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What changed in MGE ENERGY INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of MGE ENERGY INC's 2024 and 2025 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 2025 report.

+622 added−607 removedSource: 10-K (2026-02-24) vs 10-K (2025-02-25)

Top changes in MGE ENERGY INC's 2025 10-K

622 paragraphs added · 607 removed · 495 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeMGE 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.
Biggest changeAnnually, 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. These gas supplies are then available for withdrawal during the subsequent heating 12 season, November 1 through March 31.
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.
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.
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.
In 2025, 2024, and 2023, approximately 2%, 2%, 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.
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.
Gas sales, customers, and revenues for 2025 were comprised of the following: Gas operations accounted for approximately 28%, 26%, and 29% of MGE's total 2025, 2024, and 2023 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.
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.
If MGE can accelerate plans to achieve net-zero methane emissions from its natural gas system—through the evolution of new technologies, such as renewable natural gas—it will. MGE is working to reduce overall emissions from its natural gas distribution system in a quick and cost effective manner. MGE offers two voluntary renewable natural gas programs.
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.
MGE has continued to add EVs to its fleet and is 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.
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.
As of December 31, 2025, MGE has 30 MW of a renewable purchase power commitment for each of the next two years. 11 Gas Utility Operations MGE transports and distributes natural gas in a service area covering 1,722 square miles in seven south-central Wisconsin counties. The service area includes the city of Madison, Wisconsin and surrounding areas.
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 table above nets purchases and sales within the same hour in the two MISO markets. For the years ended December 31, 2025, 2024, and 2023, the amount netted between Day-ahead and the Real-time MISO markets was 306,198 MWh, 329,672 MWh, and 256,571 MWh, respectively.
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.
As of December 31, 2025, MGE supplied natural gas service to approximately 180,000 customers in the cities of Elroy, Fitchburg, Lodi, Madison, Middleton, Monona, Prairie du Chien, Verona, and Viroqua; 25 villages; and all or parts of 49 townships.
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.
As of December 31, 2025, MGE supplied electric service to approximately 170,000 customers, with approximately 91% located in the cities of Fitchburg, Madison, Middleton, and Monona, Wisconsin and 9% in adjacent areas. 8 Electric sales, customers, and revenues for 2025 were comprised of the following: Electric operations accounted for approximately 72%, 74%, and 71% of MGE's total 2025, 2024, and 2023 regulated revenues, respectively.
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.
This project will 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 has emphasized this innovation by developing customer programs to address climate change and encourage our customers to use clean energy.
These gas supplies are then available for withdrawal during the subsequent heating season, November 1 through March 31. Using storage allows MGE to buy gas supplies during the summer season, when prices are normally lower, and withdraw these supplies during the winter season, when prices are typically higher. Storage also gives MGE more flexibility in meeting daily load fluctuations.
Using storage allows MGE to buy gas supplies during the summer season, when prices are normally lower, and withdraw these supplies during the winter season, when prices are typically higher. Storage also gives MGE more flexibility in meeting daily load fluctuations.
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.
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. Since 2015, MGE has added 253 MW of solar, 93 MW of wind generation, and 11 MW of battery storage to its electric renewable generation portfolio. See Item 2.
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.
MGE has a responsibility to its customers to dispatch the lowest cost generation available pursuant to regulatory requirements. 9 MGE's electric energy delivery requirements were satisfied from the following fuel sources: (in MWh) 2025 2024 2023 Coal (a) 1,750,273 1,452,156 1,359,691 Natural gas 756,966 654,406 566,972 Renewable sources (b) 913,612 840,060 715,369 Fuel oil 862 489 544 Purchased power - other (c)(d) 305,250 537,445 744,120 Total fuel sources 3,726,963 3,484,556 3,386,696 Adjusted total fuel sources (d) 4,033,161 3,814,229 3,643,267 (a) MGE's coal generation for electric supply may fluctuate from year to year.
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.
A portion of MGE's renewable generation is dedicated to customer programs such as the Renewable Energy Rider (RER) and Shared Solar Program.
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.
MGE purchased 50 MW (25 MW in 2023 and 25 MW in 2024) in the West Riverside Energy Center (West Riverside), a highly efficient, state-of-the-art natural gas-fired plant in Beloit, Wisconsin.
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.
Electrifying Transportation - The electrification of transportation is a key strategy for reducing carbon emissions. MGE has established a network of nearly 60 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.
Renewable Energy Rider (RER) – Under this program, MGE partners with large energy users, primarily governmental entities, on customized renewable energy solutions. MGE owns the generation assets and RER customers are billed a contractual renewable resource rate (as approved by the PSCW) for all costs associated with the construction and ongoing operations of the renewable generation facility.
MGE owns the generation assets and RER customers are billed a PSCW-approved contractual renewable resource rate that covers all costs associated with the construction and ongoing operations of the renewable generation facility. MGE has developed approximately 42 MW of solar generation under the RER program.
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.
MGE is partnering with Columbia's co-owners to construct a compressed carbon dioxide long-duration energy storage system, known as the Columbia Energy Storage project. MGE's 19% share will be 3 MW. The project was selected for a grant from the U.S Department of Energy. The Columbia Energy Storage project was approved by the PSCW in 2025.
Properties for more information regarding these generation sources, including location, capacity, ownership or lease arrangement, and fuel source.
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.
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.
These amounts are reflected in "Adjusted total fuel sources." Environmental Initiatives – Electricity Generation MGE continues to advance its long-term strategy to achieve a more sustainable future for the benefit of its investors, employees, customers and the communities it services. MGE has set a target of providing 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's carbon reduction goals are generally aligned with leading scientific guidance, including recommendations from the Intergovernmental Panel on Climate Change (IPCC) to limit 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 net-zero by 2050 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.
Significant investments in solar, wind, and battery storage support MGE's long term decarbonization goal. • Renewable generation and storage - Solar, wind, and battery storage projects play a critical role in MGE's strategy for reducing carbon emissions in pursuit of net-zero carbon electricity by 2050.
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.
The initial program, launched in May 2024, enables customers to offset emissions associated with their natural gas consumption through a mechanism in which MGE purchases renewable thermal credits and retires them on behalf of participating customers.
In 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.
Properties below for further information on these facilities. In addition, MGE expects to add approximately 252 MW of solar, 18 MW of wind, and 125 MW of battery storage, which include projects approved or pending PSCW approval, by the end of 2030.
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.
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.
MGE has developed approximately 42 MW of solar generation under the RER program. Shared Solar Program – This program provides an option for residential and small business customers to power their household or business with locally generated solar energy for up to half of their annual energy use.
Shared Solar Program – This program offers residential and small business customers to meet up to half of their annual energy needs with locally generated solar energy. The first solar array associated with this program, owned by MGE, became operational in 2017 for 500 KW capacity.
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.
MGE and Columbia's co-owners are exploring converting Columbia to natural gas. • Natural gas as a fuel source - As part of MGE's continued energy transition plan, MGE plans to invest in additional natural gas-fired generation and storage facilities.
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.
MGE continues to provide technical assistance to the city in the development of an all-electric Bus Rapid Transit system. • Transitioning away from coal o Elm Road Units – In October 2025, MGE, along with the plant co-owners, filed a joint application with the PSCW to end the use of coal as a primary fuel at the Elm Road Units and transition the plant to natural gas.
Transition plans and costs will be subject to PSCW approval.
Transition plans and costs will be subject to PSCW approval. By the end of 2030, coal is expected to be used only as a backup fuel at the Elm Road Units.
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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's strategy focuses on adopting cost effective technologies as they become commercially available, while maintaining reliability and affordability.
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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.
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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. 10 Renewable Energy Rider (RER) – Under this program, MGE partners with large energy users, primarily governmental entities, to provide customized renewable energy solutions.
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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.
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The completion of a second solar facility (Morey Field) added 3.5 MW of capacity to the program, as well as 2 MW from Strix Solar, which was completed in 2025. In December 2025, the PSCW approved the implementation of a new community solar program, Shared Solar for Business, for large commercial customers.
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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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By the end of 2032, MGE expects that the Elm Road Units will be fully transitioned away from coal. o Columbia - Operational, regulatory, and environmental regulation considerations have impacted and continue to impact Columbia's generation planning.
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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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MGE, as a minority owner, and Columbia's other co-owners continue to evaluate transitioning away from coal and continue to evaluate replacing the generation from Columbia while maintaining electric service reliability.
Removed
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.
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Natural gas plants add needed reliability and balance to the electric system while MGE continues to transition away from coal-fired generation and add more renewable capacity to MGE's generation mix.
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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.
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In February 2026, MGE executed an asset purchase agreement for 168 MW of existing gas-fired generation through an ownership share in the RockGen Energy Center near Cambridge, Wisconsin, subject to PSCW approval. If approved, the transaction is expected to close in late 2027. Generation sources MGE receives electric generation supply from coal-fired, gas-fired, and renewable energy sources.
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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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The second program, launched in January 2026, enables customers to inject renewable natural gas produced on the customer's premise into MGE's distribution system; customers may sell the natural gas to MGE or another third party and may retain or sell to MGE or another third party the associated environmental attributes.
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These power sources are vital to the success of our carbon reduction goals as they will provide reliable energy to dependably serve demand, while MGE continues to build out its renewable generation infrastructure and complete its full transition away from coal.
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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.
Removed
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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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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.
Biggest changeThe principal (decreases) increases in cash flows from operating activities during 2025, compared to 2024, were as follows: (In millions) MGE Energy MGE Higher payments for fuel and purchased power at our generation plants, as well as higher natural gas costs to our customers $ (33.1 ) $ (33.1 ) Higher payments for other operation and maintenance expenses (32.1 ) (32.9 ) Changes in income taxes paid/received - includes proceeds from renewable tax credits transferred to other corporate taxpayers during 2025 and 2024 of $10.9 million and $18.5 million, respectively (19.4 ) (20.1 ) Higher payments for hosted software asset expenditures (2.3 ) (2.3 ) Higher payments for interest, driven by MGE's issuance of long-term debt (1.4 ) (1.4 ) Higher overall collections from customers, driven by higher electric and gas residential sales 71.5 71.5 Higher dividends received from ATC investment 2.2 — Decrease in cash provided by operating activities $ (14.6 ) $ (18.3 ) Capital Requirements and Investing Activities The principal (decreases) increases in cash flows from investing activities during 2025, compared to 2024, were as follows: (In millions) MGE Energy MGE Capital expenditures, primarily reflects an increase in electric and gas utility expenditures, specifically related to spending for High Noon, Sunnyside, and Koshkonong construction $ (106.3 ) $ (106.3 ) Capital contributions in ATC and other investments (4.7 ) — Proceeds from the sale of investments 1.9 — Other investing activities — (0.2 ) Decrease in cash flows from investing activities $ (109.1 ) $ (106.5 ) See " Capital Expenditures " below for more information.
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.
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 $4.5 million, before taxes. • Discount rate . The discount rate represents the rate at which pension obligations could effectively be settled on a present-value basis.
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.
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. 49
These estimates include: • The amount of electricity expected to be lost in the process of its transmission and distribution to customers (referred to as line loss) and the amount of electricity actually delivered to customers. • The amount of gas expected to be lost in the process of distribution to customers and the amount of gas actually delivered to customers. • The mix of sales between customer rate classes having different rates, which is based upon historical utilization assumptions.
These estimates include: • The amount of electricity expected to be lost in the process of its transmission and distribution to customers (referred to as line loss) and the amount of electricity actually delivered to customers. • The amount of gas expected to be lost in the process of distribution to customers and the amount of gas actually delivered to customers. 47 • The mix of sales between customer rate classes having different rates, which is based upon historical utilization assumptions.
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.
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 for the period following the Second Complaint Period.
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.
The 2024/2025 rate order included 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.
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.
MGE Energy has available at any time a $50 million committed revolving credit agreement, expiring in November 2027. As of December 31, 2025, 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.
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.
See Footnote 7 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report and " Other Matters " below for summarized financial information regarding ATC.
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.
The following table shows MGE's noncontrolling interest, net of tax, reflected on MGE's consolidated statement of income: Year Ended December 31, (In millions) 2025 2024 MGE Power Elm Road $ 15.2 $ 15.6 MGE Power West Campus 7.5 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.
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.
Solar Procurement Disruptions: MGE is monitoring import regulations under the Uyghur Forced Labor Prevention Act and the U.S. Department of Commerce's new solar tariffs. These disruptions have a potential to impact current and future solar projects which may result in an increase in costs or delays in construction timelines.
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.
The earnings calculation excludes fuel rules adjustments. Large Scale Utility Projects: Large scale generation projects recently completed or under construction, are summarized in the following table. Incurred costs are reflected in "Property, plant, and equipment, net" for projects placed in service, or "Construction 33 work in progress" for projects under construction on the consolidated balance sheets.
The PSCW has approved MGE to defer as a regulatory asset or liability, the difference between actual costs included in rates and to be recovered or refunded in a future rate proceeding.
The PSCW has approved MGE to defer as a regulatory asset or liability, the difference between actual pension and other postretirement costs included in rates and to be recovered or refunded in a future rate proceeding.
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.
As of December 31, 2025, the ratio of consolidated debt to consolidated total capitalization for each of MGE Energy and MGE, as calculated under the credit agreements' covenant, were 41.1% and 44.5%, 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.
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.
For 2025, MGE used an assumed return on assets of 7.00% for pension and 7.00% for other postretirement benefits. In 2026, the pension asset assumption will decrease to 6.84% and the postretirement benefit assumption will increase to 7.02%. The annual expected rate of return is based on projected long-term equity and bond returns, maturities and asset allocations.
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.
