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What changed in MGE ENERGY INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MGE ENERGY INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+651 added−660 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-21)

Top changes in MGE ENERGY INC's 2024 10-K

651 paragraphs added · 660 removed · 549 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeMGE is partnering with the co-owners of Columbia to construct a compressed carbon dioxide long-duration energy storage system, known as the Columbia Energy Storage project. The 20 MW project was selected for a grant from the U.S Department of Energy.
Biggest changeIn addition, MGE expects to add approximately 178 MW of solar, 18 MW of wind, and 118 MW of battery storage, which include projects approved or pending PSCW approval, by the end of 2028. MGE is partnering with the other co-owners of Columbia to construct a compressed carbon dioxide long-duration energy storage system, known as the Columbia Energy Storage project.
MGE Energy operates in the following business segments: • Regulated electric utility operations – generating, purchasing, and distributing electricity through MGE. • Regulated gas utility operations – purchasing and distributing natural gas through MGE. • Nonregulated energy operations – owning and leasing electric generating capacity that assists MGE through MGE Energy's wholly owned subsidiaries MGE Power Elm Road and MGE Power West Campus. • Transmission investments – representing our investment in American Transmission Company LLC, a company engaged in the business of providing electric transmission services primarily in Wisconsin, and our investment in ATC Holdco LLC, a company created to facilitate out-of-state electric transmission development and investments. • All other – investing in companies and property that relate to the regulated operations and financing the regulated operations, through its wholly owned subsidiaries CWDC, MAGAEL, North Mendota, and Corporate functions.
MGE Energy operates in the following business segments: • Regulated electric utility operations – generating, purchasing, and distributing electricity through MGE. • Regulated gas utility operations – purchasing and distributing natural gas through MGE. • Nonregulated energy operations – owning and leasing electric generating capacity that assists MGE through MGE Energy's wholly owned subsidiaries MGE Power Elm Road and MGE Power West Campus. • Transmission investments – representing our investment in American Transmission Company LLC, a company engaged in the business of providing electric transmission services primarily in Wisconsin, and our investment in ATC Holdco LLC, a company created to facilitate out-of-state electric transmission development and investments. • All other – investing in companies and property that relate to the regulated operations and financing the regulated operations, through its wholly owned subsidiaries CWDC, MAGAEL, and North Mendota, and Corporate functions.
As a public utility, MGE is subject to regulation by the PSCW and the FERC. The PSCW has authority to regulate most aspects of MGE's business including rates, accounts, issuance of securities, and plant siting. The PSCW also has authority over certain aspects of MGE Energy as a holding company of a public utility.
As a public utility, MGE is subject to regulation by the PSCW and the FERC. The PSCW has authority to regulate most aspects of MGE's business including rates, accounts, the issuance of securities, and plant siting. The PSCW also has authority over certain aspects of MGE Energy as a holding company of a public utility.
See " Nonregulated Energy Operations " below for more information regarding generating capacity leased to MGE by MGE Energy's nonregulated subsidiaries. Purchased power MGE enters into short- and long-term purchase power commitments with third parties to meet a portion of its anticipated electric energy supply needs.
See " Nonregulated Energy Operations " below for more information regarding generating capacity leased to MGE by MGE Energy's nonregulated subsidiaries. 10 Purchased power MGE enters into short- and long-term purchase power commitments with third parties to meet a portion of its anticipated electric energy supply needs.
MGE's future path to achieve its target of 80% carbon reduction by 2030 (from 2005 levels) is based on the transition away from coal and the addition of new renewable generation to reach our ultimate target of net-zero carbon by 2050.
MGE's future path to achieve its target of 80% carbon reduction by 2030 (from 2005 levels) is based on the planned transition away from coal and the planned addition of new renewable generation to reach our ultimate target of net-zero carbon by 2050.
The City of Madison currently has a goal of 100% electric buses used for its' new Bus Rapid Transit system located in the downtown region. • Natural gas as a fuel source - As part of MGE's continued energy transition plan, MGE plans to invest in additional natural gas plants and storage facilities.
The City of Madison currently has a goal of using 100% electric buses for its' new Bus Rapid Transit system located in the downtown region. • Natural gas as a fuel source - As part of MGE's continued energy transition plan, MGE plans to invest in additional natural gas plants and storage facilities.
Interconnections with two major pipelines provide competition in interstate pipeline service and a more reliable and economical gas supply mix, which includes gas from Canada and the mid-continent and Gulf Coast regions of the United States. During the winter months, when customer demand is high, MGE is primarily concerned with meeting its obligation to customers.
Interconnections with two major pipelines provide competition in interstate pipeline service and a more reliable and economical gas supply mix, which includes gas from Canada and the mid-continent and Gulf Coast regions of the United States. During the winter months, when customer demand is typically higher, MGE is primarily concerned with meeting its obligation to customers.
As of December 31, 2023, MGE has 30 MW of a renewable purchase power commitment for each of the next four years. Gas Utility Operations MGE transports and distributes natural gas in a service area covering 1,684 square miles in seven south-central Wisconsin counties. The service area includes the city of Madison, Wisconsin and surrounding areas.
As of December 31, 2024, MGE has 30 MW of a renewable purchase power commitment for each of the next three years. Gas Utility Operations MGE transports and distributes natural gas in a service area covering 1,684 square miles in seven south-central Wisconsin counties. The service area includes the city of Madison, Wisconsin and surrounding areas.
Approximately 3% of retail gas deliveries in 2023, 2022 and 2021 were to interruptible customers. 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.
In 2024, 2023, and 2022, approximately 2%, 3%, and 3%, respectively, of retail gas deliveries were to interruptible customers. 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.
As of December 31, 2023, MGE supplied natural gas service to approximately 176,000 customers in the cities of Elroy, Fitchburg, Lodi, Madison, Middleton, Monona, Prairie du Chien, Verona, and Viroqua; 25 villages; and all or parts of 50 townships.
As of December 31, 2024, MGE supplied natural gas service to approximately 178,000 customers in the cities of Elroy, Fitchburg, Lodi, Madison, Middleton, Monona, Prairie du Chien, Verona, and Viroqua; 25 villages; and all or parts of 50 townships.
Additionally, MGE seeks to reduce its use of fossil fuels and work to help customers with energy efficiency and electrification, including the electrification of transportation. Since 2015, MGE has added 196 MW of solar and 93 MW of wind generation facilities to its electric renewable generation portfolio. See Item 2. Properties below for further information on these facilities.
Additionally, MGE plans to reduce its use of fossil fuels and work to help customers with energy efficiency and electrification, including the electrification of transportation. 9 Since 2015, MGE has added 222 MW of solar and 93 MW of wind generation facilities to its electric renewable generation portfolio. See Item 2. Properties below for further information on these facilities.
MGE was organized as a Wisconsin corporation in 1896. Our principal offices are located at 133 South Blair Street, Madison, Wisconsin 53788, and our telephone number is (608) 252-7000. Electric Utility Operations MGE distributes electricity in a service area covering a 264 square-mile area of Dane County, Wisconsin. The service area includes the city of Madison, Wisconsin.
Our principal offices are located at 133 South Blair Street, Madison, Wisconsin 53788, and our telephone number is (608) 252-7000. Electric Utility Operations MGE distributes electricity in a service area covering a 264 square-mile area of Dane County, Wisconsin. The service area includes the city of Madison, Wisconsin.
Gas sales, customers, and revenues for 2023 were comprised of the following: Gas operations accounted for approximately 29%, 35%, and 31% of MGE's total 2023, 2022, and 2021 regulated revenues, respectively. 11 MGE can curtail gas deliveries to interruptible customers. These are customers who agree to reduce their load in the case of an emergency interruption.
Gas sales, customers, and revenues for 2024 were comprised of the following: Gas operations accounted for approximately 26%, 29%, and 35% of MGE's total 2024, 2023, and 2022 regulated revenues, respectively. MGE can curtail gas deliveries to interruptible customers. These are customers who agree to reduce their load in the case of an emergency interruption.
MGE meets customer demand by using firm supplies under contracts finalized before the heating season, supplies in storage (injected during the summer), and other firm supplies purchased during the winter period. By contract, a total of approximately 6.5 million Dth of gas can be injected into ANR's storage fields in Michigan from April 1 through October 31.
MGE meets customer demand by using firm supplies under contracts finalized before the heating season, supplies in storage (injected during the summer), and other firm supplies purchased during the winter period. 11 Annually, through our contracts with ANR, a total of approximately 6.5 million Dth of gas can be injected into ANR's storage fields in Michigan from April 1 through October 31.
The table above nets purchases and sales within the same hour in the two MISO markets. For the years ended December 31, 2023, 2022, and 2021, the amount netted between Day-ahead and the Real-time MISO markets was 256,571 MWh, 303,428 MWh, and 232,764 MWh, respectively.
The table above nets purchases and sales within the same hour in the two MISO markets. For the years ended December 31, 2024, 2023, and 2022, the amount netted between Day-ahead and the Real-time MISO markets was 329,672 MWh, 256,571 MWh, and 303,428 MWh, respectively.
The first solar array associated with this program, owned by MGE, became operational in 2017 for 500 KW capacity. MGE expanded the program by completing construction of a second solar facility (Morey Field), which added 3.5 MW of capacity to the program. Electrifying transportation - The electrification of transportation is a key strategy for reducing carbon emissions.
The first solar array associated with this program, owned by MGE, became operational in 2017 for 500 KW capacity. MGE expanded the program by completing construction of a second solar facility (Morey Field), which added 3.5 MW of capacity to the program.
As of December 31, 2023, MGE supplied electric service to approximately 163,000 customers, with approximately 90% located in the cities of Fitchburg, Madison, Middleton, and Monona and 10% in adjacent areas. 7 Electric sales, customers, and revenues for 2023 were comprised of the following: Electric operations accounted for approximately 71%, 65%, and 69% of MGE's total 2023, 2022, and 2021 regulated revenues, respectively.
As of December 31, 2024, MGE supplied electric service to approximately 167,000 customers, with approximately 91% located in the cities of Fitchburg, Madison, Middleton, and Monona, Wisconsin and 9% in adjacent areas. 7 Electric sales, customers, and revenues for 2024 were comprised of the following: Electric operations accounted for approximately 74%, 71%, and 65% of MGE's total 2024, 2023, and 2022 regulated revenues, respectively.
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 cost-effectively as quickly as possible.
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.
FERC has jurisdiction, under the Federal Power Act, over certain accounting practices and certain other aspects of MGE's business. MGE Energy's subsidiaries are also subject to regulation under local, state, and federal laws regarding air and water quality and solid waste disposal. See " Environmental " below. MGE Energy was organized as a Wisconsin corporation in 2001.
FERC has jurisdiction, under the Federal Power Act, over certain accounting practices and certain other aspects of MGE's business. MGE Energy's subsidiaries are also subject to regulation under local, state, and federal laws regarding air and water quality and solid waste disposal.
Charge@Home, MGE's home EV charging program, 10 makes it easy for EV drivers to charge efficiently and conveniently. We have continued to add EVs to our fleet and are targeting 100% all-electric or plug-in hybrid light-duty vehicles by 2030. Additionally, we are working with the City of Madison to further the electrification of its vehicles and buses.
We have continued to add EVs to our fleet and are targeting 100% all-electric or plug-in hybrid light-duty vehicles by 2030. Additionally, we are working with the City of Madison to further the electrification of its vehicles and buses.
MISO's role is to ensure equal access to the transmission system and to maintain or improve electric system reliability across 15 U.S. states and the Canadian province of Manitoba. MISO operates a bid-based energy market.
MISO, a FERC-approved RTO, is responsible for monitoring the electric transmission system that delivers power from generating plants to wholesale power customers. MISO's role is to ensure equal access to the transmission system and to maintain or improve electric system reliability across 15 U.S. states and the Canadian province of Manitoba. MISO operates a bid-based energy market.
MGE's carbon reduction goals are aligned with those of the scientific community, specifically the Intergovernmental Panel on Climate Change (IPCC) and its recommendation of limiting global temperature increases to 1.5 degrees Celsius above pre-industrial levels. In 2020, the University of Wisconsin-Madison's Nelson Institute for Environmental Studies released its analysis of MGE's goal of reaching net-zero carbon electricity by 2050.
MGE's carbon reduction goals are generally aligned with those of the scientific community, and specifically with the Intergovernmental Panel on Climate Change (IPCC) and its recommendation of limiting global temperature increases to 1.5 degrees Celsius above pre-industrial levels.
MGE has established a network of more than 50 charging stations, powered by renewable energy, serving the growing number of electric vehicles (EV) in our service area. An EV fast charging hub features some of the most powerful EV chargers in the Midwest.
MGE has established a network of more than 50 charging stations, powered by renewable energy, serving the growing number of electric vehicles (EV) in MGE's service area. The EV fast charging hubs feature some of the most powerful EV chargers in the Midwest. Charge@Home, MGE's home EV charging program, makes it easy for EV drivers to charge efficiently and conveniently.
Load serving entities such as MGE may participate in the capacity auction to obtain the necessary aggregate planning resource credits needed to meet their planning reserve margin requirement established by the PSCW.
Load serving entities such as MGE may participate in the capacity auction to obtain the necessary aggregate planning resource credits needed to meet their planning reserve margin requirement established by the PSCW. Generator owners may participate to sell any excess aggregate planning resource credits. Fuel supply and generation MGE satisfies its customers' electric demand with internal generation and purchased power.
See Item 2. Properties for a description of MGE's electric utility plant. MGE is registered with North American Electric Reliability Corporation (NERC) and one regional entity, the Midwest Reliability Organization. The essential purposes of these entities are to develop and implement regional and NERC reliability standards and determine compliance with those standards, including enforcement mechanisms.
See Part I, Item 2. Properties , of this Report for a description of MGE's electric utility plant. MGE is registered with North American Electric Reliability Corporation (NERC) and one regional entity, the Midwest Reliability Organization.
MGE's electric energy delivery requirements were satisfied from the following fuel sources: (in MWh) 2023 2022 2021 Coal (a) 1,359,691 1,219,793 1,797,017 Natural gas 566,972 539,265 405,696 Renewable sources (b) 715,369 759,194 581,374 Fuel oil 544 475 884 Purchased power - other (c)(d) 744,120 919,052 726,008 Total fuel sources 3,386,696 3,437,779 3,510,979 Adjusted total fuel sources (d) 3,643,267 3,741,207 3,743,743 (a) In 2023, MGE used more coal generation for electric supply, compared with 2022.
MGE has a responsibility to its customers to dispatch the lowest cost generation available pursuant to regulatory requirements. 8 MGE's electric energy delivery requirements were satisfied from the following fuel sources: (in MWh) 2024 2023 2022 Coal (a) 1,452,156 1,359,691 1,219,793 Natural gas 654,406 566,972 539,265 Renewable sources (b) 840,060 715,369 759,194 Fuel oil 489 544 475 Purchased power - other (c)(d) 537,445 744,120 919,052 Total fuel sources 3,484,556 3,386,696 3,437,779 Adjusted total fuel sources (d) 3,814,229 3,643,267 3,741,207 (a) MGE's coal generation for electric supply may fluctuate from year to year.
In early 2023, MGE purchased 25 MW in the West Riverside Energy Center, a highly efficient, state-of-the-art natural gas-fired plant in Beloit, Wisconsin. In fall 2023, MGE requested approval from the PSCW to purchase an additional 25 MW of capacity in West Riverside. The closing and actual transfer of ownership is expected to occur in June 2024.
In early 2023, MGE purchased 25 MW in the West Riverside Energy Center (West Riverside), a highly efficient, state-of-the-art natural gas-fired plant in Beloit, Wisconsin. In June 2024, MGE purchased an additional 25 MW of capacity in West Riverside. Natural gas has lower carbon emission rates compared to coal-fired generation.
By 2027, with the planned retirement of both units at Columbia, MGE will have eliminated approximately two-thirds of the company’s current coal-fired generation capacity. MGE's remaining use of coal is expected to be further reduced as the Elm Road Units transition to natural gas. MGE is a minority owner of the coal-fired Elm Road Generating Station.
With the planned retirement of both units at Columbia, MGE will have eliminated approximately two-thirds of the company’s current coal-fired generation capacity by 2030. o Elm Road Units – MGE along with the plant co-owners, announced plans to end the use of coal as a primary fuel at the Elm Road Units and transition the plant to natural gas.
ATC plans, constructs, operates, maintains, and expands transmission facilities that it owns to provide adequate and reliable transmission of power. ATC is regulated by FERC for all rate terms and conditions of service. ATC is also regulated by the PSCW for some aspects of its governance and is a transmission-owning member of the MISO.
ATC is regulated by FERC for all rate terms and conditions of service. ATC is also regulated by the PSCW for some aspects of its governance and is a transmission-owning member of the MISO. Regional Transmission Organizations (RTO) MISO MGE is a nontransmission owning member of MISO.
These amounts are reflected in "Adjusted total fuel sources." MGE is working toward a more sustainable future for the benefit of its investors, employees, customers and the broader community. MGE is targeting net-zero carbon electricity by 2050 and MGE has committed to achieving carbon reductions of at least 80% by 2030 (from 2005 levels).
These amounts are reflected in "Adjusted total fuel sources." Environmental Initiatives – Electricity Generation MGE is working toward a more sustainable future for the benefit of its investors, employees, customers and the broader community in its service area.
MGE has emphasized this innovation by developing customer programs to address climate change and encourage our customers to use clean energy.
MGE is working to achieve a more sustainable energy future by investing in cost-effective renewable generation and innovative new technologies and services for customers. MGE has emphasized this innovation by developing customer programs to address climate change and encourage our customers to use clean energy.
Generation sources MGE receives electric generation supply from coal-fired, gas-fired, and renewable energy sources. These sources include owned facilities as well as facilities leased from affiliates and accounted for under our nonregulated energy operations. See Item 2. Properties for more information regarding these generation sources, including location, capacity, ownership or lease arrangement, and fuel source.
MGE has additional investments in natural gas generators planned for the future to ensure adequate dispatchable capacity requirements are met. Generation sources MGE receives electric generation supply from coal-fired, gas-fired, and renewable energy sources. These sources include owned facilities as well as facilities leased from affiliates and accounted for under our nonregulated energy operations. See Item 2.
Transmission American Transmission Company LLC (ATC) was formed by Wisconsin-based utilities who were required by Wisconsin law to contribute their transmission facilities to it in 2001 and is owned by those utilities and their affiliates. ATC's purpose is to provide reliable, economic transmission service to all customers in a fair and equitable manner.
ATC continues to be owned by those utilities and their affiliates. ATC's purpose is to provide reliable, economic transmission service to all customers in a fair and equitable manner. ATC plans, constructs, operates, maintains, and expands transmission facilities that it owns to provide adequate and reliable transmission of power.
Generator owners may participate to sell any excess aggregate planning resource credits. 8 Fuel supply and generation MGE satisfies its customers' electric demand with internal generation and purchased power. MGE's current fuel mix for generation fluctuates from year-to-year due to fuel pricing in the market, generating unit availability, weather, and customer demand.
MGE's current fuel mix for generation fluctuates from year-to-year due to fuel pricing in the market, generating unit availability, weather, and customer demand.
Our RER and Shared Solar programs reduce MGE's carbon emissions while providing customers the ability to purchase renewable energy to meet their energy needs, and we have been working on many fronts in the community to further the electrification of transportation.
A portion of MGE's renewable generation is dedicated to customer programs such as the Renewable Energy Rider (RER) and Shared Solar Program. The RER and Shared Solar programs reduce MGE's carbon emissions while providing customers the ability to purchase renewable energy to meet their energy needs.
MGE is working to achieve a more sustainable energy future using the best, most cost-effective technologies as they become available.
The analysis determined that our 2050 goal is in line with model benchmarks to limit global warming to 1.5 degrees Celsius above pre-industrial levels. MGE is working to achieve a more sustainable energy future using the best, most cost-effective technologies as they become available.
By the end of 2032, MGE expects that the Elm Road Units will be fully transitioned away from coal, which will eliminate coal as an owned generation source for MGE. 9 • Renewable generation - Our solar, wind, and battery storage projects are a major step toward deep decarbonization and greater use of clean energy sources in pursuit of our net-zero carbon goal.
By the end of 2030, MGE expects coal at the Elm Road Units to be used only as a backup fuel and a full transition away from coal by the end of 2032. • Renewable generation and storage - Solar, wind, and battery storage projects play a critical role in MGE's strategy for reducing carbon in pursuit of MGE's goal of achieving net-zero carbon electricity by 2050.
