[PART I. FINANCIAL INFORMATION.](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION.) This section presents the unaudited consolidated financial information for MGE Energy, Inc. and Madison Gas and Electric Company, including financial statements, notes, and management's discussion and analysis [Filing Format](index=3&type=section&id=Filing%20Format) This combined Form 10-Q is filed by MGE Energy, Inc. and its wholly-owned subsidiary, Madison Gas and Electric Company, with MGE representing the majority of operations - The report is a combined Form 10-Q for MGE Energy, Inc. and its wholly-owned subsidiary, Madison Gas and Electric Company[7](index=7&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements based on historical performance and current expectations, subject to inherent risks and uncertainties that could cause actual results to differ materially - Forward-looking statements are based on historical performance and current expectations, involving inherent risks and uncertainties that may cause actual results to differ materially[8](index=8&type=chunk) - Factors that could cause material differences are discussed in the 2024 Annual Report on Form 10-K (Item 1A, Item 7, Footnote 16) and updated in this report (Part I, Item 2, Footnote 8)[9](index=9&type=chunk) - MGE Energy and MGE do not undertake to publicly update or revise any forward-looking statement, except as required by law[10](index=10&type=chunk) [Where to Find More Information](index=3&type=section&id=Where%20to%20Find%20More%20Information) MGE Energy and MGE file reports with the SEC, which are available on www.sec.gov and their respective company websites free of charge - SEC filings (10-K, 10-Q, 8-K) are available on **www.sec.gov**[11](index=11&type=chunk) - Reports are also available free of charge on MGE Energy's (mgeenergy.com) and MGE's (mge.com) websites[12](index=12&type=chunk) [Definitions, Abbreviations, and Acronyms Used in the Text and Notes of this Report](index=4&type=section&id=Definitions%2C%20Abbreviations%2C%20and%20Acronyms%20Used%20in%20the%20Text%20and%20Notes%20of%20this%20Report) This section provides a comprehensive list of definitions, abbreviations, and acronyms used throughout the report for clarity and consistency - The section defines various terms, abbreviations, and acronyms used in the report, including company names (e.g., MGE Energy, MGE), regulatory bodies (e.g., PSCW, SEC, EPA), and industry-specific terms (e.g., AFUDC, ATC, kWh, MW, MISO)[13](index=13&type=chunk)[14](index=14&type=chunk) [Item 1. Financial Statements.](index=6&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited consolidated financial statements for MGE Energy, Inc. and Madison Gas and Electric Company, including statements of income, cash flows, balance sheets, and common equity, along with detailed notes on significant accounting policies, new accounting standards, investments, taxes, pension plans, equity arrangements, share-based compensation, commitments, rate matters, derivatives, fair value measurements, joint plant ownership, revenue, and segment information [MGE Energy, Inc. Consolidated Financial Statements](index=6&type=section&id=MGE%20Energy%2C%20Inc.%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements for MGE Energy, Inc., including statements of income, cash flows, balance sheets, and common equity [Consolidated Statements of Income (unaudited)](index=6&type=section&id=Consolidated%20Statements%20of%20Income%20(unaudited)) This section provides the unaudited consolidated statements of income for MGE Energy, Inc. for the three and six months ended June 30 MGE Energy, Inc. Consolidated Statements of Income (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (2025 vs 2024) | | :-------------------------- | :------------------ | :------------------ | :-------------------- | | Total Operating Revenues | $159,452 | $145,713 | +$13,739 | | Total Operating Expenses | $125,229 | $115,978 | +$9,251 | | Operating Income | $34,223 | $29,735 | +$4,488 | | Net Income | $26,498 | $23,794 | +$2,704 | | Basic EPS | $0.73 | $0.66 | +$0.07 | | Diluted EPS | $0.72 | $0.66 | +$0.06 | | Dividends per share | $0.450 | $0.428 | +$0.022 | MGE Energy, Inc. Consolidated Statements of Income (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (2025 vs 2024) | | :-------------------------- | :------------------ | :------------------ | :-------------------- | | Total Operating Revenues | $378,422 | $337,049 | +$41,373 | | Total Operating Expenses | $291,334 | $266,569 | +$24,765 | | Operating Income | $87,088 | $70,480 | +$16,608 | | Net Income | $68,090 | $57,608 | +$10,482 | | Basic EPS | $1.86 | $1.59 | +$0.27 | | Diluted EPS | $1.86 | $1.59 | +$0.27 | | Dividends per share | $0.900 | $0.855 | +$0.045 | [Consolidated Statements of Cash Flows (unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) This section presents the unaudited consolidated statements of cash flows for MGE Energy, Inc. for the six months ended June 30 MGE Energy, Inc. Consolidated Statements of Cash Flows (Six Months Ended June 30) | Activity | 2025 (in thousands) | 2024 (in thousands) | Change (2025 vs 2024) | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | | Cash Provided by Operating Activities | $133,953 | $130,434 | +$3,519 | | Cash Used for Investing Activities | $(118,254) | $(113,509) | -$4,745 | | Cash Used for Financing Activities | $(27,059) | $(12,414) | -$14,645 | | Change in cash, cash equivalents, and restricted cash | $(11,360) | $4,511 | -$15,871 | | Cash, cash equivalents, and restricted cash at end of period | $13,136 | $19,537 | -$6,401 | [Consolidated Balance Sheets (unaudited)](index=8&type=section&id=Consolidated%20Balance%20Sheets%20(unaudited)) This section provides the unaudited consolidated balance sheets for MGE Energy, Inc. as of June 30, 2025, and December 31, 2024 MGE Energy, Inc. Consolidated Balance Sheets (As of June 30, 2025 and December 31, 2024) | Asset/Liability Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change | | :-------------------------------- | :--------------------------- | :----------------------------- | :------- | | Total Current Assets | $198,252 | $227,265 | -$29,013 | | Total Property, Plant, and Equipment | $2,340,734 | $2,287,346 | +$53,388 | | Total Assets | $2,860,537 | $2,827,959 | +$32,578 | | Total Current Liabilities | $109,837 | $125,563 | -$15,726 | | Total Other Credits | $719,453 | $708,561 | +$10,892 | | Common shareholders' equity | $1,269,973 | $1,230,138 | +$39,835 | | Long-term debt | $761,274 | $763,697 | -$2,423 | | Total Liabilities and Capitalization | $2,860,537 | $2,827,959 | +$32,578 | [Consolidated Statements of Common Equity (unaudited)](index=9&type=section&id=Consolidated%20Statements%20of%20Common%20Equity%20(unaudited)) This section presents the unaudited consolidated statements of common equity for MGE Energy, Inc. for the six months ended June 30 MGE Energy, Inc. Consolidated Statements of Common Equity (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (2025 vs 2024) | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | | Beginning