Earnings growth and major projects at MGE Energy (MGEE)
MGE Energy reported stronger Q1 2026 results, with net income of $48.5 million or $1.32 per share, up from $41.6 million or $1.14 a year earlier. Total operating revenue rose to $242.7 million from $219.0 million, driven by higher electric and gas revenues and new rates effective in 2026.
The effective tax rate declined to 10.8%, helped by federal production and investment tax credits tied to renewable and storage projects and higher non‑taxable AFUDC equity income. Capital expenditures more than doubled to $101.1 million, reflecting heavy investment in solar, wind, battery and storage projects.
Cash flow from operations was $80.7 million, funding part of this buildout alongside a new $90 million long‑term debt issue and an at‑the‑market equity program that sold 154,321 shares for net proceeds of $11.5 million. The company also deferred $4.4 million of 2026 fuel savings under Wisconsin fuel rules, which will be reviewed by regulators and returned through future rates.
Positive
- None.
Negative
- None.
Insights
Q1 shows solid earnings growth while capex, debt and equity funding ramp for clean energy projects.
MGE Energy grew Q1 2026 net income to $48.5 million and EPS to $1.32, helped by new electric and gas rates and lower effective tax rates from renewable‑related credits and AFUDC on projects under construction.
Capital spending reached $101.1 million versus $47.7 million a year earlier, mainly for solar, wind, battery and storage projects. This buildout is paired with higher long‑term debt, which increased via a new $90 million issue, and modest equity raised through an at‑the‑market program with $11.5 million of net proceeds.
Fuel savings of $4.4 million have been deferred under Wisconsin fuel rules and are expected to be addressed in the 2027 review of 2026 fuel costs. Subsequent filings may clarify how regulators treat these deferrals and the pace of recovery for large‑scale generation investments.
Key Figures
Key Terms
Allowance for Funds Used During Construction (AFUDC) financial
At-the-Market Offering Program financial
Fuel rules financial
Good Neighbor Plan regulatory
Coal Combustion Residuals (CCR) Rule regulatory
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
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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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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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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 April 30, 2026 |
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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. |
16 |
6. Equity and Financing Arrangements. |
17 |
7. Share-Based Compensation. |
17 |
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. |
26 |
13. Revenue. |
27 |
14. Segment Information. |
27 |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
30 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk. |
40 |
Item 4. Controls and Procedures. |
40 |
PART II. OTHER INFORMATION. |
41 |
Item 1. Legal Proceedings. |
41 |
Item 1A. Risk Factors. |
41 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. |
41 |
Item 3. Defaults Upon Senior Securities. |
41 |
Item 4. Mine Safety Disclosures. |
41 |
Item 5. Other Information. |
41 |
Item 6. Exhibits. |
42 |
Signatures - MGE Energy, Inc. |
43 |
Signatures - Madison Gas and Electric Company. |
44 |
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' 2025 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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2025 Annual Report on Form 10-K |
MGE Energy's and MGE's Annual Report on Form 10-K for the year ended December 31, 2025 |
2024 ELG Rule |
Supplemental Effluent Limitations Guidelines and Standards for the Steam Electric Power Generating Point Source Category |
2021 Incentive Plan |
MGE Energy's 2021 Long-Term Incentive Plan |
AD/CVD |
Antidumping and Countervailing Duties |
AFUDC |
Allowance for Funds Used During Construction |
ATC |
American Transmission Company LLC |
ATC Holdco |
ATC Holdco, LLC |
ATM |
At-the-Market Offering Program |
Badger Hollow |
Badger Hollow Solar Park |
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 |
CWIP |
Construction Work in Progress |
Dth |
Dekatherms, a quantity measure for natural gas |
DOC |
United States Department of Commerce |
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 Energy Center |
IRS |
Internal Revenue Service |
ITC |
Investment Tax Credit |
Koshkonong |
Koshkonong Solar Park |
kWh |
Kilowatt-hour, a measure of electric energy produced |
MISO |
Midcontinent Independent System Operator, Inc. |
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-Battery Park |
PGA |
Purchased Gas Adjustment clause, a regulatory mechanism used to reconcile natural gas costs recovered in rates to actual costs |
4
PM |
Particulate Matter |
PSCW |
Public Service Commission of Wisconsin |
PTC |
Production Tax Credit |
ROE |
Return on Equity |
Saratoga |
Saratoga Solar Electric Generation and BESS Facility |
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 Prevention Act |
Ursa |
Ursa Solar Electric Generation Facility |
USITC |
United States International Trade Commission |
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 |
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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March 31, |
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2026 |
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2025 |
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Operating Revenues: |
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Electric revenues |
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$ |
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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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( |
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( |
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Income before income taxes |
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Income tax provision |
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( |
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( |
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Net Income |
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$ |
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$ |
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Earnings Per Share of Common Stock |
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Basic |
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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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Dividends per share of common stock |
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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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Three Months Ended |
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March 31, |
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2026 |
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2025 |
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Operating Activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to cash provided by operating activities |
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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 |
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( |
) |
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( |
) |
Cash contributions to pension and other postretirement plans |
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( |
) |
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( |
) |
Equity earnings in investments |
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( |
) |
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( |
) |
Dividends from investments |
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Changes in assets and liabilities |
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Current assets |
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Accounts payable |
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( |
) |
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( |
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Deferred income taxes |
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Other current liabilities |
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( |
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Regulatory assets and liabilities, net |
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Other, net |
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( |
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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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( |
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( |
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Capital contributions to investments |
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( |
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( |
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Other |
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( |
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Cash Used for Investing Activities |
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( |
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( |
