Blount Station

9 Months Ended

Sep. 30, 2011

Blount Station Disclosure [Abstract]

Blount Station

10.       Blount Station - MGE Energy and MGE.

In 2006, MGE announced a plan to reduce capacity at Blount from 190 MW to 100 MW by the end of 2011.As part of the plan, coal use at Blount will be discontinued.MGE has determined that certain employee positions will be eliminated as a result of this plan.

In March 2009, MGE received notification from MISO that in order to meet national electric system reliability standards, MGE would need to keep Blount available at its full capacity until MISO declares that the 90 MW are no longer needed for system reliability. MGE recently received notification from MISO that the 90 MW of capacity is no longer needed to meet reliability standards and is now available for retirement on or after December 31, 2011. As a result, MGE estimates the reduction in capacity and the transition to operate exclusively on natural gas will occur by the end of 2011. MGE was previously estimating the reduction in capacity to occur in 2013.

MGE has entered into agreements providing severance benefits to employees affected by the exit plan. These benefits are being recognized ratably over the expected future service period of the employees.Total benefits expected to be paid are $0.4 million in 2011.MGE does not plan to seek recovery of severance costs resulting from the reduction of the capacity.

The following table presents the activity in the restructuring accrual from December 31, 2010, through September 30, 2011:

(In thousands)
Balance at December 31, 2010	$	259
Additional expense, net		106
Cash payments during the period		(24)
Balance at September 30, 2011	$	341

The exit plan has also resulted in accelerated depreciation for the Blount assets expected to be retired in 2011 and 2013. The majority of these assets are being recovered in rates over a four-year period that began in 2008, with the remaining balance recovered by the end of 2013.For the nine months endedSeptember 30, 2011 and 2010, $2.5 million of accelerated depreciation expense had been recognized and recovered in rates each year.