Balance | $1,230,138 | $1,140,073 | +$90,065 | | Net income | $68,090 | $57,608 | +$10,482 | | Common stock dividends declared | $(32,872) | $(30,930) | -$1,942 | | Direct Stock Purchase and Dividend Reinvestment Plan | $3,750 | — | +$3,750 | | Equity-based compensation plans and other | $867 | $877 | -$10 | | Ending Balance | $1,269,973 | $1,167,628 | +$102,345 | [Madison Gas and Electric Company Consolidated Financial Statements](index=10&type=section&id=Madison%20Gas%20and%20Electric%20Company%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Madison Gas and Electric Company, including statements of income, cash flows, balance sheets, and equity [Consolidated Statements of Income (unaudited)](index=10&type=section&id=Madison%20Gas%20and%20Electric%20Company%20Consolidated%20Statements%20of%20Income%20(unaudited)) This section provides the unaudited consolidated statements of income for Madison Gas and Electric Company for the three and six months ended June 30 Madison Gas and Electric Company Consolidated Statements of Income (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (2025 vs 2024) | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | | Total Operating Revenues | $159,452 | $145,713 | +$13,739 | | Total Operating Expenses | $124,941 | $115,849 | +$9,092 | | Operating Income | $34,511 | $29,864 | +$4,647 | | Net Income | $24,475 | $21,754 | +$2,721 | | Net Income Attributable to MGE | $18,761 | $15,988 | +$2,773 | Madison Gas and Electric Company Consolidated Statements of Income (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (2025 vs 2024) | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | | Total Operating Revenues | $378,422 | $337,049 | +$41,373 | | Total Operating Expenses | $290,749 | $266,026 | +$24,723 | | Operating Income | $87,673 | $71,023 | +$16,650 | | Net Income | $64,278 | $53,954 | +$10,324 | | Net Income Attributable to MGE | $52,965 | $42,591 | +$10,374 | [Consolidated Statements of Cash Flows (unaudited)](index=11&type=section&id=Madison%20Gas%20and%20Electric%20Company%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) This section presents the unaudited consolidated statements of cash flows for Madison Gas and Electric Company for the six months ended June 30 Madison Gas and Electric Company Consolidated Statements of Cash Flows (Six Months Ended June 30) | Activity | 2025 (in thousands) | 2024 (in thousands) | Change (2025 vs 2024) | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | | Cash Provided by Operating Activities | $127,988 | $128,429 | -$441 | | Cash Used for Investing Activities | $(112,518) | $(112,516) | -$2 | | Cash Used for Financing Activities | $(29,437) | $(15,484) | -$13,953 | | Change in cash, cash equivalents, and restricted cash | $(13,967) | $429 | -$14,396 | | Cash, cash equivalents, and restricted cash at end of period | $6,092 | $7,134 | -$1,042 | [Consolidated Balance Sheets (unaudited)](index=12&type=section&id=Madison%20Gas%20and%20Electric%20Company%20Consolidated%20Balance%20Sheets%20(unaudited)) This section provides the unaudited consolidated balance sheets for Madison Gas and Electric Company as of June 30, 2025, and December 31, 2024 Madison Gas and Electric Company Consolidated Balance Sheets (As of June 30, 2025 and December 31, 2024) | Asset/Liability Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change | | :-------------------------------- | :--------------------------- | :----------------------------- | :------- | | Total Current Assets | $191,681 | $223,304 | -$31,623 | | Total Property, Plant, and Equipment | $2,340,762 | $2,287,373 | +$53,389 | | Total Assets | $2,729,740 | $2,705,395 | +$24,345 | | Total Current Liabilities | $109,626 | $125,858 | -$16,232 | | Total Other Credits | $686,257 | $676,035 | +$10,222 | | Common shareholder's equity | $1,018,884 | $989,419 | +$29,465 | | Noncontrolling interest | $153,699 | $150,386 | +$3,313 | | Total Liabilities and Capitalization | $2,729,740 | $2,705,395 | +$24,345 | [Consolidated Statements of Equity (unaudited)](index=13&type=section&id=Madison%20Gas%20and%20Electric%20Company%20Consolidated%20Statements%20of%20Equity%20(unaudited)) This section presents the unaudited consolidated statements of equity for Madison Gas and Electric Company for the six months ended June 30 Madison Gas and Electric Company Consolidated Statements of Equity (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (2025 vs 2024) | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | | Beginning balance | $1,139,805 | $1,053,256 | +$86,549 | | Net income | $64,278 | $53,954 | +$10,324 | | Cash dividends paid to parent by MGE | $(23,500) | $(24,000) | +$500 | | Distributions to parent from noncontrolling interest | $(8,000) | $(10,000) | +$2,000 | | Ending Balance | $1,172,583 | $1,073,210 | +$99,373 | [Notes to Consolidated Financial Statements (unaudited)](index=14&type=section&id=MGE%20Energy%2C%20Inc.%2C%20and%20Madison%20Gas%20and%20Electric%20Company%20-%20Notes%20to%20Consolidated%20Financial%20Statements%20(unaudited)) This section provides detailed notes to the consolidated financial statements, covering significant accounting policies, new standards, investments, taxes, and other financial disclosures [1. Summary of Significant Accounting Policies.](index=14&type=section&id=1.%20Summary%20of%20Significant%20Accounting%20Policies.) This section outlines the significant accounting policies applied in the preparation of the consolidated financial statements - MGE consolidates MGE Power Elm Road and MGE Power West Campus as VIEs due to contractual agreements[35](index=35&type=chunk) Cash, Cash Equivalents, and Restricted Cash (In thousands) | Category | MGE Energy (June 30, 2025) | MGE Energy (Dec 31, 2024) | MGE (June 30, 2025) | MGE (Dec 31, 2024) | | :-------------------------------- | :------------------------- | :------------------------ | :------------------ | :------------------ | | Cash and cash equivalents | $10,569 | $21,302 | $3,525 | $16,865 | | Restricted cash | $869 | $1,113 | $869 | $1,113 | | Receivable - margin account | $1,698 | $2,081 | $1,698 | $2,081 | | **Total** | **$13,136** | **$24,496** | **$6,092** | **$20,059** | - Early retirement of Columbia Unit 1 and 2 by the end of **2029** is probable, with assets classified as "plant to be retired" and depreciated on a straight-line basis[42](index=42&type=chunk)[43](index=43&type=chunk) - No impairment loss was recorded as of June 30, 2025[44](index=44&type=chunk) [2. New Accounting Standards.](index=15&type=section&id=2.%20New%20Accounting%20Standards.) This section discusses the adoption of new accounting standards and their expected impact on the financial statements - New FASB guidance on income tax disclosures (effective after Dec 15, 2024) has been adopted by MGE, with **no material impact expected**[45](index=45&type=chunk) - Future FASB guidance on disaggregation of income statement expenses (effective after Dec 15, 2026) is **not expected to have a material impact**[46](index=46&type=chunk) [3. Investment in ATC and ATC Holdco.](index=15&type=section&id=3.