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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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( |
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( |
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Repayments of long-term debt |
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( |
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( |
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Issuance of long-term debt |
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Repayments of short-term debt |
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( |
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Other |
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( |
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( |
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Cash Provided by (Used for) Financing Activities |
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( |
) |
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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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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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March 31, |
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December 31, |
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ASSETS |
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2026 |
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2025 |
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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 |
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Other current liabilities |
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Total Current Liabilities |
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Other Credits: |
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Deferred income taxes |
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Investment tax credit - deferred |
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Regulatory liabilities |
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Accrued pension and other postretirement benefits |
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Asset retirement obligations |
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Other deferred liabilities and other |
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Total Other Credits |
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Capitalization: |
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Common shareholders' equity |
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Long-term debt |
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Total Capitalization |
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Commitments and contingencies (see Footnote 8) |
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Total Liabilities and Capitalization |
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$ |
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$ |
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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)
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Accumulated |
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Additional |
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Other |
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|
|
Common |
|
|
Paid-in |
|
|
Retained |
|
|
Comprehensive |
|
|
|
|
|||||
|
|
Stock |
|
|
Capital |
|
|
Earnings |
|
|
Income/(Loss) |
|
|
Total |
|
|||||
Three Months Ended March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Beginning Balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common stock dividends declared ($ |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Issuance of common stock, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity-based compensation plans and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Ending Balance - March 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Three Months Ended March 31, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Beginning Balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common stock dividends declared ($ |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Issuance of common stock, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity-based compensation plans and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Ending Balance - March 31, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
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 |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
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)
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Operating Activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to cash provided by operating activities |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
|
||
Provision for doubtful receivables |
|
|
|
|
|
|
||
Employee benefit plan credit |
|
|
( |
) |
|
|
( |
) |
Cash contributions to pension and other postretirement plans |
|
|
( |
) |
|
|
( |
) |
Changes in assets and liabilities |
|
|
|
|
|
|
||
Current assets |
|
|
|
|
|
|
||
Accounts payable |
|
|
( |
) |
|
|
( |
) |
Deferred income taxes |
|
|
|
|
|
|
||
Other current liabilities |
|
|
|
|
|
( |
) |
|
Regulatory assets and liabilities, net |
|
|
|
|
|
|
||
Other, 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 |
|
|
( |
) |
|
|
( |
) |
Capital contribution from parent |
|
|
|
|
|
|
||
Repayments of long-term debt |
|
|
( |
) |
|
|
( |
) |
Issuance of long-term debt |
|
|
|
|
|
|
||
Repayments of short-term debt |
|
|
( |
) |
|
|
|
|
Other |
|
|
( |
) |
|
|
( |
) |
Cash Provided by (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 |
|
$ |
|
|
$ |
|
||
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)
|
|
March 31, |
|
|
December 31, |
|
||
ASSETS |
|
2026 |
|
|
2025 |
|
||
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 postretirement 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 March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Beginning balance |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cash dividends paid to parent by MGE |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Distributions to parent from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||||
Ending Balance - March 31, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Three Months Ended March 31, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Beginning balance |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Capital contributions from parent |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cash dividends paid to parent by MGE |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Distributions to parent from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||||
Ending Balance - March 31, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
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)
March 31, 2026
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 March 31, 2026, and during the three months ended March 31, 2026, 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 2025 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 52 through 105 of the 2025 Annual Report on Form 10-K.
|
|
MGE Energy |
|
MGE(b) |
||||||||
|
|
March 31, |
|
March 31, |
|
March 31, |
|
March 31, |
||||
(In Thousands) |
|
2026 |
|
2025 |
|
2026 |
|
2025 |
||||
Income tax receipts, net(a): |
|
|
|
|
|
|
|
|
|
|
|
|
US Federal |
|
$ |
( |
|
$ |
( |
|
$ |
( |
|
$ |
( |
Significant noncash investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Accrued capital expenditures |
|
|
|
|
|
|
|
|
||||
The following table presents the components of total cash, cash equivalents, and restricted cash on the consolidated balance sheets.
|
|
MGE Energy |
|
MGE |
||||||||
|
|
March 31, |
|
December 31, |
|
March 31, |
|
December 31, |
||||
(In thousands) |
|
2026 |
|
2025 |
|
2026 |
|
2025 |
||||
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.
14
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.
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.
In September 2025, the Financial Accounting Standards Board issued authoritative guidance within the codification’s Internal-Use Software topic, which amends certain aspects of the accounting for and disclosure of software costs. The authoritative guidance will become effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods; early adoption is permitted as of the beginning of an annual reporting period. MGE will adopt 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.
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 |
|
|||||
|
|
March 31, |
|
|||||
(In thousands) |
|
2026 |
|
|
2025 |
|
||
Equity earnings from investment in ATC |
|
$ |
|
|
$ |
|
||
Dividends received from ATC |
|
|
|
|
|
|
||
Capital contributions to ATC |
|
|
|
|
|
|
||
In April 2026, MGE Transco made a $2.2 million capital contribution to ATC.
ATC's summarized financial data is as follows:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
(In thousands) |
|
2026 |
|
|
2025 |
|
||
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 months ended March 31, 2026, and 2025, MGE recorded $
15
operational, maintenance, and project management work for ATC, which is reimbursed by ATC. As of March 31, 2026, and December 31, 2025, MGE had a receivable due from ATC of $
Effective Tax Rate.
