded contracts exist, and upon calculations based on forward gas prices, where such exchange-traded contracts do not exist. A basis adjustment is applied to the market energy price to reflect the price differential between the market price delivery point and the counterparty delivery point. The historical relationship between the delivery points is reviewed and a discount (below 100%) or premium (above 100%) is derived. This comparison is done for both peak times when demand is high and off peak times when demand is low. If the basis adjustment is lowered, the fair value measurement will decrease and if the basis adjustment is increased, the fair value measurement will increase.

The projected power costs anticipated to be incurred under the purchased power agreement are determined using many factors, including historical generating costs, future prices, and expected fuel mix of the counterparty. An increase in the projected fuel costs would result in a decrease in the fair value measurement of the purchased power agreement. A significant input that MGE estimates is the counterparty's fuel mix in determining the projected power cost. MGE also considers the assumptions that market participants would use in valuing the asset or liability. This consideration includes assumptions about market risk such as liquidity, volatility, and contract duration. The fair value model uses a discount rate that incorporates discounting, credit, and model risks.

This model is prepared by members of MGE’s Energy Accounting group. It is reviewed on a quarterly basis by management in Energy Supply and Finance to review the assumptions, inputs, and fair value measurements.

The following table presents the significant unobservable inputs used in the pricing model as of December 31:

	Model Input
Significant Unobservable Inputs	2014	2013
Basis adjustment:
On peak	98.1%	94.2%
Off peak	95.0%	92.6%
Counterparty fuel mix:
Internal generation	50%-70%	50%-70%
Purchased power	50%-30%	50%-30%

The deferred compensation plan allows participants to defer certain cash compensation into a notional investment account. These amounts are included within other deferred liabilities in the consolidated balance sheets of MGE Energy and MGE. The notional investments earn interest based upon the semiannual rate of U.S. Treasury Bills having a 26week maturity increased by 1% compounded monthly with a minimum annual rate of 7%, compounded monthly. The notional investments are based upon observable market data, however since the deferred compensation obligations themselves are not exchanged in an active market they are classified as Level 2.

Income Taxes

Uncertainty in Income Taxes

MGE Energy and MGE account for the difference between the tax benefit amount taken on prior year tax returns, or expected to be taken on a current year tax return, and the tax benefit amount recognized in the financial statements as an unrecognized tax benefit.

Unrecognized tax benefits of $0.4 million and $2.4 million are liabilities shown with other deferred liabilities on the December 31,2014 and December 31,2013, consolidated balance sheets, respectively. At December 31,2014, $2.0 of unrecognized tax benefits are netted with deferred tax assets on the consolidated balance sheet. The interest component is offset by a regulatory asset.

During 2013, the IRS issued guidance on the treatment of electric generation repairs. This guidance prompted the reversal of the unrecognized tax benefits for these repairs in 2013. With the adoption of this new guidance in 2014 unrecognized tax benefits related to electric generation were added. At December 31,2014 and 2012, MGE Energy and MGE have an unrecognized tax benefit primarily related to temporary tax differences associated with the change in income tax method of accounting for electric generation and electric and gas distribution repairs. At December 31,2013, MGE Energy and MGE had an unrecognized tax benefit primarily related to temporary tax differences associated with the change in income tax method of accounting for electric and gas distribution repairs. There were no unrecognized tax benefits at December 31,2014, 2013, or 2012 related to federal permanent differences and tax credits.

The unrecognized tax benefits at December 31,2014, are not expected to significantly increase or decrease within the next twelve months. In addition, statutes of limitations will expire for MGE Energy and MGE tax returns. The impact of the statutes of limitations expiring is not anticipated to be material.

Pension Plans and Other Postretirement Benefits

Fair Value of Pension and Other Postretirement Benefit Plan Assets

Pension and other postretirement benefit plan investments are recorded at fair value. See Footnote 11 for more information regarding the fair value hierarchy.

The following is a description of the valuation methodologies used for assets measured at fair value as of December 31,2014:

Equity Securities – These securities consist of U.S. and international stock funds. The U.S. stock funds are primarily invested in domestic equities. Securities in these funds are typically priced using the closing price from the applicable exchange, NYSE, NASDAQ, etc. The international funds are composed of international equities. Securities are priced using the closing price from the appropriate local stock exchange.

Fixed Income Securities – These securities consist of U.S. bond funds and short-term funds. U.S. bond funds are priced by a pricing agent using inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. The short-term funds are valued initially at cost and adjusted for amortization of any discount or premium.

Real Estate – The fair value of real estate properties is determined through an external appraisal process.

Insurance Continuance Fund (ICF) – The fair value of the ICF is based on largely unobservable inputs, which are based on a commingled interest.

Fixed Rate Fund –The fair value of the Fixed Rate fund is determined based on the type of assets held. Public market data and GAAP reported market values are used when available. For all other assets, discounted cash flows are calculated using treasury rates and spreads based on the cash flow timing and quality of assets.

Derivative and Hedging Instruments

Derivative Hedging

As part of its regular operations, MGE enters into contracts, including options, swaps, futures, forwards, and other contractual commitments, to manage its exposure to commodity prices and gas revenues. To the extent that these contracts are derivatives, MGE assesses whether or not the normal purchases or normal sales exclusion applies. For contracts to which this exclusion cannot be applied, MGE Energy and MGE recognize such derivatives in the consolidated balance sheets at fair value. The majority of MGE's derivative activities are conducted in accordance with its electric and gas risk management program, which is approved by the PSCW and limits the volume MGE can hedge with specific risk management strategies. The maximum length of time over which cash flows related to energy commodities can be hedged is four years. If the derivative qualifies for regulatory deferral, the derivatives are marked to fair value and are offset with a corresponding regulatory asset or liability. The deferred gain or loss is recognized in earnings in the delivery month applicable to the instrument. Gains and losses related to hedges qualifying for regulatory treatment are recoverable in gas rates through the PGA or in electric rates as a component of the fuel rules mechanism.

Derivative Netting

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.

Regional Transmission Organizations

Regional Transmission Organizations

MGE reports on a net basis transactions on the MISO and PJM markets in which it buys and sells power within the same hour to meet electric energy delivery requirements.

Commitments and Contingencies

Chattel PaperAgreement

MGE makes available to qualifying customers a financing program for the purchase and installation of energy-related equipment that will provide more efficient use of utility service at the customer's property. MGE is party to a chattel paper purchase agreement with a financial institution under which it can sell or finance an undivided interest with recourse, in up to $10.0 million of the financing program receivables, until July 31, 2015.

MGE retains the servicing responsibility for these receivables.

MGE accounts for servicing rights under the amortization method. Initial determination of the servicing asset fair value is based on the present value of the estimated future cash flows. The discount rate is based on the PSCW authorized weighted cost of capital.

MGE maintains responsibility for collecting and remitting loan payments from customers to the financial institution and does not retain any interest in the assets sold to the financial institution.

MGE would be required to perform under its guarantee if a customer defaulted on its loan. The energy-related equipment installed at the customer sites is used to secure the customer loans. The loan balances outstanding at December 31,2014, approximate the fair value of the energy-related equipment acting as collateral. The length of the MGE guarantee to the financial institution varies from one to ten years depending on the term of the underlying customer loan.

Adoption of Accounting Principles and Recently Issued Accounting Pronouncements

New Accounting Pronouncements

Adoption of Accounting Principles and Recently Issued Accounting Pronouncements - MGE Energy and MGE.

a.Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date.

In February 2013, the FASB issued authoritative guidance within the Codification's Balance Sheet topic that provides guidance on the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date. This authoritative guidance became effective January 1, 2014. The authoritative guidance did not have a financial or disclosure impact.

b.Presentation of an Unrecognized Tax Benefit.

In July 2013, the FASB issued authoritative guidance within the Codification's Income Statement topic that provides guidance on the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The authoritative guidance was issued to eliminate diversity in practice by providing guidance on the presentation of unrecognized tax benefits. This authoritative guidance became effective January 1, 2014. The authoritative guidance will not have a financial statement or disclosure impact, unless MGE Energy or its subsidiaries are in a net operating loss position. MGE Energy or its subsidiaries are currently not in a net operating loss position.

c.Revenue from Contracts with Customers.

In May 2014, the FASB issued authoritative guidance within the Codification's Revenue Recognition topic that provides guidance on the recognition, measurement, and disclosure of revenue from contracts with customers. This authoritative guidance will become effective January 1, 2017. MGE Energy and MGE are currently assessing the impact this pronouncement will have on their financial statements.

d.Transfers and Servicing Assets.

In June 2014, the FASB issued authoritative guidance within the Codification's Transfers and Servicing topic that provides guidance on the accounting and disclosures for repurchase-to-maturity transactions, securities lending transactions, and repurchase financings. This authoritative guidance is effective January 1, 2015. The authoritative guidance will change the accounting for the Chattel Paper program. Prior to adoption of the standard, Chattel Paper was treated as an off-balance sheet arrangement. Upon adoption, assets and liabilities will increase approximately $4.4 million and additional disclosures will be required. The cumulative impact of this guidance on our financial statements is not expected to be material.

Segment Information

Segment Information

Segment Information - MGE Energy and MGE.

The electric utility business purchases, generates and distributes electricity, and contracts for transmission service. The gas utility business purchases and distributes natural gas and contracts for the transportation of natural gas. Both the electric and gas segments operate through MGE Energy's principal subsidiary, MGE.

The nonregulated energy operations are conducted through MGE Energy's subsidiaries: MGE Power, MGE Power Elm Road, and MGE Power West Campus. These subsidiaries own and lease electric generating capacity to assist MGE. MGE Power Elm Road has an ownership interest in two coal-fired generating units in Oak Creek, Wisconsin, which are leased to MGE, and MGE Power West Campus owns a controlling interest in the electric generation plant of a natural gas-fired cogeneration facility on the UW campus. MGE Power West Campus’s portion is also leased to MGE.

The transmission investment segment invests, through MGE Transco, in ATC, a company that provides electric transmission services primarily in Wisconsin. See Footnote 4 for further discussion of MGE Transco and the investment in ATC.

The "All Others" segment includes: corporate, CWDC, MAGAEL, MGE State Energy Services, and NGV Fueling Services. These entities' operations consist of investing in companies and property which relate to the regulated operations, financing the regulated operations, or owning and operating natural gas compression equipment.

General corporate expenses include the cost of executive management, corporate accounting and finance, information technology, risk management, human resources and legal functions, and employee benefits that are allocated to electric and gas segments based on formulas prescribed by the PSCW. Identifiable assets are those used in MGE's operations in each segment. Assets not allocated consist primarily of cash and cash equivalents, restricted cash, investments, other accounts receivable, and prepaid assets.

Sales between our electric and gas segments are based on PSCW approved tariffed rates. Additionally, intersegment operations related to the leasing arrangement between our electric segment and MGE Power Elm Road/MGE Power West Campus are based on terms previously approved by the PSCW. Consistent with internal reporting, management has presented the direct financing capital leases between MGE and MGE Power Elm Road/MGE Power West Campus based on actual lease payments included in rates. Lease payments made by MGE to MGE PowerElm Roadand MGE Power West Campusare shown as operating expenses. The lease payments received by MGE PowerElm Roadand MGE Power West Campusfrom MGE are shown as lease income in interdepartmental revenues. The depreciation expense associated with the Elm Road Unitsand WCCF is reflected in the nonregulated energy segment.

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Share-Based Compensation (Tables) (Performance Units [Member])

12 Months Ended

Dec. 31, 2014

Performance Unit Plan [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Performance Unit Graded Vesting Schedule

Under MGE Energy’s Performance Unit Plan, eligible employees may receive performance units that entitle the holder to receive a cash payment equal to the value of a designated number of shares of MGE Energy's common stock, plus dividend equivalent payments thereon, at the end of the set performance period. In accordance with the plan’s provisions, these awards are subject to a prescribed vesting schedule and must be settled in cash. Accordingly, no shares of common stock will be issued in connection with the plan.

On the grant date, MGE Energy and MGE measure the cost of the employee services received in exchange for a performance unit award based on the current market value of MGE Energy common stock. The fair value of the awards is re-measured quarterly, including at December 31,2014, as required by applicable accounting standards. Changes in fair value as well as the original grant are recognized as compensation cost. Since this amount is re-measured throughout the vesting period, the compensation cost is subject to variability. These units are subject to a five year graded vesting schedule.

Grant Date	MGE Energy Units Granted
February 20, 2015	18,948
February 21, 2014	21,991
February 15, 2013	22,884
February 17, 2012	25,040
January 21, 2011	23,483

Director Incentive Agreement [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Performance Unit Graded Vesting Schedule

In December 2013, aDirector Incentive Plan was approved for the non-employee members of the Board of Directors. This plan is similar to MGE Energy’s Performance Unit Plan for eligible employees described above. Under the plan, a non-employee director can receive performance units that entitle the holder to receive a cash payment equal to the value of a designated number of shares of MGE Energy’s common stock, plus dividend payments, at the end of the set performance period. The units are subject to a three year graded vesting schedule.

Grant Date	MGE Energy Units Granted
January 16, 2015	3,794
January 17, 2014	4,683

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Fair Value of Financial Instruments (Details-2) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Assets:
Available-for-sale securities	$ 2,729		$ 2,365
Derivative asset, collateral offset			200
Liabilities:
Derivative liability, collateral offset	2,200
Recurring [Member]
Assets:
Derivative assets, net	642		1,787	[1]
Total Assets	1,569		2,579
Liabilities:
Derivative liabilities, net	55,640	[1]	65,680
Deferred compensation	2,832		2,364
Total Liabilities	58,472		68,044
Recurring [Member] | Exchange-traded investments
Assets:
Available-for-sale securities	927		792
Recurring [Member] | Level 1 [Member]
Assets:
Derivative assets, net	0		735	[1]
Total Assets	927		1,527
Liabilities:
Derivative liabilities, net	1,012	[1]	0
Deferred compensation	0		0
Total Liabilities	1,012		0
Recurring [Member] | Level 1 [Member] | Exchange-traded investments
Assets:
Available-for-sale securities	927		792
Recurring [Member] | Level 2 [Member]
Assets:
Derivative assets, net	0		0	[1]
Total Assets	0		0
Liabilities:
Derivative liabilities, net	0	[1]	0
Deferred compensation	2,832		2,364
Total Liabilities	2,832		2,364
Recurring [Member] | Level 2 [Member] | Exchange-traded investments
Assets:
Available-for-sale securities	0		0
Recurring [Member] | Level 3 [Member]
Assets:
Derivative assets, net	642		1,052	[1]
Total Assets	642		1,052
Liabilities:
Derivative liabilities, net	54,628	[1]	65,680
Deferred compensation	0		0
Total Liabilities	54,628		65,680
Recurring [Member] | Level 3 [Member] | Exchange-traded investments
Assets:
Available-for-sale securities	0		0
MGE [Member]
Assets:
Available-for-sale securities	729		811
Derivative asset, collateral offset			200
Liabilities:
Derivative liability, collateral offset	2,200
MGE [Member] | Recurring [Member]
Assets:
Derivative assets, net	642		1,787	[1]
Total Assets	992		2,218
Liabilities:
Derivative liabilities, net	55,640	[1]	65,680
Deferred compensation	2,832		2,364
Total Liabilities	58,472		68,044
MGE [Member] | Recurring [Member] | Exchange-traded investments
Assets:
Available-for-sale securities	350		431
MGE [Member] | Recurring [Member] | Level 1 [Member]
Assets:
Derivative assets, net	0		735	[1]
Total Assets	350		1,166
Liabilities:
Derivative liabilities, net	1,012	[1]	0
Deferred compensation	0		0
Total Liabilities	1,012		0
MGE [Member] | Recurring [Member] | Level 1 [Member] | Exchange-traded investments
Assets:
Available-for-sale securities	350		431
MGE [Member] | Recurring [Member] | Level 2 [Member]
Assets:
Derivative assets, net	0		0	[1]
Total Assets	0		0
Liabilities:
Derivative liabilities, net	0	[1]	0
Deferred compensation	2,832		2,364
Total Liabilities	2,832		2,364
MGE [Member] | Recurring [Member] | Level 2 [Member] | Exchange-traded investments
Assets:
Available-for-sale securities	0		0
MGE [Member] | Recurring [Member] | Level 3 [Member]
Assets:
Derivative assets, net	642		1,052	[1]
Total Assets	642		1,052
Liabilities:
Derivative liabilities, net	54,628	[1]	65,680
Deferred compensation	0		0
Total Liabilities	54,628		65,680
MGE [Member] | Recurring [Member] | Level 3 [Member] | Exchange-traded investments
Assets:
Available-for-sale securities	$ 0		$ 0

[1] These amounts are shown gross and exclude $2.2 and $0.2 million of collateral that was posted against derivative positions with counterparties as of December 31, 2014 and 2013, respectively.

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MGE Energy Inc Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Operating Revenues:
Regulated electric revenues	$ 394,849	$ 403,957	$ 392,365
Regulated gas revenues	221,720	181,462	139,727
Nonregulated revenues	3,283	5,468	9,231
Total Operating Revenues	619,852	590,887	541,323
Operating Expenses:
Fuel for electric generation	42,828	46,062	46,499
Purchased power	73,232	80,830	73,842
Cost of gas sold	143,644	107,315	78,156
Other operations and maintenance	161,703	171,248	172,996
Depreciation and amortization	40,695	38,838	38,707
Other general taxes	19,652	18,607	18,360
Total Operating Expenses	481,754	462,900	428,560
Operating Income (Loss)	138,098	127,987	112,763
Other income, net	10,079	10,701	10,069
Interest expense, net	(19,673)	(18,924)	(19,467)
Income before income taxes	128,504	119,764	103,365
Income tax provision	(48,185)	(44,859)	(38,919)
Net Income	$ 80,319	$ 74,905	$ 64,446
Earnings Per Share of Common Stock (basic and diluted)	$ 2.32	$ 2.16	$ 1.86
Dividends per share of common stock	$ 1.11	$ 1.07	$ 1.04
Weighted Average Shares Outstanding (basic and diluted)	34,668	34,668	34,668

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Joint Plant Ownership (Tables)

12 Months Ended

Dec. 31, 2014

Columbia Units [Member]

Jointly Owned Utility Plant Interests [Line Items]

Schedule of Joint Plant Ownership

MGE's interest in Columbia, included in its gross utility plant in service, and the related accumulated depreciation reserves at December 31 were as follows:

(In thousands)		2014		2013
Utility plant	$	268,597	$	123,097
Accumulated depreciation		(80,645)		(78,880)
Property, plant, and equipment, net	$	187,952	$	44,217
Construction work in progress		6,941		120,858
Total property, plant, and equipment	$	194,893	$	165,075

Elm Road Units [Member]

Jointly Owned Utility Plant Interests [Line Items]

Schedule of Joint Plant Ownership

MGE Power Elm Road’s interest in the portion of the Elm Road Units in-service and the related accumulated depreciation reserves at December 31 were as follows:

(In thousands)		2014		2013
Nonregulated plant	$	199,582	$	198,198
Accumulated depreciation		(19,962)		(15,541)
Property, plant, and equipment, net	$	179,620	$	182,657
Construction work in progress		1,976		1,115
Total property, plant, and equipment	$	181,596	$	183,772

West Campus [Member]

Jointly Owned Utility Plant Interests [Line Items]

Schedule of Joint Plant Ownership

MGE Power West Campus' interest in WCCF and the related accumulated depreciation reserves at December 31 were as follows:

(In thousands)		2014		2013
Nonregulated plant	$	111,453	$	111,268
Accumulated depreciation		(24,691)		(21,704)
Property, plant, and equipment, net	$	86,762	$	89,564

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Asset Retirement Obligations (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Asset Retirement Obligations [Roll Forward]
Asset retirement obligation, beginning balance	$ 19,359	$ 18,768
Liabilities incurred	68	296
Accretion expense	1,077	1,015
Liabilities settled	(343)	(744)
Revisions in estimated cash flows	(417)	24
Asset retirement obligation, ending balance	$ 19,744	$ 19,359

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Consolidated Statements of Comprehensive Income (Parentheticals) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Unrealized gain (loss) on available-for-sale securities, taxes	$ 54	$ 189	$ (12)
MGE [Member]
Unrealized gain (loss) on available-for-sale securities, taxes	$ (33)	$ 126	$ (29)

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Commitments and Contingencies (Details-4) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
Columbia Units [Member]
Columbia
Envrionmental civil penalty expense	$ 0.2
Accrual for future environmental mitigation projects	$ 0.6
Wisconsin Energy Efficiency and Renewables Act [Member]
Energy Efficiency and Renewables
Minimum electricity generated from renewable resources by 2015	10.00%
Environmental Protection Agency [Member]
EPA's Greenhouse Gas Reduction Guidelines
National average reduction of greenhouse gas emissions by the year 2030, percentage	30.00%
Wisconsin state average reduction goal of greenhouse gas emissions by the year 2030, percentage	34.00%
Compliance plan preparation term related to the greenhouse gas emissions reduction guidelines once the final rule is approved in 2015	2 years
EPA's National Ambient Air Quality Standards
Number of pollutants monitored by the National Ambient Air Quality Standards	6
Proposed lowered regulated level of Ozone NAAQS, minimum (in parts per billion)	65
Proposed lowered regulated level of Ozone NAAQS, maximum (in parts per billion)	70
Current regulated level of Ozone NAAQS (in parts per billion)	75
Proposed lowered regulated level of Ozone NAAQS, potential additional minimum (in parts per billion)	60
EPA's Cross State Air Pollution Rule
Number of eastern states identified contributing to pollution in other states	27
Number of phases for allocation of NOx and SO2 allowances to qualifying power plants under the rule	2
EPA's Coal Combustion Residuals Rule
Timeframe allowed to meet various compliance parameters, minimum	18 months
Timeframe allowed to meet various compliance parameters, maximum	5 years

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Summary of Significant Accounting Policies (Details) (USD $)	12 Months Ended
	Dec. 31, 2014 sqmi	Dec. 31, 2013	Dec. 31, 2012
Receivable - Margin Account [Abstract]
Receivable, margin account balance, net of collateral posted against derivative positions	$ 2,200,000	$ 500,000
Derivative liability, collateral offset	2,200,000
Derivative asset, collateral offset		200,000
Trade Receivables, Allowance for Doubtful Accounts, and Concentration Risk
Late payment charge on upaid receivables	1.00%
Electric territory (in square miles)	316
Gas territory (in square miles)	1,678
Inventories
Emissions allowance included in inventory	100,000	100,000
Renewable energy credit allowance included in inventory	800,000	600,000
Purchased Gas Adjustment Clause
Purchased gas adjustment, over (under) collected	1,200,000	1,700,000
Capitalized Software Costs
Capitalized software	8,400,000	9,000,000
Capitalized software amortization	1,600,000	1,500,000	1,300,000
Impairment of Long-Lived Assets
Impairment of long-lived assets	0	0	0
Excise taxes
License fee tax rate, electric, retail sales	3.19%
License fee tax rate, electric, resale by purchaser	1.59%
License fee tax rate, natural gas	0.97%
License fee tax expense	$ 14,600,000	$ 13,800,000	$ 13,500,000
Treasury Stock
Treasury stock outstanding (in shares)	0	0
Minimum [Member] | Capitalized Software [Member]
Capitalized Software Costs
Property, plant, and equipment, useful life	5 years
Maximum [Member] | Capitalized Software [Member]
Capitalized Software Costs
Property, plant, and equipment, useful life	10 years
PSCW [Member]
Allowance for Funds Used During Construction
Authorized AFUDC rate	50.00%	50.00%	50.00%
Rate at which AFUDC was capitalized	8.21%	8.21%	8.36%
Columbia Environmental Project [Member] | PSCW [Member]
Allowance for Funds Used During Construction
Authorized AFUDC rate	100.00%	50.00%	100.00%
Electric [Member]
Property, Plant, and Equiptment
Composite straight-line depreciation rates	2.60%	2.70%	2.90%
Gas [Member]
Property, Plant, and Equiptment
Composite straight-line depreciation rates	1.70%	1.70%	1.70%
Non Regulated Energy [Member]
Property, Plant, and Equiptment
Composite straight-line depreciation rates	2.40%	2.30%	2.30%
MGE Power Elm Road [Member]
Principles of Consolidation
Ownership percentage by parent	100.00%
MGE Power West Campus [Member]
Principles of Consolidation
Ownership percentage by parent	100.00%

