MGE ENERGY INC (MGEE)

CIK: 0001161728. SIC: 4900 Electric, Gas & Sanitary Services. Latest 10-K as of: 2026-02-24.

SIC breadcrumb: Transportation, Communications, Electric, Gas, And Sanitary Services > Electric, Gas, And Sanitary Services > SIC 4900 Electric, Gas & Sanitary Services

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1161728. Latest filing source: 0001193125-26-067036.

Selected Fundamentals

Metric	Value	Unit	FY	Filed
Revenue	743,654,000	USD	2025	2026-02-24
Net income	135,889,000	USD	2025	2026-02-24
Assets	3,155,420,000	USD	2025	2026-02-24

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-24. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001161728.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Metric	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025
Revenue	544,745,000	563,099,000	559,768,000	568,855,000	538,633,000	606,584,000	714,519,000	690,431,000	676,944,000	743,654,000
Net income	75,560,000	97,606,000	84,219,000	86,874,000	92,418,000	105,761,000	110,952,000	117,699,000	120,569,000	135,889,000
Operating income	123,882,000	124,625,000	114,207,000	110,910,000	109,997,000	117,294,000	137,743,000	146,385,000	146,262,000	170,653,000
Diluted EPS				2.51	2.60	2.92	3.07	3.25	3.33	3.72
Assets	1,801,060,000	1,855,182,000	1,988,618,000	2,081,664,000	2,253,651,000	2,371,906,000	2,517,600,000	2,675,458,000	2,827,959,000	3,155,420,000
Stockholders' equity	724,088,000	778,187,000	816,644,000	855,676,000	976,000,000	1,027,468,000	1,081,674,000	1,140,073,000	1,230,138,000	1,303,936,000
Cash and cash equivalents	95,959,000	107,952,000	83,102,000	23,481,000	44,738,000	17,438,000	11,604,000	11,140,000	21,302,000	5,666,000
Net margin	13.87%	17.33%	15.05%	15.27%	17.16%	17.44%	15.53%	17.05%	17.81%	18.27%
Operating margin	22.74%	22.13%	20.40%	19.50%	20.42%	19.34%	19.28%	21.20%	21.61%	22.95%

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-05. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001161728.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarter	End Date	Revenue	Net Income	Diluted EPS	Method
2022-Q2	2022-06-30			0.60	reported discrete quarter
2022-Q3	2022-09-30			0.93	reported discrete quarter
2023-Q1	2023-03-31			0.86	reported discrete quarter
2023-Q2	2023-06-30	147,998,000	28,681,000	0.79	reported discrete quarter
2023-Q3	2023-09-30	160,528,000	37,857,000	1.05	reported discrete quarter
2023-Q4	2023-12-31	164,652,000	20,083,000		derived Q4 = FY annual - nine-month YTD
2024-Q1	2024-03-31	191,336,000	33,814,000	0.93	reported discrete quarter
2024-Q2	2024-06-30	145,713,000	23,794,000	0.66	reported discrete quarter
2024-Q3	2024-09-30	168,480,000	40,939,000	1.13	reported discrete quarter
2024-Q4	2024-12-31	171,415,000	22,022,000		derived Q4 = FY annual - nine-month YTD
2025-Q1	2025-03-31	218,970,000	41,592,000	1.14	reported discrete quarter
2025-Q2	2025-06-30	159,452,000	26,498,000	0.72	reported discrete quarter
2025-Q3	2025-09-30	175,679,000	44,497,000	1.22	reported discrete quarter
2025-Q4	2025-12-31	189,553,000	23,302,000		derived Q4 = FY annual - nine-month YTD
2026-Q1	2026-03-31	242,703,000	48,481,000	1.32	reported discrete quarter