%20Investment%20in%20ATC%20and%20ATC%20Holdco.) This section details MGE Energy's subsidiaries' investments in ATC and ATC Holdco, accounted for using the equity method - MGE Energy's subsidiaries, MGE Transco and MGEE Transco, account for investments in ATC and ATC Holdco using the equity method, with earnings recorded as "Other income"[47](index=47&type=chunk)[48](index=48&type=chunk) MGE Transco Investment in ATC (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Equity earnings from investment in ATC | $3,066 | $2,748 | $6,056 | $5,470 | | Dividends received from ATC | $2,345 | $2,132 | $5,632 | $4,238 | | Capital contributions to ATC | $2,679 | $1,070 | $5,171 | $1,785 | - MGE Transco made a **$3.2 million** capital contribution to ATC in July 2025[49](index=49&type=chunk) [4. Taxes.](index=16&type=section&id=4.%20Taxes.) This section provides details on income taxes, including effective income tax rate reconciliations and tax credit sales Effective Income Tax Rate Reconciliation (Three Months Ended June 30) | Factor | MGE Energy 2025 | MGE Energy 2024 | MGE 2025 | MGE 2024 | | :-------------------------------- | :-------------- | :-------------- | :------- | :------- | | Statutory federal income tax rate | 21.0 % | 21.0 % | 21.0 % | 21.0 % | | State income taxes, net of federal benefit | 6.4 | 6.2 | 6.2 | 6.2 | | Amortized investment tax credits | (1.3) | (2.4) | (1.4) | (2.6) | | Credit for electricity from renewable energy | (13.2) | (11.7) | (14.4) | (12.9) | | AFUDC equity, net | (0.5) | (0.7) | (0.5) | (0.7) | | Amortization of utility excess deferred tax - tax reform | (2.5) | (6.8) | (2.7) | (7.5) | | Other, net | 0.2 | 0.2 | 0.2 | 0.1 | | **Effective income tax rate** | **10.1 %** | **5.8 %** | **8.4 %** | **3.6 %** | Effective Income Tax Rate Reconciliation (Six Months Ended June 30) | Factor | MGE Energy 2025 | MGE Energy 2024 | MGE 2025 | MGE 2024 | | :-------------------------------- | :-------------- | :-------------- | :------- | :------- | | Statutory federal income tax rate | 21.0 % | 21.0 % | 21.0 % | 21.0 % | | State income taxes, net of federal benefit | 6.3 | 6.2 | 6.2 | 6.2 | | Amortized investment tax credits | (1.3) | (2.3) | (1.5) | (2.5) | | Credit for electricity from renewable energy | (11.0) | (10.8) | (11.9) | (11.9) | | AFUDC equity, net | (0.6) | (0.7) | (0.6) | (0.7) | | Amortization of utility excess deferred tax - tax reform | (2.5) | (6.4) | (2.8) | (7.0) | | Other, net | 0.1 | (0.1) | 0.1 | (0.2) | | **Effective income tax rate** | **12.0 %** | **6.9 %** | **10.5 %** | **4.9 %** | - MGE sold transfer-eligible tax credits generated in **2023** and **2024**, accounting for them under the framework of Accounting for Income Taxes, with proceeds presented in operating activities[51](index=51&type=chunk) [5. Pension and Other Postretirement Plans.](index=17&type=section&id=5.%20Pension%20and%20Other%20Postretirement%20Plans.) This section details MGE's pension and other postretirement benefit plans, including net periodic benefit costs - MGE maintains qualified and nonqualified pension plans, health care, life insurance, and 401(k) plans for employees and retirees[53](index=53&type=chunk) Net Periodic Benefit Costs (Three Months Ended June 30, in thousands) | Benefit Type | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Pension Benefits (credit) | $(2,176) | $(1,740) | | Postretirement Benefits (cost) | $135 | $170 | Net Periodic Benefit Costs (Six Months Ended June 30, in thousands) | Benefit Type | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Pension Benefits (credit) | $(4,482) | $(3,772) | | Postretirement Benefits (cost) | $207 | $407 | - MGE recovered **$0.1 million** and **$0.7 million** of deferred pension and postretirement costs during the three and six months ended June 30, 2025, respectively, compared to **$1.2 million** and **$2.6 million** in 2024[56](index=56&type=chunk) [6. Equity and Financing Arrangements.](index=17&type=section&id=6.%20Equity%20and%20Financing%20Arrangements.) This section describes MGE Energy's equity and financing arrangements, including its Direct Stock Purchase and Dividend Reinvestment Plan - MGE Energy transitioned to open market purchases for all shares issued under its Direct Stock Purchase and Dividend Reinvestment Plan (Stock Plan) effective **May 2025**[57](index=57&type=chunk) - During the six months ended June 30, 2025, MGE Energy issued approximately **40,995 shares** of common stock under the Stock Plan, generating **$3.8 million** in net proceeds for general corporate purposes[57](index=57&type=chunk) - As of June 30, 2025, **30,803 shares** were included in the diluted EPS calculation related to nonvested equity awards[58](index=58&type=chunk) [7. Share-Based Compensation.](index=18&type=section&id=7.%20Share-Based%20Compensation.) This section provides details on share-based compensation expense and awards granted under the incentive plan Share-Based Compensation Expense (in millions) | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30 | $0.5 | $0.7 | | Six Months Ended June 30 | $1.7 | $1.9 | - In Q1 2025, MGE distributed **$2.0 million** cash and **11,213 common shares** for 2022 awards[59](index=59&type=chunk) - In March 2025, MGE granted **18,136 performance units** (liability awards) and **26,398 restricted stock units** (equity awards) under the 2021 Incentive Plan[60](index=60&type=chunk)[61](index=61&type=chunk) [8. Commitments and Contingencies.](index=18&type=section&id=8.%20Commitments%20and%20Contingencies.) This section outlines MGE's significant commitments and contingencies, including plant retirements, environmental regulations, and future purchase contracts - MGE and Columbia co-owners plan to retire Columbia Units 1 and 2 by the end of **2029**, subject to operational and regulatory considerations[62](index=62&type=chunk)[135](index=135&type=chunk) - MGE is evaluating operational options and costs for Elm Road Units to comply with the EPA's finalized ELG rule (May 2024) for wastewater discharges, with a planned transition to natural gas[65](index=65&type=chunk)[136](index=136&type=chunk) - The EPA's Good Neighbor Plan, aimed at reducing NOx and SO2 emissions, is currently stayed by the Supreme Court, with MGE monitoring developments as it could impact Elm Road Units in **2026**[69](index=69&type=chunk)[70](index=70&type=chunk) Future Commitments Related to Purchase Contracts (As of June 30, 2025, in thousands) | Commodity | 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | | :---------------- | :----- | :----- | :----- | :----- | :----- | :--------- | :------ | | Coal | $9,437 | $8,387 | $4,043 | $4,126 | — | — | $25,993 | | Natural gas | $26,109 | $51,334 | $37,306 | $41,131 | $40,951 | $316,598 | $513,429 | | Renewable energy | $6,084 | $3,454 | $3,324 | $3,324 | $1,350 | $38,100 | $55,636 | | **Total** | **$41,630** | **$63,175** | **$44,673** | **$48,581** | **$42,301** | **$354,698** | **$595,058** | [9. Rate Matters.](index=21&type=section&id=9.