Pension Plans and Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2019

Compensation and Retirement Disclosure [Abstract]

Schedule of Benefit Obligations and Change in Plan Assets

(In thousands)		Pension Benefits				Other Postretirement Benefits
Change in Benefit Obligations:		2019		2018		2019		2018
Net benefit obligation at beginning of year	$	360,288	$	391,269	$	75,161	$	82,290
Service cost		4,692		5,723		1,110		1,283
Interest cost		14,302		12,859		2,893		2,612
Plan participants' contributions		-		-		969		950
Actuarial loss (gain)(a)		47,671		(34,439)		5,045		(7,555)
Gross benefits paid		(16,302)		(15,124)		(4,497)		(4,623)
Less: federal subsidy on benefits paid(b)		-		-		220		204
Benefit obligation at end of year	$	410,651	$	360,288	$	80,901	$	75,161
Change in Plan Assets:
Fair value of plan assets at beginning of year	$	323,780	$	361,651	$	42,521	$	48,470
Actual return on plan assets		76,766		(24,485)		9,277		(2,780)
Employer contributions		1,789		1,738		619		504
Plan participants' contributions		-		-		969		950
Gross benefits paid		(16,302)		(15,124)		(4,497)		(4,623)
Fair value of plan assets at end of year		386,033		323,780		48,889		42,521
Funded Status as of December 31	$	(24,618)	$	(36,508)	$	(32,012)	$	(32,640)

(a)In 2019, lower discount rates were the main driver of the actuarial loss. However, in 2018, higher discount rates were the main driver of the actuarial gain.

(b)In 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 was signed into law authorizing Medicare to provide prescription drug benefits to retirees. For the years ended December 31, 2019 and 2018, the subsidy due to MGE was $0.2 million.

Schedule of Amounts Recognized in the Consolidated Balance Sheet

The amounts recognized in the consolidated balance sheets to reflect the funded status of the plans as of December 31 are as follows:

		Pension Benefits				Other Postretirement Benefits
(In thousands)		2019		2018		2019		2018
Long-term asset	$	13,630	$	-	$	-	$	-
Current liability		(1,688)		(1,732)		-		-
Long-term liability		(36,560)		(34,776)		(32,012)		(32,640)
Net liability	$	(24,618)	$	(36,508)	$	(32,012)	$	(32,640)

Amounts Recognized in Regulatory Asset

The following table shows the amounts that have not yet been recognized in our net periodic benefit cost as of December 31 and are recorded as regulatory assets in the consolidated balance sheets:

		Pension Benefits				Other Postretirement Benefits
(In thousands)		2019		2018		2019		2018
Net actuarial loss	$	79,290	$	92,978	$	8,659	$	10,569
Prior service benefit		(268)		(385)		(4,484)		(7,153)
Transition obligation		-		-		17		21
Total	$	79,022	$	92,593	$	4,192	$	3,437

Schedule of Projected Benefit Obligations in Excess of Plan Assets

The projected benefit obligation and fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets were as follows

(In thousands)		Pension Benefits
Projected Benefit Obligation in Excess of Plan Assets		2019		2018
Projected benefit obligation, end of year	$	38,247	$	360,288
Fair value of plan assets, end of year		-		323,780

Schedule of Accumulated Benefit Obligations in Excess of Plan Assets

The accumulated benefit obligation and fair value of plan assets for pension plans with an accumulated benefit obligation in excess of plan assets were as follows:

(In thousands)		Pension Benefits
Accumulated Benefit Obligation in Excess of Plan Assets		2019		2018
Accumulated benefit obligation, end of year	$	35,798	$	31,200
Fair value of plan assets, end of year		-		-

