[10-Q] MGE Energy Inc Quarterly Earnings Report
MGE Energy (MGEE) reported solid year-over-year growth for the quarter ended 30 Jun 2025. Consolidated operating revenue rose 9.4% to $159.5 million, driven by higher electric sales (+7.4%) and gas sales (+19.2%). Operating income expanded 15.1% to $34.2 million as higher fuel and gas costs were more than offset by larger rate base and lower purchased-power expense. Net income attributable to common shareholders increased 11.4% to $26.5 million; diluted EPS improved to $0.72 from $0.66.
For the first six months, revenue advanced 12.3% to $378.4 million and net income climbed 18.2% to $68.1 million, lifting year-to-date EPS to $1.86 (vs $1.59). Operating cash flow edged up to $134.0 million; after $111.8 million in capital expenditures, free cash flow remained positive. The balance sheet shows equity of $1.27 billion against long-term debt of $761 million, maintaining a 62% equity capitalization. Cash declined to $10.6 million, partly reflecting higher dividends (+5.1% to $0.45 per share) and $111.8 million of capex linked to renewable and grid-modernization projects.
Regulatory: 2024-25 PSCW-approved rate increases of 1.5% (electric) and 2.4% (gas) are in effect; MGEE has filed for additional electric/gas hikes of 4.9% and 2.3% effective 2026 under a proposed 10.0% allowed ROE. No impairments were recorded for the planned 2029 retirement of Columbia Units 1-2. Management continues to defer variances in production-tax credits and fuel costs for future recovery.
MGE Energy (MGEE) ha riportato una solida crescita su base annua per il trimestre terminato il 30 giugno 2025. I ricavi operativi consolidati sono aumentati del 9,4% raggiungendo 159,5 milioni di dollari, grazie all'incremento delle vendite di energia elettrica (+7,4%) e gas (+19,2%). L'utile operativo è cresciuto del 15,1% a 34,2 milioni di dollari, poiché l'aumento dei costi del carburante e del gas è stato più che compensato da una base tariffaria più ampia e da una riduzione delle spese per energia acquistata. L'utile netto attribuibile agli azionisti ordinari è salito dell'11,4% a 26,5 milioni di dollari; l'utile per azione diluito è migliorato da 0,66 a 0,72 dollari.
Nei primi sei mesi, i ricavi sono aumentati del 12,3% a 378,4 milioni di dollari e l'utile netto è cresciuto del 18,2% a 68,1 milioni, portando l'utile per azione da inizio anno a 1,86 dollari (rispetto a 1,59). Il flusso di cassa operativo è leggermente aumentato a 134,0 milioni; dopo 111,8 milioni di dollari di investimenti in capitale, il flusso di cassa libero è rimasto positivo. Lo stato patrimoniale mostra un patrimonio netto di 1,27 miliardi di dollari contro un debito a lungo termine di 761 milioni, mantenendo una capitalizzazione azionaria del 62%. La liquidità è scesa a 10,6 milioni di dollari, riflettendo in parte dividendi più elevati (+5,1% a 0,45 dollari per azione) e 111,8 milioni di dollari di investimenti legati a progetti di energie rinnovabili e modernizzazione della rete.
Regolamentazione: sono in vigore gli aumenti tariffari approvati dal PSCW per il 2024-25 pari all'1,5% per l'elettricità e al 2,4% per il gas; MGEE ha presentato richiesta per ulteriori aumenti del 4,9% e 2,3% rispettivamente per elettricità e gas, efficaci nel 2026, con un ROE consentito proposto del 10,0%. Non sono state registrate svalutazioni per il previsto ritiro nel 2029 delle unità Columbia 1-2. La direzione continua a rinviare le variazioni nei crediti d'imposta alla produzione e nei costi del carburante per un recupero futuro.
MGE Energy (MGEE) reportó un sólido crecimiento interanual para el trimestre finalizado el 30 de junio de 2025. Los ingresos operativos consolidados aumentaron un 9,4% hasta 159,5 millones de dólares, impulsados por mayores ventas de electricidad (+7,4%) y gas (+19,2%). El ingreso operativo creció un 15,1% hasta 34,2 millones de dólares, ya que los mayores costos de combustible y gas fueron más que compensados por una base tarifaria más amplia y menores gastos en energía comprada. La utilidad neta atribuible a los accionistas comunes aumentó un 11,4% hasta 26,5 millones de dólares; las ganancias diluidas por acción mejoraron a 0,72 desde 0,66 dólares.
En los primeros seis meses, los ingresos avanzaron un 12,3% hasta 378,4 millones y la utilidad neta subió un 18,2% hasta 68,1 millones, elevando las ganancias por acción acumuladas a 1,86 dólares (frente a 1,59). El flujo de caja operativo aumentó ligeramente a 134,0 millones; tras 111,8 millones en gastos de capital, el flujo de caja libre se mantuvo positivo. El balance muestra un patrimonio neto de 1,27 mil millones frente a una deuda a largo plazo de 761 millones, manteniendo una capitalización accionaria del 62%. El efectivo disminuyó a 10,6 millones, reflejando en parte dividendos más altos (+5,1% a 0,45 dólares por acción) y 111,8 millones en gastos de capital vinculados a proyectos de energías renovables y modernización de la red.
Regulatorio: están vigentes aumentos tarifarios aprobados por PSCW para 2024-25 del 1,5% (eléctrico) y 2,4% (gas); MGEE ha presentado solicitudes para aumentos adicionales del 4,9% y 2,3% para electricidad y gas, respectivamente, efectivos en 2026 bajo un ROE permitido propuesto del 10,0%. No se registraron deterioros por el retiro planificado en 2029 de las unidades Columbia 1-2. La dirección continúa aplazando las variaciones en créditos fiscales por producción y costos de combustible para recuperación futura.
MGE Energy(MGEE)는 2025년 6월 30일로 종료된 분기에 전년 대비 견고한 성장을 보고했습니다. 연결 영업수익은 9.4% 증가한 1억 5,950만 달러로, 전기 판매(+7.4%)와 가스 판매(+19.2%) 증가에 힘입었습니다. 영업이익은 연료 및 가스 비용 상승에도 불구하고 더 큰 요율 기반과 구매 전력 비용 감소로 인해 15.1% 증가한 3,420만 달러를 기록했습니다. 보통주주 귀속 순이익은 11.4% 증가한 2,650만 달러였으며, 희석 주당순이익(EPS)은 0.66달러에서 0.72달러로 개선되었습니다.
상반기에는 매출이 12.3% 증가한 3억 7,840만 달러, 순이익은 18.2% 증가한 6,810만 달러를 기록하여 연초 대비 EPS가 1.59달러에서 1.86달러로 상승했습니다. 영업현금흐름은 소폭 증가한 1억 3,400만 달러였으며, 1억 1,180만 달러의 자본적지출 후에도 잉여현금흐름은 플러스를 유지했습니다. 대차대조표상 자본은 12억 7천만 달러이고 장기부채는 7억 6,100만 달러로 62%의 자본 비율을 유지하고 있습니다. 현금은 1,060만 달러로 감소했으며, 이는 배당금(+5.1% 증가해 주당 0.45달러)과 재생에너지 및 그리드 현대화 프로젝트 관련 1억 1,180만 달러의 자본지출 때문입니다.
규제: 2024-25년 PSCW 승인 요금 인상은 전기 1.5%, 가스 2.4%이며, MGEE는 2026년부터 적용되는 전기/가스 추가 인상 4.9% 및 2.3%를 신청했으며, 제안된 허용 ROE는 10.0%입니다. 2029년 예정된 Columbia 1-2호기 폐쇄에 대한 손상차손은 기록되지 않았습니다. 경영진은 생산세액공제 및 연료비 변동분을 미래 회수를 위해 계속 이연하고 있습니다.
MGE Energy (MGEE) a annoncé une solide croissance annuelle pour le trimestre clos le 30 juin 2025. Le chiffre d'affaires consolidé a augmenté de 9,4 % pour atteindre 159,5 millions de dollars, porté par une hausse des ventes d'électricité (+7,4 %) et de gaz (+19,2 %). Le résultat d'exploitation a progressé de 15,1 % à 34,2 millions de dollars, les coûts plus élevés du carburant et du gaz ayant été plus que compensés par une base tarifaire plus importante et une baisse des dépenses d'énergie achetée. Le résultat net attribuable aux actionnaires ordinaires a augmenté de 11,4 % pour atteindre 26,5 millions de dollars ; le BPA dilué est passé de 0,66 à 0,72 dollar.
Sur les six premiers mois, le chiffre d'affaires a progressé de 12,3 % à 378,4 millions de dollars et le résultat net a grimpé de 18,2 % à 68,1 millions, portant le BPA cumulé à 1,86 dollar (contre 1,59). Les flux de trésorerie opérationnels ont légèrement augmenté à 134,0 millions ; après 111,8 millions de dépenses d'investissement, les flux de trésorerie disponibles sont restés positifs. Le bilan présente des capitaux propres de 1,27 milliard de dollars pour une dette à long terme de 761 millions, maintenant une capitalisation en fonds propres de 62 %. La trésorerie a diminué à 10,6 millions, reflétant en partie des dividendes plus élevés (+5,1 % à 0,45 dollar par action) et 111,8 millions de dépenses d'investissement liées à des projets d'énergie renouvelable et de modernisation du réseau.
Réglementation : des augmentations tarifaires approuvées par le PSCW pour 2024-25 de 1,5 % (électricité) et 2,4 % (gaz) sont en vigueur ; MGEE a déposé des demandes d'augmentations supplémentaires de 4,9 % et 2,3 % pour l'électricité et le gaz, respectivement, effectives en 2026 avec un rendement autorisé proposé de 10,0 %. Aucune dépréciation n'a été enregistrée pour la mise à la retraite prévue des unités Columbia 1-2 en 2029. La direction continue de différer les écarts liés aux crédits d'impôt à la production et aux coûts du carburant pour un recouvrement futur.
MGE Energy (MGEE) meldete für das zum 30. Juni 2025 endende Quartal ein solides Wachstum im Jahresvergleich. Die konsolidierten Betriebserlöse stiegen um 9,4 % auf 159,5 Millionen US-Dollar, getrieben durch höhere Stromverkäufe (+7,4 %) und Gasverkäufe (+19,2 %). Das Betriebsergebnis wuchs um 15,1 % auf 34,2 Millionen US-Dollar, da gestiegene Brennstoff- und Gaskosten durch eine größere Bemessungsgrundlage und geringere Kosten für zugekauften Strom mehr als ausgeglichen wurden. Der den Stammaktionären zurechenbare Nettogewinn stieg um 11,4 % auf 26,5 Millionen US-Dollar; das verwässerte Ergebnis je Aktie verbesserte sich von 0,66 auf 0,72 US-Dollar.
In den ersten sechs Monaten stiegen die Umsätze um 12,3 % auf 378,4 Millionen US-Dollar und der Nettogewinn kletterte um 18,2 % auf 68,1 Millionen US-Dollar, wodurch das Ergebnis je Aktie seit Jahresbeginn auf 1,86 US-Dollar (vs. 1,59) anstieg. Der operative Cashflow stieg leicht auf 134,0 Millionen US-Dollar; nach 111,8 Millionen US-Dollar Investitionen blieb der freie Cashflow positiv. Die Bilanz zeigt ein Eigenkapital von 1,27 Milliarden US-Dollar gegenüber langfristigen Schulden von 761 Millionen US-Dollar, was eine Eigenkapitalquote von 62 % aufrechterhält. Die liquiden Mittel sanken auf 10,6 Millionen US-Dollar, was teilweise höhere Dividenden (+5,1 % auf 0,45 US-Dollar je Aktie) und 111,8 Millionen US-Dollar Investitionen in erneuerbare Energien und Netzmodernisierungsprojekte widerspiegelt.
Regulatorisch: Für 2024-25 gelten vom PSCW genehmigte Tariferhöhungen von 1,5 % (Strom) und 2,4 % (Gas); MGEE hat Anträge auf weitere Strom-/Gaserhöhungen von 4,9 % bzw. 2,3 % mit Wirkung ab 2026 unter einem vorgeschlagenen zulässigen ROE von 10,0 % gestellt. Für die geplante Stilllegung der Columbia-Einheiten 1-2 im Jahr 2029 wurden keine Wertminderungen verbucht. Das Management setzt die Abgrenzung von Schwankungen bei Produktionssteuergutschriften und Brennstoffkosten zur späteren Erholung fort.
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Insights
TL;DR – Q2 showed mid-single-digit EPS beat, strong rate-base growth, but cash trending lower due to heavy capex.
Revenue growth (+9%) and cost discipline lifted operating margin by ~100 bp YoY. EPS of $0.72 is up 10%, illustrating constructive Wisconsin regulation and expanding renewable rate base. Cash flow comfortably covered dividend but not capex; FCF was ~+$22 million aided by short-term debt draw. Equity ratio remains healthy at 62%, supporting the requested 10% ROE in the 2026-27 filing. Near-term catalysts are PSCW decisions and solar/battery projects entering service. Risk: sustained capex could pressure liquidity if rate recovery lags.
TL;DR – Results consistent with predictable regulated utility model; incremental positives from tax credits and lower purchased power.
Electric revenue up despite modest volume implies successful pass-through of prior rate hikes. Purchased-power expense fell 37% YoY, validating MGEE’s strategy to own more generation (solar, West Riverside) and rely less on market purchases. Fuel and gas costs rose, but regulatory mechanisms mitigate exposure. Declining cash balance is typical in build-cycle; capex intensity (>$110 m YTD) aligns with decarbonization roadmap. No Columbia impairment signals confidence in full cost recovery pre-2029 retirement. Overall impact on investment thesis: modestly positive, reinforcing low-risk dividend growth profile.
MGE Energy (MGEE) ha riportato una solida crescita su base annua per il trimestre terminato il 30 giugno 2025. I ricavi operativi consolidati sono aumentati del 9,4% raggiungendo 159,5 milioni di dollari, grazie all'incremento delle vendite di energia elettrica (+7,4%) e gas (+19,2%). L'utile operativo è cresciuto del 15,1% a 34,2 milioni di dollari, poiché l'aumento dei costi del carburante e del gas è stato più che compensato da una base tariffaria più ampia e da una riduzione delle spese per energia acquistata. L'utile netto attribuibile agli azionisti ordinari è salito dell'11,4% a 26,5 milioni di dollari; l'utile per azione diluito è migliorato da 0,66 a 0,72 dollari.
Nei primi sei mesi, i ricavi sono aumentati del 12,3% a 378,4 milioni di dollari e l'utile netto è cresciuto del 18,2% a 68,1 milioni, portando l'utile per azione da inizio anno a 1,86 dollari (rispetto a 1,59). Il flusso di cassa operativo è leggermente aumentato a 134,0 milioni; dopo 111,8 milioni di dollari di investimenti in capitale, il flusso di cassa libero è rimasto positivo. Lo stato patrimoniale mostra un patrimonio netto di 1,27 miliardi di dollari contro un debito a lungo termine di 761 milioni, mantenendo una capitalizzazione azionaria del 62%. La liquidità è scesa a 10,6 milioni di dollari, riflettendo in parte dividendi più elevati (+5,1% a 0,45 dollari per azione) e 111,8 milioni di dollari di investimenti legati a progetti di energie rinnovabili e modernizzazione della rete.
Regolamentazione: sono in vigore gli aumenti tariffari approvati dal PSCW per il 2024-25 pari all'1,5% per l'elettricità e al 2,4% per il gas; MGEE ha presentato richiesta per ulteriori aumenti del 4,9% e 2,3% rispettivamente per elettricità e gas, efficaci nel 2026, con un ROE consentito proposto del 10,0%. Non sono state registrate svalutazioni per il previsto ritiro nel 2029 delle unità Columbia 1-2. La direzione continua a rinviare le variazioni nei crediti d'imposta alla produzione e nei costi del carburante per un recupero futuro.
