XML 47 R25.htm IDEA: XBRL DOCUMENT
v3.3.1.900

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes. a. MGE Energy and MGE Income Taxes. MGE Energy files a consolidated federal income tax return that includes the operations of all subsidiary companies. The subsidiaries calculate their respective federal income tax provisions as if they were separate taxable entities. On a consolidated and separate company basis, MGE Energy's and MGE's income tax provision consists of the following provision (benefit) c omponents for the years ended December 31:
|  | MGE Energy |  | MGE
(In thousands) |  | 2015 |  | 2014 |  | 2013 |  | 2015 |  | 2014 |  | 2013
Current payable: |  |  |  |  |  |  |  |  |  |  |  |
Federal | $ | 16,837 | $ | (891) | $ | (1,508) | $ | 19,295 | $ | 637 | $ | (448)
State |  | 2,774 |  | (589) |  | 8,213 |  | 3,443 |  | (451) |  | 8,322
Net-deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | 15,951 |  | 39,284 |  | 37,203 |  | 13,538 |  | 38,553 |  | 36,937
State |  | 5,976 |  | 10,600 |  | 1,163 |  | 5,305 |  | 10,625 |  | 1,223
Amortized investment tax credits |  | (175) |  | (219) |  | (212) |  | (175) |  | (219) |  | (212)
Total income tax provision | $ | 41,363 | $ | 48,185 | $ | 44,859 | $ | 41,406 | $ | 49,145 | $ | 45,822
MGE Energy's and MGE's consolidated income tax provision differs from the amount computed by applying the statutory federal income tax rate to income before income taxes, as follows:
|  | MGE Energy |  | MGE |
|  | 2015 |  | 2014 |  | 2013 |  | 2015 |  | 2014 |  | 2013 |
| Statutory federal income tax rate | 35.0 % |  | 35.0 % |  | 35.0 % |  | 35.0 % |  | 35.0 % |  | 35.0 % |
| State income taxes, net of federal benefit | 5.2 % |  | 5.1 % |  | 5.1 % |  | 5.2 % |  | 5.1 % |  | 5.1 % |
| Amortized investment tax credits | (0.2)% |  | (0.2)% |  | (0.2)% |  | (0.2)% |  | (0.2)% |  | (0.2)% |
| Credit for electricity from wind energy | (1.8)% |  | (1.7)% |  | (1.5)% |  | (1.8)% |  | (1.7)% |  | (1.5)% |
| Domestic manufacturing deduction | (1.4)% |  | -% |  | (0.2)% |  | (1.4)% |  | -% |  | (0.2)% |
| AFUDC equity, net | (0.1)% |  | (0.8)% |  | (0.7)% |  | (0.1)% |  | (0.8)% |  | (0.7)% |
| Other, net, individually insignificant | -% |  | 0.1 % |  | -% |  | -% |  | 0.1 % |  | -% |
| Effective income tax rate | 36.7 % |  | 37.5 % |  | 37.5 % |  | 36.7 % |  | 37.5 % |  | 37.5 % |
The significant components of deferred tax liabilities (assets) that appear on MGE Energy's and MGE's consolidated balance sheets as of December 31 are as follows:
|  |  | MGE Energy |  | MGE |
| (In thousands) |  | 2015 |  | 2014 |  | 2015 |  | 2014 |
| Property-related | $ | 327,918 | $ | 312,903 | $ | 327,822 | $ | 312,807 |
| Investment in ATC |  | 38,213 |  | 36,140 |  | 30,382 |  | 29,156 |
| Bond transactions |  | 1,422 |  | 1,420 |  | 1,422 |  | 1,420 |
| Pension and other postretirement benefits |  | 57,697 |  | 57,847 |  | 57,697 |  | 57,847 |
| Derivatives |  | 21,660 |  | 22,331 |  | 21,660 |  | 22,331 |
| Tax deductible prepayments |  | 8,011 |  | 8,077 |  | 8,011 |  | 8,077 |
| Other |  | 14,997 |  | 10,451 |  | 14,831 |  | 10,259 |
| Gross deferred income tax liabilities |  | 469,918 |  | 449,169 |  | 461,825 |  | 441,897 |
| Future tax benefit |  | - |  | (4,092) |  | - |  | (4,092) |
| Accrued expenses |  | (21,391) |  | (32,091) |  | (21,391) |  | (32,091) |
| Pension and other postretirement benefits |  | (46,582) |  | (44,994) |  | (46,582) |  | (44,994) |
| Deferred tax regulatory account |  | (1,047) |  | (1,211) |  | (1,047) |  | (1,211) |
| Derivatives |  | (21,660) |  | (22,331) |  | (21,660) |  | (22,331) |
| Other |  | (18,523) |  | (5,957) |  | (18,589) |  | (3,746) |
| Gross deferred income tax assets |  | (109,203) |  | (110,676) |  | (109,269) |  | (108,465) |
| Less valuation allowance |  | 70 |  | 70 |  | 70 |  | 70 |
| Net deferred income tax assets |  | (109,133) |  | (110,606) |  | (109,199) |  | (108,395) |
| Deferred income taxes | $ | 360,785 | $ | 338,563 | $ | 352,626 | $ | 333,502 |
As of December 31, 2015, MGE Energy and MGE did not have federal net operating losses or federal tax credit carryforwards. As of December 31, 2014, MGE Energy and MGE had approximately $16.5 million and $5.4 million of state net operating loss and federal tax credit carryforwards, respectively. The net operating loss and tax credit carryforwards resulted in deferred tax assets of $0.8 million and $5.4 million, respectively, as of December 31, 2014, that are shown net of $2.0 million of unrecognized tax benefits and reflected in deferred tax liabilities on the consolidated balance sheets. Our state valuati on allowance reduces MGE Energy's and MGE's deferred tax assets for state carryforward losses to estimated realizable value due to the uncertainty of future income estimates in various state tax jurisdictions. For tax purposes, as