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Fair Value of Financial Instruments (Tables) | 9 Months Ended
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Sep. 30, 2021
Fair Value Disclosures [Abstract] |
Estimated Fair Market Value of Financial Instruments | The estimated fair market value of financial instruments are as follows:
|  | September 30, 2021 |  |  | December 31, 2020 |
(In thousands) |  | Carrying Amount |  |  | Fair Value |  |  | Carrying Amount |  |  | Fair Value |
MGE Energy |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 70,454 |  |  | $ | 70,454 |  |  | $ | 44,738 |  |  | $ | 44,738 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Short-term debt - commercial paper |  |  | — |  |  |  | — |  |  |  | 52,500 |  |  |  | 52,500 |
Long-term debt(a) |  |  | 624,653 |  |  |  | 692,987 |  |  |  | 528,220 |  |  |  | 639,271 |
MGE |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 57,003 |  |  | $ | 57,003 |  |  | $ | 4,103 |  |  | $ | 4,103 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Short-term debt - commercial paper |  |  | — |  |  |  | — |  |  |  | 52,500 |  |  |  | 52,500 |
Long-term debt(a) |  |  | 624,653 |  |  |  | 692,987 |  |  |  | 528,220 |  |  |  | 639,271 |
(a) Includes long-term debt due within one year. Excludes debt issuance costs and unamortized discount of $4.5 million and $4.1 million as of September 30, 2021, and December 31, 2020, respectively.
Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table presents the balances of assets and liabilities measured at fair value on a recurring basis.
|  | Fair Value as of September 30, 2021 |
(In thousands) |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
MGE Energy |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Derivatives, net(b) |  | $ | 14,210 |  |  | $ | 10,451 |  |  | $ | — |  |  | $ | 3,759 |
Exchange-traded investments |  |  | 1,124 |  |  |  | 1,124 |  |  |  | — |  |  |  | — |
Total Assets |  | $ | 15,334 |  |  | $ | 11,575 |  |  | $ | — |  |  | $ | 3,759 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Derivatives, net |  | $ | 535 |  |  | $ | 365 |  |  | $ | — |  |  | $ | 170 |
Deferred compensation |  |  | 3,496 |  |  |  | — |  |  |  | 3,496 |  |  |  | — |
Total Liabilities |  | $ | 4,031 |  |  | $ | 365 |  |  | $ | 3,496 |  |  | $ | 170 |
MGE |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Derivatives, net(b) |  | $ | 14,210 |  |  | $ | 10,451 |  |  | $ | — |  |  | $ | 3,759 |
Exchange-traded investments |  |  | 244 |  |  |  | 244 |  |  |  | — |  |  |  | — |
Total Assets |  | $ | 14,454 |  |  | $ | 10,695 |  |  | $ | — |  |  | $ | 3,759 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Derivatives, net |  | $ | 535 |  |  | $ | 365 |  |  | $ | — |  |  | $ | 170 |
Deferred compensation |  |  | 3,496 |  |  |  | — |  |  |  | 3,496 |  |  |  | — |
Total Liabilities |  | $ | 4,031 |  |  | $ | 365 |  |  | $ | 3,496 |  |  | $ | 170 |
|  | Fair Value as of December 31, 2020 |
(In thousands) |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
MGE Energy |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Derivatives, net(b) |  | $ | 806 |  |  | $ | 436 |  |  | $ | — |  |  | $ | 370 |
Exchange-traded investments |  |  | 1,750 |  |  |  | 1,750 |  |  |  | — |  |  |  | — |
Total Assets |  | $ | 2,556 |  |  | $ | 2,186 |  |  | $ | — |  |  | $ | 370 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Derivatives, net(b) |  | $ | 14,795 |  |  | $ | 370 |  |  | $ | — |  |  | $ | 14,425 |
Deferred compensation |  |  | 3,509 |  |  |  | — |  |  |  | 3,509 |  |  |  | — |
Total Liabilities |  | $ | 18,304 |  |  | $ | 370 |  |  | $ | 3,509 |  |  | $ | 14,425 |
MGE |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Derivatives, net(b) |  | $ | 806 |  |  | $ | 436 |  |  | $ | — |  |  | $ | 370 |
Exchange-traded investments |  |  | 603 |  |  |  | 603 |  |  |  | — |  |  |  | — |
Total Assets |  | $ | 1,409 |  |  | $ | 1,039 |  |  | $ | — |  |  | $ | 370 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Derivatives, net(b) |  | $ | 14,795 |  |  | $ | 370 |  |  | $ | — |  |  | $ | 14,425 |
Deferred compensation |  |  | 3,509 |  |  |  | — |  |  |  | 3,509 |  |  |  | — |
Total Liabilities |  | $ | 18,304 |  |  | $ | 370 |  |  | $ | 3,509 |  |  | $ | 14,425 |
(b) As of September 30, 2021, MGE received collateral of $9.2 million from counterparties under a master netting agreement for outstanding exchange traded derivative positions. The fair value of the derivative asset disclosed in this table has not been reduced for the collateral received. No collateral was posted against derivative positions owed to counterparties under a master netting agreement on the consolidated balance sheet as of December 31, 2020.