MGE Energy (MGEE) reportó un sólido crecimiento interanual para el trimestre finalizado el 30 de junio de 2025. Los ingresos operativos consolidados aumentaron un 9,4% hasta 159,5 millones de dólares, impulsados por mayores ventas de electricidad (+7,4%) y gas (+19,2%). El ingreso operativo creció un 15,1% hasta 34,2 millones de dólares, ya que los mayores costos de combustible y gas fueron más que compensados por una base tarifaria más amplia y menores gastos en energía comprada. La utilidad neta atribuible a los accionistas comunes aumentó un 11,4% hasta 26,5 millones de dólares; las ganancias diluidas por acción mejoraron a 0,72 desde 0,66 dólares.
En los primeros seis meses, los ingresos avanzaron un 12,3% hasta 378,4 millones y la utilidad neta subió un 18,2% hasta 68,1 millones, elevando las ganancias por acción acumuladas a 1,86 dólares (frente a 1,59). El flujo de caja operativo aumentó ligeramente a 134,0 millones; tras 111,8 millones en gastos de capital, el flujo de caja libre se mantuvo positivo. El balance muestra un patrimonio neto de 1,27 mil millones frente a una deuda a largo plazo de 761 millones, manteniendo una capitalización accionaria del 62%. El efectivo disminuyó a 10,6 millones, reflejando en parte dividendos más altos (+5,1% a 0,45 dólares por acción) y 111,8 millones en gastos de capital vinculados a proyectos de energías renovables y modernización de la red.
Regulatorio: están vigentes aumentos tarifarios aprobados por PSCW para 2024-25 del 1,5% (eléctrico) y 2,4% (gas); MGEE ha presentado solicitudes para aumentos adicionales del 4,9% y 2,3% para electricidad y gas, respectivamente, efectivos en 2026 bajo un ROE permitido propuesto del 10,0%. No se registraron deterioros por el retiro planificado en 2029 de las unidades Columbia 1-2. La dirección continúa aplazando las variaciones en créditos fiscales por producción y costos de combustible para recuperación futura.
MGE Energy(MGEE)는 2025년 6월 30일로 종료된 분기에 전년 대비 견고한 성장을 보고했습니다. 연결 영업수익은 9.4% 증가한 1억 5,950만 달러로, 전기 판매(+7.4%)와 가스 판매(+19.2%) 증가에 힘입었습니다. 영업이익은 연료 및 가스 비용 상승에도 불구하고 더 큰 요율 기반과 구매 전력 비용 감소로 인해 15.1% 증가한 3,420만 달러를 기록했습니다. 보통주주 귀속 순이익은 11.4% 증가한 2,650만 달러였으며, 희석 주당순이익(EPS)은 0.66달러에서 0.72달러로 개선되었습니다.
상반기에는 매출이 12.3% 증가한 3억 7,840만 달러, 순이익은 18.2% 증가한 6,810만 달러를 기록하여 연초 대비 EPS가 1.59달러에서 1.86달러로 상승했습니다. 영업현금흐름은 소폭 증가한 1억 3,400만 달러였으며, 1억 1,180만 달러의 자본적지출 후에도 잉여현금흐름은 플러스를 유지했습니다. 대차대조표상 자본은 12억 7천만 달러이고 장기부채는 7억 6,100만 달러로 62%의 자본 비율을 유지하고 있습니다. 현금은 1,060만 달러로 감소했으며, 이는 배당금(+5.1% 증가해 주당 0.45달러)과 재생에너지 및 그리드 현대화 프로젝트 관련 1억 1,180만 달러의 자본지출 때문입니다.
규제: 2024-25년 PSCW 승인 요금 인상은 전기 1.5%, 가스 2.4%이며, MGEE는 2026년부터 적용되는 전기/가스 추가 인상 4.9% 및 2.3%를 신청했으며, 제안된 허용 ROE는 10.0%입니다. 2029년 예정된 Columbia 1-2호기 폐쇄에 대한 손상차손은 기록되지 않았습니다. 경영진은 생산세액공제 및 연료비 변동분을 미래 회수를 위해 계속 이연하고 있습니다.
MGE Energy (MGEE) a annoncé une solide croissance annuelle pour le trimestre clos le 30 juin 2025. Le chiffre d'affaires consolidé a augmenté de 9,4 % pour atteindre 159,5 millions de dollars, porté par une hausse des ventes d'électricité (+7,4 %) et de gaz (+19,2 %). Le résultat d'exploitation a progressé de 15,1 % à 34,2 millions de dollars, les coûts plus élevés du carburant et du gaz ayant été plus que compensés par une base tarifaire plus importante et une baisse des dépenses d'énergie achetée. Le résultat net attribuable aux actionnaires ordinaires a augmenté de 11,4 % pour atteindre 26,5 millions de dollars ; le BPA dilué est passé de 0,66 à 0,72 dollar.
Sur les six premiers mois, le chiffre d'affaires a progressé de 12,3 % à 378,4 millions de dollars et le résultat net a grimpé de 18,2 % à 68,1 millions, portant le BPA cumulé à 1,86 dollar (contre 1,59). Les flux de trésorerie opérationnels ont légèrement augmenté à 134,0 millions ; après 111,8 millions de dépenses d'investissement, les flux de trésorerie disponibles sont restés positifs. Le bilan présente des capitaux propres de 1,27 milliard de dollars pour une dette à long terme de 761 millions, maintenant une capitalisation en fonds propres de 62 %. La trésorerie a diminué à 10,6 millions, reflétant en partie des dividendes plus élevés (+5,1 % à 0,45 dollar par action) et 111,8 millions de dépenses d'investissement liées à des projets d'énergie renouvelable et de modernisation du réseau.
Réglementation : des augmentations tarifaires approuvées par le PSCW pour 2024-25 de 1,5 % (électricité) et 2,4 % (gaz) sont en vigueur ; MGEE a déposé des demandes d'augmentations supplémentaires de 4,9 % et 2,3 % pour l'électricité et le gaz, respectivement, effectives en 2026 avec un rendement autorisé proposé de 10,0 %. Aucune dépréciation n'a été enregistrée pour la mise à la retraite prévue des unités Columbia 1-2 en 2029. La direction continue de différer les écarts liés aux crédits d'impôt à la production et aux coûts du carburant pour un recouvrement futur.
MGE Energy (MGEE) meldete für das zum 30. Juni 2025 endende Quartal ein solides Wachstum im Jahresvergleich. Die konsolidierten Betriebserlöse stiegen um 9,4 % auf 159,5 Millionen US-Dollar, getrieben durch höhere Stromverkäufe (+7,4 %) und Gasverkäufe (+19,2 %). Das Betriebsergebnis wuchs um 15,1 % auf 34,2 Millionen US-Dollar, da gestiegene Brennstoff- und Gaskosten durch eine größere Bemessungsgrundlage und geringere Kosten für zugekauften Strom mehr als ausgeglichen wurden. Der den Stammaktionären zurechenbare Nettogewinn stieg um 11,4 % auf 26,5 Millionen US-Dollar; das verwässerte Ergebnis je Aktie verbesserte sich von 0,66 auf 0,72 US-Dollar.
In den ersten sechs Monaten stiegen die Umsätze um 12,3 % auf 378,4 Millionen US-Dollar und der Nettogewinn kletterte um 18,2 % auf 68,1 Millionen US-Dollar, wodurch das Ergebnis je Aktie seit Jahresbeginn auf 1,86 US-Dollar (vs. 1,59) anstieg. Der operative Cashflow stieg leicht auf 134,0 Millionen US-Dollar; nach 111,8 Millionen US-Dollar Investitionen blieb der freie Cashflow positiv. Die Bilanz zeigt ein Eigenkapital von 1,27 Milliarden US-Dollar gegenüber langfristigen Schulden von 761 Millionen US-Dollar, was eine Eigenkapitalquote von 62 % aufrechterhält. Die liquiden Mittel sanken auf 10,6 Millionen US-Dollar, was teilweise höhere Dividenden (+5,1 % auf 0,45 US-Dollar je Aktie) und 111,8 Millionen US-Dollar Investitionen in erneuerbare Energien und Netzmodernisierungsprojekte widerspiegelt.
Regulatorisch: Für 2024-25 gelten vom PSCW genehmigte Tariferhöhungen von 1,5 % (Strom) und 2,4 % (Gas); MGEE hat Anträge auf weitere Strom-/Gaserhöhungen von 4,9 % bzw. 2,3 % mit Wirkung ab 2026 unter einem vorgeschlagenen zulässigen ROE von 10,0 % gestellt. Für die geplante Stilllegung der Columbia-Einheiten 1-2 im Jahr 2029 wurden keine Wertminderungen verbucht. Das Management setzt die Abgrenzung von Schwankungen bei Produktionssteuergutschriften und Brennstoffkosten zur späteren Erholung fort.
United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM For the quarterly period ended: For the transition period from _______________ to _______________ |
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Commission File No. |
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Name of Registrant, State of Incorporation, Address of Principal Executive Offices, and Telephone No. |
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IRS Employer Identification No. |
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(a ( |
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading symbol(s) |
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Name of each exchange on which registered |
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The |
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days:
MGE Energy, Inc. |
Madison Gas and Electric Company |
Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files):
MGE Energy, Inc. |
Madison Gas and Electric Company |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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Accelerated Filer |
Smaller Reporting Company |
Emerging Growth Company |
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MGE Energy, Inc. |
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☐ |
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Madison Gas and Electric Company |
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If an emerging growth company, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
MGE Energy, Inc. ☐ |
Madison Gas and Electric Company ☐ |
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act):
MGE Energy, Inc. Yes |
Madison Gas and Electric Company Yes |
Number of Shares Outstanding of Each Class of Common Stock as of July 31, 2025 |
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MGE Energy, Inc. |
Common stock, $1.00 par value, |
Madison Gas and Electric Company |
Common stock, $1.00 par value, |
1
Table of Contents
PART I. FINANCIAL INFORMATION |
3 |
Filing Format |
3 |
Forward-Looking Statements |
3 |
Where to Find More Information |
3 |
Definitions, Abbreviations, and Acronyms Used in the Text and Notes of this Report |
4 |
Item 1. Financial Statements. |
6 |
MGE Energy, Inc. |
6 |
Consolidated Statements of Income (unaudited) |
6 |
Consolidated Statements of Cash Flows (unaudited) |
7 |
Consolidated Balance Sheets (unaudited) |
8 |
Consolidated Statements of Common Equity (unaudited) |
9 |
Madison Gas and Electric Company |
10 |
Consolidated Statements of Income (unaudited) |
10 |
Consolidated Statements of Cash Flows (unaudited) |
11 |
Consolidated Balance Sheets (unaudited) |
12 |
Consolidated Statements of Equity (unaudited) |
13 |
MGE Energy, Inc., and Madison Gas and Electric Company - Notes to Consolidated Financial Statements (unaudited) |
14 |
1. Summary of Significant Accounting Policies. |
14 |
2. New Accounting Standards. |
15 |
3. Investment in ATC and ATC Holdco. |
15 |
4. Taxes. |
16 |
5. Pension and Other Postretirement Plans. |
17 |
6. Equity and Financing Arrangements. |
17 |
7. Share-Based Compensation. |
18 |
8. Commitments and Contingencies. |
18 |
9. Rate Matters. |
21 |
10. Derivative and Hedging Instruments. |
22 |
11. Fair Value of Financial Instruments. |
24 |
12. Joint Plant Construction Project Ownership. |
27 |
13. Revenue. |
27 |
14. Segment Information. |
28 |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
31 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk. |
46 |
Item 4. Controls and Procedures. |
46 |
PART II. OTHER INFORMATION. |
47 |
Item 1. Legal Proceedings. |
47 |
Item 1A. Risk Factors. |
47 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. |
47 |
Item 3. Defaults Upon Senior Securities. |
47 |
Item 4. Mine Safety Disclosures. |
47 |
Item 5. Other Information. |
47 |
Item 6. Exhibits. |
48 |
Signatures - MGE Energy, Inc. |
49 |
Signatures - Madison Gas and Electric Company |
50 |
2
PART I. FINANCIAL INFORMATION.
Filing Format
This combined Form 10-Q is being filed separately by MGE Energy, Inc. (MGE Energy) and Madison Gas and Electric Company (MGE). MGE is a wholly owned subsidiary of MGE Energy and represents a majority of its assets, liabilities, revenues, expenses, and operations. Thus, all information contained in this report relates to, and is filed by, MGE Energy. Information that is specifically identified in this report as relating solely to MGE Energy, such as its financial statements and information relating to its nonregulated business, does not relate to, and is not filed by, MGE. MGE makes no representation as to that information. The terms "we" and "our," as used in this report, refer to MGE Energy and its consolidated subsidiaries, unless otherwise indicated.
Forward-Looking Statements
Certain matters discussed in this report include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements that are not statements of historical facts are, or may be deemed to be, forward-looking statements. Such forward-looking statements are based on historical performance and current expectations, estimates, forecasts and projections about our future financial results, goals, plans, commitments, strategies and objectives, particularly related to future load growth, revenues, expenses, capital expenditures and rate recovery, financial resources, regulatory matters, and the scope and expense associated with future environmental regulation. Such statements involve inherent risks, assumptions and uncertainties, known or unknown, including internal or external factors that could delay, divert or change any of them, that are difficult to predict, may be beyond our control and could cause our future financial results, goals, plans and objectives to differ materially from those expressed in, or implied by, the statements. Words such as "believe," "expect," "anticipate," "estimate," "could," "should," "intend," "will," "commit," "target," "plan," and other similar words, and words relating to goals, targets and projections, generally identify forward-looking statements. Both MGE Energy and MGE caution investors that these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from those projected, expressed, or implied.
The factors that could cause actual results to differ materially from the forward-looking statements made by a registrant include (a) those factors discussed in the following sections of the registrants' 2024 Annual Report on Form 10-K: Item 1A. Risk Factors; Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, as updated by Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations in this report; and Item 8. Financial Statements and Supplementary Data – Footnote 16, as updated by Part I, Item 1. Financial Statements – Footnote 8 in this report; and (b) other factors discussed herein and in other filings made by that registrant with the Securities and Exchange Commission (SEC).
Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this report. MGE Energy and MGE undertake no obligation to publicly update or revise any forward-looking statement to reflect events or circumstances after the date of this report, whether as a result of new information, future events, changed circumstances or otherwise, except as required by law.
Where to Find More Information
We file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and other information with the SEC. The SEC maintains an internet site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
MGE Energy maintains a website at mgeenergy.com, and MGE maintains a website at mge.com. Copies of the reports and other information that we file with the SEC may be obtained from our websites free of charge. Information contained on MGE Energy's and MGE's websites shall not be deemed incorporated into, or to be a part of, this report.
3
Definitions, Abbreviations, and Acronyms Used in the Text and Notes of this Report
Abbreviations, acronyms, and definitions used in the text and notes of this report are defined below.