The effective income tax rates for the period, computed by dividing income tax expense by income before taxes, were as follows:
|
|
MGE Energy |
|
MGE |
||||||||||||||||
Three Months Ended March 31, |
|
2026 |
|
2025 |
|
2026 |
|
2025 |
||||||||||||
Effective income tax rate |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
||||
The effective tax rates were different than the federal statutory rate primarily due to state income taxes, net of the related federal tax benefit, federal production tax credits (PTC) and investment tax credits (ITC), the amortization of excess deferred taxes, and the impact of non-taxable income related to the equity portion of Allowance for Funds Used During Construction (AFUDC), net of depreciation. For both MGE Energy and MGE, the decrease in the effective tax rate compared to the prior year period was driven primarily by additional federal tax credits associated with renewable generation and energy storage projects, as well as increased non-taxable income related to the equity portion of AFUDC on projects under construction.
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 |
|
|||||
|
|
March 31, |
|
|||||
(In thousands) |
|
2026 |
|
|
2025 |
|
||
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 |
|
|
|
|
|
|
||
Actuarial gain |
|
|
( |
) |
|
|
( |
) |
Net periodic benefit (credit) cost |
|
$ |
( |
) |
|
$ |
|
|
16
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. In 2026, MGE is refunding over-collected costs from previous years. During the three months ended March 31, 2025, MGE recovered $
In February 2026, MGE Energy filed a prospectus supplement under which it may sell shares of its common stock having an aggregate offering price of up to $
We had the following changes to outstanding common stock during the three months ended March 31, 2026:
|
|
Three Months Ended |
||
|
|
March 31, |
||
|
|
2026 |
|
2025 |
Common stock shares outstanding at beginning of period |
|
|
||
Shares issued: |
|
|
|
|
At-the-market offering program |
|
|
||
Stock-based compensation |
|
|
||
Stock plan |
|
|
||
Common stock shares outstanding at end of period |
|
|
||
As of March 31, 2026,
During the three months ended March 31, 2026, and 2025, MGE recorded $
In the first quarter of 2026, MGE distributed cash payments of $
In March 2026, MGE granted
17
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.
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 we conduct our operations, the costs of those 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 have the potential to 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, 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 Supplemental Effluent Limitations Guidelines and Standards for the Steam Electric Power Generating Point Source Category (2024 ELG Rule) that further regulates the wastewater discharges associated with coal-fired power plants. The rule impacts Columbia and the Elm Road Units. The 2024 ELG Rule focuses on wastewater discharges from flue gas desulfurization, combustion residual leachate, and bottom ash transport water. The 2024 ELG Rule includes reduced 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 ELG 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. In December 2025, the EPA published a rule (2025 Rule) that extended several rule deadlines. This rule is also under legal challenge. The operator of the Elm Road Units is in compliance with the 2024 ELG Rule. The operator of Columbia has indicated they are in compliance with the 2024 ELG Rule. MGE will continue to monitor the outcomes of the rule challenges and work with our co-owners on their compliance plans.
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 which 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. In March 2026, Columbia received an updated WPDES permit from the WDNR. The WPDES permit has indicated that Columbia's existing intake structure meets BTA standards. MGE does not, based on current information, anticipate any further requirements at Columbia and thus does not expect this rule to have a material effect on Columbia.
18
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. Evaluations done by the owners of Columbia and the Elm Road Units in 2024 indicated that they have a plan for complying with the May 2024 rule. 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, the EPA released a new proposed rule titled "Reconsideration of 2009 Endangerment Finding and Greenhouse Gas Vehicle Standards." In February 2026, the EPA finalized the repeal, which will effectively undo the basis for federal regulation of GHG under the Clean Air Act. Several states and stakeholders have initiated legal challenges to the repeal. The scope and timing of any impacts on federal GHG regulation remain uncertain pending litigation and potential further agency action. MGE will continue to monitor developments.
The Elm Road Units are located in Milwaukee County, Wisconsin, a nonattainment area for the 2015 Ozone NAAQS. The area was redesignated to serious nonattainment by the EPA in December 2024, effective January 2025, but is currently categorized as moderate nonattainment following a stay granted by the U.S. Court of Appeals for the Seventh Circuit in September 2025. 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. The 2024 rule is on hold pending the EPA's reconsideration of this rule.
Multiple states and industry groups challenged the March 2024 PM2.5 NAAQS rule in the United States Court of Appeals for the District of Columbia Circuit. In March 2025, the EPA announced reconsideration of the rule and the litigation was put on hold pending completion of that process. In November 2025, the EPA filed a motion with the D.C. Circuit requesting to vacate the 2024 rule entirely due to error in the rulemaking process. The EPA has indicated that they intend to formally propose a revised rule in 2026.
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. 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
19
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. Initial obligations under the Federal Implementation Plan were scheduled to begin during the 2023 ozone season. 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.
In February 2026, the EPA finalized the CCR Management Unit Deadline Extension Rule, which provides a one-year extension for the submission of Facility Evaluation Reports and extends the deadline for the implementation of groundwater monitoring systems at legacy CCR management units to February 2031. Columbia continues to evaluate the impact of this extension on its compliance timeline. This update is not expected to materially affect anticipated compliance costs. In April 2026, the EPA published a proposed rule that would amend the CCR regulations by eliminating certain closure requirements that previously applied to legacy surface impoundments and CCR management units. MGE will continue to monitor legal developments and any future updates to this rule.