Suppliers for MGE's current solar projects were able to provide the CBP sufficient documentation to meet WRO and UFLPA compliance requirements, however we cannot currently predict what, if any, impact the UFLPA will have on the overall supply of solar panels into the United States and the related impact to timing and cost of solar projects included in our capital plan.
Transmission cost is generally offset by electric revenue and does not have a significant impact on net income. • Increased electric production expenses are primarily related to operating and maintenance costs for Columbia and renewable generating facilities.
Transmission cost is generally offset by electric revenue and does not have a significant impact on net income. • Increased electric production expenses are primarily related to operating and maintenance costs for the Elm Road Units and renewable generating facilities.
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.
For 2025 and 2024, net income at the nonregulated energy operations segment was $24.8 million and $24.1 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.
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.
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 2025 and 2024, other income from the transmission investment segment primarily reflected ATC's operations and was $13.0 million and $12.3 million, respectively.
The PSCW order restricts any dividends that MGE may pay MGE Energy if its common equity ratio, calculated in the manner used in the rate proceeding, is less than 55%. MGE's thirteen month rolling average common equity ratio as of December 31, 2024, is 57.6%, as determined under the calculation used in the rate proceeding.
The PSCW order restricts any dividends that MGE may pay MGE Energy if its common equity ratio, calculated in the manner used in the rate proceeding, is less than 55%. MGE's thirteen month rolling average common equity ratio as of December 31, 2025, is 58.0%, as determined under the calculation used in the rate proceeding.
The Uyghur Forced Labor Protection Act (UFLPA), a federal law that became effective on June 21, 2022, further established that all goods mined, produced, or manufactured wholly or in part in Xinjiang or by certain defined entities are prohibited from U.S. importation.
The WRO was superseded by the Uyghur Forced Labor Prevention Act (UFLPA), a federal law that became effective on June 21, 2022, which further established that all goods mined, produced, or manufactured wholly or in part in Xinjiang or by certain defined entities are prohibited from U.S. importation.
As of December 31, 2024, MGE had no commercial paper outstanding backed by the facilities and no borrowings outstanding. As of December 31, 2024, MGE had $0.6 million of letters of credit issued inside credit facilities.
As of December 31, 2025, MGE had $92.5 million of commercial paper outstanding backed by the facilities and no borrowings outstanding. As of December 31, 2025, MGE had $0.6 million of letters of credit issued inside credit facilities.
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.
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.
This restriction did not restrict MGE's payment of dividends in 2024. Cash dividends of $34.5 million and $41.0 million, respectively, were paid by MGE to MGE Energy in 2024 and 2023.
This restriction did not restrict MGE's payment of dividends in 2025. Cash dividends of $51.5 million and $34.5 million, respectively, were paid by MGE to MGE Energy in 2025 and 2024.
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.
Changes in PGA recoveries affect revenues but do not change net income in view of the pass-through treatment of the costs. Payments for natural gas increased, driving higher rates during 2025.
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 December 2023, the PSCW authorized MGE to increase 2025 rates for retail gas customers by approximately 1.32%. 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.
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.
Item 1A. Risk Factors of this Report. During the year ended December 31, 2025, MGE Energy's earnings were $135.9 million or $3.72 per share compared to $120.6 million or $3.33 per share for the same period in the prior year.
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.
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.
Significant Events The following events affected our results of operations in 2024: 2024/2025 Rate Proceeding: In December 2023, the PSCW approved a 1.54% increase to electric rates and 2.44% increase to gas rates for 2024. The PSCW also approved a 4.17% increase to electric rates and 1.32% increase to gas rates in 2025.
Significant Events The following events affected our results of operations in 2025: 2024/2025 Rate Proceeding: In December 2023, the PSCW approved a 4.17% increase to electric rates and 1.32% increase to gas rates for 2025. The PSCW approved a 2025 Fuel Cost Plan in December 2024. The plan lowered the 2025 increase in electric rates to 2.63%.
The principal increases (decreases) in cash flows from financing activities during 2024, compared to 2023, were as follows: (In millions) MGE Energy MGE Issuance of common stock $ 31.6 $ — Higher cash dividends paid, dividend rate per share ($1.76 vs. $1.67) (3.2 ) — Lower cash dividends to parent (MGE Energy) — 6.5 Higher cash distribution from parent (MGE Energy) — 30.8 Higher distributions to parent (MGE Energy) from noncontrolling interest, representing distributions from MGE Power Elm Road and MGE Power West Campus (a) — (1.5 ) Change in long-term debt (b) (40.1 ) (40.1 ) Change in short-term debt borrowings, net (5.5 ) (5.5 ) Other financing activities 0.9 0.9 Increase (decrease) in cash flows from financing activities $ (16.3 ) $ (8.9 ) (a) The noncontrolling interest arises from the accounting required for the entities, which are not owned by MGE but are consolidated as VIEs.
The principal increases (decreases) in cash flows from financing activities during 2025, compared to 2024, were as follows: (In millions) MGE Energy MGE Change in short-term debt borrowings, net $ 130.5 $ 130.5 Lower distributions to parent (MGE Energy) from noncontrolling interest, representing distributions from MGE Power Elm Road and MGE Power West Campus (a) — 5.7 Lower issuance of common stock (27.9 ) — Lower cash distribution from parent (MGE Energy) — (22.3 ) Higher cash dividends to parent (MGE Energy) — (17.0 ) Higher cash dividends paid, dividend rate per share ($1.85 vs. $1.76) (4.0 ) — Change in long-term debt (b) (0.1 ) (0.1 ) Other financing activities (0.1 ) (0.1 ) Increase in cash flows from financing activities $ 98.4 $ 96.7 (a) The noncontrolling interest arises from the accounting required for the entities, which are not owned by MGE but are consolidated as VIEs.
(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.
See Footnote 5 of the Notes to Consolidated Financial Statements in Part II, Item 8 of 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.
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's earnings for the year ended December 31, 2025, were $104.1 million compared to $89.4 million for the same period in the prior year.
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.
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. 42 Cred it Facilities As of December 31, 2025, 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 $ 92.5 $ 0.6 $ — $ 36.9 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.
See Footnote 14 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report for further discussion of the long-term debt outstanding as of December 31, 2024. (d) Leases. See Footnote 5 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report.
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 Footnote 14 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report for further discussion of the long-term debt outstanding as of December 31, 2025. (d) Leases.
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.
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.
In the year the over-collection is refunded, rates are reduced and offset as revenue subject to refund.
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.
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.
Gas retail sales increased approximately 14% for 2025, compared to the prior year period. Heating degree days (a measure for determining the impact of weather during the heating season) increased by approximately 18% in 2025 compared to the same period in the prior year.
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.
Other M atters Rate Matters In December 2023, the PSCW approved the 2024/2025 rate application for a 4.17% increase for electric rates and a 1.32% increase to gas rates for 2025. The PSCW approved a 2025 Fuel Cost Plan in December 2024. The plan lowered the 2025 increase in electric rates to 2.63%.
MGE Energy owns 100% of MGE Power Elm Road and MGE Power West Campus; however, due to the contractual agreements for these projects with MGE, the entities are considered VIEs with respect to MGE and their results are consolidated with those of MGE, the primary beneficiary of the VIEs.
Due to the contractual agreements for these projects with MGE, the entities are considered VIEs with respect to MGE and their results are consolidated with those of MGE, the primary beneficiary of the VIEs.
Capitalization Ratios MGE Energy's capitalization ratios were as follows: MGE Energy 2024 2023 Common shareholders' equity 61.5 % 59.9 % Long-term debt (a) 38.5 % 38.1 % Short-term debt — 2.0 % (a) Includes the current portion of long-term debt.
Capitalization Ratios MGE Energy's capitalization ratios were as follows: MGE Energy 2025 2024 Common shareholders' equity 58.9 % 61.5 % Long-term debt (a) 36.8 % 38.5 % Short-term debt 4.3 % — (a) Includes the current portion of long-term debt.
A valuation allowance is recorded for those benefits that do not meet this criterion. An allowance is recorded reducing the asset to a value that is believed to be recoverable based on the expectation of future taxable income.
An allowance is recorded reducing the asset to a value that is believed to be recoverable based on the expectation of future taxable income.
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.
MGE continues to assess the potential impact of these tariffs on current and future solar projects, which may result in increased costs, delays in construction timelines, or a new and potentially material financial liability due to retroactive tariffs.
In 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.
See fuel rules discussion in Footnote 9 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report. • Rate changes. In December 2024, the PSCW authorized MGE to increase 2025 rates for retail electric customers by approximately 2.63%. Rates charged to retail customers during 2025 were $10.0 million higher than those charged during 2024.
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.
MGE Energy's net income (loss) was derived from our business segments as follows: (In millions) Year Ended December 31, Business Segment: 2025 2024 Electric Utility $ 85.8 $ 74.5 Gas Utility 16.3 13.7 Nonregulated Energy 24.8 24.1 Transmission Investments 9.5 8.9 All Other (0.5 ) (0.6 ) Net Income $ 135.9 $ 120.6 Our net income during 2025 compared to 2024 primarily reflects the effects of the following factors: Electric Utility Earnings for 2025 increased year-over-year, primarily driven by a rise in the rate base due to increased electric investments approved in the 2024/2025 rate case.
These differences result in deferred tax assets and liabilities, which are recorded in the balance sheets. For deferred tax assets, a likelihood assessment is completed to determine if these assets will be recovered through adjustments to future taxable income. Future tax benefits are recognized to the extent that realization of such benefits is more likely than not.
For deferred tax assets, a likelihood assessment is completed to determine if these assets will be 48 recovered through adjustments to future taxable income. Future tax benefits are recognized to the extent that realization of such benefits is more likely than not. A valuation allowance is recorded for those benefits that do not meet this criterion.
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.
Details related to MGE's 2024/2025 rate proceeding and 2026/2027 settlement are as follows: (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 (2025 Test Period) $ 1,241,502 $ 7,106 9.7 % 56.06 % 1/1/2025 Gas (2025 Test Period) 341,369 7,146 9.7 % 56.06 % 1/1/2025 Electric (2026 Test Period) $ 1,346,269 $ 37,232 9.8 % 56.09 % 1/1/2026 Gas (2026 Test Period) 375,594 7,764 9.8 % 56.09 % 1/1/2026 Electric (2027 Test Period) $ 1,537,938 $ 33,082 9.8 % 56.05 % 1/1/2027 Gas (2027 Test Period) 393,558 8,912 9.8 % 56.05 % 1/1/2027 (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.
Our forecasted capital expenditures reflect the following significant renewable projects that are currently under construction or pending regulatory approval: Project Source Ownership Interest Share of Generation/Battery Storage Share of Costs (b) In-Service or Estimated Date of Commercial Operation Paris (a) Solar/Battery 10% 20 MW/11 MW $61 million (c)(d)(f) 2024 Solar 2025 Battery Strix Solar 100% 6 MW $12 million January 2025 Darien (a) Solar/Battery 10% 25 MW/7.5 MW $63 million (c)(d)(f) 2025 Solar 2026 Battery Koshkonong (a) Solar/Battery 10% 30 MW/16.5 MW $104 million (c)(d)(f) 2026 Solar 2027 Battery Sunnyside (e) Solar/Battery 100% 20 MW/40 MW $112 million 2026 Solar 2027 Battery High Noon (e) Solar/Battery 10% 30 MW/16.5 MW $99 million 2027 Solar 2027 Battery Ursa (e) Solar 10% 20 MW $46 million 2027 Badger Hollow (e) Wind 10% 11.2 MW $36 million 2027 Whitetail (e) Wind 10% 6.7 MW $23 million 2027 Forward Repower (e) Wind 13% 18 MW $14 million 2027 Dawn Harvest (e) Solar 10% 15 MW $34 million 2028 Good Oak (e) Solar 10% 9.8 MW $22 million 2028 Gristmill (e) Solar 10% 6.7 MW $15 million 2028 Saratoga (e) Solar/Battery 10% 15 MW/5 MW $46 million 2028 Solar 2028 Battery (a) Approved by the PSCW.
Forecasted capital expenditures reflect the following significant generation and storage projects that are currently under construction or pending regulatory approval: Project Ownership Interest Source Share of Generation/Battery Storage Share of Costs (b) In-Service or Estimated Date of Commercial Operation Darien (a) 10% Battery 7.5 MW $18 million (c)(d)(f) 2026 Sunnyside (a) 100% Solar/Battery 20 MW/40 MW $112 million (c) 2026 Koshkonong (a) 10% Solar/Battery 30 MW/16.5 MW $93 million (c)(d)(f) 2026 Solar 2027 Battery High Noon (a) 10% Solar/Battery 30 MW/16.5 MW $99 million (c)(d) 2027 Columbia Energy Dome (a) 19% Storage 3 MW $22 million (c)(d)(f)(g) 2027 Ursa (a) 10% Solar 20 MW $46 million (c) 2027 Badger Hollow (a) 10% Wind 11.2 MW $36 million (c) 2027 Whitetail (a) 10% Wind 6.7 MW $23 million 2027 Forward Repower (a) 13% Wind 18 MW $14 million (c) 2027 RockGen (e)(i) 33% Natural Gas 168 MW $203 million 2027 Elm Road (e)(h) 8% Natural Gas Conversion 106 MW $11 million 2028 Dawn Harvest (e) 10% Solar 15 MW $34 million 2028 Good Oak (e) 10% Solar 9.8 MW $22 million 2028 Gristmill (e) 10% Solar 6.7 MW $15 million 2028 Saratoga (a) 10% Solar/Battery 15 MW/5 MW $46 million (c) 2028 Fox (e) 10% Solar 10 MW $27 million 2028 Superior (e) 10% Solar 15 MW $40 million 2028 Akron (e) 10% Solar 20 MW $52 million 2029 Dawn Break (e) 10% Solar/Battery 18 MW/18 MW $78 million 2029 Emerald Bluffs (e) 10% Solar 22.5 MW $57 million 2029 (a) Approved by the PSCW.