MGE Energy and Subsidiaries: |
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CWDC |
Central Wisconsin Development Corporation |
MAGAEL |
MAGAEL, LLC |
MGE |
Madison Gas and Electric Company |
MGE Energy |
MGE Energy, Inc. |
MGE Power |
MGE Power, LLC |
MGE Power Elm Road |
MGE Power Elm Road, LLC |
MGE Power West Campus |
MGE Power West Campus, LLC |
MGE Services |
MGE Services, LLC |
MGE State Energy Services |
MGE State Energy Services, LLC |
MGE Transco |
MGE Transco Investment, LLC |
MGEE Transco |
MGEE Transco, LLC |
North Mendota |
North Mendota Energy & Technology Park, LLC |
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Other Defined Terms: |
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2024 Annual Report on Form 10-K |
MGE Energy's and MGE's Annual Report on Form 10-K for the year ended December 31, 2024 |
2021 Incentive Plan |
MGE Energy's 2021 Long-Term Incentive Plan |
AFUDC |
Allowance for Funds Used During Construction |
ATC |
American Transmission Company LLC |
ATC Holdco |
ATC Holdco, LLC |
Badger Hollow II |
Badger Hollow II Solar Farm |
Blount |
Blount Station |
BTA |
Best technology available |
CA |
Certificate of Authority |
CBP |
U.S. Customs and Border Protection |
CCR |
Coal Combustion Residual |
Codification |
Financial Accounting Standards Board Accounting Standards Codification |
Columbia |
Columbia Energy Center |
Cooling degree days (CDD) |
Measure of the extent to which the average daily temperature is above 65 degrees Fahrenheit, which is considered an indicator of possible increased demand for energy to provide cooling |
CWIP |
Construction Work in Progress |
Darien |
Darien Solar Energy Center |
Dth |
Dekatherms, a quantity measure for natural gas |
ELG |
Effluent Limitations Guidelines |
Elm Road Units |
Elm Road Generating Station |
EPA |
United States Environmental Protection Agency |
FERC |
Federal Energy Regulatory Commission |
FTR |
Financial Transmission Rights |
GHG |
Greenhouse gas |
Heating degree days (HDD) |
Measure of the extent to which the average daily temperature is below 65 degrees Fahrenheit, which is considered an indicator of possible increased demand for energy to provide heating |
High Noon |
High Noon Solar Project |
IRS |
Internal Revenue Service |
ITC |
Investment Tax Credit |
Koshkonong |
Koshkonong Solar Energy Center |
kWh |
Kilowatt-hour, a measure of electric energy produced |
MISO |
Midcontinent Independent System Operator (a regional transmission organization) |
MW |
Megawatt, a measure of electric energy generating capacity |
MWh |
Megawatt-hour, a measure of electric energy produced |
NAAQS |
National Ambient Air Quality Standards |
Nasdaq |
The Nasdaq Stock Market |
NOx |
Nitrogen oxide |
OBBBA |
One Big Beautiful Bill Act |
Paris |
Paris Solar and Battery Park |
PGA |
Purchased Gas Adjustment clause, a regulatory mechanism used to reconcile natural gas costs recovered in rates to actual costs |
PM |
Particulate Matter |
4
PSCW |
Public Service Commission of Wisconsin |
PTC |
Production Tax Credit |
ROE |
Return on equity |
SEC |
Securities and Exchange Commission |
SO2 |
Sulfur dioxide |
Stock Plan |
Direct Stock Purchase and Dividend Reinvestment Plan of MGE Energy |
Sunnyside |
Sunnyside Solar and Battery Project |
Therm |
Measure of quantity of heat used to measure gas supply |
UFLPA |
Uyghur Forced Labor Protection Act |
VIE |
Variable Interest Entity |
WCCF |
West Campus Cogeneration Facility |
WDNR |
Wisconsin Department of Natural Resources |
WEPCO |
Wisconsin Electric Power Company, a subsidiary of WEC Energy Group, Inc. |
West Riverside |
West Riverside Energy Center in Beloit, Wisconsin |
Working capital |
Current assets less current liabilities |
WPDES |
Wisconsin Pollutant Discharge Elimination System |
WRO |
Withhold Release Order |
XBRL |
eXtensible Business Reporting Language |
5
Item 1. Financial Statements.
MGE Energy, Inc.
Consolidated Statements of Income (unaudited)
(In thousands, except per share amounts)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2025 |
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2024 |
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2024 |
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Operating Revenues: |
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Electric revenues |
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$ |
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Gas revenues |
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Total Operating Revenues |
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Operating Expenses: |
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Fuel for electric generation |
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Purchased power |
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Cost of gas sold |
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Other operations and maintenance |
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Depreciation and amortization |
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Other general taxes |
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Total Operating Expenses |
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Operating Income |
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Other income, net |
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Interest expense, net |
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Income before income taxes |
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Income tax provision |
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Net Income |
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$ |
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$ |
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$ |
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$ |
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Earnings Per Share of Common Stock |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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Dividends per share of common stock |
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$ |
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$ |
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$ |
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Weighted Average Shares Outstanding |
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Basic |
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Diluted |
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The accompanying notes are an integral part of the above unaudited consolidated financial statements.
6
MGE Energy, Inc.
Consolidated Statements of Cash Flows (unaudited)
(In thousands)
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Six Months Ended |
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June 30, |
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2025 |
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2024 |
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Operating Activities: |
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Net income |
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Items not affecting cash: |
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Depreciation and amortization |
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Deferred income taxes |
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Provision for doubtful receivables |
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Employee benefit plan (credit) cost |
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Equity earnings in investments |
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Other items |
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Changes in working capital items: |
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Current assets |
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Accounts payable |
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Other current liabilities |
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Dividends from investments |
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Cash contributions to pension and other postretirement plans |
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Other noncurrent items, net |
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Cash Provided by Operating Activities |
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Investing Activities: |
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Capital expenditures |
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Capital contributions to investments |
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Other |
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Cash Used for Investing Activities |
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Financing Activities: |
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Issuance of common stock, net |
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Cash dividends paid on common stock |
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Repayments of long-term debt |
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Proceeds from short-term debt |
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Other |
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Cash Used for Financing Activities |
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Change in cash, cash equivalents, and restricted cash |
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Cash, cash equivalents, and restricted cash at beginning of period |
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Cash, cash equivalents, and restricted cash at end of period |
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$ |
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$ |
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Supplemental disclosures of cash flow information: |
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Significant noncash investing activities: |
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Accrued capital expenditures |
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The accompanying notes are an integral part of the above unaudited consolidated financial statements.
7
MGE Energy, Inc.
Consolidated Balance Sheets (unaudited)
(In thousands)
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June 30, |
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December 31, |
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ASSETS |
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2025 |
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2024 |
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Current Assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, less reserves of $ |
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Other accounts receivable, less reserves of $ |
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Unbilled revenues |
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Materials and supplies, at average cost |
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Fuel for electric generation, at average cost |
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Stored natural gas, at average cost |
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Prepaid taxes |
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Regulatory assets - current |
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Other current assets |
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Total Current Assets |
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Regulatory assets |
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Pension and other postretirement benefit asset |
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Other deferred assets and other |
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Property, Plant, and Equipment: |
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Property, plant, and equipment, net |
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Construction work in progress |
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Total Property, Plant, and Equipment |
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Investments |
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Total Assets |
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$ |
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$ |
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LIABILITIES AND CAPITALIZATION |
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Current Liabilities: |
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Long-term debt due within one year |
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$ |
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$ |
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Short-term debt |
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Accounts payable |
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Accrued interest and taxes |
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Accrued payroll related items |
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|
|
|
|
|
||
Regulatory liabilities - current |
|
|
|
|
|
|
||
Other current liabilities |
|
|
|
|
|
|
||
Total Current Liabilities |
|
|
|
|
|
|
||
Other Credits: |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
|
||
Investment tax credit - deferred |
|
|
|
|
|
|
||
Regulatory liabilities |
|
|
|
|
|
|
||
Accrued pension and other postretirement benefits |
|
|
|
|
|
|
||
Asset retirement obligations |
|
|
|
|
|
|
||
Other deferred liabilities and other |
|
|
|
|
|
|
||
Total Other Credits |
|
|
|
|
|
|
||
Capitalization: |
|
|
|
|
|
|
||
Common shareholders' equity |
|
|
|
|
|
|
||
Long-term debt |
|
|
|
|
|
|
||
Total Capitalization |
|
|
|
|
|
|
||
Commitments and contingencies (see Footnote 8) |
|
|
|
|
|
|
||
Total Liabilities and Capitalization |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of the above unaudited consolidated financial statements.
8
MGE Energy, Inc.
Consolidated Statements of Common Equity (unaudited)
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
||||||
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Other |
|
|
|
|
||||||
|
|
Common Stock |
|
|
Paid-in |
|
|
Retained |
|
|
Comprehensive |
|
|
|
|
|||||||||
|
|
Shares |
|
|
Value |
|
|
Capital |
|
|
Earnings |
|
|
Income/(Loss) |
|
|
Total |
|
||||||
Three Months Ended June 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Beginning Balance |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Common stock dividends declared |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Equity-based compensation plans and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Ending Balance - June 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Three Months Ended June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Beginning Balance |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Common stock dividends declared |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Direct Stock Purchase and Dividend Reinvestment Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity-based compensation plans and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Ending Balance - June 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Six Months Ended June 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Beginning Balance |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Common stock dividends declared |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Equity-based compensation plans and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Ending Balance - June 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Six Months Ended June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Beginning Balance |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Common stock dividends declared |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Direct Stock Purchase and Dividend Reinvestment Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity-based compensation plans and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Ending Balance - June 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
The accompanying notes are an integral part of the above unaudited consolidated financial statements.
9
Madison Gas and Electric Company
Consolidated Statements of Income (unaudited)
(In thousands)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Operating Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Electric revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Gas revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Operating Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fuel for electric generation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Purchased power |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of gas sold |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other operations and maintenance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other general taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax provision |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net Income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: Net Income Attributable to Noncontrolling |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net Income Attributable to MGE |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The accompanying notes are an integral part of the above unaudited consolidated financial statements.
10
Madison Gas and Electric Company
Consolidated Statements of Cash Flows (unaudited)
(In thousands)
|
|
Six Months Ended |
|
|||||
|
|
June 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Operating Activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Items not affecting cash: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
( |
) |
|
Provision for doubtful receivables |
|
|
|
|
|
|
||
Employee benefit plan (credit) cost |
|
|
( |
) |
|
|
|
|
Other items |
|
|
|
|
|
|
||
Changes in working capital items: |
|
|
|
|
|
|
||
Current assets |
|
|
|
|
|
|
||
Accounts payable |
|
|
( |
) |
|
|
( |
) |
Other current liabilities |
|
|
|
|
|
|
||
Cash contributions to pension and other postretirement plans |
|
|
( |
) |
|
|
( |
) |
Other noncurrent items, net |
|
|
|
|
|
|
||
Cash Provided by Operating Activities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Investing Activities: |
|
|
|
|
|
|
||
Capital expenditures |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
( |
) |
|
|
( |
) |
Cash Used for Investing Activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Financing Activities: |
|
|
|
|
|
|
||
Cash dividends paid to parent by MGE |
|
|
( |
) |
|
|
( |
) |
Distributions to parent from noncontrolling interest |
|
|
( |
) |
|
|
( |
) |
Repayments of long-term debt |
|
|
( |
) |
|
|
( |
) |
Proceeds from short-term debt |
|
|
|
|
|
|
||
Other |
|
|
( |
) |
|
|
( |
) |
Cash Used for Financing Activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Change in cash, cash equivalents, and restricted cash |
|
|
( |
) |
|
|
|
|
Cash, cash equivalents, and restricted cash at beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents, and restricted cash at end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
||
Significant noncash investing activities: |
|
|
|
|
|
|
||
Accrued capital expenditures |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of the above unaudited consolidated financial statements.
11
Madison Gas and Electric Company
Consolidated Balance Sheets (unaudited)
(In thousands)
|
|
June 30, |
|
|
December 31, |
|
||
ASSETS |
|
2025 |
|
|
2024 |
|
||
Current Assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Accounts receivable, less reserves of $ |
|
|
|
|
|
|
||
Other accounts receivable, less reserves of $ |
|
|
|
|
|
|
||
Unbilled revenues |
|
|
|
|
|
|
||
Materials and supplies, at average cost |
|
|
|
|
|
|
||
Fuel for electric generation, at average cost |
|
|
|
|
|
|
||
Stored natural gas, at average cost |
|
|
|
|
|
|
||
Prepaid taxes |
|
|
|
|
|
|
||
Regulatory assets - current |
|
|
|
|
|
|
||
Other current assets |
|
|
|
|
|
|
||
Total Current Assets |
|
|
|
|
|
|
||
Regulatory assets |
|
|
|
|
|
|
||
Pension and other post retirement benefit asset |
|
|
|
|
|
|
||
Other deferred assets and other |
|
|
|
|
|
|
||
Property, Plant, and Equipment: |
|
|
|
|
|
|
||
Property, plant, and equipment, net |
|
|
|
|
|
|
||
Construction work in progress |
|
|
|
|
|
|
||
Total Property, Plant, and Equipment |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Total Assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
LIABILITIES AND CAPITALIZATION |
|
|
|
|
|
|
||
Current Liabilities: |
|
|
|
|
|
|
||
Long-term debt due within one year |
|
$ |
|
|
$ |
|
||
Short-term debt |
|
|
|
|
|
|
||
Accounts payable |
|
|
|
|
|
|
||
Accrued interest and taxes |
|
|
|
|
|
|
||
Accrued payroll related items |
|
|
|
|
|
|
||
Regulatory liabilities - current |
|
|
|
|
|
|
||
Other current liabilities |
|
|
|
|
|
|
||
Total Current Liabilities |
|
|
|
|
|
|
||
Other Credits: |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
|
||
Investment tax credit - deferred |
|
|
|
|
|
|
||
Regulatory liabilities |
|
|
|
|
|
|
||
Accrued pension and other postretirement benefits |
|
|
|
|
|
|
||
Asset retirement obligations |
|
|
|
|
|
|
||
Other deferred liabilities and other |
|
|
|
|
|
|
||
Total Other Credits |
|
|
|
|
|
|
||
Capitalization: |
|
|
|
|
|
|
||
Common shareholder's equity |
|
|
|
|
|
|
||
Noncontrolling interest |
|
|
|
|
|
|
||
Total Equity |
|
|
|
|
|
|
||
Long-term debt |
|
|
|
|
|
|
||
Total Capitalization |
|
|
|
|
|
|
||
Commitments and contingencies (see Footnote 8) |
|
|
|
|
|
|
||
Total Liabilities and Capitalization |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of the above unaudited consolidated financial statements.
12
Madison Gas and Electric Company
Consolidated Statements of Equity (unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Other |
|
|
Non- |
|
|
|
|
|||||||
|
|
Common Stock |
|
|
Paid-in |
|
|
Retained |
|
|
Comprehensive |
|
|
Controlling |
|
|
|
|
||||||||||
|
|
Shares |
|
|
Value |
|
|
Capital |
|
|
Earnings |
|
|
Income/(Loss) |
|
|
Interest |
|
|
Total |
|
|||||||
Three Months Ended June 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Beginning balance |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cash dividends paid to parent by MGE |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Distributions to parent from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||||
Ending Balance - June 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Three Months Ended June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Beginning balance |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cash dividends paid to parent by MGE |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Distributions to parent from |
|
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|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||||
Ending Balance - June 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
|
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|
|
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|
|
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|
|||||||
Six Months Ended June 30, 2024 |
|
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|
|
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|
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|
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|
|||||||
Beginning balance |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Net income |
|
|
|
|
|
|
|
|
|
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|
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|
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|
|||||||
Cash dividends paid to parent by MGE |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Distributions to parent from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||||
Ending Balance - June 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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|||||||
Six Months Ended June 30, 2025 |
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|
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|
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|
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|||||||
Beginning balance |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|||||||
Cash dividends paid to parent by MGE |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Distributions to parent from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||||
Ending Balance - June 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
The accompanying notes are an integral part of the above unaudited consolidated financial statements.
13
MGE Energy, Inc., and Madison Gas and Electric Company
Notes to Consolidated Financial Statements (unaudited)
June 30, 2025
This report is a combined report of MGE Energy and MGE. References in this report to "MGE Energy" are to MGE Energy, Inc. and its subsidiaries. References in this report to "MGE" are to Madison Gas and Electric Company.
The accompanying consolidated financial statements as of June 30, 2025, and during the three and six months ended June 30, 2025, as applicable, are unaudited but include all adjustments that MGE Energy and MGE management consider necessary for a fair statement of their respective financial statements. All adjustments are of a normal, recurring nature except as otherwise disclosed. The year-end consolidated balance sheet information was derived from the audited balance sheet appearing in the 2024 Annual Report on Form 10-K but does not include all disclosures required by accounting principles generally accepted in the United States of America. These notes should be read in conjunction with the financial statements and the notes thereto located on pages 53 through 99 of the 2024 Annual Report on Form 10-K.
The following table presents the components of total cash, cash equivalents, and restricted cash on the consolidated balance sheets.
|
|
MGE Energy |
|
MGE |
||||||||
|
|
June 30, |
|
December 31, |
|
June 30, |
|
December 31, |
||||
(In thousands) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Cash and cash equivalents |
|
$ |
|
$ |
|
$ |
|
$ |
||||
Restricted cash |
|
|
|
|
|
|
|
|
||||
Receivable - margin account |
|
|
|
|
|
|
|
|
||||
Cash, cash equivalents, and restricted cash |
|
$ |
|
$ |
|
$ |
|
$ |
||||
Cash Equivalents
All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents.