MGE already has taken action toward its goals: • Transition away from coal - MGE and the other co-owners of Columbia, a two-unit coal-fired generation facility, intend to retire Unit 1 and Unit 2 by June 2026. MGE currently owns 19% of the facility. Final timing and retirement dates are subject to change depending on operational, regulatory, and other factors.
MGE and Columbia’s co-owners plan to explore converting at least one unit to natural gas before its retirement. MGE currently owns 19% of the facility. Final timing and retirement dates are subject to change depending on operational, regulatory, capacity needs, and other factors impacting one or more of the Columbia co-owners.
The IPCC modeling available suggested that by 2050, emissions from electricity generation in industrialized countries should be 87% to 99% lower than the 2005 baseline. The analysis determined that our 2050 goal is in line with model benchmarks to limit global warming to 1.5 degrees Celsius above pre-industrial levels.
In 2020, the University of Wisconsin-Madison's Nelson Institute for Environmental Studies released its analysis of MGE's goal of reaching net-zero carbon electricity by 2050. The IPCC modeling available suggested that by 2050, emissions from electricity generation in industrialized countries should be 87% to 99% lower than the 2005 baseline.
MGE's utility operations represent a majority of the assets, liabilities, revenues, expenses, and operations of MGE Energy.
See Footnote 22 to the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report for more information regarding MGE Energy's business segments. MGE's utility operations represent a majority of the assets, liabilities, revenues, expenses, and operations of MGE Energy.
If the Columbia Energy Storage project is approved by the PSCW, the project would be the first of its kind in the United States. MGE is working to achieve a more sustainable energy future by investing in cost-effective renewable generation and innovative new technologies and services for customers.
MGE's 19% share will be 3 MW. The project was selected for a grant from the U.S Department of Energy. If the Columbia Energy Storage project is approved by the PSCW, the project would be the first of its kind in the United States.
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Regional Transmission Organizations (RTO) MISO MGE is a nontransmission owning member of MISO. MISO, a FERC-approved RTO, is responsible for monitoring the electric transmission system that delivers power from generating plants to wholesale power customers.
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See " Environmental Regulation " below for additional information regarding the environmental regulations to which MGE Energy and its subsidiaries are subject. MGE Energy was organized as a Wisconsin corporation in 2001. MGE was organized as a Wisconsin corporation in 1896.
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MGE has a responsibility to its customers to dispatch the lowest cost generation available pursuant to regulatory requirements.
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The essential purposes of these entities are to develop and implement regional and NERC reliability standards and determine compliance with those standards, including enforcement mechanisms. Transmission In 2001, American Transmission Company LLC (ATC) was collectively formed by Wisconsin-based utilities which were required by Wisconsin law to contribute their transmission facilities to an independent system operator.
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Transition plans and costs will be subject to PSCW approval. By the end of 2030, MGE expects coal to be used only as a backup fuel at the Elm Road Units. This transition will help MGE meet its 2030 carbon reduction goal.
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MGE is targeting net-zero carbon electricity by 2050 and MGE has committed to achieving carbon reductions of at least 80% by 2030 (from 2005 levels).
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MGE offers cost-effective renewable energy solutions to customers, including the Renewable Energy Rider (RER) and Shared Solar Program, using a portion of this renewable capacity. These programs are described further below. The following includes renewable energy projects expected to be completed or proposed to be completed, and MGE's share of capacity.
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MGE already has taken action toward its goals: • Transitioning away from coal - MGE has announced plans to transition away from coal-fired generation and has no sole ownership of coal-fired assets. This transition will help MGE meet its 2030 carbon reduction goal.
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Year of Commercial Operation Project Ownership Interest Source Share of Generation/Battery Storage 2024 Tyto Solar (a) - Online February 2024 100% Solar 6 MW Paris 10% Solar 20 MW Darien (b) 10% Solar 25 MW Strix Solar (a) 100% Solar 6 MW 2025 Paris 10% Battery 11 MW 2026 Koshkonong (b) 10% Solar 30 MW High Noon – proposed (c) 10% Solar 30 MW (a) Project located within MGE service territory.
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By the end of 2032, MGE expects to eliminate coal as an owned generation source. o Columbia - MGE and the other co-owners of Columbia, a two-unit coal-fired generation facility, announced plans to retire Columbia Unit 1 and Unit 2 by the end of 2029.
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(b) 24 MW of battery storage has been approved by the PSCW as part of these projects, but is not included in the forecasted capital expenditures for 2024 through 2028. MGE will continue to evaluate timing, cost, and feasibility of the installation of battery storage.
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Transition plans and costs will be subject to PSCW approval.
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(c) A filed application is pending approval by the PSCW. 16.5 MW of battery storage has been proposed as part of this project, but is not included in the forecasted capital expenditures for 2024 through 2028. MGE will continue to evaluate timing, cost, and feasibility of the installation of battery storage.
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Pending approval by the PSCW, an additional 2 MW will be added to the program from Strix Solar, which was completed in 2025. Electrifying Transportation - The electrification of transportation is a key strategy for reducing carbon emissions.
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Natural gas has lower carbon emission rates compared to coal-fired generation. The reliable energy supply provided by West Riverside plant will help MGE to retire the Columbia coal-fired facility. MGE has additional investments in natural gas generators planned for the future to ensure adequate dispatchable capacity requirements are met.
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Properties for more information regarding these generation sources, including location, capacity, ownership or lease arrangement, and fuel source.
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For customers who want to reduce their environmental footprint further, MGE introduced a renewable natural gas program in May 2024, after approval by the PSCW. MGE purchases renewable thermal credits on behalf of customers who voluntarily elect in the program to offset the emissions associated with the customer's monthly natural gas usage.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

121 edited+32 added−34 removed23 unchanged
Biggest changeCash provided by operating activities during 2023 was $237.6 million, an increase of $83.8 million when compared to 2022, driven by: • A $71.7 million increase in cash from lower payments for fuel and purchased power at our generation plants, as well as lower natural gas costs to our customers during 2023, when compared to 2022, primarily driven by a decrease in the price of natural gas. • A $9.5 million increase in cash as a result of higher overall collections from customers during 2023, when compared to 2022.
Biggest changeThe principal increases (decreases) in cash flows from operating activities during 2024, compared to 2023, were as follows: (In millions) MGE Energy MGE Lower payments for fuel and purchased power at our generation plants, as well as lower natural gas costs to our customers, primarily driven by a decrease in the price of natural gas $ 59.0 $ 59.0 Changes in income taxes paid/received - includes $18.5 million proceeds from renewable tax credits transferred to other corporate taxpayers during 2024 22.9 25.6 Lower overall collections from customers, driven by lower purchased gas costs adjusted through the PGA customer rate (38.8 ) (38.8 ) Higher payments for other operation and maintenance expenses 1.6 0.1 Higher payments for interest, driven by MGE's issuance of long-term debt during the second half of 2023 (4.8 ) (4.8 ) Other operating activities 0.3 (0.0 ) Increase in cash provided by operating activities $ 40.2 $ 41.1 Capital Requirements and Investing Activities Cash outflows for MGE Energy and MGE principally reflect capital expenditures.
Projected debt service coverage considers the projected revenues available for debt service, after deducting expenses other than debt service, in relation to projected debt service on indebtedness.
Projected debt service coverage considers the projected revenues available for debt service, after deducting expenses other than debt service, in relation to projected debt service on indebtedness.
Suppliers for MGE's current solar projects were able to provide the CBP sufficient documentation to meet WRO compliance requirements, and MGE expects the same will be true for UFLPA purposes, 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.
Suppliers for MGE's current solar projects were able to provide the CBP sufficient documentation to meet WRO compliance requirements, and MGE expects the same will be true for UFLPA purposes, 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 MGE's capital plan.
Holding other assumptions constant, for every 1% reduction in the expected rate of return on plan assets, annual pension and other postretirement cost would increase by approximately $4.0 million, before taxes. • Discount rate . The discount rate represents the rate at which pension obligations could effectively be settled on a present-value basis.
Holding other assumptions constant, for every 1% reduction in the expected rate of return on plan assets, annual pension and other postretirement cost would increase by approximately $4.4 million, before taxes. • Discount rate . The discount rate represents the rate at which pension obligations could effectively be settled on a present-value basis.
We believe the following critical accounting estimates affect our more significant judgments used in the preparation of our consolidated financial statements. Regulatory Assets/Liabilities Regulatory assets represent costs that have been deferred to future periods when it is probable that the regulator will allow future recovery of those costs through rates.
We believe the following critical accounting estimates affect the more significant judgments used in the preparation of the consolidated financial statements. Regulatory Assets/Liabilities Regulatory assets represent costs that have been deferred to future periods when it is probable that the regulator will allow future recovery of those costs through rates.
To confirm the reasonableness of unbilled gas, the estimated unbilled consumption is compared to various other statistics, including percent of gas available for sale, change in unbilled month-to-month and change in unbilled compared to the prior year. 49 Pension and Other Postretirement Benefit Plans MGE provides employees with certain retirement (pension) and postretirement (health care and life insurance) benefits.
To confirm the reasonableness of unbilled gas, the estimated unbilled consumption is compared to various other statistics, including percent of gas available for sale, change in unbilled month-to-month and change in unbilled compared to the prior year. Pension and Other Postretirement Benefit Plans MGE provides employees with certain retirement (pension) and postretirement (health care and life insurance) benefits.
ATC Return on Equity: As discussed in " Other Matters " below, ATC's authorized ROE, which is used in calculating its rates and revenues, is the subject of a challenge before FERC. A decrease in ATC's ROE could result in lower equity earnings and distributions from ATC in the future.
ATC Return on Equity: As discussed in " Other Matters " below, ATC's authorized ROE, which is used in calculating its rates and revenues, was the subject of a challenge before FERC. A decrease in ATC's ROE could result in lower equity earnings and distributions from ATC in the future.
In the event that such 48 disruptions cause costs to exceed the levels approved for specific projects, we have filed and expect to continue to file a notification with the PSCW and expect to request recovery of any cost increases in MGE's future rate proceedings.
In the event that such disruptions cause costs to exceed the levels approved for specific projects, we have filed and expect to continue to file a notification with the PSCW and expect to request recovery of any cost increases in MGE's future rate proceedings.
In 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 cost increases in MGE's future rate proceedings.
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.
For cost recovery mechanisms, any over-collection of revenues resulting from costs authorized to be collected from customers in rates exceeding actual costs is recorded as a reduction of 37 revenue in the period incurred, as the over-collection is expected to be refunded to customers in a subsequent period.
For cost recovery mechanisms, any over-collection of revenues resulting from costs authorized to be collected from customers in rates exceeding actual costs is recorded as a reduction of revenue in the period incurred, as the over-collection is expected to be refunded to customers in a subsequent period.
MGE Energy has available at any time a $50 million committed revolving credit agreement, expiring in November 2027. As of December 31, 2023, MGE Energy had no borrowings outstanding under this credit facility. (b) Amount includes two committed revolving credit agreements totaling $130 million expiring in November 2027. These credit facilities are used to support commercial paper issuances.
MGE Energy has available at any time a $50 million committed revolving credit agreement, expiring in November 2027. As of December 31, 2024, MGE Energy had no borrowings outstanding under this credit facility. (b) Amount includes two committed revolving credit agreements totaling $130 million expiring in November 2027. These credit facilities are used to support commercial paper issuances.
The following table shows MGE Energy's noncontrolling interest, net of tax, reflected on MGE's consolidated statement of income: Year Ended December 31, (In millions) 2023 2022 MGE Power Elm Road $ 14.7 $ 14.3 MGE Power West Campus 7.2 7.3 Liquidity and C apital Resources MGE Energy and MGE expect to have adequate liquidity to support future operations and capital expenditures over the next twelve months.
The following table shows MGE Energy's noncontrolling interest, net of tax, reflected on MGE's consolidated statement of income: Year Ended December 31, (In millions) 2024 2023 MGE Power Elm Road $ 15.6 $ 14.7 MGE Power West Campus 7.3 7.2 Liquidity and C apital Resources MGE Energy and MGE expect to have adequate liquidity to support future operations and capital expenditures over the next twelve months.
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, and the scope and time of the recovery of costs in rates, which may occur after those costs have been incurred and paid.
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.
For 2023 and 2022, net income at the nonregulated energy operations segment was $22.4 million and $22.1 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.
For 2024 and 2023, net income at the nonregulated energy operations segment was $24.1 million and $22.4 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.
We base our estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Those values may differ from these estimates under different assumptions or conditions.
Estimates are based on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Those values may differ from these estimates under different assumptions or conditions.
For 2023, MGE used an assumed return on assets of 7.00% for pension and 6.59% for other postretirement benefits. In 2024, the pension asset assumption will increase to 7.24% and the postretirement benefit assumption will increase to 6.81%. The annual expected rate of return is based on projected long-term equity and bond returns, maturities and asset allocations.
For 2024, MGE used an assumed return on assets of 7.24% for pension and 6.81% for other postretirement benefits. In 2025, the pension asset assumption will decrease to 7.00% and the postretirement benefit assumption will increase to 7.00%. The annual expected rate of return is based on projected long-term equity and bond returns, maturities and asset allocations.
Actual events may differ materially from these assumptions and result in material changes to those forecasted amounts, particularly in the final forecasted years. MGE is targeting at least 80% carbon reduction from electric generation by 2030 (from 2005 levels) and net-zero carbon electricity by 2050.
Actual events may differ materially from these assumptions and result in material changes to those forecasted amounts. MGE is targeting at least 80% carbon reduction from electric generation by 2030 (from 2005 levels) and net-zero carbon electricity by 2050.
MGE expects to seek and receive recovery of fuel and purchased power costs outside 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.
MGE expects to seek and receive recovery of fuel and purchased power costs outside the fuel rules bandwidth in customer rates. See Footnote 9 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report for further information on the fuel rules bandwidth.
Legislation and rulemaking addressing climate change and related matters could significantly affect the costs of owning and operating fossil-fueled 35 generating plants. We would expect to seek and receive recovery of any such costs in rates.
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 31 costs in rates.
Cred it Facilities As of December 31, 2023, MGE Energy and MGE had the following aggregate bank commitments and available capacity under their credit agreements: Borrower Aggregate Bank Commitments Outstanding Commercial Paper Letters of Credit Issued Inside Credit Facilities Outstanding Borrowings Available Capacity Expiration Date (In millions) MGE Energy $ 50.0 $ — $ — $ — $ 50.0 November 8, 2027 MGE $ 130.0 $ 38.0 $ 0.7 $ — $ 91.3 November 8, 2027 Borrowings under the Credit Agreements may bear interest at a rate based upon either a "floating rate" or an "Adjusted Term SOFR Rate," plus an adder based upon the credit ratings assigned to MGE's senior unsecured long-term debt securities.
Cred it Facilities As of December 31, 2024, MGE Energy and MGE had the following aggregate bank commitments and available capacity under their credit agreements: Borrower Aggregate Bank Commitments Outstanding Commercial Paper Letters of Credit Issued Inside Credit Facilities Outstanding Borrowings Available Capacity Expiration Date (In millions) MGE Energy $ 50.0 $ — $ — $ — $ 50.0 November 8, 2027 MGE $ 130.0 $ — $ 0.6 $ — $ 129.4 November 8, 2027 Borrowings under the Credit Agreements may bear interest at a rate based upon either a "floating rate" or an "Adjusted Term SOFR Rate," plus an adder based upon the credit ratings assigned to MGE's senior unsecured long-term debt securities.
The contributions for years after 2024 are not yet currently estimated. Due to uncertainties in the future economic performance of plan assets, discount rates, and other key assumptions, estimated contributions are subject to change. MGE may also elect to make additional discretionary contributions to the plans. The above amounts do not include future capital calls by ATC and ATC Holdco.
Due to uncertainties in the future economic performance of plan assets, discount rates, and other key assumptions, estimated contributions are subject to change. MGE may also elect to make additional discretionary contributions to the plans. The above amounts do not include future capital calls by ATC and ATC Holdco.
We believe the accounting 50 estimate related to the valuation allowance is a critical accounting estimate because it is highly susceptible to change from period to period as it requires management to make assumptions about our future income over the lives of the deferred tax assets, and the impact of increasing or decreasing the valuation allowance is potentially material to our results of operations.
The accounting estimate related to the valuation allowance is believed to be a critical accounting estimate because it is highly susceptible to change from period to period as it requires management to make assumptions about the future income over the lives of the deferred tax assets, and the impact of increasing or decreasing the valuation allowance is potentially material to the results of operations.
They are critical accounting estimates because they are subject to management's judgment and can materially affect financial performance. • Assumed return on assets . This assumption represents the rate of return on plan assets reflecting the average rate of earnings expected on the funds invested (or to be invested) to provide for the benefits included in the projected benefit obligation.
They are critical accounting estimates because they are subject to management's judgment. • Assumed return on assets . This assumption represents the rate of return on plan assets reflecting the average rate of earnings expected on the funds invested (or to be invested) to provide for the benefits included in the projected benefit obligation.
Future Generation - 80% carbon reduction target by 2030 (from 2005 levels): MGE has outlined initiatives to achieve our raised target. • Transitioning away from coal. Columbia: MGE, along with the other plant co-owners, announced plans to retire Columbia Unit 1 and Unit 2 by June 2026.
Future Generation - 80% carbon reduction target by 2030 (from 2005 levels): MGE has outlined initiatives to achieve our target. • Transitioning away from coal. Columbia: MGE, along with the other plant co-owners, announced plans to retire Columbia Unit 1 and Unit 2 by the end of 2029.
See Footnote 7 of the Notes to Consolidated Financial Statements in this Report and " Other Matters " below for additional information concerning ATC and summarized financial information regarding ATC.
See Footnote 7 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report and " Other Matters " below for additional information concerning ATC and summarized financial information regarding ATC.
In December 2023, the PSCW approved the 2024/2025 rate application for an increase of 1.54% for electric rates and a 2.44% increase for gas rates in 2024. The application also approves a 4.17% increase for electric rates and a 1.32% increase to gas rates for 2025.
Other M atters Rate Matters In December 2023, the PSCW approved the 2024/2025 rate application for an increase of 1.54% for electric rates and a 2.44% increase for gas rates in 2024. The PSCW also approved a 4.17% increase for electric rates and a 1.32% increase to gas rates for 2025.
Sales quantity is measured by customers' meters. Due to the large volume of those meters, it is impractical to read all of them at month end. Meters are read on a systematic basis throughout the month based on established meter-reading schedules.
Due to the large volume of those meters, it is impractical to read all of them at month end. Meters are read on a systematic basis throughout the month based on established meter-reading schedules.
In December 2021, the PSCW authorized MGE to increase 2023 rates for retail gas customers by 0.96%. MGE recovers the cost of natural gas in its gas segment through the purchased gas adjustment clause (PGA). Under the PGA, MGE is able to pass through to its gas customers the cost of gas.
In December 2023, the PSCW authorized MGE to increase 2024 rates for retail gas customers by 2.44%. MGE recovers the cost of natural gas in its gas segment through the purchased gas adjustment clause (PGA). Under the PGA, MGE is able to pass through to its gas customers the cost of gas.
In the event that such disruptions cause costs to exceed the levels approved for specific projects, we have filed and expect to continue to file a notification with the PSCW and expect to request recovery of any cost increases in MGE's future rate proceedings. U.S. Department of Commerce Investigation In March 2022, the U.S.
In the event that such disruptions cause costs to exceed the levels approved for specific projects, we have filed and expect to continue to file a notification with the PSCW and expect to request recovery of any cost increases in MGE's future rate proceedings. U.S. Department of Commerce - Solar Cells and Modules In August 2023, the U.S.
Details related to MGE's 2022/2023 approved settlement agreement, 2023 electric limited reopener, and 2024/2025 rate proceeding are shown in the table below: (Dollars in thousands) Authorized Average Rate Base (a) Authorized Average CWIP (b) Authorized Return on Common Equity (c) Common Equity Component of Regulatory Capital Structure Effective Date Electric (2023 Test Period) $ 1,162,516 $ 19,976 9.8 % 55.63 % 1/1/2023 Gas (2023 Test Period) 312,270 8,228 9.8 % 55.63 % 1/1/2023 Electric (2024 Test Period) $ 1,185,550 $ 10,727 9.7 % 56.13 % 1/1/2024 Gas (2024 Test Period) 335,533 7,160 9.7 % 56.13 % 1/1/2024 Electric (2025 Test Period) $ 1,241,502 $ 7,106 9.7 % 56.06 % 1/1/2025 Gas (2025 Test Period) 341,369 7,146 9.7 % 56.06 % 1/1/2025 (a) Average rate base amounts reflect MGE's allocated share of rate base and do not include construction work in progress (CWIP) or a cash working capital allowance and were calculated using a forecasted 13-month average for the test periods.