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.
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 2025, operations and maintenance expenses increased $8.0 million, compared to 2024.
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.
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.
The timing of the in-service dates contributed to the increase in electric depreciation expense. Electric and gas other income and interest expense Electric other income decreased $9.8 million and gas other income decreased $5.7 million during 2024, compared to 2023, primarily related to pension and other postretirement other than service costs.
The timing of the in-service dates contributed to the increase in electric depreciation expense. Electric and gas other income Electric other income increased $1.0 million and gas other income decreased $0.4 million during 2025, compared to 2024, primarily related to pension and other postretirement costs, excluding service costs.
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 14 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report for information on the senior note issuance and redemption of the first mortgage bonds. 44 MGE Energy's and MGE's commercial commitments as of December 31, 2025, 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.
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 .
Holding other assumptions constant, a 0.5% decrease in the discount rate on the obligation balance as of December 31, 2025, would decrease annual pension and other postretirement credit by approximately $1.3 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.
Noncontrolling Interest, Net of Tax - MGE Noncontrolling interest, net of tax, reflects the accounting required for MGE Energy's interest in MGE Power Elm Road (the Elm Road Units) and MGE Power West Campus (WCCF).
Noncontrolling Interest, Net of Tax - MGE Noncontrolling interest, net of tax, reflects the accounting required for MGE Energy's interest in MGE Power Elm Road and MGE Power West Campus. MGE Energy owns 100% of MGE Power Elm Road and MGE Power West Campus. They are not owned by MGE.
Executive Order – Tariffs: MGE is monitoring the actions of the Trump Administration with respect to certain proposed import tariffs on foreign goods, including those from Canada, Mexico, and/or China. These tariffs have a potential impact on cost of operations and on current and future capital projects.
Tariffs: MGE is monitoring the actions of the Trump Administration with respect to certain proposed or recently implemented import tariffs on foreign goods. These tariffs have a potential impact on cost of operations and on current and future capital projects. See " Other Matters " below for additional information on the executive orders on Tariffs.
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.
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.
The average retail rate per therm excluding customer fixed charges for 2024, decreased approximately 7% compared to 2023, reflecting a decrease in natural gas commodity costs (recovered through the PGA). • Volume. For 2024, retail gas deliveries decreased approximately 4% compared to 2023 primarily attributable to unfavorable weather conditions in the first half of 2024. 34 • Other.
The average retail rate per therm excluding customer fixed charges for 2025, increased approximately 4% compared to 2024, reflecting an increase in natural gas commodity costs (recovered through the PGA). 37 • Volume. For 2025, retail gas deliveries increased approximately 14% compared to 2024 primarily attributable to unfavorable weather conditions in 2024. • Revenue subject to refund.
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.
MGE 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.
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.
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. 2024 Annual Fuel Proceeding: MGE had fuel savings in 2024. As of December 31, 2024, MGE deferred $3.0 million of 2024 fuel savings.
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.
Results of Operations Year Ended December 31, 2025, Versus the Year Ended December 31, 2024 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) 2025 2024 % Change 2025 2024 % Change Residential $ 187,264 $ 174,756 7.2% 899,781 860,759 4.5% Commercial 258,044 255,240 1.1% 1,807,517 1,777,835 1.7% Industrial 12,330 12,948 (4.8)% 143,206 141,976 0.9% Other-retail/municipal 40,048 40,796 (1.8)% 370,046 373,272 (0.9)% Total retail 497,686 483,740 2.9% 3,220,550 3,153,842 2.1% Sales to the market 30,654 10,893 181.4% 402,875 226,004 78.3% Other revenues 3,214 3,040 5.7% — — —% Total $ 531,554 $ 497,673 6.8% 3,623,425 3,379,846 7.2% Cooling degree days (normal 733) 757 728 4.0% Electric revenue increased $33.9 million during 2025 compared to 2024, due to the following: (In millions) Sales to the market $ 19.8 Rate changes 10.0 Increase in residential volume 6.7 Customer fixed and demand charges 4.9 Net increase in commercial, industrial and other-retail/municipal volume 2.9 Other 0.2 Revenue subject to refund, net (10.6 ) Total $ 33.9 • Sales to the market.
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.
See " Credit Facilities " below for information regarding MGE Energy's and MGE's credit facilities. 39 Cash Flows The following summarizes cash flows for MGE Energy and MGE during 2025 and 2024: MGE Energy MGE (In thousands) 2025 2024 2025 2024 Cash provided by (used for): Operating activities $ 263,234 $ 277,784 $ 254,651 $ 272,953 Investing activities (350,561 ) (241,487 ) (345,546 ) (239,013 ) Financing activities 71,567 (26,827 ) 76,154 (20,586 ) Cash Provided by Operating Activities Cash flows from operating activities for MGE Energy and MGE principally reflect the receipt of customer payments for electric and gas service and outflows related to fuel for electric generation, purchased power, gas, and operation and maintenance expenditures.
The following contributed to the net change: (In millions) Increased customer accounts costs $ 9.1 Increased transmission costs 6.0 Increased electric production expenses 3.3 Increased electric distribution expenses 1.1 Decreased administrative and general costs (6.4 ) Decreased gas distribution expenses (0.3 ) Decreased other expenses (0.1 ) Total $ 12.7 • Increased customer accounts costs are primarily related to collection of deferred bad debt expense from prior years.
The following contributed to the net change: (In millions) Increased transmission costs $ 3.2 Increased electric production expenses 3.0 Increased customer accounts costs 0.9 Increased administrative and general costs 0.8 Increased other expenses 0.7 Increased gas distribution expenses 0.3 Decreased electric distribution expenses (0.9 ) Total $ 8.0 • Increased transmission costs are primarily a result of an increase in transmission rate.
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.
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.
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.
Capital Expen ditures The following table shows MGE Energy's actual capital expenditures for both 2024 and 2025, and forecasted capital expenditures for 2026 through 2030: (In thousands) Actual Forecasted For the years ended December 31, 2024 2025 2026 2027 2028 2029 2030 Electric $ 192,469 $ 285,576 $ 350,000 $ 530,000 $ 250,000 $ 260,000 $ 260,000 Gas 38,101 48,003 35,000 35,000 40,000 40,000 45,000 Utility plant total 230,570 333,579 385,000 565,000 290,000 300,000 305,000 Nonregulated 6,355 9,641 10,000 15,000 10,000 10,000 10,000 MGE Energy total $ 236,925 $ 343,220 $ 395,000 $ 580,000 $ 300,000 $ 310,000 $ 315,000 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 40 programs, load growth, the timing of any required regulatory approvals, and the adequacy of rate recovery.
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.
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.
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.
Environmental Initiatives: There are proposed legislative rules and initiatives involving matters related to air emissions, water effluent, hazardous materials, and greenhouse gases, all of which affect generation plant capital expenditures and operating costs as well as future operational planning. Legislation and rulemaking addressing climate change and related matters could significantly affect the costs of owning and operating fossil-fueled generating plants.
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.
Forecasted total capital expenditures for those years is approximately $55 million. 41 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.
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.
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) 2025 2024 % Change 2025 2024 % Change Residential $ 123,719 $ 106,150 16.6% 107,304 93,613 14.6% Commercial/Industrial 80,560 65,021 23.9% 104,697 91,804 14.0% Total retail 204,279 171,171 19.3% 212,001 185,417 14.3% Gas transportation 6,582 6,905 (4.7)% 73,342 70,001 4.8% Other revenues 562 511 10.0% — — —% Total $ 211,423 $ 178,587 18.4% 285,343 255,418 11.7% Heating degree days (normal 6,876) 6,845 5,812 17.8% Average rate per therm of retail customer $ 0.964 $ 0.923 4.4% Gas revenue increased $32.8 million during 2025 compared to 2024, due to the following: (In millions) Rate changes $ 21.9 Increase in volume 18.2 Revenue subject to refund, net (3.9 ) Other (3.4 ) Total $ 32.8 Rate changes.
(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.
After tax, MGE recognized $5.4 million, $3.2 million, $2.3 million, $1.4 million, $0.6 million of AFUDC equity earnings through December 31, 2025, on Paris, Darien, Koshkonong, High Noon, and other projects, respectively, during construction. AFUDC has been excluded from the costs incurred in the table above.
(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 Footnote 14 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report for further discussion of the long-term debt outstanding as of December 31, 2025. (b) Short-term debt consisting of commercial paper and a promissory note for MGE.
In January 2025, MGE Transco made a $2.5 million contribution to ATC. 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.
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. In January 2026, MGE entered into a private placement Note Purchase Agreement in which it issued $90 million of senior unsecured notes.
(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.
(b) During both 2025 and 2024, MGE issued $50 million of senior unsecured notes that were used to assist with financing additional capital expenditures and other corporate obligations. Dividend Restrictions Dividend payments by MGE to MGE Energy are subject to restrictions arising under a PSCW rate order.
Available resources include cash and cash equivalents, operating cash flows, liquid assets, borrowing working capacity under revolving credit facilities, and access to equity and debt capital markets. In September 2024, MGE Energy began issuing new shares of common stock to participants in our Direct Stock Purchase and Dividend Reinvestment Plan.
Available resources include cash and cash equivalents, operating cash flows, liquid assets, borrowing working capacity under revolving credit facilities, and access to equity and debt capital markets.
Customs and Border Protection (CBP) issued a Withhold Release Order (WRO) against silica-based products made by Hoshine Silicon Industry Co. Ltd., a company located in China's Xinjiang Uyghur Autonomous Region.
We derived approximately 6.6% and 7.4% of our net income for 2025 and 2024, respectively from our investment in ATC. Uyghur Forced Labor Protection Act In June 2021, the U.S. Customs and Border Protection (CBP) issued a Withhold Release Order (WRO) against silica-based products made by Hoshine Silicon Industry Co. Ltd., a company located in China's Xinjiang Uyghur Autonomous Region.
(c) Authorized returns on common equity may not be indicative of actual returns earned or projections of future returns, as actual returns will be affected by the volume of electricity or gas sold. See Footnote 9.a. of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report for further discussion of rate proceedings.
(c) Authorized returns on common equity may not be indicative of actual returns earned or projections of future returns, as actual returns will be affected by the volume of electricity or gas sold.
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.
Electric fuel and purchased power Year Ended December 31, (In millions) 2025 2024 $ Change Fuel for electric generation $ 70.8 $ 54.0 $ 16.8 Purchased power 20.0 32.9 (12.9 ) The $16.8 million increase in fuel for electric generation was due to an approximately 16% increase in internal generation as well as an approximately 13% increase in the average cost.
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.
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.
Other gas revenues decreased in 2024 compared to 2023 primarily related to lower residential customer fixed charges. The PSCW approved a reduction in the customer fixed charge component of the residential gas rate in the 2024 rate proceeding. Cost of gas sold Cost of gas sold decreased $24.0 million in 2024 compared to 2023.
The PSCW approved a reduction in the customer fixed charge component of the residential gas rate in the 2025 rate proceeding. Cost of gas sold Cost of gas sold increased $24.3 million in 2025 compared to 2024. Therms delivered increased approximately 14% primarily driven by weather and cost per therm increased approximately 14%.
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.
Environmental Initiatives – Natural gas distribution: Building upon our long-standing commitment to providing affordable, sustainable energy, MGE has set a goal to achieve net-zero methane emissions from its natural gas distribution system by 2035. If MGE can accelerate plans to achieve net-zero methane emissions from its natural gas system—through the evolution of new technologies, such as renewable natural gas—it will.
Renewable generation increased approximately 26% driven by new generation sources including Badger Hollow II. Excluding deferred fuel costs, purchased power decreased $9.7 million. The decrease in purchased power was due to an approximately 30% decrease in market purchases as a result of increased internal generation.
Excluding deferred fuel costs, purchased power decreased $6.2 million. The decrease in purchased power was due to an approximately 39% decrease in market purchases as a result of increased internal generation. Furthermore, there was an approximately 1% increase in average cost partially offsetting the decrease in market purchases. Deferred fuel cost recovered in 2024 was $6.7 million.
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.
MGE does not expect to need to make any required contributions to the qualified plans for 2026. The contributions for years after 2026 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.
Income Tax Provision MGE Energy's and MGE's income tax provisions, including both current and deferred components, are based on estimates, assumptions, calculations, and interpretation of tax statutes for the current and future years. Determination of current-year federal and state income tax will not be settled for years.
See Footnote 11 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report for additional discussion of these plans. Income Tax Provision MGE Energy's and MGE's income tax provisions, including both current and deferred components, are based on estimates, assumptions, calculations, and interpretation of tax statutes for the current and future years.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeItem 1C. Cybersecurity. 24 Item 2. Properties. 25 Item 3. Legal Proceedings. 27 Item 4. Mine Safety Disclosures. 27 PART II. 28 Item 5. Market for Registrants' Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. 28 Item 6. [Reserved]. 28 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. 29 Item 7A.
Biggest changeItem 1C. Cybersecurity. 26 Item 2. Properties. 28 Item 3. Legal Proceedings. 30 Item 4. Mine Safety Disclosures. 30 PART II. 31 Item 5. Market for Registrants' Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. 31 Item 6. [Reserved]. 31 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. 32 Item 7A.
Quantitative and Qualitative Disclosures About Market Risk. 45
Quantitative and Qualitative Disclosures About Market Risk. 50

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIf 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.
Biggest changeIn addition, IRS tax policies such as tax normalization, Treasury Regulations, and evolving guidance under the IRA and OBBBA may impact our ability to economically deliver certain types of resources relative to market prices. OBBBA includes provisions for the phase-out of certain tax credits over time, creating uncertainty around long-term project economics and potentially accelerating investment timelines.