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
20
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) |
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
2029 |
|
|
2030 |
|
|
Thereafter |
|
||||||
Coal(a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
Rate increase |
|
Return on Common Equity |
|
Common Equity Component of Regulatory Capital Structure |
|
Effective Date |
Approved 2024/2025 rate proceeding(a)(b) |
|
|
|
|
|
|
|
|
Electric(c) |
|
|
|
|
1/1/2025 |
|||
Gas |
|
|
|
|
1/1/2025 |
|||
Approved 2026/2027 settlement(b)(d) |
|
|
|
|
|
|
|
|
Electric |
|
|
|
|
1/1/2026 |
|||
Gas |
|
|
|
|
1/1/2026 |
|||
Electric |
|
|
|
|
1/1/2027 |
|||
Gas |
|
|
|
|
1/1/2027 |
Fuel rules require Wisconsin utilities to defer electric fuel-related costs that fall outside a symmetrical cost tolerance band around the amount approved for a utility in its annual fuel proceedings. Any over- or under-recovery of the actual costs is determined in the following year and is then reflected in future billings to electric retail customers. The fuel rules
21
|
|
Fuel Costs (Savings) (in millions) |
|
Refund or Recovery Period |
2024 |
|
($ |
|
October 2025 |
2025 |
|
($ |
|
(b) |
2026 |
|
($ |
|
(c) |
The gross notional volume of open derivatives is as follows:
|
|
March 31, 2026 |
|
December 31, 2025 |
||||||||
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 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 March 31, 2026, the fair value of exchange traded derivatives and FTRs exceeded their cost basis by less than $
22
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 |
||
March 31, 2026 |
|
|
|
|
|
|
|
|
||
Commodity derivative contracts(a) |
|
$ |
|
|
$ |
|
|
Other current liabilities |
||
Commodity derivative contracts(a) |
|
|
|
|
|
|
|
Other deferred liabilities and other |
||
FTRs |
|
|
|
|
|
|
|
Other current assets |
||
|
|
|
|
|
|
|
|
|
||
December 31, 2025 |
|
|
|
|
|
|
|
|
||
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 |
|
||||
March 31, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity derivative contracts |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
FTRs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity derivative contracts |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity derivative contracts |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
FTRs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity derivative contracts |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
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.
|
|
2026 |
|
|
2025 |
|
||||||||||
(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 March 31: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized gain |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Realized gain (loss) reclassified to a deferred account |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Realized gain (loss) reclassified to income statement |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
23
|
|
Realized Losses (Gains) |
|
|||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||
(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 March 31: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
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 both March 31, 2026, and December 31, 2025,
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 March 31, 2026,
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 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.
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||||||||||
(In thousands) |
|
Carrying Amount |
|
|
Fair Value |
|
|
Carrying Amount |
|
|
Fair Value |
|
||||
Long-term debt(a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
24
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 March 31, 2026 |
|
|||||||||||||
(In thousands) |
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives, net(a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives, net(a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Deferred compensation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Fair Value as of December 31, 2025 |
|
|||||||||||||
(In thousands) |
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives, net(a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives, net(a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
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 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.
25
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 |
||||
|
|
March 31, |
||||
(In thousands) |
|
2026 |
|
2025 |
||
Realized and unrealized gains (losses): |
|
|
|
|
|
|
Included in regulatory liability |
|
$ |
|
$ |
||
Included in earnings |
|
|
|
|
( |
|
Settlements |
|
|
( |
|
|
|
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(b).
|
|
Three Months Ended |
||||
|
|
March 31, |
||||
(In thousands) |
|
2026 |
|
2025 |
||
Purchased power expense |
|
$ |
|
$ |
( |
|
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 |
|
Estimated Date of Commercial Operation |
Darien(b)(c) |
|
|
Battery |
|
|
$ |
|
$ |
|
2027 |
||
Koshkonong(b)(d) |
|
|
Solar/Battery |
|
|
$ |
|
$ |
|
2026 Solar |
||
High Noon(b)(e) |
|
|
Solar/Battery |
|
|
$ |
|
$ |
|
2027 |
||
Columbia Energy Dome(b)(e) |
|
|
Storage |
|
|
$ |
|
$ |
|
2027 |
||
Badger Hollow(b)(f) |
|
|
Wind |
|
|
$ |
|
$ |
|
2027 |
||
Whitetail(g) |
|
|
Wind |
|
|
$ |
|
$ |
|
2027 |
||
Dawn Harvest(b)(h) |
|
|
Solar |
|
|
$ |
|
$ |
|
2027 |
||
Ursa(b)(e) |
|
|
Solar |
|
|
$ |
|
$ |
|
2028 |
||
Saratoga(b)(i) |
|
|
Solar/Battery |
|
|
$ |
|
$ |
|
2028 |
||
Good Oak(b)(e) |
|
|
Solar |
|
|
$ |
|
$ |
|
2028 |
||
Gristmill(b)(e) |
|
|
Solar |
|
|
$ |
|
$ |
|
2028 |
26
Revenues disaggregated by revenue source were as follows:
|
|
Three Months Ended |
|
|||||
(In thousands) |
|
March 31, |
|
|||||
Electric revenues |
|
2026 |
|
|
2025 |
|
||
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 |
|
$ |
|
|
$ |
|
||
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 2025 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.
