Variable Interest Entities

12 Months Ended

Dec. 31, 2018

Variable Interest Entities Disclosure [Abstract]

Variable Interest Entities - MGE Energy and MGE.

a. Consolidated Variable Interest Entities.

MGE Power Elm Road and MGE Power West Campus are not subsidiaries of MGE; but, they have been consolidated in the financial statements of MGE. MGE Power Elm Road and MGE Power West Campus were created for the purpose of owning new generating assets. Power Elm Road's sole principal asset is an undivided ownership interest in two coal-fired generating plants (the Elm Road Units) located in Oak Creek, Wisconsin, which it leases to MGE pursuant to long-term leases. Power West Campus's sole principal asset is the WCCF, which it leases to MGE pursuant to a long-term lease. Based on the nature and terms of the contractual agreements, MGE is expected to absorb a majority of the expected losses or residual value associated with its ownership of MGE Power Elm Road and Power West Campus and therefore holds a variable interest despite the absence of an equity interest.

In accordance with applicable accounting guidance, MGE Energy and MGE consolidate VIEs of which they are the primary beneficiary. MGE has the power to direct the activities that most significantly impact both the Elm Road Units' and the WCCF's economic performance and is also the party most closely associated with MGE Power Elm Road and MGE Power West Campus. As a result, MGE is the primary beneficiary. As of December 31, MGE has included the following significant accounts on its consolidated balance sheets related to its interest in these VIEs:

		MGE Power Elm Road				MGE Power West Campus
(In thousands)		2018		2017		2018		2017
Property, plant, and equipment, net	$	173,464	$	176,002	$	81,273	$	80,282
Construction work in progress		530		1,225		478		610
Affiliate receivables		-		-		3,707		4,236
Deferred income taxes		30,595		29,256		14,222		13,795
Long-term debt^(a)		56,806		59,416		41,496		43,262
Noncontrolling interest		97,519		97,635		43,935		43,267

b. Other Variable Interest Entities.

MGE has a variable interest in entities through purchase power agreements relating to purchased energy from the facilities covered by the agreements. As of December 31, 2018 and 2017, MGE had 11 megawatts and 61 megawatts, respectively, of capacity available under these agreements. MGE evaluated the variable interest entities for possible consolidation. The interest holder is considered the primary beneficiary of the entity and is required to consolidate the entity if the interest holder has the power to direct the activities that most significantly impact the economics of the variable interest entity. MGE examined qualitative factors such as the length of the remaining term of the contracts compared with the remaining lives of the plants, who has the power to direct the operations and maintenance of the facilities, and other factors, and determined MGE is not the primary beneficiary of the variable interest entities. There is not a significant potential exposure to loss as a result of involvement with these variable interest entities.