Details related to MGE's 2024/2025 rate proceeding are shown in the table below: (Dollars in thousands) Authorized Average Rate Base (a) Authorized Average CWIP (b) Authorized Return on Common Equity (c) Common Equity Component of Regulatory Capital Structure Effective Date Electric (2024 Test Period) $ 1,185,550 $ 10,727 9.7 % 56.13 % 1/1/2024 Gas (2024 Test Period) 335,533 7,160 9.7 % 56.13 % 1/1/2024 Electric (2025 Test Period) $ 1,241,502 $ 7,106 9.7 % 56.06 % 1/1/2025 Gas (2025 Test Period) 341,369 7,146 9.7 % 56.06 % 1/1/2025 (a) Average rate base amounts reflect MGE's allocated share of rate base and do not include construction work in progress (CWIP) or a cash working capital allowance and were calculated using a forecasted 13-month average for the test periods.
In accordance with the 2024/2025 rate order from the PSCW, MGE will have an earnings sharing mechanism, under which, if MGE earns above the 9.7% authorized ROE: (i) the utility will retain 100.0% of earnings for the first 15 basis points above the authorized ROE; (ii) 50.0% of the next 60 basis points will be required to be refunded to customers; and (iii) 100.0% of any remaining excess earnings will be required to be refunded to customers.
The 2024/2025 rate order includes an earnings sharing mechanism, under which, if MGE earns above the 9.7% ROE authorized in the rate order: (i) MGE will retain 100% of earnings for the first 15 basis points above the authorized ROE; (ii) 50% of the next 60 basis points will be required to be deferred and returned to customers; and (iii) 100% of any remaining excess earnings will be required to be refunded to customers.
See the 2024-2028 capital expenditures forecast included under " Liquidity and Capital Resources " below for additional information on West Riverside. 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.
See our 2025-2029 capital expenditures forecast included under " Liquidity and Capital Resources " below for information on these projects. 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.
By the end of 2032, MGE expects that the Elm Road Units will be fully transitioned away from coal, which will eliminate coal as an internal generation source for MGE. • Growing renewable generation. MGE is seeking to acquire a joint interest in several renewable generation projects.
This transition will help MGE meet its 2030 carbon reduction goals. By the end of 2032, MGE expects that the Elm Road Units will be fully transitioned away from coal, which will eliminate coal as an internal generation source for MGE. • Growing renewable generation. MGE is seeking to acquire a joint interest in several renewable generation projects.
Final timing and retirement dates for Units 1 and 2 are subject to change depending on operational, regulatory, and other factors. MGE has a plan, which it continues to evaluate, to replace the generation from Columbia while maintaining electric service reliability.
Final timing and retirement dates for Units 1 and 2 are subject to change depending on operational, regulatory, capacity needs, and other factors impacting one or more of the Columbia co-owners. MGE has a plan, which it continues to evaluate, to replace the generation from Columbia while maintaining electric service reliability.
Item 1A. Risk Factors of this Report. During the year ended December 31, 2023, MGE Energy's earnings were $117.7 million or $3.25 per share compared to $111.0 million or $3.07 per share for the same period in the prior year.
Item 1A. Risk Factors of this Report. During the year ended December 31, 2024, MGE Energy's earnings were $120.6 million or $3.33 per share compared to $117.7 million or $3.25 per share for the same period in the prior year.
Transmission Investments In 2022, our share of ATC's earnings reflected an estimated possible loss of approximately $0.9 million inclusive of interest and net of tax, related to the August 2022 developments in the MISO transmission owners complaints on authorized return on equity. See additional information in " Other Matters " below.
Transmission Investments In 2024, our share of ATC's earnings reflected an increase in net income for the reduction of estimated possible loss of approximately $0.8 million inclusive of interest and net of tax, related to the October 2024 developments in the MISO transmission owners complaints on authorized return on equity. See additional information in " Other Matters " below.
On an on-going basis, we evaluate our estimates, including those related to regulatory assets and liabilities, unbilled revenues, pension obligations, and income taxes.
On an on-going basis, estimates are evaluated, including those related to regulatory assets and liabilities, unbilled revenues, pension obligations, and income taxes.
Gas retail sales decreased approximately 13%. Heating degree days (a measure for determining the impact of weather during the heating season) decreased by approximately 15% in 2023 compared to the same period in the prior year.
Gas retail sales decreased approximately 4% and heating degree days (a measure for determining the impact of weather during the heating season) decreased by approximately 6% in 2024 compared to the same period in the prior year.
MGE Energy's net income was derived from our business segments as follows: (In millions) Year Ended December 31, Business Segment: 2023 2022 Electric Utility $ 75.9 $ 65.2 Gas Utility 14.1 18.2 Nonregulated Energy 22.4 22.1 Transmission Investments 7.7 6.7 All Other (2.4 ) (1.2 ) Net Income $ 117.7 $ 111.0 Our net income during 2023 compared to 2022 primarily reflects the effects of the following factors: Electric Utility An increase in electric investments contributed to earnings for 2023.
MGE Energy's net income (loss) was derived from our business segments as follows: (In millions) Year Ended December 31, Business Segment: 2024 2023 Electric Utility $ 74.5 $ 75.9 Gas Utility 13.7 14.1 Nonregulated Energy 24.1 22.4 Transmission Investments 8.9 7.7 All Other (0.6 ) (2.4 ) Net Income $ 120.6 $ 117.7 Our net income during 2024 compared to 2023 primarily reflects the effects of the following factors: Electric Utility An increase in electric investments, as part of the 2024 rate case, contributed to earnings for 2024.
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 2023 and 2022, other income at the transmission investment segment primarily reflects ATC's operations and was $10.6 million and $9.1 million, respectively.
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 2024 and 2023, other income from the transmission investment segment primarily reflected ATC's operations and was $12.3 million and $10.6 million, respectively.
These costs will be subject to the PSCW's annual review of 2023 fuel costs, expected to be completed during 2024. See Footnote 9.b. of the Notes to Consolidated Financial Statements in this Report for further information regarding fuel proceedings. 2022 Annual Fuel Proceeding: MGE under-recovered fuel costs in 2022.
These costs will be subject to the PSCW's annual review of 2024 fuel costs, expected to be completed during 2025. See Footnote 9.b. of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report for further information regarding fuel proceedings. 2023 Annual Fuel Proceeding: MGE had fuel savings in 2023.
During 2023, MGE issued $120.0 million of senior unsecured notes that were used to repay $30 million of maturing unsecured senior notes and to assist with financing additional capital expenditures and other corporate obligations, compared to $25.0 million issued in 2022.
(b) During 2024, MGE issued $50 million of senior unsecured notes that were used to assist with financing additional capital expenditures and other corporate obligations. During 2023, MGE issued $120 million of senior unsecured notes that were used to repay $30 million of maturing unsecured senior notes and to assist with financing additional capital expenditures and other corporate obligations.
As 44 of December 31, 2023, approximately $699.6 million was available for the payment of dividends under this covenant.
As of December 31, 2024, approximately $754.6 million was available for the payment of dividends under this covenant.
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.
During 2025, several items may affect our financial condition and results of operations, including: 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.
MGE's earnings for the year ended December 31, 2023, were $90.5 million compared to $83.9 million for the same period in the prior year.
MGE's earnings for the year ended December 31, 2024, were $89.4 million compared to $90.5 million for the same period in the prior year.
MGE is currently assessing the potential impact of these disruptions on current and future solar projects which may result in an increase in costs or delays in construction timelines.
MGE continues to assess the potential impact of these tariffs on current and future solar projects which may result in an increase in costs or delays in construction timelines.
Regulatory assets and regulatory liabilities typically include deferral of energy costs, the normalization of income taxes, pension and other postretirement costs, the deferral of certain operating expenses, and non-ARO removal costs. The accounting for these regulatory assets and liabilities is in accordance with regulatory accounting standards.
Regulatory assets and regulatory liabilities typically include deferral of energy costs, the normalization of income taxes, pension and other postretirement costs, the deferral of certain operating expenses, and non-ARO removal costs.
In December 2022, the PSCW authorized MGE to increase 2023 rates for retail electric customers by approximately 9.01%. Rates charged to retail customers during 2023 were $42.4 million higher than those charged during 2022. See Footnote 9 of the Notes to Consolidated Financial Statements in this Report for further information on the rate increase.
In December 2023, the PSCW authorized MGE to increase 2024 rates for retail electric customers by approximately 1.54%. Rates charged to retail customers during 2024 were $6.5 million higher than those charged during 2023. See Footnote 9 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report for further information on the rate increase.
In the year the over-collection is refunded, rates are reduced and offset as revenue subject to refund. There is no net income impact in the year the costs are refunded.
In the year the over-collection is refunded, rates are reduced and offset as revenue subject to refund.
The amount and timing of future capital calls to these entities is uncertain and primarily dependent on the operations and expansion of ATC and the development activities by ATC Holdco. 46 MGE Energy's and MGE's commercial commitments as of December 31, 2023, representing commitments triggered by future events and including financing arrangements to secure obligations of MGE Energy and MGE, are as follows: Expiration Within: Due After (In thousands) Total 1 Year 2-3 Years 4-5 Years 5 Years MGE Energy Lines of credit (a) $ 180,000 $ — $ — $ 180,000 $ — MGE Lines of credit (b) $ 130,000 $ — $ — $ 130,000 $ — (a) Amount includes the facilities discussed in (b) plus an additional line of credit.
MGE Energy's and MGE's commercial commitments as of December 31, 2024, representing commitments triggered by future events and including financing arrangements to secure obligations of MGE Energy and MGE, are as follows: Expiration Within: Due After (In thousands) Total 1 Year 2-3 Years 4-5 Years 5 Years MGE Energy Lines of credit (a) $ 180,000 $ — $ 180,000 $ — $ — 41 MGE Lines of credit (b) $ 130,000 $ — $ 130,000 $ — $ — (a) Amount includes the facilities discussed in (b) plus an additional line of credit.
See Footnote 5 of the Notes to Consolidated Financial Statements in this Report. (e) Purchase obligations consist primarily of the purchase of electricity and natural gas, electric transmission, natural gas storage capacity, natural gas pipeline transportation, and the purchase and transport of coal. See Footnote 16.c. of the Notes to Consolidated Financial Statements in this Report.
(e) Purchase obligations consist primarily of the purchase of electricity and natural gas, electric transmission, natural gas storage capacity, natural gas pipeline transportation, and the purchase and transport of coal. See Footnote 16.c. of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report. (f) Construction obligations consist primarily of Paris, Darien, and other renewable projects.
As of December 31, 2023, the ratio of consolidated debt to consolidated total capitalization for each of MGE Energy and MGE, as calculated under the credit agreements' covenant, were 40.1% and 43.2%, respectively. See Footnote 13 of the Notes to Consolidated Financial Statements in this Report for additional information regarding the credit facilities.
As of December 31, 2024, the ratio of consolidated debt to consolidated total capitalization for each of MGE Energy and MGE, as calculated under the credit agreements' covenant, were 38.5% and 41.4%, respectively. See Footnote 13 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report for additional information regarding the credit facilities.
Holding other assumptions constant, a 0.5% decrease in the discount rate on the obligation balance as of December 31, 2023, would increase annual pension and other postretirement cost by approximately $1.2 million, before taxes. • Medical trend assumptions . The health care cost trend rate is the assumed rate of increase in per-capita health care charges. • Mortality rate assumption.
Holding other assumptions constant, a 0.5% decrease in the discount rate on the obligation balance as of December 31, 2024, would decrease annual pension and other postretirement cost by approximately $0.2 million, before taxes. • Medical trend assumptions .
(f) Construction obligations consist primarily of Paris, Darien, and other renewable projects. (g) Other obligations are primarily related to investment commitments, environmental projects, and uncertain tax positions. The above amounts do not include any contributions for MGE's pension and postretirement plans. MGE does not expect to need to make any required contributions to the qualified plans for 2024.
(g) Other obligations are primarily related to investment commitments, environmental projects, and uncertain tax positions. The above amounts do not include any contributions for MGE's pension and postretirement plans. MGE does not expect to need to make any required contributions to the qualified plans for 2025. The contributions for years after 2025 are not yet currently estimated.
(b) MGE received specific approval to recover 100% AFUDC on Badger Hollow II, Paris, and Darien. After tax, MGE recognized $5.6 million, $2.2 million, and $0.6 million of AFUDC equity earnings through December 31, 2023, on Badger Hollow II, Paris, and Darien, respectively, during construction. AFUDC has been excluded from the costs incurred in the table above.
(b) MGE received specific approval to recover 100% AFUDC on Paris, Darien, and Koshkonong. After tax, MGE recognized $4.8 million, $2.7 million, and $0.2 million of AFUDC equity earnings through December 31, 2024, on Paris, Darien, and Koshkonong, respectively, during construction. AFUDC has been excluded from the costs incurred in the table above. (c) Estimated date of commercial operation.
See " Other Matters " below for additional information on solar procurement disruptions. 36 The following discussion is based on the business segments as discussed in Footnote 22 of the Notes to Consolidated Financial Statements in this Report.
See " Other Matters " below for additional information on the executive orders on Tariffs. 32 The following discussion is based on the business segments as discussed in Footnote 22 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report.
An approximately 21% decrease in average cost also contributed to the decrease in purchase power costs. Deferred fuel cost recovered in 2023 is $5.4 million compared to $8.7 million deferred in 2022. Fuel and purchased power costs are generally offset by electric revenue and do not have a significant impact on net income.
Furthermore, there was an approximately 4% increase in average cost partially offsetting the decrease in market purchases. Deferred fuel cost recovered in 2024 is $6.7 million compared to $5.4 million in 2023. Fuel and purchased power costs are generally offset by electric revenue and do not have a significant impact on net income.
In August 2022, the Court ruled that four of the five arguments made by the complaining parties were unpersuasive. However, the Court agreed that FERC’s decision to reintroduce a risk-premium model into its ROE methodology was arbitrary and capricious. The Court vacated the underlying orders for the First Complaint Period and remanded to FERC for further proceedings.
However, the Court agreed that FERC’s decision to reintroduce a risk-premium model into its ROE methodology was arbitrary and capricious. The Court vacated the underlying orders for the First Complaint Period and remanded to FERC for further proceedings.
MGE's remaining use of coal is expected to be further reduced as the Elm Road Units transition to natural gas. By the end of 2030, coal is expected to be used only as a backup fuel at the Elm Road Units. This transition will help MGE meet its 2030 carbon reduction goals.
Transition plans and costs will be subject to PSCW approval. MGE's remaining use of coal is expected to be further reduced as the Elm Road Units transition to natural gas. By the end of 2030, coal is expected to be used only as a backup fuel at the Elm Road Units.
(b) Short-term debt consisting of commercial paper for MGE. See Footnote 13 of the Notes to Consolidated Financial Statements in this Report. (c) Amount represents interest expense on long-term debt. See Footnote 14 of the Notes to Consolidated Financial Statements in this Report for further discussion of the long-term debt outstanding as of December 31, 2023. (d) Leases.
(b) Short-term debt consisting of commercial paper for MGE. See Footnote 13 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report. (c) Amount represents interest expense on long-term debt.
See " Capital Expenditures " below for more information. MGE Energy MGE Energy's cash used for investing activities increased $49.9 million for 2023 when compared to 2022. Capital expenditures for 2023 were $222.1 million. This amount represents an increase of $47.0 million from the expenditures made in 2022.
See " Capital Expenditures " below for more information. MGE Energy MGE Energy's cash used for investing activities increased $11.5 million for 2024 when compared to 2023. Capital expenditures for 2024 were $236.9 million. This amount represents an increase of $14.9 million from the expenditures made in 2023. This increase primarily reflects an increase in electric and gas utility expenditures.
Capital Expen ditures The following table shows MGE Energy's actual capital expenditures for both 2022 and 2023, and forecasted capital expenditures for 2024 through 2028: (In thousands) Actual Forecasted For the years ended December 31, 2022 2023 2024 2025 2026 2027 2028 Electric $ 141,273 $ 180,743 $ 177,000 $ 186,000 $ 193,000 $ 222,000 $ 207,000 Gas 27,656 36,402 28,000 29,000 32,000 29,000 28,000 Utility plant total 168,929 217,145 205,000 215,000 225,000 251,000 235,000 Nonregulated 6,101 4,926 9,000 10,000 7,000 6,000 8,000 MGE Energy total $ 175,030 $ 222,071 $ 214,000 $ 225,000 $ 232,000 $ 257,000 $ 243,000 Forecasted capital expenditures are based upon management's assumptions with respect to future events, including the timing and amount of expenditures associated with environmental compliance initiatives, legislative and regulatory action, supply chain and market disruptions, customer demand and support for electrification and renewable energy resources, energy conservation programs, load growth, the timing of any required regulatory approvals, and the adequacy of rate recovery.
Capital Expen ditures The following table shows MGE Energy's actual capital expenditures for both 2023 and 2024, and forecasted capital expenditures for 2025 through 2029: (In thousands) Actual Forecasted For the years ended December 31, 2023 2024 2025 2026 2027 2028 2029 Electric $ 180,743 $ 192,469 $ 203,000 $ 229,000 $ 247,000 $ 256,000 $ 276,000 Gas 36,402 38,101 28,000 28,000 30,000 29,000 27,000 Utility plant total 217,145 230,570 231,000 257,000 277,000 285,000 303,000 Nonregulated 4,926 6,355 9,000 9,000 9,000 11,000 9,000 MGE Energy total $ 222,071 $ 236,925 $ 240,000 $ 266,000 $ 286,000 $ 296,000 $ 312,000 Forecasted capital expenditures are based upon management's assumptions with respect to future events, including the timing and amount of expenditures associated with environmental compliance initiatives, legislative and regulatory action, supply chain and market disruptions, customer demand and support for electrification and renewable energy resources, energy conservation 37 programs, load growth, the timing of any required regulatory approvals, and the adequacy of rate recovery.
Cash Flows The following summarizes cash flows for MGE Energy and MGE during 2023 and 2022: MGE Energy MGE (In thousands) 2023 2022 2023 2022 Cash provided by (used for): Operating activities $ 237,561 $ 153,735 $ 231,822 $ 151,067 Investing activities (230,020 ) (180,145 ) (224,027 ) (176,095 ) Financing activities (10,483 ) 25,543 (11,590 ) 27,730 40 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.
Cash Flows The following summarizes cash flows for MGE Energy and MGE during 2024 and 2023: MGE Energy MGE (In thousands) 2024 2023 2024 2023 Cash provided by (used for): Operating activities $ 277,784 $ 237,561 $ 272,953 $ 231,822 Investing activities (241,487 ) (230,020 ) (239,013 ) (224,027 ) Financing activities (26,827 ) (10,483 ) (20,586 ) (11,590 ) 36 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.
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.
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. 40 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.
If future recovery of costs becomes no longer probable, the assets and liabilities would be recognized as current-period revenues or expenses. Amortization of regulatory assets and liabilities is provided over the recovery or deferral period as allowed in the related regulatory agreement. Unbilled Revenues Revenues from the sale of electricity and gas are recorded when they are delivered to customers.
Amortization of regulatory assets and liabilities is provided over the recovery or deferral period as allowed in the related regulatory agreement. Unbilled Revenues Revenues from the sale of electricity and gas are recorded when they are delivered to customers. Sales quantity is measured by customers' meters.
MGE recovers the cost of natural gas in its gas segment through the PGA as described under gas deliveries and revenue above. Consolidated operations and maintenance expenses For 2023, operations and maintenance expenses increased $6.1 million, compared to 2022.
Cost per therm decreased approximately 19% and therms delivered decreased approximately 4%. 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 For 2024, operations and maintenance expenses increased $12.7 million, compared to 2023.
See Footnote 9.a. of the Notes to Consolidated Financial Statements in this Report for further discussion of rate proceedings. 47 ATC MISO transmission owners, including ATC, are involved in two complaints filed at FERC by several parties challenging that the base ROE in effect for MISO transmission owners, including ATC, was no longer just and reasonable.
ATC MISO transmission owners, including ATC, are involved in two complaints filed at FERC by several parties challenging that the base ROE in effect for MISO transmission owners, including ATC, was no longer just and reasonable.
MGE has covenanted with the holders of its first mortgage bonds not to declare or pay any dividend or make any other distribution on or purchase any shares of its common stock unless, after giving effect thereto, the aggregate amount of all such dividends and distributions and all amounts applied to such purchases, after December 31, 1945, shall not exceed the earned surplus (retained earnings) accumulated subsequent to December 31, 1945.