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Segment Reporting Information [Line Items]
Operating revenues	$ 145,707	$ 135,135	$ 128,765	$ 210,245	$ 155,263	$ 140,099	$ 128,288	$ 167,237	$ 619,852		$ 590,887		$ 541,323
Depreciation and amortization									(40,695)		(38,838)		(38,707)
Other operating expenses									(441,059)		(424,062)		(389,853)
Operating Income (Loss)	29,566	40,120	24,441	43,971	25,962	39,900	24,497	37,628	138,098		127,987		112,763
Other (deductions) income, net									10,079		10,701		10,069
Interest (expense) income, net									(19,673)		(18,924)		(19,467)
Income before income taxes									128,504		119,764		103,365
Income tax (provision) benefit	(8,600)	(14,286)	(9,034)	(16,265)	(7,829)	(14,692)	(8,660)	(13,678)	(48,185)		(44,859)		(38,919)
Net Income	15,186	23,329	14,087	27,717	14,077	24,353	13,891	22,584	80,319		74,905		64,446
Segment Reporting Information Assets And Capital Expenditures [Abstract]
Assets	1,697,666				1,579,060				1,697,666		1,579,060		1,586,924
Capital expenditures									92,676		119,047		98,435
Electric [Member]
Segment Reporting Information [Line Items]
Operating revenues									394,849		403,957		392,365
Gas [Member]
Segment Reporting Information [Line Items]
Operating revenues									221,720		181,462		139,727
Non Regulated Energy [Member]
Segment Reporting Information [Line Items]
Operating revenues									3,283		5,468		9,231
Transmission Investment [Member]
Segment Reporting Information [Line Items]
Operating revenues									0		0		0
All Others [Member]
Segment Reporting Information [Line Items]
Operating revenues									0		0		0
Operating Segments [Member]
Segment Reporting Information [Line Items]
Operating revenues									619,852		590,887		541,323
Operating Segments [Member] | Electric [Member]
Segment Reporting Information [Line Items]
Operating revenues									395,358		404,494		392,852
Depreciation and amortization									(26,933)		(25,780)		(26,031)
Other operating expenses									(297,409)		(316,277)		(300,149)
Operating Income (Loss)									71,016		62,437		66,672
Other (deductions) income, net									2,847		3,062		1,145
Interest (expense) income, net									(10,410)		(9,645)		(10,189)
Income before income taxes									63,453		55,854		57,628
Income tax (provision) benefit									(22,070)		(19,176)		(20,906)
Net Income									41,383		36,678		36,722
Segment Reporting Information Assets And Capital Expenditures [Abstract]
Assets	948,241				899,257				948,241		899,257		888,444
Capital expenditures									68,067		100,146		81,965
Operating Segments [Member] | Gas [Member]
Segment Reporting Information [Line Items]
Operating revenues									230,086		194,091		152,541
Depreciation and amortization									(6,308)		(5,898)		(5,569)
Other operating expenses									(194,203)		(162,661)		(136,567)
Operating Income (Loss)									29,575		25,532		10,405
Other (deductions) income, net									(86)		59		323
Interest (expense) income, net									(3,229)		(2,986)		(2,874)
Income before income taxes									26,260		22,605		7,854
Income tax (provision) benefit									(10,480)		(9,168)		(2,769)
Net Income									15,780		13,437		5,085
Segment Reporting Information Assets And Capital Expenditures [Abstract]
Assets	308,499				265,694				308,499		265,694		285,468
Capital expenditures									22,104		15,554		13,812
Operating Segments [Member] | Non Regulated Energy [Member]
Segment Reporting Information [Line Items]
Operating revenues									45,975		48,059		43,945
Depreciation and amortization									(7,407)		(7,156)		(7,107)
Other operating expenses									(139)		(128)		(121)
Operating Income (Loss)									38,429		40,775		36,717
Other (deductions) income, net									0		0		0
Interest (expense) income, net									(6,208)		(6,400)		(6,537)
Income before income taxes									32,221		34,375		30,180
Income tax (provision) benefit									(12,932)		(13,682)		(12,113)
Net Income									19,289		20,693		18,067
Segment Reporting Information Assets And Capital Expenditures [Abstract]
Assets	281,410				288,116				281,410		288,116		323,216
Capital expenditures									2,505		3,347		2,658
Operating Segments [Member] | Transmission Investment [Member]
Segment Reporting Information [Line Items]
Operating revenues									0		0		0
Depreciation and amortization									0		0		0
Other operating expenses									0		(1)		0
Operating Income (Loss)									0		(1)		0
Other (deductions) income, net									9,150		9,434		9,080
Interest (expense) income, net									0		0		0
Income before income taxes									9,150		9,433		9,080
Income tax (provision) benefit									(3,664)		(3,796)		(3,648)
Net Income									5,486		5,637		5,432
Segment Reporting Information Assets And Capital Expenditures [Abstract]
Assets	67,697				64,504				67,697		64,504		61,064
Capital expenditures									0		0		0
Operating Segments [Member] | All Others [Member]
Segment Reporting Information [Line Items]
Operating revenues									0		0		0
Depreciation and amortization									(47)		(4)		0
Other operating expenses									(875)		(752)		(1,031)
Operating Income (Loss)									(922)		(756)		(1,031)
Other (deductions) income, net									(1,832)		(1,854)		(479)
Interest (expense) income, net									174		107		133
Income before income taxes									(2,580)		(2,503)		(1,377)
Income tax (provision) benefit									961		963		517
Net Income									(1,619)		(1,540)		(860)
Segment Reporting Information Assets And Capital Expenditures [Abstract]
Assets	441,109				431,436				441,109		431,436		413,291
Capital expenditures									0		0		0
Operating Segments [Member] | Assets Not Allocated [Member]
Segment Reporting Information Assets And Capital Expenditures [Abstract]
Assets	41,346				19,853				41,346		19,853		18,559
Capital expenditures									0		0		0
Consolidation/Elimination Entries [Member]
Segment Reporting Information [Line Items]
Operating revenues									(51,567)		(55,757)		(48,015)
Depreciation and amortization									0		0		0
Other operating expenses									51,567		55,757		48,015
Operating Income (Loss)									0		0		0
Other (deductions) income, net									0		0		0
Interest (expense) income, net									0		0		0
Income before income taxes									0		0		0
Income tax (provision) benefit									0		0		0
Net Income									0		0		0
Segment Reporting Information Assets And Capital Expenditures [Abstract]
Assets	(390,636)				(389,800)				(390,636)		(389,800)		(403,118)
Capital expenditures									0		0		0
Consolidation/Elimination Entries [Member] | Electric [Member]
Segment Reporting Information [Line Items]
Operating revenues									509		537		487
Consolidation/Elimination Entries [Member] | Gas [Member]
Segment Reporting Information [Line Items]
Operating revenues									8,366		12,629		12,814
Consolidation/Elimination Entries [Member] | Non Regulated Energy [Member]
Segment Reporting Information [Line Items]
Operating revenues									42,692		42,591		34,714
Consolidation/Elimination Entries [Member] | Transmission Investment [Member]
Segment Reporting Information [Line Items]
Operating revenues									0		0		0
Consolidation/Elimination Entries [Member] | All Others [Member]
Segment Reporting Information [Line Items]
Operating revenues									0		0		0
MGE [Member]
Segment Reporting Information [Line Items]
Operating revenues									619,895		590,925		541,323
Depreciation and amortization									(40,648)		(38,834)		(38,707)
Other operating expenses									(485,319)	[1]	(464,868)	[1]	(424,156)	[1]
Operating Income (Loss)									93,928	[1]	87,223	[1]	78,460	[1]
Other (deductions) income, net									7,857	[1]	8,253	[1]	6,446	[1]
Interest (expense) income, net									(19,847)		(19,031)		(19,600)
Income tax (provision) benefit									(49,145)		(45,822)		(39,435)
Net Income Including Noncontrolling Interest									81,938		76,445		65,306
Less Net Income Attributable to Noncontrolling Interest, net of tax									(26,310)		(27,438)		(24,489)
Net Income									55,628		49,007		40,817
Segment Reporting Information Assets And Capital Expenditures [Abstract]
Assets	1,640,622				1,530,643				1,640,622		1,530,643		1,553,651
Capital expenditures									92,676		119,047		98,435
MGE [Member] | Electric [Member]
Segment Reporting Information [Line Items]
Operating revenues									394,871		403,980		392,365
MGE [Member] | Gas [Member]
Segment Reporting Information [Line Items]
Operating revenues									221,741		181,477		139,727
MGE [Member] | Non Regulated Energy [Member]
Segment Reporting Information [Line Items]
Operating revenues									3,283		5,468		9,231
MGE [Member] | Transmission Investment [Member]
Segment Reporting Information [Line Items]
Operating revenues									0		0		0
MGE [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Operating revenues									619,895		590,925		541,323
MGE [Member] | Operating Segments [Member] | Electric [Member]
Segment Reporting Information [Line Items]
Operating revenues									395,358		404,494		392,852
Depreciation and amortization									(26,933)		(25,780)		(26,031)
Other operating expenses									(319,175)	[1]	(335,059)	[1]	(320,701)	[1]
Operating Income (Loss)									49,250	[1]	43,655	[1]	46,120	[1]
Other (deductions) income, net									2,543	[1]	2,668	[1]	791	[1]
Interest (expense) income, net									(10,410)		(9,645)		(10,189)
Net Income Including Noncontrolling Interest									41,383		36,678		36,722
Less Net Income Attributable to Noncontrolling Interest, net of tax									0		0		0
Net Income									41,383		36,678		36,722
Segment Reporting Information Assets And Capital Expenditures [Abstract]
Assets	948,241				899,257				948,241		899,257		888,444
Capital expenditures									68,067		100,146		81,965
MGE [Member] | Operating Segments [Member] | Gas [Member]
Segment Reporting Information [Line Items]
Operating revenues									230,086		194,091		152,541
Depreciation and amortization									(6,308)		(5,898)		(5,569)
Other operating expenses									(204,597)	[1]	(171,717)	[1]	(139,236)	[1]
Operating Income (Loss)									19,181	[1]	16,476	[1]	7,736	[1]
Other (deductions) income, net									(172)	[1]	(53)	[1]	223	[1]
Interest (expense) income, net									(3,229)		(2,986)		(2,874)
Net Income Including Noncontrolling Interest									15,780		13,437		5,085
Less Net Income Attributable to Noncontrolling Interest, net of tax									0		0		0
Net Income									15,780		13,437		5,085
Segment Reporting Information Assets And Capital Expenditures [Abstract]
Assets	308,499				265,694				308,499		265,694		285,468
Capital expenditures									22,104		15,554		13,812
MGE [Member] | Operating Segments [Member] | Non Regulated Energy [Member]
Segment Reporting Information [Line Items]
Operating revenues									45,975		48,059		43,945
Depreciation and amortization									(7,407)		(7,156)		(7,107)
Other operating expenses									(13,071)	[1]	(13,810)	[1]	(12,234)	[1]
Operating Income (Loss)									25,497	[1]	27,093	[1]	24,604	[1]
Other (deductions) income, net									0	[1]	0	[1]	0	[1]
Interest (expense) income, net									(6,208)		(6,400)		(6,537)
Net Income Including Noncontrolling Interest									19,289		20,693		18,067
Less Net Income Attributable to Noncontrolling Interest, net of tax									0		0		0
Net Income									19,289		20,693		18,067
Segment Reporting Information Assets And Capital Expenditures [Abstract]
Assets	281,360				288,066				281,360		288,066		323,166
Capital expenditures									2,505		3,347		2,658
MGE [Member] | Operating Segments [Member] | Transmission Investment [Member]
Segment Reporting Information [Line Items]
Operating revenues									0		0		0
Depreciation and amortization									0		0		0
Other operating expenses									0	[1]	(1)	[1]	0	[1]
Operating Income (Loss)									0	[1]	(1)	[1]	0	[1]
Other (deductions) income, net									5,486	[1]	5,638	[1]	5,432	[1]
Interest (expense) income, net									0		0		0
Net Income Including Noncontrolling Interest									5,486		5,637		5,432
Less Net Income Attributable to Noncontrolling Interest, net of tax									0		0		0
Net Income									5,486		5,637		5,432
Segment Reporting Information Assets And Capital Expenditures [Abstract]
Assets	67,697				64,504				67,697		64,504		61,064
Capital expenditures									0		0		0
MGE [Member] | Operating Segments [Member] | Assets Not Allocated [Member]
Segment Reporting Information Assets And Capital Expenditures [Abstract]
Assets	41,346				19,853				41,346		19,853		18,559
Capital expenditures									0		0		0
MGE [Member] | Consolidation/Elimination Entries [Member]
Segment Reporting Information [Line Items]
Operating revenues									(51,524)		(55,719)		(48,015)
Depreciation and amortization									0		0		0
Other operating expenses									51,524	[1]	55,719	[1]	48,015	[1]
Operating Income (Loss)									0	[1]	0	[1]	0	[1]
Other (deductions) income, net									0	[1]	0	[1]	0	[1]
Interest (expense) income, net									0		0		0
Net Income Including Noncontrolling Interest									0		0		0
Less Net Income Attributable to Noncontrolling Interest, net of tax									(26,310)		(27,438)		(24,489)
Net Income									(26,310)		(27,438)		(24,489)
Segment Reporting Information Assets And Capital Expenditures [Abstract]
Assets	(6,521)				(6,731)				(6,521)		(6,731)		(23,050)
Capital expenditures									0		0		0
MGE [Member] | Consolidation/Elimination Entries [Member] | Electric [Member]
Segment Reporting Information [Line Items]
Operating revenues									(487)		514		487
MGE [Member] | Consolidation/Elimination Entries [Member] | Gas [Member]
Segment Reporting Information [Line Items]
Operating revenues									8,345		12,614		12,814
MGE [Member] | Consolidation/Elimination Entries [Member] | Non Regulated Energy [Member]
Segment Reporting Information [Line Items]
Operating revenues									42,692		42,591		34,714
MGE [Member] | Consolidation/Elimination Entries [Member] | Transmission Investment [Member]
Segment Reporting Information [Line Items]
Operating revenues									$ 0		$ 0		$ 0

[1] *Amounts are shown net of the related tax expense, consistent with the presentation on the consolidated MGE Income Statement.

XML

Segment Information

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Segment Information

Segment Information - MGE Energy and MGE.

The electric utility business purchases, generates and distributes electricity, and contracts for transmission service. The gas utility business purchases and distributes natural gas and contracts for the transportation of natural gas. Both the electric and gas segments operate through MGE Energy's principal subsidiary, MGE.

The nonregulated energy operations are conducted through MGE Energy's subsidiaries: MGE Power, MGE Power Elm Road, and MGE Power West Campus. These subsidiaries own and lease electric generating capacity to assist MGE. MGE Power Elm Road has an ownership interest in two coal-fired generating units in Oak Creek, Wisconsin, which are leased to MGE, and MGE Power West Campus owns a controlling interest in the electric generation plant of a natural gas-fired cogeneration facility on the UW campus. MGE Power West Campus’s portion is also leased to MGE.

The transmission investment segment invests, through MGE Transco, in ATC, a company that provides electric transmission services primarily in Wisconsin. See Footnote 4 for further discussion of MGE Transco and the investment in ATC.

The "All Others" segment includes: corporate, CWDC, MAGAEL, MGE State Energy Services, and NGV Fueling Services. These entities' operations consist of investing in companies and property which relate to the regulated operations, financing the regulated operations, or owning and operating natural gas compression equipment.

General corporate expenses include the cost of executive management, corporate accounting and finance, information technology, risk management, human resources and legal functions, and employee benefits that are allocated to electric and gas segments based on formulas prescribed by the PSCW. Identifiable assets are those used in MGE's operations in each segment. Assets not allocated consist primarily of cash and cash equivalents, restricted cash, investments, other accounts receivable, and prepaid assets.

Sales between our electric and gas segments are based on PSCW approved tariffed rates. Additionally, intersegment operations related to the leasing arrangement between our electric segment and MGE Power Elm Road/MGE Power West Campus are based on terms previously approved by the PSCW. Consistent with internal reporting, management has presented the direct financing capital leases between MGE and MGE Power Elm Road/MGE Power West Campus based on actual lease payments included in rates. Lease payments made by MGE to MGE PowerElm Roadand MGE Power West Campusare shown as operating expenses. The lease payments received by MGE PowerElm Roadand MGE Power West Campusfrom MGE are shown as lease income in interdepartmental revenues. The depreciation expense associated with the Elm Road Unitsand WCCF is reflected in the nonregulated energy segment.

The following table shows segment information for MGE Energy's and MGE's operations:

(In thousands)MGE Energy		Electric		Gas		Non-Regulated Energy		Transmission Investment		All Others		Consolidation/ Elimination Entries		Consolidated Total
Year Ended December 31, 2014
Operating revenues	$	394,849	$	221,720	$	3,283	$	-	$	-	$	-	$	619,852
Interdepartmental revenues		509		8,366		42,692		-		-		(51,567)		-
Total operating revenues		395,358		230,086		45,975		-		-		(51,567)		619,852
Depreciation and amortization		(26,933)		(6,308)		(7,407)		-		(47)		-		(40,695)
Other operating expenses		(297,409)		(194,203)		(139)		-		(875)		51,567		(441,059)
Operating income (loss)		71,016		29,575		38,429		-		(922)		-		138,098
Other (deductions) income, net		2,847		(86)		-		9,150		(1,832)		-		10,079
Interest (expense) income, net		(10,410)		(3,229)		(6,208)		-		174		-		(19,673)
Income (loss) before taxes		63,453		26,260		32,221		9,150		(2,580)		-		128,504
Income tax (provision) benefit		(22,070)		(10,480)		(12,932)		(3,664)		961		-		(48,185)
Net income (loss)	$	41,383	$	15,780	$	19,289	$	5,486	$	(1,619)	$	-	$	80,319
Year Ended December 31, 2013
Operating revenues	$	403,957	$	181,462	$	5,468	$	-	$	-	$	-	$	590,887
Interdepartmental revenues		537		12,629		42,591		-		-		(55,757)		-
Total operating revenues		404,494		194,091		48,059		-		-		(55,757)		590,887
Depreciation and amortization		(25,780)		(5,898)		(7,156)		-		(4)		-		(38,838)
Other operating expenses		(316,277)		(162,661)		(128)		(1)		(752)		55,757		(424,062)
Operating income (loss)		62,437		25,532		40,775		(1)		(756)		-		127,987
Other (deductions) income, net		3,062		59		-		9,434		(1,854)		-		10,701
Interest (expense) income, net		(9,645)		(2,986)		(6,400)		-		107		-		(18,924)
Income (loss) before taxes		55,854		22,605		34,375		9,433		(2,503)		-		119,764
Income tax (provision) benefit		(19,176)		(9,168)		(13,682)		(3,796)		963		-		(44,859)
Net income (loss)	$	36,678	$	13,437	$	20,693	$	5,637	$	(1,540)	$	-	$	74,905
Year Ended December 31, 2012
Operating revenues	$	392,365	$	139,727	$	9,231	$	-	$	-	$	-	$	541,323
Interdepartmental revenues		487		12,814		34,714		-		-		(48,015)		-
Total operating revenues		392,852		152,541		43,945		-		-		(48,015)		541,323
Depreciation and amortization		(26,031)		(5,569)		(7,107)		-		-		-		(38,707)
Other operating expenses		(300,149)		(136,567)		(121)		-		(1,031)		48,015		(389,853)
Operating income (loss)		66,672		10,405		36,717		-		(1,031)		-		112,763
Other (deductions) income, net		1,145		323		-		9,080		(479)		-		10,069
Interest (expense) income, net		(10,189)		(2,874)		(6,537)		-		133		-		(19,467)
Income (loss) before taxes		57,628		7,854		30,180		9,080		(1,377)		-		103,365
Income tax (provision) benefit		(20,906)		(2,769)		(12,113)		(3,648)		517		-		(38,919)
Net income (loss)	$	36,722	$	5,085	$	18,067	$	5,432	$	(860)	$	-	$	64,446

(In thousands)MGE		Electric		Gas		Non-Regulated Energy		Transmission Investment		Consolidation/ Elimination Entries		Consolidated Total
Year Ended December 31, 2014
Operating revenues	$	394,871	$	221,741	$	3,283	$	-	$	-	$	619,895
Interdepartmental revenues		487		8,345		42,692		-		(51,524)		-
Total operating revenues		395,358		230,086		45,975		-		(51,524)		619,895
Depreciation and amortization		(26,933)		(6,308)		(7,407)		-		-		(40,648)
Other operating expenses*		(319,175)		(204,597)		(13,071)		-		51,524		(485,319)
Operating income*		49,250		19,181		25,497		-		-		93,928
Other (deductions) income, net*		2,543		(172)		-		5,486		-		7,857
Interest expense, net		(10,410)		(3,229)		(6,208)		-		-		(19,847)
Net income		41,383		15,780		19,289		5,486		-		81,938
Less: Net income attributable to
noncontrolling interest, net of tax		-		-		-		-		(26,310)		(26,310)
Net income attributable to MGE	$	41,383	$	15,780	$	19,289	$	5,486	$	(26,310)	$	55,628
Year Ended December 31, 2013
Operating revenues	$	403,980	$	181,477	$	5,468	$	-	$	-	$	590,925
Interdepartmental revenues		514		12,614		42,591		-		(55,719)		-
Total operating revenues		404,494		194,091		48,059		-		(55,719)		590,925
Depreciation and amortization		(25,780)		(5,898)		(7,156)		-		-		(38,834)
Other operating expenses*		(335,059)		(171,717)		(13,810)		(1)		55,719		(464,868)
Operating income (loss)*		43,655		16,476		27,093		(1)		-		87,223
Other (deductions) income, net*		2,668		(53)		-		5,638		-		8,253
Interest expense, net		(9,645)		(2,986)		(6,400)		-		-		(19,031)
Net income		36,678		13,437		20,693		5,637		-		76,445
Less: net income attributable to
noncontrolling interest, net of tax		-		-		-		-		(27,438)		(27,438)
Net income attributable to MGE	$	36,678	$	13,437	$	20,693	$	5,637	$	(27,438)	$	49,007
Year Ended December 31, 2012
Operating revenues	$	392,365	$	139,727	$	9,231	$	-	$	-	$	541,323
Interdepartmental revenues		487		12,814		34,714		-		(48,015)		-
Total operating revenues		392,852		152,541		43,945		-		(48,015)		541,323
Depreciation and amortization		(26,031)		(5,569)		(7,107)		-		-		(38,707)
Other operating expenses*		(320,701)		(139,236)		(12,234)		-		48,015		(424,156)
Operating income*		46,120		7,736		24,604		-		-		78,460
Other income, net*		791		223		-		5,432		-		6,446
Interest expense, net		(10,189)		(2,874)		(6,537)		-		-		(19,600)
Net income		36,722		5,085		18,067		5,432		-		65,306
Less: Net income attributable to
noncontrolling interest, net of tax		-		-		-		-		(24,489)		(24,489)
Net income attributable to MGE	$	36,722	$	5,085	$	18,067	$	5,432	$	(24,489)	$	40,817
*Amounts are shown net of the related tax expense, consistent with the presentation on the consolidated MGE Income Statement.

The following table shows segment information for MGE Energy's and MGE's assets and capital expenditures:
		Utility						Consolidated
(In thousands) MGE Energy		Electric		Gas		Assetsnot Allocated		Nonregulated Energy		Transmission Investment		All Others		Consolidation/ Elimination Entries		Total
Assets:
December 31, 2014	$	948,241	$	308,499	$	41,346	$	281,410	$	67,697	$	441,109	$	(390,636)	$	1,697,666
December 31, 2013		899,257		265,694		19,853		288,116		64,504		431,436		(389,800)		1,579,060
December 31, 2012		888,444		285,468		18,559		323,216		61,064		413,291		(403,118)		1,586,924
Capital Expenditures:
Year ended Dec. 31, 2014	$	68,067	$	22,104	$	-	$	2,505	$	-	$	-	$	-	$	92,676
Year ended Dec. 31, 2013		100,146		15,554		-		3,347		-		-		-		119,047
Year ended Dec. 31, 2012		81,965		13,812		-		2,658		-		-		-		98,435

		Utility						Consolidated
(In thousands)MGE		Electric		Gas		Assetsnot Allocated		Nonregulated Energy		Transmission Investment		Consolidation/ Elimination Entries		Total
Assets:
December 31, 2014	$	948,241	$	308,499	$	41,346	$	281,360	$	67,697	$	(6,521)	$	1,640,622
December 31, 2013		899,257		265,694		19,853		288,066		64,504		(6,731)		1,530,643
December 31, 2012		888,444		285,468		18,559		323,166		61,064		(23,050)		1,553,651
Capital Expenditures:
Year ended Dec. 31, 2014	$	68,067	$	22,104	$	-	$	2,505	$	-	$	-	$	92,676
Year ended Dec. 31, 2013		100,146		15,554		-		3,347		-		-		119,047
Year ended Dec. 31, 2012		81,965		13,812		-		2,658		-		-		98,435

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Joint Plant Ownership (Details) (USD $)	12 Months Ended
	Dec. 31, 2014 MW	Dec. 31, 2013	Dec. 31, 2012
Columbia Units [Member]
Jointly Owned Plants, Net Plant Ownership [Abstract]
Plant	$ 268,597,000	$ 123,097,000
Accumulated depreciation	(80,645,000)	(78,880,000)
Property, plant, and equipment, net	187,952,000	44,217,000
Construction work in progress	6,941,000	120,858,000
Total property, plant, and equipment	194,893,000	165,075,000
Columbia Units [Member] | MGE [Member]
Jointly Owned Utility Plant Interests [Line Items]
Jointly owned utility plant, proportion of total net summer generating capability	31.00%
Jointly owned utility plant, plant capacity (in MW)	239
Jointly owned utility plant, ownership interest	22.00%
Jointly owned utility plant, fuel, operating, and maintenance expense	28,100,000	37,500,000	36,300,000
Elm Road Units [Member] | MGE [Member]
Jointly Owned Utility Plant Interests [Line Items]
Jointly owned utility plant, fuel, operating, and maintenance expense	20,300,000	13,400,000	13,200,000
Elm Road Units [Member] | MGE Power Elm Road [Member]
Jointly Owned Utility Plant Interests [Line Items]
Jointly owned utility plant, proportion of total net summer generating capability	14.00%
Jointly owned utility plant, proportion of total net summer generating capability, plant capacity (in MW)	106
Jointly owned utility plant, number of operating units	2
Jointly Owned Plants, Net Plant Ownership [Abstract]
Plant	199,582,000	198,198,000
Accumulated depreciation	(19,962,000)	(15,541,000)
Property, plant, and equipment, net	179,620,000	182,657,000
Construction work in progress	1,976,000	1,115,000
Total property, plant, and equipment	181,596,000	183,772,000
Elm Road Unit 1 [Member] | MGE Power Elm Road [Member]
Jointly Owned Utility Plant Interests [Line Items]
Jointly owned utility plant, plant capacity (in MW)	615
Jointly owned utility plant, ownership interest	8.33%
Elm Road Unit 2 [Member] | MGE Power Elm Road [Member]
Jointly Owned Utility Plant Interests [Line Items]
Jointly owned utility plant, plant capacity (in MW)	615
Jointly owned utility plant, ownership interest	8.33%
West Campus [Member] | UW [Member]
Jointly Owned Utility Plant Interests [Line Items]
Jointly owned utility plant, ownership interest	45.00%
Jointly owned utility plant, fuel, operating, and maintenance expense	2,800,000	4,900,000	4,900,000
West Campus [Member] | MGE Power West Campus [Member]
Jointly Owned Utility Plant Interests [Line Items]
Jointly owned utility plant, ownership interest	55.00%
Jointly Owned Plants, Net Plant Ownership [Abstract]
Plant	111,453,000	111,268,000
Accumulated depreciation	(24,691,000)	(21,704,000)
Property, plant, and equipment, net	$ 86,762,000	$ 89,564,000

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Long-Term Debt

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt- MGE Energy and MGE.

a.Long-Term Debt.