Climate change and the regulatory response to it could significantly affect our operations in a number of ways, including increased operating costs and capital expenditures, restrictions on energy supply options, operational limits on our fossil fuel fired plants, permitting difficulties, and emission limits. MGE would expect to seek and receive rate recovery of associated compliance costs, if and when required.
Climate change and the regulatory response to it could significantly affect our operations in a number of ways, including increased operating costs and capital expenditures, restrictions on energy supply options, operational limits on fossil fuel fired plants, permitting difficulties, and emission limits. MGE would expect to seek and receive rate recovery of associated compliance costs, if and when required.
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.
MGE continues to monitor proposed climate change legislation and regulation. MGE has taken steps to address GHG emissions and is targeting net-zero carbon electricity by 2050.
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.
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. 25 We are exposed to counterparty credit risk primarily through our regulated energy business.
All employees have access to a variety of learning resources to help ensure they are equipped with the knowledge and skills to effectively navigate the evolving utility industry. Workplace Culture MGE supports an inclusive, respectful work environment where individuals and groups can achieve their full potential. MGE seeks to attract and retain the best people to do the job.
All employees have access to a variety of learning resources to help ensure they are equipped with the knowledge and skills to effectively navigate the evolving utility industry. 16 Workplace Culture MGE supports an inclusive, respectful work environment where individuals and groups can achieve their full potential. MGE seeks to attract and retain the best people to do the job.
Our ability to obtain adjustments to those rates depends upon timely regulatory action under applicable statutes and regulations. These proceedings typically involve multiple parties, including governmental bodies and officials, consumer advocacy groups, and various consumers of energy, who focus on differing elements of the rate setting process, including environmental matters and addressing affordability concerns.
Our ability to obtain adjustments to those rates depends upon timely regulatory action under applicable statutes and regulations. These proceedings typically involve multiple parties, including governmental bodies and officials, consumer advocacy groups, and various consumers of energy, who may focus on differing elements of the rate setting process, including environmental matters, addressing affordability concerns.
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.
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.
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.
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 19 recovery planning.
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.
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. 13 Blount received its most recent WPDES permit from the Wisconsin Department of Natural Resources (WDNR) in October 2023.
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.
Individual plants can meet their caps through reducing emissions and/or buying allowances on the market. 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 (Good Neighbor Plan).
System interruptions or failures, whether isolated or more widespread, could impact our ability to provide service to our customers, which could have a material adverse effect on our operations and financial performance. Generation, transmission systems, and natural gas pipelines are part of an interconnected system.
System interruptions or failures, whether isolated or more widespread, could 23 impact our ability to provide service to our customers, which could have a material adverse effect on our operations and financial performance. Generation, transmission systems, and natural gas pipelines are part of an interconnected system.
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.
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.
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.
As of December 31, 2025, 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.
MGE will continue to evaluate this plan for its applicability to MGE's decarbonization plans and to evaluate potential impact to our operations. Solid Waste Coal Combustion Residuals (CCR) Rule The CCR rule regulates the disposal of solid waste coal ash and defines what ash use activities would be considered generally exempt beneficial reuse of coal ash.
MGE will continue to evaluate this plan for its applicability to MGE's decarbonization plans and to evaluate potential impact on our operations. 15 Solid Waste Coal Combustion Residuals (CCR) Rule The CCR Rule regulates the disposal of solid waste coal ash and defines what ash use activities would be considered generally exempt beneficial reuse of coal ash.
The final rule grants some emissions flexibility for existing coal-fired units that retire and/or fuel switch by certain dates. For existing natural gas boiler units, the final rule establishes a process where states must submit plans to the EPA for establishing standards.
The final rule granted some emissions flexibility for existing coal-fired units that retire and/or fuel switch by certain dates. For existing natural gas boiler units, the final rule establishes a process where states must submit plans to the EPA for establishing standards.
Review of the Elm Road Units has indicated that the costs to comply with this rule are not expected to be significant. In May 2024, the EPA published its final CCR Legacy Rule. The CCR Legacy Rule applies to previous closed disposal sites.
Review of the Elm Road Units has indicated that the costs to comply with this rule are not expected to be significant. In May 2024, the EPA published its final CCR Legacy Rule. The CCR Legacy Rule applies to previously closed disposal sites.
While we believe we have identified and discussed below the key risk factors affecting our business, additional unknown risks and uncertainties may adversely affect our performance or financial condition in the future. Regulatory Risk We are subject to extensive government regulation in our business, which affects our costs and responsiveness to changing events and circumstances.
While we believe we have identified and discussed below the key risk factors affecting our business, additional unknown risks and uncertainties may adversely affect our performance or financial condition in the future. Regulatory Risk We are subject to extensive government regulation in our business, which affects our costs and ability to respond to changing events and circumstances.
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.
That interest is presently held by MGE Transco, a wholly-owned subsidiary of MGE Energy. As of December 31, 2025, MGE Transco held a 3.6% ownership interest in ATC.
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 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 targeting GHG emissions from the electric power industry may also occur if the federal government fails to act on greenhouse gas initiatives.
Therefore, a disruption caused by the impact of a cyber security incident on the regional electric transmission grid, natural gas pipeline infrastructure or other fuel sources of our third-party service providers' operations, could also negatively impact our business.
Therefore, a disruption caused by the impact of a cybersecurity incident on the regional electric transmission grid, natural gas pipeline infrastructure or other fuel sources of our third-party service providers' operations, could also negatively impact our business.
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.
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; reducing investor confidence; and disrupting, or causing volatility in, capital markets.
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.
Decisions are subject to judicial review, potentially leading to additional uncertainty associated with the approval proceedings, including with respect to outcome and timing. 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.
Rules regulating nitrogen oxide (NO x ) and sulfur dioxide (SO 2 ) emissions, including the Cross State Air Pollution Rule (CSAPR) and Clean Air Visibility Rule The EPA's CSAPR and its progeny are a suite of interstate air pollution transport rules designed to reduce ozone and PM2.5 ambient air levels in areas that the EPA has determined as being significantly impacted by pollution from upwind states.
Rules regulating nitrogen oxide (NO x ) and sulfur dioxide (SO 2 ) emissions, including the Cross State Air Pollution Rule's (CSAPR) Good Neighbor Plan and Clean Air Visibility Rule The EPA's CSAPR and its progeny (e.g. the Good Neighbor Plan) are a suite of interstate air pollution transport rules designed to reduce ozone and PM2.5 ambient air levels in areas that the EPA has determined as being significantly impacted by pollution from upwind states.
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.
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; our ability to transition away from 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.
Our business is subject to regulation at the State and federal levels. The regulations adopted by the State and federal agencies affect how we do business, our ability to undertake specified actions since pre-approval or authorization may be required for projects, the costs of operations, and the rates charged to recover those costs.
Our business is subject to regulation at the local, state, and federal levels. The regulations adopted by local, state, and federal agencies affect how we do business, our ability to undertake specified actions since pre-approval or authorization may be required for projects, the costs of operations, and the rates we are authorized to charge to recover those costs.
The PSCW regulates MGE's rates; terms and conditions of service; various business practices and transactions; financing; the closure of generating facilities and related cost recovery; and transactions between it and its affiliates, including MGE Energy. MGE is also subject to regulation by the FERC, which regulates certain aspects of its business. MGE is subject to oversight and monitoring by MISO.
The PSCW regulates MGE's rates; terms and conditions of service; various business practices and transactions; financing; the closure of generating facilities and related cost recovery; and transactions between it and its affiliates, including MGE Energy. MGE is also subject to regulation by the FERC, which regulates certain aspects of its business, including certain accounting policies.
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.
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 318 employees as of December 31, 2025.
A changing climate creates uncertainty and could result in broad changes, both physical and financial in nature, to our operations. Physical risks arising from extreme weather events and changing climate patterns, including swings in intensity, disruption of operations, infrastructure damage, and impact of customer demand.
Our operations could be adversely affected by global climate change. A changing climate creates uncertainty and could result in broad changes, both physical and financial in nature, to our operations. Physical risks arising from extreme weather events and changing climate patterns, including swings in intensity, disruption of operations, infrastructure damage, and impact of customer demand.
As 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.
As of December 31, 2025, MGE Energy and its subsidiaries had 726 employees, 318 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 234 April 30, 2028 Local Union No. 39 of the Office and Professional Employees International Union 80 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, 2025, women and ethnic minorities represented 27% and 10% of our total workforce, respectively.
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.
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. The rule also regulates legacy wastewater that is discharged from certain surface impoundments.
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.
Renewable energy continues to play a critical role in MGE's strategy for reducing carbon emissions. 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.
These assumptions may differ materially from actual future results. Accordingly, we may not achieve our stated long-term goals in the timeframe projected or at all. Failure to attract and retain an appropriately qualified workforce could affect our operations. We must attract, train, and retain a workforce to meet current and future needs.
These assumptions may differ materially from actual future developments. Accordingly, we may not achieve our stated long-term goals in the timeframe projected or at all. Failure to attract and retain an appropriately qualified workforce could affect our operations.
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.
Compliance with these standards affects our operating costs and any noncompliance could 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.
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.
However, the final impact of this rule will not be known until the EPA determines the attainment status of Wisconsin counties, and the State of Wisconsin develops an attainment implementation plan. MGE will continue to follow the rule's developments.
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.
A decline in the market value of trust fund assets may increase our current and longer-term funding requirements by increasing the level of contributions required to meet benefit obligations.
The recovery of under-collected electric fuel-related costs would be reduced by the amount that exceeds the excess revenue test. These costs are subject to the PSCW's annual review of fuel costs completed in the year following the deferral. MGE assumes the risks and benefits of variances that are within the cost tolerance band.
The recovery of under-collected electric fuel-related costs would be reduced by the amount that exceeds the excess revenue test. These costs are subject to the PSCW's annual review of fuel costs completed in the year following the deferral.
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.
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.
Global Climate Change MGE produces greenhouse gas (GHG) emissions, primarily from the fossil fuel generating facilities it uses to meet customers' energy needs, as well as from its natural gas pipeline system and fleet vehicles.
MGE will continue to monitor legal developments and any future updates to this rule. 14 Global Climate Change MGE produces greenhouse gas (GHG) emissions, primarily from the fossil fuel generating facilities it uses to meet customers' energy needs, as well as from its natural gas pipeline system and fleet vehicles.
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.
Lorenz (b) Vice President – Energy Operations 05/01/2021 – present 7 Age: 59 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 10 Age: 52 Scott R.
There is also uncertainty as to when or how credit rating agencies, capital markets, the FERC, or state public utility commissions will treat impacts of any future federal or state tax regulation. These impacts could subject us to credit rating downgrades.
There is also uncertainty as to when or how credit rating agencies, capital markets, the FERC, or state public utility commissions will treat impacts of any future federal or state tax regulation. These impacts could result in credit rating downgrades or negatively affect financial metrics such as funds from operations-to-debt ratios.
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.
Smith (b) Vice President – Business and Regulatory Strategy 05/01/2021 – present 7 Age: 54 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. (c) Retired effective December 31, 2025. 18 Item 1A. Ris k Factors.
Failure to meet these requirements on renewable projects that began construction after January 28, 2023, could result in a significant reduction in the amount of renewable tax credits, which could adversely impact our financial condition and results of operations. Our utility business currently owns and operates renewable energy generating facilities.
The IRA introduced new labor requirements that are conditions to qualification for renewable tax credits. Failure to meet these requirements on renewable projects that began construction after January 28, 2023, could result in a significant reduction in the amount of renewable tax credits, which could adversely impact our financial condition and results of operations.
Hobbie (b) Executive Vice President – Marketing and Communications 03/01/2017 – present 30 Age: 66 Jenny L. Lagerwall (a) Assistant Vice President – Accounting and Controller (Chief Accounting Officer) 07/01/2024 – present 1 Age: 41 Assistant Vice President – Accounting 03/01/2024 – 07/01/2024 Director – Financial Reporting 10/01/2015 – 03/01/2024 James J.
Lagerwall (a) Assistant Vice President – Accounting and Controller (Chief Accounting Officer) 07/01/2024 – present 1 Age: 42 Assistant Vice President – Accounting 03/01/2024 – 07/01/2024 Director – Financial Reporting 10/01/2015 – 03/01/2024 James J.
More recently, our operations have been impacted by domestic and global supply chain disruptions which are delaying the delivery of materials, equipment, and other resources that are critical to our business operations and projects under construction, including our renewable energy projects. Supply interruptions could affect our ability to operate and maintain our system and ability to implement our long-term goals.
Our operations have been, and may continue to be, impacted by domestic and global supply chain disruptions which are delaying the delivery of materials, equipment, and other resources that are critical to our business operations and projects under construction, including our renewable energy projects.
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.
Supply interruptions could affect our ability to operate and maintain our system and ability to implement our long-term goals. 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 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.
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. Compliance with such regulation may result in increased capital and operating costs, including expenditures for equipment, technology, and monitoring activities.
We cannot provide any assurance regarding the potential impacts of climate change or related policies and regulations to reduce GHG emissions on our operations, which could have a material adverse impact on our financial condition and results of operations.
We cannot provide any assurance regarding the potential impacts of climate change or related policies and regulations to reduce GHG emissions on our operations, which could have a material adverse impact on our financial condition and results of operations. 22 The ability to obtain an adequate supply of coal could limit the ability to operate the co-owned coal-fired facilities from which we receive a significant portion of our electric supply.
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.
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.
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.
Stop Work Authority is an employee-developed program to communicate that all employees have equal authority and responsibility to stop work when a perceived unsafe condition or behavior is reported. 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.
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.
Despite such measures, we have been and may in the future be subject to cyber incidents. 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.
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.
