XML 74 R49.htm IDEA: XBRL DOCUMENT v3.8.0.1
Pension Plans and Other Postretirement Benefits (Tables)
 12 Months Ended
Dec. 31, 2017
Compensation and Retirement Disclosure [Abstract]  
Schedule of Benefit Obligations and Change in Plan Assets
(In thousands)Pension BenefitsOther Postretirement Benefits
Change in Benefit Obligations:2017201620172016
Net benefit obligation at beginning of year$349,556$332,565$78,842$74,935
Service cost5,3835,3651,2311,271
Interest cost12,62512,3932,6662,681
Plan participants' contributions--894767
Actuarial loss(a)37,68911,4122,7492,638
Gross benefits paid(13,984)(12,179)(4,262)(3,637)
Less: federal subsidy on benefits paid(b)--170187
Benefit obligation at end of year$391,269$349,556$82,290$78,842
Change in Plan Assets:
Fair value of plan assets at beginning of year$311,933$290,716$43,177$40,170
Actual return on plan assets56,98724,1817,1043,236
Employer contributions6,7159,2151,5572,641
Plan participants' contributions--894767
Gross benefits paid(13,984)(12,179)(4,262)(3,637)
Fair value of plan assets at end of year$361,651$311,933$48,470$43,177
Funded Status at December 31$(29,618)$(37,623)$(33,820)$(35,665)

(a) In 2017 and 2016, lower discount rates were the main driver of 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, 2017 and 2016, 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 as of December 31 are as follows:

Pension BenefitsOther Postretirement Benefits
(In thousands)2017201620172016
Long-term asset$7,336$2,020$-$-
Current liability(1,726)(972)--
Long-term liability(35,228)(38,671)(33,820)(35,665)
Net liability$(29,618)$(37,623)$(33,820)$(35,665)
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)2017201620172016
Net actuarial loss$81,969$84,656$12,600$14,728
Prior service benefit(429)(446)(9,821)(12,489)
Transition obligation--2326
Total$81,540$84,210$2,802$2,265
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 Assets20172016
Projected benefit obligation, end of year$36,954$227,739
Fair value of plan assets, end of year-188,096
Schedule of Accumulated Benefit Obligations in Excess of Plan Assets

The accumulated benefit obligation and fair value of plan assets for pension plans with an accumulated benefit obligation in excess of plan assets were as follows:

(In thousands)Pension Benefits
Accumulated Benefit Obligation in Excess of Plan Assets20172016
Accumulated benefit obligation, end of year$32,813$26,927
Fair value of plan assets, end of year--
Net Periodic Benefit Costs
(In thousands)Pension BenefitsOther Postretirement Benefits
Components of Net Periodic Benefit Cost:201720162015201720162015
Service cost$5,383$5,365$7,263$1,231$1,271$1,559
Interest cost12,62512,39313,7662,6662,6813,075
Expected return on assets(22,963)(22,365)(22,682)(2,887)(2,829)(2,812)
Amortization of:
Transition obligation---333
Prior service (credit) cost(17)1023(2,669)(2,669)(2,669)
Actuarial loss6,3525,6005,395660589953
Net periodic benefit cost (credit)$1,380$1,003$3,765$(996)$(954)$109
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
2017201620172016
Discount rate3.73%4.29%3.58%4.11%
Rate of compensation increase3.67%3.71%N/AN/A
Assumed health care cost trend rates:
Health care cost trend rate assumed for next year N/AN/A6.00%6.25%
Rate to which the cost trend rate is assumed to
decline (the ultimate trend rate) N/AN/A5.00%5.00%
Year that the rate reaches the ultimate trend rate N/AN/A20222022

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

Pension BenefitsOther Postretirement Benefits
201720162015201720162015
Discount rate4.30%4.51%4.11%4.09%4.32%3.96%
Expected rate of return on plan assets7.40%7.65%7.80%6.80%6.96%7.06%
Rate of compensation increase3.76%3.76%3.84%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 2017 dollars:

(In thousands)1% Increase1% Decrease
Effect on other postretirement benefit obligation$740$(1,076)
Effect on total service and interest cost components19(31)
Fair Value of Plan Assets by Asset Category

The asset allocation for MGE's pension plans as of December 31, 2017 and 2016, and the target allocation for 2018, by asset category, follows:

Target AllocationPercentage of Plan Assets at Year End
20172016
Equity securities(a)63.0 %65.0 %65.0 %
Fixed income securities30.0 %29.0 %27.0 %
Real estate7.0 %6.0 %8.0 %
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.

All of the fair values of MGE's plan assets are measured using net asset value, except for cash and cash equivalents which are considered level 1 investments. The fair values of MGE's plan assets by asset category as of December 31 are as follows:

(In thousands)20172016
Cash and Cash Equivalents$488$284
Equity Securities:
U.S. Large Cap124,594107,406
U.S. Mid Cap29,13825,966
U.S. Small Cap37,78233,836
International Blend71,51459,054
Fixed Income Securities:
Short-Term Fund4,6414,318
High Yield Bond19,40017,978
Long Duration Bond91,67871,512
Real Estate25,99529,441
Insurance Continuance Fund1,5001,514
Fixed Rate Fund3,3913,801
Total$410,121$355,110
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
2018$15,011$3,828$(215)$3,613
201916,0094,233(234)3,999
202016,8304,678(259)4,419
202117,7175,157(280)4,877
202218,8695,481(305)5,176
2023 - 2027107,40229,636(1,941)27,695