%20Rate%20Matters.) This section discusses approved and proposed rate proceedings, including rate increases, authorized return on equity, and deferred fuel costs Approved and Proposed Rate Proceedings | Year | Service | Rate Increase | ROE | Common Equity Structure | Effective Date | | :--- | :------ | :------------ | :-- | :---------------------- | :------------- | | 2024 | Electric | 1.54% | 9.7% | 56.1% | 1/1/2024 | | 2024 | Gas | 2.44% | 9.7% | 56.1% | 1/1/2024 | | 2025 | Electric | 2.63% | 9.7% | 56.1% | 1/1/2025 | | 2025 | Gas | 1.32% | 9.7% | 56.1% | 1/1/2025 | | 2026 (Proposed) | Electric | 4.89% | 10.0% | 56.1% | 1/1/2026 | | 2026 (Proposed) | Gas | 2.33% | 10.0% | 56.1% | 1/1/2026 | | 2027 (Proposed) | Electric | 4.33% | 10.0% | 56.0% | 1/1/2027 | | 2027 (Proposed) | Gas | 2.16% | 10.0% | 56.0% | 1/1/2027 | - An earnings sharing mechanism dictates that if MGE's ROE exceeds the authorized **9.7%**, a portion of excess earnings will be deferred and returned to customers[76](index=76&type=chunk)[127](index=127&type=chunk) Deferred Electric Fuel-Related Costs (in millions) | Year | Fuel Costs (Savings) | Refund or Recovery Period | | :--- | :------------------- | :------------------------ | | 2022 | $8.8 | Oct 2023 - Sep 2024 | | 2023 | ($7.2) | Oct 2024 - Dec 2024 | | 2024 | ($3.0) | Oct 2025 | | 2025 | ($2.5) | Subject to 2026 PSCW review | [10. Derivative and Hedging Instruments.](index=23&type=section&id=10.%20Derivative%20and%20Hedging%20Instruments.) This section describes MGE's use of derivatives and FTRs to manage commodity price risk, including notional volumes and fair values - MGE uses derivatives and FTRs to manage commodity price risk, with a maximum hedging period of **four years**[79](index=79&type=chunk) Gross Notional Volume of Open Derivatives | Contract Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Commodity derivative contracts (MWh) | 279,520 | 307,640 | | Commodity derivative contracts (Dth) | 6,662,500 | 6,285,000 | | FTRs (MW) | 5,159 | 2,131 | - As of June 30, 2025, and December 31, 2024, the fair value of exchange-traded derivatives and FTRs exceeded their cost basis by **$0.7 million** and **$0.1 million**, respectively[82](index=82&type=chunk) Fair Value of Derivative Instruments on Consolidated Balance Sheets (In thousands) | Category | June 30, 2025 (Assets) | June 30, 2025 (Liabilities) | Dec 31, 2024 (Assets) | Dec 31, 2024 (Liabilities) | | :-------------------------- | :--------------------- | :------------------------ | :-------------------- | :------------------------- | | Commodity derivative contracts | $1,678 | $1,239 | $1,213 | $1,261 | | FTRs | $258 | — | $108 | — | [11. Fair Value of Financial Instruments.](index=25&type=section&id=11.%20Fair%20Value%20of%20Financial%20Instruments.) This section categorizes financial instruments by fair value levels and provides estimated fair market values for long-term debt - Fair value is categorized into Level 1 (quoted prices in active markets), Level 2 (observable market data for similar assets/liabilities or non-active markets), and Level 3 (unobservable inputs reflecting management's best estimate)[92](index=92&type=chunk)[93](index=93&type=chunk) Estimated Fair Market Value of Long-Term Debt (In thousands) | Metric | June 30, 2025 (Carrying Amount) | June 30, 2025 (Fair Value) | Dec 31, 2024 (Carrying Amount) | Dec 31, 2024 (Fair Value) | | :-------------------------- | :------------------------------ | :------------------------- | :----------------------------- | :------------------------- | | Long-term debt | $770,775 | $710,479 | $773,400 | $698,765 | Recurring Fair Value Measurements (As of June 30, 2025, in thousands) | Category | Total | Level 1 | Level 2 | Level 3 | | :-------------------------- | :---- | :------ | :------ | :------ | | Assets: Derivatives, net | $1,936 | $1,416 | — | $520 | | Liabilities: Derivatives, net | $1,239 | $916 | — | $323 | | Liabilities: Deferred compensation | $6,753 | — | $6,753 | — | - Most exchange-traded derivative contracts are Level 1, while some exchange-traded contracts, over-the-counter transactions, and FTRs are classified as Level 3 due to unobservable inputs or limited market data[101](index=101&type=chunk) [12. Joint Plant Construction Project Ownership.](index=28&type=section&id=12.%20Joint%20Plant%20Construction%20Project%20Ownership.) This section details MGE's ownership interests in joint plant construction projects, including estimated costs and commercial operation dates MGE Joint Plant Construction Project Ownership (As of June 30, 2025) | Project | Ownership Interest | Source | Share of Generation | Estimated Costs (Excl. AFUDC) | Costs Incurred (Excl. AFUDC) | Date of Commercial Operation | | :---------------- | :----------------- | :----------- | :------------------ | :---------------------------- | :---------------------------- | :--------------------------- | | Paris | 10% | Battery | 11 MW | $25 million | $23.4 million | June 2025 Battery | | Darien | 10% | Solar/Battery | 25 MW/7.5 MW | $63 million | $46.3 million | March 2025 Solar, 2026 Battery | | Koshkonong | 10% | Solar/Battery | 30 MW/16.5 MW | $104 million | $24.8 million | 2026 Solar, 2027 Battery | | High Noon | 10% | Solar/Battery | 30 MW/16.5 MW | $99 million | $17.8 million | 2027 | | Columbia Energy Dome | 19% | Storage | 3 MW | $17 million | $0.7 million | 2027 | - MGE recognized **$0.5 million** and **$2.1 million** (after tax) in AFUDC for these projects during the three and six months ended June 30, 2025, respectively, compared to **$1.5 million** and **$2.7 million** in 2024[107](index=107&type=chunk) - Estimated costs for Paris, Darien, and Koshkonong are expected to exceed previously approved Certificate of Authority (CA) levels, with MGE requesting recovery in future rate case proceedings[109](index=109&type=chunk) [13. Revenue.](index=27&type=section&id=13.%20Revenue.) This section provides a breakdown of MGE's operating revenues by source for the three and six months ended June 30 Operating Revenues by Source (Three Months Ended June 30, in thousands) | Revenue Source | 2025 | 2024 | Change | | :-------------------------- | :----- | :----- | :----- | | Electric revenues | $129,313 | $120,383 | +$8,930 | | Gas revenues | $29,925 | $25,116 | +$4,809 | | Non-regulated energy revenues | $214 | $214 | $0 | | **Total Operating Revenue** | **$159,452** | **$145,713** | **+$13,739** | Operating Revenues by Source (Six Months Ended June 30, in thousands) | Revenue Source | 2025 | 2024 | Change | | :-------------------------- | :----- | :----- | :----- | | Electric revenues | $254,767 | $236,508 | +$18,259 | | Gas revenues | $123,406 | $100,285 | +$23,121 | | Non-regulated energy revenues | $249 | $256 | -$7 | | **Total Operating Revenue** | **$378,422** | **$337,049** | **+$41,373** | [14. Segment Information.](index=29&type=section&id=14.