		2014				2013
(In thousands)		MGE Energy		MGE		MGE Energy		MGE
First Mortgage Bonds: (a)
7.70%, 2028 Series	$	1,200	$	1,200	$	1,200	$	1,200
Tax Exempt Debt:
3.45%, 2027 Series,
Industrial Development Revenue Bonds		19,300		19,300		19,300		19,300
Medium-Term Notes: (b)
5.25%, due 2017		30,000		30,000		30,000		30,000
6.12%, due 2028		20,000		20,000		20,000		20,000
7.12%, due 2032		25,000		25,000		25,000		25,000
6.247%, due 2037		25,000		25,000		25,000		25,000
Total Medium-Term Notes		100,000		100,000		100,000		100,000
Other Long-Term Debt: (c)
5.59%, due 2018 (d)		20,000		20,000		20,000		20,000
3.38%, due 2020 (d)		15,000		15,000		15,000		15,000
3.09%, due 2023 (d)		30,000		30,000		30,000		30,000
3.29%, due 2026 (d)		15,000		15,000		15,000		15,000
5.68%, due 2033 (e)		28,954		28,954		29,797		29,797
5.19%, due 2033 (e)		19,264		19,264		19,857		19,857
5.26%, due 2040 (d)		15,000		15,000		15,000		15,000
5.04%, due 2040 (f)		41,805		41,805		43,472		43,472
4.74%, due 2041 (f)		26,167		26,167		27,167		27,167
4.38%, due 2042 (d)		28,000		28,000		28,000		28,000
4.42%, due 2043 (d)		20,000		20,000		20,000		20,000
4.47%, due 2048 (d)		20,000		20,000		20,000		20,000
Total Other Long-Term Debt		279,190		279,190		283,293		283,293
Long-term debt due within one year		(4,182)		(4,182)		(4,102)		(4,102)
Unamortized discount		(252)		(252)		(277)		(277)
Total Long-Term Debt	$	395,256	$	395,256	$	399,414	$	399,414

(a)MGE's utility plant is subject to the lien of its Indenture of Mortgage and Deed of Trust, under which its first mortgage bonds are issued. The Mortgage Indenture provides that dividends or any other distribution or purchase of shares may not be made if the aggregate amount thereof since December 31, 1945 would exceed the earned surplus (retained earnings) accumulated subsequent to December 31, 1945. As of December 31,2014, approximately $334.8 million was available for the payment of dividends under this covenant.

(b)The indenture under which MGE's Medium-Term notes are issued provides that those notes will be entitled to be equally and ratably secured in the event that MGE issues any additional first mortgage bonds.

(c)Unsecured notes issued pursuant to various Note Purchase Agreements with one or more purchasers. The notes are not issued under, or governed by, MGE’s Indenture dated as of September 1, 1998, which governs MGE’s Medium-Term Notes.

(d)Issued by MGE. Under that Note Purchase Agreement: (i) note holders have the right to require MGE to repurchase their notes at par in the event of an acquisition of beneficial ownership of 30% or more of the outstanding voting stock of MGE Energy, (ii) MGE must maintain a ratio of its consolidated indebtedness to consolidated total capitalization not to exceed a maximum of 65%, and (iii) MGE cannot issue "Priority Debt" in an amount exceeding 20% of its consolidated assets. Priority Debt is defined as any indebtedness of MGE secured by liens other than specified liens permitted by the Note Purchase Agreement and certain unsecured indebtedness of certain subsidiaries. As of December 31, 2014, MGE is in compliance with the covenant requirements.

(e)Issued by MGE Power West Campus. The Note Purchase Agreements require it to maintain a projected debt service coverage ratio of not less than 1.25 to 1.00, and debt to total capitalization ratio of not more than 0.65 to 1.00. The notes are secured by a collateral assignment of lease payments that MGE is making to MGE Power West Campus for use of its ownership interest in the West Campus Cogeneration Facility pursuant to a long-term lease.As of December 31, 2014, MGE Power West Campus is in compliance with the covenant requirements.

(f)Issued by MGE Power Elm Road. The Note Purchase Agreement requires MGE Power Elm Road to maintain a projected and actual debt service coverage ratio at the end of any calendar quarter of not less than 1.25 to 1.00 for the trailing 12-month period. The notes are secured by a collateral assignment of lease payments that MGE is making to MGE Power Elm Road for use of its ownership interest in the Elm Road Units pursuant to long-term leases.As of December 31, 2014, MGE Power Elm Road is in compliance with the covenant requirements.

b. Long-Term Debt Maturities.

Below is MGE Energy's and MGE's aggregate maturities for all long-term debt for years following the December 31,2014,consolidated balance sheets.

		MGE
(In thousands)		Energy		MGE *
2015	$	4,182	$	4,182
2016		4,268		4,268
2017		34,358		34,358
2018		24,452		24,452
2019		4,553		4,553
Future years		327,877		327,877
Total	$	399,690	$	399,690

*Includes $48.2 million for MGE Power West Campusand $68.0 million for MGE Power Elm Road, all of which are consolidated with MGE's debt (see Footnote 2 for further information).

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Quarterly Summary of Operations

12 Months Ended

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

Quarterly Summary of Operations

Quarterly Summary of Operations - MGE Energy (unaudited).

(In thousands, except per share amounts)		Quarters Ended
2014		March 31		June 30		September 30		December 31
Operating revenues:
Regulated electric revenues	$	98,852	$	96,697	$	112,869	$	86,431
Regulated gas revenues		110,713		31,218		21,404		58,385
Nonregulated revenues		680		850		862		891
Total Operating Revenues		210,245		128,765		135,135		145,707
Operating expenses		166,274		104,324		95,015		116,141
Operating income		43,971		24,441		40,120		29,566
Interest and other income, net		11		(1,320)		(2,505)		(5,780)
Income tax provision		(16,265)		(9,034)		(14,286)		(8,600)
Earnings on common stock	$	27,717	$	14,087	$	23,329	$	15,186
Earnings per common share	$	0.80	$	0.41	$	0.67	$	0.44
Dividends per share	$	0.272	$	0.272	$	0.283	$	0.283
2013
Operating revenues:
Regulated electric revenues	$	93,494	$	96,846	$	119,836	$	93,781
Regulated gas revenues		72,467		30,042		18,864		60,089
Nonregulated revenues		1,276		1,400		1,399		1,393
Total Operating Revenues		167,237		128,288		140,099		155,263
Operating expenses		129,609		103,791		100,199		129,301
Operating income		37,628		24,497		39,900		25,962
Interest and other income, net		(1,366)		(1,946)		(855)		(4,056)
Income tax provision		(13,678)		(8,660)		(14,692)		(7,829)
Earnings on common stock	$	22,584	$	13,891	$	24,353	$	14,077
Earnings per common share	$	0.65	$	0.40	$	0.70	$	0.41
Dividends per share	$	0.263	$	0.263	$	0.272	$	0.272

Notes:

• The quarterly results of operations within a year may not be comparable because of seasonal and other factors.

• The sum of earnings per share of common stock for any four quarters may vary slightly from the earnings per share of common stock for the equivalent twelve-month period due to rounding.

• MGE Energy's operations are based primarily on its utility subsidiary MGE.

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Adoption of Accounting Principles and Recently Issued Accounting Pronouncements (Details) (Accounting Standards Update 2014-11 [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
Accounting Standards Update 2014-11 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New accounting pronouncement, effect of adoption, increase in assets and liabilities (secured borrowings)	$ 4.4

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Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments - MGE Energy and MGE.

Fair value is defined as the price that would be received to sell an asset or would be paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The standard clarifies that fair value should be based on the assumptions market participants would use when pricing the asset or liability including assumptions about risk. The standard also establishes a three level fair value hierarchy based upon the observability of the assumptions used and requires the use of observable market data when available. The levels are:

Level 1 - Pricing inputs are quoted prices within active markets for identical assets or liabilities.

Level 2 - Pricing inputs are quoted prices within active markets for similar assets or liabilities; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations that are correlated with or otherwise verifiable by observable market data.

Level 3 - Pricing inputs are unobservable and reflect management's best estimate of what market participants would use in pricing the asset or liability.

a. Fair Value of Financial Assets and Liabilities Recorded at the Carrying Amount.

At December 31,2014 and 2013, the carrying amount of cash, cash equivalents, and outstanding commercial paper approximates fair market value due to the short maturity of those investments and obligations. The estimated fair market value of MGE Energy's and MGE long-term debt is based on quoted market prices for similar financial instruments at December 31. Since long-term debt is not traded in an active market, it is classified as Level 2.The estimated fair market value of MGE Energy's and MGE's financial instruments are as follows:

		2014				2013
(In thousands)		Carrying Amount		Fair Value		Carrying Amount		Fair Value
MGE Energy
Assets:
Cash and cash equivalents	$	65,755	$	65,755	$	68,813	$	68,813
Liabilities:
Short-term debt - commercial paper		7,000		7,000		-		-
Long-term debt*		399,690		457,420		403,793		432,010
MGE
Assets:
Cash and cash equivalents	$	4,562	$	4,562	$	14,808	$	14,808
Liabilities:
Short-term debt - commercial paper		7,000		7,000		-		-
Long-term debt*		399,690		457,420		403,793		432,010
*Includes long-term debt due within one year.

b. Recurring Fair Value Measurements.

The following table presents the balances of assets and liabilities measured at fair value on a recurring basis for MGE Energy and MGE.

	Fair Value as of December 31, 2014
(In thousands)		Total		Level 1		Level 2		Level 3
MGE Energy
Assets:
Derivatives, net	$	642	$	-	$	-	$	642
Exchange-traded investments		927		927		-		-
Total Assets	$	1,569	$	927	$	-	$	642
Liabilities:
Derivatives, net(a)	$	55,640	$	1,012	$	-	$	54,628
Deferred compensation		2,832		-		2,832		-
Total Liabilities	$	58,472	$	1,012	$	2,832	$	54,628
MGE
Assets:
Derivatives, net	$	642	$	-	$	-	$	642
Exchange-traded investments		350		350		-		-
Total Assets	$	992	$	350	$	-	$	642
Liabilities:
Derivatives, net(a)	$	55,640	$	1,012	$	-	$	54,628
Deferred compensation		2,832		-		2,832		-
Total Liabilities	$	58,472	$	1,012	$	2,832	$	54,628
	Fair Value as of December 31, 2013
(In thousands)		Total		Level 1		Level 2		Level 3
MGE Energy
Assets:
Derivatives, net	$	1,787	$	735	$	-	$	1,052
Exchange-traded investments		792		792		-		-
Total Assets	$	2,579	$	1,527	$	-	$	1,052
Liabilities:
Derivatives, net	$	65,680	$	-	$	-	$	65,680
Deferred compensation		2,364		-		2,364		-
Total Liabilities	$	68,044	$	-	$	2,364	$	65,680
MGE
Assets:
Derivatives, net	$	1,787	$	735	$	-	$	1,052
Exchange-traded investments		431		431		-		-
Total Assets	$	2,218	$	1,166	$	-	$	1,052
Liabilities:
Derivatives, net	$	65,680	$	-	$	-	$	65,680
Deferred compensation		2,364		-		2,364		-
Total Liabilities	$	68,044	$	-	$	2,364	$	65,680
(a)     These amounts are shown gross and exclude $2.2 million and $0.2 million of collateral that was
posted against derivative positions with counterparties as of December 31, 2014 and 2013, respectively.

No transfers were made in or out of Level 1 or Level 2 for the year ended December 31, 2014.

Investments include exchange-traded investment securities valued using quoted prices on active exchanges and are therefore classified as Level 1.

Derivatives include exchange-traded derivative contracts, over-the-counter transactions, a ten-year purchased power agreement, and FTRs. Most exchange-traded derivative contracts are valued based on unadjusted quoted prices in active markets and are therefore classified as Level 1. A small number of exchange-traded derivative contracts are valued using quoted market pricing in markets with insufficient volumes and are therefore considered unobservable and classified as Level 3. Transactions done with an over-the-counter party are on inactive markets and are therefore classified as Level 3. These transactions are valued based on quoted prices from markets with similar exchange traded transactions. FTRs are priced based upon monthly auction results for identical or similar instruments in a closed market with limited data available and are therefore classified as Level 3.

The ten-year purchased power agreement (see Footnote 16) was valued using an internally-developed pricing model and therefore is classified as Level 3. The model projects future market energy prices and compares those prices to the projected power costs to be incurred under the contract. Inputs to the model require significant management judgment and estimation. Future energy prices are based on a forward power pricing curve using exchange-traded contracts in the electric futures market, where such exchange-traded contracts exist, and upon calculations based on forward gas prices, where such exchange-traded contracts do not exist. A basis adjustment is applied to the market energy price to reflect the price differential between the market price delivery point and the counterparty delivery point. The historical relationship between the delivery points is reviewed and a discount (below 100%) or premium (above 100%) is derived. This comparison is done for both peak times when demand is high and off peak times when demand is low. If the basis adjustment is lowered, the fair value measurement will decrease and if the basis adjustment is increased, the fair value measurement will increase.

The projected power costs anticipated to be incurred under the purchased power agreement are determined using many factors, including historical generating costs, future prices, and expected fuel mix of the counterparty. An increase in the projected fuel costs would result in a decrease in the fair value measurement of the purchased power agreement. A significant input that MGE estimates is the counterparty's fuel mix in determining the projected power cost. MGE also considers the assumptions that market participants would use in valuing the asset or liability. This consideration includes assumptions about market risk such as liquidity, volatility, and contract duration. The fair value model uses a discount rate that incorporates discounting, credit, and model risks.

This model is prepared by members of MGE’s Energy Accounting group. It is reviewed on a quarterly basis by management in Energy Supply and Finance to review the assumptions, inputs, and fair value measurements.

The following table presents the significant unobservable inputs used in the pricing model as of December 31:

	Model Input
Significant Unobservable Inputs	2014	2013
Basis adjustment:
On peak	98.1%	94.2%
Off peak	95.0%	92.6%
Counterparty fuel mix:
Internal generation	50%-70%	50%-70%
Purchased power	50%-30%	50%-30%

The deferred compensation plan allows participants to defer certain cash compensation into a notional investment account. These amounts are included within other deferred liabilities in the consolidated balance sheets of MGE Energy and MGE. The notional investments earn interest based upon the semiannual rate of U.S. Treasury Bills having a 26week maturity increased by 1% compounded monthly with a minimum annual rate of 7%, compounded monthly. The notional investments are based upon observable market data, however since the deferred compensation obligations themselves are not exchanged in an active market they are classified as Level 2.

The following table summarizes the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for both MGE Energy and MGE.

(In thousands)		2014		2013		2012
Balance as of January 1,	$	(64,628)	$	(72,346)	$	(40,661)
Realized and unrealized gains (losses):
Included in regulatory liabilities (assets)		10,642		7,718		(31,685)
Included in other comprehensive income		-		-		-
Included in earnings		5,129		(2,618)		(5,005)
Included in current assets		-		(108)		-
Purchases		26,382		23,726		13,370
Sales		(125)		(2)		92
Issuances		-		-		-
Settlements		(31,386)		(20,998)		(8,457)
Transfers in and/or out of Level 3		-		-		-
Balance as of December 31,	$	(53,986)	$	(64,628)	$	(72,346)
Total gains (losses) included in earnings attributed to the
change in unrealized gains (losses) related to assets and
liabilities held at December 31,(b)	$	-	$	-	$	-

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 for both MGE Energy and MGE(b).

(In thousands)
Year Ended December 31,		2014		2013		2012
Purchased power expense	$	5,137	$	(2,618)	$	(5,005)
Cost of gas sold expense		(8)		-		-
Total	$	5,129	$	(2,618)	$	(5,005)

(b)MGE's exchange-traded derivative contracts, over-the-counter party transactions, ten-year 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.

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Noncontrolling Interest (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
MGE [Member]
Noncontrolling Interest [Line Items]
Noncontrolling interest on balance sheet	$ 125,689		$ 118,963
Net income attributable to noncontrolling interest, net of tax	26,310		27,438		24,489
MGE Transco [Member]
Noncontrolling Interest [Line Items]
Noncontrolling interest on balance sheet	22,397	[1]	19,998	[1]
Net income attributable to noncontrolling interest, net of tax	2,484	[1]	2,408	[1]	2,146	[1]
MGE Power [Member]
Noncontrolling Interest [Line Items]
Ownership percentage by parent	100.00%
MGE Power West Campus [Member]
Noncontrolling Interest [Line Items]
Ownership percentage by parent	100.00%
Noncontrolling interest on balance sheet	30,755	[2]	29,089	[2]
Net income attributable to noncontrolling interest, net of tax	7,666	[2]	7,657	[2]	7,506	[2]
MGE Power Elm Road [Member]
Noncontrolling Interest [Line Items]
Ownership percentage by parent	100.00%
Noncontrolling interest on balance sheet	72,537	[2]	69,876	[2]
Net income attributable to noncontrolling interest, net of tax	$ 16,160	[2]	$ 17,373	[2]	$ 14,837	[2]

[1] At December 31,2014, MGE is the majority owner, and MGE Energy is the minority owner, of MGE Transco. MGE Energy's proportionate share of the equity and net income of MGE Transco is classified within the MGE financial statements as noncontrolling interest.

[2] MGE Power Elm Road and MGE Power West Campus are not subsidiaries of MGE; however, they have been consolidated in the consolidated financial statements of MGE (see Footnote 2). MGE Power Elm Road and MGE Power West Campus are100% owned by MGE Power, and MGE Power is 100% owned by MGE Energy. MGE Energy's proportionate share of the equity and net income (through its wholly owned subsidiary MGE Power) of MGE Power Elm Road and MGE Power West Campus is classified within the MGE financial statements as noncontrolling interest.

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Schedule II - Valuation and Qualifying Accounts (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Valuation and Qualifying Accounts [Roll Forward]
Balance at beginning of period	$ 4,969,711	$ 4,816,118	$ 4,100,333
Charged to costs and expenses	1,898,300	2,373,342	2,825,300
Charged to other accounts	15,092	37,200	44,400
Net accounts written off	(2,134,446)	(2,256,949)	(2,153,915)
Balance at end of period	$ 4,748,657	$ 4,969,711	$ 4,816,118

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MGE Energy Inc Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Operating Activities:
Net Income	$ 80,319	$ 74,905	$ 64,446
Items not affecting cash:
Depreciation and amortization	40,695	38,838	38,707
Deferred income taxes	49,884	38,365	44,797
Provision for doubtful receivables	1,898	2,448	2,498
Employee benefit plan expenses	(1,080)	13,303	18,353
Equity earnings in ATC	(9,150)	(9,434)	(9,079)
Other items	729	117	1,283
Changes in working capital items:
Trade and other receivables (change)	2,115	(3,827)	(6,208)
Inventories (change)	(10,399)	2,488	1,457
Unbilled revenues (change)	720	(3,720)	(2,508)
Prepaid taxes (change)	(19,804)	414	2,731
Other current assets (change)	(5,693)	2,514	4,093
Accounts payable (change)	2,756	858	(272)
Other current liabilities (change)	(4,195)	6,271	425
Dividend income from ATC	7,740	7,404	7,146
Cash contributions to pension and other postretirement plans	(3,321)	(34,765)	(28,857)
Debt make-whole premium	0	(6,757)	0
Other noncurrent items, net	(4,452)	10,845	6,992
Cash Provided by (Used for) Operating Activities	128,762	140,267	146,004
Investing Activities:
Capital expenditures	(92,676)	(119,047)	(98,435)
Capital contributions to investments	(2,185)	(1,660)	(2,419)
Purchase of investment - land	0	(10)	(3)
Other investing	(1,297)	(1,205)	(496)
Cash Provided by (Used for) Investing Activities	(96,158)	(121,922)	(101,353)
Financing Activities:
Cash dividends paid on common stock	(38,429)	(37,107)	(35,951)
Repayment of long-term debt	(4,103)	(43,012)	(30,668)
Issuance of long-term debt	0	85,000	28,000
Increase in short-term debt	7,000	0	0
Other financing	(130)	(770)	(844)
Cash Provided by (Used for) Financing Activities	(35,662)	4,111	(39,463)
Change in Cash and Cash Equivalents:	(3,058)	22,456	5,188
Cash and cash equivalents at beginning of period	68,813	46,357	41,169
Cash and cash equivalents at end of period	65,755	68,813	46,357
Supplemental disclosures of cash flow information:
Interest paid	20,478	17,991	19,499
Income taxes paid	19,579	8,046	3,544
Income taxes received	(644)	(1,339)	(12,536)
Significant noncash investing activities:
Accrued capital expenditures	$ 1,569	$ 9,892	$ 10,317

XML

Madison Gas and Electric Company Consolidated Statements of Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Operating Revenues:
Regulated electric revenues	$ 394,849		$ 403,957		$ 392,365
Regulated gas revenues	221,720		181,462		139,727
Nonregulated revenues	3,283		5,468		9,231
Total Operating Revenues	619,852		590,887		541,323
Operating Expenses:
Fuel for electric generation	42,828		46,062		46,499
Purchased power	73,232		80,830		73,842
Cost of gas sold	143,644		107,315		78,156
Other operations and maintenance	161,703		171,248		172,996
Depreciation and amortization	40,695		38,838		38,707
Other general taxes	19,652		18,607		18,360
Total Operating Expenses	481,754		462,900		428,560
Operating Income (Loss)	138,098		127,987		112,763
Other Income and Deductions:
Equity in earnings in ATC	9,150		9,434		9,079
Total Other Income and Deductions	10,079		10,701		10,069
Interest Expense:
Net Interest Expense	19,673		18,924		19,467
Net Income	80,319		74,905		64,446
MGE [Member]
Operating Revenues:
Regulated electric revenues	394,871		403,980		392,365
Regulated gas revenues	221,741		181,477		139,727
Nonregulated revenues	3,283		5,468		9,231
Total Operating Revenues	619,895		590,925		541,323
Operating Expenses:
Fuel for electric generation	42,836		46,070		46,499
Purchased power	73,245		80,844		73,842
Cost of gas sold	143,665		107,330		78,156
Other operations and maintenance	160,831		170,498		171,965
Depreciation and amortization	40,648		38,834		38,707
Other general taxes	19,652		18,607		18,360
Income tax provision	45,090		41,519		35,334
Total Operating Expenses	525,967		503,702		462,863
Operating Income (Loss)	93,928	[1]	87,223	[1]	78,460	[1]
Other Income and Deductions:
AFUDC - equity funds	3,466		3,140		1,731
Equity in earnings in ATC	9,150		9,434		9,079
Income tax provision	(4,055)		(4,303)		(4,101)
Other deductions, net	(704)		(18)		(263)
Total Other Income and Deductions	7,857	[1]	8,253	[1]	6,446	[1]
Income before interest expense	101,785		95,476		84,906
Interest Expense:
Interest on long-term debt	20,927		20,087		20,386
Other interest, net	62		(21)		(82)
AFUDC - borrowed funds	(1,142)		(1,035)		(704)
Net Interest Expense	19,847		19,031		19,600
Net Income Including Noncontrolling Interest	81,938		76,445		65,306
Less Net Income Attributable to Noncontrolling Interest, net of tax	(26,310)		(27,438)		(24,489)
Net Income	$ 55,628		$ 49,007		$ 40,817

[1] *Amounts are shown net of the related tax expense, consistent with the presentation on the consolidated MGE Income Statement.

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Investments

12 Months Ended

Dec. 31, 2014

Investments Disclosure [Abstract]

Investments

Investments - MGE Energy and MGE.

a. Equity Method Investments, Available for Sale Securities, and Other Investments.

		MGE Energy				MGE
(In thousands)		2014		2013		2014		2013
Available for sale securities:
Cost basis	$	1,964	$	1,736	$	489	$	490
Gross unrealized gains		765		629		240		321
Fair value	$	2,729	$	2,365	$	729	$	811
Equity method investments:
ATC	$	67,673	$	64,488	$	67,673	$	64,488
Other		1,199		1,099		-		-
Total equity method investments	$	68,872	$	65,587	$	67,673	$	64,488
Other investments		159		-		-		-
Total	$	71,760	$	67,952	$	68,402	$	65,299

MGE Energy's and MGE's available for sale securities represent publicly traded securities and private equity investments in common stock of companies in various industries.

During the years endedDecember 31,2014 and 2013,certain investments were liquidated. As a result of these liquidations, MGE Energy and MGE received the following:

		MGE Energy						MGE
(In thousands)		2014		2013		2012		2014		2013		2012
Cash proceeds	$	38	$	39	$	-	$	-	$	16	$	-
Gain (loss) on sale		21		2		-		-		(3)		-

b. ATC.

ATC owns and operates electric transmission facilities primarily in Wisconsin. MGE received an interest in ATC when it, like other Wisconsin electric utilities, contributed its electric transmission facilities to ATC as required by Wisconsin law. That interest is presently held by MGE Transco, which is jointly owned by MGE Energy and MGE.