Because a portion of our costs are recovered through volumetric charges, reductions in electricity deliveries could affect the timing of our recovery of those costs and may require changes to rate structures. 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.
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.
See Footnote 16.a. of the Notes to the Consolidated Financial Statements in this Report for further discussion of compliance costs for Columbia. 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.
Governance The Human Resources and Compensation Committee of the Board of Directors of MGE Energy oversees MGE Energy's human resource strategies.
Governance The Human Resources and Compensation Committee of the Board of Directors of MGE Energy oversees MGE Energy's human resource strategies. It reviews the salaries, fees and other benefits of officers and directors and recommends compensation adjustments to the board.
Federal Action on Climate Change In January 2025, President Trump signed several executive orders relating to energy and climate policy, including directing his administration to withdraw the U.S. from the Paris Climate Accords.
Federal Action on Climate Change In January 2025, the Trump Administration issued several executive orders relating to energy and climate policy, including directing the United States' withdrawal from the Paris Agreement. As of January 2026, the U.S. has formally withdrawn.
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 Columbia operator timely submitted its renewal application to the WDNR. Columbia's operator anticipates that BTA improvements required by the future renewal permit will be coordinated with the WDNR by the end of 2029. MGE will continue to work with Columbia's operator to evaluate regulatory requirements. MGE does not expect this rule to have a material effect on Columbia.
We cannot guarantee that the protections we have in place will be completely successful in the event of a cyber attack.
Moreover, the rapid evolution and increased adoption of AI technologies may intensify our cybersecurity risks. We cannot guarantee that the protections we have in place will be completely successful in the event of a cyber attack.
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. There is uncertainty regarding whether and how the current and future Presidential administrations will address climate change-related matters, including restrictions on greenhouse gas emissions, such as carbon.
There is uncertainty regarding whether and how the current and future Presidential administrations will address climate change-related matters, including restrictions on greenhouse gas emissions, such as carbon.
Financial Information About Segments See Footnote 22 of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Report for financial information relating to MGE Energy's and MGE's business segments.
Financial Information About Segments See Footnote 22 of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Report for financial information relating to MGE Energy's and MGE's business segments. 17 Information About our Execut ive Officers The names, ages, and positions of MGE Energy and MGE's executive officers are listed below along with their business experience during the past five years.
A wide range of backgrounds, cultures, and experiences strengthens MGE's work environment. MGE's goal is to create a healthy, inclusive, and productive work environment for all MGE employees. MGE has an employee-led steering team that works to engage employees and identify opportunities for supporting diversity, equity and inclusion throughout the workforce.
A wide range of backgrounds and ideas strengthens MGE's work environment. MGE's goal is to create a healthy and productive work environment that provides a sense of belonging for all MGE employees. MGE's employee-led steering team on workplace culture works to engage employees and identify opportunities for connecting and for living our values.
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.
MGE currently exceeds the applicable minimum requirement of approximately 8%. The costs to comply with this requirement are being recovered in rates. 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.
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.
Executive Title Effective Date Service Years as an Officer Jeffrey M. Keebler (a) Chairman of the Board, President, and Chief Executive Officer 10/01/2018 – present 14 Age: 54 Jared J. Bushek (a) Vice President – Chief Financial Officer and Treasurer 03/01/2023 – present 10 Age: 45 Vice President – Finance, Chief Information Officer and Treasurer 09/01/2020 – 03/01/2023 Melissa T.
These factors could significantly reduce the PTC and ITC produced by our wind or solar farms, resulting in increased federal income tax expense. We could also be forced to replace lost generation capacity with additional power purchases from third parties, potentially leading to increased costs.
These factors, combined with labor requirements under IRA and FEOC compliance risks and credit phase-outs under OBBBA, could reduce credits and increase federal income tax expense. We could also be forced to replace lost generation capacity with additional power purchases from third parties, potentially leading to increased costs.
If that happens, we may have to finance overruns through cash from operations, which may delay other projects, or by securing additional financing. Any or all of these methods may not be available when or in the amounts needed or may adversely affect our financial condition, results of operations and cash flows.
If that happens, we may have to finance overruns through cash from operations, which may delay other projects, or by securing additional financing.
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.
Columbia's existing pollution control upgrades, and the EPA's stance that compliance with the CSAPR and its progeny such as the Good Neighbor Plan satisfy the requirements of BART, should mean that Columbia will not need to do additional work to meet BART requirements.
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.
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.
Based on previous treatment of environmental compliance projects, management believes that any compliance costs will be recovered in future rates.
See Footnote 16.a. of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Report for further discussion of environmental compliance obligations. Based on previous treatment of environmental compliance projects, management believes that any compliance costs will be recovered in future rates.
Columbia's operator has evaluated the rule and determined that parts of the rule apply to Columbia's previously closed site. See Footnote 16.a. of the Notes to the Consolidated Financial Statements in this Report for further discussion of compliance costs for Columbia.
Columbia's operator has evaluated the rule and determined that parts of the rule apply to Columbia's previously closed site.
Inability to recover excess costs, or inability to complete the project in a timely manner, could adversely impact our financial condition and results of operations. Further, our revenues and cash flows may not increase immediately following our expenditure of funds on a particular project, which could affect our liquidity and financial position.
Further, our revenues and cash flows may not increase immediately following our expenditure of funds on a particular project or in the period during which the expenditure occurs, which could affect our liquidity and financial position. Our stated long-term goals are based on various assumptions and beliefs that may not prove to be achievable in the time frame projected.
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.
The committee determines the amounts and elements of compensation for the company's executive officers and provides overall guidance for the company's executive compensation policies and programs. Such policies relate 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.
Advancements in power generation technology, including commercial and residential solar generation installations and commercial micro turbine installations, are improving the cost-effectiveness of customer self-supply of electricity. Improvements in energy storage technology, including batteries and fuel cells, could also better position customers to meet their around-the-clock electricity requirements.
Our revenues and the timing of cost recovery could be adversely impacted by improvements in power generation, storage, and use of technology to minimize energy use. Advancements in distributed generation, including commercial and residential solar installations and commercial micro turbines, continue to improve the cost-effectiveness of customer self-supply of electricity.
States will have two years from the publication date of these rules to submit plans to the EPA for review and approval. The EPA has indicated that it is separately developing performance standards and emission guidelines for GHG emissions from existing natural gas-fired combustion turbines.
States will have two years from the publication date of these rules to submit plans to the EPA for review and approval. Preliminary evaluation of the final ruling showed that MGE met the requirements for the gas-fired boilers at Blount.
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.
Some of our current long-term goals include MGE's target of net‐zero carbon electricity by 2050 and MGE's Energy 2030 framework, which describes our plan for growth in renewables generation. MGE is working to achieve a more sustainable energy future using cost‐effective renewable generation and storage technologies.
The amount of tax credits we earn depends on the date the qualifying generating facilities are placed in service and various operating and economic factors, including facility generation, transmission constraints, unfavorable trends in pricing for wind or solar energy, adverse weather conditions, the breakdown or failure of equipment, and the applicable tax credit rate.
Our utility business owns and operates renewable energy generating facilities that produce PTC and ITC credits. The amount of credits earned depends on facility in-service dates and operating factors, including generation output, transmission constraints, pricing trends, adverse weather conditions, equipment reliability, and the applicable credit rates.
No assurance can be given that future losses for such events will not exceed the limits of our insurance coverage, if applicable. Facilities for electric generation, transmission, and gas and electric distribution are potential targets of terrorist threats and activities, including both physical or cyber attacks.
Uninsured or underinsured losses could materially and adversely affect our financial condition and results of operations. Facilities for electric generation, transmission, and gas and electric distribution are potential targets of terrorist threats and activities, including both physical or cyber attacks.
These obligations include debt service and obligations to trade creditors, among others. Our subsidiaries are also subject to contractual and regulatory restrictions on the payment of dividends. Disruptions in the financial markets or changes to our credit ratings may affect our ability to finance at a reasonable cost and in accordance with our planned schedule.
These obligations include debt service and obligations to trade creditors, among others. Our subsidiaries are also subject to contractual and regulatory restrictions that may limit or impair their ability to pay dividends to MGE Energy.
Such developments could reduce customer purchases of electricity but may not necessarily reduce our investment and operating requirements due to our obligation to serve customers, including those self-supply customers whose equipment has failed for any reason to provide the power they need whether due to inadequate on-site resources, restricted operating hours, or equipment failure.
AI-driven energy management tools could also enable customers to optimize usage and further reduce purchases from us. Such developments could reduce customer purchases of electricity but may not reduce our investment and operating requirements due to our obligation to serve customers, including those whose self-supply resources fail.
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).
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 may not be able to fully use tax credits if our future federal and state taxable income and related income tax liability is insufficient to permit their use or if we are unable to transfer tax credits to a third party.
We have historically reduced our consolidated federal and state income tax liability through various tax credits. We may not be able to fully use these tax credits if future taxable income is insufficient or if transferability options are limited. Any future disallowance of credits due to legislative changes or adverse determinations could materially affect our tax obligations and financial results.
We could be adversely affected by changes in the development, and utilization by our customers, of power generation, storage, and use technologies. Our revenues and the timing of the recovery of our costs could be adversely affected by improvements in power generation, storage, and use technology.
Other pending or future legislative or regulatory actions may also impact the development, construction and operation of new data centers in our service area. We could be adversely affected by changes in the development, and utilization by our customers, of power generation, storage, and use technologies, as well as emerging technologies such as AI.
Changes in federal income tax policy or our inability to use or generate tax credits may adversely affect our financial condition, results of operations, and cash flows, as well as our credit ratings. If corporate tax rates or policies are changed, we may be required to take material charges against earnings.
MGE assumes the risks and benefits of variances that are within the cost tolerance band. 20 Changes in federal income tax policy, including provisions under the Inflation Reduction Act (IRA) and One Big Beautiful Bill Act (OBBBA), or our inability to use or generate tax credits, may adversely affect our financial condition, results of operations, and cash flows, and credit ratings.

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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 12/31/2019 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
Biggest changeCumulative Five-Year Total Return Comparison (assumes $1,000 invested on 12/31/2020 with dividends reinvested) Value of Investment as of December 31, 2020 2021 2022 2023 2024 2025 MGEE $ 1,000 $ 1,199 $ 1,048 $ 1,102 $ 1,463 $ 1,247 Russell 2000 1,000 1,148 914 1,068 1,191 1,344 EEI Index 1,000 1,171 1,185 1,082 1,288 1,438
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.
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 20, 2026, there were 17,347,894 outstanding shares of MGE common stock, all of which were held by MGE Energy.
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.
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 2020 through 2025. The EEI Index reflects the consolidated performance of Edison Electric Institute investor-owned electric utilities.
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.
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 20, 2026, there were 13,655 shareholders of record.
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The cumulative total returns over the indicated period are based on historical data and should not be considered indicative of future returns.

Item 7. Management's Discussion & Analysis

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

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Biggest changeThat 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.
Biggest changeThat responsibility is manifested in actions MGE has taken, and will continue to take, to achieve its goal of net-zero carbon by 2050. As part of this long‑term transition, MGE continues to evaluate the role of coal‑fired generation in its portfolio, including previously announced plans regarding the Columbia Energy Center and the planned fuel transition at the Elm Road Units.
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
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, • Environmental laws and regulations, including adopted and pending environmental rule changes, and • Other factors listed in
General 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.
General 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 170,000 customers in Dane County, Wisconsin, • Regulated gas utility operations, conducted through MGE, which distribute natural gas to approximately 180,000 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, 2023, as compared to the year ended December 31, 2022. 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, 2024, as compared to the year ended December 31, 2023. That discussion can be found in Item 7.
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.
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, 2024, which was filed with the SEC on February 25, 2025. 32 Execut ive Overview We principally earn revenue and generate cash from operations by providing electric and natural gas utility services, including electric power generation and electric power and gas distribution.
MGE will continue to focus on growing earnings while controlling operating and fuel costs. MGE's goal is to provide safe and efficient operations in addition to providing customer value. We believe it is critical to maintain a strong credit rating consistent with financial strength in MGE in order to accomplish these goals.
We believe it is critical to maintain a strong credit rating consistent with financial strength in MGE in order to accomplish these goals.
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Execut ive Overview We principally earn revenue and generate cash from operations by providing electric and natural gas utility services, including electric power generation and electric power and gas distribution.