Restricted Cash
MGE has certain cash accounts that are restricted to uses other than current operations and designated for a specific purpose. MGE's restricted cash accounts include cash held by trustees for certain employee benefits and cash deposits held by third parties. These are included in "Other current assets" on the consolidated balance sheets.
Receivable – Margin Account
Cash amounts held by counterparties as margin collateral for certain financial transactions are recorded as Receivable – margin account in "Other current assets" on the consolidated balance sheets. The costs being hedged are fuel for electric generation, purchased power, and cost of gas sold.
14
Columbia.
An asset that will be retired in the near future and substantially in advance of its previously expected retirement date is subject to abandonment accounting. In the second quarter of 2021, the operator of Columbia received approval from Midcontinent Independent System Operator (MISO) to retire Columbia Units 1 and 2. The co-owners intend to retire Unit 1 and Unit 2 by the end of 2029. Final timing and retirement dates continue to be evaluated and depend upon operational and regulatory considerations, capacity needs and availability, and other factors impacting one or more of the Columbia co-owners. As of June 30, 2025, early retirement of Columbia Unit 1 and 2 was probable.
Our ownership share of Columbia assets was classified as plant to be retired within "Property, plant, and equipment, net" on the consolidated balance sheets contained in the 2024 Annual Report on Form 10-K. Assets for Columbia Unit 1 and Unit 2 are currently included in rate base, and MGE continues to depreciate them on a straight-line basis using the composite depreciation rates approved by the Public Service Commission of Wisconsin (PSCW) that include retirement dates of 2029 for both Units.
If it becomes probable that regulators will disallow full recovery or a return on the remaining net book value of a generating unit that is either abandoned or probable of being abandoned, an impairment loss would be required. An impairment loss would be recorded to the extent that the remaining net book value of the generating unit exceeds the present value of the amount expected to be recovered from ratepayers.
In December 2023, the Financial Accounting Standards Board issued authoritative guidance within the codification's Income Taxes topic, which expanded the disclosure requirements over effective tax rate reconciliations and income taxes paid. For public business entities, the authoritative guidance is effective for annual disclosures for fiscal years beginning after December 15, 2024. MGE has adopted the standard as of the effective date. The adoption of this standard is not expected to have a material impact on MGE Energy's and MGE's financial statements.
In November 2024, the Financial Accounting Standards Board issued authoritative guidance within the codification's Income Statement - Reporting Comprehensive Income topic, which added disclosure requirements for the disaggregation of certain income statement expenses. The authoritative guidance will become effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. MGE will adopt the standard as of the effective date. The adoption of this standard will not have a material impact on MGE Energy's and MGE's financial statements.
ATC owns and operates electric transmission facilities primarily in Wisconsin. MGE received an interest in ATC when it, like other Wisconsin electric utilities, contributed its electric transmission facilities to ATC, as required by Wisconsin law. That interest is presently held by MGE Transco, a subsidiary of MGE Energy. ATC Holdco was formed by several members of ATC, including MGE Energy, to pursue electric transmission development and investments outside of Wisconsin. The ownership interest in ATC Holdco is held by MGEE Transco, a subsidiary of MGE Energy.
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
(In thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Equity earnings from investment in ATC |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Dividends received from ATC |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital contributions to ATC |
|
|
|
|
|
|
|
|
|
|
|
|
||||
15
In July 2025, MGE Transco made a $
ATC's summarized financial data is as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
(In thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Operating revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Operating expenses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Earnings before members' income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
MGE receives transmission and other related services from ATC. During the three and six months ended June 30, 2025, MGE recorded $
Effective Tax Rate.
The 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 |
||||||||||||||||
Three Months Ended June 30, |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||||||||||
Statutory federal income tax rate |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
||||
State income taxes, net of federal benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortized investment tax credits |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
Credit for electricity from renewable energy |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
AFUDC equity, net |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
Amortization of utility excess deferred tax - tax reform(a) |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
Other, net, individually insignificant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effective income tax rate |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
MGE Energy |
|
MGE |
||||||||||||||||
Six Months Ended June 30, |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||||||||||
Statutory federal income tax rate |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
||||
State income taxes, net of federal benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortized investment tax credits |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
Credit for electricity from renewable energy |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
AFUDC equity, net |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
Amortization of utility excess deferred tax - tax reform(a) |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
Other, net, individually insignificant |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
( |
) |
|
||
Effective income tax rate |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
||||
In 2024, MGE sold transfer-eligible tax credits generated in 2023 and 2024. MGE elects to account for the transferred tax credits under the framework of Accounting for Income Taxes. The sale of tax credits is presented in the operating activities section of the consolidated statements of cash flows consistent with the presentation of cash taxes paid. MGE includes any expected proceeds from the transfer of tax credits in the evaluation of realizability of deferred tax assets related to tax credits
16
and records a valuation allowance for the difference between the tax value of the credits and the expected proceeds. The PSCW approved the deferral by MGE of any differential between tax credit transfer proceeds and the tax value of credits reflected in rates to its next rate case filing.
MGE maintains qualified and nonqualified pension plans, health care, and life insurance benefits and defined contribution 401(k) benefit plans for its employees and retirees.
The components of net periodic benefit cost, other than the service cost component, are recorded in "Other income, net" on the consolidated statements of income. The service cost component is recorded in "Other operations and maintenance" on the consolidated statements of income. MGE has regulatory treatment and recognizes regulatory assets or liabilities for timing differences between when net periodic benefit costs are recovered and when costs are recognized.
The following table presents the components of net periodic benefit costs recognized.
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
(In thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Pension Benefits |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Components of net periodic benefit cost: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Service cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expected return on assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Actuarial loss |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net periodic benefit (credit) cost |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Postretirement Benefits |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Components of net periodic benefit cost: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Service cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expected return on assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Transition obligation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Prior service credit |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Actuarial gain |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net periodic benefit cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As approved by the PSCW, MGE is allowed to defer differences between actual employee benefit plan costs and costs reflected in current rates. The deferred costs may be recovered or refunded in MGE's next rate filing. During the three and six months ended June 30, 2025, MGE recovered $
17
As of June 30, 2025,
During the three and six months ended June 30, 2025, MGE recorded $
In the first quarter of 2025, MGE distributed cash payments of $
In March 2025, MGE granted
Share-based compensation expense is recognized on a straight-line basis over the requisite service period. Awards classified as equity awards are measured based on their grant-date fair value. Awards classified as liability awards are recorded at fair value each reporting period. The performance units can be paid out in cash, shares of common stock, or a combination of cash and stock and are classified as a liability award. The restricted stock units will be paid out in shares of common stock, and therefore are classified as equity awards.
In February 2021, MGE and the other co-owners of Columbia announced plans to retire Units 1 and 2 at that facility. Effects of the environmental compliance requirements discussed below will depend upon the final Columbia retirement dates approved and required compliance dates of applicable regulations in effect.
MGE Energy and MGE are subject to frequently changing local, state, and federal regulations concerning air quality, water quality, land use, threatened and endangered species, hazardous materials handling, and solid waste disposal. These regulations affect the manner in which operations are conducted, the costs of operations, as well as capital and operating expenditures. Several of these environmental rules are subject to legal challenges, reconsideration and/or other uncertainties. Regulatory initiatives, proposed rules, and court challenges to adopted rules could potentially have a material effect on capital expenditures and operating costs. Management believes compliance costs will be recovered in future rates based on previous treatment of environmental compliance projects.
These initiatives, proposed rules, and court challenges include:
With the closure of the wet pond system in 2023 (as described in further detail in the CCR section below), Columbia complies with ELG requirements. With the installation of additional wastewater treatment equipment completed in 2023, the Elm Road Units comply with ELG requirements.
In May 2024, the EPA finalized the ELG rule that further regulates the wastewater discharges associated with coal-fired power plants. The rule focuses on wastewater discharges from flue gas desulfurization and bottom ash transport water. The rule includes a reduction in requirements for plants that have already installed pollution controls based on previous versions of the rule, and for plants that will be retiring or switching to natural gas by certain dates. Although the 2024 ELG rule is currently being challenged in federal court, the litigation is on hold while the EPA undertakes a reconsideration process. The 2024 rule builds upon the 2020 ELG Rule, which also remains under legal challenge and is similarly on hold pending the outcome of the EPA's review.
18
Pollution control prevention equipment was installed under previous versions of the rule and the planned fuel switching to natural gas. MGE and the operator of the Elm Road Units are currently evaluating operational options and costs for Elm Road to be in compliance with the requirements of the rule.
Blount received its most recent Wisconsin Pollutant Discharge Elimination System (WPDES) permit from the Wisconsin Department of Natural Resources (WDNR) in October 2023. Blount's latest WPDES permit assumes that the plant meets BTA standards for entrainment for the duration of this permit which expires in 2028. The WDNR included a requirement to conduct an optimization study to demonstrate compliance with impingement BTA standards in the latest permit that needs to be completed by January 2028. Once the WDNR determines the impingement requirements at Blount, MGE will be able to determine any compliance costs of meeting Blount's permit requirements.
Intakes at Columbia are subject to this rule. The Columbia operator timely submitted its renewal application. BTA improvements required by the renewal permit will be coordinated with the owners' plan to retire both units by the end of 2029. MGE will continue to work with Columbia's operator to evaluate regulatory requirements in light of the planned retirement. MGE does not expect this rule to have a material effect on Columbia.
In May 2024, the EPA published its final performance standards and emission guidelines under Section 111(b) of the Clean Air Act for carbon dioxide emissions from new combustion turbines and existing fossil fuel-fired boilers used to produce electricity. The final rule granted some emissions flexibility for existing coal-fired units that retire and/or fuel switch by certain dates. For existing natural gas boiler units, the final rule established a process where states must submit plans to the EPA for establishing standards. States had two years from the publication date of these rules to submit plans to the EPA for review and approval. Preliminary evaluation of the final ruling showed that MGE met the requirements for the gas-fired boilers at Blount. Furthermore, MGE would meet the requirements for the coal-fired units at Columbia through planned unit retirements and the Elm Road Units through its transition to natural gas. In June 2025, the EPA published a proposed rule with two potential options: (1) repeal the performance standards and emission guidelines under Section 111 of the Clean Air Act associated with GHG emissions from fossil fuel-fired power plants, or (2) retain only the efficiency-based requirements for new natural gas-fired power plants and repeal all other aspects of the rule. In July 2025, EPA released a new proposed rule titled “Reconsideration of 2009 Endangerment Finding and Greenhouse Gas Vehicle Standards”. This proposal would repeal EPA’s 2009 GHG Endangerment Finding, which in effect, would undo the basis for federal regulation of GHG under the Clean Air Act. MGE will continue to follow these rule developments.
The Elm Road Units are located in Milwaukee County, Wisconsin, a serious nonattainment area for the 2015 Ozone NAAQS. At this time, the operator of the Elm Road Units does not expect that the 2015 Ozone NAAQS or the Milwaukee County nonattainment designation will have a direct material effect on the Elm Road Units.
In March 2024, the EPA published a final rule to lower the average annual PM2.5 NAAQS from 12 ug/m3 to 9 ug/m3 effective May 2024. The new annual PM2.5 NAAQS could impact Milwaukee County, where the Elm Road units are located, if the county is determined to be in nonattainment. A nonattainment designation would require the State of Wisconsin to develop a plan to get into attainment, which would likely include additional limitations for new and modified plants in the county. In February 2025, Wisconsin's Governor Evers submitted a state-wide attainment recommendation to the EPA.
19
The final impact of this rule will not be known until the EPA determines the attainment status of Wisconsin counties and the State of Wisconsin develops an attainment implementation plan for any areas not in attainment. MGE will continue to follow the rule's developments.
The EPA's Good Neighbor Plan and its progeny are a suite of interstate air pollution transport rules designed to reduce ozone and PM2.5 ambient air levels in areas that the EPA has determined as being significantly impacted by pollution from upwind states. This is accomplished through a reduction in NOx and SO2 from qualifying fossil fuel-fired power plants and industrial boilers in upwind "contributing" states. NOx and SO2 contribute to fine particulate pollution and NOx contributes to ozone formation in downwind areas. Reductions are generally achieved through a cap-and-trade system. Individual plants can meet their caps through reducing emissions and/or buying allowances on the market.
In March 2023 (published June 2023), the EPA finalized its Federal Implementation Plan to address state obligations under the Clean Air Act "good neighbor" provisions for the 2015 Ozone NAAQS (Good Neighbor Plan). The Good Neighbor Plan impacts 23 states, including Wisconsin. For Wisconsin, the Good Neighbor Plan includes revisions to the current obligations for fossil-fuel power generation, which includes Blount, Columbia, the Elm Road Units, WCCF, West Riverside, and West Marinette. Emissions budgets can be met with planned retirements, fuel switching, and immediately available measures, including consistently operating emissions controls already installed at power plants. In 2026, additional obligations would go into effect, including a further reduction in emissions budgets. Wisconsin would need to submit a State Implementation Plan to meet its obligations or accept the EPA's Good Neighbor Plan.
Multiple legal challenges to the Good Neighbor Plan and related state implementation plan disapprovals are pending, including in the United States Court of Appeals for the District of Columbia. In June 2024, the Supreme Court of the United States granted a request to stay the Good Neighbor Plan and block its enforcement pending judicial review by the U.S. Court of Appeals for the District of Columbia on the merits of petitioner's challenges to implementation of the rule. The EPA has temporarily halted the enforcement of the Good Neighbor Plan's requirements for all pollution sources in states affected by the plan, including Wisconsin. While the EPA addresses these concerns, interim rules have been implemented in Wisconsin to address interstate pollution. Based on MGE's current evaluation, if the Good Neighbor Plan goes into effect as-is, the 2026 additional emission reductions may impact the Elm Road Units. However, final impact of the rules will not be known until judicial reviews are completed and/or the EPA takes further action regarding the rule.
The CCR rule regulates the disposal of solid waste coal ash and defines what ash use activities would be considered generally exempt beneficial reuse of coal ash. The CCR rule also regulates landfills, ash ponds, and other surface impoundments used for coal combustion residuals by regulating their design, location, monitoring, and operation. The CCR rule requires owners and operators of coal-fired power plants to stop transporting CCR and non-CCR wastewater to unlined surface impoundments. At Columbia, the coal combustion residuals system completed in 2023 replaced the unlined surface impoundment, and Columbia complies with this rule.
Review of the Elm Road Units has indicated that the costs to comply with the CCR rule are not expected to be significant.
In May 2024, the EPA published its final CCR Legacy Rule. The CCR Legacy Rule applies to previously closed disposal sites. In 2024, MGE recorded an asset retirement obligation for its estimated share of the legal liability associated with the effect of the CCR Legacy Rule for remediation and groundwater compliance monitoring at Columbia. Actual costs of compliance may be different than the amount recorded due to potential changes in compliance strategies that will be used, as well as other potential changes in cost estimate.
20
MGE is involved in various legal matters that are being defended and handled in the normal course of business. MGE accrues for costs that are probable of being incurred and subject to reasonable estimation. The accrued amount for these matters is not material to the financial statements. MGE does not expect the resolution of these matters to have a material adverse effect on its consolidated results of operations, financial condition, or cash flows.
MGE Energy and MGE have entered into various commodity supply, transportation, and storage contracts to meet their obligations to deliver electricity and natural gas to customers. Management expects to recover these costs in future customer rates.