MGE Transco has accounted for its investment in ATC under the equity method of accounting. For the years endedDecember 31,2014, 2013, and 2012, MGE Transco recorded the following:

(In thousands)		2014		2013		2012
Equity in earnings from investment in ATC	$	9,150	$	9,434	$	9,079
Dividends received from ATC		7,740		7,404		7,146
Capital contributions to ATC		1,775		1,420		2,131

On January 30, 2015, MGE Transco made a $0.2million capital contribution to ATC.

At December 31,2014 and 2013, MGE Transco held a 3.6% ownership interest in ATC. MGE Transco's investment balance is different from the amount of the underlying equity in the net assets of ATC. This difference is attributable to the allocation of certain tax impacts related to the initial asset transfer.

At December 31,2014 and 2013, MGE is the majority owner, and MGE Energy, the holding company, is the minority owner of MGE Transco. MGE Energy's proportionate share of the equity and net income of MGE Transco is classified within the MGE financial statements as noncontrolling interest.

ATC's summarized financial data for the years endedDecember 31,2014, 2013, and 2012 is as follows:

(In thousands)
Income statement data for the year ended December 31,		2014		2013		2012
Operating revenues	$	635,033	$	626,336	$	603,254
Operating expenses		(307,451)		(295,069)		(280,999)
Other income (expense)		117		831		(2,533)
Interest expense, net		(88,970)		(84,484)		(82,296)
Earnings before members' income taxes	$	238,729	$	247,614	$	237,426
Balance sheet data as of December 31,		2014		2013		2012
Current assets	$	66,410	$	80,715	$	63,134
Noncurrent assets		3,728,675		3,509,517		3,274,704
Total assets	$	3,795,085	$	3,590,232	$	3,337,838
Current liabilities	$	313,065	$	381,467	$	251,541
Long-term debt		1,701,000		1,550,000		1,550,000
Other noncurrent liabilities		163,818		126,167		95,829
Members' equity		1,617,202		1,532,598		1,440,468
Total members' equity and liabilities	$	3,795,085	$	3,590,232	$	3,337,838

XML

Schedule I - Condensed Parent Company Finanical Statements (Details-Comprehensive Income Statement Parentheticals) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Condensed Income Statements, Captions [Line Items]
Unrealized gain (loss) on available-for-sale securities, taxes	$ 54	$ 189	$ (12)
MGE Energy [Member]
Condensed Income Statements, Captions [Line Items]
Unrealized gain (loss) on available-for-sale securities, taxes	$ 54	$ 189	$ (12)

XML

Commitments and Contingencies (Details-3) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Leases, Future Minimum Rental Payments [Abstract]
Minimum lease payments, 2015	$ 1,553,000
Minimum lease payments, 2016	1,346,000
Minimum lease payments, 2017	872,000
Minimum lease payments, 2018	419,000
Minimum lease payments, 2019	258,000
Minimum lease payments, Thereafter	7,938,000
Rental expense under operating leases	$ 2,500,000	$ 2,700,000	$ 2,600,000
Operating leases, renewal option term (one year or less)	1 year

XML

Commitments and Contingencies (Details-1) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014 MW
Purchase Obligation, Fiscal Year Maturity [Abstract]
Purchase obligation due in next twelve months	122,841
Purchase obligation due in second year	78,534
Purchase obligation due in third year	63,703
Purchase obligation due in fourth year	57,828
Purchase obligation due in fifth year	41,360
Coal [Member]
Purchase Obligation, Fiscal Year Maturity [Abstract]
Purchase obligation due in next twelve months	22,630	[1]
Purchase obligation due in second year	16,436	[1]
Purchase obligation due in third year	10,664	[1]
Purchase obligation due in fourth year	6,560	[1]
Purchase obligation due in fifth year	3,850	[1]
Natural Gas, Transportation and Storage [Member]
Purchase Obligation, Fiscal Year Maturity [Abstract]
Purchase obligation due in next twelve months	18,074	[2]
Purchase obligation due in second year	9,938	[2]
Purchase obligation due in third year	273	[2]
Purchase obligation due in fourth year	192	[2]
Purchase obligation due in fifth year	0	[2]
Natural Gas, Supply [Member]
Purchase Obligation, Fiscal Year Maturity [Abstract]
Purchase obligation due in next twelve months	14,971	[3]
Purchase obligation due in second year	0	[3]
Purchase obligation due in third year	0	[3]
Purchase obligation due in fourth year	0	[3]
Purchase obligation due in fifth year	0	[3]
Purchase Power [Member]
Purchase Obligation, Fiscal Year Maturity [Abstract]
Purchase obligation due in next twelve months	50,714	[4]
Purchase obligation due in second year	51,437	[4]
Purchase obligation due in third year	52,043	[4]
Purchase obligation due in fourth year	50,752	[4]
Purchase obligation due in fifth year	37,367	[4]
Ten-year Purchase Power Agreement, Osceola Windpower II, LLC [Member]
Purchase Power Agreement [Abstract]
Long-term purchase commitment, term	10 years
Long-term purchase commitment, minimum power required (in MW)	50
Other [Member]
Purchase Obligation, Fiscal Year Maturity [Abstract]
Purchase obligation due in next twelve months	16,452
Purchase obligation due in second year	723
Purchase obligation due in third year	723
Purchase obligation due in fourth year	324
Purchase obligation due in fifth year	143

[1] Total coal commitments for the Columbia and Elm Road Units, including transportation. Fuel procurement for MGE's jointly owned Columbia and Elm Road Units are handled by WPL and WEPCO, respectively, who are the operators of those facilities. If any minimum purchase obligations must be paid under these contracts, management believes these obligations would be considered costs of service and recoverable in rates.

[2] MGE's natural gas transportation and storage contracts require fixed monthly payments for firm supply pipeline transportation and storage capacity. The pricing components of the fixed monthly payments for the transportation and storage contracts are established by FERC but may be subject to change.

[3] These commitments include market-based pricing. Management expects to recover these costs in future customer rates.

[4] MGE has several purchase power agreements to help meet future electric supply requirements. Management expects to recover these costs in future customer rates. In October 2008, MGE entered into a ten-year purchase power agreement to help meet future electric supply requirements. Under this agreement, MGE has agreed to purchase 50 MW of wind power from Osceola Windpower II, LLC, which is located in Iowa. This facility became operational in October 2008. MGE does not have any capacity payment commitments under this agreement. However, MGE is obligated to purchase its ratable share of the energy produced by the project. MGE's commitment related to its ratable share of energy produced by the project has been estimated and is included in the above numbers.

XML

Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014
Document and Entity Information [Line Items]
Entity Registrant Name	MGE Energy Inc
Entity Central Index Key	0001161728
Document Type	10-K
Document Period End Date	Dec. 31, 2014
Amendment Flag	false
Trading Symbol	MGEE
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Well known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float	$ 1,365,673,259
Entity Common Stock Shares Outstanding	34,668,370
MGE [Member]
Document and Entity Information [Line Items]
Entity Registrant Name	Madison Gas and Electric Company
Entity Central Index Key	0000061339
Entity Well known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock Shares Outstanding	17,347,894

XML

Joint Plant Ownership

12 Months Ended

Dec. 31, 2014

Regulated Operations [Abstract]

Joint Plant Ownership

Joint Plant Ownership - MGE Energy and MGE.

a. Columbia.

MGE and two other utilities jointly own Columbia, a coal-fired generating facility located in Portage,Wisconsin, which accounts for 31% (239 MW) of MGE's net summer rated capacity. Power from this facility is shared in proportion to each company's ownership interest. MGE has a 22% ownership interest in Columbia. The other owners are WPL, which operates Columbia, and WPSC. MGE's share of fuel, operating, and maintenance expenses for Columbia were $28.1 million, $37.5 million, and $36.3 million for the years ended December 31,2014, 2013, and 2012, respectively. See Footnote 20 for discussion of MGE's future capital commitments in respect to the environmental projects at Columbia as a result of this ownership interest.

Each owner provides its own financing and reflects its respective portion of facilities and operating costs in its financial statements. MGE's interest in Columbia, included in its gross utility plant in service, and the related accumulated depreciation reserves at December 31 were as follows:

(In thousands)		2014		2013
Utility plant	$	268,597	$	123,097
Accumulated depreciation		(80,645)		(78,880)
Property, plant, and equipment, net	$	187,952	$	44,217
Construction work in progress		6,941		120,858
Total property, plant, and equipment	$	194,893	$	165,075

b. Elm Road.

MGE Power Elm Road owns an 8.33% ownership interest in each of two 615 MW coal-fired generating units in Oak Creek, Wisconsin, which accounts for 14% (106 MW) of MGE’s net summer rated capacity. Unit 1 entered commercial operation on February 2, 2010. Unit 2 entered commercial operation on January 12, 2011. MGE Power Elm Road's sole principal asset is that ownership interest in those generating units. MGE Power Elm Road’s interest in the Elm Road Units is leased to MGE pursuant to long-term leases.

The remainder of the ownership interest in the Elm Road Units is held by two other entities, one of which is also responsible for the Units’ operation. Each owner provides its own financing and reflects its respective portion of the facility and costs in its financial statements. MGE’s share of fuel, operating, and maintenance expenses for the Elm Road Units were $20.3 million, $13.4 million, and $13.2 million for the years ended December 31,2014,2013, and 2012, respectively.MGE Power Elm Road’s interest in the portion of the Elm Road Units in-service and the related accumulated depreciation reserves at December 31 were as follows:

(In thousands)		2014		2013
Nonregulated plant	$	199,582	$	198,198
Accumulated depreciation		(19,962)		(15,541)
Property, plant, and equipment, net	$	179,620	$	182,657
Construction work in progress		1,976		1,115
Total property, plant, and equipment	$	181,596	$	183,772

c. WCCF.

MGE Power West Campus and the UW jointly own the West Campus Cogeneration Facility located on the UW campus in Madison, Wisconsin. MGE Power West Campus owns 55% of the facility and the UW owns 45% of the facility. The UW owns a controlling interest in the chilled-water and steam plants, which are used to meet the growing needs for air-conditioning and steam-heat capacity for the UW campus. MGE Power West Campus owns a controlling interest in the electric generation plant, which is leased and operated by MGE.

Each owner provides its own financing and reflects its respective portion of the facility and operating costs in its financial statements. MGE Power West Campus' interest in WCCF and the related accumulated depreciation reserves at December 31 were as follows:

(In thousands)		2014		2013
Nonregulated plant	$	111,453	$	111,268
Accumulated depreciation		(24,691)		(21,704)
Property, plant, and equipment, net	$	86,762	$	89,564

Operating charges are allocated to the UW based on formulas contained in the operating agreement. Under the provisions of this arrangement, the UW is required to reimburse MGE for their allocated portion of fuel and operating expenses. For the year endedDecember 31,2014, the UW allocated share of fuel and operating costs was $2.8 million. For the years ended December 31,2013 and 2012, the UW allocated share of fuel and operating costs was $4.9 million.

XML

Pension Plans and Other Postretirement Benefits (Details-5) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	$ 327,500	$ 315,000
Cash and Cash Equivalents [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		5,109
Equity Securities [Member] | U.S. Large Cap [Memeber]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	99,256	96,258
Equity Securities [Member] | U.S. Mid Cap [Memeber]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	22,926	22,741
Equity Securities [Member] | U.S. Small Cap [Memeber]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	29,353	28,854
Equity Securities [Member] | International Blend [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	47,650	54,873
Fixed Income Securities [Member] | Short-Term Fund [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	3,776	4,789
Fixed Income Securities [Member] | High Yield Bond [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	15,492	15,127
Fixed Income Securities [Member] | Long Duration Bond [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	79,603	66,193
Real Estate [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	23,480	19,628
Insurance Continuance Fund [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,518	1,428
Fixed Rate Fund [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	4,446
Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	5,109
Level 1 [Member] | Cash and Cash Equivalents [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		5,109
Level 1 [Member] | Equity Securities [Member] | U.S. Large Cap [Memeber]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 1 [Member] | Equity Securities [Member] | U.S. Mid Cap [Memeber]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 1 [Member] | Equity Securities [Member] | U.S. Small Cap [Memeber]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 1 [Member] | Equity Securities [Member] | International Blend [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 1 [Member] | Fixed Income Securities [Member] | Short-Term Fund [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 1 [Member] | Fixed Income Securities [Member] | High Yield Bond [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 1 [Member] | Fixed Income Securities [Member] | Long Duration Bond [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 1 [Member] | Real Estate [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 1 [Member] | Insurance Continuance Fund [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 1 [Member] | Fixed Rate Fund [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0
Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	298,056	288,835
Level 2 [Member] | Cash and Cash Equivalents [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		0
Level 2 [Member] | Equity Securities [Member] | U.S. Large Cap [Memeber]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	99,256	96,258
Level 2 [Member] | Equity Securities [Member] | U.S. Mid Cap [Memeber]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	22,926	22,741
Level 2 [Member] | Equity Securities [Member] | U.S. Small Cap [Memeber]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	29,353	28,854
Level 2 [Member] | Equity Securities [Member] | International Blend [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	47,650	54,873
Level 2 [Member] | Fixed Income Securities [Member] | Short-Term Fund [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	3,776	4,789
Level 2 [Member] | Fixed Income Securities [Member] | High Yield Bond [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	15,492	15,127
Level 2 [Member] | Fixed Income Securities [Member] | Long Duration Bond [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	79,603	66,193
Level 2 [Member] | Real Estate [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 2 [Member] | Insurance Continuance Fund [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 2 [Member] | Fixed Rate Fund [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0
Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	29,444	21,056
Level 3 [Member] | Cash and Cash Equivalents [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		0
Level 3 [Member] | Equity Securities [Member] | U.S. Large Cap [Memeber]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 3 [Member] | Equity Securities [Member] | U.S. Mid Cap [Memeber]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 3 [Member] | Equity Securities [Member] | U.S. Small Cap [Memeber]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 3 [Member] | Equity Securities [Member] | International Blend [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 3 [Member] | Fixed Income Securities [Member] | Short-Term Fund [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 3 [Member] | Fixed Income Securities [Member] | High Yield Bond [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 3 [Member] | Fixed Income Securities [Member] | Long Duration Bond [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Level 3 [Member] | Real Estate [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	23,480	19,628	17,141
Level 3 [Member] | Insurance Continuance Fund [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,518	1,428	1,466
Level 3 [Member] | Fixed Rate Fund [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	$ 4,446	$ 0	$ 0

XML

Rate Matters (Details) (PSCW [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2015	Oct. 31, 2014
Public Utilities, Rate Matters [Abstract]
Authorized AFUDC rate	50.00%	50.00%	50.00%
MGE [Member]
Public Utilities, Rate Matters [Abstract]
Authorized return on common stock	10.30%	10.30%
Fuel Rules [Abstract]
Fuel rules, bandwidth	2.00%
Fuel rules, electric fuel costs, deferral, upper threshold	102.00%
Fuel rules, electric fuel costs, deferral, lower threshold	98.00%
Fuel Rules Credit, 2012 [Member] | MGE [Member]
Public Utilities, Rate Matters [Abstract]
Return of electric fuel credit, total	6.3
Fuel Rules Credit, 2013 [Member] | MGE [Member]
Public Utilities, Rate Matters [Abstract]
Return of electric fuel credit, total					6.5
Approved Future Rate Matters [Member] | MGE [Member]
Public Utilities, Rate Matters [Abstract]
Authorized return on common stock				10.20%
Columbia Environmental Project [Member]
Public Utilities, Rate Matters [Abstract]
Authorized AFUDC rate	100.00%	50.00%	100.00%
Columbia Environmental Project [Member] | MGE [Member]
Public Utilities, Rate Matters [Abstract]
Authorized AFUDC rate	100.00%	50.00%
Electric Rate Proceeding [Member] | MGE [Member]
Public Utilities, Rate Matters [Abstract]
Authorized rate increase (decrease), percentage	0.00%	3.80%	4.30%
Authorized rate increase (decrease), amount	0	14.9	15.7
Electric Rate Proceeding [Member] | Approved Future Rate Matters [Member] | MGE [Member]
Public Utilities, Rate Matters [Abstract]
Authorized rate increase (decrease), percentage				3.80%
Authorized rate increase (decrease), amount				15.4
Gas Rate Proceeding [Member] | MGE [Member]
Public Utilities, Rate Matters [Abstract]
Authorized rate increase (decrease), percentage	0.00%	1.00%	0.30%
Authorized rate increase (decrease), amount	0	1.6	0.6
Gas Rate Proceeding [Member] | Approved Future Rate Matters [Member] | MGE [Member]
Public Utilities, Rate Matters [Abstract]
Authorized rate increase (decrease), percentage				(2.00%)
Authorized rate increase (decrease), amount				(3.8)

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MGE Energy Inc Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Statement of Other Comprehensive Income [Abstract]
Net Income	$ 15,186	$ 23,329	$ 14,087	$ 27,717	$ 14,077	$ 24,353	$ 13,891	$ 22,584	$ 80,319	$ 74,905	$ 64,446
Other comprehensive income/(loss), net of tax:
Unrealized gain (loss) on available for sale securities, net of tax									81	283	(18)
Comprehensive Income									$ 80,400	$ 75,188	$ 64,428

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Madison Gas and Electric Company Consolidated Statements of Common Equity (USD $) In Thousands, unless otherwise specified	Total USD ($)	MGE [Member] USD ($)	Common Stock [Member]	Common Stock [Member] MGE [Member] USD ($)	Additional Paid-In Capital [Member] MGE [Member] USD ($)	Retained Earnings [Member] MGE [Member] USD ($)	Accumulated Other Comprehensive (Loss)/ Income [Member] USD ($)	Accumulated Other Comprehensive (Loss)/ Income [Member] MGE [Member] USD ($)	Noncontrolling Interest [Member] MGE [Member] USD ($)
Beginning balance, value at Dec. 31, 2011		$ 527,277		$ 17,348	$ 192,417	$ 203,114		$ 47	$ 114,351
Beginning balance, shares at Dec. 31, 2011			34,668	17,348
Increase (Decrease) in Common Equity [Roll Forward]
Net Income		65,306				40,817			24,489
Other comprehensive income/(loss)	(18)	(43)					(18)	(43)
Cash dividends paid to parent by MGE	(44,343)	(20,404)				(20,404)
Equity contribution received by noncontrolling interest		2,130							2,130
Distributions to parent from noncontrolling interest		(23,500)							(23,500)
Ending balance, value at Dec. 31, 2012		550,766		17,348	192,417	223,527		4	117,470
Ending balance, shares at Dec. 31, 2012			34,668	17,348
Increase (Decrease) in Common Equity [Roll Forward]
Net Income		76,445				49,007			27,438
Other comprehensive income/(loss)	283	188					283	188
Cash dividends paid to parent by MGE	(52,366)	(25,000)				(25,000)
Equity contribution received by noncontrolling interest		1,420							1,420
Distributions to parent from noncontrolling interest		(27,365)							(27,365)
Ending balance, value at Dec. 31, 2013		576,454		17,348	192,417	247,534		192	118,963
Ending balance, shares at Dec. 31, 2013			34,668	17,348
Increase (Decrease) in Common Equity [Roll Forward]
Net Income		81,938				55,628			26,310
Other comprehensive income/(loss)	81	(48)					81	(48)
Cash dividends paid to parent by MGE	(47,859)	(26,500)				(26,500)
Equity contribution received by noncontrolling interest		1,775							1,775
Distributions to parent from noncontrolling interest		(21,359)							(21,359)
Ending balance, value at Dec. 31, 2014		$ 612,260		$ 17,348	$ 192,417	$ 276,662		$ 144	$ 125,689
Ending balance, shares at Dec. 31, 2014			34,668	17,348

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MGE Energy Inc Consolidated Statements of Common Equity (USD $) In Thousands, unless otherwise specified	Total	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive (Loss)/ Income [Member]
Beginning balance, value at Dec. 31, 2011	$ 550,952	$ 34,668	$ 316,268	$ 199,904	$ 112
Beginning balance, shares at Dec. 31, 2011		34,668
Increase (Decrease) in Common Equity [Roll Forward]
Net Income	64,446			64,446
Other comprehensive income/(loss)	(18)				(18)
Common stock dividends declared	(35,951)			(35,951)
Ending balance, value at Dec. 31, 2012	579,429	34,668	316,268	228,399	94
Ending balance, shares at Dec. 31, 2012		34,668
Increase (Decrease) in Common Equity [Roll Forward]
Net Income	74,905			74,905
Other comprehensive income/(loss)	283				283
Common stock dividends declared	(37,107)			(37,107)
Ending balance, value at Dec. 31, 2013	617,510	34,668	316,268	266,197	377
Ending balance, shares at Dec. 31, 2013		34,668
Increase (Decrease) in Common Equity [Roll Forward]
Net Income	80,319			80,319
Other comprehensive income/(loss)	81				81
Common stock dividends declared	(38,429)			(38,429)
Cash in lieu of fractional shares related to stock split	(80)			(80)
Ending balance, value at Dec. 31, 2014	$ 659,401	$ 34,668	$ 316,268	$ 308,007	$ 458
Ending balance, shares at Dec. 31, 2014		34,668

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Notes Payable to Banks, Commercial Paper, and Lines of Credit

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Notes Payable to Banks, Commercial Paper, and Lines of Credit

Notes Payable to Banks, Commercial Paper, and Lines of Credit.

a. MGE Energy.

At December 31,2014, MGE Energy had an unsecured, committed revolving line of credit of $50 million expiring July 31, 2017. At December 31,2014, no borrowings were outstanding under this facility.

The agreement requires MGE Energy to maintain a ratio of its consolidated indebtedness to consolidated total capitalization not to exceed a maximum of 65%. A change in control constitutes a default under the agreement. Change in control events are defined as (i) a failure by MGE Energy to hold 100% of the outstanding voting equity interest in MGE or (ii) the acquisition of beneficial ownership of 30% or more of the outstanding voting stock of MGE Energy by one person or two or more persons acting in concert.As of December 31, 2014, MGE Energy is in compliance with the covenant requirements.

b.MGE.

For short-term borrowings, MGE generally issues commercial paper (issued at the prevailing discount rate at the time of issuance), which is supported by unused committed bank lines of credit. At December 31,2014, MGE had an unsecured, committed revolving line of credit for $100 million expiring July 31, 2017. The agreement requires MGE to have a period of at least one day, during any 365-day period, on which the principal amount of all outstanding loans thereunder shall be zero. At December 31,2014, no borrowings were outstanding under this facility; however, there was $7.0 million in commercial paper outstanding.

The agreement requires MGE to maintain a ratio of consolidated debt to consolidated total capitalization not to exceed a maximum of 65%. The ratio calculation excludes assets, liabilities, revenues, and expenses included in MGE's financial statements as the result of the consolidation of VIEs, such as MGE Power West Campus and MGE Power Elm Road. A change in control constitutes a default under the agreement. Change in control events are defined as (i) a failure by MGE Energy to hold 100% of the outstanding voting equity interest in MGE or (ii) the acquisition of beneficial ownership of 30% or more of the outstanding voting stock of MGE Energy by one person or two or more persons acting in concert. As of December 31, 2014, MGE is in compliance with the covenant requirements.

c. MGE Energy and MGE.

Information concerning short-term borrowings for the past three years is shown below:

		As of December 31,
(In thousands)		2014		2013		2012
MGE Energy(a)
Available lines of credit	$	150,000	$	150,000	$	115,000
Short-term debt outstanding	$	7,000	$	-	$	-
Weighted-average interest rate		0.20%		-%		-%
During the year:
Maximum short-term borrowings	$	9,000	$	32,000	$	16,000
Average short-term borrowings	$	182	$	6,992	$	1,154
Weighted-average interest rate		0.24%		0.18%		0.17%
MGE
Available lines of credit	$	100,000	$	100,000	$	75,000
Commercial paper outstanding	$	7,000	$	-	$	-
Weighted-average interest rate		0.20%		-%		-%
During the year:
Maximum short-term borrowings	$	9,000	$	32,000	$	16,000
Average short-term borrowings	$	182	$	6,992	$	1,154
Weighted-average interest rate		0.24%		0.18%		0.17%

(a)MGE Energy short-term borrowings include MGE Energy and MGE lines of credit and MGE commercial paper.

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Regulatory Assets and Liabilities

12 Months Ended

Dec. 31, 2014

Regulatory Assets and Liabilities Disclosure [Abstract]

Regulatory Assets and Liabilities

Regulatory Assets and Liabilities - MGE Energy and MGE.

The following regulatory assets and liabilities are reflected in MGE's consolidated balance sheet as of December 31:

(In thousands)		2014		2013
Regulatory Assets
Asset retirement obligation	$	4,532	$	4,863
Debt related costs		11,133		11,786
Derivatives		54,998		63,893
Environmental costs		700		920
Tax recovery related to AFUDC equity		8,821		6,956
Unfunded pension and other postretirement liability		84,551		24,591
Other		448		534
Total regulatory assets	$	165,183	$	113,543
Regulatory Liabilities
Conservation costs	$	680	$	455
Deferred fuel savings		755		13,386
Elm Road		1,497		607
Income taxes		1,794		2,082
Non-ARO removal costs		16,129		15,182
Renewable energy credits		753		574
Other		1,107		1,044
Total regulatory liabilities	$	22,715	$	33,330

MGE expects to recover its regulatory assets and return its regulatory liabilities through rates charged to customers based on PSCW decisions made during the ratemaking process or based on PSCW long-standing policies and guidelines. The adjustments to rates for these regulatory assets and liabilities will occur over the periods either specified by the PSCW or over the corresponding period related to the asset or liability. We believe it is probable that MGE will continue to recover from customers the regulatory assets described above based on prior and current ratemaking treatment for such costs. All regulatory assets for which a cash outflow had been made are earning a return, except for amounts expended for environmental costs.

Asset Retirement Obligation

See Footnote 19 for further discussion.

