Derivative and Hedging Instruments (Tables)

9 Months Ended

Sep. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Gross Notional Volume of Open Derivatives

The gross notional volume of open derivatives is as follows:

	September 30, 2016	December 31, 2015
Commodity derivative contracts	465,835 MWh	355,580 MWh
Commodity derivative contracts	6,157,500 Dth	5,037,500 Dth
FTRs	3,567 MW	2,000 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 sheets. 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. As of September 30,2016 and December 31, 2015, MGE Energy and MGE had a receivable – margin account balance of $1.6million and $2.3 million, respectively, which is shown net of any collateral posted against derivative positions.

	Asset Derivatives			Liability Derivatives
(In thousands)	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
September 30, 2016
Commodity derivative contracts	Other current assets	$	1,023	Derivative liability (current)	$	351
Commodity derivative contracts	Other deferred charges		114	Derivative liability (long-term)		97
FTRs	Other current assets		230	Derivative liability (current)		-
PPA	N/A		N/A	Derivative liability (current)		8,030
PPA	N/A		N/A	Derivative liability (long-term)		42,460
December 31, 2015
Commodity derivative contracts	Other current assets	$	146	Derivative liability (current)	$	1,266
Commodity derivative contracts	Other deferred charges		144	Derivative liability (long-term)		70
FTRs	Other current assets		234	Derivative liability (current)		-
PPA	N/A		N/A	Derivative liability (current)		8,340
PPA	N/A		N/A	Derivative liability (long-term)		44,930

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 consolidated balance sheets.

Offsetting of Derivative Assets
(In thousands)		Gross Amounts		Gross Amounts Offset in Balance Sheets		Collateral Posted Against Derivative Positions		Net Amount Presented in Balance Sheets
September 30, 2016
Commodity derivative contracts	$	1,137	$	(448)	$	-	$	689
FTRs		230		-		-		230
December 31, 2015
Commodity derivative contracts	$	290	$	(290)	$	-	$	-
FTRs		234		-		-		234

Offsetting Liabilities

Offsetting of Derivative Liabilities
(In thousands)		Gross Amounts		Gross Amounts Offset in Balance Sheets		Collateral Posted Against Derivative Positions		Net Amount Presented in Balance Sheets
September 30, 2016
Commodity derivative contracts	$	448	$	(448)	$	-	$	-
PPA		50,490		-		-		50,490
December 31, 2015
Commodity derivative contracts	$	1,336	$	(290)	$	(1,038)	$	8
PPA		53,270		-		-		53,270

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 sheets at September 30,2016 and 2015, and the consolidated income statements for the three and nine months endedSeptember 30,2016 and 2015.

		2016				2015
(In thousands)		Current and Long-Term Regulatory Asset		Other Current Assets		Current and Long-Term Regulatory Asset		Other Current Assets
Three Months Ended September 30:
Balance at July 1,	$	50,521	$	659	$	56,048	$	455
Unrealized (gain) loss		(663)		-		4,036		-
Realized gain (loss) reclassified to a deferred account		17		(17)		(408)		408
Realized (loss) gain reclassified to income statement		(304)		46		(2,278)		(91)
Balance at September 30,	$	49,571	$	688	$	57,398	$	772
Nine Months Ended September 30:
Balance at January 1,	$	54,082	$	1,208	$	54,998	$	1,001
Unrealized loss		1,128		-		8,514		-
Realized (loss) gain reclassified to a deferred account		(1,417)		1,417		(1,700)		1,700
Realized (loss) gain reclassified to income statement		(4,222)		(1,937)		(4,414)		(1,929)
Balance at September 30,	$	49,571	$	688	$	57,398	$	772

Derivative Gains and Losses in Income Statement

		Realized Losses (Gains)
		2016				2015
(In thousands)		Fuel for Electric Generation/ Purchased Power		Cost of Gas Sold		Fuel for Electric Generation/ Purchased Power		Cost of Gas Sold
Three Months Ended September 30:
Commodity derivative contracts	$	45	$	-	$	862	$	(17)
FTRs		(703)		-		(233)		-
PPA		916		-		1,757		-
Nine Months Ended September 30:
Commodity derivative contracts	$	1,469	$	1,814	$	1,860	$	1,742
FTRs		(635)		-		(607)		-
PPA		3,511		-		3,348		-