The rate proceeding calculation includes indebtedness imputed amounts for MGE's outstanding purchase power capacity payments and other PSCW adjustments but does not include the indebtedness associated with MGE Power Elm Road and MGE Power West Campus, which are consolidated into MGE's financial statements but are not direct obligations of MGE. 39 MGE has covenanted with the holders of its first mortgage bonds not to declare or pay any dividend or make any other distribution on or purchase any shares of its common stock unless, after giving effect thereto, the aggregate amount of all such dividends and distributions and all amounts applied to such purchases, after December 31, 1945, shall not exceed the earned surplus (retained earnings) accumulated subsequent to December 31, 1945.
In 2022, our share of ATC's earnings reflected an estimated possible loss of approximately $0.9 million, inclusive of interest and net of tax, for a possible additional refund for the First Complaint Period and for the period following the Second Complaint Period.
Prior to the ruling, MGE Energy's share of ATC’s earnings reflected a possible loss of approximately $1.2 million, inclusive of interest and net of tax, for a possible additional refund for the First Complaint Period and 42 for the period following the Second Complaint Period.
Results of Operations Year Ended December 31, 2023, Versus the Year Ended December 31, 2022 Electric sales and revenues The following table compares MGE's electric revenues and electric kWh sales by customer class for each of the years indicated: Revenues Sales (kWh) (In thousands, except CDD) 2023 2022 % Change 2023 2022 % Change Residential $ 171,137 $ 161,300 6.1% 871,558 884,476 (1.5)% Commercial 252,268 232,057 8.7% 1,772,483 1,790,397 (1.0)% Industrial 13,759 13,303 3.4% 151,283 152,734 (1.0)% Other-retail/municipal 40,815 37,323 9.4% 363,643 363,213 0.1% Total retail 477,979 443,983 7.7% 3,158,967 3,190,820 (1.0)% Sales to the market 10,163 19,385 (47.6)% 132,143 132,079 0.0% Other revenues 1,587 1,799 (11.8)% — — —% Total $ 489,729 $ 465,167 5.3% 3,291,110 3,322,899 (1.0)% Cooling degree days (normal 705) 780 787 (0.9)% Electric revenue increased $24.6 million during 2023 compared to 2022, due to the following: (In millions) Rate changes $ 42.4 Sales to the market (9.2 ) Decrease in volume (3.7 ) Customer fixed and demand charges (3.2 ) Revenue subject to refund, net (1.5 ) Other (0.2 ) Total $ 24.6 • Rate changes.
Results of Operations Year Ended December 31, 2024, Versus the Year Ended December 31, 2023 Electric sales and revenues The following table compares MGE's electric revenues and electric kWh sales by customer class for each of the years indicated: Revenues Sales (kWh) (In thousands, except CDD) 2024 2023 % Change 2024 2023 % Change Residential $ 174,756 $ 171,137 2.1% 860,759 871,558 (1.2)% Commercial 255,240 252,268 1.2% 1,777,835 1,772,483 0.3% Industrial 12,948 13,759 (5.9)% 141,976 151,283 (6.2)% Other-retail/municipal 40,796 40,815 —% 373,272 363,643 2.6% Total retail 483,740 477,979 1.2% 3,153,842 3,158,967 (0.2)% Sales to the market 10,893 10,163 7.2% 226,004 132,143 71.0% Other revenues 3,040 1,587 91.6% — — —% Total $ 497,673 $ 489,729 1.6% 3,379,846 3,291,110 2.7% Cooling degree days (normal 709) 728 780 (6.7)% Electric revenue increased $7.9 million during 2024 compared to 2023, due to the following: (In millions) Rate changes $ 6.5 Customer fixed and demand charges 2.6 Other 1.2 Sales to the market 0.7 Decrease in residential volume (1.8 ) Revenue subject to refund, net (1.3 ) Total $ 7.9 • Rate changes.
MGE continually assesses whether the regulatory assets and liabilities meet the criteria for probability of future recovery or deferral. This assessment considers factors such as changes in the regulatory environment, recent rate orders to other regulated entities under the same jurisdiction, and the status of any pending or potential deregulation legislation.
This assessment considers factors such as changes in the regulatory environment, recent rate orders to other regulated entities under the same jurisdiction, and the status of any pending or potential deregulation legislation. If future recovery of costs becomes no longer probable, the assets and liabilities would be recognized as current-period revenues or expenses.
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.
The earnings calculation excludes fuel rules adjustments. 30 Large Scale Utility Projects: Large scale generation projects recently completed or under construction, are shown in the following table. Incurred costs are reflected in "Property, plant, and equipment, net" for projects placed in service, or "Construction work in progress" for projects under construction on the consolidated balance sheets.
Expected mortality rates are used in the valuation to determine the expected duration of future benefit payments to the plan participants. MGE utilizes mortality tables and projection scales developed by the society of actuaries. These tables and scales were last updated in 2021.
The health care cost trend rate is the assumed rate of increase in per-capita health care charges. 44 • Mortality rate assumption. Expected mortality rates are used in the valuation to determine the expected duration of future benefit payments to the plan participants. MGE utilizes mortality tables and projection scales developed by the society of actuaries.
Department of Commerce investigation on whether to impose 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.
Solar Procurement Disruptions: MGE is monitoring import regulations under the Uyghur Forced Labor Protection Act and the U.S. Department of Commerce 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.
Changes in PGA recoveries affect revenues but do not change net income in view of the pass-through treatment of the costs. Payments 38 for natural gas decreased driving lower rates during 2023. The average retail rate per therm for 2023 decreased approximately 10% compared to 2022, reflecting a decrease in natural gas commodity costs (recovered through the PGA). • Volume.
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 decreased driving lower rates during 2024.
This base ROE is effective for the First Complaint Period and for all periods following September 2016. This order also dismissed the second complaint. Accordingly, no refunds were ordered for the Second Complaint Period. As a result of the May 2020 FERC order, our share of ATC's earnings reflected a $0.6 million reduction of our reserve.
This base ROE is effective for the First Complaint Period and for all periods following September 2016. This order also dismissed the second complaint. Accordingly, no refunds were ordered for the Second Complaint Period.
Electric fuel and purchased power Year Ended December 31, (In millions) 2023 2022 $ Change Fuel for electric generation $ 57.6 $ 61.3 $ (3.7 ) Purchased power 41.2 46.8 (5.6 ) The $3.7 million decrease in fuel for electric generation was due to an approximately 11% decrease in the average cost offset by an approximately 5% increase in internal generation.
There is no net income impact in the year the costs are refunded. 33 Electric fuel and purchased power Year Ended December 31, (In millions) 2024 2023 $ Change Fuel for electric generation $ 54.0 $ 57.6 $ (3.6 ) Purchased power 32.9 41.2 (8.3 ) The $3.6 million decrease in fuel for electric generation was due to an approximately 17% decrease in the average cost, partially offset by an approximately 13% increase in internal generation.
Forecasted total capital expenditures for those years is approximately $39 million. 43 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.
Investments in advanced metering infrastructure will provide additional benefits including outage and demand response and automated meter reading capabilities. Forecasted total capital expenditures for those years is approximately $52 million. 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.
Any increase in rates associated with fuel or purchase power costs are generally offset in fuel and purchased power costs and do not have a significant impact on net income. • Sales to the market. Sales to the market typically occur when MGE has more generation and purchases in the MISO market than are needed for its customer demand.
Any increase in rates associated with fuel or purchase power costs are generally offset in fuel and purchased power costs and do not have a significant impact on net income. • Customer fixed and demand charges.
Gas deliveries and revenues The following table compares MGE's gas revenues and gas therms delivered by customer class during each of the years indicated: (In thousands, except HDD and average Revenues Therms Delivered rate per therm of retail customer) 2023 2022 % Change 2023 2022 % Change Residential $ 116,640 $ 143,544 (18.7)% 97,326 114,162 (14.7)% Commercial/Industrial 75,410 99,165 (24.0)% 96,053 106,911 (10.2)% Total retail 192,050 242,709 (20.9)% 193,379 221,073 (12.5)% Gas transportation 7,399 5,780 28.0% 72,181 78,966 (8.6)% Other revenues 563 183 n.m.% — — —% Total $ 200,012 $ 248,672 (19.6)% 265,560 300,039 (11.5)% Heating degree days (normal 6,991) 6,167 7,210 (14.5)% Average rate per therm of retail customer $ 0.993 $ 1.098 (9.6)% n.m. not meaningful Gas revenue decreased $48.7 million during 2023 compared to 2022, due to the following: (In millions) Rate changes $ (31.7 ) Decrease in volume (18.5 ) Other 1.3 Revenue subject to refund, net 0.2 Total $ (48.7 ) Rate changes.
Gas deliveries and revenues The following table compares MGE's gas revenues and gas therms delivered by customer class during each of the years indicated: (In thousands, except HDD and average Revenues Therms Delivered rate per therm of retail customer) 2024 2023 % Change 2024 2023 % Change Residential $ 106,150 $ 116,640 (9.0)% 93,613 97,326 (3.8)% Commercial/Industrial 65,021 75,410 (13.8)% 91,804 96,053 (4.4)% Total retail 171,171 192,050 (10.9)% 185,417 193,379 (4.1)% Gas transportation 6,905 7,399 (6.7)% 70,001 72,181 (3.0)% Other revenues 511 563 (9.2)% — — —% Total $ 178,587 $ 200,012 (10.7)% 255,418 265,560 (3.8)% Heating degree days (normal 6,968) 5,812 6,167 (5.8)% Average rate per therm of retail customer $ 0.923 $ 0.993 (7.0)% Gas revenue decreased $21.4 million during 2024 compared to 2023, due to the following: (In millions) Rate changes $ (9.4 ) Decrease in volume (9.1 ) Other (3.0 ) Revenue subject to refund, net 0.1 Total $ (21.4 ) Rate changes.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 31, 2023, MGE had 719 employees, 317 of which are covered by collective bargaining agreements as described below: Union Number of Employees Represented Expiration of Collective Bargaining Agreement Local Union 2304 of the International Brotherhood of Electrical Workers 227 April 30, 2028 Local Union No. 39 of the Office and Professional Employees International Union 85 May 31, 2028 Local Union No. 2006, Unit 6 of the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial, and Service Workers International Union 5 October 31, 2028 Governance The Human Resources and Compensation Committee of the Board of Directors of MGE Energy oversees MGE's human resource strategies around diversity, equity and inclusion, workplace environment and culture, employee engagement, talent development, retention and recruitment.
Biggest changeAs of December 31, 2024, MGE Energy and its subsidiaries had 717 employees, 314 of whom were covered by collective bargaining agreements as described below: Union Number of Employees Represented Expiration of Collective Bargaining Agreement Local Union 2304 of the International Brotherhood of Electrical Workers 233 April 30, 2028 Local Union No. 39 of the Office and Professional Employees International Union 77 May 31, 2028 Local Union No. 2006, Unit 6 of the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial, and Service Workers International Union 4 October 31, 2028 As of December 31, 2024, women and ethnic minorities represented 25% and 10% of our total workforce, respectively.
In 2016, ATC Holdco was formed by several of the members of ATC, including MGE Energy, to explore electric transmission development and investments outside of Wisconsin, which typically have long development and investment lead times before becoming operational. MGE Energy's ownership interest in ATC Holdco is held by MGEE Transco, a wholly-owned subsidiary.
In 2016, ATC Holdco was formed by several of the members of ATC, including MGE Energy, to explore electric transmission development and investments outside of Wisconsin, which typically have long development and investment lead times before becoming operational. MGE Energy's ownership interest in ATC Holdco is held by MGEE Transco, a wholly-owned subsidiary of MGE Energy.
Effects of the environmental compliance requirements discussed below will depend upon the final Columbia retirement dates approved, applicable regulations at that time, and required compliance dates.
The effects of the environmental compliance requirements discussed below will depend upon the final Columbia retirement dates approved, applicable regulations at that time, and required compliance dates.
Air Quality Air quality regulations promulgated by the EPA and WDNR in accordance with the Federal Clean Air Act and the Clean Air Act Amendments of 1990 impose restrictions on emission of particulates, sulfur dioxide (SO 2 ), nitrogen oxides (NO x ), hazardous air pollutants and other pollutants, and require permits for operation of emission sources.
Air Quality Air quality regulations promulgated by the EPA and WDNR in accordance with the Federal Clean Air Act and the Clean Air Act Amendments of 1990 impose restrictions on the emission of particulates, sulfur dioxide (SO 2 ), nitrogen oxides (NO x ), hazardous air pollutants and other pollutants, and require permits for the operation of emission sources.
Similarly, very cold temperatures can dramatically increase the demand for gas for heating. A significant portion of our gas system demand is driven by heating. Extreme summer conditions or storms may stress electric systems, resulting in increased maintenance costs and limiting the ability to meet peak customer demand.
Similarly, very cold temperatures can dramatically increase the demand for gas for heating. A significant portion of our gas system demand is driven by heating. Extreme summer conditions or storms may stress electric systems, resulting in increased maintenance costs and limiting our ability to meet peak customer demand.
We operate in a highly engineered industry that requires the continued operation of sophisticated information technology systems and network infrastructure to manage our finances, to operate our control facilities, to provide electric and gas service to our customers, and to enable compliance with applicable regulatory requirements.
We operate in a highly engineered industry that requires the continued operation of sophisticated information technology systems and network infrastructure to manage our finances, operate our control facilities, provide electric and gas service to our customers, and enable compliance with applicable regulatory requirements.
These long-term goals are based on certain assumptions regarding the timing, scope, and relative costs of technological advancements, including generation, storage and energy use technologies; levels of customer participation in programs and partnerships, which will be critical to the achievement of the goals; our ability to transition or displace existing coal-fired resources; our ability to complete renewable generation projects in a timely manner and within approved budgets; our ability to obtain recovery of costs in rates; and our ability to obtain the necessary permits or licenses for such projects.
These long-term goals are based on certain assumptions regarding the timing, scope, and relative costs of technological advancements, including generation, storage and energy use technologies; levels of customer participation in programs and partnerships, which will be critical to the achievement of the goals; our ability to transition or displace existing coal-fired resources; our ability to complete renewable generation and storage projects in a timely manner and within approved budgets; our ability to obtain recovery of costs in rates; and our ability to obtain the necessary permits or licenses for such projects.
The availability of coal and the means to transport coal could: • Affect our operating costs due to increased costs associated with lower levels of owned generation or the need for alternate coal supply or transportation, • Limit the ability to generate electricity if the plant operator is unable to arrange timely deliveries of adequate supplies of coal, and • Result in potentially higher costs for replacement purchased power as well as potential lost market sales opportunities.
Changes to the availability of coal and the means to transport coal could: • Affect our operating costs due to increased costs associated with lower levels of owned generation or the need for alternate coal supply or transportation, • Limit the ability to generate electricity if the plant operator is unable to arrange timely deliveries of adequate supplies of coal, and • Result in potentially higher costs for replacement purchased power as well as potential lost market sales opportunities.
We may also be unable to make the necessary improvements to our operational system, causing service interruptions. Furthermore, our facilities are interconnected with third-party transmission providers. Damage to or failures of these providers' equipment or facilities is out of our control but could lead to service interruptions. The resulting interruption of services would result in lost revenues and additional costs.
We may also be unable to make the necessary improvements to our operational system, causing service interruptions. Furthermore, our facilities are interconnected with third-party transmission providers. Damage to or failures of these providers' equipment or facilities is out of our control but could lead to service interruptions. Any resulting interruption of services would result in lost revenues and additional costs.
If the technology systems were to fail or be breached by a cyber-attack, and not be recovered in a timely fashion, we may be unable to fulfill critical business functions, equipment may fail to work and confidential data could be compromised, any additional costs may not be recoverable in rates, or may exceed cyber insurance limits, or may not be covered by cyber insurance and could adversely impact our results of operations.
If the technology systems were to fail or be breached by a cyber attack, and not be recovered in a timely fashion, we may be unable to fulfill critical business functions, equipment may fail to work and 21 confidential data could be compromised, any additional costs may not be recoverable in rates, or may exceed cyber insurance limits, or may not be covered by cyber insurance and could adversely impact our results of operations.
A significant portion of our electric generating capacity is dependent on coal. Demand for coal has been impacted by prevailing prices for natural gas and coal plant closures and may affect mine performance. Consequently, we are exposed to the risk that counterparties to these contracts will not be able to fulfill their obligations.
A significant portion of our electric generating capacity is dependent on coal. Demand for coal has been, and may continue to be, impacted by prevailing prices for natural gas and coal plant closures and may affect mine performance. Consequently, we are exposed to the risk that counterparties to these contracts will not be able to fulfill their obligations.
MGE must adhere in its electric distribution system to mandatory reliability standards established by NERC. These standards cover areas such as critical infrastructure protection, emergency preparedness, facility design, and transmission operations, among others. The critical infrastructure protection standards focus on physical and 19 access security of cyber assets, as well as incident response and recovery planning.
MGE must adhere in its electric distribution system to mandatory reliability standards established by NERC. These standards cover areas such as critical infrastructure protection, emergency preparedness, facility design, and transmission operations, among others. The critical infrastructure protection standards focus on physical and access security of cyber assets, as well as incident response and recovery planning.
In addition, certain financial metrics used by credit rating agencies, such as our funds from operations-to-debt percentage, could be negatively impacted by future rulings. 21 Operating Risk We are affected by weather, which affects customer demand and can affect the operation of our facilities. The demand for electricity and gas is affected by weather.
In addition, certain financial metrics used by credit rating agencies, such as our funds from operations-to-debt percentage, could be negatively impacted by future rulings. Operating Risk We are affected by weather, which affects customer demand and can affect the operation of our facilities. The demand for electricity and gas is affected by weather.
Our stated long-term goals are based on various assumptions and beliefs that may not prove to be achievable in the time frame projected. Some of our current long-term goals include MGE's targeting of a net‐zero carbon electricity by 2050 and MGE's Energy 2030 framework, which describes our plan for growth in renewables generation.
Our stated long-term goals are based on various assumptions and beliefs that may not prove to be achievable in the time frame projected. Some of our current long-term goals include MGE's targeting of net‐zero carbon electricity by 2050 and MGE's Energy 2030 framework, which describes our plan for growth in renewables generation.
Possible changes to MISO's accredited capacity methodology may impact new generating facilities such as solar and wind which may require adjustments to the current resource plan. We may need to add additional resources to comply with MISO's planning reserve margin requirements or procure capacity in the market whereby such costs might not be recovered in rates.
Possible changes to MISO's accredited capacity methodology may impact generating facilities such as solar and wind which may require adjustments to the current resource plan. We may need to add additional resources to comply with MISO's planning reserve margin requirements or procure capacity in the market whereby such costs might not be recovered in rates.
MGE is working to achieve a more sustainable energy future using cost‐effective renewable generation technologies. Management established these goals in conjunction with our board of directors based upon a number of different internal and external factors that characterize and influence our current and expected future activities.
MGE is working to achieve a more sustainable energy future using cost‐effective renewable generation and storage technologies. Management established these goals in conjunction with our board of directors based upon a number of different internal and external factors that characterize and influence our current and expected future activities.
Cooling Water Intake Rules (Section 316(b)) Section 316(b) of the Clean Water Act requires cooling water intake structures at electric power plants to meet best available technology (BTA) standards to reduce mortality from entrainment (drawing aquatic life into a plant's cooling system) and impingement (trapping aquatic life on screens).
Cooling Water Intake Rules (Section 316(b)) Section 316(b) of the Clean Water Act requires that cooling water intake structures at electric power plants meet best available technology (BTA) standards to reduce mortality from entrainment (drawing aquatic life into a plant's cooling system) and impingement (trapping aquatic life on screens of cooling water intake structures).
The EPA finalized its Section 316(b) rule for existing facilities in 2014. Section 316(b) requirements are implemented in Wisconsin through modifications to plants' WPDES permits, which govern plant wastewater discharges. Blount received its most recent WPDES permit from the Wisconsin Department of Natural Resources (WDNR) in October 2023.
The EPA finalized its Section 316(b) rule for existing facilities in 2014. Section 316(b) requirements are implemented in Wisconsin through modifications to WPDES permits, which govern plant wastewater discharges. Blount received its most recent WPDES permit from the Wisconsin Department of Natural Resources (WDNR) in October 2023.
In the case of our renewable generation projects, we 24 may face delays in the completion of the necessary transmission system connections or upgrades to accommodate the project. If a capital project exceeds the approved project costs approved by the PSCW, we may not be able to recover those excess costs through regulated customer rates.