Net Periodic Benefit Costs

(In thousands)		Pension Benefits						Other Postretirement Benefits
Components of Net Periodic Benefit Cost:		2019(a)		2018		2017		2019(a)		2018		2017
Service cost	$	4,692	$	5,723	$	5,383	$	1,110	$	1,283	$	1,231
Interest cost		14,302		12,859		12,625		2,893		2,612		2,666
Expected return on assets		(22,786)		(26,241)		(22,963)		(2,723)		(3,232)		(2,887)
Amortization of:
Transition obligation		-		-		-		3		3		3
Prior service (credit) cost		(117)		(44)		(17)		(2,669)		(2,669)		(2,669)
Actuarial loss		7,379		5,278		6,352		401		488		660
Net periodic benefit cost (credit)	$	3,470	$	(2,425)	$	1,380	$	(985)	$	(1,515)	$	(996)

Plan Assumptions

The weighted-average assumptions used to determine the benefit obligations were as follows for the years ended December 31:

	Pension Benefits				Other Postretirement Benefits
	2019		2018		2019		2018
Discount rate	3.42	%	4.32	%	3.30	%	4.24	%
Rate of compensation increase	3.21	%	3.20	%	N/A		N/A
Assumed health care cost trend rates:
Health care cost trend rate assumed for next year	N/A		N/A		6.00	%	6.25	%
Rate to which the cost trend rate is assumed to
decline (the ultimate trend rate)	N/A		N/A		5.00	%	5.00	%
Year that the rate reaches the ultimate trend rate	N/A		N/A		2024		2024

The weighted-average assumptions used to determine the net periodic cost were as follows for the years ended December 31:

	Pension Benefits						Other Postretirement Benefits
	2019		2018		2017		2019		2018		2017
Discount rate	4.32	%	3.73	%	4.30	%	4.24	%	3.60	%	4.09	%
Expected rate of return on plan assets	7.20	%	7.40	%	7.40	%	6.72	%	6.94	%	6.80	%
Rate of compensation increase	3.25	%	3.72	%	3.76	%	N/A		N/A		N/A

Effect of 1% Increase or Decrease in Health Care Costs

The following table shows how an assumed 1% increase or 1% decrease in health care cost trends could impact postretirement benefits in 2019 dollars:

(In thousands)		1% Increase		1% Decrease
Effect on other postretirement benefit obligation	$	674	$	(918)
Effect on total service and interest cost components		25		(34)

Fair Value of Plan Assets by Asset Category

The asset allocation for MGE's pension plans as of December 31, 2019 and 2018, and the target allocation for 2020, by asset category, follows:

	Target Allocation		Percentage of Plan Assets at Year End
			2019		2018
Equity securities(a)	63.0	%	64.0	%	60.0	%
Fixed income securities	30.0	%	29.0	%	33.0	%
Real estate	7.0	%	7.0	%	7.0	%
Total	100.0	%	100.0	%	100.0	%

(a) Target allocations for equity securities are broken out as follows: 45.5% United States equity and 17.5% non-United States equity.The fair values of MGE's plan assets by asset category as of December 31 are as follows:

(In thousands)		2019		2018
Cash and Cash Equivalents	$	964	$	701
Equity Securities:
U.S. Large Cap		134,458		102,984
U.S. Mid Cap		31,288		23,683
U.S. Small Cap		36,495		28,573
International Blend		76,293		61,299
Fixed Income Securities:
Short-Term Fund		7,449		4,053
High Yield Bond		21,276		19,437
Long Duration Bond		92,642		93,216
Real Estate		29,671		27,923
Insurance Continuance Fund		1,530		1,491
Fixed Rate Fund		2,856		2,941
Total	$	434,922	$	366,301

Benefit Payments, Fiscal Year Maturity

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:

		Pension		Other Postretirement Benefits
(In thousands)		Pension Benefits		Gross Postretirement Benefits		Expected Medicare Part D Subsidy		Net Postretirement Benefits
2020	$	17,111	$	4,580	$	(233)	$	4,347
2021		17,859		4,947		(255)		4,692
2022		19,029		5,161		(283)		4,878
2023		19,942		5,458		(307)		5,151
2024		20,768		5,676		(330)		5,346
2025 - 2029		113,044		28,054		(2,060)		25,994