Quarterly Charts

Macro Cross-References

CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
UNRATE - Unemployment Rate
FEDFUNDS - Federal Funds Effective Rate
CES0500000003 - Average Hourly Earnings of All Employees, Total Private
DFEDTARU - Federal Funds Target Range - Upper Limit
DFEDTARL - Federal Funds Target Range - Lower Limit
DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
PCEPI - Personal Consumption Expenditures: Chain-type Price Index
PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
PPIACO - Producer Price Index by Commodity: All Commodities
T10YIE - 10-Year Breakeven Inflation Rate
U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
PAYEMS - All Employees, Total Nonfarm
CIVPART - Labor Force Participation Rate
EMRATIO - Employment-Population Ratio
UNEMPLOY - Unemployed
CE16OV - Employment Level
ICSA - Initial Claims
JTSJOL - Job Openings: Total Nonfarm
JTSQUR - Quits: Total Nonfarm
GDPC1 - Real Gross Domestic Product
A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
INDPRO - Industrial Production: Total Index
TCU - Capacity Utilization: Total Index
HOUST - New Privately-Owned Housing Units Started: Total Units
PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
RSAFS - Advance Retail Sales: Retail Trade
PCE - Personal Consumption Expenditures
DSPIC96 - Real Disposable Personal Income
PSAVERT - Personal Saving Rate
M2SL - M2
BOPGSTB - U.S. International Trade in Goods and Services: Balance
MSPUS - Median Sales Price of Houses Sold for the United States
HSN1F - New One Family Houses Sold: United States
RHORUSQ156N - Homeownership Rate in the United States
TTLCONS - Total Construction Spending: Total Construction in the United States
RRVRUSQ156N - Rental Vacancy Rate in the United States
TOTALSL - Total Consumer Credit Owned and Securitized
REVOLSL - Revolving Consumer Credit Owned and Securitized
DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
GDP - Gross Domestic Product
GPDI - Gross Private Domestic Investment
GCE - Government Consumption Expenditures and Gross Investment
PCEC - Personal Consumption Expenditures
NETEXP - Net Exports of Goods and Services
GFDEBTN - Federal Debt: Total Public Debt
GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
FYFSD - Federal Surplus or Deficit
FGRECPT - Federal Government Current Receipts
FGEXPND - Federal Government: Current Expenditures
MANEMP - All Employees, Manufacturing
USCONS - All Employees, Construction
USTRADE - All Employees, Retail Trade
USFIRE - All Employees, Financial Activities
USGOVT - All Employees, Government
AWHAETP - Average Weekly Hours of All Employees, Total Private
DGORDER - Manufacturers' New Orders: Durable Goods
NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
BUSINV - Total Business Inventories
EXPGS - Exports of Goods and Services
IMPGS - Imports of Goods and Services
IR - Import Price Index (End Use): All Commodities
PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001193125-26-205678.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-05-05. Report date: 2026-03-31.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

General

MGE Energy is an investor-owned public utility holding company operating through subsidiaries in five business segments:

•
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 of the regulated operations, through its wholly owned subsidiaries CWDC, MAGAEL, and North Mendota, and corporate operations and services.

MGE will continue to focus on growing earnings while controlling operating and fuel costs. MGE's goal is to provide safe and efficient operations in addition to providing customer value. We believe it is critical to maintain a strong credit rating consistent with financial strength in MGE in order to accomplish these goals.

The ownership/leasing structure for our nonregulated energy operations was adopted under applicable state regulatory guidelines for MGE's participation in these generation facilities, consisting principally of a stable return on the equity investment in the new generation facilities over the term of the related leases. The nonregulated energy operations include an ownership interest in two coal-fired generating units in Oak Creek, Wisconsin, and a partial ownership of a cogeneration project on the UW-Madison campus. A third party operates the units in Oak Creek, and MGE operates the cogeneration project. Due to the nature of MGE's participation in these facilities, the results of MGE Energy's nonregulated operations are also consolidated into MGE's consolidated financial position and results of operations under applicable accounting standards.

Executive Overview

We principally earn revenue and generate cash from operations by providing electric and natural gas utility services, including electric power generation and electric power and gas distribution. The earnings and cash flows from the utility business are sensitive to various external factors, including, but not limited to:

•
Weather, and its impact on customer sales,

•
Economic conditions, including current business activity and employment and their impact on customer demand,

•
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 Item 1A. Risk Factors in our 2025 Annual Report on Form 10-K.

During the three months ended March 31, 2026, MGE Energy's earnings were $48.5 million, or $1.32 per share, compared to $41.6 million, or $1.14 per share, during the same period in the prior year. MGE's earnings during the three months ended March 31, 2026, were $40.1 million compared to $34.2 million during the same period in the prior year.

MGE Energy's net income was derived from our business segments as follows:

Three Months Ended

(In millions)

March 31,

Business Segment:

2026

2025

Electric Utility

25.7

20.2

Gas Utility

13.8

13.6

Nonregulated Energy

6.3

6.0

Transmission Investments

2.6

2.3

All Other

0.1

(0.5)

Net Income

48.5

41.6

Our net income during the three months ended March 31, 2026, compared to the same periods in the prior year, primarily reflects the effects of the following factors:

Electric Utility

Earnings for the three months ended March 31, 2026, increased year-over-year, primarily driven by a rise in the rate base due to increased electric investments approved in the 2026/2027 rate case.