In the case of our renewable generation projects, we may face delays in the completion of the necessary transmission system connections or upgrades to accommodate the project. If a capital project exceeds the approved project costs approved by the PSCW, we may not be able to recover those excess costs through regulated customer rates.
Disruption in the delivery of fuel, including disruptions as a result of transportation delays, weather, labor relations, force majeure events, or environmental regulations affecting any of our fuel suppliers, has affected, and could affect our ability to generate electricity at our facilities at the desired level.
Disruption in the delivery of fuel, including disruptions as a result of transportation delays, weather, labor relations, force majeure events, or environmental regulations affecting any of our fuel suppliers, has affected, and could in the future affect our ability to generate electricity at our facilities at the desired level.
These factors may also affect the terms under which any of the existing coal supply or transportation agreements are renewed or replaced upon the expiration of their current terms. Our ability to manage our purchased power costs is influenced by a number of uncontrollable factors.
These factors may also affect the terms under which any of the existing coal supply or transportation agreements are renewed or replaced upon the expiration of their current terms. 20 Our ability to manage our purchased power costs is influenced by a number of uncontrollable factors.
Given that the Wisconsin SIP recognizes the Columbia unit retirements as part of its emission reduction plan, MGE does not anticipate further obligations with this rule at Columbia. MGE will continue to monitor legal developments and any future updates to this rule.
Given that the Wisconsin SIP recognizes the Columbia unit retirements as part of its emission reduction plan, MGE does not anticipate further obligations with respect to this rule at Columbia. MGE will continue to monitor legal developments and any future updates to this rule.
Such issues could adversely affect revenues or increase costs to repair and maintain our systems. 23 Our operations and confidential information are subject to the risk of physical or cyber attacks, which could have an adverse effect on our business and performance.
Such issues could adversely affect revenues or increase costs to repair and maintain our systems. Our operations and confidential information are subject to the risk of physical or cyber attacks, which could have an adverse effect on our business and performance.
In April 2022, the OSCE released Wisconsin's Clean Energy Plan. The plan includes a goal to achieve net zero carbon by 2050. MGE is engaged in this process by participating on a Stakeholder Advisory 15 Team in a voluntary capacity.
In April 2022, the OSCE released Wisconsin's Clean Energy Plan. The plan includes a goal to achieve net zero carbon by 2050. MGE is engaged in this process by participating on a Stakeholder Advisory Team in a voluntary capacity.
A decline in the market value of those assets may increase our current and longer-term funding requirements for these 25 obligations. Changes in the value of trust fund assets may affect the level of required contributions to these trusts to meet benefit obligations.
A decline in the market value of those assets may increase our current and longer-term funding requirements for these obligations. Changes in the value of trust fund assets may affect the level of required contributions to these trusts to meet benefit obligations.
Borrowing levels under commercial paper arrangements vary from period to period depending upon capital investments and other factors. Such interest rate risk means that we are exposed to increased financing costs and associated cash payments as a result of changes in the short-term interest rates. We are exposed to counterparty credit risk primarily through our regulated energy business.
Our borrowing levels under commercial paper arrangements vary from period to period depending upon capital investments and other factors. Such interest rate risk means that we are exposed to potential increased financing costs and associated cash payments as a result of changes in short-term interest rates. We are exposed to counterparty credit risk primarily through our regulated energy business.
MGE continues to monitor proposed climate change legislation and regulation. 14 MGE has taken steps to address GHG emissions. MGE is targeting net-zero carbon electricity by 2050.
MGE continues to monitor proposed climate change legislation and regulation. MGE has taken steps to address GHG emissions. MGE is targeting net-zero carbon electricity by 2050.
See "Electric Utility Operations - Fuel supply and generation" above for further information. 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.
See "Electric Utility Operations - Fuel supply and generation" above for further information. Building upon MGE's 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.
Individual plants can meet their caps through reducing emissions and/or buying allowances on the market. In March 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.
Individual plants can meet their caps through reducing emissions and/or buying allowances on the market. 13 In 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.
We face risk for the recovery of fuel and purchased power costs. MGE has price risk exposure with respect to the price of natural gas, electricity, coal, emission credits, and oil. MGE burns natural gas in several of its electric generation facilities. In many cases, the cost of purchased power is tied to the cost of natural gas.
We face risk regarding the recovery of fuel and purchased power costs. MGE has price risk exposure with respect to the price of natural gas, electricity, coal, emission credits, and oil. MGE burns natural gas in several of its electric generation facilities. In many cases, the cost of purchased power is tied to the cost of natural gas.
The credit markets have experienced disruption and uncertainty in prior years. To the extent that such issues affect the ability or willingness of credit providers or investors to participate in the credit markets or particular types of investments, or affect their perception of the risk associated with particular types of investments, our cost of borrowing could be affected.
The credit markets have experienced disruption and uncertainty. To the extent that such issues affect the ability or willingness of credit providers or investors to participate in the credit markets or particular types of investments, or affect their perception of the risk associated with particular types of investments, our cost of borrowing could be affected.
Investors may also move away from investing in fossil fuel generated electricity for reputational or perceived risk-related reasons, which could raise our costs of attracting capital. • If we are not seen as being proactive in addressing concerns: 20 o we may experience reputational issues among our customers and the communities that we serve.
Investors may also move away from investing in fossil fuel generated electricity for reputational or perceived risk-related reasons, which could raise our costs of attracting capital. If we are seen as being proactive in addressing concerns we may experience reputational issues among our customers and the communities that we serve.
Item 2. Properties for a description of these facilities, their joint owners, and the related lease arrangements. Transmission Investments 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.
Item 2. Properties for a description of these facilities, their joint owners, and the related lease arrangements. Transmission Investments ATC owns and operates electric transmission facilities primarily in Wisconsin. MGE received an interest in ATC when it, in coordination with other Wisconsin electric utilities, contributed its electric transmission facilities to ATC as required by Wisconsin law.
Failure to identify qualified replacement employees could increase costs as a result of decreased productivity and increased safety incidents. If we are unable to attract and retain an appropriately qualified workforce, our operations could be negatively affected. We are also subject to multiple collective bargaining agreements covering approximately 317 employees.
Failure to identify qualified replacement employees could increase costs as a result of decreased productivity and increased safety incidents. If we are unable to attract and retain an appropriately qualified workforce, our operations could be negatively affected. We are also 22 subject to multiple collective bargaining agreements covering approximately 314 employees.
These evolving regulations affect us by: • Introducing uncertainty into our planning and capital expenditures processes, as changes in requirements may affect the timing and choice of compliance methods and require costly revisions to prior plans and commitments. • Imposing or modifying limits on the operations of our facilities in order to meet restrictions on air emissions, water use or water discharges. • Requiring capital expenditures and changes in operating procedures and costs as a result of the need to install additional pollution controls or more advanced technology or equipment at new or existing facilities. • Mandating increasing purchases of renewable energy, which affects the use of existing generation, and energy efficiency initiatives, which affect revenues.
These evolving regulations have affected us, and may continue to affect us by, among other items: • Introducing uncertainty into our planning and capital expenditures processes, as changes in requirements may affect the timing and choice of compliance methods and require costly revisions to prior plans and commitments. • Imposing or modifying limits on the operations of our facilities in order to meet restrictions on air emissions, water use or water discharges. • Requiring capital expenditures and changes in operating procedures and costs as a result of the need to install additional pollution controls or more advanced technology or equipment at new or existing facilities. • Mandating increasing purchases of renewable energy, which affects the use of existing generation, and energy efficiency initiatives, which affect revenues.
MGE has an ongoing transition plan to eliminate coal generation with the retirement of Columbia in 2026 and Elm Road transition from coal to natural gas by the end of 2032. Also under the 2030 framework, MGE aims to increase renewable energy to 25% of retail electric sales by 2025 and to 30% by 2030.
MGE has an ongoing transition plan to eliminate coal generation with the retirement of Columbia by the end of 2029 and Elm Road transition from coal to natural gas by the end of 2032. Also under the 2030 framework, MGE aims to increase renewable energy to 25% of retail electric sales by 2025 and to 30% by 2030.
While it is difficult to know the extent of possible legislation or regulatory activity, it is expected there will be an increase in the number and scope of environmental laws and regulations aimed at carbon sources, including fossil-fueled generation and the transportation of natural gas.
While it is difficult to know the extent of possible legislation or regulatory activity, there may be an increase in the number and scope of environmental laws and regulations aimed at carbon sources, including fossil-fueled generation and the transportation of natural gas.
Events such as an aging workforce without appropriate replacements, mismatch of skill sets to future needs, labor market conditions, evolving employee culture expectations, or unavailability of contract resources may lead to operating challenges and increased costs. Some of the challenges include lack of resources, loss of knowledge, and time required for replacement employees to develop necessary skills.
Events such as an aging workforce without sufficient replacement workers, mismatch of skill sets to future needs, labor market conditions, evolving employee culture expectations, or unavailability of contract resources may lead to operating challenges and increased costs. Some of the challenges include lack of resources, loss of knowledge, and time required for replacement employees to develop necessary skills.
Columbia's existing pollution control upgrades, and the EPA's stance that compliance with the CSAPR equals compliance with BART, should mean that Columbia will not need to do additional work to meet BART requirements. Wisconsin's 2021 SIP argues that Wisconsin will meet its current regional haze goals based on expected emissions reductions, which include Columbia unit retirements.
Columbia's existing pollution control upgrades, and the EPA's stance that compliance with the CSAPR satisfies the requirements of BART, should mean that Columbia will not need to do additional work to meet BART requirements. Wisconsin's 2021 SIP argues that Wisconsin will meet its current regional haze goals based on expected emissions reductions, which include the planned Columbia unit retirements.
That interest is presently held by MGE Transco, a wholly-owned subsidiary of MGE Energy. As of December 31, 2023, MGE Transco held a 3.6% ownership interest in ATC.
That interest is presently held by MGE Transco, a wholly-owned subsidiary of MGE Energy. As of December 31, 2024, MGE Transco held a 3.6% ownership interest in ATC.
As of December 31, 2023, MGEE Transco held a 4.4% ownership interest in ATC Holdco. Environ mental 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 12 waste disposal.
As of December 31, 2024, MGEE Transco held a 4.4% ownership interest in ATC Holdco. Environ mental Regulation 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.
Human Capital MGE Energy and MGE are committed to attracting, developing, and retaining a sustainable workforce and aims to foster a diverse, equitable, and inclusive culture.
Human Capital MGE Energy and MGE are committed to attracting, developing, and retaining a sustainable workforce and aim to foster a diverse, equitable, and inclusive culture.
The lack of availability of new and existing generating facilities may also impact our current resource plan to be in accordance with MISO's methodology. ATC, in which we have an investment, is subject to regulation by FERC as to, among other things, rates.
The lack of availability of new and existing generating facilities may also impact our current resource plan in order to conform our plan with MISO's methodology. ATC, in which we have an investment, is subject to regulation by FERC as to, among other things, rates.
Our subsidiaries have incurred and are expected to continue to incur costs from more stringent regulation of GHG from power plants, natural gas delivery, GHG used in power distribution, and efficiencies lost during power distribution.
Our subsidiaries have incurred and may continue to incur costs from more stringent regulation of GHG from power plants, natural gas delivery, GHG used in power distribution, and efficiencies lost during power distribution.
Decisions are subject to judicial review, potentially leading to additional uncertainty associated with the approval proceedings. Rate regulation is based on providing an opportunity to recover costs that have been reasonably incurred and the ability to earn a reasonable rate of return on invested capital.
Decisions are subject to judicial review, potentially leading to additional uncertainty associated with the approval proceedings. Rate regulation provides us an opportunity to recover costs that have been reasonably incurred and the ability to earn a reasonable rate of return on invested capital.
A terrorist attack, war, natural disaster, pandemic virus or disease, including the recent COVID-19 pandemic, or other catastrophic or unpredictable event could adversely affect our future revenues, expenses and operating results by: interrupting our normal business operations; causing employee absences or casualties, including loss of our key employees; interrupting or affecting supplier operations; requiring substantial expenditures and expenses to repair, replace and restore normal business operations; and reducing investor confidence.
A terrorist attack, war, natural disaster, wildfire, severe storms, pandemic virus or disease, or other catastrophic or unpredictable event could adversely affect our future revenues, expenses and operating results by: interrupting our normal business operations; causing employee absences or casualties, including loss of our key employees; interrupting or affecting supplier operations; requiring substantial expenditures and expenses to repair, replace and restore normal business operations; and reducing investor confidence.
We face risk in connection with the completion of significant capital projects. Our capital projects, such as our renewable generation projects, are subject to various completion risks that could cause costs to increase or delays in completion.
We face risk in connection with the completion of significant capital projects. Our capital projects, such as our renewable generation and storage projects, are subject to various completion risks that could cause increases in costs or delays in completion.
Any reduction of sales from these factors may not result in rates that fully recover our costs and require adjustments to our rates. Under applicable accounting for regulated operations, certain costs and revenues are deferred as regulatory assets and liabilities for future recovery or refund to customers, as authorized by our regulators.
Any reduction of sales from these factors may not result in rates that fully recover our costs and may require adjustments to our rates, which we cannot guarantee will be approved. Under applicable accounting for regulated operations, certain costs and revenues are deferred as regulatory assets and liabilities for future recovery or refund to customers, as authorized by our regulators.
Stop Work Authority is an employee-developed program to communicate the right every worker has to stop any unsafe work activity. We encourage employees across the company to make health and wellness a priority. Good health brings vitality and energy to our work lives and our home lives.
Stop Work Authority is an employee-developed program to communicate the right every worker has to stop any unsafe work activity. MGE encourages employees across the company to make health and wellness a priority. Good health brings vitality and energy to employees' work lives and home lives.
MGE's programs to promote health and wellness include hybrid work schedules, the Healthy Rewards program, and access to athletic trainers for sprain and strain prevention and ergonomic assessments.
MGE's programs to promote health and wellness include hybrid work schedules, the Healthy Rewards program, and access to occupational therapists for sprain and strain prevention and ergonomic assessments.
We are exposed to additional purchased power costs to the extent that our power needs cannot be fully covered by the supplies available from our existing facilities and contractual arrangements.
We have been, and will continue to be, exposed to additional purchased power costs to the extent that our power needs cannot be fully covered by the supplies available from our existing facilities and contractual arrangements.
In February 2021, MGE and the other co-owners of Columbia announced plans to retire that facility. The co-owners intend to retire Unit 1 and Unit 2 by June 2026. Final timing and unit retirement dates are subject to change depending on operational, regulatory, and other factors.
In February 2021, MGE and the other co-owners of Columbia announced plans to retire that facility. The co-owners intend to retire Unit 1 and Unit 2 by the end of 2029. Final timing and unit retirement dates are subject to change depending on operational, regulatory, capacity needs, and other factors impacting the Columbia co-owners.
Such policies related to Stock Ownership Guidelines, the recovery, or the "clawback" of, excess compensation based on erroneous data, and succession planning. Development and Training The energy industry is ever-changing. MGE Energy and MGE believe it is important to continue to engage our human capital resources as our industry evolves.
Such policies related to Stock Ownership Guidelines, the recovery, or the "clawback" of, excess compensation based on erroneous data, and succession planning. Development and Training The energy industry is ever-changing. MGE believes it is important to continue to engage human capital resources as the industry evolves. MGE is committed to sustainable workforce practices such as career development and training.
Inflation has also increased 22 prices of equipment, materials, employee wages and benefits, and other resources. Inflationary pressures in the economy could lead to higher expenses which may adversely impact our financial condition and results of operations.
Inflation has also increased prices of equipment, materials, employee wages and benefits, and other resources. Inflationary pressures in the economy could lead to higher expenses which may adversely impact our financial condition and results of operations. Our operations could be adversely affected by global climate change.
A decline in energy consumption may adversely affect our revenues and future growth. Increased credit risk reflects the risk that our retail customers will not pay their bills in a timely manner or at all, which may lead to a reduction in liquidity and an eventual increase in bad debt expense.
Increased credit risk reflects the risk that our retail customers will not pay their bills in a timely manner or at all, which may lead to a reduction in liquidity and an eventual increase in bad debt expense.
If tax rates are increased, there could be timing delays before regulated rates provide for recovery of those tax increases in revenues. In addition, certain IRS tax policies, such as tax normalization, may impact our ability to economically deliver certain types of resources relative to market prices.
If tax rates are increased, there could be timing delays before regulated rates provide for recovery of those tax increases in revenues. In addition, 18 certain IRS tax policies, such as tax normalization and Treasury Regulations and guidance issued in connection with the IRA, may impact our ability to economically deliver certain types of resources relative to market prices.
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 cost-effectively as quickly as possible.
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.
Keebler (a) Chairman of the Board, President, and Chief Executive Officer 10/01/2018 12 Age: 52 Jared J. Bushek (a) Vice President – Chief Financial Officer and Treasurer 03/01/2023 8 Age: 43 Vice President – Finance, Chief Information Officer and Treasurer 09/01/2020 Assistant Vice President – Chief Information Officer 07/23/2015 Lynn K.
Keebler (a) Chairman of the Board, President, and Chief Executive Officer 10/01/2018 – present 13 Age: 53 Jared J. Bushek (a) Vice President – Chief Financial Officer and Treasurer 03/01/2023 – present 9 Age: 44 Vice President – Finance, Chief Information Officer and Treasurer 09/01/2020 – 03/01/2023 Assistant Vice President – Chief Information Officer 07/23/2015 – 09/01/2020 Lynn K.
In addition, since a portion of our costs are recovered through charges based upon the volume of power delivered, a reduction in electricity deliveries will affect the timing of our recovery of those costs and may require changes to our rate structures.
In addition, since a portion of our costs are recovered through charges based upon the volume of power delivered, a reduction in electricity deliveries will affect the timing of our recovery of those costs and may require changes to our rate structures. 19 We are affected by local, national, and worldwide economic activity.
We are affected by local, national, and worldwide economic activity. MGE Energy's and MGE's operations are affected by local, national and worldwide economic conditions. The consequences of a prolonged period of reduced economic activity may include lower demand for energy, uncertainty regarding energy prices and the capital and commodity markets, and increased credit risk.
MGE Energy's and MGE's operations are affected by local, national and worldwide economic conditions. The consequences of a prolonged period of reduced economic activity may include lower demand for energy, uncertainty regarding energy prices and the capital and commodity markets, and increased credit risk. A decline in energy consumption may adversely affect our revenues and future growth.
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 impingement study in the latest permit which needs to be completed in the next three years.
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.
Lorenz (b) Vice President – Energy Operations 05/01/2021 5 Age: 57 Assistant Vice President – Energy Operations 10/01/2018 Cari Anne Renlund (a) Vice President, General Counsel and Secretary 09/01/2020 8 Age: 50 Vice President and General Counsel 11/02/2015 Scott R.
Lorenz (b) Vice President – Energy Operations 05/01/2021 – present 6 Age: 58 Assistant Vice President – Energy Operations 10/01/2018 – 05/01/2021 Cari Anne Renlund (a) Vice President, General Counsel and Secretary 09/01/2020 – present 9 Age: 51 Vice President and General Counsel 11/02/2015 – 09/01/2020 Scott R.
Compliance with these standards affects operating costs and any noncompliance can result in sanctions, including monetary penalties. We are subject to changing environmental laws and regulations that may affect our costs and business plans. We are subject to environmental laws and regulations that affect the manner in which we conduct business, including capital expenditures, operating costs, and potential liabilities.
Compliance with these standards affects our operating costs and any noncompliance could result in sanctions, including monetary penalties. 17 We are subject to changing environmental laws and regulations that may affect our costs and business plans.
Changes in power generation, storage, and use technologies could have significant effects on customer behaviors and their energy consumption. Customers could engage in individual conservation efforts by voluntarily reducing their consumption of electricity through changes in energy use and through the use of more energy efficient lighting, appliances, and equipment.
Customers could engage in individual conservation efforts by voluntarily reducing their consumption of electricity through changes in energy use and through the use of more energy efficient lighting, appliances, and equipment.
We go beyond applicable occupational health and safety standards by involving employees from all levels of the organization in the continuous improvement of our company-wide safety culture. Our continuous improvement process incorporates safety perception surveys, improvement projects, and monitoring of leading indicators.
The team meets regularly to examine safety topics and to identify and to prioritize continuous improvement opportunities. MGE goes beyond applicable occupational health and safety standards by involving employees from all levels of the organization in the continuous improvement of the company-wide safety culture. MGE's continuous improvement process incorporates safety perception surveys, improvement projects, and monitoring of leading indicators.