(In thousands) |
|
2025 |
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
2029 |
|
|
Thereafter |
|
||||||
Coal(a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Natural gas(b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Renewable energy(c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
Rate increase |
|
Return on Common Equity |
|
Common Equity Component of Regulatory Capital Structure |
|
Effective Date |
Approved 2024/2025 rate proceeding(a)(b) |
|
|
|
|
|
|
|
|
Electric |
|
|
|
|
1/1/2024 |
|||
Gas |
|
|
|
|
1/1/2024 |
|||
Electric(c) |
|
|
|
|
1/1/2025 |
|||
Gas |
|
|
|
|
1/1/2025 |
|||
Proposed 2026/2027 rate proceeding(d) |
|
|
|
|
|
|
|
|
Electric(e) |
|
|
|
|
1/1/2026 |
|||
Gas(e) |
|
|
|
|
1/1/2026 |
|||
Electric(f) |
|
|
|
|
1/1/2027 |
|||
Gas(f) |
|
|
|
|
1/1/2027 |
21
|
|
Fuel Costs (Savings) (in millions) |
|
Refund or Recovery Period |
2022 |
|
$ |
|
October 2023 through September 2024 |
2023 |
|
($ |
|
October 2024 through December 2024 |
2024 |
|
($ |
|
October 2025 |
2025 |
|
($ |
|
(b) |
The gross notional volume of open derivatives is as follows:
|
|
June 30, 2025 |
|
December 31, 2024 |
||||||||
Commodity derivative contracts |
|
|
|
|
MWh |
|
|
|
|
MWh |
||
Commodity derivative contracts |
|
|
|
|
Dth |
|
|
|
|
Dth |
||
FTRs |
|
|
|
|
MW |
|
|
|
|
MW |
||
MGE purchases and sells exchange-traded and over-the-counter options, swaps, and future contracts. These arrangements are primarily entered into to help stabilize the price risk associated with gas or power purchases. These
22
transactions are employed by both MGE's gas and electric segments. Additionally, as a result of the firm transmission agreements that MGE holds on electricity transmission paths in the MISO market, MGE holds financial transmission rights (FTRs). An FTR is a financial instrument that entitles the holder to a stream of revenues or charges based on the differences in hourly day-ahead energy prices between two points on the transmission grid. The fair values of these instruments are offset with a corresponding regulatory asset/liability depending on whether the instruments are in a net loss/gain position. Depending on the nature of the instrument, the gain or loss associated with these transactions will be reflected as cost of gas sold, fuel for electric generation, or purchased power expense in the delivery month applicable to the instrument. As of June 30, 2025, and December 31, 2024, the fair value of exchange traded derivatives and FTRs exceeded their cost basis by $
The following table summarizes the fair value of the derivative instruments on the consolidated balance sheets.
|
|
Derivative |
|
|
Derivative |
|
|
|
||
(In thousands) |
|
Assets |
|
|
Liabilities |
|
|
Balance Sheet Location |
||
June 30, 2025 |
|
|
|
|
|
|
|
|
||
Commodity derivative contracts(a) |
|
$ |
|
|
$ |
|
|
Other current assets |
||
Commodity derivative contracts(a) |
|
|
|
|
|
|
|
Other deferred charges |
||
FTRs |
|
|
|
|
|
|
|
Other current assets |
||
|
|
|
|
|
|
|
|
|
||
December 31, 2024 |
|
|
|
|
|
|
|
|
||
Commodity derivative contracts(a) |
|
$ |
|
|
$ |
|
|
Other current liabilities |
||
Commodity derivative contracts(a) |
|
|
|
|
|
|
|
Other deferred liabilities and other |
||
FTRs |
|
|
|
|
|
|
|
Other current assets |
||
The following table shows the effect of netting arrangements for recognized derivative assets and liabilities that are subject to a master netting arrangement or similar arrangement on the consolidated balance sheets.
Offsetting of Derivative Assets and Liabilities
(In thousands) |
|
Gross Amounts |
|
|
Gross Amounts Offset in Balance Sheets |
|
|
Collateral Posted Against Derivative Positions |
|
|
Net Amount Presented in Balance Sheets |
|
||||
June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity derivative contracts |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
FTRs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity derivative contracts |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity derivative contracts |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
FTRs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity derivative contracts |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
23
The following tables summarize the unrealized and realized gains/losses related to the derivative instruments on the consolidated balance sheets and the consolidated statements of income.
|
|
2025 |
|
|
2024 |
|
||||||||||
(In thousands) |
|
Current and Long-Term Regulatory Asset (Liability) |
|
|
Other Current Assets |
|
|
Current and Long-Term Regulatory Asset (Liability) |
|
|
Other Current Assets |
|
||||
Three Months Ended June 30: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance as of April 1, |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Unrealized loss |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized (loss) gain reclassified to a deferred account |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Realized (loss) gain reclassified to income statement |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Balance as of June 30, |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Six Months Ended June 30: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance as of January 1, |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Unrealized loss |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized (loss) gain reclassified to a deferred account |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Realized (loss) gain reclassified to income statement |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Balance as of June 30, |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
Realized Losses (Gains) |
|
|||||||||||||
|
|
2025 |
|
|
2024 |
|
||||||||||
(In thousands) |
|
Fuel for Electric Generation/ Purchased Power |
|
|
Cost of Gas Sold |
|
|
Fuel for Electric Generation/ Purchased Power |
|
|
Cost of Gas Sold |
|
||||
Three Months Ended June 30: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity derivative contracts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
FTRs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Six Months Ended June 30: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity derivative contracts |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
FTRs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
MGE's commodity derivative contracts and FTRs are subject to regulatory deferral. These derivatives are marked to fair value and are offset with a corresponding regulatory asset or liability. Realized gains and losses are deferred on the consolidated balance sheets and are recognized in earnings in the delivery month applicable to the instrument. As a result of the treatment described above, there are no unrealized gains or losses that flow through earnings.
Certain counterparties extend MGE a credit limit. If MGE exceeds these limits, the counterparties may require collateral to be posted. As of June 30, 2025, and December 31, 2024,
Nonperformance of counterparties to the non-exchange traded derivatives could expose MGE to credit loss. However, MGE enters into transactions only with companies that meet or exceed strict credit guidelines, and it monitors these counterparties on an ongoing basis to mitigate nonperformance risk in its portfolio. As of June 30, 2025,
Fair value is defined as the price that would be received to sell an asset or would be paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The accounting standard clarifies that fair value should be based on the assumptions market participants would use when pricing the asset or liability including assumptions about risk. The standard also establishes a
24
three-level fair value hierarchy based upon the observability of the assumptions used and requires the use of observable market data when available. The levels are:
Level 1 - Pricing inputs are quoted prices within active markets for identical assets or liabilities.
Level 2 - Pricing inputs are quoted prices within active markets for similar assets or liabilities; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations that are correlated with or otherwise verifiable by observable market data.
Level 3 - Pricing inputs are unobservable and reflect management's best estimate of what market participants would use in pricing the asset or liability.
|
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||||||||||
(In thousands) |
|
Carrying Amount |
|
|
Fair Value |
|
|
Carrying Amount |
|
|
Fair Value |
|
||||
Long-term debt(a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following table presents the balances of assets and liabilities measured at fair value on a recurring basis for both MGE and MGE Energy.
|
|
Fair Value as of June 30, 2025 |
|
|||||||||||||
(In thousands) |
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives, net(b) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives, net(b) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Deferred compensation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Fair Value as of December 31, 2024 |
|
|||||||||||||
(In thousands) |
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives, net(b) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives, net(b) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Deferred compensation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Exchange-traded Investments.
Deferred Compensation. The deferred compensation plans allow participants to defer certain cash compensation into notional investment accounts. These amounts are included within "Other deferred liabilities and other" in the consolidated balance sheets. The value of certain deferred compensation obligations is based on the market value of the
25
participants' notional investment accounts. The underlying notional investments are comprised primarily of equities, mutual funds, and fixed income securities that are based on directly and indirectly observable market prices. Since the deferred compensation obligations themselves are not exchanged in an active market, they are classified as Level 2.
The value of legacy deferred compensation obligations is based on notional investments that earn interest based upon the semiannual rate of U.S. Treasury Bills having a
Derivatives. Derivatives include exchange-traded derivative contracts, over-the-counter transactions, and FTRs. Most exchange-traded derivative contracts are valued based on unadjusted quoted prices in active markets and are therefore classified as Level 1. A small number of exchange-traded derivative contracts are valued using quoted market pricing in markets with insufficient volumes and are therefore considered unobservable and classified as Level 3. Transactions done with an over-the-counter party are on inactive markets and are therefore classified as Level 3. These transactions are valued based on quoted prices from markets with similar exchange-traded transactions. FTRs are priced based upon monthly auction results for identical or similar instruments in a closed market with limited data available and are therefore classified as Level 3.
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 |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
(In thousands) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Beginning balance |
|
$ |
|
$ |
( |
|
$ |
( |
|
$ |
( |
|
Realized and unrealized gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Included in regulatory assets |
|
|
|
|
|
|
|
|
||||
Included in regulatory liability |
|
|
( |
|
|
|
|
|
|
|||
Included in earnings |
|
|
( |
|
|
( |
|
|
( |
|
|
( |
Settlements |
|
|
|
|
|
|
|
|
||||
Balance as of June 30, |
|
$ |
|
$ |
( |
|
$ |
|
$ |
( |
||
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 |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
(In thousands) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Purchased power expense |
|
$ |
( |
|
$ |
( |
|
$ |
( |
|
$ |
( |
26
MGE has ownership interests in generation projects with other co-owners, some of which are under construction, as shown in the following table. Incurred costs are reflected in "Property, plant, and equipment, net" or "Construction work in progress" on the consolidated balance sheets.
Project |
|
Ownership Interest |
|
Source |
|
Share of |
|
Share of Estimated |
|
Costs incurred as |
|
Date of |
Paris(b) |
|
|
Battery |
|
|
$ |
|
$ |
|
June 2025 Battery |
||
Darien(c) |
|
|
Solar/Battery |
|
|
$ |
|
$ |
|
March 2025 Solar |
||
Koshkonong(d) |
|
|
Solar/Battery |
|
|
$ |
|
$ |
|
2026 Solar(h) |
||
High Noon(e) |
|
|
Solar/Battery |
|
|
$ |
|
$ |
|
2027(h) |
||
Columbia Energy Dome(f) |
|
|
Storage |
|
|
$ |
|
$ |
|
2027(h) |
MGE received specific approval to recover
Revenues disaggregated by revenue source were as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
(In thousands) |
|
June 30, |
|
|
June 30, |
|
||||||||||
Electric revenues |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Residential |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Industrial |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other-retail/municipal |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total retail |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales to the market |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total electric revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gas revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Residential |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial/Industrial |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total retail |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gas transportation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total gas revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-regulated energy revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Operating Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
27
MGE Energy operates in the following business segments: electric utility, gas utility, nonregulated energy, transmission investment, and all other. See Footnote 22 to the consolidated financial statements included in Part II, Item 8 of the 2024 Annual Report on Form 10-K for additional discussion of each of these segments.
Fuel and purchased power and Purchased gas costs are significant segment expenses as defined in Segment Reporting. The Chief Operating Decision Maker does not review disaggregated assets on a segment basis; therefore, such information is not presented.
The following table shows segment information for MGE Energy's and MGE's operations:
(In thousands) |
|
Electric |
|
|
Gas |
|
|
Non-Regulated Energy |
|
|
Transmission Investment |
|
|
Total Reportable Segments |
|
|
All Others |
|
|
Consolidation/ |
|
|
Consolidated Total |
|
||||||||
Three Months Ended June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
159,452 |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||
Interdepartmental revenues |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|||||
Total operating revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||||
Fuel and purchased power |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Purchased gas costs |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Other segment items(a) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Income tax (provision) benefit |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Equity in earnings of investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Three Months Ended June 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
145,713 |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||
Interdepartmental revenues |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|||||
Total operating revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||||
Fuel and purchased power |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Purchased gas costs |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Other segment items(a) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Income tax (provision) benefit |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||||
Equity in earnings of investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Six Months Ended June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
378,422 |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||
Interdepartmental revenues |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|||||
Total operating revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||||
Fuel and purchased power |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Purchased gas costs |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Other segment items(a) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Income tax (provision) benefit |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Equity in earnings of investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Six Months Ended June 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
337,049 |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||
Interdepartmental revenues |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|||||
Total operating revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||||
Fuel and purchased power |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Purchased gas costs |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Other segment items(a) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Income tax (provision) benefit |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Equity in earnings of investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||||
28
(In thousands) |
|
Electric |
|
|
Gas |
|
|
Non-Regulated Energy |
|
|
Total Reportable Segments |
|
|
Consolidation/ |
|
|
Consolidated Total |
|
||||||
Three Months Ended June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
159,452 |
|
|
$ |
— |
|
|
$ |
|
||||
Interdepartmental revenues |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|||
Total operating revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Fuel and purchased power |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Purchased gas costs |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Other segment items(a) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Income tax benefit (provision) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net income attributable to noncontrolling interest, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Net income attributable to MGE |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Three Months Ended June 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
145,713 |
|
|
$ |
— |
|
|
$ |
|
||||
Interdepartmental revenues |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|||
Total operating revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Fuel and purchased power |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Purchased gas costs |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Other segment items(a) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Income tax benefit (provision) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Net income attributable to noncontrolling interest, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Net income attributable to MGE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Six Months Ended June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
378,422 |
|
|
$ |
— |
|
|
$ |
|
||||
Interdepartmental revenues |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|||
Total operating revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Fuel and purchased power |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Purchased gas costs |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Other segment items(a) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Income tax benefit (provision) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net income attributable to noncontrolling interest, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Net income attributable to MGE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Six Months Ended June 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
337,049 |
|
|
$ |
— |
|
|
$ |
|
||||
Interdepartmental revenues |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|||
Total operating revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Fuel and purchased power |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Purchased gas costs |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Other segment items(a) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Income tax benefit (provision) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net income attributable to noncontrolling interest, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Net income attributable to MGE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
The following table shows segment information for MGE Energy's and MGE's capital expenditures:
|
|
Utility |
|
|
Consolidated |
|
||||||||||||||||||||||
(In thousands) |
|
Electric |
|
|
Gas |
|
|
Non-regulated Energy |
|
|
Transmission Investment |
|
|
All Others |
|
|
Consolidation/ Elimination Entries |
|
|
Total |
|
|||||||
Six Months Ended June 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Six Months Ended June 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
29
|
|
Utility |
|
|
Consolidated |
|
||||||||||||||
(In thousands) |
|
Electric |
|
|
Gas |
|
|
Non-regulated Energy |
|
|
Consolidation/ Elimination Entries |
|
|
Total |
|
|||||
Six Months Ended June 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Six Months Ended June 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
30
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
General
MGE Energy is an investor-owned public utility holding company operating through subsidiaries in five business segments:
MGE plans to continue to focus on growing earnings while controlling operating and fuel costs. MGE's goal is to provide safe and efficient operations in addition to providing customer value. We believe it is critical to maintain a strong credit rating consistent with financial strength in MGE in order to accomplish these goals.
The ownership/leasing structure for our nonregulated energy operations was adopted under applicable state regulatory guidelines for MGE's participation in these generation facilities, consisting principally of a stable return on the equity investment in the new generation facilities over the term of the related leases. The nonregulated energy operations include an ownership interest in two coal-fired generating units in Oak Creek, Wisconsin and a partial ownership of a cogeneration project on the University of Wisconsin-Madison campus. A third party operates the units in Oak Creek, and MGE operates the cogeneration project. Due to the nature of MGE's participation in these facilities, the results of MGE Energy's nonregulated operations are also consolidated into MGE's consolidated financial position and results of operations under applicable accounting standards.
Executive Overview
We principally earn revenue and generate cash from operations by providing electric and natural gas utility services, including electric power generation and electric power and gas distribution. The earnings and cash flows from the utility business are sensitive to various external factors, including, but not limited to:
During the three months ended June 30, 2025, MGE Energy's earnings were $26.5 million, or $0.73 per share, compared to $23.8 million, or $0.66 per share, during the same period in the prior year. MGE's earnings during the three months ended June 30, 2025, were $18.8 million compared to $16.0 million during the same period in the prior year.
During the six months ended June 30, 2025, MGE Energy's earnings were $68.1 million, or $1.86 per share, compared to $57.6 million, or $1.59 per share, during the same period in the prior year. MGE's earnings during the six months ended June 30, 2025, were $53.0 million compared to $42.6 million during the same period in the prior year.