Significant Events

The following events affected the first three months of 2026:

2026/2027 Rate Settlement Agreement: In December 2025, the PSCW approved a unanimous settlement agreement that MGE reached with intervening parties in its 2026/2027 rate case. As part of the settlement agreement, the PSCW approved a 0.15% increase for electric rates and a 2.77% increase to gas rates for 2026 and a 3.63% increase for electric rates and a 2.04% increase to gas rates for 2027. See "Other Matters" below for additional information on the 2026/2027 rate case settlement.

2026 Deferred Fuel Savings: MGE had deferred fuel savings through the three months ended March 31, 2026. As of March 31, 2026, MGE deferred $4.4 million of 2026 fuel savings. These costs will be subject to the PSCW's annual review of 2026 fuel costs, expected to be completed during 2027. See Footnote 9 of the Notes to the Consolidated Financial Statements in this Report for further information regarding fuel cost proceedings.

Large Scale Utility Projects: Large scale generation projects recently completed or under construction, are summarized in the following table. Incurred costs are reflected in "Property, plant, and equipment, net" for projects placed in service, or "Construction work in progress" for projects under construction on the consolidated balance sheets.

Source

(In millions)

Share of

Estimated

Costs(a)

Costs Incurred as of March 31, 2026(a)(b)

Solar

544.9

143.2

Wind

73.0

10.7

Battery

193.4

61.5

Storage

22.0

2.0

Other

11.0

0.4

(a)
Excluding AFUDC.

(b)
MGE received specific approval to recover 100% AFUDC. After tax, MGE recognized $3.2 million, $2.3 million, $1.0 million, $0.7 million of AFUDC equity earnings through March 31, 2026, on Koshkonong, High Noon, Sunnyside, and other projects, respectively, during construction. AFUDC has been excluded from the costs incurred in the table above.

In February 2026, MGE executed an asset purchase agreement to acquire 33.4% ownership interest in the RockGen Energy Center, an existing natural gas-fired generating plant near Cambridge, Wisconsin. MGE's estimated cost is approximately $203 million. If approved, the transaction is expected to close in late 2027.

In the near term, several items may affect us, including:

2025 Annual Fuel Proceeding: MGE had fuel savings in 2025. As of December 31, 2025, MGE deferred $7.1 million of 2025 fuel savings. These costs will be subject to the PSCW's annual review of 2025 fuel costs, expected to be completed during 2026. MGE has proposed to return these savings in October 2026.

Environmental Initiatives: There are proposed legislative rules and initiatives involving matters related to air emissions, water effluent, hazardous materials, and greenhouse gases, all of which affect generation plant capital expenditures and operating costs as well as future operational planning. Legislation and rulemaking addressing climate change and related matters could significantly affect the costs of owning and operating fossil-fueled generating plants. MGE would expect to seek and receive recovery of any such costs in rates. However, it is difficult to estimate the amount of such costs due to the uncertainty as to the timing and form of any legislation or rules, the timing and effects of any judicial review, and the scope and time of the recovery of costs in rates, which may occur after those costs have been incurred and paid.

Future Generation – MGE continues to work toward its goal of net-zero carbon electricity by 2050. Solar, wind, and battery storage projects are a major step toward deep decarbonization and greater use of clean energy sources in pursuit of our goal.

•
Growing renewable generation and storage. MGE is seeking to acquire, or has acquired, joint interests in several renewable generation and storage projects. The forecasted capital expenditures include approximately 252 MW of solar, 18 MW of wind, and 125 MW of storage, which include projects approved or pending PSCW approval. See the 2026-2030 capital expenditures forecast disclosed in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Annual Report on Form 10-K.

•
Transitioning away from coal. 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. See the 2026-2030 capital expenditures forecast disclosed in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Annual Report on Form 10-K. By the end of 2030, coal is expected to be used only as a backup fuel at the Elm Road Units. By the end of 2032, MGE expects that the Elm Road Units will be fully transitioned away from coal.

Columbia: Operational, regulatory, and environmental regulation considerations have impacted and continue to impact Columbia's generation planning. MGE, as a minority owner, and Columbia's other co-owners continue to evaluate transitioning away from coal and continue to evaluate replacing the generation from Columbia while maintaining electric service reliability. MGE and Columbia's co-owners are exploring converting Columbia to natural gas.