27
The following tables show 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 March 31, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
242,703 |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||
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) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Equity in earnings of investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Three Months Ended March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
218,970 |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||
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) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Equity in earnings of investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||||
(In thousands) |
|
Electric |
|
|
Gas |
|
|
Non-Regulated Energy |
|
|
Total Reportable Segments |
|
|
Consolidation/ |
|
|
Consolidated Total |
|
||||||
Three Months Ended March 31, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
242,703 |
|
|
$ |
— |
|
|
$ |
|
||||
Interdepartmental revenues |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|||
Total operating revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Fuel and purchased power |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Purchased gas costs |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Other segment items(b) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Income tax benefit (provision) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net income attributable to noncontrolling interest, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Net income attributable to MGE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Three Months Ended March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
218,970 |
|
|
$ |
— |
|
|
$ |
|
||||
Interdepartmental revenues |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|||
Total operating revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Fuel and purchased power |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Purchased gas costs |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Other segment items(b) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Income tax benefit (provision) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net income attributable to noncontrolling interest, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Net income attributable to MGE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
28
The following tables show 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 |
|
|||||||
Three Months Ended March 31, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Three Months Ended March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
Utility |
|
|
Consolidated |
|
||||||||||||||
(In thousands) |
|
Electric |
|
|
Gas |
|
|
Non-regulated Energy |
|
|
Consolidation/ Elimination Entries |
|
|
Total |
|
|||||
Three Months Ended March 31, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Three Months Ended March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
29
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 will 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 UW-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 March 31, 2026, MGE Energy's earnings were $48.5 million, or $1.32 per share, compared to $41.6 million, or $1.14 per share, during the same period in the prior year. MGE's earnings during the three months ended March 31, 2026, were $40.1 million compared to $34.2 million during the same period in the prior year.
30
MGE Energy's net income was derived from our business segments as follows:
|
|
Three Months Ended |
||||
(In millions) |
|
March 31, |
||||
Business Segment: |
|
2026 |
|
2025 |
||
Electric Utility |
|
$ |
25.7 |
|
$ |
20.2 |
Gas Utility |
|
|
13.8 |
|
|
13.6 |
Nonregulated Energy |
|
|
6.3 |
|
|
6.0 |
Transmission Investments |
|
|
2.6 |
|
|
2.3 |
All Other |
|
|
0.1 |
|
|
(0.5) |
Net Income |
|
$ |
48.5 |
|
$ |
41.6 |
Our net income during the three months ended March 31, 2026, compared to the same periods in the prior year, primarily reflects the effects of the following factors:
Electric Utility
Earnings for the three months ended March 31, 2026, increased year-over-year, primarily driven by a rise in the rate base due to increased electric investments approved in the 2026/2027 rate case.
Significant Events
The following events affected the first three months of 2026:
2026/2027 Rate Settlement Agreement: In December 2025, the PSCW approved a unanimous settlement agreement that MGE reached with intervening parties in its 2026/2027 rate case. As part of the settlement agreement, the PSCW approved a 0.15% increase for electric rates and a 2.77% increase to gas rates for 2026 and a 3.63% increase for electric rates and a 2.04% increase to gas rates for 2027. See "Other Matters" below for additional information on the 2026/2027 rate case settlement.
2026 Deferred Fuel Savings: MGE had deferred fuel savings through the three months ended March 31, 2026. As of March 31, 2026, MGE deferred $4.4 million of 2026 fuel savings. These costs will be subject to the PSCW's annual review of 2026 fuel costs, expected to be completed during 2027. See Footnote 9 of the Notes to the Consolidated Financial Statements in this Report for further information regarding fuel cost proceedings.
Large Scale Utility Projects: Large scale generation projects recently completed or under construction, are summarized 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.
Source |
|
Share of |
|
|
Costs Incurred as of March 31, 2026(a)(b) |
Solar |
$ |
544.9 |
|
$ |
143.2 |
Wind |
|
73.0 |
|
|
10.7 |
Battery |
|
193.4 |
|
|
61.5 |
Storage |
|
22.0 |
|
|
2.0 |
Other |
|
11.0 |
|
|
0.4 |
In February 2026, MGE executed an asset purchase agreement to acquire 33.4% ownership interest in the RockGen Energy Center, an existing natural gas-fired generating plant near Cambridge, Wisconsin. MGE's estimated cost is approximately $203 million. If approved, the transaction is expected to close in late 2027.
31
In the near term, several items may affect us, including:
2025 Annual Fuel Proceeding: MGE had fuel savings in 2025. As of December 31, 2025, MGE deferred $7.1 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. MGE has proposed to return these savings in October 2026.
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 – MGE continues to work toward its goal of net-zero carbon electricity by 2050. Solar, wind, and battery storage projects are a major step toward deep decarbonization and greater use of clean energy sources in pursuit of our goal.
Columbia: Operational, regulatory, and environmental regulation considerations have impacted and continue to impact Columbia's generation planning. MGE, as a minority owner, and Columbia's other co-owners continue to evaluate transitioning away from coal and continue to evaluate replacing the generation from Columbia while maintaining electric service reliability. MGE and Columbia's co-owners are exploring converting Columbia to natural gas.
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. MGE offers two voluntary renewable natural gas programs. The initial program, launched in May 2024, enables customers to offset emissions associated with their natural gas consumption through a mechanism in which MGE purchases renewable thermal credits and retires them on behalf of participating customers. The second program, launched in January 2026, enables customers to inject renewable natural gas produced on the customer's premise into MGE's distribution system. Customers may sell the natural gas to MGE or another third party and may retain or sell to MGE or another third party the associated environmental attributes.
Solar Procurement Disruptions: MGE is monitoring import regulations under the Uyghur Forced Labor Prevention 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.