31
MGE Energy's net income was derived from our business segments as follows:
|
Three Months Ended |
|
Six Months Ended |
||||||||
(In millions) |
June 30, |
|
June 30, |
||||||||
Business Segment: |
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Electric Utility |
$ |
19.6 |
|
$ |
15.6 |
|
$ |
39.8 |
|
$ |
31.4 |
Gas Utility |
|
(1.3) |
|
|
0.1 |
|
|
12.3 |
|
|
10.7 |
Nonregulated Energy |
|
6.2 |
|
|
6.1 |
|
|
12.2 |
|
|
11.9 |
Transmission Investments |
|
2.2 |
|
|
2.0 |
|
|
4.5 |
|
|
4.0 |
All Other |
|
(0.2) |
|
|
— |
|
|
(0.7) |
|
|
(0.4) |
Net Income |
$ |
26.5 |
|
$ |
23.8 |
|
$ |
68.1 |
|
$ |
57.6 |
Our net income during the three and six months ended June 30, 2025, compared to the same periods in the prior year, primarily reflects the effects of the following factors:
Electric Utility
An increase in electric investments, as part of the 2025 rate case, contributed to an increase in earnings for the three and six months ended June 30, 2025, as compared to the same periods in the prior year. Favorable weather contributed to higher electric residential sales for the three and six months ended June 30, 2025, compared to the same periods in the prior year.
Gas Utility
Higher gas retail sales in the first half of 2025 contributed to higher gas earnings for the six months ended June 30, 2025, compared to the same period in the prior year. Gas retail sales increased approximately 16%. Heating degree days (a measure for determining the impact of weather during the heating season) increased by approximately 18% in the first six months of 2025 compared to the same period in the prior year.
Significant Events
The following events affected the first six months of 2025:
2025 Rate Proceeding: In December 2023, the PSCW approved a 4.17% increase to electric rates and 1.32% increase to gas rates for 2025. The PSCW approved a 2025 Fuel Cost Plan in December 2024. The plan lowered the 2025 increase in electric rates to 2.63%, reflecting lower expected fuel costs. See "Other Matters" below for additional information on the 2025 rate proceeding.
The 2025 rate order includes an earnings sharing mechanism, under which, if MGE earns above the 9.7% ROE authorized in the rate order: (i) the utility will retain 100% of earnings for the first 15 basis points above the authorized ROE; (ii) 50% of the next 60 basis points will be required to be deferred and returned to customers; and (iii) 100% of any remaining excess earnings will be required to be refunded to customers. The earnings calculation excludes fuel rules adjustments.
2025 Deferred Fuel Savings: MGE had deferred fuel savings through the six months ended June 30, 2025. As of June 30, 2025, MGE deferred $2.5 million of 2025 fuel savings. These costs will be subject to the PSCW's annual review of 2025 fuel costs, expected to be completed during 2026. See Footnote 9 of the Notes to the Consolidated Financial Statements in this Report for further information regarding fuel cost proceedings.
32
Large Scale Utility Projects: Large scale generation projects recently completed or under construction, are shown in the following table. Incurred costs are reflected in "Property, plant, and equipment, net" for projects placed in service, or "Construction work in progress" for projects under construction on the consolidated balance sheets.
Project |
|
Ownership Interest |
|
Source |
|
Share of Generation |
|
Share of |
|
Costs incurred |
|
Date of |
Paris |
|
10% |
|
Battery |
|
11 MW |
|
$25 million(d) |
|
$23.4 million(b) |
|
June 2025 Battery(f) |
Darien |
|
10% |
|
Solar/Battery |
|
25 MW/7.5 MW |
|
$63 million(d) |
|
$46.3 million(b) |
|
March 2025 Solar |
Koshkonong |
|
10% |
|
Solar/Battery |
|
30 MW/16.5 MW |
|
$104 million(d) |
|
$24.8 million(b) |
|
2026(c) Solar |
High Noon |
|
10% |
|
Solar/Battery |
|
30 MW/16.5 MW |
|
$99 million |
|
$17.8 million |
|
2027(c) |
Sunnyside |
|
100% |
|
Solar/Battery |
|
20MW/40MW |
|
$112 million |
|
$1.0 million |
|
2026(c) Solar |
Columbia Energy Dome |
|
19% |
|
Storage |
|
3 MW |
|
$17 million |
|
$0.7 million |
|
2027(c) |
Ursa(e) |
|
10% |
|
Solar |
|
20 MW |
|
$46 million |
|
$0.3 million |
|
2027(c) |
Badger Hollow(e) |
|
10% |
|
Wind |
|
11.2 MW |
|
$36 million |
|
$0.3 million |
|
2027(c) |
Whitetail(e) |
|
10% |
|
Wind |
|
6.7 MW |
|
$23 million |
|
$0.1 million |
|
2027(c) |
Forward Repower(e) |
|
13% |
|
Wind |
|
18 MW |
|
$14 million |
|
$0.3 million |
|
2027(c) |
Dawn Harvest(e) |
|
10% |
|
Solar |
|
15 MW |
|
$34 million |
|
$0.6 million |
|
2028(c) |
Good Oak(e) |
|
10% |
|
Solar |
|
9.8 MW |
|
$22 million |
|
$1.4 million |
|
2028(c) |
Gristmill(e) |
|
10% |
|
Solar |
|
6.7 MW |
|
$15 million |
|
$1.3 million |
|
2028(c) |
Saratoga(e) |
|
10% |
|
Solar/Battery |
|
15 MW/5 MW |
|
$46 million |
|
$1.1 million |
|
2028(c) |
In the near term, several items may affect us, including:
2024 Annual Fuel Proceeding: MGE had fuel savings in 2024. As of December 31, 2024, MGE deferred $3.0 million of 2024 fuel savings. The PSCW has completed the annual review of 2024 fuel costs and gave approval for MGE to return these savings in October 2025. There was no change to the costs to be refunded in the fuel rule proceedings from the amount MGE deferred in the previous year.
Environmental Initiatives: There are proposed legislative rules and initiatives involving matters related to air emissions, water effluent, hazardous materials, and greenhouse gases, all of which affect generation plant capital expenditures and operating costs as well as future operational planning. Legislation and rulemaking addressing climate change and related matters could significantly affect the costs of owning and operating fossil-fueled generating plants. MGE would expect to seek and receive recovery of any such costs in rates. However, it is difficult to estimate the amount of such costs due to the uncertainty as to the timing and form of any legislation or rules, the timing and effects of any judicial review, and the scope and time of the recovery of costs in rates, which may occur after those costs have been incurred and paid.
Future Generation – 80% carbon reduction target by 2030 (from 2005 levels): MGE has outlined initiatives to achieve our target.
33
Elm Road Units: MGE, along with the plant co-owners, announced plans to end the use of coal as a primary fuel at the Elm Road Units and transition the plant to natural gas. Transition plans and costs will be subject to PSCW approval. MGE's remaining use of coal is expected to be further reduced as the Elm Road Units transition to natural gas. By the end of 2030, coal is expected to be used only as a backup fuel at the Elm Road Units. This transition will help MGE meet its 2030 carbon reduction goals. By the end of 2032, MGE expects that the Elm Road Units will be fully transitioned away from coal, which will eliminate coal as an internal generation source for MGE.
Environmental Initiatives – Natural gas distribution: Building upon our long-standing commitment to providing affordable, sustainable energy, MGE has set a goal to achieve net-zero methane emissions from its natural gas distribution system by 2035. If MGE can accelerate plans to achieve net-zero methane emissions from its natural gas system—through the evolution of new technologies, such as renewable natural gas—it will. MGE is working to reduce overall emissions from its natural gas distribution system in a quick and cost-effective manner. For customers who want to reduce their environmental footprint further, MGE introduced a renewable natural gas program in May 2024, after approval by the PSCW. MGE purchases renewable thermal credits on behalf of customers who voluntarily elect in the program to offset the emissions associated with the customer's monthly natural gas usage.
Solar Procurement Disruptions: MGE is monitoring import regulations under the Uyghur Forced Labor Protection Act and the U.S. Department of Commerce's new solar tariffs. These disruptions have a potential to impact current and future solar projects which may result in an increase in costs or delays in construction timelines. In the event that such disruptions cause costs to exceed the levels approved for specific projects, we have filed, and expect to continue to file, notifications with the PSCW and expect to request recovery of any increases in MGE's future rate proceedings. See "Other Matters" below for additional information on the solar procurement disruptions.
Tariffs: MGE is monitoring the actions of the Trump Administration with respect to certain proposed or recently implemented import tariffs on foreign goods. These tariffs have a potential impact on cost of operations and on current and future capital projects. See "Other Matters" below for additional information on tariffs.
Tax Update: On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, introducing significant changes to tax credits and compliance requirements. See "Other Matters" below for additional information on the OBBBA.
Financing and Equity Issuance Plans: MGE Energy annually evaluates its financing plan, dividend practices, and credit line sizing, focusing on its credit rating while meeting cash needs to fund capital requirements, including construction expenditures, retire debt, pay dividends, and operating expenses. As of June 30, 2025, MGE had $280 million of remaining regulatory authority from the PSCW to issue long-term debt to finance authorized utility capital expenditures. During the beginning of 2025, MGE Energy issued new shares of common stock to participants in its Direct Stock Purchase and Dividend Reinvestment Plan. As of May 2025, MGE Energy began purchasing shares in the open market for participants in the Direct Stock Purchase and Dividend Reinvestment Plan.
The following discussion is based on the business segments as discussed in Footnote 14 of the Notes to Consolidated Financial Statements in this Report.
Results of Operations
Three Months Ended June 30, 2025 and 2024
Electric sales and revenues
The following table compares MGE's electric revenues and electric kWh sales by customer class for each of the periods indicated:
34
|
|
Revenues |
|
Sales (kWh) |
||||||||||
|
|
Three Months Ended June 30, |
|
Three Months Ended June 30, |
||||||||||
(In thousands, except CDD) |
|
2025 |
|
2024 |
|
% Change |
|
2025 |
|
2024 |
|
% Change |
||
Residential |
|
$ |
43,182 |
|
$ |
40,321 |
|
7.1% |
|
203,344 |
|
193,886 |
|
4.9% |
Commercial |
|
|
64,027 |
|
|
64,161 |
|
(0.2)% |
|
439,972 |
|
440,151 |
|
—% |
Industrial |
|
|
3,117 |
|
|
3,445 |
|
(9.5)% |
|
35,737 |
|
36,822 |
|
(2.9)% |
Other-retail/municipal |
|
|
10,342 |
|
|
10,403 |
|
(0.6)% |
|
99,198 |
|
97,648 |
|
1.6% |
Total retail |
|
|
120,668 |
|
|
118,330 |
|
2.0% |
|
778,251 |
|
768,507 |
|
1.3% |
Sales to the market |
|
|
7,840 |
|
|
1,519 |
|
n.m.% |
|
92,400 |
|
36,706 |
|
n.m.% |
Other |
|
|
805 |
|
|
534 |
|
50.7% |
|
— |
|
— |
|
—% |
Total |
|
$ |
129,313 |
|
$ |
120,383 |
|
7.4% |
|
870,651 |
|
805,213 |
|
8.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cooling degree days (normal 208) |
|
|
|
|
|
|
|
|
|
223 |
|
207 |
|
7.7% |
n.m. not meaningful
Electric revenue increased $8.9 million during the three months ended June 30, 2025, compared to the same period in the prior year, due to the following:
(In millions) |
|
|
Sales to the market |
$ |
6.3 |
Rate changes |
|
2.4 |
Increase in residential volume |
|
1.6 |
Customer fixed and demand charges |
|
1.4 |
Other |
|
0.3 |
Revenue subject to refund, net |
|
(3.1) |
Total |
$ |
8.9 |
35
Electric fuel and purchased power
|
Three Months Ended June 30, |
|||||||
(In millions) |
2025 |
|
2024 |
|
$ Change |
|||
Fuel for electric generation |
$ |
16.3 |
|
$ |
11.2 |
|
$ |
5.1 |
Purchased power |
|
5.6 |
|
|
8.9 |
|
|
(3.3) |
The $5.1 million increase in fuel for electric generation was due to an approximately 22% increase in internal generation driven by an increase in sales and 19% increase in the average cost, each compared to the same period in the prior year.
Excluding deferred fuel costs, purchased power decreased $1.2 million. The decrease in purchased power was due to an approximately 48% decrease in market purchases as a result of increased internal generation. This decrease was partially offset by an approximately 59% increase in average cost. Deferred fuel cost recovered during the three months ended June 30, 2024, was $2.1 million. There were no deferred fuel costs recovered during the three months ended June 30, 2025.
Fuel and purchased power costs are generally offset by electric revenue and do not have a significant impact on net income. MGE expects to seek and receive recovery of fuel and purchased power costs that exceed the fuel rules bandwidth in customer rates. See Footnote 9 of the Notes to Consolidated Financial Statements in this Report for further information on the fuel rules bandwidth.
Gas deliveries and revenues
The following table compares MGE's gas revenues and gas therms delivered by customer class for each of the periods indicated:
|
|
Revenues |
|
Therms Delivered |
||||||||||
(In thousands, except HDD and average |
|
Three Months Ended June 30, |
|
Three Months Ended June 30, |
||||||||||
rate per therm of retail customer) |
|
2025 |
|
2024 |
|
% Change |
|
2025 |
|
2024 |
|
% Change |
||
Residential |
|
$ |
17,956 |
|
$ |
15,589 |
|
15.2% |
|
13,034 |
|
11,822 |
|
10.3% |
Commercial/Industrial |
|
|
10,434 |
|
|
7,876 |
|
32.5% |
|
14,484 |
|
13,824 |
|
4.8% |
Total retail |
|
|
28,390 |
|
|
23,465 |
|
21.0% |
|
27,518 |
|
25,646 |
|
7.3% |
Gas transportation |
|
|
1,384 |
|
|
1,505 |
|
(8.0)% |
|
15,429 |
|
15,367 |
|
0.4% |
Other |
|
|
151 |
|
|
146 |
|
3.4% |
|
— |
|
— |
|
—% |
Total |
|
$ |
29,925 |
|
$ |
25,116 |
|
19.1% |
|
42,947 |
|
41,013 |
|
4.7% |
Heating degree days (normal 782) |
|
|
|
|
|
|
|
|
|
843 |
|
599 |
|
40.7% |
Average rate per therm of retail customer |
|
$ |
1.032 |
|
$ |
0.915 |
|
12.8% |
|
|
|
|
|
|
Gas revenue increased $4.8 million during the three months ended June 30, 2025, compared to the same period in the prior year, due to the following:
(In millions) |
|
|
Rate changes |
$ |
5.6 |
Increase in volume |
|
0.4 |
Other |
|
(0.9) |
Revenue subject to refund, net |
|
(0.3) |
Total |
$ |
4.8 |
MGE recovers the cost of natural gas in its gas segment through the purchased gas adjustment clause (PGA). Under the PGA, MGE is able to pass through to its gas customers the cost of gas. Changes in PGA recoveries affect revenues but do not change net income in view of the pass-through treatment of the costs. Payments for natural gas increased, driving higher rates during the three months ended June 30, 2025.
The average retail rate per therm excluding customer fixed charges for the three months ended June 30, 2025, increased approximately 13% compared to the same period in the prior year, reflecting an increase in natural gas commodity costs (recovered through the PGA).
36
Cost of gas sold
Cost of gas sold increased $5.0 million during the three months ended June 30, 2025, compared to the same period in the prior year. Cost per therm increased approximately 67% and therms delivered increased approximately 8%. MGE recovers the cost of natural gas in its gas segment through the PGA as described under gas deliveries and revenues above.
Consolidated operations and maintenance expenses
During the three months ended June 30, 2025, operations and maintenance expenses increased $1.1 million, compared to the same period in the prior year. The following contributed to the net change:
(In millions) |
|
|
Increased other expenses |
$ |
0.7 |
Increased transmission costs |
|
0.6 |
Increased gas distribution expenses |
|
0.4 |
Increased electric production expenses |
|
0.4 |
Decreased electric distribution expenses |
|
(0.6) |
Decreased administrative and general costs |
|
(0.4) |
Total |
$ |
1.1 |
Consolidated depreciation expense
Electric depreciation expense increased $1.2 million and gas depreciation expense increased $0.2 million during the three months ended June 30, 2025, compared to the same period in the prior year. Paris solar was placed in service in December 2024 and Darien solar was placed in service in March 2025. The timing of the in-service dates contributed to the increase in electric depreciation expense.
Electric and gas other income
Electric other income increased $0.8 million and gas other income decreased $1.2 million during the three months ended June 30, 2025, compared to the same period in the prior year, primarily related to pension and other postretirement, excluding service costs. The PSCW has approved MGE to defer as a regulatory asset or liability, the difference between actual pension and other postretirement costs included in rates and to be recovered or refunded in a future rate proceeding. Pension and other postretirement cost is generally offset by electric and gas revenue and does not have a significant impact on net income.