Environmental Initiatives – Natural gas distribution: Building upon our long-standing commitment to providing affordable, sustainable energy, MGE has set a goal to achieve net-zero methane emissions from its natural gas distribution system by 2035. If MGE can accelerate plans to achieve net-zero methane emissions from its natural gas system—through the evolution of new technologies, such as renewable natural gas—it will. MGE is working to reduce overall emissions from its natural gas distribution system in a quick and cost-effective manner. MGE offers two voluntary renewable natural gas programs. The initial program, launched in May 2024, enables customers to offset emissions associated with their natural gas consumption through a mechanism in which MGE purchases renewable thermal credits and retires them on behalf of participating customers. The second program, launched in January 2026, enables customers to inject renewable natural gas produced on the customer's premise into MGE's distribution system. Customers may sell the natural gas to MGE or another third party and may retain or sell to MGE or another third party the associated environmental attributes.

Solar Procurement Disruptions: MGE is monitoring import regulations under the Uyghur Forced Labor Prevention Act and the U.S. Department of Commerce's new solar tariffs. These disruptions have a potential to impact current and future solar projects which may result in an increase in costs or delays in construction timelines. In the event that such disruptions cause costs to exceed the levels approved for specific projects, we have filed, and expect to continue to file, notifications with the PSCW and expect to request recovery of any increases in MGE's future rate proceedings. See "Other Matters" below for additional information on the solar procurement disruptions.

Tariffs: MGE is monitoring the actions of the Trump Administration with respect to certain proposed or recently implemented import tariffs on foreign goods. These tariffs have a potential impact on cost of operations and on current and future capital projects. See "Other Matters" below for additional information on tariffs.

Finan

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-24. Report date: 2025-12-31.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

General

MGE Energy is an investor-owned public utility holding company operating through subsidiaries in five business segments:

•
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,

•
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.

Our primary focus is our core utility customers, which are served by MGE as well as creating long-term value for our shareholders. MGE seeks to meet its customers' expectations for reasonably priced, reliable electric and gas service provided in a responsible manner. That 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. MGE remains focused on reducing reliance on coal over time and expanding ownership of renewable generation to support a cleaner, reliable energy future.

The ownership/leasing structure for our nonregulated energy operations was adopted under applicable state regulatory guidelines for MGE's participation in these generation facilities, consisting principally of a stable return on the equity investment in the new generation facilities over the term of the related leases. The nonregulated energy operations include an ownership interest in two coal-fired generating units in Oak Creek, Wisconsin and a partial ownership of a cogeneration project on the UW-Madison campus. A third party operates the units in Oak Creek, and MGE operates the cogeneration project. Due to the nature of MGE's participation in these facilities, the results of MGE Energy's nonregulated operations are also consolidated into MGE's consolidated financial position and results of operations under applicable accounting standards.

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, 2024, which was filed with the SEC on February 25, 2025.

Executive Overview

•
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 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. 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.

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. Additionally, higher electric residential sales contributed to the increase, partially due to growth in residential customers. Favorable weather conditions further contributed to increased residential sales in 2025.

Gas Utility

Higher gas retail sales in 2025 contributed to higher gas earnings for 2025, 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.

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%. See "Other Matters" below for additional information on the 2024/2025 rate proceeding.

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. The earnings calculation excludes fuel rules adjustments.

work in progress" for projects under construction on the consolidated balance sheets. See "Capital Expenditures" below for additional information on projects.

Source

(In millions)

Share of

Estimated

Costs(a)

Costs Incurred as of December 31, 2025(a)(b)

Solar

584.0

185.4

Wind

73.0

10.7

Battery

224.3

85.1

Storage

22.0

2.7

Other

11.0

0.1

(a)
Excluding AFUDC.

(b)
MGE received specific approval to recover 100% AFUDC. 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.

Deferred Fuel Savings: As of December 31, 2025, MGE deferred $7.1 million of 2025 fuel savings. These costs will be subject to the PSCW's annual review of 2025 fuel costs, expected to be completed during 2026. 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. The PSCW has completed their review of 2024 fuel costs and approved MGE's return of these savings in October 2025. There was no change to the costs to be refunded as a result of the fuel rules proceedings from the amount MGE deferred in 2024.