Significant Unobservable Inputs | The following table presents the significant unobservable inputs used in the pricing model.
|  | Model Input
|  | September 30, |  | December 31,
Significant Unobservable Inputs |  | 2021 |  | 2020
Basis adjustment: |  |  |  |
On peak |  | 95.5% |  | 94.2%
Off peak |  | 96.4% |  | 94.5%
Counterparty fuel mix: |  |  |  |
Internal generation - range |  | 41%-66% |  | 46%-65%
Internal generation - weighted average |  | 54.2% |  | 56.5%
Purchased power - range |  | 59%-34% |  | 54%-35%
Purchased power - weighted average |  | 45.8% |  | 43.5%
Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table summarizes the changes in Level 3 commodity derivative assets and liabilities measured at fair value on a recurring basis.
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
(In thousands) |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Beginning balance |  | $ | (4,533 | ) |  | $ | (21,023 | ) |  | $ | (14,055 | ) |  | $ | (26,456 | )
Realized and unrealized gains (losses): |  |  |  |  |  |  |  |  |  |  |  |
Included in regulatory assets |  |  | — |  |  |  | 5,296 |  |  |  | — |  |  |  | 10,729 |
Included in regulatory liability |  |  | 8,122 |  |  |  | — |  |  |  | 17,644 |  |  |  | — |
Included in other comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Included in earnings |  |  | 2,476 |  |  |  | (1,524 | ) |  |  | 2,686 |  |  |  | (4,687 | )
Included in current assets |  |  | — |  |  |  | (37 | ) |  |  | 175 |  |  |  | (101 | )
Purchases |  |  | 6,638 |  |  |  | 5,505 |  |  |  | 18,899 |  |  |  | 15,837 |
Sales |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Issuances |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Settlements |  |  | (9,114 | ) |  |  | (3,944 | ) |  |  | (21,760 | ) |  |  | (11,049 | )
Balance as of September 30, |  | $ | 3,589 |  |  | $ | (15,727 | ) |  | $ | 3,589 |  |  | $ | (15,727 | )
Total gains (losses) included in earnings attributed to the change in unrealized gains (losses) related to assets and liabilities held as of September 30,(c) |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
(c) MGE's exchange-traded derivative contracts, over-the-counter party transactions, purchased power agreement, and FTRs are subject to regulatory deferral. These derivatives are therefore marked to fair value and are offset in the financial statements with a corresponding regulatory asset or liability.
Gains and Losses Included in Income for Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table presents total realized and unrealized gains (losses) included in income for Level 3 assets and liabilities measured at fair value on a recurring basis(c).
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
(In thousands) |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Purchased power expense |  | $ | 2,476 |  |  | $ | (1,496 | ) |  | $ | 3,113 |  |  | $ | (4,343 | )
Cost of gas sold expense |  |  | — |  |  |  | (28 | ) |  |  | (427 | ) |  |  | (344 | )
Total |  | $ | 2,476 |  |  | $ | (1,524 | ) |  | $ | 2,686 |  |  | $ | (4,687 | )
(c) MGE's exchange-traded derivative contracts, over-the-counter party transactions, purchased power agreement, and FTRs are subject to regulatory deferral. These derivatives are therefore marked to fair value and are offset in the financial statements with a corresponding regulatory asset or liability.

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- Definition Tabular disclosure of assets and liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123874694&loc=d3e19207-110258 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123874694&loc=d3e19207-110258 + Details
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