In March 2023, the EPA published a proposed update to this rule that would further regulate the wastewater discharges associated with coal-fired power plants. The proposed rule focuses on wastewater discharges from flue gas desulfurization, bottom ash transport water, and combustion residual leachate.
In May 2024, the EPA finalized the ELG rule that further regulates wastewater discharges associated with coal-fired power plants. The rule focuses on wastewater discharges from flue gas desulfurization, combustion residual leachate, and bottom ash transport water.
However, we will not know the impact of this rule until it is finalized, 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.
However, the final impact of this rule will not be known until PM monitoring data from 2023 and 2024 is evaluated and approved, 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.
In addition, any future disallowance of some or all of those tax credits as a result of legislation or an adverse determination by one of the applicable taxing jurisdictions could materially affect our tax obligations and financial results. Our utility business currently owns and operates renewable energy generating facilities.
In addition, any future disallowance of some or all of those tax credits as a result of legislation or an adverse determination by one of the applicable taxing jurisdictions could materially affect our tax obligations and financial results. The IRA introduced new labor requirements that are conditions to qualification for renewable tax credits.
Clean Air Visibility Rule Columbia is subject to the best available retrofit technology (BART) regulations, a subsection of Clean Air Visibility Rule, which may require pollution control retrofits.
See Footnote 16.a. of the Notes to the Consolidated Financial Statements in this Report for further discussion of the proposed rule. Clean Air Visibility Rule Columbia is subject to the best available retrofit technology (BART) regulations, a subsection of the Clean Air Visibility Rule, which may require pollution control retrofits.
Smith (b) Vice President – Business and Regulatory Strategy 05/01/2021 5 Age: 52 Assistant Vice President – Business and Regulatory Strategy 03/01/2018 Note: Ages, years of service, and positions as of December 31, 2023. (a) Executive officer of MGE Energy and MGE. (b) Executive officer of MGE. 18 Item 1A. Ris k Factors.
Smith (b) Vice President – Business and Regulatory Strategy 05/01/2021 – present 6 Age: 53 Assistant Vice President – Business and Regulatory Strategy 03/01/2018 – 05/01/2021 (a) Executive officer of MGE Energy and MGE. (b) Executive officer of MGE. 16 Item 1A. Ris k Factors.
However, we will not know the impact of this rule with any certainty until the rule is finalized. Renewable Energy Standards Wisconsin law establishes a minimum amount of energy MGE must supply from renewable sources. MGE currently exceeds the applicable minimum requirement of approximately 8%. The costs to comply with this requirement are being recovered in rates.
Based on previous treatment of environmental compliance projects, management believes that any compliance costs will be recovered in future rates. Renewable Energy Standards Wisconsin law establishes a minimum amount of energy MGE must supply from renewable sources. MGE currently exceeds the applicable minimum requirement of approximately 8%. The costs to comply with this requirement are being recovered in rates.
We are committed to sustainable workforce practices such as career development and training. We offer all employees the opportunity to learn and grow—whether the goal is to increase job proficiency, improve decision-making skills, or prepare for new roles and responsibilities. We work to provide our employees with the tools they need to be successful in their careers.
MGE offers all employees the opportunity to learn and grow—whether the goal is to increase job proficiency, improve decision-making skills, or prepare for 15 new roles and responsibilities. MGE works to provide employees with the tools they need to be successful in their careers. This strategy is essential given MGE's aging workforce.
A nonattainment designation would require the State of Wisconsin to develop a plan to get into attainment, which may include additional emission limitations for the Elm Road units.
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. With the planned transition of the Elm Road Units to natural gas, there is a low probability for the need of additional emission limitations.
Columbia's permit renewal application is due in 2024 and in November 2023 the Columbia operator timely submitted its renewal application to the WDNR. BTA improvements required by the future renewal permit may be coordinated with the owners' plan to retire both units by June of 2026.
The Columbia operator timely submitted its renewal application to the WDNR. BTA improvements required by the future renewal permit will be coordinated with the owners' plan to retire both units by the end of 2029. MGE will continue to work with Columbia's operator to evaluate regulatory requirements in light of the planned retirements.
The deadline for moderate classified areas to meet attainment standards is August 2024. At this time, the operator of the Elm Road Units does not expect that the 2015 Ozone NAAQS or the Milwaukee County nonattainment designation to have a material effect on the Units based on final designations.
Ozone NAAQS The Elm Road Units are located in Milwaukee County, Wisconsin, a nonattainment area for the 2015 Ozone NAAQS. At this time, the operator of the Elm Road Units does not expect that the 2015 Ozone NAAQS or the Milwaukee County nonattainment designation will have a direct material effect on the Elm Road Units.
In addition, litigation by environmental nongovernment organizations targeting GHG emissions from the electric power industry is also likely if the federal government fails to act on greenhouse gas initiatives.
While it is difficult to know the extent of possible legislation or regulatory activity, the federal government may consider, and could pass, some form of greenhouse gas legislation or regulations. In addition, litigation by environmental nongovernment organizations targeting GHG emissions from the electric power industry may also occur if the federal government fails to act on greenhouse gas initiatives.
While we have not been subject to cyber incidents that have had a material impact on operations to date, the safeguards we have may not always be effective due to the evolving nature of cyber-attacks. We cannot guarantee that such protections will be completely successful in the event of a cyber-attack.
While we have not been subject to cyber incidents that have had a material impact on operations to date, the safeguards we have may not always be effective due to the evolving nature of cyber attacks. Moreover, the rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity risks.
MGE is following the development of recommendations and plans developed by agencies as a result of IRA and executive orders, as well as other executive actions taken by the Biden administration, to determine their applicability to MGE's decarbonization plans and to evaluate any potential impact to our operations.
MGE is following the development of recommendations and plans developed by agencies as a result of executive orders, as well as other executive actions taken by the Trump administration, to determine their applicability to MGE's decarbonization, investment and environmental compliance plans and to evaluate any potential impact to our operations. 14 State and Regional Action on Climate Change In August 2019, Wisconsin Governor Tony Evers signed an executive order to establish the Office of Sustainability and Clean Energy (OSCE).
We have historically reduced our consolidated federal and state income tax liability with the use of various tax credits under the applicable tax codes.
There is uncertainty regarding whether and how the current and future Presidential administrations or U.S. Congress will address tax policy and regulation. We have historically reduced our consolidated federal and state income tax liability with the use of various tax credits under the applicable tax codes.
Those issues could affect customers' energy choices, including efforts at self-supply, and could affect the handling and treatment of our rate requests and cost recovery. o we may experience difficulty in attracting investors, which could affect the availability and cost of capital and financing. These matters represent uncertainties in the operation and management of our business.
Those issues could affect customers' energy choices, including efforts at self-supply, and could affect the handling and treatment of our rate requests and cost recovery.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeBusiness and Footnote 16.a. of the Notes to Consolidated Financial Statements in this Report for a description of several environmental proceedings affecting MGE. See Footnote 16b. of the Notes to Consolidated Financial Statements under Item 8. Financial Statements and Supplementary Data in this Report for a description of other legal matters. Item 4. Min e Safety Disclosures.
Biggest changeBusiness and Footnote 16.a. of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report for a description of several environmental proceedings affecting MGE. See Footnote 16b. of the Notes to Consolidated Financial Statements under Part II, Item 8. Financial Statements and Supplementary Data in this Report for a description of other legal matters.
Item 3. Lega l Proceedings. MGE Energy and MGE 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 "Environmental" under Item 1.
Item 3. Lega l Proceedings. MGE Energy and MGE 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 "Environmental Regulations" under Part I, Item 1.
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MGE Energy and MGE - Not applicable. 31 PAR T II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCumulative Five-Year Total Return Comparison (assumes $1,000 invested on 12/31/2018 with dividends reinvested) Value of Investment as of December 31, 2018 2019 2020 2021 2022 2023 MGEE $ 1,000 $ 1,341 $ 1,216 $ 1,458 $ 1,275 $ 1,340 Russell 2000 1,000 1,255 1,506 1,729 1,376 1,608 EEI Index 1,000 1,258 1,243 1,456 1,473 1,344 Item 6. [ R eserved] 32
Biggest changeCumulative Five-Year Total Return Comparison (assumes $1,000 invested on 12/31/2019 with dividends reinvested) Value of Investment as of December 31, 2019 2020 2021 2022 2023 2024 MGEE $ 1,000 $ 907 $ 1,088 $ 951 $ 1,000 $ 1,328 Russell 2000 1,000 1,200 1,377 1,096 1,281 1,427 EEI Index 1,000 988 1,158 1,171 1,069 1,273
Stock Performance Graph The performance graph below illustrates a five-year comparison of cumulative total returns based on an initial investment of $1,000 in MGE Energy common stock, as compared with the Russell 2000 and the EEI Index for the period 2019 through 2023. The EEI Index reflects the consolidated performance of Edison Electric Institute investor-owned electric utilities.
Stock Performance Graph The performance graph below illustrates a five-year comparison of cumulative total returns based on an initial investment of $1,000 in MGE Energy common stock, as compared with the Russell 2000 and the EEI Index for the period 2019 through 2024. The EEI Index reflects the consolidated performance of Edison Electric Institute investor-owned electric utilities.
For additional information regarding dividends and dividend restrictions, see Footnote 15 of the Notes to the Consolidated Financial Statements under Item 8. Financial Statements and Supplementary Data in this Report. MGE As of January 31, 2024, there were 17,347,894 outstanding shares of MGE common stock, all of which were held by MGE Energy.
For additional information regarding dividends and dividend restrictions, see Footnote 15 of the Notes to the Consolidated Financial Statements under Part II, Item 8. Financial Statements and Supplementary Data in this Report. MGE As of February 12, 2025, there were 17,347,894 outstanding shares of MGE common stock, all of which were held by MGE Energy.
Item 5. Ma rket for Registrants' Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. Market for Common Equity MGE Energy MGE Energy common stock is traded on Nasdaq under the symbol MGEE. As of January 31, 2024, there were 40,660 shareholders of record.
Item 5. Ma rket for Registrants' Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. Market for Common Equity MGE Energy MGE Energy common stock is traded on Nasdaq under the symbol MGEE. As of February 12, 2025, there were 14,383 shareholders of record.
Added
The number of record holders is based upon the actual number of holders registered on our books at such date and does not include holders of shares in "street names" or persons, partnerships, associations, corporations or other entities identified in security position listings maintained by depository trust companies.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeGeneral MGE Energy is an investor-owned public utility holding company operating through subsidiaries in five business segments: • Regulated electric utility operations, conducted through MGE, which generate and distribute electricity to approximately 163,000 customers in Dane County, Wisconsin, • Regulated gas utility operations, conducted through MGE, which distribute natural gas to approximately 176,000 customers in seven south-central and western Wisconsin counties, • Nonregulated energy operations, conducted through MGE Power and its subsidiaries, which owns interests in electric generating capacity that is leased to MGE, • Transmission investments, representing our equity investment in ATC, which owns and operates electric transmission facilities primarily in Wisconsin, and ATC Holdco, a company created to facilitate out-of-state electric transmission development and investments, and • All other, which includes corporate operations and services.
Biggest changeGeneral MGE Energy is an investor-owned public utility holding company operating through subsidiaries in five business segments: • Regulated electric utility operations, conducted through MGE, which generate and distribute electricity to approximately 167,000 customers in Dane County, Wisconsin, • Regulated gas utility operations, conducted through MGE, which distribute natural gas to approximately 178,000 customers in seven south-central and western Wisconsin counties, • Nonregulated energy operations, conducted through MGE Power and its subsidiaries, which owns interests in electric generating capacity that is leased to MGE, • Transmission investments, representing our equity investment in ATC, which owns and operates electric transmission facilities primarily in Wisconsin, and ATC Holdco, a company created to facilitate out-of-state electric transmission development and investments, and • All other, which includes investing in companies and property that relate to the regulated operations and financing the regulated operations, through its wholly owned subsidiaries CWDC, MAGAEL, and North Mendota, and corporate operations and services.
We have not included a discussion of results of operations and changes in financial position for the year ended December 31, 2022, as compared to the year ended December 31, 2021. That discussion can be found in Item 7.
We have not included a discussion of results of operations and changes in financial position for the year ended December 31, 2023, as compared to the year ended December 31, 2022. That discussion can be found in Item 7.
The earnings and cash flows from the utility business are sensitive to various external factors, including: • Weather, and its impact on customer sales, • Economic conditions, including current business activity and employment and their impact on customer demand, • Rates, regulation and regulatory issues, and their impact on the timing and recovery of costs, • Energy commodity prices, including natural gas prices, • Equity price risk pertaining to pension related assets, 33 • Credit market conditions, including interest rates and our debt credit rating, • Environmental laws and regulations, including adopted and pending environmental rule changes, and • Other factors listed in
The earnings and cash flows from the utility business are sensitive to various external factors, including, but not limited to: • Weather, and its impact on customer sales, • Economic conditions, including current business activity and employment and their impact on customer demand, • Rates, regulation and regulatory issues, and their impact on the timing and recovery of costs, • Energy commodity prices, including natural gas prices, • Equity price risk pertaining to pension related assets, • Credit market conditions, including interest rates and our debt credit rating, 29 • Environmental laws and regulations, including adopted and pending environmental rule changes, and • Other factors listed in
Management's Discussion and Analysis of Financial Condition and Results of Operations in our annual report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 22, 2023.
Management's Discussion and Analysis of Financial Condition and Results of Operations in our annual report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 21, 2024.
That responsibility is manifested in actions intended to achieve 80% carbon reduction by 2030 (from 2005 levels) and net-zero carbon by 2050, including: • reducing the proportion that coal generation represents in its generation mix, as evidenced by its announcements of the retirement of Columbia (a coal generation plant) and the planned change in the Elm Road Units fuel source from coal to natural gas, and • growing ownership of renewable generation sources.
That responsibility is manifested in actions MGE has taken, and will continue to take, to achieve its goals of 80% carbon reduction by 2030 (from 2005 levels) and net-zero carbon by 2050, including: • reducing the proportion that coal generation represents in its generation mix, as evidenced by its announcements of the retirement of Columbia (a coal generation plant) and the planned change in the Elm Road Units fuel source from coal to natural gas, and • growing ownership of renewable generation sources.
Our primary focus is our core utility customers at MGE as well as creating long-term value for our shareholders. MGE seeks to meet its customers' expectations for reasonably priced, reliable electric and gas service provided in a reasonable manner.
Our primary focus is our core utility customers, which are served by MGE as well as creating long-term value for our shareholders. MGE seeks to meet its customers' expectations for reasonably priced, reliable electric and gas service provided in a responsible manner.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe following table shows segment information for MGE Energy's and MGE's operations: (In thousands) MGE Energy Electric Gas Non-Regulated Energy Transmission Investment All Others Consolidation/ Elimination Entries Consolidated Total Year Ended December 31, 2023 Operating revenues $ 489,729 $ 200,012 $ 690 $ — $ — $ — $ 690,431 Interdepartmental revenues 922 15,501 41,586 — — ( 58,009 ) — Total operating revenues 490,651 215,513 42,276 — — ( 58,009 ) 690,431 Depreciation and amortization ( 77,440 ) ( 15,531 ) ( 7,381 ) — — — ( 100,352 ) Operating income (loss) 90,991 21,663 34,729 — ( 998 ) — 146,385 Interest (expense) income, net ( 20,609 ) ( 6,038 ) ( 4,004 ) 2 220 — ( 30,429 ) Income tax (provision) benefit ( 10,182 ) ( 7,175 ) ( 8,370 ) ( 2,897 ) 821 — ( 27,803 ) Equity in earnings of investments — — — 10,631 — — 10,631 Net income (loss) 75,946 14,068 22,356 7,736 ( 2,407 ) — 117,699 Year Ended December 31, 2022 Operating revenues $ 465,167 $ 248,672 $ 680 $ — $ — $ — $ 714,519 Interdepartmental revenues ( 44 ) 34,073 41,555 — — ( 75,584 ) — Total operating revenues 465,123 282,745 42,235 — — ( 75,584 ) 714,519 Depreciation and amortization ( 62,897 ) ( 15,261 ) ( 7,391 ) — — — ( 85,549 ) Operating income (loss) 77,672 26,261 34,683 — ( 873 ) — 137,743 Interest (expense) income, net ( 17,578 ) ( 4,787 ) ( 4,322 ) — 40 — ( 26,647 ) Income tax (provision) benefit ( 7,299 ) ( 8,492 ) ( 8,272 ) ( 2,490 ) 329 — ( 26,224 ) Equity in earnings of investments — — — 9,136 — — 9,136 Net income (loss) 65,187 18,215 22,090 6,647 ( 1,187 ) — 110,952 Year Ended December 31, 2021 Operating revenues $ 420,286 $ 185,620 $ 678 $ — $ — $ — $ 606,584 Interdepartmental revenues 556 22,728 40,866 — — ( 64,150 ) — Total operating revenues 420,842 208,348 41,544 — — ( 64,150 ) 606,584 Depreciation and amortization ( 56,672 ) ( 12,852 ) ( 7,459 ) — — — ( 76,983 ) Operating income (loss) 58,993 25,133 33,936 — ( 768 ) — 117,294 Interest (expense) income, net ( 15,261 ) ( 4,315 ) ( 4,577 ) — 41 — ( 24,112 ) Income tax (provision) benefit 10,672 ( 4,922 ) ( 7,998 ) ( 2,486 ) 619 — ( 4,115 ) Equity in earnings of investments — — — 9,339 ( 69 ) — 9,270 Net income (loss) 63,910 15,511 21,361 6,852 ( 1,873 ) — 105,761 106 (In thousands) MGE Electric Gas Non-Regulated Energy Consolidation/ Elimination Entries Consolidated Total Year Ended December 31, 2023 Operating revenues $ 489,729 $ 200,012 $ 690 $ — $ 690,431 Interdepartmental revenues 922 15,501 41,586 ( 58,009 ) — Total operating revenues 490,651 215,513 42,276 ( 58,009 ) 690,431 Depreciation and amortization ( 77,440 ) ( 15,531 ) ( 7,381 ) — ( 100,352 ) Operating income 90,991 21,663 34,729 — 147,383 Interest expense, net ( 20,609 ) ( 6,038 ) ( 4,004 ) — ( 30,651 ) Income tax provision ( 10,182 ) ( 7,175 ) ( 8,370 ) — ( 25,727 ) Net income attributable to MGE 75,946 14,068 22,356 ( 21,868 ) 90,502 Year Ended December 31, 2022 Operating revenues $ 465,167 $ 248,672 $ 680 $ — $ 714,519 Interdepartmental revenues ( 44 ) 34,073 41,555 ( 75,584 ) — Total operating revenues 465,123 282,745 42,235 ( 75,584 ) 714,519 Depreciation and amortization ( 62,897 ) ( 15,261 ) ( 7,391 ) — ( 85,549 ) Operating income 77,672 26,261 34,683 — 138,616 Interest expense, net ( 17,578 ) ( 4,787 ) ( 4,322 ) — ( 26,687 ) Income tax provision ( 7,299 ) ( 8,492 ) ( 8,272 ) — ( 24,063 ) Net income attributable to MGE 65,187 18,215 22,090 ( 21,576 ) 83,916 Year Ended December 31, 2021 Operating revenues $ 420,286 $ 185,620 $ 678 $ — $ 606,584 Interdepartmental revenues 556 22,728 40,866 ( 64,150 ) — Total operating revenues 420,842 208,348 41,544 ( 64,150 ) 606,584 Depreciation and amortization ( 56,672 ) ( 12,852 ) ( 7,459 ) — ( 76,983 ) Operating income 58,993 25,133 33,936 — 118,062 Interest expense, net ( 15,261 ) ( 4,315 ) ( 4,577 ) — ( 24,153 ) Income tax benefit (provision) 10,672 ( 4,922 ) ( 7,998 ) — ( 2,248 ) Net income attributable to MGE 63,910 15,511 21,361 ( 22,391 ) 78,391 The following table shows segment information for MGE Energy's and MGE's assets and capital expenditures: Utility Consolidated (In thousands) MGE Energy Electric Gas Non-regulated Energy Transmission Investment (a) All Others Consolidation/ Elimination Entries Total Assets: December 31, 2023 $ 1,777,903 $ 533,876 $ 245,232 $ 86,516 $ 469,392 $ ( 437,461 ) $ 2,675,458 December 31, 2022 1,626,373 530,733 247,841 80,642 467,112 ( 435,101 ) 2,517,600 December 31, 2021 1,525,163 485,345 252,584 75,990 467,954 ( 435,130 ) 2,371,906 Capital Expenditures: Year ended Dec. 31, 2023 $ 180,743 $ 36,402 $ 4,926 $ — $ — $ — $ 222,071 Year ended Dec. 31, 2022 141,273 27,656 6,101 — — — 175,030 Year ended Dec. 31, 2021 115,234 34,071 3,864 — — — 153,169 Utility Consolidated (In thousands) MGE Electric Gas Non-regulated Energy Consolidation/ Elimination Entries Total Assets: December 31, 2023 $ 1,777,903 $ 533,876 $ 245,181 $ ( 1,992 ) $ 2,554,968 December 31, 2022 1,626,373 530,733 247,791 ( 258 ) 2,404,639 December 31, 2021 1,525,163 485,345 252,534 ( 267 ) 2,262,775 Capital Expenditures: Year ended Dec. 31, 2023 $ 180,743 $ 36,402 $ 4,926 $ — $ 222,071 Year ended Dec. 31, 2022 141,273 27,656 6,101 — 175,030 Year ended Dec. 31, 2021 115,234 34,071 3,864 — 153,169 (a) The Transmission Investment segment represents MGE Energy's investment in equity method investees. 107 Item 9.