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MGE remains focused on reducing reliance on coal over time and expanding ownership of renewable generation to support a cleaner, reliable energy future. MGE will continue to focus on growing earnings while controlling operating and fuel costs. MGE's goal is to provide safe and efficient operations in addition to providing customer value.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeConsolidated Statements of Common Equity (In thousands, except per share amounts) Accumulated Additional Other Common Stock Paid-in Retained Comprehensive Shares Value Capital Earnings Income/(Loss) Total 2022 Beginning balance - December 31, 2021 36,163 $ 36,163 $ 394,903 $ 596,402 $ — $ 1,027,468 Net income 110,952 110,952 Common stock dividends declared ($ 1.59 per share) ( 57,500 ) ( 57,500 ) Equity-based compensation plans and other 754 754 Ending balance - December 31, 2022 36,163 36,163 395,657 649,854 — 1,081,674 2023 Net income 117,699 117,699 Common stock dividends declared ($ 1.67 per share) ( 60,393 ) ( 60,393 ) Equity-based compensation plans and other 1,093 1,093 Ending balance - December 31, 2023 36,163 36,163 396,750 707,160 — 1,140,073 2024 Net income 120,569 120,569 Common stock dividends declared ($ 1.76 per share) ( 63,596 ) ( 63,596 ) Direct Stock Purchase and Dividend Reinvestment Plan 314 314 31,386 31,700 Equity-based compensation plans and other 13 13 1,379 1,392 Ending balance - December 31, 2024 36,490 $ 36,490 $ 429,515 $ 764,133 $ — $ 1,230,138 The accompanying notes are an integral part of the above consolidated financial statements. 56 Madison Gas and Electric Company Consolidated Statements of Income (In thousands) For the Years Ended December 31, 2024 2023 2022 Operating Revenues: Electric revenues $ 498,357 $ 490,419 $ 465,847 Gas revenues 178,587 200,012 248,672 Total Operating Revenues 676,944 690,431 714,519 Operating Expenses: Fuel for electric generation 53,994 57,627 61,329 Purchased power 32,852 41,224 46,821 Cost of gas sold 82,693 106,647 152,570 Other operations and maintenance 227,671 214,897 209,007 Depreciation and amortization 108,581 100,352 85,549 Other general taxes 23,986 22,301 20,627 Total Operating Expenses 529,777 543,048 575,903 Operating Income 147,167 147,383 138,616 Other income, net 5,885 21,365 17,626 Interest expense, net ( 33,369 ) ( 30,651 ) ( 26,687 ) Income before income taxes 119,683 138,097 129,555 Income tax provision ( 7,384 ) ( 25,727 ) ( 24,063 ) Net Income $ 112,299 $ 112,370 $ 105,492 Less Net Income Attributable to Noncontrolling Interest, net of tax ( 22,855 ) ( 21,868 ) ( 21,576 ) Net Income Attributable to MGE $ 89,444 $ 90,502 $ 83,916 The accompanying notes are an integral part of the above consolidated financial statements. 57 Madison Gas and E lectric Company Consolidated Statements of Cash Flows (In thousands) For the Years Ended December 31, 2024 2023 2022 Operating Activities: Net income $ 112,299 $ 112,370 $ 105,492 Items not affecting cash: Depreciation and amortization 108,581 100,352 85,549 Deferred income taxes ( 433 ) 21,536 22,767 Provision for doubtful receivables 8,800 1,764 1,764 Employee benefit plan (credit) cost 606 ( 5,796 ) ( 8,142 ) Other items 2,247 ( 241 ) 672 Changes in working capital items: Accounts receivable and unbilled revenues ( 6,582 ) 11,130 ( 16,697 ) Inventories 5,542 ( 850 ) ( 22,226 ) Prepaid taxes 3,979 ( 3,871 ) 912 Other current assets 9,983 5,032 ( 3,774 ) Accounts payable 6,495 ( 5,209 ) 5,104 Deferred income taxes 18,501 — — Accrued interest and taxes 2,540 1,413 ( 2,737 ) Other current liabilities ( 2,397 ) ( 3,272 ) ( 2,541 ) Cash contributions to pension and other postretirement plans ( 7,722 ) ( 7,747 ) ( 7,308 ) Other noncurrent items, net 10,514 5,211 ( 7,768 ) Cash Provided by Operating Activities 272,953 231,822 151,067 Investing Activities: Capital expenditures ( 236,925 ) ( 222,071 ) ( 175,030 ) Other ( 2,088 ) ( 1,956 ) ( 1,065 ) Cash Used for Investing Activities ( 239,013 ) ( 224,027 ) ( 176,095 ) Financing Activities: Cash dividends paid to parent by MGE ( 34,500 ) ( 41,000 ) ( 33,500 ) Distributions to parent from noncontrolling interest ( 22,000 ) ( 20,500 ) ( 22,000 ) Capital contribution from parent 30,750 — — Repayment of long-term debt ( 5,146 ) ( 54,314 ) ( 4,889 ) Issuance of long-term debt 50,000 139,300 25,000 (Repayments of) proceeds from short-term debt ( 38,000 ) ( 32,500 ) 65,000 Other ( 1,690 ) ( 2,576 ) ( 1,881 ) Cash (Used for) Provided by Financing Activities ( 20,586 ) ( 11,590 ) 27,730 Change in cash, cash equivalents, and restricted cash 13,354 ( 3,795 ) 2,702 Cash, cash equivalents, and restricted cash at beginning of period 6,705 10,500 7,798 Cash, cash equivalents, and restricted cash at end of period $ 20,059 $ 6,705 $ 10,500 The accompanying notes are an integral part of the above consolidated financial statements. 58 Madison Gas and Elect ric Company Consolidated Balance Sheets (In thousands) As of December 31, ASSETS 2024 2023 Current Assets: Cash and cash equivalents $ 16,865 $ 2,819 Accounts receivable, less reserves of $ 6,905 and $ 6,537 , respectively 51,277 46,734 Other accounts receivable, less reserves of $ 2,124 and $ 1,561 , respectively 10,063 15,616 Unbilled revenues 35,833 33,181 Materials and supplies, at average cost 36,187 33,385 Fuel for electric generation, at average cost 11,521 13,423 Stored natural gas, at average cost 19,937 25,840 Prepaid taxes 18,359 22,338 Regulatory assets - current 8,522 20,979 Other current assets 14,740 16,088 Total Current Assets 223,304 230,403 Regulatory assets 36,764 81,589 Pension and other postretirement benefit asset 132,264 93,896 Other deferred assets and other 25,690 20,780 Property, Plant, and Equipment: Property, plant, and equipment, net 2,149,165 2,018,149 Construction work in progress 138,208 110,091 Total Property, Plant, and Equipment 2,287,373 2,128,240 Investments — 60 Total Assets $ 2,705,395 $ 2,554,968 LIABILITIES AND CAPITALIZATION Current Liabilities: Long-term debt due within one year $ 5,285 $ 5,146 Short-term debt — 38,000 Accounts payable 77,453 65,434 Accrued interest and taxes 11,866 9,325 Accrued payroll related items 15,870 15,888 Regulatory liabilities - current 7,966 15,296 Other current liabilities 7,418 6,502 Total Current Liabilities 125,858 155,591 Other Credits: Deferred income taxes 280,961 244,634 Investment tax credit - deferred 44,988 46,892 Regulatory liabilities 163,336 162,316 Accrued pension and other postretirement benefits 50,155 55,058 Asset retirement obligations 69,132 54,430 Other deferred liabilities and other 67,463 63,969 Total Other Credits 676,035 627,299 Capitalization: Common shareholder's equity: Common Stock - $ 1 par value - 50,000 shares authorized; 17,348 shares outstanding 17,348 17,348 Additional paid-in capital 283,667 252,917 Retained earnings 688,404 633,460 Total Common Shareholder's Equity 989,419 903,725 Noncontrolling interest 150,386 149,531 Total Equity 1,139,805 1,053,256 Long-term debt 763,697 718,822 Total Capitalization 1,903,502 1,772,078 Commitments and contingencies (see Footnote 16) Total Liabilities and Capitalization $ 2,705,395 $ 2,554,968 The accompanying notes are an integral part of the above consolidated financial statements. 59 Madison Gas and Elec tric Company Consolidated Statements of Equity (In thousands) Accumulated Additional Other Non- Common Stock Paid-in Retained Comprehensive Controlling Shares Value Capital Earnings Income/(Loss) Interest Total 2022 Beginning balance - December 31, 2021 17,348 $ 17,348 $ 252,917 $ 533,542 $ — $ 148,587 $ 952,394 Net income 83,916 21,576 105,492 Cash dividends paid to parent by MGE ( 33,500 ) ( 33,500 ) Distributions to parent from noncontrolling interest ( 22,000 ) ( 22,000 ) Ending balance - December 31, 2022 17,348 $ 17,348 $ 252,917 $ 583,958 $ — $ 148,163 $ 1,002,386 2023 Net income 90,502 21,868 112,370 Cash dividends paid to parent by MGE ( 41,000 ) ( 41,000 ) Distributions to parent from noncontrolling interest ( 20,500 ) ( 20,500 ) Ending balance - December 31, 2023 17,348 $ 17,348 $ 252,917 $ 633,460 $ — $ 149,531 $ 1,053,256 2024 Net income 89,444 22,855 112,299 Capital contributions from parent 30,750 30,750 Cash dividends paid to parent by MGE ( 34,500 ) ( 34,500 ) Distributions to parent from noncontrolling interest ( 22,000 ) ( 22,000 ) Ending balance - December 31, 2024 17,348 $ 17,348 $ 283,667 $ 688,404 $ — $ 150,386 $ 1,139,805 The accompanying notes are an integral part of the above consolidated financial statements. 60 Notes to Consolidated Financial Statements December 31, 2024, 2023, and 2022 This report is a combined report of MGE Energy and MGE.
Biggest changeConsolidated Statements of Common Equity (In thousands, except per share amounts) Accumulated Additional Other Common Stock Paid-in Retained Comprehensive Shares Value Capital Earnings Income/(Loss) Total 2023 Beginning balance - December 31, 2022 36,163 $ 36,163 $ 395,657 $ 649,854 $ — $ 1,081,674 Net income 117,699 117,699 Common stock dividends declared ($ 1.67 per share) ( 60,393 ) ( 60,393 ) Equity-based compensation plans and other 1,093 1,093 Ending balance - December 31, 2023 36,163 36,163 396,750 707,160 — 1,140,073 2024 Net income 120,569 120,569 Common stock dividends declared ($ 1.76 per share) ( 63,596 ) ( 63,596 ) Direct Stock Purchase and Dividend Reinvestment Plan 314 314 31,386 31,700 Equity-based compensation plans and other 13 13 1,379 1,392 Ending balance - December 31, 2024 36,490 36,490 429,515 764,133 — 1,230,138 2025 Net income 135,889 135,889 Common stock dividends declared ($ 1.85 per share) ( 67,587 ) ( 67,587 ) Direct Stock Purchase and Dividend Reinvestment Plan 41 41 3,709 3,750 Equity-based compensation plans and other 11 11 1,735 1,746 Ending balance - December 31, 2025 36,542 $ 36,542 $ 434,959 $ 832,435 $ — $ 1,303,936 The accompanying notes are an integral part of the above consolidated financial statements. 61 Madison Gas and Electric Company Consolidated Statements of Income (In thousands) For the Years Ended December 31, 2025 2024 2023 Operating Revenues: Electric revenues $ 532,231 $ 498,357 $ 490,419 Gas revenues 211,423 178,587 200,012 Total Operating Revenues 743,654 676,944 690,431 Operating Expenses: Fuel for electric generation 70,847 53,994 57,627 Purchased power 20,004 32,852 41,224 Cost of gas sold 107,026 82,693 106,647 Other operations and maintenance 235,835 227,671 214,897 Depreciation and amortization 114,324 108,581 100,352 Other general taxes 23,920 23,986 22,301 Total Operating Expenses 571,956 529,777 543,048 Operating Income 171,698 147,167 147,383 Other income, net 6,549 5,885 21,365 Interest expense, net ( 34,102 ) ( 33,369 ) ( 30,651 ) Income before income taxes 144,145 119,683 138,097 Income tax provision ( 17,348 ) ( 7,384 ) ( 25,727 ) Net Income $ 126,797 $ 112,299 $ 112,370 Less Net Income Attributable to Noncontrolling Interest, net of tax ( 22,652 ) ( 22,855 ) ( 21,868 ) Net Income Attributable to MGE $ 104,145 $ 89,444 $ 90,502 The accompanying notes are an integral part of the above consolidated financial statements. 62 Madison Gas and E lectric Company Consolidated Statements of Cash Flows (In thousands) For the Years Ended December 31, 2025 2024 2023 Operating Activities: Net income $ 126,797 $ 112,299 $ 112,370 Adjustments to reconcile net income to cash provided by operating activities Depreciation and amortization 114,324 108,581 100,352 Deferred income taxes 6,458 ( 433 ) 21,536 Provision for doubtful receivables 8,800 8,800 1,764 Employee benefit plan (credit) cost ( 5,045 ) 606 ( 5,796 ) Cash contributions to pension and other postretirement plans ( 7,979 ) ( 7,722 ) ( 7,747 ) Changes in working capital items: Accounts receivable and unbilled revenues ( 21,227 ) ( 6,582 ) 11,130 Inventories 5,071 5,542 ( 850 ) Prepaid taxes ( 389 ) 3,979 ( 3,871 ) Other current assets ( 3,138 ) 676 954 Accounts payable 8,481 6,495 ( 5,209 ) Deferred income taxes 10,996 18,501 — Other current liabilities ( 1,128 ) 8,191 4,573 Regulatory assets and liabilities, net 9,625 6,572 ( 968 ) Other, net 3,005 7,448 3,584 Cash Provided by Operating Activities 254,651 272,953 231,822 Investing Activities: Capital expenditures ( 343,220 ) ( 236,925 ) ( 222,071 ) Other ( 2,326 ) ( 2,088 ) ( 1,956 ) Cash Used for Investing Activities ( 345,546 ) ( 239,013 ) ( 224,027 ) Financing Activities: Cash dividends paid to parent by MGE ( 51,500 ) ( 34,500 ) ( 41,000 ) Distributions to parent from noncontrolling interest ( 16,250 ) ( 22,000 ) ( 20,500 ) Capital contribution from parent 8,500 30,750 — Repayment of long-term debt ( 5,285 ) ( 5,146 ) ( 54,314 ) Issuance of long-term debt 50,000 50,000 139,300 Proceeds from (repayments of) short-term debt 92,525 ( 38,000 ) ( 32,500 ) Other ( 1,836 ) ( 1,690 ) ( 2,576 ) Cash Provided by (Used for) Financing Activities 76,154 ( 20,586 ) ( 11,590 ) Change in cash, cash equivalents, and restricted cash ( 14,741 ) 13,354 ( 3,795 ) Cash, cash equivalents, and restricted cash at beginning of period 20,059 6,705 10,500 Cash, cash equivalents, and restricted cash at end of period $ 5,318 $ 20,059 $ 6,705 The accompanying notes are an integral part of the above consolidated financial statements. 63 Madison Gas and Elect ric Company Consolidated Balance Sheets (In thousands) As of December 31, ASSETS 2025 2024 Current Assets: Cash and cash equivalents $ 2,248 $ 16,865 Accounts receivable, less reserves of $ 8,578 and $ 6,905 , respectively 57,558 51,277 Other accounts receivable, less reserves of $ 2,084 and $ 2,124 , respectively 12,979 10,063 Unbilled revenues 42,770 35,833 Materials and supplies, at average cost 37,850 36,187 Fuel for electric generation, at average cost 11,010 11,521 Stored natural gas, at average cost 15,317 19,937 Prepaid taxes 18,748 18,359 Regulatory assets - current 8,879 8,522 Other current assets 17,225 14,740 Total Current Assets 224,584 223,304 Regulatory assets 42,758 36,764 Pension and other postretirement benefit asset 164,985 132,264 Other deferred assets and other 17,817 25,690 Property, Plant, and Equipment: Property, plant, and equipment, net 2,279,927 2,149,165 Construction work in progress 292,969 138,208 Total Property, Plant, and Equipment 2,572,896 2,287,373 Total Assets $ 3,023,040 $ 2,705,395 LIABILITIES AND CAPITALIZATION Current Liabilities: Long-term debt due within one year $ 21,633 $ 5,285 Short-term debt 94,527 — Accounts payable 117,658 77,453 Accrued interest and taxes 10,234 11,866 Accrued payroll related items 17,244 15,870 Regulatory liabilities - current 23,490 7,966 Other current liabilities 8,843 7,418 Total Current Liabilities 293,629 125,858 Other Credits: Deferred income taxes 301,198 280,961 Investment tax credit - deferred 48,609 44,988 Regulatory liabilities 185,372 163,336 Accrued pension and other postretirement benefits 51,105 50,155 Asset retirement obligations 76,289 69,132 Other deferred liabilities and other 67,281 67,463 Total Other Credits 729,854 676,035 Capitalization: Common shareholder's equity: Common Stock - $ 1 par value - 50,000 shares authorized; 17,348 shares outstanding 17,348 17,348 Additional paid-in capital 292,167 283,667 Retained earnings 741,049 688,404 Total Common Shareholder's Equity 1,050,564 989,419 Noncontrolling interest 156,788 150,386 Total Equity 1,207,352 1,139,805 Long-term debt 792,205 763,697 Total Capitalization 1,999,557 1,903,502 Commitments and contingencies (see Footnote 16) Total Liabilities and Capitalization $ 3,023,040 $ 2,705,395 The accompanying notes are an integral part of the above consolidated financial statements. 64 Madison Gas and Elec tric Company Consolidated Statements of Equity (In thousands) Accumulated Additional Other Non- Common Stock Paid-in Retained Comprehensive Controlling Shares Value Capital Earnings Income/(Loss) Interest Total 2023 Beginning balance - December 31, 2022 17,348 $ 17,348 $ 252,917 $ 583,958 $ — $ 148,163 $ 1,002,386 Net income 90,502 21,868 112,370 Cash dividends paid to parent by MGE ( 41,000 ) ( 41,000 ) Distributions to parent from noncontrolling interest ( 20,500 ) ( 20,500 ) Ending balance - December 31, 2023 17,348 $ 17,348 $ 252,917 $ 633,460 $ — $ 149,531 $ 1,053,256 2024 Net income 89,444 22,855 112,299 Capital contributions from parent 30,750 30,750 Cash dividends paid to parent by MGE ( 34,500 ) ( 34,500 ) Distributions to parent from noncontrolling interest ( 22,000 ) ( 22,000 ) Ending balance - December 31, 2024 17,348 $ 17,348 $ 283,667 $ 688,404 $ — $ 150,386 $ 1,139,805 2025 Net income 104,145 22,652 126,797 Capital contributions from parent 8,500 8,500 Cash dividends paid to parent by MGE ( 51,500 ) ( 51,500 ) Distributions to parent from noncontrolling interest ( 16,250 ) ( 16,250 ) Ending balance - December 31, 2025 17,348 $ 17,348 $ 292,167 $ 741,049 $ — $ 156,788 $ 1,207,352 The accompanying notes are an integral part of the above consolidated financial statements. 65 Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 This report is a combined report of MGE Energy and MGE.