Tax Update: On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, introducing significant changes to tax credits and compliance requirements. See "Other Matters" below for additional information on the OBBBA.

ATC Return on Equity: As discussed in "Other Matters" below, ATC's authorized ROE, which is used in calculating its rates and revenues, was the subject of a challenge before FERC. A decrease in ATC's ROE could result in lower equity earnings and distributions from ATC in the future. MGE Energy derived approximately 6.6% and 7.4% of net income for 2025 and 2024, respectively, from the investment in ATC.

During 2026, several items may affect our financial condition and results of operations, including:

Future Generation - MGE continues to work toward its goal of net-zero carbon electricity by 2050. Solar, wind, and battery storage projects are a major step toward deep decarbonization and greater use of clean energy sources in pursuit of our goal.

•
Growing renewable generation and storage. MGE is seeking to acquire, or has acquired, joint interests in several renewable generation and storage projects. The forecasted capital expenditures include approximately 252 MW of solar, 18 MW of wind, and 125 MW of storage, which include projects approved or pending PSCW approval. See the 2026-2030 capital expenditures forecast included under "Liquidity and Capital Resources" below for information on those projects.

2026-2030 capital expenditures forecast included under "Liquidity and Capital Resources" below for additional information. By the end of 2030, coal is expected to be used only as a backup fuel at the Elm Road Units. By the end of 2032, MGE expects that the Elm Road Units will be fully transitioned away from coal.

Environmental Initiatives – Natural gas distribution: Building upon our long-standing commitment to providing affordable, sustainable energy, MGE has set a goal to achieve net-zero methane emissions from its natural gas distribution system by 2035. If MGE can accelerate plans to achieve net-zero methane emissions from its natural gas system—through the evolution of new technologies, such as renewable natural gas—it will. MGE is working to reduce overall emissions from its natural gas distribution system in a quick and cost-effective manner. MGE offers two voluntary renewable natural gas programs. The initial program, launched in May 2024, enables customers to offset emissions associated with their natural gas consumption through a mechanism in which MGE purchases renewable thermal credits and retires them on behalf of participating customers. The second program, launched in January 2026, enables customers to inject renewable natural gas produced on the customer's premise into MGE's distribution system; customers may sell the natural gas to MGE or another third party and may retain or sell to MGE or another third party the associated environmental attributes.

Financing and Equity Issuance Plans: As of December 31, 2025, MGE has $230 million of remaining regulatory authority from the PSCW to issue long-term debt to finance authorized utility capital expenditures. In January 2026, MGE issued $90 million of long-term debt. See "Liquidity and Capital Resources" below for additional information. MGE expects to use a portion of the remaining authority during 2026 to finance authorized utility capital expenditures. In 2026, MGE Energy expects to begin issuing new shares of common stock to participants in our Direct Stock Purchase and Dividend Reinvestment Plan. The amount and timing of any financings will be primarily driven by capital investments and cash requirements and will depend upon market conditions, regulatory approvals, and other factors.

Large-Load Growth: Management is seeing growing interest from large‑load customers, including data‑intensive and technology‑focused operations, seeking reliable and scalable electric service in our service territory. Our favorable location, strong regional transmission access, and proximity to major economic and research institutions support this interest. MGE engages early with prospective customers to evaluate load needs, interconnection requirements, and potential system impacts. Although the timing and size of individual projects remain uncertain, these inquiries represent a potential source of incremental and durable load growth.

The following discussion is based on the business segments as discussed in Footnote 22 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report.

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. Sales to the market typically occur when MGE has more generation in the MISO market than are needed for its customer demand. The excess electricity is then sold to other utilities or power marketers in the MISO market. During 2025, market volumes increased compared to 2024, reflecting increase in sales. Additionally, the cost of capacity sold increased, contributing to the revenue generated from increased sales to the market from excess generation and purchases. The revenue generated from these sales is largely offset by fuel rules costs, and do not have a significant impact on net income. 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. 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. Any increase in rates associated with fuel or purchase power costs are generally offset in fuel and purchased power costs and do not have a significant impact on net income.

•
Residential Volume. During 2025, residential sales increased by approximately 5% compared to 2024. This increase was driven by favorable weather conditions and an increase in customers during 2025, compared to the same period in the prior year.

•
Customer fixed and demand charges. During 2025, fixed and demand charges increased $4.9 million primarily attributable to the increase in demand charges for commercial customers.