Nonregulated Energy Operations - MGE Energy and MGE
The nonregulated energy operations are conducted through MGE Energy's subsidiaries: MGE Power Elm Road (the Elm Road Units) and MGE Power West Campus (WCCF), which have been formed to own and lease electric generating capacity to assist MGE. During the three months ended June 30, 2025 and 2024, net income at the nonregulated energy operations segment was $6.2 million and $6.0 million, respectively.
Transmission Investment Operations - MGE Energy
The transmission investment segment holds our interest in ATC and ATC Holdco, and its income reflects our equity in the earnings of those investments. ATC Holdco was formed in December 2016 to pursue transmission development opportunities that typically have long development and investment lead times before becoming operational. During the three months ended June 30, 2025 and 2024, other income at the transmission investment segment primarily reflects ATC's operations and was $3.1 million and $2.8 million, respectively. See Footnote 3 of the Notes to Consolidated Financial Statements in this Report for summarized financial information regarding ATC.
Consolidated Income Taxes - MGE Energy and MGE
See Footnote 4 of the Notes to Consolidated Financial Statements in this Report for the effective tax rate reconciliation.
37
Noncontrolling Interest, Net of Tax - MGE
Noncontrolling interest, net of tax, reflects the accounting required for MGE Energy's interest in MGE Power Elm Road (the Elm Road Units) and MGE Power West Campus (WCCF). MGE Energy owns 100% of MGE Power Elm Road and MGE Power West Campus. They are not owned by MGE. Due to the contractual agreements for these projects with MGE, the entities are considered VIEs with respect to MGE and their results are consolidated with those of MGE, the primary beneficiary of the VIEs. The following table shows MGE Energy's noncontrolling interest, net of tax, reflected on MGE's consolidated statement of income:
|
|
Three Months Ended |
|||
|
|
June 30, |
|||
(In millions) |
|
2025 |
|
|
2024 |
MGE Power Elm Road |
$ |
3.9 |
|
$ |
3.9 |
MGE Power West Campus |
|
1.8 |
|
|
1.9 |
Results of Operations
Six Months Ended June 30, 2025 and 2024
Electric sales and revenues
The following table compares MGE's electric revenues and electric kWh sales by customer class for each of the periods indicated:
|
|
|
Revenues |
|
Sales (kWh) |
|||||||||
|
|
|
Six Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||||
(In thousands, except CDD) |
|
|
2025 |
|
|
2024 |
|
% Change |
|
2025 |
|
2024 |
|
% Change |
Residential |
|
$ |
88,321 |
|
$ |
81,462 |
|
8.4% |
|
418,336 |
|
393,578 |
|
6.3% |
Commercial |
|
|
124,662 |
|
|
124,024 |
|
0.5% |
|
870,250 |
|
860,943 |
|
1.1% |
Industrial |
|
|
6,081 |
|
|
6,855 |
|
(11.3)% |
|
70,270 |
|
74,270 |
|
(5.4)% |
Other-retail/municipal |
|
|
19,690 |
|
|
20,093 |
|
(2.0)% |
|
178,950 |
|
180,495 |
|
(0.9)% |
Total retail |
|
|
238,754 |
|
|
232,434 |
|
2.7% |
|
1,537,806 |
|
1,509,286 |
|
1.9% |
Sales to the market |
|
|
14,320 |
|
|
2,595 |
|
n.m. |
|
219,499 |
|
61,687 |
|
n.m. |
Other revenues |
|
|
1,693 |
|
|
1,479 |
|
14.5% |
|
— |
|
— |
|
—% |
Total |
|
$ |
254,767 |
|
$ |
236,508 |
|
7.7% |
|
1,757,305 |
|
1,570,973 |
|
11.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cooling degree days (normal 208) |
|
|
|
|
|
|
|
|
|
223 |
|
207 |
|
7.7% |
n.m. not meaningful
Electric revenue increased $18.3 million during the six months ended June 30, 2025, compared to the same period in the prior year, due to the following:
(In millions) |
|
|
Sales to the market |
$ |
11.7 |
Rate changes |
|
4.8 |
Increase in residential volume |
|
4.3 |
Customer fixed and demand charges |
|
2.4 |
Net increase in commercial, industrial and other-retail/municipal volume |
|
0.6 |
Other |
|
0.2 |
Revenue subject to refund, net |
|
(5.7) |
Total |
$ |
18.3 |
38
Electric fuel and purchased power
|
Six Months Ended June 30, |
|||||||
(In millions) |
2025 |
|
2024 |
|
$ Change |
|||
Fuel for electric generation |
$ |
33.9 |
|
$ |
23.9 |
|
$ |
10.0 |
Purchased power |
|
9.9 |
|
|
18.3 |
|
|
(8.4) |
The $10.0 million increase in fuel for electric generation in the first half of 2025 was due to an approximately 27% increase in internal generation driven by an increase in sales and 12% increase in the average cost, each compared to the same period in the prior year.
Excluding deferred fuel costs, purchased power decreased $4.3 million in the first half of 2025, compared to the same period in the prior year. The decrease in purchased power was due to an approximately 53% decrease in market purchases as a result of increased internal generation. This decrease was partially offset by an approximately 48% increase in average cost. Deferred fuel cost recovered during the six months ended June 30, 2024, was $4.1 million. There were no deferred fuel costs recovered during the six months ended June 30, 2025.
Fuel and purchased power costs are generally offset by electric revenue and do not have a significant impact on net income. MGE expects to seek and receive recovery of fuel and purchased power costs that exceed the fuel rules bandwidth in customer rates. See Footnote 9 of the Notes to Consolidated Financial Statements in this Report for further information on the fuel rules bandwidth.
Gas deliveries and revenues
The following table compares MGE's gas revenues and gas therms delivered by customer class for each of the periods indicated:
|
|
|
Revenues |
|
Therms Delivered |
|||||||||
(In thousands, except HDD and average |
|
|
Six Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||||
rate per therm of retail customer) |
|
|
2025 |
|
|
2024 |
|
% Change |
|
2025 |
|
2024 |
|
% Change |
Residential |
|
$ |
71,824 |
|
$ |
58,987 |
|
21.8% |
|
65,263 |
|
55,629 |
|
17.3% |
Commercial/Industrial |
|
|
47,547 |
|
|
37,400 |
|
27.1% |
|
60,620 |
|
53,048 |
|
14.3% |
Total retail |
|
|
119,371 |
|
|
96,387 |
|
23.8% |
|
125,883 |
|
108,677 |
|
15.8% |
Gas transportation |
|
|
3,697 |
|
|
3,585 |
|
3.1% |
|
37,253 |
|
36,256 |
|
2.7% |
Other revenues |
|
|
338 |
|
|
313 |
|
8.0% |
|
— |
|
— |
|
—% |
Total |
|
$ |
123,406 |
|
$ |
100,285 |
|
23.1% |
|
163,136 |
|
144,933 |
|
12.6% |
Heating degree days (normal 4,283) |
|
|
|
|
|
|
|
|
|
4,212 |
|
3,580 |
|
17.7% |
Average rate per therm of retail customer |
|
$ |
0.948 |
|
$ |
0.887 |
|
6.9% |
|
|
|
|
|
|
39
Gas revenue increased $23.1 million during the six months ended June 30, 2025, compared to the same period in the prior year, due to the following:
(In millions) |
|
|
Rate changes |
$ |
13.9 |
Increase in volume |
|
11.3 |
Other |
|
(1.8) |
Revenue subject to refund, net |
|
(0.3) |
Total |
$ |
23.1 |
MGE recovers the cost of natural gas in its gas segment through the purchased gas adjustment clause (PGA). Under the PGA, MGE is able to pass through to its gas customers the cost of gas. Changes in PGA recoveries affect revenues but do not change net income in view of the pass-through treatment of the costs. Payments for natural gas increased, driving higher rates during the six months ended June 30, 2025.
The average retail rate per therm excluding customer fixed charges for the six months ended June 30, 2025, increased approximately 7% compared to the same period in the prior year, reflecting an increase in natural gas commodity costs (recovered through the PGA).
Cost of gas sold
Cost of gas sold increased $17.1 million during the six months ended June 30, 2025, compared to the same period in the prior year. Therms delivered increased approximately 16% and cost per therm increased approximately 17%. MGE recovers the cost of natural gas in its gas segment through the PGA as described under gas deliveries and revenues above.
Consolidated operations and maintenance expenses
During the six months ended June 30, 2025, operations and maintenance expenses increased $3.6 million, compared to the same period in the prior year. The following contributed to the net change:
(In millions) |
|
|
Increased transmission costs |
$ |
1.6 |
Increased customer services |
|
0.9 |
Increased electric production expenses |
|
0.9 |
Increased other expenses |
|
0.9 |
Increased gas distribution expenses |
|
0.7 |
Decreased administrative and general costs |
|
(0.9) |
Decreased electric distribution expenses |
|
(0.5) |
Total |
$ |
3.6 |
40
Consolidated depreciation expense
Electric depreciation expense increased $2.1 million and gas depreciation expense increased $0.3 million during the six months ended June 30, 2025, compared to the same period in the prior year. Paris solar was placed in service in December 2024 and Darien solar was placed in service in March 2025. The timing of the in-service dates contributed to the increase in electric depreciation expense.
Electric and gas other income
Electric other income decreased $0.7 million and gas other income decreased $1.2 million during the six months ended June 30, 2025, compared to the same period in the prior year, primarily related to pension and other postretirement, excluding service costs. The PSCW has approved MGE to defer as a regulatory asset or liability, the difference between actual pension and other postretirement costs included in rates and to be recovered or refunded in a future rate proceeding. Pension and other postretirement cost is generally offset by electric and gas revenue and does not have a significant impact on net income.
Nonregulated Energy Operations - MGE Energy and MGE
The nonregulated energy operations are conducted through MGE Energy's subsidiaries: MGE Power Elm Road (the Elm Road Units) and MGE Power West Campus (WCCF), which have been formed to own and lease electric generating capacity to assist MGE. During the six months ended June 30, 2025 and 2024, net income at the nonregulated energy operations segment was $12.2 million and $11.9 million, respectively.
Transmission Investment Operations - MGE Energy
The transmission investment segment holds our interest in ATC and ATC Holdco, and its income reflects our equity in the earnings of those investments. ATC Holdco was formed in December 2016 to pursue transmission development opportunities that typically have long development and investment lead times before becoming operational. During the six months ended June 30, 2025 and 2024, other income at the transmission investment segment primarily reflects ATC's operations and was $6.2 million and $5.5 million, respectively. See Footnote 3 of the Notes to Consolidated Financial Statements in this Report for summarized financial information regarding ATC.
Consolidated Income Taxes - MGE Energy and MGE
See Footnote 4 of the Notes to Consolidated Financial Statements in this Report for the effective tax rate reconciliation.
Noncontrolling Interest, Net of Tax - MGE
Noncontrolling interest, net of tax, reflects the accounting required for MGE Energy's interest in MGE Power Elm Road (the Elm Road Units) and MGE Power West Campus (WCCF). MGE Energy owns 100% of MGE Power Elm Road and MGE Power West Campus. They are not owned by MGE. Due to the contractual agreements for these projects with MGE, the entities are considered VIEs with respect to MGE and their results are consolidated with those of MGE, the primary beneficiary of the VIEs. The following table shows MGE's noncontrolling interest, net of tax, reflected on MGE's consolidated statement of income:
|
|
Six Months Ended |
|
|||||
|
|
June 30, |
|
|||||
(In millions) |
|
2025 |
|
|
2024 |
|
||
MGE Power Elm Road |
|
$ |
7.7 |
|
|
$ |
7.7 |
|
MGE Power West Campus |
|
|
3.6 |
|
|
|
3.6 |
|
Contractual Obligations and Commercial Commitments - MGE Energy and MGE
There were no material changes, other than from the normal course of business, to MGE Energy's and MGE's contractual obligations (representing cash obligations that are considered to be firm commitments) and commercial commitments (representing commitments triggered by future events) during the six months ended June 30, 2025, except as noted below. Further discussion of the contractual obligations and commercial commitments is included in Footnote 16 of the Notes to Consolidated Financial Statements and "Contractual Obligations and Commercial Commitments for MGE Energy and MGE" under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in the 2024 Annual Report on Form 10-K.
41
Purchase Contracts – MGE Energy and MGE
See Footnote 8.c. of Notes to Consolidated Financial Statements in this Report for a description of commitments as of June 30, 2025, that MGE Energy and MGE have entered with respect to various commodity supply and transportation contracts to meet their obligations to deliver electricity and natural gas to customers.
Liquidity and Capital Resources
MGE Energy and MGE expect to have adequate liquidity to support future operations and capital expenditures over the next twelve months. Available resources include cash and cash equivalents, operating cash flows, liquid assets, borrowing working capacity under revolving credit facilities, and access to equity and debt capital markets. During the beginning of 2025, MGE Energy issued new shares of common stock to participants in our Direct Stock Purchase and Dividend Reinvestment Plan. Beginning in May 2025, MGE Energy expects to purchase shares in the open market for participants in the Direct Stock Purchase and Dividend Reinvestment Plan. MGE Energy also expects to generate funds from operations and both long-term and short-term debt financing. See "Credit Facilities" under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources in the 2024 Annual Report on Form 10-K for information regarding MGE Energy's and MGE's credit facilities.
Cash Flows
The following summarizes cash flows for MGE Energy and MGE during the six months ended June 30, 2025 and 2024:
|
|
MGE Energy |
|
MGE |
||||||||
(In thousands) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Cash provided by (used for): |
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
$ |
133,953 |
|
$ |
130,434 |
|
$ |
127,988 |
|
$ |
128,429 |
Investing activities |
|
|
(118,254) |
|
|
(113,509) |
|
|
(112,518) |
|
|
(112,516) |
Financing activities |
|
|
(27,059) |
|
|
(12,414) |
|
|
(29,437) |
|
|
(15,484) |
Cash Provided by Operating Activities
Cash flows from operating activities for MGE Energy and MGE principally reflect the receipt of customer payments for electric and gas service and outflows related to fuel for electric generation, purchased power, gas, and operation and maintenance expenditures.
The principal increases (decreases) in cash flows from operating activities during the six months ended June 30, 2025, compared to the same period in 2024, were as follows:
(In millions) |
|
MGE Energy |
|
MGE |
||
Higher overall collections from customers, driven by higher electric and gas residential sales |
|
$ |
46.3 |
|
$ |
46.3 |
Higher dividend received from ATC |
|
|
1.8 |
|
|
— |
Higher payments for fuel and purchased power at our generation plants, as well as higher natural gas costs to our customers |
|
|
(23.5) |
|
|
(23.5) |
Changes in income taxes paid/received |
|
|
(8.0) |
|
|
(8.9) |
Higher payments for other operation and maintenance expenses |
|
|
(12.4) |
|
|
(14.2) |
Higher payments for interest |
|
|
(0.2) |
|
|
(0.2) |
Other operating activities |
|
|
(0.5) |
|
|
0.1 |
Increase (decrease) in cash provided by operating activities |
|
$ |
3.5 |
|
$ |
(0.4) |
Capital Requirements and Investing Activities
MGE Energy
MGE Energy's cash used for investing activities increased $4.7 million during the six months ended June 30, 2025, as compared to the same period in the prior year.
Capital expenditures during the six months ended June 30, 2025, were $111.8 million. This amount represents an increase of $0.1 million from the expenditures made in the same period in the prior year.
Capital contributions in ATC increased $2.7 million during the six months ended June 30, 2025, when compared to the same period in the prior year.
42
MGE
MGE's cash used for investing activities remained flat during the six months ended June 30, 2025, when compared to the same period in the prior year.
Capital expenditures during the six months ended June 30, 2025, were $111.8 million. This amount represents an increase of $0.1 million from the expenditures made in the same period in the prior year.
Capital Expenditures
MGE Energy's and MGE's liquidity are primarily affected by their capital expenditure requirements. During the three months ended June 30, 2025, capital expenditures for MGE Energy and MGE totaled $111.8 million, which included $106.0 million of utility capital expenditures. Utility capital expenditures include investments in renewable generation and battery storage facilities, such as the Koshkonong and High Noon projects.