32
Financing and Equity Issuance Plans: As of March 31, 2026, MGE has $140 million of remaining regulatory authority from the PSCW to issue long-term debt to finance authorized utility capital expenditures. MGE expects to use a portion of the remaining authority during 2026 to finance authorized utility capital expenditures. MGE Energy has equity programs available to issue new shares of common stock, including its at-the-market offering program and its Direct Stock Purchase and Dividend Reinvestment Plan. See Footnote 6 of the Notes to Consolidated Financial Statements in this Report for additional information on these programs.
The amount and timing of any financings will be primarily driven by capital investments and cash requirements and will depend upon market conditions, regulatory approvals, and other factors.
Large-Load Growth: Management is seeing growing interest from large‑load customers, including data‑intensive and technology‑focused operations, seeking reliable and scalable electric service in our service territory. Our favorable location, strong regional transmission access, and proximity to major economic and research institutions support this interest. MGE engages early with prospective customers to evaluate load needs, interconnection requirements, and potential system impacts. Although the timing and size of individual projects remain uncertain, these inquiries represent a potential source of incremental and durable load growth.
Results of Operations
Three Months Ended March 31, 2026 and 2025
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) |
|||||||||
|
|
|
Three Months Ended March 31, |
|
Three Months Ended March 31, |
|||||||||
(In thousands) |
|
|
2026 |
|
|
2025 |
|
% Change |
|
2026 |
|
2025 |
|
% Change |
Residential |
|
$ |
45,314 |
|
$ |
45,139 |
|
0.4% |
|
215,333 |
|
214,992 |
|
0.2% |
Commercial |
|
|
61,419 |
|
|
60,635 |
|
1.3% |
|
434,159 |
|
430,278 |
|
0.9% |
Industrial |
|
|
2,848 |
|
|
2,964 |
|
(3.9)% |
|
34,824 |
|
34,533 |
|
0.8% |
Other-retail/municipal |
|
|
9,334 |
|
|
9,348 |
|
(0.1)% |
|
80,223 |
|
79,752 |
|
0.6% |
Total retail |
|
|
118,915 |
|
|
118,086 |
|
0.7% |
|
764,539 |
|
759,555 |
|
0.7% |
Sales to the market |
|
|
11,609 |
|
|
6,480 |
|
79.2% |
|
117,752 |
|
127,099 |
|
(7.4)% |
Other revenues |
|
|
856 |
|
|
888 |
|
(3.6)% |
|
— |
|
— |
|
—% |
Total |
|
$ |
131,380 |
|
$ |
125,454 |
|
4.7% |
|
882,291 |
|
886,654 |
|
(0.5)% |
Electric revenue increased $5.9 million during the three months ended March 31, 2026, compared to the same period in the prior year, due to the following:
(In millions) |
|
|
Sales to the market |
$ |
5.1 |
Rate changes |
|
2.0 |
Customer fixed and demand charges |
|
0.5 |
Net increase in commercial, industrial and other-retail/municipal volume |
|
0.2 |
Increase in residential volume |
|
0.1 |
Revenue subject to refund, net |
|
(1.9) |
Other |
|
(0.1) |
Total |
$ |
5.9 |
33
Electric fuel and purchased power
|
Three Months Ended March 31, |
|||||||
(In millions) |
2026 |
|
2025 |
|
$ Change |
|||
Fuel for electric generation |
$ |
20.3 |
|
$ |
17.6 |
|
$ |
2.7 |
Purchased power |
|
2.5 |
|
|
4.4 |
|
|
(1.9) |
The $2.7 million increase in fuel for electric generation in the first three months of 2026 was due to an approximately 18% increase in the average cost, partially offset by a 2% decrease in internal generation, each compared to the same period in the prior year.
Excluding deferred fuel costs, purchased power decreased $1.9 million in the first three months of 2026, compared to the same period in the prior year. The decrease in purchased power was due to an approximately 53% decrease in average cost. This decrease was partially offset by an approximately 21% increase in market purchases as a result of decreased internal generation. There were no deferred fuel costs recovered during the three months ended March 31, 2026 and 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 March 31, |
|
Three Months Ended March 31, |
|||||||||
rate per therm of retail customer) |
|
|
2026 |
|
|
2025 |
|
% Change |
|
2026 |
|
2025 |
|
% Change |
Residential |
|
$ |
62,764 |
|
$ |
53,868 |
|
16.5% |
|
50,258 |
|
52,229 |
|
(3.8)% |
Commercial/Industrial |
|
|
45,505 |
|
|
37,113 |
|
22.6% |
|
45,016 |
|
46,136 |
|
(2.4)% |
Total retail |
|
|
108,269 |
|
|
90,981 |
|
19.0% |
|
95,274 |
|
98,365 |
|
(3.1)% |
Gas transportation |
|
|
2,767 |
|
|
2,313 |
|
19.6% |
|
21,741 |
|
21,824 |
|
(0.4)% |
Other revenues |
|
|
227 |
|
|
187 |
|
21.4% |
|
— |
|
— |
|
—% |
Total |
|
$ |
111,263 |
|
$ |
93,481 |
|
19.0% |
|
117,015 |
|
120,189 |
|
(2.6)% |
Heating degree days (normal 3,490) |
|
|
|
|
|
|
|
|
|
3,327 |
|
3,369 |
|
(1.2)% |
Average rate per therm of retail customer |
|
$ |
1.136 |
|
$ |
0.925 |
|
22.8% |
|
|
|
|
|
|
Gas revenue increased $17.8 million during the three months ended March 31, 2026, compared to the same period in the prior year, due to the following:
(In millions) |
|
|
Rate changes |
$ |
16.8 |
Revenue subject to refund, net |
|
2.5 |
Other |
|
1.0 |
Decrease in volume |
|
(2.5) |
Total |
$ |
17.8 |
34
MGE recovers the cost of natural gas in its gas segment through the 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 March 31, 2026.