Debt Related Costs

This balance includes debt issuance costs of extinguished debt and other debt related expenses. The PSCW has allowed rate recovery on unamortized issuance costs for extinguished debt facilities. When the facility replacing the old facility is deemed by the PSCW to be more favorable for the ratepayers, the PSCW will allow rate recovery of any unamortized issuance costs related to the old facility. These amounts are recovered over the term of the new facility.

In 2013, MGE issued long-term debt and used the net proceeds to redeem Medium-Term Notes and partially redeem Senior Notes. Included in the redemption prices were make-whole premiums totalling $6.8 million. The make-whole premiums are treated as a regulatory asset and will be amortized over the life of the long-term debt issued.

Derivatives

MGE has physical and financial contracts that are defined as derivatives. The amounts recorded for the net mark-to-market value of the commodity based contracts is offset with a corresponding regulatory asset or liability because these transactions are part of the PGA or fuel rules clause authorized by the PSCW. A significant portion of the recorded amount is related to a ten-year purchased power agreement that provides MGE with firm capacity and energy during a base term from June 1, 2012 through May 31, 2022. This agreement is accounted for as a derivative contract. See Footnote 16 for further discussion.

Environmental Costs

MGE has been allowed to defer actual costs on certain environmental matters, including clean up of two landfill sites and legal expenditures pertaining to the response to the EPA Clean Air Act enforcement matter at Columbia. For further discussion of the Columbia Clean Air Act litigation, see Footnote 18.d.

Tax Recovery Related to AFUDC Equity

AFUDC equity represents the after-tax equity cost associated with utility plant construction and results in a temporary difference between the book and tax basis of such plant. It is probable under PSCW regulation that MGE will recover in future rates the future increase in taxes payable represented by the deferred income tax liability. The amounts will be recovered in rates over the depreciable life of the asset for which AFUDC was applied. Tax recovery related to AFUDC equity represents the revenue requirement related to recovery of these future taxes payable, calculated at current statutory tax rates.

Unfunded Pension and Other Postretirement Liability

MGE is required to recognize the unfunded status of defined benefit pension and other postretirement pension plans as a net liability or asset on the balance sheet with an offset to a regulatory asset. The unfunded status represents future expenses that are expected to be recovered in rates. See Footnote 13 for further discussion.

Conservation Costs

MGE has received regulatory treatment for certain conservation expenditures. The expenditures are used for Focus on Energy programs, Wisconsin’s statewide energy efficiency and renewable resource program, to promote energy efficiency on the customer's premises. Costs for Focus on Energy programs are estimated in MGE's rates utilizing escrow accounting. The escrow accounting allows the utility to true-up its actual costs incurred and reflect the amount of the true-up in its next rate case filing and amortize the amount over the rate case period.

Deferred Fuel Savings

The fuel rules require the PSCW and Wisconsin utilities to defer electric fuel-related costs that fall outside a symmetrical cost tolerance band. Any over/under recovery of the actual costs is determined on an annual basis and is adjusted in future billings to electric retail customers. Under the electric fuel rules, MGE is required to defer the benefit of lower costs if the actual electric fuel costs fall outside the lower end of the range and is required to defer costs, less any excess revenues, if the actual electric fuel costs exceed the upper end of the range. Excess revenues are defined as revenues in the year in question that provide MGE with a greater return on common equity than authorized by the PSCW in MGE’s latest rate order. See Footnote 17.b. for further discussion.

Elm Road

Costs associated with Elm Road are estimated in MGE’s rates utilizing escrow accounting and include costs for lease payments, management fees, community impact mitigation, and operating costs. Also, MGE has deferred payments made to MGE Power Elm Road for carrying costs during construction of the facility. MGE is collecting carrying costs in rates over a six year period that began in 2010. All other costs are collected in rates over a one to two year period.

Income Taxes

Excess deferred income taxes result from past taxes provided at rates higher than current rates. The regulatory liability and deferred investment tax credit reflects the revenue requirement associated with the return of these tax benefits to customers.

Non-ARO Removal Costs

In connection with accounting for asset retirement obligations, companies are required to reclassify cumulative collections for non-ARO removal costs as a regulatory liability, with an offsetting entry to accumulated depreciation. Under the current rate structure, these removal costs are being recovered as a component of depreciation expense.

Renewable Energy Credits

MGE receives renewable energy credits from certain purchase power agreements. The value of the credits are recorded as inventory and expensed when the credit is redeemed or expired. A regulatory liability has been established for the value of the renewable energy credits included in inventory. In Wisconsin, renewable energy credits expire four years after the year of acquisition.

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Regional Transmission Organizations (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Regional Transmission Organizations Disclosure [Abstract]
Reduction to sales and purchased power expense from reporting RTO transactions from net basis reporting	$ 91.1	$ 78.0	$ 75.9

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Variable Interest Entities

12 Months Ended

Dec. 31, 2014

Variable Interest Entities Disclosure [Abstract]

Variable Interest Entities

Variable Interest Entities - MGE Energy and MGE.

a. MGE Power Elm Road.

MGE Power Elm Road is not a subsidiary of MGE; however, it has been consolidated in the financial statements of MGE. MGE Power Elm Road was created for the purpose of owning new generating assets. Its sole principal assets are an undivided ownership interest in two coal-fired generating plants located in Oak Creek, Wisconsin, which it leases to MGE pursuant to long-term leases. Based on the nature and terms of the contractual agreements, MGE is expected to absorb a majority of the expected losses, residual value, or both, associated with the ownership of MGE Power Elm Road and therefore holds a variable interest in MGE Power Elm Road, even though it has no equity interest in MGE Power Elm Road. MGE Energy and MGE consolidate VIEs for which they are the primary beneficiary. MGE has the power to direct the activities that most significantly impact the Elm Road Units’ economic performance and is also the party most closely associated with MGE Power Elm Road. As a result, MGE is the primary beneficiary. At December 31, MGE has included the following significant accounts on its consolidated balance sheet related to its interest in this VIE:

(In thousands)		2014		2013
Property, plant, and equipment, net	$	179,620	$	182,657
Construction work in progress		1,976		1,115
Affiliate receivables		1,742		-
Deferred income tax asset - current		-		219
Deferred income tax liability		40,044		34,141
Long-term debt		67,972		70,639
Noncontrolling interest		72,537		69,876

Long-term debt consists of $68.0 million of senior secured notes that require that MGE Power Elm Road maintain a projected and actual debt service coverage ratio at the end of any calendar quarter of not less than 1.25 to 1.00for the trailing 12-month period. The debt is secured by a collateral assignment of lease payments that MGE is making to MGE Power Elm Road for use of the Elm Road Units pursuant to the related long-term leases.As of December 31, 2014, MGE Power Elm Road is in compliance with the covenant requirements.

MGE has been and will continue to recover in rates the lease payments made to MGE Power Elm Road.MGE received approval from the PSCW to collect in rates the carrying costs incurred by MGE Power Elm Road. The total carrying costs on the Elm Road Units is $62.5 million. MGE is collecting carrying costs in rates over a six year period that began in 2010. Of these costs, $17.0 million relates to the capitalized interest and the debt portion of the units. These costs will be recognized over the period in which the generating units will be depreciated. The remaining $45.5 million represents the equity portion and is being recognized over the period allowed for recovery in rates.

b. MGE Power West Campus.

MGE Power West Campus is not a subsidiary of MGE; however, it has been consolidated in the financial statements of MGE. MGE Power West Campus was created for the purpose of owning new generating assets. Its sole principal asset is the WCCF, which it leases to MGE pursuant to a long-term lease. MGE is responsible for operation of the plant during the term of the lease. Based on the nature and terms of these contractual relationships, MGE absorbs a majority of the expected losses, residual value, or both, associated with the ownership and operation of the WCCF and therefore holds a variable interest in MGE Power West Campus, even though it has no equity interest in MGE Power West Campus. MGE has the power to direct the activities that most significantly impact WCCF’s economic performance and is also the party most closely associated with MGE Power West Campus. As a result, MGE is the primary beneficiary. At December 31, MGE has included the following significant accounts on its consolidated balance sheet related to its interest in this VIE:

(In thousands)		2014		2013
Property, plant, and equipment, net	$	86,763	$	89,564
Affiliate receivables		5,862		6,767
Accrued interest and taxes		569		4,888
Deferred income taxes		23,813		23,154
Long-term debt		48,218		49,653
Noncontrolling interest		30,755		29,089

Long-term debt consists of $48.2 million of senior secured notes that require that MGE Power West Campus maintain a projected debt service coverage ratio of not less than 1.25 to 1.00 and debt to total capitalization ratio of not more than 0.65 to 1.00. The debt is secured by a collateral assignment of lease payments that MGE is making to MGE Power West Campus for use of the cogeneration facility pursuant to the long-term lease. As of December 31, 2014, MGE Power West Campus is in compliance with the covenant requirements.

MGE has been and will continue to recover lease payments made to MGE Power West Campus in rates. Also, MGE received approval from the PSCW to collect approximately $12.1 million in carrying costs incurred by MGE Power West Campus during construction of the facility. The carrying costs are being recovered in rates over a 10 year period that started in 2005.

c. Other Variable Interest Entities.

MGE has a variable interest in entities through purchase power agreements relating to purchased energy from the facilities. As of December 31,2014 and 2013, MGE had 61 megawatts of capacity available under these agreements. MGE evaluated the variable interest entities for possible consolidation. The interest holder is considered the primary beneficiary of the entity and is required to consolidate the entity if the interest holder has the power to direct the activities that most significantly impact the economics of the variable interest entity. MGE examined qualitative factors such as the length of the remaining term of the contracts compared with the remaining lives of the plants, who has the power to direct the operations and maintenance of the facilities, and other factors, and determined MGE is not the primary beneficiary of the variable interest entities. There is not a significant potential exposure to loss as a result of involvement with these variable interest entities.

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Variable Interest Entities (Details) (USD $)	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013
Significant Balance Sheet Accounts Related to Interests in Variable Interest Entities
Property, plant, and equipment, net	$ 1,189,077,000		$ 1,018,809,000
Construction work in progress	19,029,000		141,415,000
Deferred income tax asset - current	3,482,000		0
Accrued interest and taxes	5,086,000		5,661,000
Other Variable Interest Entities
Other variable interest entities, purchase power agreement, plant capacity (in MW)	61		61
MGE Power Elm Road [Member]
Significant Balance Sheet Accounts Related to Interests in Variable Interest Entities
Property, plant, and equipment, net	179,620,000		182,657,000
Construction work in progress	1,976,000		1,115,000
Affiliate receivables, current and noncurrent	1,742,000		0
Deferred income tax asset - current	0		219,000
Deferred income taxes	40,044,000		34,141,000
Long-term debt, gross, current and noncurrent	67,972,000		70,639,000
Noncontrolling interest	72,537,000	[1]	69,876,000	[1]
Total carrying costs	62,500,000
Total capitalized interest	17,000,000
Total capitalized cost of equity	45,500,000
Carrying cost rate recovery period	6 years
MGE Power Elm Road [Member] | Minimum [Member]
Significant Balance Sheet Accounts Related to Interests in Variable Interest Entities
Debt service coverage ratio	1.25
MGE Power West Campus [Member]
Significant Balance Sheet Accounts Related to Interests in Variable Interest Entities
Property, plant, and equipment, net	86,763,000		89,564,000
Affiliate receivables, current and noncurrent	5,862,000		6,767,000
Accrued interest and taxes	569,000		4,888,000
Deferred income taxes	23,813,000		23,154,000
Long-term debt, gross, current and noncurrent	48,218,000		49,653,000
Noncontrolling interest	30,755,000	[1]	29,089,000	[1]
Carrying costs recovered	$ 12,100,000
Carrying cost rate recovery period	10 years
MGE Power West Campus [Member] | Minimum [Member]
Significant Balance Sheet Accounts Related to Interests in Variable Interest Entities
Debt service coverage ratio	1.25
MGE Power West Campus [Member] | Maximum [Member]
Significant Balance Sheet Accounts Related to Interests in Variable Interest Entities
Debt to total capitalization ratio	0.65

[1] MGE Power Elm Road and MGE Power West Campus are not subsidiaries of MGE; however, they have been consolidated in the consolidated financial statements of MGE (see Footnote 2). MGE Power Elm Road and MGE Power West Campus are100% owned by MGE Power, and MGE Power is 100% owned by MGE Energy. MGE Energy's proportionate share of the equity and net income (through its wholly owned subsidiary MGE Power) of MGE Power Elm Road and MGE Power West Campus is classified within the MGE financial statements as noncontrolling interest.

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Consolidated Statements of Common Equity (Parentheticals) (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Dividends per share of common stock	$ 0.283	$ 0.283	$ 0.272	$ 0.272	$ 0.272	$ 0.272	$ 0.263	$ 0.263	$ 1.11	$ 1.07	$ 1.04

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies.

a.Basis of Presentation - MGE Energy and MGE.

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which give recognition to the rate making accounting policies for regulated operationsprescribed by the regulatory authorities having jurisdiction, principally the PSCW and FERC. MGE's accounting records conform to the FERC uniform system of accounts.

b.Principles of Consolidation - MGE Energy and MGE.

MGE, a wholly owned subsidiary of MGE Energy, is a regulated electric and gas utility headquartered in Madison, Wisconsin. MGE Energy and MGE consolidate all majority owned subsidiaries in which it has controlling influence. MGE is the majority owner of MGE Transco. MGE Transco is a nonregulated entity formed to manage the investment in ATC.

Wholly owned subsidiaries of MGE Energy include CWDC, MAGAEL, MGE Power, MGE State Energy Services, and NGV Fueling Services. MGE Power owns 100% of MGE Power Elm Road and MGE PowerWest Campus. MGE Power and its subsidiaries are part of MGE Energy's nonregulated energy operations, which were formed to own and lease electric generation projects to assist MGE.

MGE Energy and MGE consolidate variable interest entities (VIEs) for which it is the primary beneficiary. Variable interest entities are legal entities that possess any of the following characteristics: equity investors who have an insufficient amount of equity at risk to finance their activities, equity owners who do not have the power to direct the significant activities of the entity (or have voting rights that are disproportionate to their ownership interest), or equity holders who do not receive expected losses or returns significant to the VIE. If MGE Energy or MGE is not the primary beneficiary and an ownership interest is held, the VIE is accounted for under the equity method of accounting. When assessing the determination of the primary beneficiary, all relevant facts and circumstances are considered, including: the power, through voting or similar rights, to direct the activities of the VIE that most significantly impact the VIE's economic performance and the obligation to absorb the expected losses and/or the right to receive the expected returns of the VIE. Ongoing reassessments of all VIEs are performed to determine if the primary beneficiary status has changed. MGE has consolidated MGE Power Elm Road and MGE PowerWest Campus. Both entities are VIEs. MGE is considered the primary beneficiary of these entities as a result of contractual agreements. See Footnote 2 for more discussion of these entities.

The consolidated financial statements reflect the application of certain accounting policies described in this note. All significant intercompany accounts and transactions have been eliminated in consolidation.

c.Use of Estimates - MGE Energy and MGE.

In order to prepare consolidated financial statements in conformity with GAAP, management must make estimates and assumptions. These estimates could affect reported amounts of assets, liabilities, and disclosures at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from management's estimates.

d.Cash Equivalents and Restricted Cash - MGE Energy and MGE.

MGE Energy and MGE consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

MGE has certain cash accounts that are restricted to uses other than current operations and designated for a specific purpose. MGE's restricted cash accounts include cash held by trustees for certain employee benefits. These are included in other current assets.

e.Receivable – Margin Account - MGE Energy and MGE.

Cash amounts held by counterparties as margin for certain financial transactions are recorded as receivable – margin account in other current assets on the consolidated balance sheet. As of December 31,2014 and 2013, the receivable – margin account balance of $2.2 million and $0.5 million, respectively, is shown net of any collateral posted against derivative positions. As of December 31,2014 and 2013, there was $2.2 million and $0.2 million, respectively, of collateral posted against derivative positions. Changes in this cash account are considered cash flows from operating activities to match with the costs being hedged. The costs being hedged are fuel for electric generation, purchased power, and cost of gas sold.

f.Trade Receivables, Allowance for Doubtful Accounts, and Concentration Risk - MGE Energy and MGE.

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. However, a 1% late payment charge is recorded on all receivables unpaid after the due date. The allowance for doubtful accounts associated with these receivables represents our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine our allowance for doubtful accounts based on historical write-off experience, regional economic data, and review of the accounts receivable aging.

MGE is obligated to provide service to all electric and gas customers within its franchised territories. MGE's franchised electric territory includes a 316 square-mile area in Dane County, Wisconsin, and MGE's franchised gas territory includes a service area covering 1,678 square-miles in Wisconsin. MGE manages this concentration and the related credit risk through its credit and collection policies, which are consistent with state regulatory requirements.

g.Inventories - MGE Energy and MGE.

Inventories consist of natural gas in storage, fossil fuels, materials and supplies, SO₂ allowances, and renewable energy credits (RECs). MGE values natural gas in storage, fossil fuels, and materials and supplies using average cost.

SO₂ emission allowances are included in material and supplies on the consolidated balance sheet and are recorded at weighted average cost. These allowances are charged to fuel expense as they are used in operations. MGE's emission allowance balance was $0.1 million as of December 31,2014 and 2013.

REC allowances are included in materials and supplies on the consolidate balance sheet and are recorded based on specific identification. These allowances are charged to purchase power expense as they are used in operations. MGE's REC allowance balances as of December 31,2014 and 2013, were $0.8 million and $0.6 million, respectively.

h.Regulatory Assets and Liabilities - MGE Energy and MGE.

Regulatory assets and regulatory liabilities are recorded consistent with regulatory treatment. Regulatory assets represent costs which are deferred due to the probable future recovery from customers through regulated rates. Regulatory liabilities represent the excess recovery of costs or accrued credits which were deferred because MGE believes it is probable such amounts will be returned to customers through future regulated rates. Regulatory assets and liabilities are amortized in the consolidated statements of income consistent with the recovery or refund included in customer rates. MGE believes that it is probable that its recorded regulatory assets and liabilities will be recovered and refunded, respectively, in future rates. See Footnote 6 for further information.

i.Debt Issuance Costs - MGE Energy and MGE.

Premiums, discounts, and expenses incurred with the issuance of outstanding long-term debt are amortized over the life of the debt issue. Any call premiums or unamortized expenses associated with refinancing higher-cost debt obligations used to finance utility-regulated assets and operations are amortized consistent with regulatory treatment of those items.

j.Property, Plant, and Equipment - MGE Energy and MGE.

Property, plant, and equipment is recorded at original cost. Cost includes indirect costs consisting of payroll taxes, pensions, postretirement benefits, other fringe benefits, and administrative and general costs. Also, included in the cost is AFUDC for utility property and capitalized interest for nonregulated property. Additions for significant replacements of property are charged to property, plant, and equipment at cost; and minor items are charged to maintenance expense. Depreciation rates on utility property are approved by the PSCW, based on the estimated economic lives of property, and include estimates for salvage value and removal costs. Removal costs of utility property, less any salvage value, are adjusted through regulatory liabilities. Depreciation rates on nonregulated property are based on the estimated economic lives of the property. See Footnote 3 for further information.

Provisions at composite straight-line depreciation rates approximate the following percentages for the cost of depreciable property:

	2014	2013	2012
Electric	2.6 %	2.7 %	2.9 %
Gas	1.7 %	1.7 %	1.7 %
Nonregulated	2.4 %	2.3 %	2.3 %

k.Asset Retirement Obligations - MGE Energy and MGE.

MGE Energy and MGE are required to record a liability for the fair value of an ARO to be recognized in the period in which it is incurred if it can be reasonably estimated. The offsetting associated asset retirement costs are capitalized as a long-lived asset and depreciated over the asset’s useful life. The expected present value technique used to calculate the fair value of ARO liabilities includes assumptions about costs, probabilities, settlement dates, interest accretion, and inflation. Revisions to the assumptions, including the timing or amount of expected asset retirement costs, could result in increases or decreases to the AROs. All asset retirement obligations are recorded as other long-term liabilities on our balance sheets. MGE has regulatory treatment and recognizes regulatory assets or liabilities for the timing differences between when we recover legal AROs in rates and when we would recognize these costs. See Footnote 19 for further information.

l.Repairs and Maintenance Expense - MGE Energy and MGE.

MGE utilizes the direct expensing method for planned major maintenance projects. Under this method, MGE expenses all costs associated with major planned maintenance activities as incurred.

m.Purchased Gas Adjustment Clause - MGE Energy and MGE.

MGE's natural gas rates are subject to a fuel adjustment clause designed to recover or refund the difference between the actual cost of purchased gas and the amount included in rates. Differences between the amounts billed to customers and the actual costs recoverable are deferred and recovered or refunded in future periods by means of prospective monthly adjustments to rates. At December 31,2014 and 2013, MGE had over collected $1.2 million and $1.7 million, respectively. These amounts are included in other current liabilities on the consolidated balance sheet.

n.Revenue Recognition - MGE Energy and MGE.

Operating revenues are recorded as service is rendered or energy is delivered to customers. Meters are read on a systematic basis throughout the month based on established meter-reading schedules. At the end of the month, MGE accrues an estimate for the unbilled amount of energy delivered to customers. The unbilled revenue estimate is based on daily system demand volumes, weather factors, estimated line losses, estimated customer usage by class, and applicable customer rates.

o.Utility Cost Recovery - MGE Energy and MGE.

MGE’s rates include a provision for fuel costs. The PSCW allows Wisconsin utilities to defer electric fuel-related costs, less excess revenues, that fall outside a symmetrical cost tolerance band. Any over/under recovery of the actual costs is determined on an annual basis and will be adjusted in future billings to electric retail customers. Such deferred amounts will be recognized in “Purchased Power Expense” in MGE Energy’s and MGE’s income statement each period. The cumulative effects of these deferred amounts will be recorded in “Regulatory assets” or “Regulatory liabilities” on MGE Energy’s and MGE’s consolidated balance sheets until they are reflected in future billings to customers. See Footnote 17.b. for further information regarding the regulatory rules applicable to the recovery of electric fuel costs.

p.Allowance for Funds Used During Construction - MGE Energy and MGE.

Allowance for funds used during construction is included in utility plant accounts and represents the cost of borrowed funds used during plant construction and a return on shareholders' capital used for construction purposes. In the consolidated income statements, the cost of borrowed funds (AFUDC-debt) is presented as an offset to interest expense and the return on shareholders' capital (AFUDC-equity funds) is shown as an item within other income. For both 2014 and 2013, as approved by the PSCW, MGE capitalized AFUDC-debt and equity on 50% of applicable average construction work in progress at 8.21%. For 2012, MGE capitalized AFUDC-debt and equity on 50% of applicable average construction work in progress at 8.36%. For both 2014 and 2012, MGE received specific approval to recover 100% AFUDC on certain environmental costs for Columbia and 50% in 2013. Although the allowance does not represent current cash income, it is recovered under the ratemaking process over the service lives of the related properties. See Footnote 20 for further information regarding Columbia AFUDC.

q.Investments - MGE Energy and MGE.

Investments in limited liability companies that have specific ownership accounts in which MGE Energy or MGE's ownership interest is more than minor and are considered to have significant influence are accounted for using the equity method. All other investments are carried at fair value or at cost, as appropriate. See Footnote 4 for further information.

r.Capitalized Software Costs - MGE Energy and MGE.

Property, plant, and equipment includes the net book value of capitalized costs of internal use software totaling $8.4 million and $9.0 million at December 31,2014 and 2013, respectively. During 2014, 2013, and 2012, MGE recorded $1.6 million, $1.5 million, and $1.3 million, respectively, of amortization expense related to these costs. These costs are amortized on a straight-line basis over the estimated useful lives of the assets. For internal use software, the useful lives range from five to ten years.

s.Impairment of Long-Lived Assets - MGE Energy and MGE.

MGE reviews plant and equipment and other property for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. MGE's policy for determining when long-lived assets are impaired is to recognize an impairment loss if the sum of the expected future cash flows (undiscounted and without interest charges) from an asset are less than the carrying amount of that asset. If an impairment loss is recognized, the amount that will be recorded will be measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. There is no impairment of long-lived assets at December 31,2014, 2013, and 2012.

t.Income Taxes and Excise Taxes - MGE Energy and MGE.

Income taxes

Under the liability method, income taxes are deferred for all temporary differences between pretax financial and taxable income and between the book and tax basis of assets and liabilities using the tax rates scheduled by law to be in effect when the temporary differences reverse. Future tax benefits are recognized to the extent that realization of such benefits is more likely than not. A valuation allowance is recorded for those benefits that do not meet this criterion.

Accounting for uncertainty in income taxes applies to all tax positions and requires a recognition threshold and measurement standard for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in an income tax return. The threshold is defined for recognizing tax return positions in the financial statements as "more likely than not" that the position is sustainable, based on its merits. Subsequent recognition, derecognition, and measurement is based on management's best judgment given the facts, circumstances, and information available at the reporting date.

Regulatory and accounting principles have resulted in a regulatory liability related to income taxes. Excess deferred income taxes result from past taxes provided at rates higher than current rates. The income tax regulatory liability and deferred investment tax credit reflect the revenue requirement associated with the return of these tax benefits to customers.

Investment tax credits from regulated operations are amortized over related property service lives.

Excise taxes

MGE Energy, through its utility operations, pays a state license fee tax in lieu of property taxes on property used in utility operations. License fee tax is calculated as a percentage of adjusted operating revenues of the prior year. The electric tax rate is 3.19% for retail sales and 1.59% for sales of electricity for resale by the purchaser. The tax rate on sales of natural gas is 0.97%. The tax is required to be estimated and prepaid in the year prior to its computation and expensing. License fee tax expense, included in other general taxes, was $14.6 million, $13.8 million, and $13.5 million for the years ended December 31,2014, 2013, and 2012, respectively.

Operating income taxes, including tax credits and license fee tax, are included in rates for utility related items.

u.Share-Based Compensation - MGE Energy and MGE.