Biggest changeThe following table shows segment information for MGE Energy's and MGE's operations: (In thousands) MGE Energy Electric Gas Non-Regulated Energy Transmission Investment Total Reportable Segments All Others Consolidation/ Elimination Entries Consolidated Total Year Ended December 31, 2024 Operating revenues $ 497,673 $ 178,587 $ 684 $ — $ 676,944 $ — $ — $ 676,944 Interdepartmental revenues ( 194 ) 14,983 43,831 — 58,620 — ( 58,620 ) — Total operating revenues 497,479 193,570 44,515 — 735,564 — ( 58,620 ) 676,944 Fuel and purchased power ( 90,726 ) — — — ( 90,726 ) — 3,880 ( 86,846 ) Purchased gas costs — ( 93,834 ) — — ( 93,834 ) — 11,141 ( 82,693 ) Depreciation and amortization ( 84,264 ) ( 16,779 ) ( 7,538 ) — ( 108,581 ) — — ( 108,581 ) Interest expense ( 25,616 ) ( 6,943 ) ( 3,793 ) — ( 36,352 ) — — ( 36,352 ) Other segment items (a) ( 225,985 ) ( 60,290 ) ( 113 ) — ( 286,388 ) ( 793 ) 43,599 ( 243,582 ) Income tax (provision) benefit 3,620 ( 1,995 ) ( 9,009 ) ( 3,345 ) ( 10,729 ) 133 — ( 10,596 ) Equity in earnings of investments — — — 12,275 12,275 — — 12,275 Net income (loss) 74,508 13,729 24,062 8,930 121,229 ( 660 ) — 120,569 Year Ended December 31, 2023 Operating revenues $ 489,729 $ 200,012 $ 690 $ — $ 690,431 $ — $ — $ 690,431 Interdepartmental revenues 922 15,501 41,586 — 58,009 — ( 58,009 ) — Total operating revenues 490,651 215,513 42,276 — 748,440 — ( 58,009 ) 690,431 Fuel and purchased power ( 102,520 ) — — — ( 102,520 ) — 3,669 ( 98,851 ) Purchased gas costs — ( 118,509 ) — — ( 118,509 ) — 11,862 ( 106,647 ) Depreciation and amortization ( 77,440 ) ( 15,531 ) ( 7,381 ) — ( 100,352 ) — — ( 100,352 ) Interest expense ( 22,883 ) ( 6,146 ) ( 4,062 ) — ( 33,091 ) — — ( 33,091 ) Other segment items (a) ( 201,680 ) ( 54,084 ) ( 107 ) 2 ( 255,869 ) ( 3,228 ) 42,478 ( 216,619 ) Income tax (provision) benefit ( 10,182 ) ( 7,175 ) ( 8,370 ) ( 2,897 ) ( 28,624 ) 821 — ( 27,803 ) Equity in earnings of investments — — — 10,631 10,631 — — 10,631 Net income (loss) 75,946 14,068 22,356 7,736 120,106 ( 2,407 ) — 117,699 Year Ended December 31, 2022 Operating revenues $ 465,167 $ 248,672 $ 680 $ — $ 714,519 $ — $ — $ 714,519 Interdepartmental revenues ( 44 ) 34,073 41,556 — 75,585 — ( 75,585 ) — Total operating revenues 465,123 282,745 42,236 — 790,104 — ( 75,585 ) 714,519 Fuel and purchased power ( 111,915 ) — — — ( 111,915 ) — 3,765 ( 108,150 ) Purchased gas costs — ( 182,904 ) — — ( 182,904 ) — 30,334 ( 152,570 ) Depreciation and amortization ( 62,896 ) ( 15,262 ) ( 7,391 ) — ( 85,549 ) — — ( 85,549 ) Interest expense ( 18,884 ) ( 4,867 ) ( 4,322 ) — ( 28,073 ) — — ( 28,073 ) Other segment items (a) ( 198,942 ) ( 53,005 ) ( 161 ) — ( 252,108 ) ( 1,515 ) 41,486 ( 212,137 ) Income tax (provision) benefit ( 7,299 ) ( 8,492 ) ( 8,272 ) ( 2,489 ) ( 26,552 ) 328 — ( 26,224 ) Equity in earnings of investments — — — 9,136 9,136 — — 9,136 Net income (loss) 65,187 18,215 22,090 6,647 112,139 ( 1,187 ) — 110,952 (a) Other segment items include AFUDC Income, Other Income, Net, Other Operations and Maintenance, Other General Taxes, and Interest Revenue. 98 (In thousands) MGE Electric Gas Non-Regulated Energy Total Reportable Segments Consolidation/ Elimination Entries Consolidated Total Year Ended December 31, 2024 Operating revenues $ 497,673 $ 178,587 $ 684 $ 676,944 $ — $ 676,944 Interdepartmental revenues ( 194 ) 14,983 43,831 58,620 ( 58,620 ) — Total operating revenues 497,479 193,570 44,515 735,564 ( 58,620 ) 676,944 Fuel and purchased power ( 90,726 ) — — ( 90,726 ) 3,880 ( 86,846 ) Purchased gas costs — ( 93,834 ) — ( 93,834 ) 11,141 ( 82,693 ) Depreciation and amortization ( 84,264 ) ( 16,779 ) ( 7,538 ) ( 108,581 ) — ( 108,581 ) Interest expense ( 25,616 ) ( 6,943 ) ( 3,793 ) ( 36,352 ) — ( 36,352 ) Other segment items (a) ( 225,985 ) ( 60,290 ) ( 113 ) ( 286,388 ) 43,599 ( 242,789 ) Income tax benefit (provision) 3,620 ( 1,995 ) ( 9,009 ) ( 7,384 ) — ( 7,384 ) Net income attributable to noncontrolling interest, net of tax — — — — ( 22,855 ) ( 22,855 ) Net income attributable to MGE 74,508 13,729 24,062 112,299 ( 22,855 ) 89,444 Year Ended December 31, 2023 Operating revenues $ 489,729 $ 200,012 $ 690 $ 690,431 $ — $ 690,431 Interdepartmental revenues 922 15,501 41,586 58,009 ( 58,009 ) — Total operating revenues 490,651 215,513 42,276 748,440 ( 58,009 ) 690,431 Fuel and purchased power ( 102,520 ) — — ( 102,520 ) 3,669 ( 98,851 ) Purchased gas costs — ( 118,509 ) — ( 118,509 ) 11,862 ( 106,647 ) Depreciation and amortization ( 77,440 ) ( 15,531 ) ( 7,381 ) ( 100,352 ) — ( 100,352 ) Interest expense ( 22,883 ) ( 6,146 ) ( 4,062 ) ( 33,091 ) — ( 33,091 ) Other segment items (a) ( 201,680 ) ( 54,084 ) ( 107 ) ( 255,871 ) 42,478 ( 213,393 ) Income tax provision ( 10,182 ) ( 7,175 ) ( 8,370 ) ( 25,727 ) — ( 25,727 ) Net income attributable to noncontrolling interest, net of tax — — — — ( 21,868 ) ( 21,868 ) Net income attributable to MGE 75,946 14,068 22,356 112,370 ( 21,868 ) 90,502 Year Ended December 31, 2022 Operating revenues $ 465,167 $ 248,672 $ 680 714,519 $ — 714,519 Interdepartmental revenues ( 44 ) 34,073 41,556 75,585 ( 75,585 ) — Total operating revenues 465,123 282,745 42,236 790,104 ( 75,585 ) 714,519 Fuel and purchased power ( 111,915 ) — — ( 111,915 ) 3,765 ( 108,150 ) Purchased gas costs — ( 182,904 ) — ( 182,904 ) 30,334 ( 152,570 ) Depreciation and amortization ( 62,896 ) ( 15,262 ) ( 7,391 ) ( 85,549 ) — ( 85,549 ) Interest expense ( 18,884 ) ( 4,867 ) ( 4,322 ) ( 28,073 ) — ( 28,073 ) Other segment items (a) ( 198,942 ) ( 53,005 ) ( 161 ) ( 252,108 ) 41,486 ( 210,622 ) Income tax provision ( 7,299 ) ( 8,492 ) ( 8,272 ) ( 24,063 ) — ( 24,063 ) Net income attributable to noncontrolling interest, net of tax — — — — ( 21,576 ) ( 21,576 ) Net income attributable to MGE 65,187 18,215 22,090 105,492 ( 21,576 ) 83,916 (a) Other segment items include AFUDC Income, Other Income, Net, Other Operations and Maintenance, Other General Taxes, and Interest Revenue.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Regulatory assets represent costs which are deferred due to the probable future recovery from customers through regulated rates while regulatory liabilities represent the excess recovery of costs or accrued credits which were deferred because management believes it is probable such amounts will be returned to customers through future regulated rates.
Regulatory assets represent costs which are deferred due to the probable future recovery from customers through regulated rates, while regulatory liabilities represent the excess recovery of costs or accrued credits which were deferred because management believes it is probable such amounts will be returned to customers through future regulated rates.
Investments - MGE Energy and MGE. Investments in limited liability companies that have specific ownership accounts in which MGE Energy or MGE's ownership interest is more than minor and are considered to have significant influence are accounted for using the equity method.
Investments in limited liability companies that have specific ownership accounts in which MGE Energy or MGE's ownership interest is more than minor and are considered to have significant influence are accounted for using the equity method.
If it becomes probable that regulators will disallow full recovery or a return on the remaining net book value of a generating unit that is either abandoned or probable of being abandoned, an impairment loss would be required.
If it becomes probable that regulators will disallow full recovery or a return on the remaining net book value of a generating unit that is either abandoned or probable of being abandoned, an impairment loss would be required.
A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable 55 assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Under that Note Purchase Agreement: (i) note holders have the right to require MGE to repurchase their notes at par in the event of an acquisition of beneficial ownership of 30% or more of the outstanding voting stock of MGE 92 Energy, (ii) MGE must maintain a ratio of its consolidated indebtedness to consolidated total capitalization not to exceed a maximum of 65%, and (iii) MGE cannot issue "Priority Debt" in an amount exceeding 20% of its consolidated assets.
Under that Note Purchase Agreement: (i) note holders have the right to require MGE to repurchase their notes at par in the event of an acquisition of beneficial ownership of 30% or more of the outstanding voting stock of MGE Energy, (ii) MGE must maintain a ratio of its consolidated indebtedness to consolidated total capitalization not to exceed a maximum of 65%, and (iii) MGE cannot issue "Priority Debt" in an amount exceeding 20% of its consolidated assets.
The fair value of the derivative liability disclosed in this table has not been reduced for the collateral posted. Exchange-traded Investments. Investments include exchange-traded investment securities valued using quoted prices on active exchanges and are therefore classified as Level 1. 102 Deferred Compensation. The deferred compensation plans allow participants to defer certain cash compensation into notional investment accounts.
The fair value of the derivative liability disclosed in this table has not been reduced for the collateral posted. Exchange-traded Investments. Investments include exchange-traded investment securities valued using quoted prices on active exchanges and are therefore classified as Level 1. Deferred Compensation. The deferred compensation plans allow participants to defer certain cash compensation into notional investment accounts.
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 they are in a net loss/gain position.
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.
The PSCW also approved deferral of any differential in PTC tax credits reflected in rates and actual credits produced. These deferrals will be reflected in MGE's next rate case filing. The gas rate increases were also driven by our investment made in grid modernization and higher pension and OPEB and uncollectible costs (including costs previously deferred from prior years).
The PSCW also approved deferral of any differential in PTC tax credits reflected in rates and actual credits produced. These deferrals will be reflected in MGE's next rate case filing. The gas rate increases were also driven by MGE's investment made in grid modernization and higher pension and OPEB and uncollectible costs (including costs previously deferred from prior years).
The maximum length of time over which cash flows related to energy commodities can be hedged under applicable PSCW approvals is four years. MGE has financial gas and electric commodity contracts to hedge commodity price risk in the gas and electric utility segments. These contracts are primarily comprised of exchange-traded option and future contracts.
The maximum length of time over which cash flows related to energy commodities can be hedged under applicable PSCW approvals is four years. 45 MGE has financial gas and electric commodity contracts to hedge commodity price risk in the gas and electric utility segments. These contracts are primarily comprised of exchange-traded option and future contracts.
As disclosed by management, management continually assesses whether the regulatory assets and liabilities meet the criteria for probability of future recovery or deferral. This assessment considers factors such as changes in the regulatory environment, recent rate orders to other regulated entities under the same jurisdiction, and the status of any pending or potential deregulation legislation.
As disclosed by management, management assesses whether the regulatory assets and liabilities meet the criteria for probability of future recovery or deferral. This assessment considers factors such as changes in the regulatory environment, recent rate orders to other regulated entities under the same jurisdiction, and the status of any pending or potential deregulation legislation.
As disclosed by management, management continually assesses whether the regulatory assets and liabilities meet the criteria for probability of future recovery or deferral. This assessment considers factors such as changes in the regulatory environment, recent rate orders to other regulated entities under the same jurisdiction, and the status of any pending or potential deregulation legislation.
As disclosed by management, management assesses whether the regulatory assets and liabilities meet the criteria for probability of future recovery or deferral. This assessment considers factors such as changes in the regulatory environment, recent rate orders to other regulated entities under the same jurisdiction, and the status of any pending or potential deregulation legislation.
Treasury Bills having a 26 -week maturity increased by 1 % compounded monthly with a minimum annual rate of 7 %, compounded monthly. The notional investments are based upon observable market data, however, since the deferred compensation obligations themselves are not exchanged in an active market, they are classified as Level 2. Derivatives.
Treasury Bills having a 26 -week maturity increased by 1 % compounded monthly with a 94 minimum annual rate of 7 %, compounded monthly. The notional investments are based upon observable market data, however, since the deferred compensation obligations themselves are not exchanged in an active market, they are classified as Level 2. Derivatives.
As of December 31, 2023, MGE Energy and MGE continue to have an unrecognized tax benefit associated with the change in income tax method of accounting for electric generation and electric distribution repairs, however, the tax benefit relating to gas distribution repairs has been recognized due to the adoption of the safe harbor method of accounting for gas repairs issued by the Internal Revenue Service.
As of December 31, 2024, and 2023, MGE Energy and MGE continue to have an unrecognized tax benefit associated with the change in income tax method of accounting for electric generation and electric distribution repairs, however, the tax benefit relating to gas distribution repairs has been recognized due to the adoption of the safe harbor method of accounting for gas repairs issued by the Internal Revenue Service in 2023.
The interest component recoverable in rates is offset by a regulatory asset. As of December 31, 2022, and 2021, MGE Energy and MGE had an unrecognized tax benefit primarily related to temporary tax differences associated with the change in income tax method of accounting for electric generation and electric and gas distribution repairs.
The interest component recoverable in rates is offset by a regulatory asset. As of December 31, 2022, MGE Energy and MGE had an unrecognized tax benefit primarily related to temporary tax differences associated with the change in income tax method of accounting for electric generation and electric and gas distribution repairs.
MGE reports, on a net basis, transactions on the MISO markets in which it buys and sells power within the same hour to meet electric energy delivery requirements. Transportation of Gas MGE has contracts under which it provides gas transportation services to customers who have elected to purchase gas from a third party.
MGE reports, on a net basis, transactions on the MISO markets in which it buys and sells power within the same hour to meet electric energy delivery requirements. 96 Transportation of Gas MGE has contracts under which it provides gas transportation services to customers who have elected to purchase gas from a third party.
Cash flows from such derivative instruments are classified on a basis consistent with the nature of the underlying hedged item. h. Regulatory Assets and Liabilities - MGE Energy and MGE. Regulatory assets and regulatory liabilities are recorded consistent with regulatory treatment. Regulatory assets represent costs which are deferred due to the probable future recovery from 68 customers through regulated rates.
Cash flows from such derivative instruments are classified on a basis consistent with the nature of the underlying hedged item. h. Regulatory Assets and Liabilities - MGE Energy and MGE. Regulatory assets and regulatory liabilities are recorded consistent with regulatory treatment. Regulatory assets represent costs which are deferred due to the probable future recovery from customers through regulated rates.
Changes in fair value as well as the original grant are recognized as compensation cost. Since this amount is remeasured throughout the vesting period, the compensation cost is subject to variability. For nonretirement eligible employees under the 2006 Performance Unit Plan, stock-based 89 compensation costs are accrued and recognized using the graded vesting method.
Changes in fair value as well as the original grant are recognized as compensation cost. Since this amount is remeasured throughout the vesting period, the compensation cost is subject to variability. For nonretirement eligible employees under the 2006 Performance Unit Plan, stock-based compensation costs are accrued and recognized using the graded vesting method.
The threshold is defined for recognizing tax return positions in the financial statements as "more likely than not" that the position is 71 sustainable, based on its merits. Subsequent recognition, derecognition, and measurement is based on management's best judgment given the facts, circumstances, and information available at the reporting date.
The threshold is defined for recognizing tax return positions in the financial statements as "more likely than not" that the position is sustainable, based on its merits. Subsequent recognition, derecognition, and measurement is based on management's best judgment given the facts, circumstances, and information available at the reporting date.
Performance units under the 2021 Incentive Plan can be paid out in shares of MGE Energy common stock, cash or a combination of cash and stock. MGE assumes it will make 90 future payouts of its performance units granted in cash; therefore, these performance units are accounted for as liability awards.
Performance Units - Liability Awards - Performance units under the 2021 Incentive Plan can be paid out in shares of MGE Energy common stock, cash or a combination of cash and stock. MGE assumes it will make future payouts of its performance units granted in cash; therefore, these performance units are accounted for as liability awards.
Awards are subject to vesting provisions providing for 100% vesting at the end of the performance period. Compensation cost for retirement eligible employees or employees that will become retirement eligible during the vesting schedule are recognized on an abridged horizon as retirement eligibility accelerates vesting. The performance units contain market and performance conditions.
Awards are subject to vesting provisions providing for 100% vesting at the end of the performance period. Compensation cost for retirement eligible 83 employees or employees that will become retirement eligible during the vesting schedule are recognized on an abridged horizon as retirement eligibility accelerates vesting. The performance units contain market and performance conditions.
Changes in measurement are reported in earnings. Equity security investments with readily determinable fair values are carried at fair value. Realized and unrealized gains and losses are included in earnings. See Footnote 7 for further information on investments and Footnote 19 for further information on fair value of investments. 70 s. Capitalized Software Costs - MGE Energy and MGE.
Changes in measurement are reported in earnings. Equity security investments with readily determinable fair values are carried at fair value. Realized and unrealized gains and losses are included in earnings. See Footnote 7 for further information on investments and Footnote 19 for further information on fair value of investments. s. Capitalized Software Costs - MGE Energy and MGE.
Derivative activities are in accordance with the company's risk management policy. If the derivative qualifies for regulatory deferral, the derivatives are marked to fair value and are offset with a corresponding regulatory asset or liability depending on whether the derivative is in a net loss or net gain position, respectively.
Derivative activities are in accordance with the company's risk management policy. If the derivative qualifies for regulatory deferral, the derivatives are marked to fair value and are offset with a corresponding regulatory asset or liability depending on whether the derivative is in a net loss or net gain position, 62 respectively.
Change in control events are defined as (i) a failure by MGE Energy to hold 100 % of the outstanding voting equity interest in MGE or (ii) the acquisition of beneficial ownership of 30 % or more of the outstanding voting stock of MGE Energy by one person or two or more persons acting in concert. 14.