The average retail rate per therm excluding customer fixed charges for the three months ended March 31, 2026, increased approximately 23% 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 $16.9 million during the three months ended March 31, 2026, compared to the same period in the prior year. Cost per therm increased approximately 36%, partially offset by a decrease in therms delivered of approximately 3%. 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 March 31, 2026, operations and maintenance expenses increased $5.0 million, compared to the same period in the prior year. The following contributed to the net change:
(In millions) |
|
|
Increased administrative and general costs |
$ |
3.5 |
Increased transmission costs |
|
1.6 |
Increased electric production expenses |
|
0.7 |
Decreased other expenses |
|
(0.5) |
Decreased electric distribution expenses |
|
(0.3) |
Total |
$ |
5.0 |
Consolidated depreciation expense
Electric depreciation expense decreased $0.3 million and gas depreciation expense increased $0.6 million during the three months ended March 31, 2026, compared to the same period in the prior year.
35
Electric and gas other income
Electric other income increased $6.0 million and gas other income increased $1.0 million during the three months ended March 31, 2026, compared to the same period in the prior year, driven by a $4.2 million positive impact from non-service costs components of pension and other postretirement 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. Higher AFUDC-Equity due to continued capital investment further contributed to an increase in electric other 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 March 31, 2026 and 2025, net income at the nonregulated energy operations segment was $6.3 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 March 31, 2026 and 2025, other income at the transmission investment segment primarily reflects ATC's operations and was $3.5 million and $3.2 million, respectively. See Footnote 3 of the Notes to Consolidated Financial Statements in this Report for summarized financial information regarding ATC.
All Other Operations - MGE Energy
Other income
The increase of $1.0 million in other income from all other operations during the three months ended March 31, 2026, primarily reflects results from investment gains recognized in the current year, from venture capital funds. These venture capital investments support early-stage companies working to advance smart technologies, the customer experience, distributed energy resources, electrification, cybersecurity and other priorities for utility companies, such as greater sustainability.
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.
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:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
(In millions) |
|
2026 |
|
|
2025 |
|
||
MGE Power Elm Road |
|
$ |
3.7 |
|
|
$ |
3.8 |
|
MGE Power West Campus |
|
|
1.9 |
|
|
|
1.8 |
|
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 three months ended March 31, 2026, except as noted below. Further discussion of the contractual obligations and commercial commitments is included in Footnote 16 of the Notes to Consolidated Financial
36
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 2025 Annual Report on Form 10-K.
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 March 31, 2026, 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, including our at-the-market program. The amount and timing of any financings will be primarily driven by capital investments and cash requirements and will depend upon market conditions, regulatory approvals, and other factors. MGE plans to maintain a capital structure consistent with authorized levels approved by its regulator. 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 2025 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 three months ended March 31, 2026 and 2025:
|
|
MGE Energy |
|
MGE |
||||||||
(In thousands) |
|
2026 |
|
2025 |
|
2026 |
|
2025 |
||||
Cash provided by (used for): |
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
$ |
80,693 |
|
$ |
77,862 |
|
$ |
79,175 |
|
$ |
73,954 |
Investing activities |
|
|
(105,459) |
|
|
(50,592) |
|
|
(102,426) |
|
|
(48,049) |
Financing activities |
|
|
28,515 |
|
|
(15,107) |
|
|
26,368 |
|
|
(19,458) |
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 three months ended March 31, 2026, compared to the same period in 2025, were as follows:
(In millions) |
|
MGE Energy |
|
MGE |
||
Higher overall collections from customers, driven by higher electric and gas rates |
|
$ |
29.6 |
|
$ |
29.6 |
Lower payments for other operation and maintenance expenses |
|
|
2.1 |
|
|
3.9 |
Changes in income taxes paid/received |
|
|
0.4 |
|
|
0.4 |
Higher payments for fuel and purchased power at our generation plants, as well as higher natural gas costs to our customers |
|
|
(28.3) |
|
|
(28.3) |
Lower dividend received from ATC |
|
|
(0.6) |
|
|
— |
Higher payments for interest |
|
|
(0.3) |
|
|
(0.3) |
Other operating activities |
|
|
(0.1) |
|
|
(0.1) |
Increase in cash provided by operating activities |
|
$ |
2.8 |
|
$ |
5.2 |
37
Capital Requirements and Investing Activities
The principal increases (decreases) in cash flows from investing activities during the three months ended March 31, 2026, compared to the same period in 2025, were as follows:
(In millions) |
|
MGE Energy |
|
MGE |
||
Capital expenditures, primarily reflects an increase in electric and gas utility expenditures, specifically related to spending for Saratoga, Ursa, and Badger Hollow Wind construction |
|
$ |
(53.5) |
|
$ |
(53.5) |
Capital contributions in ATC and other investments |
|
|
(2.3) |
|
|
— |
Proceeds from the sale of investments |
|
|
1.7 |
|
|
— |
Other investing activities |
|
|
(0.8) |
|
|
(0.9) |
Decrease in cash flows from investing activities |
|
$ |
(54.9) |
|
$ |
(54.4) |
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 three months ended March 31, 2026, compared to the same period in 2025, were as follows:
(In millions) |
|
MGE Energy |
|
MGE |
||
Change in long-term debt(a) |
|
$ |
88.8 |
|
$ |
88.8 |
Higher cash distribution from parent (MGE Energy) |
|
|
— |
|
|
16.8 |
Higher issuance of common stock |
|
|
10.7 |
|
|
— |
Change in short-term debt borrowings, net |
|
|
(54.3) |
|
|
(54.3) |
Higher cash dividends to parent (MGE Energy) |
|
|
— |
|
|
(4.5) |
Higher cash dividends paid, dividend rate per share ($0.475 vs. $0.450) |
|
|
(0.9) |
|
|
— |
Higher distributions to parent (MGE Energy) from noncontrolling interest, representing distributions from MGE Power Elm Road and MGE Power West Campus(b) |
|
|
— |
|
|
(0.3) |
Other financing activities |
|
|
(0.7) |
|
|
(0.7) |
Increase in cash flows from financing activities |
|
$ |
43.6 |
|
$ |
45.8 |
(b) The noncontrolling interest arises from the accounting required for the entities, which are not owned by MGE but are consolidated as VIEs.