Under two separate incentive plans, eligible participants, including employees and non-employee directors, may receive performance units that entitle the holder to receive a cash payment equal to the value of a designated number of shares of MGE Energy's common stock, plus dividend equivalent payments thereon, at the end of the set performance period. Under the plans, these awards are subject to a prescribed vesting schedule and must be settled in cash. Accordingly, no new shares of common stock are issued in connection with the plans.

MGE Energy and MGE initially measure the cost of the employee or director services received in exchange for a performance unit award based on the current market value of MGE Energy common stock. The fair value of the award is subsequently re-measured at each reporting date through the settlement date. Changes in fair value during the requisite period are recognized as compensation cost over that period.

See Footnote 14 for additional information regarding the plans.

v.Treasury Stock - MGE Energy.

Treasury shares are recorded at cost. Any shares of common stock repurchased are held as treasury shares unless cancelled or reissued. No treasury shares are held as of December 31, 2014 and 2013.

w.Comprehensive Income - MGE Energy and MGE.

Total comprehensive income includes all changes in equity during a period except those resulting from investments by and distributions to shareholders. Comprehensive income is reflected in the consolidated statements of comprehensive income.

x.Derivative and Hedging Instruments - MGE Energy and MGE.

As part of regular operations, MGE enters into contracts, including options, swaps, futures, forwards, and other contractual commitments, to manage its exposure to commodity prices and gas revenues. MGE recognizes all derivatives in the consolidated balance sheets at fair value, with changes in the fair value of derivative instruments to be recorded in current earnings or deferred in accumulated other comprehensive income (loss), depending on whether a derivative is designated as, and is effective as, a hedge and on the type of hedge transaction. Derivative activities are in accordance with the company's risk management policy.

If the derivative qualifies for regulatory deferral, the derivatives are marked to fair value and any resulting loss or gain is offset with a corresponding regulatory asset or liability. Cash flows from such derivative instruments are classified on a basis consistent with the nature of the underlying hedged item.

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Property, Plant, and Equipment

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, Plant, and Equipment - MGE Energy and MGE.

Property, plant, and equipment consisted of the following at December 31:

		MGE Energy				MGE
(In thousands)		2014		2013		2014		2013
Utility:
Electric	$	1,110,953	$	953,290	$	1,110,970	$	953,307
Gas		369,975		351,694		369,987		351,705
Total utility plant		1,480,928		1,304,984		1,480,957		1,305,012
Less: Accumulated depreciation and amortization		559,615		560,066		559,615		560,066
In-service utility plant, net		921,313		744,918		921,342		744,946
Nonregulated:
Nonregulated		313,152		311,742		312,314		310,745
Less: Accumulated depreciation and amortization		45,388		37,851		45,305		37,814
In-service nonregulated plant, net		267,764		273,891		267,009		272,931
Construction work in progress:
Utility construction work in progress		16,988		140,301		16,988		140,301
Nonregulated construction work in progress		2,041		1,114		2,041		1,114
Total property, plant, and equipment	$	1,208,106	$	1,160,224	$	1,207,380	$	1,159,292

MGE's utility plant is subject to the lien of its Indenture of Mortgage and Deed of Trust. As of December 31,2014 and 2013, there was $1.2  million of bonds outstanding under that indenture. See Footnote 9 for further discussion of the mortgage indenture.

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Investments (Details-3) (ATC [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
ATC [Member]
Equity method investment summarized income statement [Abstract]
Operating revenues	$ 635,033	$ 626,336	$ 603,254
Operating expenses	(307,451)	(295,069)	(280,999)
Other income (expense)	117	831	(2,533)
Interest expense, net	(88,970)	(84,484)	(82,296)
Earnings before members' income taxes	238,729	247,614	237,426
Equity method investment balance sheet assets [Abstract]
Current assets	66,410	80,715	63,134
Noncurrent assets	3,728,675	3,509,517	3,274,704
Total assets	3,795,085	3,590,232	3,337,838
Equity method investment balance sheet liabilities [Abstract]
Current liabilities	313,065	381,467	251,541
Long-term debt	1,701,000	1,550,000	1,550,000
Other noncurrent liabilities	163,818	126,167	95,829
Members' equity	1,617,202	1,532,598	1,440,468
Total members' equity and liabilities	$ 3,795,085	$ 3,590,232	$ 3,337,838

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Derivative and Hedging Instruments (Details-1) (USD $)	12 Months Ended
	Dec. 31, 2014 Dth MWh	Dec. 31, 2013 MWh Dth	Dec. 31, 2012
Gross Notional Volume of Open Derivatives
Derivative, right to reclaim collateral (receivable)	$ 2,200,000
Other Current Assets [Member]
Derivative Fair Values [Abstract]
Derivative fair value, net	1,001,000	411,000	574,000
Commodity Contracts and Financial Transimission Rights [Member]
Derivative Fair Values [Abstract]
Derivative fair value, net	(1,600,000)	1,800,000
Commodity Derivative Contracts [Member]
Gross Notional Volume of Open Derivatives
Notional amount, energy measure (in MWh)	448,000	458,660
Notional amount, decatherm measure (in Dth)	4,405,000	3,750,000
Derivative Fair Values [Abstract]
Derivative fair value, gross asset	223,000	1,523,000
Derivative fair value, gross liability	2,433,000	99,000
Commodity Derivative Contracts [Member] | Other Current Assets [Member]
Derivative Fair Values [Abstract]
Derivative fair value, gross asset	130,000	1,356,000
Commodity Derivative Contracts [Member] | Other Deferred Charges [Member]
Derivative Fair Values [Abstract]
Derivative fair value, gross asset	93,000	167,000
Commodity Derivative Contracts [Member] | Derivative Liability (Current) [Member]
Derivative Fair Values [Abstract]
Derivative fair value, gross liability	2,262,000	51,000
Commodity Derivative Contracts [Member] | Derivative Liability (Long-term) [Member]
Derivative Fair Values [Abstract]
Derivative fair value, gross liability	171,000	48,000
Energy Related Commodity Contract [Member] | Cash Flow Hedging [Member]
Derivatives Fair Value [Line Items]
Maximum term of derivative hedging contract	4 years
Financial Transmission Rights [Member]
Gross Notional Volume of Open Derivatives
Notional amount, power measure (in MW)	1,854	1,984
Derivative Fair Values [Abstract]
Derivative fair value, gross asset	642,000	363,000
Financial Transmission Rights [Member] | Other Current Assets [Member]
Derivative Fair Values [Abstract]
Derivative fair value, gross asset	642,000	363,000
Financial Transmission Rights [Member] | Derivative Liability (Current) [Member]
Derivative Fair Values [Abstract]
Derivative fair value, gross liability	0	0
Ten-year PPA [Member]
Derivative Fair Values [Abstract]
Derivative fair value, net	(53,400,000)	(65,700,000)
Derivative fair value, gross liability	53,430,000	65,680,000
Ten-year PPA [Member] | Derivative Liability (Current) [Member]
Derivative Fair Values [Abstract]
Derivative fair value, gross liability	6,870,000	7,750,000
Ten-year PPA [Member] | Derivative Liability (Long-term) [Member]
Derivative Fair Values [Abstract]
Derivative fair value, gross liability	$ 46,560,000	$ 57,930,000

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Regulatory Assets and Liabilities (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Regulatory Assets [Line Items]
Regulatory Assets	$ 165,183	$ 113,543
Regulatory Liabilities [Line Items]
Regulatory Liabilities	22,715	33,330
Debt make-whole premium	0	6,757	0
Conservation Costs Regulatory Liability [Member]
Regulatory Liabilities [Line Items]
Regulatory Liabilities	680	455
Deferred Fuel Savings [Member]
Regulatory Liabilities [Line Items]
Regulatory Liabilities	755	13,386
Elm Road Regulatory Liability [Member]
Regulatory Liabilities [Line Items]
Regulatory Liabilities	1,497	607
Income Taxes [Member]
Regulatory Liabilities [Line Items]
Regulatory Liabilities	1,794	2,082
Non-ARO Removal Cost [Member]
Regulatory Liabilities [Line Items]
Regulatory Liabilities	16,129	15,182
Renewable Energy Credits [Member]
Regulatory Liabilities [Line Items]
Regulatory Liabilities	753	574
Other Regulatory Liability [Member]
Regulatory Liabilities [Line Items]
Regulatory Liabilities	1,107	1,044
Asset Retirement Obligation [Member]
Regulatory Assets [Line Items]
Regulatory Assets	4,532	4,863
Debt Related Costs [Member]
Regulatory Assets [Line Items]
Regulatory Assets	11,133	11,786
Derivatives [Member]
Regulatory Assets [Line Items]
Regulatory Assets	54,998	63,893
Environmental Costs [Member]
Regulatory Assets [Line Items]
Regulatory Assets	700	920
Tax Recovery AFUDC Equity [Member]
Regulatory Assets [Line Items]
Regulatory Assets	8,821	6,956
Unfunded Pension and Other Postretirement Plans Costs [Member]
Regulatory Assets [Line Items]
Regulatory Assets	84,551	24,591
Other Regulatory Asset [Member]
Regulatory Assets [Line Items]
Regulatory Assets	$ 448	$ 534

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Schedule I - Condensed Parent Company Finanical Statements (Details-Comprehensive Income Statement) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Operating Expenses:
Other operations and maintenance									$ 161,703	$ 171,248	$ 172,996
Total Operating Expenses	116,141	95,015	104,324	166,274	129,301	100,199	103,791	129,609	481,754	462,900	428,560
Operating Income (Loss)	29,566	40,120	24,441	43,971	25,962	39,900	24,497	37,628	138,098	127,987	112,763
Equity in earnings of investments									9,150	9,434	9,079
Income before income taxes									128,504	119,764	103,365
Income tax provision	(8,600)	(14,286)	(9,034)	(16,265)	(7,829)	(14,692)	(8,660)	(13,678)	(48,185)	(44,859)	(38,919)
Net Income	15,186	23,329	14,087	27,717	14,077	24,353	13,891	22,584	80,319	74,905	64,446
Other comprehensive income/(loss), net of tax:
Unrealized gain (loss) on available for sale securities, net of tax									81	283	(18)
Comprehensive Income									80,400	75,188	64,428
MGE Energy [Member]
Operating Expenses:
Other operations and maintenance									689	613	649
Total Operating Expenses									689	613	649
Operating Income (Loss)									(689)	(613)	(649)
Equity in earnings of investments									81,811	76,362	65,132
Other income/(loss), net									(1,879)	(1,863)	(496)
Other interest									93	55	45
Income before income taxes									79,336	73,941	64,032
Income tax provision									983	964	414
Net Income									80,319	74,905	64,446
Other comprehensive income/(loss), net of tax:
Unrealized gain (loss) on available for sale securities, net of tax									81	283	(18)
Comprehensive Income									$ 80,400	$ 75,188	$ 64,428

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Investments (Details-2) (USD $) In Thousands, unless otherwise specified	12 Months Ended			0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Jan. 30, 2015
Schedule Of Equity Method Investments [Line Items]
Equity in earnings in ATC	$ 9,150	$ 9,434	$ 9,079
Dividend income from ATC	7,740	7,404	7,146
Contributions to investments	2,185	1,660	2,419
MGE Transco [Member] | ATC [Member]
Schedule Of Equity Method Investments [Line Items]
Equity in earnings in ATC	9,150	9,434	9,079
Dividend income from ATC	7,740	7,404	7,146
Contributions to investments	1,775	1,420	2,131
MGE Transco ownership interest in ATC	3.60%	3.60%
MGE Transco [Member] | ATC [Member] | Subsequent Event [Member]
Schedule Of Equity Method Investments [Line Items]
Contributions to investments				$ 200

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Commitments and Contingencies (Details-2) (Chattel Paper Agreement [Member], USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Guarantor Obligations [Line Items]
Guarantor obligation, maximum financing receivable	$ 10,000,000
Guarantor obligation, current carrying value	4,400,000	5,400,000	4,500,000
Servicing asset, amount recognized at period end	200,000	300,000	200,000
Servicing asset, gain recognized during the year in connection with sale of new loan assets	100,000	200,000	100,000
Servicing asset, amortization	100,000
Guarantor obligation, proceeds received from financial institution for sale of loan assets	500,000	1,600,000	1,200,000
Guarantor obligation, payments to financial institution for loan assets	1,500,000	800,000	1,200,000
Guarantor Obligation, Fiscal Year Maturity [Abstract]
Guarantor obligation, 2015	906,000
Guarantor obligation, 2016	884,000
Guarantor obligation, 2017	482,000
Guarantor obligation, 2018	420,000
Guarantor obligation, 2019	$ 410,000
Minimum [Member]
Guarantor Obligations [Line Items]
Guarantor obligation, term	1 year
Maximum [Member]
Guarantor Obligations [Line Items]
Guarantor obligation, term	10 years

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Adoption of Accounting Principles and Recently Issued Accounting Pronouncements

12 Months Ended

Dec. 31, 2014

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Adoption of Accounting Principles and Recently Issued Accounting Pronouncements

Adoption of Accounting Principles and Recently Issued Accounting Pronouncements - MGE Energy and MGE.

a.Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date.

In February 2013, the FASB issued authoritative guidance within the Codification's Balance Sheet topic that provides guidance on the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date. This authoritative guidance became effective January 1, 2014. The authoritative guidance did not have a financial or disclosure impact.

b.Presentation of an Unrecognized Tax Benefit.

In July 2013, the FASB issued authoritative guidance within the Codification's Income Statement topic that provides guidance on the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The authoritative guidance was issued to eliminate diversity in practice by providing guidance on the presentation of unrecognized tax benefits. This authoritative guidance became effective January 1, 2014. The authoritative guidance will not have a financial statement or disclosure impact, unless MGE Energy or its subsidiaries are in a net operating loss position. MGE Energy or its subsidiaries are currently not in a net operating loss position.

c.Revenue from Contracts with Customers.

In May 2014, the FASB issued authoritative guidance within the Codification's Revenue Recognition topic that provides guidance on the recognition, measurement, and disclosure of revenue from contracts with customers. This authoritative guidance will become effective January 1, 2017. MGE Energy and MGE are currently assessing the impact this pronouncement will have on their financial statements.

d.Transfers and Servicing Assets.

In June 2014, the FASB issued authoritative guidance within the Codification's Transfers and Servicing topic that provides guidance on the accounting and disclosures for repurchase-to-maturity transactions, securities lending transactions, and repurchase financings. This authoritative guidance is effective January 1, 2015. The authoritative guidance will change the accounting for the Chattel Paper program. Prior to adoption of the standard, Chattel Paper was treated as an off-balance sheet arrangement. Upon adoption, assets and liabilities will increase approximately $4.4 million and additional disclosures will be required. The cumulative impact of this guidance on our financial statements is not expected to be material.

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Tax Provision

On a consolidated and separate company basis, MGE Energy’s and MGE’s income tax provision consists of the following provision (benefit) components for the years endedDecember 31:

		MGE Energy						MGE
(In thousands)		2014		2013		2012		2014		2013		2012
Current payable:
Federal	$	(891)	$	(1,508)	$	(6,053)	$	637	$	(448)	$	(5,030)
State		(589)		8,213		436		(451)		8,322		613
Net-deferred:
Federal		39,284		37,203		37,178		38,553		36,937		36,589
State		10,600		1,163		7,618		10,625		1,223		7,523
Amortized investment tax credits		(219)		(212)		(260)		(219)		(212)		(260)
Total income tax provision	$	48,185	$	44,859	$	38,919	$	49,145	$	45,822	$	39,435

Effective Tax Rate Reconciliation

MGE Energy’s and MGE’s consolidated income tax provision differs from the amount computed by applying the statutory federal income tax rate to income before income taxes, as follows:

	MGE Energy			MGE
	2014	2013	2012	2014	2013	2012
Statutory federal income tax rate	35.0 %	35.0 %	35.0 %	35.0 %	35.0 %	35.0 %
State income taxes, net of federal benefit	5.1 %	5.1 %	5.0 %	5.1 %	5.1 %	5.0 %
Amortized investment tax credits	(0.2)%	(0.2)%	(0.3)%	(0.2)%	(0.2)%	(0.2)%
Credit for electricity from wind energy	(1.7)%	(1.5)%	(1.6)%	(1.7)%	(1.5)%	(1.5)%
Domestic manufacturing deduction	-%	(0.2)%	0.3 %	-%	(0.2)%	0.3 %
AFUDC equity, net	(0.8)%	(0.7)%	(0.4)%	(0.8)%	(0.7)%	(0.4)%
Other, net, individually insignificant	0.1 %	-%	(0.3)%	0.1 %	-%	(0.5)%
Effective income tax rate	37.5 %	37.5 %	37.7 %	37.5 %	37.5 %	37.7 %

Deferred Tax Liabilities (Assets)

The significant components of deferred tax liabilities (assets) that appear on MGE Energy’s and MGE’s consolidated balance sheets as of December 31 as follows:

		MGE Energy				MGE
(In thousands)		2014		2013		2014		2013
Property-related	$	312,903	$	263,881	$	312,807	$	263,881
Investment in ATC		36,140		32,696		29,156		27,073
Bond transactions		1,420		1,553		1,420		1,553
Pension and other postretirement benefits		57,847		34,478		57,847		34,478
Derivatives		22,331		26,361		22,331		26,361
Tax deductible prepayments		8,077		7,508		8,077		7,508
Other		10,451		1,995		10,259		1,911
Gross deferred income tax liabilities		449,169		368,472		441,897		362,765
Future tax benefit		(4,092)		-		(4,092)		-
Accrued expenses		(32,091)		(17,195)		(32,091)		(17,195)
Pension and other postretirement benefits		(44,994)		(26,838)		(44,994)		(26,838)
Deferred tax regulatory account		(1,211)		(1,402)		(1,211)		(1,402)
Derivatives		(22,331)		(26,361)		(22,331)		(26,361)
Other		(5,957)		(10,369)		(3,746)		(9,356)
Gross deferred income tax assets		(110,676)		(82,165)		(108,465)		(81,152)
Less valuation allowance		70		195		70		195
Net deferred income tax assets		(110,606)		(81,970)		(108,395)		(80,957)
Deferred income taxes	$	338,563	$	286,502	$	333,502	$	281,808

Unrecognized Tax Benefits and Interest

A tabular reconciliation of unrecognized tax benefits and interest from January 1, 2012 to December 31, 2014, is as follows:

(In thousands)
Unrecognized tax benefits:		2014		2013		2012
Unrecognized tax benefits, January 1,	$	2,363	$	3,204	$	2,364
Additions based on tax positions related to the current year		610		377		401
Additions based on tax positions related to the prior years		618		424		580
Reductions based on tax positions related to the current year		-		(40)		-
Reductions based on tax positions related to the prior years		(1,226)		(1,602)		(141)
Unrecognized tax benefits, December 31,	$	2,365	$	2,363	$	3,204
(In thousands)
Interest on unrecognized tax benefits:		2014		2013		2012
Accrued interest on unrecognized tax benefits, January 1,	$	101	$	314	$	216
Reduction in interest expense on uncertain tax positions		(97)		(275)		-
Interest expense on uncertain tax positions		88		62		98
Accrued interest on unrecognized tax benefits, December 31,	$	92	$	101	$	314

Tax Years that Remain Subject to Examination

The following table shows tax years that remain subject to examination by major jurisdiction:

Taxpayer	Open Years
MGE Energy and consolidated subsidiaries in federal return	2011 through 2014
MGE Energy Wisconsin combined reporting corporation return	2010 through 2014

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Noncontrolling Interest

12 Months Ended

Dec. 31, 2014

Noncontrolling Interest [Line Items]

Noncontrolling Interest

Noncontrolling Interest - MGE.

The noncontrolling interest on MGE’s balance sheet at December 31 was as follows:

(In thousands)		2014		2013
MGE Power Elm Road (a)	$	72,537	$	69,876
MGE Power West Campus (a)		30,755		29,089
MGE Transco (b)		22,397		19,998
Total noncontrolling interest	$	125,689	$	118,963

The net income attributable to noncontrolling interest, net of tax, for the years ended December 31,2014, 2013, and 2012was as follows:

(In thousands)		2014		2013		2012
MGE Power Elm Road (a)	$	16,160	$	17,373	$	14,837
MGE Power West Campus (a)		7,666		7,657		7,506
MGE Transco (b)		2,484		2,408		2,146
Net income attributable to noncontrolling interest, net of tax	$	26,310	$	27,438	$	24,489

(a)MGE Power Elm Road and MGE Power West Campus are not subsidiaries of MGE; however, they have been consolidated in the consolidated financial statements of MGE (see Footnote 2). MGE Power Elm Road and MGE Power West Campus are100% owned by MGE Power, and MGE Power is 100% owned by MGE Energy. MGE Energy's proportionate share of the equity and net income (through its wholly owned subsidiary MGE Power) of MGE Power Elm Road and MGE Power West Campus is classified within the MGE financial statements as noncontrolling interest.

(b)At December 31,2014, MGE is the majority owner, and MGE Energy is the minority owner, of MGE Transco. MGE Energy's proportionate share of the equity and net income of MGE Transco is classified within the MGE financial statements as noncontrolling interest.

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Pension Plans and Other Postretirement Benefits

12 Months Ended

Dec. 31, 2014

Compensation and Retirement Disclosure [Abstract]

Pension Plans and Other Postretirement Benefits

Pension Plans and Other Postretirement Benefits - MGE Energy and MGE.

MGE maintains qualified and nonqualified pension plans, health care, and life insurance benefits, and defined contribution 401(k) benefit plans for its employees and retirees. MGE's costs for the 401(k) plans were $2.5 million, $2.3 million, and $2.1 million in 2014, 2013, and 2012, respectively. A measurement date of December 31 is utilized for all pension and postretirement benefit plans.

All employees hired after December 31, 2006, have been enrolled in the defined contribution pension plan, rather than the defined benefit pension plan previously in place.

a.Benefit Obligations and Plan Assets.

(In thousands)		Pension Benefits				Other Postretirement Benefits
Change in benefit obligations:		2014		2013		2014		2013
Net benefit obligation at beginning of year	$	283,958	$	315,505	$	66,100	$	92,605
Service cost		6,179		7,705		1,339		2,380
Interest cost		13,574		12,656		3,166		3,871
Plan participants' contributions		-		-		708		665
Plan amendments(a)		-		-		-		(20,915)
Actuarial (gain) loss(b)		48,162		(40,335)		10,090		(9,687)
Gross benefits paid		(11,640)		(11,573)		(3,113)		(2,998)
Less: federal subsidy on benefits paid(c)		-		-		188		179
Benefit obligation at end of year	$	340,233	$	283,958	$	78,478	$	66,100
Change in plan assets:
Fair value of plan assets at beginning of year	$	277,398	$	212,277	$	37,602	$	32,124
Actual return on plan assets		21,907		45,816		2,558		5,000
Employer contributions		883		30,878		1,197		2,811
Plan participants' contributions		-		-		708		665
Gross benefits paid		(11,640)		(11,573)		(3,113)		(2,998)
Fair value of plan assets at end of year	$	288,548	$	277,398	$	38,952	$	37,602
Funded Status at December 31	$	(51,685)	$	(6,560)	$	(39,526)	$	(28,498)

(a) In 2013, MGE capped the amount it pays each year toward retiree medical premiums at 175%of the 2013 employer contribution for qualified employees.

(b) In 2014, lower discount rates and mortality table updates were the main drivers to the actuarial loss.

(c) 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 the years ended December 31, 2014 and 2013, the subsidy due to MGE was $0.2 million.

The accumulated benefit obligation for the defined benefit pension plans at the end of 2014 and 2013 was $304.0 million and $254.5 million, respectively.

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

		Pension Benefits				Other Postretirement Benefits
(In thousands)		2014		2013		2014		2013
Long-term asset	$	-	$	15,071	$	-	$	-
Current liability		(1,025)		(945)		(65)		(13)
Long-term liability		(50,660)		(20,686)		(39,461)		(28,485)
Net liability	$	(51,685)	$	(6,560)	$	(39,526)	$	(28,498)

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 our consolidated balance sheets:

		Pension Benefits				Other Postretirement Benefits
(In thousands)		2014		2013		2014		2013
Net actuarial loss	$	85,102	$	37,499	$	17,657	$	7,761
Prior service cost		(413)		(209)		(17,827)		(20,495)
Transition obligation		-		-		32		35
Total	$	84,689	$	37,290	$	(138)	$	(12,699)

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

(In thousands)		Pension Benefits
Projected benefit obligation in excess of plan assets		2014		2013
Projected benefit obligation, end of year	$	340,233	$	21,631
Fair value of plan assets, end of year		288,548		-

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets and an accumulated benefit obligation in excess of plan assets were as follows:

(In thousands)		Pension Benefits
Accumulated benefit obligation in excess of plan assets		2014		2013
Projected benefit obligation, end of year	$	340,233	$	21,631
Accumulated benefit obligation, end of year		304,023		19,795
Fair value of plan assets, end of year		288,548		-

b. Net Periodic Cost.

MGE has elected to recognize the cost of its transition obligation (the accumulated postretirement benefit obligation as of January 1, 1993) by amortizing it on a straight-line basis over 20 years.

(In thousands)		Pension Benefits						Other Postretirement Benefits
Components of net periodic (benefit) cost:		2014		2013		2012		2014		2013		2012
Service cost	$	6,179	$	7,705	$	7,139	$	1,339	$	2,380	$	2,528
Interest cost		13,574		12,656		12,704		3,166		3,871		4,431
Expected return on assets		(22,051)		(19,027)		(15,182)		(2,615)		(2,176)		(1,741)
Amortization of:
Transition obligation		-		-		-		3		3		425
Prior service (benefit) cost		204		314		430		(2,669)		110		110
Actuarial loss		703		8,014		8,288		252		1,236		2,346
Net periodic (benefit) cost	$	(1,391)	$	9,662	$	13,379	$	(524)	$	5,424	$	8,099

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
	2014	2013	2014	2013
Discount rate	4.11%	4.88%	3.96%	4.69%
Rate of compensation increase	3.85%	3.90%	N/A	N/A
Assumed health care cost trend rates:
Health care cost trend rate assumed for next year	N/A	N/A	6.5%	7.0%
Rate to which the cost trend rate is assumed to
decline (the ultimate trend rate)	N/A	N/A	5.0%	5.0%
Year that the rate reaches the ultimate trend rate	N/A	N/A	2021	2018

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
	2014	2013	2012	2014	2013	2012
Discount rate	4.88%	4.09%	4.50%	4.69%	4.14%	4.55%
Expected rate of return on plan assets	8.10%	8.10%	8.10%	7.07%	6.79%	7.26%
Rate of compensation increase	3.93%	4.60%	4.59%	N/A	N/A	N/A

The assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans.The following table shows how an assumed 1% increase or 1% decrease in health care cost trends could impact postretirement benefits in 2014 dollars:

(In thousands)		1% Increase		1% Decrease
Effect on other postretirement benefit obligation	$	1,465	$	(1,852)
Effect on total service and interest cost components		75		(101)

MGE employs a building-block approach in determining the expected long-term rate of return for asset classes. Historical markets are studied and long-term historical relationships among asset classes are analyzed, consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors, such as interest rates and dividend yields, are evaluated before long-term capital market assumptions are determined.

The expected long-term nominal rate of return for plan assets is primarily a function of expected long-term real rates of return for component asset classes and the plan's target asset allocation in conjunction with an inflation assumption. Peer data and historical returns are reviewed to check for appropriateness.

d. Investment Strategy.

MGE employs a total return investment approach whereby a mix of equities, fixed income, and real estate investments are used to maximize the expected long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan-funded status, and corporate financial condition. The investment portfolio contains a diversified blend of equity, fixed income, and real estate investments. Investment risk is measured and monitored on an ongoing basis through periodic investment portfolio reviews and liability measurements.

The asset allocation for MGE's pension plans at the end of 2014 and 2013, and the target allocation for 2015, by asset category, follows:

	Target Allocation	Percentage of Plan Assets at Year End
		2014	2013
Equity securities(a)	63.0 %	62.0 %	66.0 %
Fixed income securities	30.0 %	31.0 %	28.0 %
Real estate	7.0 %	7.0 %	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,

17.5% non-United States equity.

The fair value of plan assets for the postretirement benefit plans is $39.0 million and $37.6 million at the end of 2014 and 2013, respectively. Of this amount, $32.8 million and $31.1 million at the end of 2014and 2013, respectively, were held in the master pension trust and are allocable to postretirement health expenses. The target asset allocation and investment strategy for the portion of assets held in the master pension trust are the same as that explained for MGE's pension plans. The remainder of postretirement benefit assets is held either in an insurance continuance fund for the payment of retiree life benefits or a health benefit trust for payment of retiree health claims. There is no formal target asset allocation for these assets, but the intent is to seek interest income and maintain stability of principal.

e. Concentrations of Credit Risk.

MGE evaluated its pension and other postretirement benefit plans' asset portfolios for the existence of significant concentrations of credit risk as of December 31,2014. Types of concentrations that were evaluated include, but are not limited to, investment concentrations in a single entity, type of industry, and foreign country. As of December 31,2014, there were no significant concentrations (defined as greater than 10 percent of plan assets) of risk in MGE pension and postretirement benefit plan assets.

f. Fair Value Measurements of Plan Assets.

Pension and other postretirement benefit plan investments are recorded at fair value. See Footnote 11 for more information regarding the fair value hierarchy.

The following is a description of the valuation methodologies used for assets measured at fair value as of December 31,2014:

Equity Securities – These securities consist of U.S. and international stock funds. The U.S. stock funds are primarily invested in domestic equities. Securities in these funds are typically priced using the closing price from the applicable exchange, NYSE, NASDAQ, etc. The international funds are composed of international equities. Securities are priced using the closing price from the appropriate local stock exchange.

Fixed Income Securities – These securities consist of U.S. bond funds and short-term funds. U.S. bond funds are priced by a pricing agent using inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. The short-term funds are valued initially at cost and adjusted for amortization of any discount or premium.

Real Estate – The fair value of real estate properties is determined through an external appraisal process.

Insurance Continuance Fund (ICF) – The fair value of the ICF is based on largely unobservable inputs, which are based on a commingled interest.

Fixed Rate Fund –The fair value of the Fixed Rate fund is determined based on the type of assets held. Public market data and GAAP reported market values are used when available. For all other assets, discounted cash flows are calculated using treasury rates and spreads based on the cash flow timing and quality of assets.

The fair value of MGE's plan assets, by asset category are as follows:

	Fair Value as of December 31, 2014
(In thousands)		Total		Level 1		Level 2		Level 3
Equity Securities:
U.S. Large Cap	$	99,256	$	-	$	99,256	$	-
U.S. Mid Cap		22,926		-		22,926		-
U.S. Small Cap		29,353		-		29,353		-
International Blend		47,650		-		47,650		-
Fixed Income Securities:
Short-Term Fund		3,776		-		3,776		-
High Yield Bond		15,492		-		15,492		-
Long Duration Bond		79,603		-		79,603		-
Real Estate		23,480		-		-		23,480
Insurance Continuance Fund		1,518		-		-		1,518
Fixed Rate Fund		4,446		-		-		4,446
Total	$	327,500	$	-	$	298,056	$	29,444
	Fair Value as of December 31, 2013
(In thousands)		Total		Level 1		Level 2		Level 3
Cash and Cash Equivalents	$	5,109	$	5,109	$	-	$	-
Equity Securities:
U.S. Large Cap		96,258		-		96,258		-
U.S. Mid Cap		22,741		-		22,741		-
U.S. Small Cap		28,854		-		28,854		-
International Blend		54,873		-		54,873		-
Fixed Income Securities:
Short-Term Fund		4,789		-		4,789		-
High Yield Bond		15,127		-		15,127		-
Long Duration Bond		66,193		-		66,193		-
Real Estate		19,628		-		-		19,628
Insurance Continuance Fund		1,428		-		-		1,428
Total	$	315,000	$	5,109	$	288,835	$	21,056

No transfers were made in or out of Level 1 or Level 2 for the year endedDecember 31,2014.

The following table summarizes the changes in the fair value of the Level 3 plan assets.

		Level 3 Assets
(In thousands)		Real Estate		Insurance Continuance Fund		Fixed Rate Fund
Balance as of January 1, 2013	$	17,141	$	1,466	$	-
Actual return on plan assets:
Relating to assets still held at the reporting date		1,565		42		-
Purchases, sales, and settlements		922		(80)		-
Transfers in and/or out of Level 3		-		-		-
Balance as of December 31, 2013	$	19,628	$	1,428	$	-
Actual return on plan assets:
Relating to assets still held at the reporting date		1,561		44		54
Purchases, sales, and settlements		2,291		46		4,392
Transfers in and/or out of Level 3		-		-		-
Balance as of December 31, 2014	$	23,480	$	1,518	$	4,446

g. Expected Cash Flows.

Contributions to the qualified plans for 2015 are expected to be $10 million, which was paid in January 2015. MGE does not expect to make contributions to the plans for 2016.The contributions for years after 2016 are not yet currently estimated. MGE has adopted the asset smoothing as permitted in accordance with the Pension Protection Act of 2006, including modifications made by WRERA.

Due to uncertainties in the future economic performance of plan assets, discount rates, and other key assumptions, estimated contributions are subject to change. MGE may also elect to make additional discretionary contributions.

In 2014, MGE made $3.3 millionin employer contributions to its pension and postretirement plans.

h. Benefit Payments.

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
2015	$	11,944	3,101	(211)	2,890
2016		12,631	3,338	(237)	3,101
2017		13,408	3,757	(258)	3,499
2018		14,613	4,272	(282)	3,990
2019		15,559	4,776	(306)	4,470
2020 - 2024		92,915	29,871	(2,005)	27,866

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Commitments and Contingencies (Details-5) (USD $)	12 Months Ended
	Dec. 31, 2014
MGE [Member]
Other Commitments [Line Items]
Other commitments, due in 2015	$ 474,000
Other commitments, due in 2016	475,000
Other commitments, due in 2017	433,000
Other commitments, due in 2018	435,000
Other commitments, due in 2019	437,000
Other commitment, due thereafter	6,524,000
MGE Energy [Member] | Investments in Non Public Entities, Capital Infusions [Member]
Other Commitments [Line Items]
Other commitment, initial agreed upon commitment total	1,400,000
MGE Energy [Member] | Venture Debt Fund [Member]
Other Commitments [Line Items]
Other commitment, contract term, expiring in 2016	3 years
Other commitment, initial agreed upon commitment total	1,000,000
Other commitments, total as of balance sheet date	$ 200,000

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Notes Payable to Banks, Commercial Paper, and Lines of Credit (Tables)

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Schedule of Short-Term Borrowings

Information concerning short-term borrowings for the past three years is shown below:

		As of December 31,
(In thousands)		2014		2013		2012
MGE Energy(a)
Available lines of credit	$	150,000	$	150,000	$	115,000
Short-term debt outstanding	$	7,000	$	-	$	-
Weighted-average interest rate		0.20%		-%		-%
During the year:
Maximum short-term borrowings	$	9,000	$	32,000	$	16,000
Average short-term borrowings	$	182	$	6,992	$	1,154
Weighted-average interest rate		0.24%		0.18%		0.17%
MGE
Available lines of credit	$	100,000	$	100,000	$	75,000
Commercial paper outstanding	$	7,000	$	-	$	-
Weighted-average interest rate		0.20%		-%		-%
During the year:
Maximum short-term borrowings	$	9,000	$	32,000	$	16,000
Average short-term borrowings	$	182	$	6,992	$	1,154
Weighted-average interest rate		0.24%		0.18%		0.17%

(a)MGE Energy short-term borrowings include MGE Energy and MGE lines of credit and MGE commercial paper.

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Schedule I - Condensed Parent Company Finanical Statements (Details-Balance Sheet) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Current Assets:
Cash and cash equivalents	$ 65,755	$ 68,813	$ 46,357	$ 41,169
Accounts receivable, net:
Other current assets	10,711	8,225
Total Current Assets	253,959	220,601
Other deferred assets and other	4,837	5,853
Investments:
Other investments	159	0
Total investments	71,760	67,952
Total Assets	1,697,666	1,579,060	1,586,924
Current Liabilities:
Other current liabilities	13,931	9,489
Total Current Liabilities	89,996	96,666
Other Credits:
Deferred income taxes	342,045	284,791
Total Other Credits	553,013	465,470
Shareholders' Equity:
Retained income	308,007	266,197
Other comprehensive income (loss)	458	377
Total Common Shareholders' Equity	659,401	617,510	579,429	550,952
Commitments and contingencies (see Footnote 3)	0	0
Total Liabilities and Capitalization	1,697,666	1,579,060
MGE Energy [Member]
Current Assets:
Cash and cash equivalents	58,429	51,204	36,881	24,620
Accounts receivable, net:
Accounts receivable from affiliates	64	125
Other current assets	2,809	1,015
Total Current Assets	61,302	52,344
Other deferred assets and other	140	157
Investments:
Investments in affiliates	619,563	583,435
Other investments	1,177	948
Total investments	620,740	584,383
Total Assets	682,182	636,884
Current Liabilities:
Accounts payable to affiliates	7,096	530
Accrued taxes	663	4,297
Other current liabilities	2,601	3,076
Total Current Liabilities	10,360	7,903
Other Credits:
Deferred income taxes	7,125	5,646
Accounts payable to affiliates	5,296	5,825
Total Other Credits	12,421	11,471
Shareholders' Equity:
Common shareholders' equity	350,936	350,936
Retained income	308,007	266,197
Other comprehensive income (loss)	458	377
Total Common Shareholders' Equity	659,401	617,510
Commitments and contingencies (see Footnote 3)	0	0
Total Liabilities and Capitalization	$ 682,182	$ 636,884

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Straight-Line Depreciation Rates

Provisions at composite straight-line depreciation rates approximate the following percentages for the cost of depreciable property:

	2014	2013	2012
Electric	2.6 %	2.7 %	2.9 %
Gas	1.7 %	1.7 %	1.7 %
Nonregulated	2.4 %	2.3 %	2.3 %

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Schedule I - Condensed Parent Company Finanical Statements (Details-Notes 2) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Dividends from Affiliates [Line Items]
Dividends from affiliates	$ 47,859,000	$ 52,366,000	$ 44,343,000
First Mortgage Bonds [Member] | 7.70%, 2028 Series
Dividend Restrictions
Debt covenant, allowable amount available for payment of dividends	334,800,000
MGE [Member]
Dividends from Affiliates [Line Items]
Dividends from affiliates	26,500,000	25,000,000	20,404,000
Dividend Restrictions
Dividend restrictions, minimum common equity ratio	0.55
Common equity ratio	0.569
MGE [Member] | First Mortgage Bonds [Member] | 7.70%, 2028 Series
Dividend Restrictions
Debt covenant, allowable amount available for payment of dividends	334,800,000
MGE Construct [Member]
Dividends from Affiliates [Line Items]
Dividends from affiliates	0	0	239,000
MGE Power Elm Road [Member]
Dividends from Affiliates [Line Items]
Dividends from affiliates	13,500,000	17,300,000	16,000,000
MGE Power [Member]
Dividends from Affiliates [Line Items]
Dividends from affiliates	0	0	200,000
MGE Power West Campus [Member]
Dividends from Affiliates [Line Items]
Dividends from affiliates	6,000,000	9,250,000	7,500,000
MGE Transco [Member]
Dividends from Affiliates [Line Items]
Dividends from affiliates	$ 1,859,000	$ 816,000	$ 0

XML

Madison Gas and Electric Company Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on available for sale securities, net of tax	$ 81	$ 283	$ (18)
Comprehensive Income	80,400	75,188	64,428
MGE [Member]
Net Income	81,938	76,445	65,306
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on available for sale securities, net of tax	(48)	188	(43)
Comprehensive Income Including Noncontrolling Interest	81,890	76,633	65,263
Less: Comprehensive Income Attributable to Noncontrolling Interest, net of tax	(26,310)	(27,438)	(24,489)
Comprehensive Income	$ 55,580	$ 49,195	$ 40,774

XML

Derivative and Hedging Instruments (Details-4) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Current and Long-Term Regulatory Asset [Member]
Change in Derivative Fair Value [Roll Forward]
Beginning balance	$ 63,893	$ 72,329
Change in unrealized loss	(14,518)	(5,069)
Realized gain (loss) reclassified to a deferred account	595	(823)
Realized gain (loss) reclassified to income statement	5,028	(2,544)
Ending balance	54,998	63,893
Other Current Assets [Member]
Change in Derivative Fair Value [Roll Forward]
Beginning balance	411	574
Change in unrealized loss	0	0
Realized gain (loss) reclassified to a deferred account	(595)	823
Realized gain (loss) reclassified to income statement	1,185	(986)
Ending balance	$ 1,001	$ 411

XML

Consolidated Balance Sheets (Parentheticals) (USD $) In Thousands, except Per Share data, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Receivables, Net
Reserve for uncollectible accounts receivable	$ 4,329	$ 4,219
Reserve for uncollectible other accounts receivable	420	750
Common shareholders' equity
Common stock, par value	$ 1	$ 1
Common stock, shares authorized	75,000	50,000
Common stock, shares issued	34,668	34,668
Common stock, shares outstanding	34,668	34,668
MGE [Member]
Receivables, Net
Reserve for uncollectible accounts receivable	4,329	4,219
Reserve for uncollectible other accounts receivable	$ 420	$ 750
Common shareholders' equity
Common stock, par value	$ 1	$ 1
Common stock, shares authorized	50,000	50,000
Common stock, shares outstanding	17,348	17,348

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Quarterly Summary of Operations (Tables)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

Quarterly Summary of Operations

(In thousands, except per share amounts)		Quarters Ended
2014		March 31		June 30		September 30		December 31
Operating revenues:
Regulated electric revenues	$	98,852	$	96,697	$	112,869	$	86,431
Regulated gas revenues		110,713		31,218		21,404		58,385
Nonregulated revenues		680		850		862		891
Total Operating Revenues		210,245		128,765		135,135		145,707
Operating expenses		166,274		104,324		95,015		116,141
Operating income		43,971		24,441		40,120		29,566
Interest and other income, net		11		(1,320)		(2,505)		(5,780)
Income tax provision		(16,265)		(9,034)		(14,286)		(8,600)
Earnings on common stock	$	27,717	$	14,087	$	23,329	$	15,186
Earnings per common share	$	0.80	$	0.41	$	0.67	$	0.44
Dividends per share	$	0.272	$	0.272	$	0.283	$	0.283
2013
Operating revenues:
Regulated electric revenues	$	93,494	$	96,846	$	119,836	$	93,781
Regulated gas revenues		72,467		30,042		18,864		60,089
Nonregulated revenues		1,276		1,400		1,399		1,393
Total Operating Revenues		167,237		128,288		140,099		155,263
Operating expenses		129,609		103,791		100,199		129,301
Operating income		37,628		24,497		39,900		25,962
Interest and other income, net		(1,366)		(1,946)		(855)		(4,056)
Income tax provision		(13,678)		(8,660)		(14,692)		(7,829)
Earnings on common stock	$	22,584	$	13,891	$	24,353	$	14,077
Earnings per common share	$	0.65	$	0.40	$	0.70	$	0.41
Dividends per share	$	0.263	$	0.263	$	0.272	$	0.272

Notes:

• The quarterly results of operations within a year may not be comparable because of seasonal and other factors.

• The sum of earnings per share of common stock for any four quarters may vary slightly from the earnings per share of common stock for the equivalent twelve-month period due to rounding.

• MGE Energy's operations are based primarily on its utility subsidiary MGE.

XML

Pension Plans and Other Postretirement Benefits (Details-7) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Expected Cash Flows
Expected employer contributions, 2015	$ 10,000,000
Expected employer contributions, 2016	0
Cash contributions to pension and other postretirement plans	3,321,000	34,765,000	28,857,000
Pension Benefits [Member]
Benefit Payments
Defined benefit plan expected future benefit payments, 2015	11,944,000
Defined benefit plan expected future benefit payments, 2016	12,631,000
Defined benefit plan expected future benefit payments, 2017	13,408,000
Defined benefit plan expected future benefit payments, 2018	14,613,000
Defined benefit plan expected future benefit payments, 2019	15,559,000
Defined benefit plan expected future benefit payments, 2020-2024	92,915,000
Postretirement Benefits [Member]
Benefit Payments
Defined benefit plan expected future benefit payments, 2015	2,890,000
Defined benefit plan expected future benefit payments, 2016	3,101,000
Defined benefit plan expected future benefit payments, 2017	3,499,000
Defined benefit plan expected future benefit payments, 2018	3,990,000
Defined benefit plan expected future benefit payments, 2019	4,470,000
Defined benefit plan expected future benefit payments, 2020-2024	27,866,000
Gross Postretirement Benefits [Member]
Benefit Payments
Defined benefit plan expected future benefit payments, 2015	3,101,000
Defined benefit plan expected future benefit payments, 2016	3,338,000
Defined benefit plan expected future benefit payments, 2017	3,757,000
Defined benefit plan expected future benefit payments, 2018	4,272,000
Defined benefit plan expected future benefit payments, 2019	4,776,000
Defined benefit plan expected future benefit payments, 2020-2024	29,871,000
Expected Medicare Part D Subsidy [Member]
Benefit Payments
Defined benefit plan expected future benefit payments, 2015	(211,000)
Defined benefit plan expected future benefit payments, 2016	(237,000)
Defined benefit plan expected future benefit payments, 2017	(258,000)
Defined benefit plan expected future benefit payments, 2018	(282,000)
Defined benefit plan expected future benefit payments, 2019	(306,000)
Defined benefit plan expected future benefit payments, 2020-2024	$ (2,005,000)

XML

Schedule I - Condensed Parent Company Finanical Statements (Details-Notes 1) (Line of Credit [Member], USD $)	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Credit facilities [Line Items]
Available lines of credit	$ 150,000,000	[1]	$ 150,000,000	[1]	$ 115,000,000	[1]
MGE Energy [Member] | MGE Energy $50 million unsecured commiteed revolving line of credit
Credit facilities [Line Items]
Available lines of credit	50,000,000
Line of credit, borrowings outstanding	$ 0

[1] MGE Energy short-term borrowings include MGE Energy and MGE lines of credit and MGE commercial paper.