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.
Accounting for the Effects of Regulatory Matters As described in Notes 1 and 8 to the consolidated financial statements, regulatory assets and regulatory liabilities are recorded consistent with regulatory treatment.
Accounting for the Effects of Regulatory Matters As described in Notes 1 and 8 to the consolidated financial statements, 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, 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.
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 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.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s assessment of regulatory proceedings, including controls over the probability of recovery of regulatory assets, deferral of regulatory liabilities, and the related accounting and disclosure impacts.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s assessment of regulatory proceedings, including controls over the probability of recovery of regulatory assets, deferral of regulatory liabilities, and the related accounting and disclosure impacts.
Common Stock - MGE Energy and MGE. MGE Energy sells shares of its common stock through its Direct Stock Purchase and Dividend Reinvestment Plan (the Stock Plan). Those shares may be newly issued shares or shares that are purchased in the open market by an independent agent for participants in the Stock Plan.
MGE Energy sells shares of its common stock through its Direct Stock Purchase and Dividend Reinvestment Plan (the Stock Plan). Those shares may be newly issued shares or shares that are purchased in the open market by an independent agent for participants in the Stock Plan.
MGE recognizes derivatives, excluding those that qualify for the normal purchases or normal sales exclusion, in the consolidated balance sheets at fair value, with changes in the fair value of derivative instruments to be recorded in current earnings or deferred in accumulated other comprehensive income (loss), depending on whether a derivative is designated as, and is effective as, a hedge and on the type of hedge transaction.
MGE recognizes derivatives, excluding those that qualify for the normal purchases or normal sales exclusion, in the consolidated balance sheets at fair value, with changes in the fair value of derivative instruments to be recorded in current earnings or deferred in accumulated other 67 comprehensive income (loss), depending on whether a derivative is designated as, and is effective as, a hedge and on the type of hedge transaction.
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.
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.
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.
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.
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.
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. 97 b. Notional Amounts.
Historical markets are studied and long-term historical relationships among asset classes are analyzed, consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors, such as interest rates and dividend yields, are evaluated before long-term capital market assumptions are determined.
Historical markets are studied and long-term historical relationships among asset classes are analyzed, consistent with the widely 86 accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors, such as interest rates and dividend yields, are evaluated before long-term capital market assumptions are determined.
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.
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, 100 mutual funds, and fixed income securities that are based on directly and indirectly observable market prices.
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.
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 Power Elm Road and MGE Power West Campus and therefore MGE holds a variable interest despite the absence of an equity interest.
The accounting standard clarifies that fair value should be based on the assumptions market participants would use when pricing the asset or liability including assumptions about risk. The standard also establishes a three-level fair value hierarchy based upon the observability of the assumptions used and requires the use of observable market data when available.
The accounting standard clarifies that fair value should be based on the assumptions market participants would use when pricing the asset or liability including assumptions about risk. The standard also establishes a 99 three-level fair value hierarchy based upon the observability of the assumptions used and requires the use of observable market data when available.
The Clean Water Act regulates discharges from "point 86 sources," such as power plants, by establishing discharge limits via water discharge permits. MGE's power plants operate under Wisconsin Pollution Discharge Elimination System (WPDES) permits issued by the WDNR to ensure compliance with these discharge limits. Permits are subject to periodic renewal.
The Clean Water Act regulates discharges from "point sources," such as power plants, by establishing discharge limits via water discharge permits. MGE's power plants operate under Wisconsin Pollution Discharge Elimination System (WPDES) permits issued by the WDNR to ensure compliance with these discharge limits. Permits are subject to periodic renewal.
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.
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.
Consistent with internal reporting, management has presented the direct financing capital leases between MGE and MGE Power Elm Road/MGE Power West Campus based on actual lease payments included in rates. Lease payments made by MGE to MGE Power Elm Road and MGE Power West Campus are shown as operating expenses.
Consistent with internal reporting, management has 103 presented the direct financing capital leases between MGE and MGE Power Elm Road/MGE Power West Campus based on actual lease payments included in rates. Lease payments made by MGE to MGE Power Elm Road and MGE Power West Campus are shown as operating expenses.
A measurement date of December 31 is utilized for all pension and postretirement benefit plans. All employees hired after December 31, 2006, have been enrolled in the defined contribution pension plan rather than the defined benefit pension plan previously in place. a. Benefit Obligations and Plan Assets.
A measurement date of December 31 is utilized for all pension and postretirement benefit plans. All employees hired after December 31, 2006, have been enrolled in the defined contribution pension plan rather than the defined benefit pension plan previously in place. 84 a. Benefit Obligations and Plan Assets.
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 .
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 .
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. 49 Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
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. 54 Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
The recovery of under-collected electric fuel-related costs would be reduced by the amount that exceeds the excess revenue test. These costs are subject to the PSCW's annual 75 review of fuel costs completed in the year following the deferral.
The recovery of under-collected electric fuel-related costs would be reduced by the amount that exceeds the excess revenue test. These costs are subject to the PSCW's annual review of fuel costs completed in the year following the deferral.
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.
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.
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.
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 $4.5 million, before taxes.
MGE utilizes the direct expensing method for planned major maintenance projects. Under this method, MGE expenses all costs associated with major planned maintenance activities as incurred. m. Purchased Gas Adjustment Clause - MGE Energy and MGE.
MGE utilizes the direct expensing method for planned major maintenance projects. Under this method, MGE expenses all costs associated with major planned maintenance activities as incurred. 68 m. Purchased Gas Adjustment Clause - MGE Energy and MGE.
MGE recorded an obligation for the fair value of its legal liability for asset retirement obligations (AROs) associated with removal of the West Campus Cogeneration Facility and the Elm Road Units, electric substations, combustion turbine generating units, wind generating facilities, and solar generating facilities, all of which are located on property not owned and would need to be removed upon the ultimate end of the associated leases.
MGE recorded an obligation for the fair value of its legal liability for asset retirement obligations (AROs) associated with removal of the West Campus Cogeneration Facility and the Elm Road Units, electric substations, combustion turbine generating units, wind generating facilities, solar generating facilities, and battery storage, all of which are located on property not owned and would need to be removed upon the ultimate end of the associated leases.
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.
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, 2025 , MGE had no significant leases not yet commenced that would create significant future rights and obligations.
The timing of infusions is dependent on the needs of the fund and is therefore uncertain at this time. MGE has several other commitments related to various projects.
The timing of infusions is dependent on the needs of the fund and is therefore uncertain at this time. 96 MGE has several other commitments related to various projects.
This targeted approach ensures that resources are directed toward segments with the greatest potential for growth and profitability, aligning with the organization's broader strategic objectives. Fuel and Purchase Power and Purchase Gas Costs are significant segment expenses as defined in Segment Reporting. The CODM does not review disaggregated assets on a segment basis; therefore, such information is not presented.
This targeted approach ensures that resources are directed toward segments with the greatest potential for growth and profitability, aligning with the organization's broader strategic objectives. Fuel and purchased power and Purchased gas costs are significant segment expenses as defined in Segment Reporting. The CODM does not review disaggregated assets on a segment basis; therefore, such information is not presented.
Pension and Other Postretirement Costs The current accounting treatment for Pension and Other Postretirement costs allows MGE to reflect any differential between pension and other postretirement costs reflected in rates and actual costs incurred in its next rate filing. 73 Tax Recovery Related to AFUDC Equity AFUDC equity represents the after-tax equity cost associated with utility plant construction and results in a temporary difference between the book and tax basis of such plant.
Pension and Other Postretirement Costs The current accounting treatment for Pension and Other Postretirement costs allows MGE to reflect any differential between pension and other postretirement costs reflected in rates and actual costs incurred in its next rate filing. 79 Tax Recovery Related to AFUDC Equity AFUDC equity represents the after-tax equity cost associated with utility plant construction and results in a temporary difference between the book and tax basis of such plant.
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.
Individual plants can meet their caps through reducing emissions and/or buying allowances on the market. In March 2023 (published June 2023), the EPA finalized its Federal Implementation Plan to address state obligations under the Clean Air Act "good neighbor" provisions for the 2015 Ozone NAAQS (Good Neighbor Plan). The Good Neighbor Plan impacts 23 states, including Wisconsin.
Unfunded or funded Pension and Other Postretirement Asset or Liability MGE records unrecognized net actuarial gains and losses as a net regulatory asset or liability in lieu of accumulated other comprehensive gain or loss on the balance sheet, as these amounts are expected to be recovered or refunded in future rates. See Footnote 11 for further discussion.
Unfunded or funded Pension and Other Postretirement Asset or Liability MGE records unrecognized net actuarial gains and losses as a net regulatory asset or liability in lieu of accumulated other comprehensive gain or loss on the balance sheet, as these amounts are expected to be recovered or refunded in future rates. See Footnote 11 for further discussion. 80 9.
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.
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 2025.
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.
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, 2025 , 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 2024, 2023, and 2022 . 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 2025, 2024, and 2023 . v. Income Taxes and Excise Taxes - MGE Energy and MGE.
Differences between the amounts billed to customers and the actual costs recoverable are deferred and recovered or refunded in future periods by means of prospective monthly adjustments to rates. Renewable Project Savings The PSCW requires MGE to defer the revenue requirement impact for the change of the in-service date for Paris to a future rate proceeding. 74 9.
Differences between the amounts billed to customers and the actual costs recoverable are deferred and recovered or refunded in future periods by means of prospective monthly adjustments to rates. Renewable Project Savings The PSCW requires MGE to defer the revenue requirement impact for the change of the in-service date for Paris to a future rate proceeding.
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.
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, 2025, 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, 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.
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, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.