of December 31, 2015, both M GE Energy and MGE had approximately $1.4 million of state tax net operating loss ded uctions subject to a valuation allowance that expire between 2020 and 2023 if unused. In November 2015, the FASB issued authoritative accounting guidance on the presentation of deferred taxes in the financial statements. Prior to the authoritative guidance, deferred taxes were presented as a net current asset or liability and net noncurrent asset or liability. As a result of the Accounting Standard Update (ASU), all deferred tax assets and liabilities, along with any related valuation allowance, will be classified as noncurrent on the consolidated balance sheets. The authoritative guidance s tates that early adoption of the ASU is permitted using either prospective or retrospective application. MGE Energy and MGE have adopted this standard early by retrospectively applying the guidance to all prior periods presented in addition to the current year ended December 31, 2015. For MGE Energy and MGE, as of December 31, 2014, current assets ("D eferred income tax es") decreased by approximately $3.5 million and $1.3 million, respectively, and noncurrent liabilities ("Defe rred income tax es") decreased by approximately $3.5 million and $1.3 million, respectively, as a c umulative result of the guidance. b. Accounting for Uncertainty in Income Taxes - MGE Energy and MGE. MGE Energy and MGE account for the difference between the tax benefit amount taken on prior year tax returns, or expected to be taken on a current year tax return, and the tax benefit amount recognized in the financial statements as an unrecognized tax benefit. A tabular reconciliation of unrecognized tax benefits and interest from January 1, 2013 to December 31, 2015, is as follows:
| (In thousands) |  |  |  |  |  |  |
| Unrecognized Tax Benefits: |  | 2015 |  | 2014 |  | 2013 |
| Unrecognized tax benefits, January 1, | $ | 2,365 | $ | 2,363 | $ | 3,204 |
| Additions based on tax positions related to the current year |  | 488 |  | 610 |  | 377 |
| Additions based on tax positions related to the prior years |  | 520 |  | 618 |  | 424 |
| Reductions based on tax positions related to the current year |  | - |  | - |  | (40) |
| Reductions based on tax positions related to the prior years |  | (845) |  | (1,226) |  | (1,602) |
| Unrecognized tax benefits, December 31, | $ | 2,528 | $ | 2,365 | $ | 2,363 |
| (In thousands) |  |  |  |  |  |  |
| Interest on Unrecognized Tax Benefits: |  | 2015 |  | 2014 |  | 2013 |
| Accrued interest on unrecognized tax benefits, January 1, | $ | 92 | $ | 101 | $ | 314 |
| Reduction in interest expense on uncertain tax positions |  | (102) |  | (97) |  | (275) |
| Interest expense on uncertain tax positions |  | 321 |  | 88 |  | 62 |
| Accrued interest on unrecognized tax benefits, December 31, | $ | 311 | $ | 92 | $ | 101 |
Unrecognized tax benefits of $2.5 million and $0.4 million ar e liabilities shown with "Other deferred l iabilities" on the December 31, 2015 and 2014, consolidated balance sheets, respectively. At December 31, 2014, $2.0 mi llion of unrecognized tax benefits are netted with deferred tax liabilities on the consolidated balance sheet. The interest component is offset by a regulatory asset. During 2013, the IRS issued guidance on the treatment of electric generation repairs. This guidance prompted the reversal of the unrecognized tax benefits for these repairs in 2013. With the adoption of this new guidance in 2014 unrecognized tax benefits related to electric generation were ad ded. At December 31, 2015 and 2014, MGE Energy and MGE have an unrecognized tax benefit primarily related to temporary tax differences associated with the change in income tax method of accounting for electric generation and electric and gas distributio n repairs. At December 31, 2013, MGE Energy and MGE had an unrecognized tax benefit primarily related to temporary tax differences associated with the change in income tax method of accounting for electric and gas distribution repairs. There were no unrec ognized tax benefits at December 31, 2015, 2014, or 2013 related to federal permanent differences and tax credits. The unrecognized tax benefits at December 31, 2015, are not expected to significantly increase or decrease within the next twelve mo nths. In addition, statutes of limitations will expire for MGE Energy and MGE tax returns. The impact of the statutes of limitations expiring is not anticipated to be material. The following table shows tax years that remain subject to examination by major jurisdiction:
| Taxpayer | Open Years |
| MGE Energy and consolidated subsidiaries in federal return | 2012 through 2015 |
| MGE Energy Wisconsin combined reporting corporation return | 2011 through 2015 |

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration