Pension Plans and Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2015

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:		2015		2014		2015		2014
Net benefit obligation at beginning of year	$	340,233	$	283,958	$	78,478	$	66,100
Service cost		7,263		6,179		1,559		1,339
Interest cost		13,766		13,574		3,075		3,166
Plan participants' contributions		-		-		741		708
Actuarial (gain) loss(a)		(17,576)		48,162		(5,828)		10,090
Gross benefits paid		(11,121)		(11,640)		(3,280)		(3,113)
Less: federal subsidy on benefits paid(b)		-		-		190		188
Benefit obligation at end of year	$	332,565	$	340,233	$	74,935	$	78,478
Change in Plan Assets:
Fair value of plan assets at beginning of year	$	288,548	$	277,398	$	38,952	$	37,602
Actual return on plan assets		4,153		21,907		603		2,558
Employer contributions		9,136		883		3,154		1,197
Plan participants' contributions		-		-		741		708
Gross benefits paid		(11,121)		(11,640)		(3,280)		(3,113)
Fair value of plan assets at end of year	$	290,716	$	288,548	$	40,170	$	38,952
Funded Status at December 31	$	(41,849)	$	(51,685)	$	(34,765)	$	(39,526)

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

(b) 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, 2015 and 2014, 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)		2015		2014		2015		2014
Current liability	$	(966)	$	(1,025)	$	(52)	$	(65)
Long-term liability		(40,883)		(50,660)		(34,713)		(39,461)
Net liability	$	(41,849)	$	(51,685)	$	(34,765)	$	(39,526)

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)		2015		2014		2015		2014
Net actuarial loss	$	80,660	$	85,102	$	13,086	$	17,657
Prior service benefit		(436)		(413)		(15,158)		(17,827)
Transition obligation		-		-		29		32
Total	$	80,224	$	84,689	$	(2,043)	$	(138)

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		2015		2014
Projected benefit obligation, end of year	$	332,565	$	340,233
Fair value of plan assets, end of year		290,716		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		2015		2014
Projected benefit obligation, end of year	$	332,565	$	340,233
Accumulated benefit obligation, end of year		302,471		304,023
Fair value of plan assets, end of year		290,716		288,548

Net Periodic Benefit Costs

(In thousands)		Pension Benefits						Other Postretirement Benefits
Components of Net Periodic Cost (Benefit):		2015		2014		2013		2015		2014		2013
Service cost	$	7,263	$	6,179	$	7,705	$	1,559	$	1,339	$	2,380
Interest cost		13,766		13,574		12,656		3,075		3,166		3,871
Expected return on assets		(22,682)		(22,051)		(19,027)		(2,812)		(2,615)		(2,176)
Amortization of:
Transition obligation		-		-		-		3		3		3
Prior service cost (benefit)		23		204		314		(2,669)		(2,669)		110
Actuarial loss		5,395		703		8,014		953		252		1,236
Net periodic cost (benefit)	$	3,765	$	(1,391)	$	9,662	$	109	$	(524)	$	5,424

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
	2015	2014	2015	2014
Discount rate(a)	4.51%	4.11%	4.32%	3.96%
Rate of compensation increase	3.78%	3.85%	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%	6.5%
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	2022	2021

(a) In 2015, MGE refined its methodology for using discount rates to measure the components of net periodic benefit cost. The refined methodology uses individual spot rates, instead of a weighted average of the yield curve spot rates, for measuring the service cost and interest cost components. The change in methodology does not alter the measurement of the related benefit obligation as of December 31,2015.

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
	2015	2014	2013	2015	2014	2013
Discount rate	4.11%	4.88%	4.09%	3.96%	4.69%	4.14%
Expected rate of return on plan assets	7.80%	8.10%	8.10%	7.06%	7.07%	6.79%
Rate of compensation increase	3.84%	3.93%	4.60%	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 2015 dollars:

(In thousands)		1% Increase		1% Decrease
Effect on other postretirement benefit obligation	$	1,391	$	(1,753)
Effect on total service and interest cost components		80		(92)

Fair Value of Plan Assets by Asset Category

The asset allocation for MGE's pension plans at the end of 2015 and 2014, and the target allocation for 2016, by asset category, follows:

	Target Allocation	Percentage of Plan Assets at Year End
		2015	2014
Equity securities(a)	63.0 %	63.0 %	62.0 %
Fixed income securities	30.0 %	29.0 %	31.0 %
Real estate	7.0 %	8.0 %	7.0 %
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, 2015
(In thousands)		Total		Level 1		Level 2		Level 3
Cash and Cash Equivalents	$	300	$	300	$	-	$	-
Equity Securities:
U.S. Large Cap		98,949		-		98,949		-
U.S. Mid Cap		22,446		-		22,446		-
U.S. Small Cap		27,561		-		27,561		-
International Blend		55,948		-		55,948		-
Fixed Income Securities:
Short-Term Fund		3,388		-		3,388		-
High Yield Bond		16,225		-		16,225		-
Long Duration Bond		73,112		-		73,112		-
Real Estate		27,231		-		-		27,231
Insurance Continuance Fund		1,518		-		-		1,518
Fixed Rate Fund		4,208		-		-		4,208
Total	$	330,886	$	300	$	297,629	$	32,957
	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

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, 2014	$	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
Actual return on plan assets:
Relating to assets still held at the reporting date		2,749		46		103
Purchases, sales, and settlements		1,002		(46)		(341)
Transfers in and/or out of Level 3		-		-		-
Balance as of December 31, 2015	$	27,231	$	1,518	$	4,208

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
2016	$	12,489	$	3,119	$	(227)	$	2,892
2017		13,320		3,481		(249)		3,232
2018		14,506		3,947		(273)		3,674
2019		15,456		4,453		(296)		4,157
2020		16,381		4,910		(325)		4,585
2021 - 2025		95,167		30,364		(2,121)		28,243