The target asset allocation for the VEBA trusts are established based on a similar investment strategy as the 401(h) assets, with consideration for liquidity needs in the VEBA trusts. e. Concentrations of Credit Risk. MGE evaluated its pension and other postretirement benefit plans' asset portfolios for the existence of significant concentrations of credit risk as of December 31, 2024.
The target asset allocation for the VEBA trusts are established based on a similar investment strategy as the 401(h) assets, with consideration for liquidity needs in the VEBA trusts. e. Concentrations of Credit Risk. MGE evaluated its pension and other postretirement benefit plans' asset portfolios for the existence of significant concentrations of credit risk as of December 31, 2025.
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.
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, 2025. MGE also may have AROs relating to the removal of various assets, such as certain electric and gas distribution facilities.
Types of concentrations that were evaluated include, but are not limited to, investment concentrations in a single entity, type of industry, and foreign country. As of December 31, 2024 , there were no significant concentrations (defined as greater than 10 percent of plan assets) of risk in MGE pension and postretirement benefit plan assets. f.
Types of concentrations that were evaluated include, but are not limited to, investment concentrations in a single entity, type of industry, and foreign country. As of December 31, 2025 , there were no significant concentrations (defined as greater than 10 percent of plan assets) of risk in MGE pension and postretirement benefit plan assets. f.
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.
Based on results for the year ended December 31, 2025, 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, 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.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.
The principal considerations for our determination that performing procedures relating to accounting for the effects of regulatory matters is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating audit evidence related 51 to assessing the effects of regulatory matters on the accounting for regulatory assets and liabilities, including the probability of recovery of regulatory assets and deferral of regulatory liabilities.
The principal considerations for our determination that performing procedures relating to accounting for the effects of regulatory matters is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating audit evidence related 56 to assessing the effects of regulatory matters on the accounting for regulatory assets and liabilities, including the probability of recovery of regulatory assets and deferral of regulatory liabilities.
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.
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, 2025 and 2024.
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. MGE has adopted the asset smoothing as permitted in accordance with the Pension Protection Act of 2006, including modifications made by WRERA.
MGE does not expect to need to make any required contributions to the qualified plans for 2026. The contributions for years after 2026 are not yet currently estimated. MGE has adopted the asset smoothing as permitted in accordance with the Pension Protection Act of 2006, including modifications made by WRERA.
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.
Awards are subject to vesting provisions providing for 100% vesting at the end of the performance period. Compensation cost for retirement eligible 89 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.
MGE Energy holds investments in nonpublic venture capital funds. From time to time, these entities require additional capital infusions from their investors. MGE Energy has committed to contribute $ 5.8 million in capital for such infusions. The timing of these infusions is dependent on the needs of the investee and is therefore uncertain at this time.
MGE Energy holds investments in nonpublic venture capital funds. From time to time, these entities require additional capital infusions from their investors. MGE Energy has committed to contribute $ 5.1 million in capital for such infusions. The timing of these infusions is dependent on the needs of the investee and is therefore uncertain at this time.
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.
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, 2025 , MGE Power Elm Road was in compliance with the covenant requirements. b. Long-Term Debt Maturities.
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.
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, 2025.
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.
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.
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.
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 2025.
These procedures also included, among others, (i) evaluating the reasonableness of management’s assessment regarding the probability of recovery of regulatory assets and deferral of regulatory liabilities, (ii) assessing the effects of new or changes to existing rate orders on certain regulatory asset and liability balances, and (iii) testing, on a sample basis, regulatory assets and regulatory liabilities by considering the provisions outlined in rate orders, applicable information from other correspondence with regulators, and applicable regulatory precedents. /s/ PricewaterhouseCoopers LLP Chicago, Illinois February 25, 2025 We have served as the Company's auditor since 1993. 50 Report of Indepen dent Registered Public Accounting Firm To the Board of Directors and Shareholder of Madison Gas and Electric Company Opinion on the Financial Statements We have audited the consolidated financial statements, including the related notes, as listed in the index appearing under Item 15(a)(1), and the financial statement schedule listed in the index appearing under Item 15(a)(2), of Madison Gas and Electric Company and its subsidiaries (the "Company") (collectively referred to as the "consolidated financial statements").
These procedures also included, among others, (i) evaluating the reasonableness of management’s assessment regarding the probability of recovery of regulatory assets and deferral of regulatory liabilities, (ii) assessing the effects of new or changes to existing rate orders on certain regulatory asset and liability balances, and (iii) testing, on a sample basis, regulatory assets and regulatory liabilities by considering the provisions outlined in rate orders, applicable information from other correspondence with regulators, and applicable regulatory precedents. /s/ PricewaterhouseCoopers LLP Chicago, Illinois February 24, 2026 We have served as the Company's auditor since 1993. 55 Report of Indepen dent Registered Public Accounting Firm To the Board of Directors and Shareholder of Madison Gas and Electric Company Opinion on the Financial Statements We have audited the consolidated financial statements, including the related notes, as listed in the index appearing under Item 15(a)(1), and the financial statement schedule listed in the index appearing under Item 15(a)(2), of Madison Gas and Electric Company and its subsidiaries (the "Company") (collectively referred to as the "consolidated financial statements").
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.
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, 2025. 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, 2024, 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, 2025, 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, 2024. 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, 2025. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
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).
We also have audited the Company's internal control over financial reporting as of December 31, 2025, 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, 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.
(b) As of December 31, 2025 , 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.
MGE is obligated to provide service to all electric and gas customers within its franchised territories. MGE's franchised electric territory includes a 264 square-mile area in Dane County, Wisconsin, and MGE's franchised gas territory includes a service area covering 1,684 square miles in Wisconsin.
MGE is obligated to provide service to all electric and gas customers within its franchised territories. MGE's franchised electric territory includes a 264 square-mile area in Dane County, Wisconsin, and MGE's franchised gas territory includes a service area covering 1,722 square miles in Wisconsin.
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.
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. 51 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, 2024, 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, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
The earnings calculation excludes fuel rules adjustments. See "Fuel Rules" below. (d) The PSCW approved a 2025 Fuel Cost Plan in December 2024. The plan lowered the 2025 increase in electric rates to 2.63% to reflect lower expected fuel costs.
The earnings calculation excludes fuel rules adjustments. See "Fuel Rules" below. (c) The PSCW approved a 2025 Fuel Cost Plan in December 2024. The plan lowered the 2025 increase in electric rates to 2.63% to reflect lower expected fuel costs.
Bad debt expense In March 2020, the PSCW issued an order authorizing deferral of expenditures incurred to ensure the provision of safe, reliable, and affordable access to utility services during the COVID-19 pandemic and late payment charges. Expenditures include items such as bad debt expense. Recovery of these expenditures is occurring during 2024 and 2025.
Bad debt expense In March 2020, the PSCW issued an order authorizing deferral of expenditures incurred to ensure the provision of safe, reliable, and affordable access to utility services during the COVID-19 pandemic and late payment charges. Expenditures include items such as bad debt expense. Recovery of these expenditures occurred during 2024 and 2025.
Asset Retirement Obligations - MGE Energy and MGE. A liability is recorded for the fair value of an asset retirement obligation (ARO) to be recognized in the period in which it is incurred if it can be reasonably estimated. The offsetting associated asset retirement costs are capitalized as a long-lived asset and depreciated over the asset's useful life.
A liability is recorded for the fair value of an asset retirement obligation (ARO) to be recognized in the period in which it is incurred if it can be reasonably estimated. The offsetting associated asset retirement costs are capitalized as a long-lived asset and depreciated over the asset's useful life.
Rules regulating nitrogen oxide (NO x ) and sulfur dioxide (SO 2 ) emissions, including the Cross State Air Pollution Rule (CSAPR) and Clean Air Visibility Rule The EPA's CSAPR and its progeny are a suite of interstate air pollution transport rules designed to reduce ozone and PM2.5 ambient air levels in areas that the EPA has determined as being significantly impacted by pollution from upwind states.
Rules regulating nitrogen oxide (NO x ) and sulfur dioxide (SO 2 ) emissions, including the Cross State Air Pollution Rule's (CSAPR) Good Neighbor Plan and Clean Air Visibility Rule The EPA's Good Neighbor Plan and its progeny are a suite of interstate air pollution transport rules designed to reduce ozone and PM2.5 ambient air levels in areas that the EPA has determined as being significantly impacted by pollution from upwind states.
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.
These derivatives are therefore marked to fair value and are offset in the financial statements with a corresponding regulatory asset or liability. 101 20. Revenue - MGE En ergy and MGE.
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.
Certain counterparties extend MGE a credit limit. If MGE exceeds these limits, the counterparties may require collateral to be posted. As of both December 31, 2025 and 2024 , no counterparties were in a net liability position. Nonperformance of counterparties to the non-exchange traded derivatives could expose MGE to credit loss.
(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.
(b) These costs will be subject to the PSCW's annual review of 2025 fuel costs, expected to be completed in 2026. 81 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.
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.
Changes in measurement are reported in earnings. Equity security investments with 69 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. s. Capitalized Software Costs - MGE Energy and MGE.
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 ownership interest in ATC Holdco is held by MGEE Transco, a subsidiary of MGE Energy. As of December 31, 2025 and 2024, MGE Transco held a 3.6 % ownership interest in ATC. As of December 31, 2025 and 2024, MGEE Transco held a 4.4 % ownership interest in ATC Holdco.
These procedures also included, among others, (i) evaluating the reasonableness of management’s assessment regarding the probability of recovery of regulatory assets and deferral of regulatory liabilities, (ii) assessing the effects of new or changes to existing rate orders on certain regulatory asset and liability balances, and (iii) testing, on a sample basis, regulatory assets and regulatory liabilities by considering the provisions outlined in rate orders, applicable information from other correspondence with regulators, and applicable regulatory precedents. /s/ PricewaterhouseCoopers LLP Chicago, Illinois February 25, 2025 We have served as the Company's auditor since 1993. 52 MGE Energy, Inc.
These procedures also included, among others, (i) evaluating the reasonableness of management’s assessment regarding the probability of recovery of regulatory assets and deferral of regulatory liabilities, (ii) assessing the effects of new or changes to existing rate orders on certain regulatory asset and liability balances, and (iii) testing, on a sample basis, regulatory assets and regulatory liabilities by considering the provisions outlined in rate orders, applicable information from other correspondence with regulators, and applicable regulatory precedents. /s/ PricewaterhouseCoopers LLP Chicago, Illinois February 24, 2026 We have served as the Company's auditor since 1993. 57 MGE Energy, Inc.
The fuel rules bandwidth is set at plus or minus 2 % in 2024 and 2023. The electric fuel-related costs are subject to an excess revenues test. Excess revenues are defined as revenues in the year in question that provide MGE with a greater return on common equity than authorized by the PSCW in MGE's latest rate order.
The fuel rules bandwidth was set at plus or minus 2 % in 2025 and 2024. The electric fuel-related costs are subject to an excess revenues test. Excess revenues are defined as revenues in the year in question that provide MGE with a greater return on common equity than authorized by the PSCW in MGE's latest rate order.
The notes are not issued under, or governed by, MGE's Indenture dated as of September 1, 1998, which governs MGE's Medium-Term Notes. (e) Issued by MGE.
The notes are not issued under, or governed by, MGE's Indenture dated as of September 1, 1998, which governs MGE's Medium-Term Notes. (d) Issued by MGE.
MGE had no material investments in 2024 or 2023. For the years ended December 31, 2024, 2023, and 2022, there were no material liquidated investments for MGE. For the years ended December 31, 2024, 2023, and 2022, certain investments were liquidated for MGE Energy.
MGE had no material investments in 2025 or 2024. For the years ended December 31, 2025, 2024, and 2023, there were no material liquidated investments for MGE. For the years ended December 31, 2025, 2024, and 2023, certain investments were liquidated for MGE Energy.
For the years ended December 31, 2024, 2023, and 2022, MGE recorded $ 10.5 million, $ 10.4 million and $ 10.8 million, respectively, of amortization expense. Capitalized software costs are amortized on a straight-line basis over the estimated useful lives of the assets. The useful lives range from three to fifteen years. t.
For the years ended December 31, 2025, 2024, and 2023, MGE recorded $ 10.1 million, $ 10.5 million and $ 10.4 million, respectively, of amortization expense. Capitalized software costs are amortized on a straight-line basis over the estimated useful lives of the assets. The useful lives range from three to fifteen years. t.
The following table summarizes deferred electric fuel-related costs: Fuel Costs (Savings) ( in millions ) Refund or Recovery Period 2021 $ 3.3 (a) January 2023 through December 2023 2022 $ 8.8 (a) October 2023 through September 2024 2023 ($ 7.2 ) (a) October 2024 through December 2024 2024 ($ 3.0 ) (b) (a) There was no change to the refund or recovery in the fuel rules proceedings from the amount MGE deferred.
The following table summarizes deferred electric fuel-related costs: Fuel Costs (Savings) ( in millions ) Refund or Recovery Period 2022 $ 8.8 (a) October 2023 through September 2024 2023 ($ 7.2 ) (a) October 2024 through December 2024 2024 ($ 3.0 ) (a) October 2025 2025 ($ 7.1 ) (b) (a) There was no change to the refund or recovery in the fuel rules proceedings from the amount MGE deferred.
(c) The indenture under which MGE's Medium-Term notes are issued provides that those notes will be entitled to be equally and ratably secured in the event that MGE issues any additional first mortgage bonds. (d) Unsecured notes issued pursuant to various Note Purchase Agreements with one or more purchasers.
(b) The indenture under which MGE's Medium-Term notes are issued provides that those notes will be entitled to be equally and ratably secured in the event that MGE issues any additional secured bonds. (c) Unsecured notes issued pursuant to various Note Purchase Agreements with one or more purchasers.

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