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Rate Matters | 6 Months Ended
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Jun. 30, 2016
Regulated Operations [Abstract] |
Rate Matters | Rate Matters - MGE Energy and MGE. a. Rate P roceedings. I n April 2016, MGE filed an application with the PSCW requesting a 1.7% increase to electric rates and a 3.7% increase to gas rates for 2017. The proposed electric and gas rate increases cover costs primarily associated with the state's electric transmission and MGE's natural gas system infrastructure improvements. In its application, MGE has also proposed mecha nisms to address potential 2018 electric and gas rate changes, including a rate adjustment for limited issues and escrow accounting on certain costs. In July 2015, the PSCW approved MGE's request to extend the current accounting treatment for transmi ssion related costs through 2016, conditioned upon MGE not filing a base rate case for 2016. This accounting treatment will allow MGE to reflect any differential between transmission costs reflected in rates and actual costs incurred in its next rate case filing, which occurred in the April 2016 filing. On December 23, 2014, the PSCW authorized MGE to increase 2015 rates for retail electric customers by 3.8% or $15.4 million and to decrease gas rates by 2.0% or $3.8 million. The increase in retail electric rates cover costs associated with the construction of emission-reduction equipment at Columbia, improvements and reliability of the state's electric transmissi on system, fuel and purchased power related to coal delivery costs, partially offset by lower cost as a result of market conditions for pension and post retirement benefit costs. The authorized return on common stock equity is 10.2%. The PSCW also approved changes to customer rates and rate design for gas service that became effective January 1, 2015. Gas rate design consists of a fixed monthly customer charge and a variable charge tied to actual usage, in addition to the sepa rate charge through the PGA for natural gas commodity costs. The change shifted more of the rate recovery to the monthly charge, reflecting the related fixed costs of providing gas services, and reduced the variable usage-based charge. Thus, gas net income is expected to be more evenly distributed during the yea r and less sensitive to weather. b. Fuel R ules. Fuel rules require the PSCW and Wisconsin utilities to defer electric fuel-related costs that fall outside a symmetrical cost tolerance band around the amount approved for a utility in its annual fuel proceedings. Any over/under recovery of the actual costs is determined on an annual basis and is adjusted in future billings to electric retail customers. The fuel rules bandwidth is currently set at plus or minus 2%. Under fuel rules, MGE would defer costs, les s any excess revenues, if its actual electric fuel costs exceeded 102% of the electric fuel costs allowed in its latest rate order. Excess revenues are defined as revenues in the year in question that provide MGE with a greater ret urn on common equity than authorized by the PSCW in MGE's latest rate order. Conversely, MGE is required to defer the benefit of lower costs if actual electric fuel costs were less than 98% of the electric fuel costs allowed in th at order. In August 2015, the PSCW approved a $0.00256/kWh fuel credit that began on September 1, 2015, and will continue throughout 2016. The fuel credit established a mechanism to return $10.9 million of fuel savings to elect ric customers as a bill credit. MGE returned $2.6 million of electric fuel-related savings in customer bill credits during the period from September 1, 2015, through December 31, 2015. MGE returned $3.9 million of electric fuel-related savings during the six months ended June 30, 2016. In January 2016, the PSCW lowered MGE's 2016 fuel rules monitored costs by $14.8 million as a result of c ontinued lower projected fuel costs in 2016. Also, in March 2016, MGE filed its 2015 fuel plan reconciliation application with an overcollection of 2015 fuel rules monitored costs. The return of the additional 2015 and 2016 fuel savings to customers was ad dressed during the PSCW's annual review during 2016 of 2015 fuel costs. In July 2016, the PSCW issued a final order stating that MGE shall refund the additional fuel savings incurred during 2015 and 2016 for a total of $15.7 milli on to its retail electric customers over a one-month period expected to occur by the end of the third quarter of 2016. This one-time fuel credit will be in addition to the fuel credit approved in August 2015, which is currently being returned to customers throughout the remainder of 2016. As of June 30, 2016, MGE had a deferred balance of $14.8 million of electric fuel-related savings that are outside the range authorized by the PSCW. Within this amount, MGE has deferred $2.3 million of 2016 fuel savings that were in excess of the fuel savings included within the fuel credits referenced above. These costs will be subject to the PSCW's annual review of 2016 fuel costs, expected to be completed in 2017.

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