XML

Long-Term Debt (Details) (USD $)	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013
Debt Instrument [Line Items]
Long-term debt due within one year	$ (4,182,000)		$ (4,102,000)
Unamortized discount	(252,000)		(277,000)
Total Long-Term Debt	395,256,000		399,414,000
Long-Term Debt Maturities [Abstract]
Long term debt maturities in 2015	4,182,000
Long term debt maturities in 2016	4,268,000
Long term debt maturities in 2017	34,358,000
Long term debt maturities in 2018	24,452,000
Long term debt maturities in 2019	4,553,000
Long term debt maturities in future years	327,877,000
Total	399,690,000
First Mortgage Bonds [Member] | 7.70%, 2028 Series
Debt Instrument [Line Items]
Long-term debt, gross	1,200,000	[1]	1,200,000	[1]
Interest rate	7.70%	[1]	7.70%	[1]
Debt covenant, allowable amount available for payment of dividends	334,800,000
Tax Exempt Debt [Member] | 3.45%, 2027 Series, Industrial Development Revenue Bonds
Debt Instrument [Line Items]
Long-term debt, gross	19,300,000		19,300,000
Interest rate	3.45%		3.45%
Medium-Term Notes [Member]
Debt Instrument [Line Items]
Long-term debt, gross	100,000,000	[2]	100,000,000	[2]
Medium-Term Notes [Member] | 5.25%, due 2017
Debt Instrument [Line Items]
Long-term debt, gross	30,000,000	[2]	30,000,000	[2]
Interest rate	5.25%	[2]	5.25%	[2]
Medium-Term Notes [Member] | 6.12%, due 2028
Debt Instrument [Line Items]
Long-term debt, gross	20,000,000	[2]	20,000,000	[2]
Interest rate	6.12%	[2]	6.12%	[2]
Medium-Term Notes [Member] | 7.12%, due 2032
Debt Instrument [Line Items]
Long-term debt, gross	25,000,000	[2]	25,000,000	[2]
Interest rate	7.12%	[2]	7.12%	[2]
Medium-Term Notes [Member] | 6.247%, due 2037
Debt Instrument [Line Items]
Long-term debt, gross	25,000,000	[2]	25,000,000	[2]
Interest rate	6.247%	[2]	6.247%	[2]
Other Long-Term Debt [Member]
Debt Instrument [Line Items]
Long-term debt, gross	279,190,000	[3]	283,293,000	[3]
Other Long-Term Debt [Member] | 5.59%, due 2018
Debt Instrument [Line Items]
Long-term debt, gross	20,000,000	[3],[4]	20,000,000	[3],[4]
Interest rate	5.59%	[3],[4]	5.59%	[3],[4]
Other Long-Term Debt [Member] | 5.59%, due 2018 | Minimum [Member]
Debt Instrument [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
Priority debt to assets ratio	0.2
Other Long-Term Debt [Member] | 5.59%, due 2018 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
Other Long-Term Debt [Member] | 3.38%, due 2020
Debt Instrument [Line Items]
Long-term debt, gross	15,000,000	[3],[4]	15,000,000	[3],[4]
Interest rate	3.38%	[3],[4]	3.38%	[3],[4]
Other Long-Term Debt [Member] | 3.38%, due 2020 | Minimum [Member]
Debt Instrument [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
Priority debt to assets ratio	0.2
Other Long-Term Debt [Member] | 3.38%, due 2020 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
Other Long-Term Debt [Member] | 3.09%, due 2023
Debt Instrument [Line Items]
Long-term debt, gross	30,000,000	[3],[4]	30,000,000	[3],[4]
Interest rate	3.09%	[3],[4]	3.09%	[3],[4]
Other Long-Term Debt [Member] | 3.09%, due 2023 | Minimum [Member]
Debt Instrument [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
Priority debt to assets ratio	0.2
Other Long-Term Debt [Member] | 3.09%, due 2023 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
Other Long-Term Debt [Member] | 3.29%, due 2026
Debt Instrument [Line Items]
Long-term debt, gross	15,000,000	[3],[4]	15,000,000	[3],[4]
Interest rate	3.29%	[3],[4]	3.29%	[3],[4]
Other Long-Term Debt [Member] | 3.29%, due 2026 | Minimum [Member]
Debt Instrument [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
Priority debt to assets ratio	0.2
Other Long-Term Debt [Member] | 3.29%, due 2026 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
Other Long-Term Debt [Member] | 5.68%, due 2033
Debt Instrument [Line Items]
Long-term debt, gross	28,954,000	[3],[5]	29,797,000	[3],[5]
Interest rate	5.68%	[3],[5]	5.68%	[3],[5]
Other Long-Term Debt [Member] | 5.19%, due 2033
Debt Instrument [Line Items]
Long-term debt, gross	19,264,000	[3],[5]	19,857,000	[3],[5]
Interest rate	5.19%	[3],[5]	5.19%	[3],[5]
Other Long-Term Debt [Member] | 5.26%, due 2040
Debt Instrument [Line Items]
Long-term debt, gross	15,000,000	[3],[4]	15,000,000	[3],[4]
Interest rate	5.26%	[3],[4]	5.26%	[3],[4]
Other Long-Term Debt [Member] | 5.26%, due 2040 | Minimum [Member]
Debt Instrument [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
Priority debt to assets ratio	0.2
Other Long-Term Debt [Member] | 5.26%, due 2040 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
Other Long-Term Debt [Member] | 5.04%, due 2040
Debt Instrument [Line Items]
Long-term debt, gross	41,805,000	[3],[6]	43,472,000	[3],[6]
Interest rate	5.04%	[3],[6]	5.04%	[3],[6]
Other Long-Term Debt [Member] | 4.74%, due 2041
Debt Instrument [Line Items]
Long-term debt, gross	26,167,000	[3],[6]	27,167,000	[3],[6]
Interest rate	4.74%	[3],[6]	4.74%	[3],[6]
Other Long-Term Debt [Member] | 4.38%, due 2042
Debt Instrument [Line Items]
Long-term debt, gross	28,000,000	[3],[4]	28,000,000	[3],[4]
Interest rate	4.38%	[3],[4]	4.38%	[3],[4]
Other Long-Term Debt [Member] | 4.38%, due 2042 | Minimum [Member]
Debt Instrument [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
Priority debt to assets ratio	0.2
Other Long-Term Debt [Member] | 4.38%, due 2042 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
Other Long-Term Debt [Member] | 4.42%, due 2043
Debt Instrument [Line Items]
Long-term debt, gross	20,000,000	[3],[4]	20,000,000	[3],[4]
Interest rate	4.42%	[3],[4]	4.42%	[3],[4]
Other Long-Term Debt [Member] | 4.42%, due 2043 | Minimum [Member]
Debt Instrument [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
Priority debt to assets ratio	0.2
Other Long-Term Debt [Member] | 4.42%, due 2043 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
Other Long-Term Debt [Member] | 4.47%, due 2048
Debt Instrument [Line Items]
Long-term debt, gross	20,000,000	[3],[4]	20,000,000	[3],[4]
Interest rate	4.47%	[3],[4]	4.47%	[3],[4]
Other Long-Term Debt [Member] | 4.47%, due 2048 | Minimum [Member]
Debt Instrument [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
Priority debt to assets ratio	0.2
Other Long-Term Debt [Member] | 4.47%, due 2048 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
MGE [Member]
Debt Instrument [Line Items]
Long-term debt due within one year	(4,182,000)		(4,102,000)
Unamortized discount	(252,000)		(277,000)
Total Long-Term Debt	395,256,000		399,414,000
Long-Term Debt Maturities [Abstract]
Long term debt maturities in 2015	4,182,000	[7]
Long term debt maturities in 2016	4,268,000	[7]
Long term debt maturities in 2017	34,358,000	[7]
Long term debt maturities in 2018	24,452,000	[7]
Long term debt maturities in 2019	4,553,000	[7]
Long term debt maturities in future years	327,877,000	[7]
Total	399,690,000	[7]
MGE [Member] | First Mortgage Bonds [Member] | 7.70%, 2028 Series
Debt Instrument [Line Items]
Long-term debt, gross	1,200,000	[1]	1,200,000	[1]
Interest rate	7.70%	[1]	7.70%	[1]
Debt covenant, allowable amount available for payment of dividends	334,800,000
MGE [Member] | Tax Exempt Debt [Member] | 3.45%, 2027 Series, Industrial Development Revenue Bonds
Debt Instrument [Line Items]
Long-term debt, gross	19,300,000		19,300,000
Interest rate	3.45%		3.45%
MGE [Member] | Medium-Term Notes [Member]
Debt Instrument [Line Items]
Long-term debt, gross	100,000,000	[2]	100,000,000	[2]
MGE [Member] | Medium-Term Notes [Member] | 5.25%, due 2017
Debt Instrument [Line Items]
Long-term debt, gross	30,000,000	[2]	30,000,000	[2]
Interest rate	5.25%	[2]	5.25%	[2]
MGE [Member] | Medium-Term Notes [Member] | 6.12%, due 2028
Debt Instrument [Line Items]
Long-term debt, gross	20,000,000	[2]	20,000,000	[2]
Interest rate	6.12%	[2]	6.12%	[2]
MGE [Member] | Medium-Term Notes [Member] | 7.12%, due 2032
Debt Instrument [Line Items]
Long-term debt, gross	25,000,000	[2]	25,000,000	[2]
Interest rate	7.12%	[2]	7.12%	[2]
MGE [Member] | Medium-Term Notes [Member] | 6.247%, due 2037
Debt Instrument [Line Items]
Long-term debt, gross	25,000,000	[2]	25,000,000	[2]
Interest rate	6.247%	[2]	6.247%	[2]
MGE [Member] | Other Long-Term Debt [Member]
Debt Instrument [Line Items]
Long-term debt, gross	279,190,000	[3]	283,293,000	[3]
MGE [Member] | Other Long-Term Debt [Member] | 5.59%, due 2018
Debt Instrument [Line Items]
Long-term debt, gross	20,000,000	[3],[4]	20,000,000	[3],[4]
Interest rate	5.59%	[3],[4]	5.59%	[3],[4]
MGE [Member] | Other Long-Term Debt [Member] | 5.59%, due 2018 | Minimum [Member]
Debt Instrument [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
Priority debt to assets ratio	0.2
MGE [Member] | Other Long-Term Debt [Member] | 5.59%, due 2018 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
MGE [Member] | Other Long-Term Debt [Member] | 3.38%, due 2020
Debt Instrument [Line Items]
Long-term debt, gross	15,000,000	[3],[4]	15,000,000	[3],[4]
Interest rate	3.38%	[3],[4]	3.38%	[3],[4]
MGE [Member] | Other Long-Term Debt [Member] | 3.38%, due 2020 | Minimum [Member]
Debt Instrument [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
Priority debt to assets ratio	0.2
MGE [Member] | Other Long-Term Debt [Member] | 3.38%, due 2020 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
MGE [Member] | Other Long-Term Debt [Member] | 3.09%, due 2023
Debt Instrument [Line Items]
Long-term debt, gross	30,000,000	[3],[4]	30,000,000	[3],[4]
Interest rate	3.09%	[3],[4]	3.09%	[3],[4]
MGE [Member] | Other Long-Term Debt [Member] | 3.09%, due 2023 | Minimum [Member]
Debt Instrument [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
Priority debt to assets ratio	0.2
MGE [Member] | Other Long-Term Debt [Member] | 3.09%, due 2023 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
MGE [Member] | Other Long-Term Debt [Member] | 3.29%, due 2026
Debt Instrument [Line Items]
Long-term debt, gross	15,000,000	[3],[4]	15,000,000	[3],[4]
Interest rate	3.29%	[3],[4]	3.29%	[3],[4]
MGE [Member] | Other Long-Term Debt [Member] | 3.29%, due 2026 | Minimum [Member]
Debt Instrument [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
Priority debt to assets ratio	0.2
MGE [Member] | Other Long-Term Debt [Member] | 3.29%, due 2026 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
MGE [Member] | Other Long-Term Debt [Member] | 5.68%, due 2033
Debt Instrument [Line Items]
Long-term debt, gross	28,954,000	[3],[5]	29,797,000	[3],[5]
Interest rate	5.68%	[3],[5]	5.68%	[3],[5]
MGE [Member] | Other Long-Term Debt [Member] | 5.19%, due 2033
Debt Instrument [Line Items]
Long-term debt, gross	19,264,000	[3],[5]	19,857,000	[3],[5]
Interest rate	5.19%	[3],[5]	5.19%	[3],[5]
MGE [Member] | Other Long-Term Debt [Member] | 5.26%, due 2040
Debt Instrument [Line Items]
Long-term debt, gross	15,000,000	[3],[4]	15,000,000	[3],[4]
Interest rate	5.26%	[3],[4]	5.26%	[3],[4]
MGE [Member] | Other Long-Term Debt [Member] | 5.26%, due 2040 | Minimum [Member]
Debt Instrument [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
Priority debt to assets ratio	0.2
MGE [Member] | Other Long-Term Debt [Member] | 5.26%, due 2040 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
MGE [Member] | Other Long-Term Debt [Member] | 5.04%, due 2040
Debt Instrument [Line Items]
Long-term debt, gross	41,805,000	[3],[6]	43,472,000	[3],[6]
Interest rate	5.04%	[3],[6]	5.04%	[3],[6]
MGE [Member] | Other Long-Term Debt [Member] | 4.74%, due 2041
Debt Instrument [Line Items]
Long-term debt, gross	26,167,000	[3],[6]	27,167,000	[3],[6]
Interest rate	4.74%	[3],[6]	4.74%	[3],[6]
MGE [Member] | Other Long-Term Debt [Member] | 4.38%, due 2042
Debt Instrument [Line Items]
Long-term debt, gross	28,000,000	[3],[4]	28,000,000	[3],[4]
Interest rate	4.38%	[3],[4]	4.38%	[3],[4]
MGE [Member] | Other Long-Term Debt [Member] | 4.38%, due 2042 | Minimum [Member]
Debt Instrument [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
Priority debt to assets ratio	0.2
MGE [Member] | Other Long-Term Debt [Member] | 4.38%, due 2042 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
MGE [Member] | Other Long-Term Debt [Member] | 4.42%, due 2043
Debt Instrument [Line Items]
Long-term debt, gross	20,000,000	[3],[4]	20,000,000	[3],[4]
Interest rate	4.42%	[3],[4]	4.42%	[3],[4]
MGE [Member] | Other Long-Term Debt [Member] | 4.42%, due 2043 | Minimum [Member]
Debt Instrument [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
Priority debt to assets ratio	0.2
MGE [Member] | Other Long-Term Debt [Member] | 4.42%, due 2043 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
MGE [Member] | Other Long-Term Debt [Member] | 4.47%, due 2048
Debt Instrument [Line Items]
Long-term debt, gross	20,000,000	[3],[4]	20,000,000	[3],[4]
Interest rate	4.47%	[3],[4]	4.47%	[3],[4]
MGE [Member] | Other Long-Term Debt [Member] | 4.47%, due 2048 | Minimum [Member]
Debt Instrument [Line Items]
Debt covenant, ownership interest by outside party resulting in repurchase of notes at par value	30.00%
Priority debt to assets ratio	0.2
MGE [Member] | Other Long-Term Debt [Member] | 4.47%, due 2048 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
MGE Power Elm Road [Member]
Debt Instrument [Line Items]
Long-term debt, gross	67,972,000		70,639,000
MGE Power Elm Road [Member] | Minimum [Member]
Debt Instrument [Line Items]
Debt service coverage ratio	1.25
MGE Power Elm Road [Member] | Other Long-Term Debt [Member] | 5.04%, due 2040 | Minimum [Member]
Debt Instrument [Line Items]
Debt service coverage ratio	1.25
MGE Power Elm Road [Member] | Other Long-Term Debt [Member] | 4.74%, due 2041 | Minimum [Member]
Debt Instrument [Line Items]
Debt service coverage ratio	1.25
MGE Power West Campus [Member]
Debt Instrument [Line Items]
Long-term debt, gross	$ 48,218,000		$ 49,653,000
MGE Power West Campus [Member] | Minimum [Member]
Debt Instrument [Line Items]
Debt service coverage ratio	1.25
MGE Power West Campus [Member] | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
MGE Power West Campus [Member] | Other Long-Term Debt [Member] | 5.68%, due 2033 | Minimum [Member]
Debt Instrument [Line Items]
Debt service coverage ratio	1.25
MGE Power West Campus [Member] | Other Long-Term Debt [Member] | 5.68%, due 2033 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65
MGE Power West Campus [Member] | Other Long-Term Debt [Member] | 5.19%, due 2033 | Minimum [Member]
Debt Instrument [Line Items]
Debt service coverage ratio	1.25
MGE Power West Campus [Member] | Other Long-Term Debt [Member] | 5.19%, due 2033 | Maximum [Member]
Debt Instrument [Line Items]
Debt to total capitalization ratio	0.65

[1] MGE's utility plant is subject to the lien of its Indenture of Mortgage and Deed of Trust, under which its first mortgage bonds are issued. The Mortgage Indenture provides that dividends or any other distribution or purchase of shares may not be made if the aggregate amount thereof since December 31, 1945 would exceed the earned surplus (retained earnings) accumulated subsequent to December 31, 1945. As of December 31,2014, approximately $334.8 million was available for the payment of dividends under this covenant.

[2] The indenture under which MGE's Medium-Term notes are issued provides that those notes will be entitled to be equally and ratably secured in the event that MGE issues any additional first mortgage bonds.

[3] Unsecured notes issued pursuant to various Note Purchase Agreements with one or more purchasers. The notes are not issued under, or governed by, MGE’s Indenture dated as of September 1, 1998, which governs MGE’s Medium-Term Notes.

[4] Issued by MGE. Under that Note Purchase Agreement: (i) note holders have the right to require MGE to repurchase their notes at par in the event of an acquisition of beneficial ownership of 30% or more of the outstanding voting stock of MGE Energy, (ii) MGE must maintain a ratio of its consolidated indebtedness to consolidated total capitalization not to exceed a maximum of 65%, and (iii) MGE cannot issue "Priority Debt" in an amount exceeding 20% of its consolidated assets. Priority Debt is defined as any indebtedness of MGE secured by liens other than specified liens permitted by the Note Purchase Agreement and certain unsecured indebtedness of certain subsidiaries. As of December 31, 2014, MGE is in compliance with the covenant requirements.

[5] Issued by MGE Power West Campus. The Note Purchase Agreements require it to maintain a projected debt service coverage ratio of not less than 1.25 to 1.00, and debt to total capitalization ratio of not more than 0.65 to 1.00. The notes are secured by a collateral assignment of lease payments that MGE is making to MGE Power West Campus for use of its ownership interest in the West Campus Cogeneration Facility pursuant to a long-term lease.As of December 31, 2014, MGE Power West Campus is in compliance with the covenant requirements.

[6] Issued by MGE Power Elm Road. The Note Purchase Agreement requires MGE Power Elm Road to maintain a projected and actual debt service coverage ratio at the end of any calendar quarter of not less than 1.25 to 1.00 for the trailing 12-month period. The notes are secured by a collateral assignment of lease payments that MGE is making to MGE Power Elm Road for use of its ownership interest in the Elm Road Units pursuant to long-term leases.As of December 31, 2014, MGE Power Elm Road is in compliance with the covenant requirements.

[7] Includes $48.2 million for MGE Power West Campusand $68.0 million for MGE Power Elm Road, all of which are consolidated with MGE's debt (see Footnote 2 for further information).

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Share-Based Compensation

12 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation - MGE Energy and MGE.

Under MGE Energy’s Performance Unit Plan, eligible employees may receive performance units that entitle the holder to receive a cash payment equal to the value of a designated number of shares of MGE Energy's common stock, plus dividend equivalent payments thereon, at the end of the set performance period. In accordance with the plan’s provisions, these awards are subject to a prescribed vesting schedule and must be settled in cash. Accordingly, no shares of common stock will be issued in connection with the plan.

On the grant date, MGE Energy and MGE measure the cost of the employee services received in exchange for a performance unit award based on the current market value of MGE Energy common stock. The fair value of the awards is re-measured quarterly, including at December 31,2014, as required by applicable accounting standards. Changes in fair value as well as the original grant are recognized as compensation cost. Since this amount is re-measured throughout the vesting period, the compensation cost is subject to variability. These units are subject to a five year graded vesting schedule.

Grant Date	MGE Energy Units Granted
February 20, 2015	18,948
February 21, 2014	21,991
February 15, 2013	22,884
February 17, 2012	25,040
January 21, 2011	23,483

For nonretirement eligible employees, stock based compensation costs are accrued and recognized using the graded vesting method. Compensation cost for retirement eligible employees or employees that will become retirement eligible during the vesting schedule are recognized on an abridged horizon.

In December 2013, aDirector Incentive Plan was approved for the non-employee members of the Board of Directors. This plan is similar to MGE Energy’s Performance Unit Plan for eligible employees described above. Under the plan, a non-employee director can receive performance units that entitle the holder to receive a cash payment equal to the value of a designated number of shares of MGE Energy’s common stock, plus dividend payments, at the end of the set performance period. The units are subject to a three year graded vesting schedule.

Grant Date	MGE Energy Units Granted
January 16, 2015	3,794
January 17, 2014	4,683

During the years endedDecember 31,2014, 2013, and 2012, MGE recorded $2.0 million, $1.5 million,and $1.4 million, respectively, in compensation expense as a result of awards under the plans. In January 2014, cash payments of $1.2 million were distributed relating to awards that were granted in 2009. No forfeitures occurred during theyears endedDecember 31,2014, 2013, and 2012. At December 31,2014, $5.2 million of outstanding awards are vested, and of this amount no cash settlements have occurred.

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Fair Value of Financial Instruments (Details-4) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ (64,628)		$ (72,346)		$ (40,661)
Realized and unrealized gains (losses):
Included in regulatory liabilities (assets)	10,642		7,718		(31,685)
Included in other comprehensive income	0		0		0
Included in earnings	5,129	[1]	(2,618)	[1]	(5,005)	[1]
Included in current assets	0		(108)		0
Purchases	26,382		23,726		13,370
Sales	(125)		(2)		92
Issuances	0		0		0
Settlements	(31,386)		(20,998)		(8,457)
Transfers in and/or out of Level 3	0		0		0
Ending balance	(53,986)		(64,628)		(72,346)
Total gains (losses) included in earnings attributed to the change in unrealized gains (losses) related to assets and liabilities	0	[1]	0	[1]	0	[1]
Purchased Power Expense [Member]
Realized and unrealized gains (losses):
Included in earnings	5,137	[1]	(2,618)	[1]	(5,005)	[1]
Cost Of Gas Sold Expense [Member]
Realized and unrealized gains (losses):
Included in earnings	$ (8)	[1]	$ 0	[1]	$ 0	[1]

[1] MGE's exchange-traded derivative contracts, over-the-counter party transactions, ten-year 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.

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Condensed Parent Company Financial Statements

12 Months Ended

Dec. 31, 2014

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Parent Company Financial Statements

Schedule I
Condensed Parent Company Financial Statements
MGE Energy, Inc.
Statements of Comprehensive Income
(Parent Company Only)
(In thousands)
		For the years ended December 31,
		2014		2013		2012
Operating Expenses:
Other operations and maintenance	$	689	$	613	$	649
Total Operating Expenses		689		613		649
Operating Loss		(689)		(613)		(649)
Equity in earnings of investments		81,811		76,362		65,132
Other income/(loss), net		(1,879)		(1,863)		(496)
Other interest		93		55		45
Income before income taxes		79,336		73,941		64,032
Income tax provision		983		964		414
Net Income		80,319		74,905		64,446
Other Comprehensive Income, Net of Tax:
Unrealized gain (loss) on available-for-sale securities, net of
tax (($54), ($189), and $12)		81		283		(18)
Comprehensive Income	$	80,400	$	75,188	$	64,428
The accompanying notes are an integral part of the above consolidated financial statements.

MGE Energy, Inc.
Statements of Cash Flows
(Parent Company Only)
(In thousands)
		For the years ended December 31,
		2014		2013		2012
Net Cash Flows Provided by Operating Activities	$	48,165	$	53,952	$	49,819
Investing Activities:
Other investing		(2,422)		(2,425)		(1,558)
Cash Provided by (Used for) Investing Activities		(2,422)		(2,425)		(1,558)
Financing Activities:
Cash dividends paid on common stock		(38,429)		(37,107)		(35,951)
Other financing		(89)		(97)		(49)
Cash Used for Financing Activities		(38,518)		(37,204)		(36,000)
Change in Cash and Cash Equivalents:		7,225		14,323		12,261
Cash and cash equivalents at beginning of period		51,204		36,881		24,620
Cash and cash equivalents at end of period	$	58,429	$	51,204	$	36,881
The accompanying notes are an integral part of the above consolidated financial statements.

Schedule I
Condensed Parent Company Financial Statements (continued)
MGE Energy, Inc.
Balance Sheets
(Parent Company Only)
(In thousands)
		At December 31,
ASSETS		2014		2013
Current Assets:
Cash and cash equivalents	$	58,429	$	51,204
Accounts receivable, net:
Accounts receivable from affiliates		64		125
Other current assets		2,809		1,015
Total Current Assets		61,302		52,344
Other deferred assets and other		140		157
Investments:
Investments in affiliates		619,563		583,435
Other investments		1,177		948
Total Investments		620,740		584,383
Total Assets	$	682,182	$	636,884
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable to affiliates	$	7,096	$	530
Accrued taxes		663		4,297
Other current liabilities		2,601		3,076
Total Current Liabilities		10,360		7,903
Other Credits:
Deferred income taxes		7,125		5,646
Accounts payable to affiliates		5,296		5,825
Total Other Credits		12,421		11,471
Shareholders' Equity:
Common shareholders' equity		350,936		350,936
Retained income		308,007		266,197
Other comprehensive income		458		377
Total Shareholders' Equity		659,401		617,510
Commitments and contingencies (see Footnote 3)		-		-
Total Liabilities and Shareholders' Equity	$	682,182	$	636,884
The accompanying notes are an integral part of the above consolidated financial statements.

Schedule I

Condensed Parent Company Financial Statements (continued)

Notes to Condensed Financial Statements

(Parent Company Only)

1. Basis of Presentation.

MGE Energy is a holding company and conducts substantially all of its business operations through its subsidiaries. For Parent Company only presentation, investment in subsidiaries are accounted for using the equity method. These condensed Parent Company financial statements and related notes have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X. These statements should be read in conjunction with the financial statements and the notes in Item 8. Financial Statements and Supplementary Data of the Annual Report on Form 10-K for the year ended December 31, 2014.

2. Credit Agreements.

As of December 31,2014, MGE Energy had access to an unsecured, committed credit facility with aggregate bank commitments of $50.0 million. At December 31,2014, no borrowings were outstanding under this facility.

See Footnote 10 of the Notes to Consolidated Financial Statements for further information regarding MGE Energy's credit agreements.

3. Commitments and Contingencies.

See Footnote 18 of the Notes to Consolidated Financial Statements for commitments and contingencies.

4. Dividends from Affiliates.

		Dividends from Affiliates
(In thousands)		2014		2013		2012
MGE	$	26,500	$	25,000	$	20,404
MGE Construct		-		-		239
MGE Power Elm Road		13,500		17,300		16,000
MGE Power		-		-		200
MGE Power West Campus		6,000		9,250		7,500
MGE Transco		1,859		816		-
Total	$	47,859	$	52,366	$	44,343

Dividend Restrictions

Dividend payments by MGE to MGE Energy are subject to restrictions arising under a PSCW rate order and, to a lesser degree, MGE's first mortgage bonds. The PSCW order restricts any dividends that MGE may pay MGE Energy if its common equity ratio, calculated in the manner used in the rate proceeding, is less than 55%. MGE's thirteen month rolling average common equity ratio at December 31,2014 is 56.9% as determined under the calculation used in the rate proceeding. MGE paid cash dividends of $26.5million to MGE Energy in 2014.The rate proceeding calculation includes as indebtedness imputed amounts for MGE's outstanding purchase power capacity payments and other PSCW adjustments, but does not include the indebtedness associated with MGE Power Elm Roador MGE Power West Campus, which are consolidated into MGE's financial statements but are not direct obligations of MGE.

MGE has covenanted with the holders of its first mortgage bonds not to declare or pay any dividend or make any other distribution on or purchase any shares of its common stock unless, after giving effect thereto, the aggregate amount of all such dividends and distributions and all amounts applied to such purchases, after December 31, 1945, shall not exceed the earned surplus (retained earnings) accumulated subsequent to December 31, 1945. As of December 31,2014, approximately $334.8 million was available for the payment of dividends under this covenant.

See Footnotes 9 and 10 of the Notes to Consolidated Financial Statement for long-term debt and lines of credit dividend restrictions.

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Common Equity

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Common Equity

Common Equity.

a. Common Stock - MGE Energy and MGE.

On December 20, 2013, MGE Energy’s Board of Directors declared a three-for-two stock split of MGE Energy’s outstanding shares of common stock, effective in the form of a stock dividend. Shareholders of record at the close of business on January 24, 2014 received one additional share of MGE Energy common stock for every two shares of common stock owned on that date. The additional shares were distributed on February 7, 2014. Shareholders received cash in lieu of any fractional shares of common stock they otherwise would have received in connection with the dividend. All share and per share data provided in this report give effect to this stock split.

MGE Energy sells shares of its common stock through its Stock Plan. Those shares may be newly issued shares or shares that MGE Energy has purchased in the open market for resale to participants in the Stock Plan. All sales under the stock plan are covered by a shelf registration statement that MGE Energy filed with the SEC. For the years endedDecember 31,2014 and 2013, MGE Energy did not issue any new shares of common stock under the Stock Plan.

MGE Energy purchases shares on the open market to provide shares to meet obligations to participants in the Stock Plan. The shares are purchased on the open market through a securities broker-dealer and then are reissued under the Stock Plan as needed to meet share delivery requirements. The volume and timing of share repurchases in the open market depends upon the level of dividend reinvestment and optional share purchases being made from time to time by plan participants. As a result, there is no specific maximum number of shares to be repurchased and no specified termination date for the repurchases.

During the years endedDecember 31,2014 and 2013, MGE Energy paid $38.4 million (or $1.11 per share) and $37.1 million (or $1.07 per share), respectively, in cash dividends on its common stock. Dividends on common stock at MGE are subject to restrictions imposed by the PSCW and the covenants of MGE's outstanding first mortgage bonds. See Footnote 9 for further discussion of these covenants. During the years endedDecember 31,2014 and 2013, MGE paid $26.5 million and $25.0 million, respectively, in cash dividends to MGE Energy.

b. Dilutive Shares Calculation - MGE Energy.

MGE Energy does not hold any dilutive securities.

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Related Party Transactions (Details) (ATC [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
ATC [Member]
Related party transaction [Line Items]
Related party expenses	$ 26.8	$ 27.7	$ 25.3
Due from Related Parties	$ 0.1	$ 0.2	$ 0.2