Investments

12 Months Ended

Dec. 31, 2016

Investments - MGE Energy and MGE.

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

		MGE Energy				MGE
(In thousands)		2016		2015		2016		2015
Available for sale securities:
Cost basis	$	2,216	$	2,225	$	455	$	480
Gross unrealized gains		346		599		40		40
Gross unrealized losses		(8)		(2)		(8)		(2)
Fair value		2,554		2,822		487		518
Equity method investments:
ATC and ATC Holdco^(a)		72,458		69,466		-		69,466
Other		1,158		1,184		-		-
Total equity method investments		73,616		70,650		-		69,466
Other investments		120		159		-		-
Total	$	76,290	$	73,631	$	487	$	69,984

(a) MGE Transco holds an ownership interest in ATC, and MGEE Transco holds an ownership interest in ATC Holdco. In July 2016, MGE's ownership interest in MGE Transco declined below a majority, resulting in MGE Energy's investment in MGE Transco being deconsolidated from MGE's consolidated financial statements. See Footnote 8 for further discussion of noncontrolling interest. In December 2016, MGE's ownership interest in MGE Transco was transferred to MGE Energy, see "ATC and ATC Holdco" below for additional information.

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, 2016, 2015, and 2014, certain investments were liquidated. As a result of these liquidations, MGE Energy and MGE received the following:

		MGE Energy						MGE
(In thousands)		2016		2015		2014		2016		2015		2014
Cash proceeds	$	408	$	19	$	38	$	16	$	19	$	-
Gain (loss) on sale		121		10		21		(8)		10		-

b. ATC and ATC Holdco.

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, as of December 1, 2016, is owned by MGE Energy. ATC Holdco was formed by several members of ATC, including MGE Energy, to pursue electric transmission development and investments outside of Wisconsin. The ownership interest in ATC Holdco is held by MGEE Transco, a wholly-owned subsidiary of MGE Energy.

MGE Transco and MGEE Transco have accounted for their investment in ATC and ATC Holdco, respectively, under the equity method of accounting. For the years ended December 31, 2016, 2015, and 2014, MGE Transco recorded the following:

(In thousands)		2016		2015		2014
Equity earnings from investment in ATC	$	8,670	$	7,728	$	9,150
Dividends received from ATC^(a)		7,926		6,645		7,740
Capital contributions to ATC		2,486		710		1,775

(a) As of December 31, 2016, MGE Transco recorded a $2.1 million receivable from ATC for a cash dividend received in January 2017.

ATC Holdco's activities commenced in late December 2016 and had an immaterial impact on results of operations, cash flows, and financial condition.

At December 31, 2016 and 2015, MGE Transco held a 3.6% ownership interest in ATC. At December 31, 2016, MGEE Transco held a 4.0% ownership interest in ATC Holdco. On January 31, 2017, MGE Transco made a $1.4 million capital contribution to ATC, and on January 10, 2017, MGEE Transco made a $0.2 million capital contribution to ATC Holdco.

In June 2016, the PSCW required MGE to transfer its interest in ATC to MGE Energy, which was to be completed by December 31, 2022. The requirement arose in the context of requests for regulatory approvals by several owners of ATC in connection with a reorganization of ATC. MGE's ownership interest in ATC, held through MGE Transco, was transferred net of deferred tax liabilities to MGE Energy by way of a dividend in kind of $15.8 million as of December 1, 2016. As a result of the transfer, MGE's ownership interest in MGE Transco was completely eliminated in favor of MGE Energy. See Footnote 12 for further discussion of the transfer of deferred tax liabilities. The change had no effect on MGE Energy's consolidated financial statements.

ATC's summarized financial data for the years ended December 31, 2016, 2015, and 2014 is as follows:

(In thousands)
Income statement data for the year ended December 31,		2016		2015		2014
Operating revenues	$	650,806	$	615,836	$	635,033
Operating expenses		(322,517)		(319,321)		(307,451)
Other income		3,225		1,176		117
Interest expense, net		(98,758)		(97,250)		(88,970)
Earnings before members' income taxes	$	232,756	$	200,441	$	238,729

Balance sheet data as of December 31,		2016		2015
Current assets	$	75,790	$	80,520
Noncurrent assets		4,312,893		3,948,265
Total assets	$	4,388,683	$	4,028,785

Current liabilities	$	495,126	$	330,248
Long-term debt		1,865,302		1,790,718
Other noncurrent liabilities		271,495		244,991
Members' equity		1,756,760		1,662,828
Total members' equity and liabilities	$	4,388,683	$	4,028,785