Capitalization Ratios
MGE Energy's capitalization ratios were as follows:
|
|
MGE Energy |
||
|
|
March 31, 2026 |
|
December 31, 2025 |
Common shareholders' equity |
|
58.9% |
|
58.9% |
Long-term debt(a) |
|
39.3% |
|
36.8% |
Short-term debt |
|
1.8% |
|
4.3% |
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
38
See the discussion of environmental matters included in the 2025 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 2025, the PSCW approved a settlement agreement for MGE's 2026/2027 rate case. As part of that settlement agreement, the PSCW approved a 0.15% increase for electric rates and a 2.77% increase to gas rates for 2026 and a 3.63% increase for electric rates and a 2.04% increase to gas rates for 2027.
Details related to MGE's 2026/2027 settlement 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 (2026 Test Period) |
|
$ |
1,346,269 |
|
$ |
37,232 |
|
9.8% |
|
56.09% |
|
1/1/2026 |
Gas (2026 Test Period) |
|
$ |
375,594 |
|
$ |
7,764 |
|
9.8% |
|
56.09% |
|
1/1/2026 |
Electric (2027 Test Period) |
|
$ |
1,537,938 |
|
$ |
33,082 |
|
9.8% |
|
56.05% |
|
1/1/2027 |
Gas (2027 Test Period) |
|
$ |
393,558 |
|
$ |
8,912 |
|
9.8% |
|
56.05% |
|
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.
Uyghur Forced Labor Prevention Act
The UFLPA, a federal law that became effective in June 2022, prohibits importation of goods, including silica-based products used in the production of solar panels, that are mined, produced, or manufactured wholly or in part in China’s Xinjiang Uyghur Autonomous Region. 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 increase costs beyond approved levels, we have filed and expect to continue filing notifications with the PSCW and will seek recovery of those costs in 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 June 2024, following AD/CVD investigations by the DOC and the USITC determining that Chinese manufacturers were circumventing tariffs on solar panels by shipping them through Cambodia, Malaysia, Thailand, and Vietnam, the DOC began applying tariffs to the importation of solar cells from those countries. In Q2 2025, the DOC and USITC issued final determinations affirming and increasing the tariffs. Later that year, the U.S. Court of International Trade ruled that the prior two-year moratorium was unlawful, permitting retroactive collection, though the ruling has been stayed pending appeal to the Federal Circuit.
In late 2025, the DOC initiated new AD/CVD investigations into solar imports from India, Indonesia, and Laos. A preliminary affirmative determination for the CVD investigation was announced in early 2026, which resulted in increased tariffs. Preliminary determinations in the AD investigation remain ongoing. Additionally, a new 'Section 232' national security investigation into the global polysilicon supply chain was launched in late 2025, which could result in broad, global tariffs on solar components regardless of their country of origin.
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MGE continues to assess the potential impact of these tariffs on current and future solar projects, which may result in increased costs, delays in construction timelines, or a new and potentially material financial liability due to retroactive tariffs. In the event that such disruptions increase costs beyond approved levels, we have filed and expect to continue filing notifications with the PSCW and will seek recovery of those costs in 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
In July 2025, the OBBBA was signed into law, introducing significant changes to tax credits and compliance requirements. The OBBBA accelerates the termination of the Clean Electricity PTC and ITC for wind and solar projects placed in service after 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 restrictions on credit eligibility, disallowing credits, and foreign entity material assistance. The Treasury Department issued new beginning-of-construction guidance in August 2025. Interim guidance has also been released on domestic content requirements. MGE has evaluated the impact of the OBBBA and will continue 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.
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 2025 Annual Report on Form 10-K.
Item 4. Controls and Procedures.
During the first quarter of 2026, 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 March 31, 2026, 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 March 31, 2026, 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 2025 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
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 March 31, 2026, 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 |
101.CAL |
* |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.LAB |
* |
Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
* |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
101.DEF |
* |
Inline XBRL Taxonomy Extension Definitions Linkbase 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: May 5, 2026 |
/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: May 5, 2026 |
/s/ Jared J. Bushek |
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Jared J. Bushek Executive Vice President - Chief Financial Officer and Treasurer (Chief Financial Officer) |
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Date: May 5, 2026 |
/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: May 5, 2026 |
/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: May 5, 2026 |
/s/ Jared J. Bushek |
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Jared J. Bushek Executive Vice President - Chief Financial Officer and Treasurer (Chief Financial Officer) |
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Date: May 5, 2026 |
/s/ Jenny L. Lagerwall |
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Jenny L. Lagerwall Assistant Vice President - Accounting and Controller (Chief Accounting Officer) |
44