%20Segment%20Information.) This section provides financial information by MGE Energy's five business segments, including net income and capital expenditures - MGE Energy operates in five business segments: electric utility, gas utility, nonregulated energy, transmission investment, and all other[110](index=110&type=chunk) MGE Energy Segment Net Income (Three Months Ended June 30, 2025, in thousands) | Segment | Net Income (Loss) | | :-------------------------- | :---------------- | | Electric Utility | $19,580 | | Gas Utility | $(1,297) | | Non-Regulated Energy | $6,192 | | Transmission Investment | $3,060 | | All Others | $2,225 | | **Consolidated Total** | **$26,498** | MGE Energy Segment Net Income (Six Months Ended June 30, 2025, in thousands) | Segment | Net Income (Loss) | | :-------------------------- | :---------------- | | Electric Utility | $39,775 | | Gas Utility | $12,288 | | Non-Regulated Energy | $12,215 | | Transmission Investment | $4,539 | | All Others | $(727) | | **Consolidated Total** | **$68,090** | MGE Energy Capital Expenditures by Segment (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Electric Utility | $83,034 | $86,755 | | Gas Utility | $22,975 | $20,879 | | Non-regulated Energy | $5,744 | $3,988 | | Transmission Investment | — | — | | All Others | — | — | | **Consolidated Total** | **$111,753** | **$111,622** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=32&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides an overview of MGE Energy's financial performance, highlighting net income growth for both MGE Energy and MGE for the three and six months ended June 30, 2025, driven by increased electric investments and higher gas retail sales. It discusses significant events such as rate proceedings, deferred fuel savings, large-scale utility projects, environmental initiatives, and potential impacts from solar procurement disruptions and new tax legislation (OBBBA). The section also details liquidity, capital resources, cash flows, and capitalization ratios - MGE Energy's net income increased to **$26.5 million** ($0.73/share) for Q2 2025 (vs. $23.8 million, $0.66/share in Q2 2024) and **$68.1 million** ($1.86/share) for H1 2025 (vs. $57.6 million, $1.59/share in H1 2024)[119](index=119&type=chunk)[120](index=120&type=chunk) - MGE's net income increased to **$18.8 million** for Q2 2025 (vs. $16.0 million in Q2 2024) and **$53.0 million** for H1 2025 (vs. $42.6 million in H1 2024)[119](index=119&type=chunk)[120](index=120&type=chunk) - Earnings growth was primarily driven by increased electric investments (2025 rate case) and higher gas retail sales (up **16%** in H1 2025 due to **18%** increase in heating degree days)[124](index=124&type=chunk)[125](index=125&type=chunk) - MGE deferred **$2.5 million** in 2025 fuel savings as of June 30, 2025, subject to PSCW review in 2026[128](index=128&type=chunk) - MGE is pursuing large-scale generation projects including solar, battery, and wind facilities, with estimated capital expenditures for approximately **178 MW** of solar, **18 MW** of wind, and **118 MW** of battery storage[130](index=130&type=chunk)[135](index=135&type=chunk) - MGE aims for **80% carbon reduction by 2030** (from 2005 levels) by transitioning away from coal (Columbia retirement by 2029, Elm Road Units to natural gas by 2030/2032) and growing renewable generation[135](index=135&type=chunk)[136](index=136&type=chunk) - Solar procurement disruptions (UFLPA, solar tariffs) and the One Big Beautiful Bill Act (OBBBA) pose risks of increased costs or delays for solar projects and impact tax credit eligibility[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[196](index=196&type=chunk)[198](index=198&type=chunk)[200](index=200&type=chunk) MGE Energy Capitalization Ratios | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Common shareholders' equity | 62.2% | 61.5% | | Long-term debt | 37.5% | 38.5% | | Short-term debt | 0.3% | 0.0% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) There were no material changes to market risks previously disclosed, except for an increase in the value of employee benefit plan assets by approximately 7% during the first six months of 2025, which can impact future expenses - No material changes to market risks were disclosed, except for equity price risk related to pension-related assets[202](index=202&type=chunk) - The value of employee benefit plan assets, managed by third-party investment managers, increased by approximately **7%** during the six months ended June 30, 2025, impacting future expenses[203](index=203&type=chunk) [Item 4. Controls and Procedures.](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures.) As of June 30, 2025, both MGE Energy and MGE's principal executive and financial officers concluded that their disclosure controls and procedures were effective. No material changes in internal controls over financial reporting occurred during the quarter - As of June 30, 2025, MGE Energy and MGE's management concluded that their disclosure controls and procedures were **effective**[205](index=205&type=chunk) - No material changes in internal controls over financial reporting occurred during the quarter ended June 30, 2025[206](index=206&type=chunk) [PART II. OTHER INFORMATION.](index=48&type=section&id=PART%20II.%20OTHER%20INFORMATION.) This section provides additional information including legal proceedings, risk factors, equity sales, defaults, mine safety disclosures, other information, and exhibits [Item 1. Legal Proceedings.](index=48&type=section&id=Item%201.%20Legal%20Proceedings.) MGE Energy and its subsidiaries are involved in various legal proceedings in the ordinary course of business, with no material adverse effect expected on consolidated results, financial condition, or cash flows - MGE Energy and its subsidiaries are involved in various legal proceedings in the normal course of business[207](index=207&type=chunk) - Accrued costs for these matters are not material, and their resolution is not expected to have a **material adverse effect** on consolidated results, financial condition, or cash flows[73](index=73&type=chunk) [Item 1A. Risk Factors.](index=48&type=section&id=Item%201A.%20Risk%20Factors.) There were no material changes from the risk factors disclosed in the 2024 Annual Report on Form 10-K - No material changes from the risk factors disclosed in the 2024 Annual Report on Form 10-K[208](index=208&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) MGE Energy issues common stock through its Direct Stock Purchase and Dividend Reinvestment Plan, transitioning to open market purchases for participants starting May 2025 - MGE Energy issues common stock through its Direct Stock Purchase and Dividend Reinvestment Plan[209](index=209&type=chunk) - Starting **May 2025**, MGE Energy began purchasing shares in the open market for plan participants[209](index=209&type=chunk) [Item 3. Defaults Upon Senior Securities.](index=48&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) There were no defaults upon senior securities - No defaults upon senior securities[210](index=210&type=chunk) [Item 4. Mine Safety Disclosures.](index=48&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to MGE Energy and MGE - Not applicable to MGE Energy and MGE[211](index=211&type=chunk) [Item 5. Other Information.](index=48&type=section&id=Item%205.