MGE does not currently expect any material changes to its total forecasted expenditures as presented in the 2025 through 2029 capital expenditure forecast included under Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources in the 2024 Annual Report on Form 10-K. MGE's plan to achieve its target of 80% carbon reduction by 2030 (from 2005 levels) is based on the transition away from coal, addition of new renewable generation, and additional generation sources that provide the reliable energy to serve demand dependably. The mix of generation sources presented in the 2025 through 2029 capital expenditure forecast may shift based on reliability needs as MGE continues on the path to achieve its carbon reduction goals. Additionally, MGE is monitoring a range of regulatory and trade policy developments that may affect solar project timelines and costs, including import regulations under the Uyghur Forced Labor Prevention Act, solar tariffs administered by the U.S. Department of Commerce, tariffs issued through executive orders, and potential impacts related to the OBBBA. These disruptions have impacted and may continue to impact current and future solar projects by increasing costs or causing delays in construction timelines. As projects are delayed, timing of capital expenditures will be correspondingly shifted. See "Other Matters" below for additional information on the solar procurement disruptions.
Cash Used for Financing Activities
The principal sources and uses of cash are related to short-term and long-term borrowings and repayments and the payment of cash dividends.
The principal increases (decreases) in cash flows from financing activities during the six months ended June 30, 2025, compared to the same period in 2024, were as follows:
(In millions) |
|
MGE Energy |
|
MGE |
||
Issuance of common stock |
|
$ |
3.8 |
|
$ |
— |
Higher cash dividends paid, dividend rate per share ($0.900 vs. $0.855) |
|
|
(1.9) |
|
|
— |
Lower cash dividends to parent (MGE Energy) |
|
|
— |
|
|
0.5 |
Lower distributions to parent (MGE Energy) from noncontrolling interest, representing distributions from MGE Power Elm Road and MGE Power West Campus(a) |
|
|
— |
|
|
2.0 |
Change in long-term debt |
|
|
(0.1) |
|
|
(0.1) |
Change in short-term debt borrowings, net |
|
|
(16.3) |
|
|
(16.3) |
Other financing activities |
|
|
(0.1) |
|
|
(0.1) |
Decrease in cash flows from financing activities |
|
$ |
(14.6) |
|
$ |
(14.0) |
Capitalization Ratios
MGE Energy's capitalization ratios were as follows:
|
|
MGE Energy |
||
|
|
June 30, 2025 |
|
December 31, 2024 |
Common shareholders' equity |
|
62.2% |
|
61.5% |
Long-term debt(a) |
|
37.5% |
|
38.5% |
Short-term debt |
|
0.3% |
|
—% |
43
Credit Ratings
MGE Energy's and MGE's access to the capital markets, including, in the case of MGE, the commercial paper market, and their respective financing costs in those markets, may depend on the credit ratings of the entity that is accessing the capital markets.
None of MGE Energy's or MGE's borrowing is subject to default or prepayment as a result of a downgrading of credit ratings, although a downgrading of MGE's credit ratings would increase fees and interest charges under both MGE Energy's and MGE's credit agreements and may affect the collateral required to be posted under derivative transactions.
Environmental Matters
In March 2025, the EPA announced its intention to initiate regulatory actions concerning several key environmental regulations, including the 2024 power plant greenhouse gas regulations, Effluent Limitation Guidelines, the 2024 amendments to the CCR Rule, and the 2023 Good Neighbor Plan. See Footnote 8.a. of Notes to Consolidated Financial Statements in this Report for additional details on where the EPA has taken regulatory action or similar formal steps since making the announcement. MGE is closely monitoring the EPA's administrative efforts in these areas and will evaluate appropriate responses as developments occur.
See the discussion of environmental matters included in the 2024 Annual Report on Form 10-K, as updated by Footnote 8.a. of Notes to Consolidated Financial Statements in this Report.
Other Matters
Rate Matters
In December 2023, the PSCW approved the 2024/2025 rate application for a 4.17% increase for electric rates and a 1.32% increase to gas rates for 2025. The PSCW approved a 2025 Fuel Cost Plan in December 2024. The plan lowered the 2025 increase in electric rates to 2.63%.
In April 2025, MGE filed a 2026/2027 rate application with a proposed increase of 4.89% for electric rates and a 2.33% increase for gas rates in 2026. The application addresses rates for 2027 proposing a 4.33% increase for electric rates and a 2.16% increase to gas rates for 2027. PSCW approval is pending. A final order is expected before the end of the year.
Details related to MGE's 2024/2025 approved rate proceeding and 2026/2027 proposed rate proceeding are as follows:
(Dollars in thousands) |
|
Average Rate Base(a) |
|
Average CWIP(b) |
|
Return on Common Equity(c) |
|
Common Equity Component of Regulatory Capital Structure |
|
Effective Date |
||
Electric (2025 Test Period) |
|
$ |
1,241,502 |
|
$ |
7,106 |
|
9.7% |
|
56.06% |
|
1/1/2025 |
Gas (2025 Test Period) |
|
$ |
341,369 |
|
$ |
7,146 |
|
9.7% |
|
56.06% |
|
1/1/2025 |
Electric (2026 Test Period)(d) |
|
$ |
1,362,320 |
|
$ |
34,666 |
|
10.0% |
|
56.08% |
|
1/1/2026 |
Gas (2026 Test Period)(d) |
|
$ |
378,582 |
|
$ |
6,053 |
|
10.0% |
|
56.08% |
|
1/1/2026 |
Electric (2027 Test Period)(d) |
|
$ |
1,549,683 |
|
$ |
29,151 |
|
10.0% |
|
56.04% |
|
1/1/2027 |
Gas (2027 Test Period)(d) |
|
$ |
399,304 |
|
$ |
6,291 |
|
10.0% |
|
56.04% |
|
1/1/2027 |
See Footnote 9 of Notes to Consolidated Financial Statements in this Report for further discussion of rate proceedings and an earnings sharing mechanism if MGE earns above the authorized return on common equity in the rate order.
44
Uyghur Forced Labor Protection Act
In June 2021, the U.S. Customs and Border Protection (CBP) issued a Withhold Release Order (WRO) against silica-based products made by Hoshine Silicon Industry Co. Ltd., a company located in China's Xinjiang Uyghur Autonomous Region. The WRO was superseded by the Uyghur Forced Labor Protection Act (UFLPA), a federal law that became effective on June 21, 2022, which further established that all goods mined, produced, or manufactured wholly or in part in Xinjiang or by certain defined entities are prohibited from U.S. importation. Suppliers for MGE's current solar projects were able to provide the CBP sufficient documentation to meet WRO and UFLPA compliance requirements, however we cannot currently predict what, if any, impact the UFLPA will have on the overall supply of solar panels into the United States and the related impact to timing and cost of solar projects included in our capital plan. In the event that such disruptions cause costs to exceed the levels approved for specific projects, we have filed and expect to continue to file a notification with the PSCW and expect to request recovery of any cost increases in MGE's future rate proceedings.
In January 2025, several more Chinese companies, including five solar supply chain providers, were banned under the UFLPA. MGE continues to ensure its compliance with the UFLPA.
U.S. Department of Commerce - Solar Cells and Modules
In August 2023, the U.S. Department of Commerce issued its final determination on a solar tariff investigation that began in 2022, finding that Chinese manufacturers were circumventing tariffs on solar panels by shipping them through four Southeast Asian countries. A 24-month exemption from tariffs for solar panel and module imports from these four countries was in effect from June 2022 until June 6, 2024. In May 2024, the Biden Administration announced that bifacial solar panels would be subject to safeguard tariffs under Section 201 of the Trade Act of 1974, from which they were previously excluded. President Biden also directed U.S. Trade Representatives to increase tariffs under Section 301 from 25% to 50% on solar cells and modules. This change went into effect in September 2024. In April 2025, the U.S. Department of Commerce issued final determinations indicating that panel cells imported from Cambodia, Malaysia, Thailand, and Vietnam are being unfairly traded. The U.S. International Trade Commission issued a final injury ruling in favor of the tariffs, which went into effect in June 2025. MGE continues to assess the potential impact of these tariffs on current and future solar projects which may result in an increase in costs or delays in construction timelines. In the event that such disruptions cause costs to exceed the levels approved for specific projects, we have filed and expect to continue to file a notification with the PSCW and expect to request recovery of any cost increases in MGE's future rate proceedings.
Tariffs
U.S. and international trade policies, including tariffs, port fees, trade sanctions, and other import/export regulations, continue to evolve, influenced by geopolitical developments and economic priorities. MGE is proactively evaluating the potential effects of these changes on operating costs and capital investments, particularly for renewable energy and battery storage initiatives. Such policy shifts could lead to higher costs or delays in project timelines.
Tax Update - One Big Beautiful Bill Act
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, introducing significant changes to tax credits and compliance requirements. The OBBBA accelerates the termination of the Clean Electricity Production Tax Credit (PTC) and Clean Electricity Investment Tax Credit (ITC) for wind and solar projects placed in service after December 31, 2027, unless construction begins by July 4, 2026. The phase out of PTCs and ITCs does not apply to energy storage, hydroelectric facilities, nuclear, or any other zero emission technology. The OBBBA imposes stringent restrictions on tax credit eligibility, disallowing credits, and other provisions for projects involving material assistance from specified foreign entities or foreign-influenced entities for projects that begin construction after December 31, 2025. Additionally, the bill increases domestic content requirements, mandating that 45% of project components (by cost) be U.S.-sourced in 2025, rising to 55% by 2027. The OBBBA's implementation depends on forthcoming Treasury Department guidance as directed under the Executive Order issued on July 7, 2025, particularly regarding the definitions of "begin construction," Foreign Entity of Concern compliance, and domestic content certification processes. The lack of clarity on these definitions introduces significant uncertainty in the ability to secure tax credits for projects in development. MGE continues to evaluate the impact of the OBBBA and is closely monitoring Treasury Department updates and engaging with industry groups to ensure compliance.
Adoption of Accounting Principles and Recently Issued Accounting Pronouncements
See Footnote 2 of Notes to Consolidated Financial Statements in this Report for discussion of new accounting pronouncements.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There were no material changes to the market risks disclosed in Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our 2024 Annual Report on Form 10-K, except as noted below.
Equity Price Risk - Pension-Related Assets
MGE currently funds its liabilities related to employee benefits through trust funds. These funds, which include investments in debt and equity securities, are managed by various third-party investment managers. Changes in the market value of these investments can have an impact on the future expenses related to these liabilities. The value of employee benefit plan assets increased by approximately 7% during the six months ended June 30, 2025.
Item 4. Controls and Procedures.
During the second quarter of 2025, each registrant's management, including the principal executive officer and principal financial officer, evaluated its disclosure controls and procedures related to the recording, processing, summarization, and reporting of information in its periodic reports that it files with the SEC. These disclosure controls and procedures have been designed to ensure that material information relating to that registrant, including its subsidiaries, is accumulated and made known to that registrant's management, including these officers, by other employees of that registrant and its subsidiaries as appropriate to allow timely decisions regarding required disclosure, and that this information is recorded, processed, summarized, evaluated, and reported, as applicable, within the time periods specified in the SEC's rules and forms. The evaluations take into account changes in the internal and external operating environments that may impact those controls and procedures. Due to the inherent limitations of control systems, not all misstatements may be detected. These inherent limitations include the realities that judgments in decision making can be faulty and breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Also, MGE Energy does not control or manage certain of its unconsolidated entities and thus, its access and ability to apply its procedures to those entities is more limited than is the case for its consolidated subsidiaries.
As of June 30, 2025, each registrant's principal executive officer and principal financial officer concluded that its disclosure controls and procedures were effective. Each registrant intends to strive continually to improve its disclosure controls and procedures to enhance the quality of its financial reporting.
During the quarter ended June 30, 2025, there were no changes in either registrant's internal controls over financial reporting that materially affected, or are reasonably likely to affect materially, that registrant's internal control over financial reporting.
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PART II. OTHER INFORMATION.
Item 1. Legal Proceedings.
MGE Energy and its subsidiaries, including MGE, from time to time are involved in various legal proceedings that are handled and defended in the ordinary course of business. See Footnotes 8.a. and 8.b. of Notes to Consolidated Financial Statements in this Report for more information.
Item 1A. Risk Factors.
There were no material changes from the risk factors disclosed in Item 1A. Risk Factors in our 2024 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Under the MGE Energy, Inc. Stock Plan, common stock shares purchased by plan participants may be either shares issued by MGE Energy or shares purchased on the open market, as determined from time to time by MGE Energy. Shares issued by MGE Energy are covered by an existing registration statement. Shares purchased in the open market are purchased at the direction of the plan participants by MGE Energy's transfer agent's securities broker-dealer for the accounts of those plan participants. Subject to the plan's restrictions, the timing and amount of open market purchases is determined by the plan participants and the broker-dealer. MGE Energy is not involved in the open market purchases. During the beginning of 2025, MGE Energy issued new shares of common stock to participants in its Direct Stock Purchase and Dividend Reinvestment Plan. MGE Energy began purchasing shares in the open market starting in May 2025.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable to MGE Energy and MGE.
Item 5. Other Information.
During the three months ended June 30, 2025, no director or officer of MGE Energy or MGE
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Item 6. Exhibits.
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Ex. No. |
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Exhibit Description |
31.1 |
* |
Certifications Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934 filed by Jeffrey M. Keebler for MGE Energy, Inc. |
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31.2 |
* |
Certifications Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934 filed by Jared J. Bushek for MGE Energy, Inc. |
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31.3 |
* |
Certifications Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934 filed by Jeffrey M. Keebler for Madison Gas and Electric Company |
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31.4 |
* |
Certifications Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934 filed by Jared J. Bushek for Madison Gas and Electric Company |
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32.1 |
** |
Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code (Sarbanes-Oxley Act of 2002) filed by Jeffrey M. Keebler for MGE Energy, Inc. |
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32.2 |
** |
Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code (Sarbanes-Oxley Act of 2002) filed by Jared J. Bushek for MGE Energy, Inc. |
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32.3 |
** |
Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code (Sarbanes-Oxley Act of 2002) filed by Jeffrey M. Keebler for Madison Gas and Electric Company |
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32.4 |
** |
Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code (Sarbanes-Oxley Act of 2002) filed by Jared J. Bushek for Madison Gas and Electric Company |
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101.INS |
* |
XBRL Instance |
101.SCH |
* |
XBRL Taxonomy Extension Schema With Embedded Linkbases Document |
104.1 |
* |
Included in the cover page, formatted in Inline XBRL |
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* |
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Filed herewith. |
** |
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Furnished herewith. |
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Signatures - MGE Energy, Inc.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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MGE ENERGY, INC. |
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Date: August 6, 2025 |
/s/ Jeffrey M. Keebler |
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Jeffrey M. Keebler Chairman, President and Chief Executive Officer (Duly Authorized Officer) |
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Date: August 6, 2025 |
/s/ Jared J. Bushek |
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Jared J. Bushek Vice President - Chief Financial Officer and Treasurer (Chief Financial Officer) |
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Date: August 6, 2025 |
/s/ Jenny L. Lagerwall |
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Jenny L. Lagerwall Assistant Vice President - Accounting and Controller (Chief Accounting Officer) |
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Signatures – Madison Gas and Electric Company
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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MADISON GAS AND ELECTRIC COMPANY |
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Date: August 6, 2025 |
/s/ Jeffrey M. Keebler |
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Jeffrey M. Keebler Chairman, President and Chief Executive Officer (Duly Authorized Officer) |
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Date: August 6, 2025 |
/s/ Jared J. Bushek |
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Jared J. Bushek Vice President - Chief Financial Officer and Treasurer (Chief Financial Officer) |
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Date: August 6, 2025 |
/s/ Jenny L. Lagerwall |
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Jenny L. Lagerwall Assistant Vice President - Accounting and Controller (Chief Accounting Officer) |
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FAQ
How did MGEE's Q2 2025 earnings compare with Q2 2024?
What were MGEE's year-to-date capital expenditures?
What is the current quarterly dividend for MGEE?
How much debt does MGEE carry?
What rate increases are pending approval?
When are the Columbia coal units expected to retire?
