MGE Energy(US:MGEE)2024-11-06 16:36Financial Performance - MGE Energy's earnings for the three months ended September 30, 2024, were $40.9 million or $1.13 per share, an increase from $37.9 million or $1.05 per share in the same period last year, reflecting a 7.9% year-over-year growth [108]. - For the nine months ended September 30, 2024, MGE Energy's earnings were $98.5 million or $2.72 per share, compared to $97.6 million or $2.70 per share in the prior year, indicating a slight increase of 0.9% [108]. - Electric revenue increased by $8.9 million to $147.79 million for the three months ended September 30, 2024, compared to $138.89 million in the same period of 2023, representing a 6.4% increase [130]. - Electric revenue increased by $6.7 million (1.8%) during the nine months ended September 30, 2024, compared to the same period in 2023, totaling $384.3 million [153]. - Gas revenue decreased by $26.9 million (18.2%) during the nine months ended September 30, 2024, totaling $120.8 million, primarily due to a decrease in volume and lower average rates [162]. - MGE Energy's cash provided by operating activities for the nine months ended September 30, 2024, was $209.8 million, an increase from $194.0 million in 2023 [183]. - MGE Energy's cash used for investing activities increased by $11.1 million during the nine months ended September 30, 2024, compared to the same period in the prior year [185]. - MGE's cash flows from financing activities increased by $0.4 million during the nine months ended September 30, 2024, compared to the same period in 2023 [198]. Segment Performance - Electric utility segment earnings for the three months ended September 30, 2024, were $35.0 million, up from $31.1 million in the same period last year, while gas utility segment earnings decreased to $(2.0) million from $(0.8) million [110]. - Gas retail sales decreased approximately 7% due to warmer than normal weather, with heating degree days down by approximately 9% in the first nine months of 2024 compared to the prior year [112]. - Total retail electric sales decreased slightly by 0.1% to 902,615 kWh in Q3 2024 from 903,147 kWh in Q3 2023 [130]. - Residential electric sales decreased by approximately 2% due to warmer weather conditions, impacting sales volumes [157]. - Total retail electric sales volume decreased by 0.3% during the nine months ended September 30, 2024, totaling 2,411,901 kWh [153]. Rate Changes - The PSCW approved a 1.54% increase to electric rates and a 2.44% increase to gas rates for 2024, with further increases planned for 2025 [113]. - The PSCW authorized a 1.54% increase in retail electric rates effective December 2023, contributing to higher revenues [154]. - The average retail rate per therm for gas customers decreased approximately 2% to $1.246 in Q3 2024 compared to $1.270 in Q3 2023 [139]. - The average retail rate per therm for gas customers decreased approximately 12% compared to the same period in the prior year, reflecting lower natural gas commodity costs [165]. Operational Expenses - Consolidated operations and maintenance expenses increased by $3.1 million, driven by higher customer accounts costs and transmission costs [141]. - Operations and maintenance expenses increased by $11.8 million during the nine months ended September 30, 2024, driven by increased customer accounts costs and transmission costs [168]. - Electric depreciation expense rose by $1.5 million in Q3 2024, attributed to the placement of Badger Hollow II in service in December 2023 [146]. - Electric depreciation expense increased by $4.7 million due to the addition of new generating facilities, including Badger Hollow II, which went online in December 2023 [172]. Renewable Energy Initiatives - MGE Energy is targeting an 80% carbon reduction by 2030 from 2005 levels, with plans to transition away from coal and increase renewable generation [121]. - MGE has acquired a joint interest in several renewable generation projects, forecasting capital expenditures for 198 MW of solar, 97 MW of battery, and 18 MW of wind [124]. - MGE aims to achieve net-zero methane emissions from its natural gas distribution system by 2035, introducing a renewable natural gas program effective May 2024 [125]. - MGE is monitoring potential disruptions in solar procurement due to new tariffs and regulations, which may impact costs and timelines for current and future projects [126]. - MGE holds a 19% ownership interest in the Columbia Energy Storage Project, which is currently under development [194]. Capital Expenditures - Capital expenditures for MGE Energy during the nine months ended September 30, 2024, were $164.1 million, reflecting an increase of $13.8 million from the prior year [186]. - MGE Energy's forecasted total capital expenditures for 2024 are projected to be $226.0 million, increasing to $312.0 million by 2029 [189]. - MGE's forecasted capital expenditures for electric and gas distribution from 2024 to 2029 are approximately $57 million, focusing on enhanced metering solutions [196]. Other Income and Investments - Nonregulated energy operations net income increased to $6.1 million in Q3 2024 from $5.6 million in Q3 2023 [148]. - Nonregulated energy operations net income increased to $18.0 million for the nine months ended September 30, 2024, compared to $16.7 million in the prior year [174]. - The transmission investment segment reported other income of $2.9 million in Q3 2024, up from $2.7 million in Q3 2023 [149]. - Other income from the transmission investment segment increased to $8.4 million in the nine months ended September 30, 2024, compared to $7.9 million in the same period of 2023 [175]. - MGE derived approximately 6.0% of its net income from its investment in ATC during the nine months ended September 30, 2024 [208]. Tax and Liquidity - The effective tax rate reconciliation is detailed in the financial statements, reflecting the company's tax obligations [177]. - MGE Energy expects to have adequate liquidity to support future operations and capital expenditures over the next twelve months [182]. - MGE's common shareholders' equity ratio increased to 60.8% as of September 30, 2024, compared to 59.9% at the end of 2023 [199]. Regulatory Changes - The FERC ruling in October 2024 resulted in a 4-basis point reduction in the base ROE from 10.02% to 9.98% [175]. - The company expects potential procurement disruptions to impact costs and timelines for solar projects, necessitating notifications to the PSCW for cost recovery [193][210].