%20Other%20Information.) During the three months ended June 30, 2025, no director or officer of MGE Energy or MGE adopted or terminated a Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q2 2025[212](index=212&type=chunk) [Item 6. Exhibits.](index=49&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Form 10-Q, including certifications pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, certifications pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002, and XBRL-related documents - The exhibits include various certifications (Rule 13a-14(a), 15d-14(a), Section 1350 of Sarbanes-Oxley Act) and XBRL documents[213](index=213&type=chunk) [Signatures - MGE Energy, Inc.](index=50&type=section&id=Signatures%20-%20MGE%20Energy%2C%20Inc.) This section contains the duly authorized signatures for MGE Energy, Inc.'s Form 10-Q report, including those of the Chairman, President and CEO, Chief Financial Officer, and Chief Accounting Officer, dated August 6, 2025 - The report is signed by Jeffrey M. Keebler (Chairman, President and CEO), Jared J. Bushek (VP - CFO and Treasurer), and Jenny L. Lagerwall (AVP - Accounting and Controller) for MGE Energy, Inc.[215](index=215&type=chunk)[217](index=217&type=chunk) [Signatures - Madison Gas and Electric Company](index=51&type=section&id=Signatures%20-%20Madison%20Gas%20and%20Electric%20Company) This section contains the duly authorized signatures for Madison Gas and Electric Company's Form 10-Q report, including those of the Chairman, President and CEO, Chief Financial Officer, and Chief Accounting Officer, dated August 6, 2025 - The report is signed by Jeffrey M. Keebler (Chairman, President and CEO), Jared J. Bushek (VP - CFO and Treasurer), and Jenny L. Lagerwall (AVP - Accounting and Controller) for Madison Gas and Electric Company[219](index=219&type=chunk)[221](index=221&type=chunk)

Core Viewpoint - MGE (MGEE) reported quarterly earnings of $1.14 per share, exceeding the Zacks Consensus Estimate of $0.98 per share, and showing an increase from $0.93 per share a year ago, indicating a 16.33% earnings surprise [1] Financial Performance - MGE's revenues for the quarter ended March 2025 were $218.97 million, surpassing the Zacks Consensus Estimate by 8.18%, compared to $191.34 million in the same quarter last year [2] - Over the last four quarters, MGE has exceeded consensus EPS estimates only once and has topped consensus revenue estimates two times [2] Stock Performance and Outlook - MGE shares have declined approximately 2.7% since the beginning of the year, while the S&P 500 has decreased by 4.7% [3] - The future performance of MGE's stock will largely depend on management's commentary during the earnings call and the revisions of earnings estimates [3][4] Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is $0.78 on revenues of $156.63 million, and for the current fiscal year, it is $3.69 on revenues of $720.77 million [7] - The trend for estimate revisions prior to the earnings release was unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Utility - Electric Power industry is currently ranked in the top 20% of over 250 Zacks industries, suggesting that stocks in the top 50% of Zacks-ranked industries tend to outperform those in the bottom 50% by more than 2 to 1 [8]

Earnings Announcement - MGE Energy, Inc. announced its first quarter 2025 earnings on May 7, 2025[5] - The press release regarding the earnings is included as Exhibit 99.1 in the report[5] Financial Reporting - No financial statements of businesses acquired or pro forma financial information were reported[7] - The registrants are not emerging growth companies and have not elected to use the extended transition period for new financial accounting standards[4] Report Signing - The report was signed by Jenny L. Lagerwall, Assistant Vice President - Accounting and Controller[9]

PART I. FINANCIAL INFORMATION [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements.) Presents MGE Energy and MGE's unaudited Q1 2025 consolidated financial statements, including income, cash flow, and balance sheets [MGE Energy, Inc. - Consolidated Statements of Income](index=6&type=section&id=MGE%20Energy%2C%20Inc.%20-%20Consolidated%20Statements%20of%20Income%20%28unaudited%29) MGE Energy, Inc. - Q1 2025 vs Q1 2024 Income Statement Highlights | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | **Total Operating Revenues** | $218,970 | $191,336 | +14.4% | | **Operating Income** | $52,865 | $40,745 | +29.7% | | **Net Income** | $41,592 | $33,814 | +23.0% | | **Diluted EPS** | $1.14 | $0.93 | +22.6% | | **Dividends per share** | $0.450 | $0.428 | +5.1% | [MGE Energy, Inc. - Consolidated Statements of Cash Flows](index=7&type=section&id=MGE%20Energy%2C%20Inc.%20-%20Consolidated%20Statements%20of%20Cash%20Flows%20%28unaudited%29) MGE Energy, Inc. - Q1 2025 vs Q1 2024 Cash Flow Summary | Activity (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Cash Provided by Operating Activities** | $77,862 | $65,815 | | **Cash Used for Investing Activities** | ($50,592) | ($46,426) | | **Cash Used for Financing Activities** | ($15,107) | ($14,288) | | **Change in cash, cash equivalents, and restricted cash** | $12,163 | $5,101 | [MGE Energy, Inc. - Consolidated Balance Sheets](index=8&type=section&id=MGE%20Energy%2C%20Inc.%20-%20Consolidated%20Balance%20Sheets%20%28unaudited%29) MGE Energy, Inc. - Balance Sheet Highlights | Metric (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | $2,841,377 | $2,827,959 | | **Total Liabilities** | $820,000 | $834,124 | | **Total Common Shareholders' Equity** | $1,258,913 | $1,230,138 | | **Total Liabilities and Capitalization** | $2,841,377 | $2,827,959 | [Madison Gas and Electric Company - Consolidated Statements of Income](index=10&type=section&id=Madison%20Gas%20and%20Electric%20Company%20-%20Consolidated%20Statements%20of%20Income%20%28unaudited%29) MGE - Q1 2025 vs Q1 2024 Income Statement Highlights | Metric (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Total Operating Revenues** | $218,970 | $191,336 | | **Operating Income** | $53,162 | $41,159 | | **Net Income** | $39,803 | $32,200 | | **Net Income Attributable to MGE** | $34,204 | $26,603 | [Notes to Consolidated Financial Statements](index=14&type=section&id=MGE%20Energy%2C%20Inc.