Segment Information

12 Months Ended

Dec. 31, 2015

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, MGE 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 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, 2015
Operating revenues	$	412,528	$	143,737	$	7,763	$	-	$	-	$	-	$	564,028
Interdepartmental revenues		513		11,780		39,435		-		-		(51,728)		-
Total operating revenues		413,041		155,517		47,198		-		-		(51,728)		564,028
Depreciation and amortization		(29,945)		(6,758)		(7,475)		-		(47)		-		(44,225)
Other operating expenses		(318,001)		(128,241)		(158)		(19)		(857)		51,728		(395,548)
Operating income (loss)		65,095		20,518		39,565		(19)		(904)		-		124,255
Other (deductions) income, net		400		(33)		-		7,728		518		-		8,613
Interest (expense) income, net		(11,187)		(3,203)		(5,993)		-		221		-		(20,162)
Income (loss) before taxes		54,308		17,282		33,572		7,709		(165)		-		112,706
Income tax (provision) benefit		(17,915)		(6,915)		(13,474)		(3,102)		43		-		(41,363)
Net income (loss)	$	36,393	$	10,367	$	20,098	$	4,607	$	(122)	$	-	$	71,343

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

(In thousands)MGE		Electric		Gas		Non-Regulated Energy		Transmission Investment		Consolidation/ Elimination Entries		Consolidated Total
Year Ended December 31, 2015
Operating revenues	$	412,550	$	143,752	$	7,763	$	-	$	-	$	564,065
Interdepartmental revenues		491		11,765		39,435		-		(51,691)		-
Total operating revenues		413,041		155,517		47,198		-		(51,691)		564,065
Depreciation and amortization		(29,945)		(6,758)		(7,475)		-		-		(44,178)
Other operating expenses*		(335,803)		(135,124)		(13,632)		(19)		51,691		(432,887)
Operating income (loss)*		47,293		13,635		26,091		(19)		-		87,000
Other (deductions) income, net*		287		(65)		-		4,626		-		4,848
Interest expense, net		(11,187)		(3,203)		(5,993)		-		-		(20,383)
Net income		36,393		10,367		20,098		4,607		-		71,465
Less: Net income attributable to
noncontrolling interest, net of tax		-		-		-		-		(26,097)		(26,097)
Net income attributable to MGE	$	36,393	$	10,367	$	20,098	$	4,607	$	(26,097)	$	45,368

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

*Amounts are shown net of the related tax expense, consistent with the presentation on the MGE Consolidated Statements of Income.

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		Non-regulated Energy		Transmission Investment		All Others		Consolidation/ Elimination Entries		Total
Assets:
December 31, 2015	$	976,271	$	299,792	$	49,753	$	278,735	$	69,470	$	434,868	$	(378,216)	$	1,730,673
December 31, 2014^(a)		948,005		307,582		41,124		281,514		67,697		438,898		(390,636)		1,694,184
December 31, 2013		899,257		265,694		19,853		288,116		64,504		431,436		(389,800)		1,579,060
Capital Expenditures:
Year ended Dec. 31, 2015	$	49,370	$	18,787	$	-	$	3,873	$	-	$	-	$	-	$	72,030
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

		Utility						Consolidated
(In thousands)MGE		Electric		Gas		Assets not Allocated		Non-regulated Energy		Transmission Investment		Consolidation/ Elimination Entries		Total
Assets:
December 31, 2015	$	976,271	$	299,792	$	49,753	$	278,685	$	69,470	$	(187)	$	1,673,784
December 31, 2014^(a)		948,005		307,582		41,124		281,464		67,697		(6,521)		1,639,351
December 31, 2013		899,257		265,694		19,853		288,066		64,504		(6,731)		1,530,643
Capital Expenditures:
Year ended Dec. 31, 2015	$	49,370	$	18,787	$	-	$	3,873	$	-	$	-	$	72,030
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

(a) Reflects retrospective application of new accounting pronouncement. See Footnote 12 for additional information.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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+ Details