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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 BenefitsOther Postretirement Benefits
Change in benefit obligations:2014201320142013
Net benefit obligation at beginning of year$283,958 $315,505 $66,100 $92,605
Service cost6,179 7,705 1,339 2,380
Interest cost13,574 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 assets21,907 45,816 2,558 5,000
Employer contributions883 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 BenefitsOther Postretirement Benefits
(In thousands)2014201320142013
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 BenefitsOther Postretirement Benefits
(In thousands)2014201320142013
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 assets20142013
Projected benefit obligation, end of year$340,233 $21,631
Fair value of plan assets, end of year288,548 -
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 assets20142013
Projected benefit obligation, end of year$340,233 $21,631
Accumulated benefit obligation, end of year304,023 19,795
Fair value of plan assets, end of year288,548 -
Net Periodic Benefit Costs
(In thousands)Pension BenefitsOther Postretirement Benefits
Components of net periodic (benefit) cost:201420132012201420132012
Service cost$6,179 $7,705 $7,139 $1,339 $2,380 $2,528
Interest cost13,574 12,656 12,704 3,166 3,871 4,431
Expected return on assets(22,051)(19,027)(15,182)(2,615)(2,176)(1,741)
Amortization of:
Transition obligation---3 3 425
Prior service (benefit) cost204 314 430 (2,669)110 110
Actuarial loss703 8,014 8,288 252 1,236 2,346
Net periodic (benefit) cost$(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 BenefitsOther Postretirement Benefits
2014201320142013
Discount rate4.11%4.88%3.96%4.69%
Rate of compensation increase3.85%3.90%N/AN/A
Assumed health care cost trend rates:
Health care cost trend rate assumed for next year N/AN/A6.5%7.0%
Rate to which the cost trend rate is assumed to
decline (the ultimate trend rate) N/AN/A5.0%5.0%
Year that the rate reaches the ultimate trend rate N/AN/A20212018

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

Pension BenefitsOther Postretirement Benefits
201420132012201420132012
Discount rate4.88%4.09%4.50%4.69%4.14%4.55%
Expected rate of return on plan assets8.10%8.10%8.10%7.07%6.79%7.26%
Rate of compensation increase3.93%4.60%4.59%N/AN/AN/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% Increase1% Decrease
Effect on other postretirement benefit obligation$1,465 $(1,852)
Effect on total service and interest cost components75 (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 AllocationPercentage of Plan Assets at Year End
20142013
Equity securities(a)63.0 %62.0 %66.0 %
Fixed income securities30.0 %31.0 %28.0 %
Real estate7.0 %7.0 %6.0 %
Total100.0 %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)TotalLevel 1Level 2Level 3
Equity Securities:
U.S. Large Cap$99,256 $-$99,256 $-
U.S. Mid Cap22,926 -22,926 -
U.S. Small Cap29,353 -29,353 -
International Blend47,650 -47,650 -
Fixed Income Securities:
Short-Term Fund3,776 -3,776 -
High Yield Bond15,492 -15,492 -
Long Duration Bond79,603 -79,603 -
Real Estate23,480 --23,480
Insurance Continuance Fund1,518 --1,518
Fixed Rate Fund4,446 --4,446
Total$327,500 $-$298,056 $29,444
Fair Value as of December 31, 2013
(In thousands)TotalLevel 1Level 2Level 3
Cash and Cash Equivalents$5,109 $5,109 $-$-
Equity Securities:
U.S. Large Cap96,258 -96,258 -
U.S. Mid Cap22,741 -22,741 -
U.S. Small Cap28,854 -28,854 -
International Blend54,873 -54,873 -
Fixed Income Securities:
Short-Term Fund4,789 -4,789 -
High Yield Bond15,127 -15,127 -
Long Duration Bond66,193 -66,193 -
Real Estate19,628 --19,628
Insurance Continuance Fund1,428 --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 EstateInsurance Continuance FundFixed 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 date1,565 42 -
Purchases, sales, and settlements922 (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 date1,561 44 54
Purchases, sales, and settlements2,291 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:

PensionOther Postretirement Benefits
(In thousands)Pension BenefitsGross Postretirement BenefitsExpected Medicare Part D SubsidyNet Postretirement Benefits
2015$11,944 3,101 (211)2,890
201612,631 3,338 (237)3,101
201713,408 3,757 (258)3,499
201814,613 4,272 (282)3,990
201915,559 4,776 (306)4,470
2020 - 202492,915 29,871 (2,005)27,866