%2C%20and%20Madison%20Gas%20and%20Electric%20Company%20-%20Notes%20to%20Consolidated%20Financial%20Statements%20%28unaudited%29) - MGE Transco's equity earnings from its investment in American Transmission Company (ATC) were **$3.0 million** in Q1 2025, up from **$2.7 million** in Q1 2024. Dividends received from ATC also increased to **$3.3 million** from **$2.1 million** year-over-year[53](index=53&type=chunk) - MGE Energy's effective income tax rate was **13.1%** for Q1 2025, compared to **7.7%** for Q1 2024. The increase was primarily due to a smaller benefit from the amortization of excess deferred taxes related to the 2017 Tax Cut and Jobs Act[55](index=55&type=chunk) - In Q1 2025, MGE Energy issued approximately **35,774 shares** of common stock under its Direct Stock Purchase and Dividend Reinvestment Plan, raising net proceeds of about **$3.3 million**[61](index=61&type=chunk) - The EPA finalized new environmental rules in May 2024, including the Effluent Limitations Guidelines (ELG) and Greenhouse Gas (GHG) performance standards, which will impact coal-fired power plants. MGE is evaluating compliance options for its Elm Road Units and expects to meet requirements for other units through planned retirements and fuel switching[69](index=69&type=chunk)[71](index=71&type=chunk) Approved and Proposed Rate Changes | Period | Utility | Rate Increase | Authorized ROE | Effective Date | | :--- | :--- | :--- | :--- | :--- | | **2025** | Electric | 2.63% | 9.7% | 1/1/2025 | | **2025** | Gas | 1.32% | 9.7% | 1/1/2025 | | **2026 (Proposed)** | Electric | 4.89% | 10.0% | 1/1/2026 | | **2026 (Proposed)** | Gas | 2.33% | 10.0% | 1/1/2026 | | **2027 (Proposed)** | Electric | 4.33% | 10.0% | 1/1/2027 | | **2027 (Proposed)** | Gas | 2.16% | 10.0% | 1/1/2027 | Joint Plant Construction Project Ownership (as of March 31, 2025) | Project | Ownership Interest | Share of Generation | Estimated Costs (in millions) | Costs Incurred (in millions) | Est. Commercial Operation | | :--- | :--- | :--- | :--- | :--- | :--- | | **Paris** | 10% | 11 MW Battery | $25 million | $22.9 million | 2025 Battery | | **Darien** | 10% | 25 MW Solar/7.5 MW Battery | $63 million | $47.1 million | 2025 Solar / 2026 Battery | | **Koshkonong** | 10% | 30 MW Solar/16.5 MW Battery | $104 million | $20.0 million | 2026 Solar / 2027 Battery | | **High Noon** | 10% | 30 MW Solar/16.5 MW Battery | $99 million | $1.1 million | 2027 | MGE Energy Segment Net Income (Q1 2025 vs Q1 2024) | Segment (in thousands) | Q1 2025 Net Income (in thousands) | Q1 2024 Net Income (in thousands) | | :--- | :--- | :--- | | **Electric Utility** | $20,195 | $15,764 | | **Gas Utility** | $13,585 | $10,613 | | **Non-Regulated Energy** | $6,023 | $5,823 | | **Transmission Investment** | $2,314 | $1,996 | | **All Others** | ($525) | ($382) | | **Consolidated Total** | **$41,592** | **$33,814** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) MGE Energy's Q1 2025 net income rose from utility segment growth, driven by rate adjustments and weather, supporting renewable investments MGE Energy Net Income by Business Segment (in millions) | Business Segment | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Electric Utility | $20.2 | $15.8 | | Gas Utility | $13.6 | $10.6 | | Nonregulated Energy | $6.0 | $5.8 | | Transmission Investments | $2.3 | $2.0 | | All Other | ($0.5) | ($0.4) | | **Total Net Income** | **$41.6** | **$33.8** | - Electric utility earnings increased due to higher investments included in the 2025 rate case and favorable weather that boosted residential sales[119](index=119&type=chunk) - Gas utility earnings increased due to a **19% rise** in gas retail sales, driven by a **13% increase** in heating degree days compared to Q1 2024[120](index=120&type=chunk) - MGE is advancing its goal of **80% carbon reduction by 2030** by transitioning coal plants (Columbia and Elm Road) to natural gas and investing in new renewable generation, including approximately **178 MW of solar** and **18 MW of wind projects**[130](index=130&type=chunk)[131](index=131&type=chunk) - The company is monitoring potential solar project cost increases and delays due to the Uyghur Forced Labor Protection Act (UFLPA) and new U.S. tariffs on solar cells and modules[132](index=132&type=chunk)[172](index=172&type=chunk)[174](index=174&type=chunk) MGE Energy Capitalization Ratios | Component | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Common shareholders' equity | 62.1% | 61.5% | | Long-term debt | 37.9% | 38.5% | | Short-term debt | 0.0% | 0.0% | [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) No material changes were reported to the market risks disclosed in the 2024 Annual Report on Form 10-K - There were no material changes to the market risks disclosed in the 2024 Annual Report on Form 10-K[177](index=177&type=chunk) [Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded the company's disclosure controls were effective as of March 31, 2025, with no material changes to internal controls - As of March 31, 2025, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[179](index=179&type=chunk) - No changes in internal controls over financial reporting occurred during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[180](index=180&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings.) The company is involved in ordinary course legal proceedings not expected to materially affect financial condition or operations - MGE Energy and its subsidiaries are involved in various legal proceedings handled in the ordinary course of business, which are not expected to be material[181](index=181&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors.) No material changes were reported from the risk factors disclosed in the 2024 Annual Report on Form 10-K - No material changes were reported from the risk factors disclosed in the 2024 Annual Report on Form 10-K[182](index=182&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) MGE Energy issued new common stock in Q1 2025 via its Direct Stock Purchase Plan, shifting to open market purchases from May 2025 - In Q1 2025, MGE Energy issued new common stock shares to participants in its Direct Stock Purchase and Dividend Reinvestment Plan. The company plans to switch to open market purchases for the plan starting in May 2025[183](index=183&type=chunk) [Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) The company reports no defaults upon senior securities - None[184](index=184&type=chunk) [Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to MGE Energy and MGE - Not applicable[185](index=185&type=chunk) [Other Information](index=41&type=section&id=Item%205.%20Other%20Information.) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q1 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q1 2025[186](index=186&type=chunk) [Exhibits](index=42&type=section&id=Item%206.%20Exhibits.) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data files - The report includes required certifications from the CEO and CFO under Sarbanes-Oxley Act rules, as well as XBRL data files[187](index=187&type=chunk)

MGE (MGEE) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended March 2025. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The earnings report might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may mov ...

At Energy Profits in Dividends, we seek to generate a 7%+ income yield by investing in a portfolio of energy stocks while minimizing our risk of principal loss. By subscribing, you will get access to our best ideas earlier than they are released to the general public (and many of them are not released at all) as well as far more in-depth research than we make available to everybody. In addition, all subscribers can read any of my work without a subscription to Seeking Alpha Premium!As we can see, MGE Energy ...