Change in control events are defined as (i) a failure by MGE Energy to hold 100 % of the outstanding voting equity interest in MGE or (ii) the acquisition of beneficial ownership of 30 % or more of the outstanding voting stock of MGE Energy by one person or two or more persons acting in concert. 84 14.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
In addition, the PSCW authorized MGE to defer a recovery of and a return on costs associated for any change in the in service date for Paris and Darien and force majeure costs for Badger Hollow II, Paris, and Darien that were not reflected in this rate filing.
In addition, the PSCW authorized MGE to defer a recovery of and a return on costs associated for any change in the in service date for Paris and force majeure costs for Badger Hollow II and Paris that were not reflected in this rate filing.
(d) The ratio calculation excludes assets, liabilities, revenues, and expenses included in MGE's financial statements as the result of the consolidation of VIEs, such as MGE Power West Campus and MGE Power Elm Road. A change in control constitutes a 91 default under the agreements.
(d) The ratio calculation excludes assets, liabilities, revenues, and expenses included in MGE's financial statements as the result of the consolidation of VIEs, such as MGE Power West Campus and MGE Power Elm Road. A change in control constitutes a default under the agreements.
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 are based on notional investments that earn interest based upon the semiannual rate of U.S.
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.
Date of commercial operation of the solar array was November 2020. (h) The Badger Hollow I and II solar farm is located in southwestern Wisconsin in Iowa County, near the villages of Montfort and Cobb. Date of commercial operation of Badger Hollow I was November 2021 and December 2023 for Badger Hollow II .
Date of commercial operation of the solar array was November 2020. 70 (h) The Badger Hollow I and II solar farm is located in southwestern Wisconsin in Iowa County, near the villages of Montfort and Cobb. Date of commercial operation of Badger Hollow I was November 2021 and December 2023 for Badger Hollow II .
The lease payments received by MGE Power Elm Road and MGE Power West Campus from MGE are shown as lease income in interdepartmental revenues. The depreciation expense associated with the Elm Road Units and WCCF is reflected in the nonregulated energy segment.
The lease payments received by MGE Power Elm Road and MGE Power West 97 Campus from MGE are shown as lease income in interdepartmental revenues. The depreciation expense associated with the Elm Road Units and WCCF is reflected in the nonregulated energy segment.
Holding other assumptions constant, for every 1% reduction in the expected rate of return on plan assets, annual pension and other postretirement cost would increase by approximately $4.0 million, before taxes.
Holding other assumptions constant, for every 1% reduction in the expected rate of return on plan assets, annual pension and other postretirement cost would increase by approximately $4.4 million, before taxes.
All derivative instruments in this table are presented on a gross basis and are calculated prior to the netting of instruments with the same counterparty under a master netting agreement as well as the 99 netting of collateral.
All derivative instruments in this table are presented on a gross basis and are calculated prior to the netting of instruments with the same counterparty under a master netting agreement as well as the netting of collateral.
These derivatives are therefore marked to fair value and are offset in the financial statements with a corresponding regulatory asset or liability. 20. Revenue - MGE En ergy and MGE.
These derivatives are therefore marked to fair value and are offset in the financial statements with a corresponding regulatory asset or liability. 95 20. Revenue - MGE En ergy and MGE.
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. Certain environmental groups filed petitions against the PSCW challenging the fixed customer charge set in MGE's 2022/2023 rate settlement, 2023 electric limited reopener, and 2024/2025 rate order.
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. Several environmental groups filed petitions against the PSCW challenging the fixed customer charge set in MGE's 2022/2023 rate settlement, 2023 electric limited reopener, and 2024/2025 rate order.
Lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Operating lease expense is recognized on a straight-line basis over the lease term. As of December 31, 2023 , MGE had no significant leases not yet commenced that would create significant future rights and obligations.
Lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Operating lease expense is recognized on a straight-line basis over the lease term. As of December 31, 2024 , MGE had no significant leases not yet commenced that would create significant future rights and obligations.
The following descriptions are the categories of underlying plan assets held within the pension and other postretirement benefit plans as of December 31, 2023: Cash and Cash Equivalents – This category includes highly liquid investments with maturities of less than three months which are traded in active markets. Equity Securities – These securities consist of U.S. and international stock funds.
The following descriptions are the categories of underlying plan assets held within the pension and other postretirement benefit plans as of December 31, 2024: Cash and Cash Equivalents – This category includes highly liquid investments with maturities of less than three months which are traded in active markets. Equity Securities – These securities consist of U.S. and international stock funds.
These costs are recognized in "Other operations and maintenance" expense in the consolidated statements of income and are amortized on a straight-line basis over the term of the hosted contract, which includes renewable option periods. Software assets for hosted arrangements have terms ranging from three to ten years. u. Impairment of Long-Lived Assets - MGE Energy and MGE.
These costs are recognized in "Other operations and maintenance" expense in the consolidated statements of income and are amortized on a straight-line basis over the term of the hosted contract, which includes renewable option periods. Software assets for hosted arrangements have terms ranging from three to thirteen years. u. Impairment of Long-Lived Assets - MGE Energy and MGE.
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 December 31, 2023 , no counterparties had defaulted. 19. Fair Value of Financial Instru ments - MGE Energy and MGE.
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 December 31, 2024 , no counterparties had defaulted. 19. Fair Value of Financial Instru ments - MGE Energy and MGE.
An impairment loss would be recorded for the difference of the remaining net book value of the generating unit that is greater than the present value of the amount expected to be recovered from ratepayers. There was no significant impairment of long-lived assets during 2023, 2022, and 2021 . v. Income Taxes and Excise Taxes - MGE Energy and MGE.
An impairment loss would be recorded for the difference of the remaining net book value of the generating unit that is greater than the present value of the amount expected to be recovered from ratepayers. There was no significant impairment of long-lived assets during 2024, 2023, and 2022 . v. Income Taxes and Excise Taxes - MGE Energy and MGE.
Additionally, if a counterparty were to default and MGE were to liquidate all contracts with that entity, MGE's credit loss could include: the loss in value of mark-to-market contracts, the amount owed for settled transactions, and additional payments to settle unrealized losses. As of December 31, 2023, no counterparties had defaulted.
Additionally, if a counterparty were to default and MGE were to liquidate all contracts with that entity, MGE's credit loss could include: the loss in value of mark-to-market contracts, the amount owed for settled transactions, and additional payments to settle unrealized losses. As of December 31, 2024, no counterparties had defaulted.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
Changes in management's assumptions regarding settlement dates, settlement methods, or assigned probabilities could have a material effect on the liabilities and the associated regulatory asset recorded as of December 31, 2023. MGE also may have AROs relating to the removal of various assets, such as certain electric and gas distribution facilities.
Changes in management's assumptions regarding settlement dates, settlement methods, or assigned probabilities could have a material effect on the liabilities and the associated regulatory asset recorded as of December 31, 2024. MGE also may have AROs relating to the removal of various assets, such as certain electric and gas distribution facilities.
The deferred gain or loss is recognized in earnings in the delivery month applicable to the instrument. Gains and losses related to hedges qualifying for regulatory treatment are refundable or recoverable in gas rates through the PGA or in electric rates as a component of the fuel rules mechanism. b. Notional Amounts.
The deferred gain or loss is recognized in earnings in the delivery month applicable to the instrument. Gains and losses related to hedges qualifying for regulatory treatment are refundable or recoverable in gas rates through the Purchased Gas Adjustment (PGA) or in electric rates as a component of the fuel rules mechanism. b. Notional Amounts.
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 which are based on directly and indirectly observable market prices.
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.
Based on results for the year ended December 31, 2023, no one customer constituted more than 10% of total operating revenues for MGE Energy and MGE. Credit risk for electric and gas is managed by MGE's credit and collection policies, which are consistent with state regulatory requirements.
Based on results for the year ended December 31, 2024, no one customer constituted more than 10% of total operating revenues for MGE Energy and MGE. Credit risk for electric and gas is managed by MGE's credit and collection policies, which are consistent with state regulatory requirements.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
For financial statement purposes, instruments are netted with the same counterparty under a master netting agreement as well as the netting of collateral.
For financial statement 91 purposes, instruments are netted with the same counterparty under a master netting agreement as well as the netting of collateral.
Based on the nature and terms of the contractual agreements, MGE is expected to absorb a majority of the expected losses or residual value associated with the ownership of the 72 generation assets by MGE Power Elm Road and MGE Power West Campus and therefore MGE holds a variable interest despite the absence of an equity interest.
Based on the nature and terms of the contractual agreements, MGE is expected to absorb a majority of the expected losses or residual value associated with the ownership of the generation assets by MGE 66 Power Elm Road and MGE Power West Campus and therefore MGE holds a variable interest despite the absence of an equity interest.
The debt is secured by a collateral assignment of lease payments that MGE makes to MGE Power Elm Road for use of the Elm Road Units pursuant to the related long-term leases. MGE Power West Campus's long-term debt includes debt issuance costs of $ 0.1 million as of December 31, 2023 and 2022.
The debt is secured by a collateral assignment of lease payments that MGE makes to MGE Power Elm Road for use of the Elm Road Units pursuant to the related long-term leases. MGE Power West Campus's long-term debt includes debt issuance costs of $ 0.1 million as of December 31, 2024 and 2023.
Insurance Continuance Fund – The Insurance Continuance Fund is a supplemental retirement plan that includes assets that have been segregated and restricted to pay retiree term life insurance premiums. Fixed Rate Fund – The Fixed Rate fund is supported by an underlying portfolio of fixed income securities, including public bonds, commercial mortgages, and private placement bonds.
Insurance Continuance Fund – The Insurance Continuance Fund is a supplemental retirement plan that includes assets that had been segregated and restricted to pay retiree term life insurance premiums. Fixed Rate Fund – The Fixed Rate fund is supported by an underlying portfolio of fixed income securities, including public bonds, commercial mortgages, and private placement bonds.
The notes are secured by a collateral assignment of lease payments that MGE is making to MGE Power Elm Road for use of the Elm Road Units pursuant to long-term leases. As of December 31, 2023 , MGE Power Elm Road was in compliance with the covenant requirements. b. Long-Term Debt Maturities.
The notes are secured by a collateral assignment of lease payments that MGE is making to MGE Power Elm Road for use of the Elm Road Units pursuant to long-term leases. As of December 31, 2024 , MGE Power Elm Road was in compliance with the covenant requirements. b. Long-Term Debt Maturities.
Certain counterparties extend MGE a credit limit. If MGE exceeds these limits, the counterparties may require collateral to be posted. As of December 31, 2023 and 2022 , no counterparties were in a net liability position. Nonperformance of counterparties to the non-exchange traded derivatives could expose MGE to credit loss.
Certain counterparties extend MGE a credit limit. If MGE exceeds these limits, the counterparties may require collateral to be posted. As of December 31, 2024 and 2023 , no counterparties were in a net liability position. Nonperformance of counterparties to the non-exchange traded derivatives could expose MGE to credit loss.
MGE Power and its subsidiaries are part of MGE Energy's nonregulated energy operations, which were formed to own and lease electric generation projects to assist MGE. MGE Transco and MGEE Transco are nonregulated entities formed to own the investments in ATC and ATC Holdco, respectively. MGE did not own any subsidiaries as of December 31, 2023.
MGE Power and its subsidiaries are part of MGE Energy's nonregulated energy operations, which were formed to own and lease electric generation projects to assist MGE. MGE Transco and MGEE Transco are nonregulated entities formed to own the investments in ATC and ATC Holdco, respectively. MGE did not own any subsidiaries as of December 31, 2024.
(b) These costs will be subject to the PSCW's annual review of 2023 fuel costs, expected to be completed in 2024. 10. Income Ta xes. a. MGE Energy and MGE Income Taxes. MGE Energy files a consolidated federal income tax return that includes the operations of all subsidiary companies.
(b) These costs will be subject to the PSCW's annual review of 2024 fuel costs, expected to be completed in 2025. 10. Income Ta xes. a. MGE Energy and MGE Income Taxes. MGE Energy files a consolidated federal income tax return that includes the operations of all subsidiary companies.
The unrecognized tax benefits as of December 31, 2023 , are not expected to significantly increase or decrease within the next twelve months. In addition, statutes of limitations will expire for MGE Energy and MGE tax returns. The impact of the statutes of limitations expiring is not anticipated to be material.
The unrecognized tax benefits as of December 31, 2024 , are not expected to significantly increase or decrease within the next twelve months. In addition, statutes of limitations will expire for MGE Energy and MGE tax returns. The impact of the statutes of limitations expiring is not anticipated to be material.
The PSCW order restricts any dividends, above the PSCW authorized amount that MGE may pay MGE Energy if MGE's common equity ratio, calculated in the manner used in the rate proceeding, is less than 55 %. This restriction did not restrict MGE's payment of dividends in 2023.
The PSCW order restricts any dividends, above the PSCW authorized amount that MGE may pay MGE Energy if MGE's common equity ratio, calculated in the manner used in the rate proceeding, is less than 55 %. This restriction did not restrict MGE's payment of dividends in 2024.
Based on our assessment under the framework in the Internal Control - Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31, 2023. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Based on our assessment under the framework in the Internal Control - Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31, 2024. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
The effectiveness of MGE Energy ' s internal control over financial reporting as of December 31, 2023, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.
The effectiveness of MGE Energy ' s internal control over financial reporting as of December 31, 2024, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.
Based on our assessment under the framework in the Internal Control - Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31, 2023. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Based on our assessment under the framework in the Internal Control - Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31, 2024. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
MGE is involved in various legal matters that are being defended and handled in the normal course of business. MGE accrues for costs that are probable of being incurred and subject to reasonable estimation. The accrued amount for these matters is not material to the financial statements.
MGE is involved in various legal matters that are being defended and handled in the ordinary course of business. MGE accrues for costs that are probable of being incurred and subject to reasonable estimation. The accrued amount for these matters is not material to the financial statements.
We also have audited the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
(b) As of December 31, 2023 , MGE Energy and MGE had no borrowings outstanding under these credit facilities and were in compliance with the covenant requirements of the credit agreements. (c) A change in control constitutes a default under the agreement.
(b) As of December 31, 2024 , MGE Energy and MGE had no borrowings outstanding under these credit facilities and were in compliance with the covenant requirements of the credit agreements. (c) A change in control constitutes a default under the agreement.
All asset retirement obligations are recorded as "Other long-term liabilities" on the consolidated balance sheets. MGE has regulatory treatment and recognizes regulatory assets or liabilities for the timing differences between when it recovers legal AROs in rates and when it would recognize these costs. See Footnote 17 for further information. l. Repairs and Maintenance Expense - MGE Energy and MGE.
All asset retirement obligations are recorded as "Asset retirement obligations" on the consolidated balance sheets. MGE has regulatory treatment and recognizes regulatory assets or liabilities for the timing differences between when it recovers legal AROs in rates and when it would recognize these costs. See Footnote 17 for further information. l. Repairs and Maintenance Expense - MGE Energy and MGE.
MGE has limited concentrations of credit risk from customer accounts receivable because of the large number of customers and relatively strong economy in its service territory. 52 Item 8. Financial Statements and Supplementary Data.
MGE has limited concentrations of credit risk from customer accounts receivable because of the large number of customers and relatively strong economy in its service territory. 46 Item 8. Financial Statements and Supplementary Data.
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Fuel rules require Wisconsin utilities to defer electric fuel-related costs that fall outside a symmetrical cost tolerance band. 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. MGE is subject to a plus or minus 2% range in 2023.
Fuel rules require Wisconsin utilities to defer electric fuel-related costs that fall outside a symmetrical cost tolerance band. 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. MGE was subject to a plus or minus 2% range in 2024.
FTRs are priced based upon monthly auction results for identical or similar instruments in a closed market with limited data available and are therefore classified as Level 3. The purchased power agreement, with a term ended May 2022, (see Footnote 18 ) was valued using an internal pricing model and therefore was classified as Level 3.
FTRs are priced based upon monthly auction results for identical or similar instruments in a closed market with limited data available and are therefore classified as Level 3. The purchased power agreement, with a term ended May 2022, was valued using an internal pricing model and therefore was classified as Level 3.
For the years ended December 31, 2023, 2022, and 2021, MGE recorded $ 2.9 million, $ 3.1 million, and $ 2.2 million, respectively, of amortization expense related to software assets for hosted arrangements.
For the years ended December 31, 2024, 2023, and 2022, MGE recorded $ 3.2 million, $ 2.9 million, and $ 3.1 million, respectively, of amortization expense related to software assets for hosted arrangements.
Sierra Club and Vote Solar have filed petitions with the Dane County Circuit Court seeking review of the PSCW decisions approving MGE's electric and gas 2022/2023 rate settlement, 2023 electric limited reopener, and 2024/2025 rate order. The PSCW is named as the responding party; MGE is not named as a party.
Sierra Club and Vote Solar filed petitions with the Dane County Circuit Court seeking review of the PSCW decisions approving MGE's electric and gas 2022/2023 rate settlement, 2023 electric limited reopener, and 2024/2025 rate order. The PSCW was named as the responding party; MGE was not named as a party.
The fair value of the derivative liability disclosed in this table has not been reduced for the collateral posted. The following tables show 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.
The fair value of the derivative liability disclosed in this table has not been reduced for the collateral posted. 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.
Provisions at composite straight-line depreciation rates approximate the following percentages for the cost of depreciable property: 2023 2022 2021 Electric (a) 3.8 % 3.2 % 3.2 % Gas 2.1 % 2.1 % 2.2 % Nonregulated 2.3 % 2.3 % 2.4 % (a) In the 2023 limited reopener, the PSCW approved new depreciation rates for Columbia effective January 1, 2023 . k.
Provisions at composite straight-line depreciation rates approximate the following percentages for the cost of depreciable property: 2024 2023 2022 Electric (a) 3.8 % 3.8 % 3.2 % Gas 2.1 % 2.1 % 2.1 % Nonregulated 2.3 % 2.3 % 2.3 % (a) In the 2023 limited reopener, the PSCW approved new depreciation rates for Columbia effective January 1, 2023 . k.
The ownership interest in ATC Holdco is held by MGEE Transco, a subsidiary of MGE Energy. As of December 31, 2023 and 2022, MGE Transco held a 3.6 % ownership interest in ATC. As of December 31, 2023 and 2022, MGEE Transco held a 4.4 % ownership interest in ATC Holdco.
The ownership interest in ATC Holdco is held by MGEE Transco, a subsidiary of MGE Energy. As of December 31, 2024 and 2023, MGE Transco held a 3.6 % ownership interest in ATC. As of December 31, 2024 and 2023, MGEE Transco held a 4.4 % ownership interest in ATC Holdco.
The CWA also regulates surface water quality issues that affect aquatic life, such as water temperatures, chemical concentrations, intake structures, and wetlands filling into Waters of the U.S. (WOTUS), defined by EPA regulation. The CWA also includes discharge standards, which require the use of effluent-treatment processes equivalent to categorical "best practicable" or "best available" technologies.
The Clean Water Act also regulates surface water quality issues that affect aquatic life, such as water temperatures, chemical concentrations, intake structures, and wetlands filling into Waters of the U.S., defined by EPA regulation. The Clean Water Act also includes discharge standards, which require the use of effluent-treatment processes equivalent to categorical "best practicable" or "best available" technologies.
Compensation expense for these performance units is recorded ratably over the performance period based on the fair value of the awards at each reporting period. The payout is based upon achievement of specified performance goals during a performance period set by the Compensation Committee of MGE Energy's Board of Directors.
Compensation expense for these performance units is recorded ratably over the performance period based on the fair value of the awards at each reporting period. The payout is based upon achievement of specified performance goals during a performance period set by the Human Resources and Compensation Committee of MGE Energy's Board of Directors.
The Mortgage Indenture provides that dividends or any other distribution or purchase of MGE shares may not be made if the aggregate amount thereof since December 31, 1945, would exceed the earned surplus (retained earnings) accumulated subsequent to December 31, 1945. As of December 31, 2023, approximately $ 699.6 million was available for the payment of dividends under this covenant.
The Mortgage Indenture provides that dividends or any other distribution or purchase of MGE shares may not be made if the aggregate amount thereof since December 31, 1945, would exceed the earned surplus (retained earnings) accumulated subsequent to December 31, 1945. As of December 31, 2024, approximately $ 754.6 million was available for the payment of dividends under this covenant.
Individual plants can meet their caps through reducing emissions and/or buying allowances on the market. In March 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. The final rule impacts 23 states, including Wisconsin.
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 (FIP Rule). The FIP Rule impacts 23 states, including Wisconsin.

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