Core Viewpoint - MGE's quarterly earnings of $0.61 per share fell short of the Zacks Consensus Estimate of $0.84 per share, marking a -27.38% earnings surprise, despite an increase from $0.55 per share a year ago [1][2] Financial Performance - MGE reported revenues of $171.42 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 2.71%, compared to $164.65 million in the same quarter last year [2] - Over the last four quarters, MGE has not surpassed consensus EPS estimates and has only topped revenue estimates once [2] Stock Performance - MGE shares have declined approximately 1% since the beginning of the year, while the S&P 500 has gained 1.7% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.96 on revenues of $198.17 million, and for the current fiscal year, it is $3.84 on revenues of $707.88 million [7] - The trend of estimate revisions for MGE is mixed, which could change following the recent earnings report [6] Industry Context - The Utility - Electric Power industry is currently in the top 50% of over 250 Zacks industries, suggesting that stocks in this category tend to outperform those in the bottom 50% by more than 2 to 1 [8]

Financial Performance - MGE Energy's GAAP earnings for the full year of 2024 were $120.6 million, or $3.33 per share, representing an increase from $117.7 million, or $3.25 per share, in 2023[1] - For Q4 2024, MGE Energy reported earnings of $22.0 million, or 61 cents per share, up from $20.1 million, or 55 cents per share, in Q4 2023[2] - Operating revenues for the full year of 2024 were $676.9 million, a decrease from $690.4 million in 2023[6] - Operating income for the full year of 2024 was $146.3 million, slightly down from $146.4 million in 2023[6] - The weighted average shares outstanding for basic earnings per share in 2024 were 36,210 thousand, compared to 36,163 thousand in 2023[6] Customer Base - MGE Energy serves 167,000 electricity customers and 178,000 natural gas customers in Wisconsin[7] Renewable Energy Initiatives - MGE Energy completed the Paris solar project in December 2024, contributing to its renewable generation investments[2] - The company continues to focus on cost-effective renewable generation to support asset growth and increase electric earnings[2] Market Conditions - Gas retail therm deliveries decreased approximately 4% in 2024 compared to the prior year, primarily due to warmer-than-normal weather[3] Forward-Looking Statements - MGE Energy cautions that forward-looking statements are based on current expectations and are subject to risks and uncertainties[8]

Electric Operations and Revenue - MGE Energy's electric operations accounted for approximately 74%, 71%, and 65% of total regulated revenues in 2024, 2023, and 2022 respectively[27]. - As of December 31, 2024, MGE supplied electric service to approximately 167,000 customers, with 91% located in urban areas[26]. - MGE's electric operations include regulated electric and gas utility operations, as well as nonregulated energy operations[26]. - Gas operations accounted for approximately 26%, 29%, and 35% of MGE's total regulated revenues in 2024, 2023, and 2022, respectively[49]. - No single customer accounted for more than 10% of total operating revenues for MGE Energy and MGE in 2024[281]. Carbon Reduction and Renewable Energy Goals - MGE aims for a net-zero carbon electricity target by 2050 and has committed to achieving at least 80% carbon reductions by 2030 from 2005 levels[36]. - MGE's carbon reduction goals align with the recommendations of the Intergovernmental Panel on Climate Change (IPCC)[37]. - MGE plans to eliminate coal as an owned generation source by the end of 2032, reducing approximately two-thirds of its current coal-fired generation capacity by 2030[39]. - MGE is working to increase renewable energy to 25% of retail electric sales by 2025 and to 30% by 2030[72]. - MGE currently exceeds Wisconsin's renewable energy requirement of approximately 8%[81]. Transition from Coal and Natural Gas - The company is transitioning away from coal and adding new renewable generation to meet its carbon reduction goals[38]. - MGE plans to retire the Columbia unit by the end of 2029 and transition the Elm Road Units from coal to natural gas by the end of 2032[72]. - MGE purchased 25 MW in the West Riverside Energy Center in early 2023 and an additional 25 MW in June 2024, as part of its investment in natural gas plants[45]. Renewable Energy Projects and Initiatives - Since 2015, MGE has added 222 MW of solar and 93 MW of wind generation facilities, with an expectation to add approximately 178 MW of solar, 18 MW of wind, and 118 MW of battery storage by the end of 2028[40]. - MGE has developed approximately 42 MW of solar generation under the Renewable Energy Rider (RER) program, partnering with large energy users[43]. - The Shared Solar Program allows residential and small business customers to use locally generated solar energy for up to half of their annual energy needs, with a total capacity of 4 MW from two solar facilities[44]. - MGE's 19% share in the Columbia Energy Storage project will be 3 MW, which is set to be the first of its kind in the United States if approved[41]. Emission Reduction and Environmental Compliance - MGE aims to achieve net-zero methane emissions from its natural gas distribution system by 2035, introducing a renewable natural gas program in May 2024[51]. - The EPA finalized a rule to lower the average annual PM2.5 NAAQS from 12 ug/m3 to 9 ug/m3, effective May 2024, which may impact Milwaukee County[67]. - The EPA's final performance standards under section 111(b) of the Clean Air Act for carbon dioxide emissions will require states to submit plans for existing natural gas-fired combustion turbines within two years[74]. Workforce and Safety - As of December 31, 2024, MGE Energy had 717 employees, with women and ethnic minorities representing 25% and 10% of the workforce, respectively[82]. - MGE has implemented a comprehensive safety culture involving employees at all levels to enhance workplace safety[87]. Financial Management and Risk - MGE manages market risks associated with interest rates, commodity prices, and equity returns through risk management policies and derivative instruments[270]. - MGE expects to recover $72.3 million in fuel and purchased power costs in 2025, subject to PSCW fuel rules[272]. - As of December 31, 2024, the fair value of exchange-traded derivatives and financial transmission rights (FTRs) exceeded the cost basis by $0.1 million[275]. - A 1% reduction in the expected rate of return on pension plan assets would increase annual pension costs by approximately $4.4 million before taxes[277]. - The value of employee benefit plans trusts' assets increased by approximately 11% in 2024 and 15% in 2023[277]. - MGE manages credit risk through established credit policies, including credit approval processes and counterparty limits[278]. - MGE's cash and cash equivalents are placed with high credit-quality financial institutions to mitigate credit risk[282]. - MGE employs physical contracts and financial derivative contracts to reduce price risk from market fluctuations[274]. - Assuming a 1% change in average interest rates, 2024 interest expense and net income would have increased/decreased by $0.4 million for both MGE Energy and MGE[276].

Group 1 - The article emphasizes the importance of building a reliable stream of income through dividend investing rather than focusing solely on immediate income for financial independence [1] - The author has been involved in dividend investing since 2009 and has documented their journey towards financial independence through a blog called Kody's Dividends since July 2018 [1] - The author contributes to various platforms including Sure Dividend, The Dividend Kings, and iREIT+Hoya Capital, showcasing a commitment to analyzing dividend growth stocks [1] Group 2 - The article does not provide any specific investment recommendations or advice, highlighting that past performance is not indicative of future results [2] - It clarifies that Seeking Alpha's analysts are third-party authors, which may include both professional and individual investors who might not be licensed or certified [2]