•
Commercial, industrial, and other-retail/municipal volume. During 2025, there was an approximately 2% increase in commercial sales compared to the same period in the prior year. This increase was driven by more favorable weather conditions and increased use per customer in the current year.

•
Revenue subject to refund. For cost recovery mechanisms, any over-collection of revenues resulting from costs authorized to be collected from customers in rates exceeding actual costs is recorded as a reduction of revenue in the period incurred, as the over-collection is expected to be refunded to customers in a subsequent period. 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.

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.

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. There were no deferred fuel costs recovered during 2025.

Fuel and purchased power costs are generally offset by electric revenue and do not have a significant impact on net income. MGE expects to seek and receive recovery of fuel and purchased power costs 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.

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. 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. 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.

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).

•
Volume. For 2025, retail gas deliveries increased approximately 14% compared to 2024 primarily attributable to unfavorable weather conditions in 2024.

•
Other. Other gas revenues decreased in 2025 compared to 2024 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 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%. 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. 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. Transmission costs represent ATC and MISO network transmission expenses authorized to collect in rates. 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. 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.

Consolidated depreciation expense

Electric depreciation expense increased $4.9 million and gas depreciation expense increased $0.6 million for 2025, compared to 2024. Paris solar was placed in service in December 2024, Darien solar was placed in service in March 2025, and Paris battery was placed in service in June 2025. 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. The PSCW has approved MGE to defer as a regulatory asset or liability, the difference between actual pension and other postretirement costs included in rates and to be recovered or refunded in a future rate proceeding. Pension and other postretirement cost is generally offset by electric and gas revenue and does not have a significant impact on net income.

Nonregulated Energy Operations - MGE Energy and MGE

The nonregulated energy operations are conducted through certain of MGE Energy's subsidiaries: MGE Power Elm Road (the Elm Road Units) and MGE Power West Campus (WCCF), which have been formed to own and lease electric generating capacity to assist MGE. 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 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. 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.

All Other Operations - MGE Energy

Other income

The increase of $0.6 million in other income from all other operations during 2025 compared to 2024, primarily reflects results from investment gains recognized in the current year, from venture capital funds. These venture capital investments support early-stage companies working to advance smart technologies, the customer experience, distributed energy resources, electrification, cybersecurity and other priorities for utility companies, such as greater sustainability. This increase was partially offset by a $2.5 million (pre-tax) voluntary contribution to the Madison Gas and Electric Foundation, MGE's philanthropic arm, in 2025.

Consolidated Income Taxes - MGE Energy and MGE

See Footnote 10 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report for the effective tax rate reconciliation.

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. Due to the contractual agreements for these projects with MGE, the entities are considered VIEs with respect to MGE and their results are consolidated with those of MGE, the primary beneficiary of the VIEs. The following table shows MGE's noncontrolling interest, net of tax, reflected on MGE's consolidated statement of income:

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 Capital Resources

MGE Energy and MGE expect to have adequate liquidity to support future operations and capital expenditures over the next twelve months. Available resources include cash and cash equivalents, operating cash flows, liquid assets, borrowing working capacity under revolving credit facilities, and access to equity and debt capital markets. During the beginning of 2025, MGE Energy issued new shares of common stock to participants in our Direct Stock Purchase and Dividend Reinvestment Plan until May 2025 when it purchased shares in the open market. Beginning in March 2026, MGE Energy expects to issue new shares of common stock to participants in the Direct Stock Purchase and Dividend Reinvestment Plan. MGE Energy also expects to generate funds from operations and both long-term and short-term debt financing. The amount and timing of any financings will be primarily driven by capital investments and cash requirements and will depend upon market conditions, regulatory approvals, and other factors. MGE plans to maintain a capital structure consistent with authorized levels approved by its regulator. See "Credit Facilities" below for information regarding MGE Energy's and MGE's credit facilities.

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 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

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.

Capital Expenditures

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

Gas

38,101

48,003

35,000

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

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

programs, load growth, the timing of any required regulatory approvals, and the adequacy of rate recovery. Actual events may differ materially from these assumptions and result in material changes to those forecasted amounts.

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)

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.

(b)
Excluding AFUDC.

(d)
See Footnote 6 of Notes to Consolidated Financial Statements in Part II, Item 8 of this Report for information on costs incurred.

(e)
Pending approval by the PSCW.

(f)
Estimated costs are expected to exceed PSCW previously approved CA levels. Notifications are provided to the PSCW when costs increase above CA levels. MGE has and will continue to request recovery of the updates in its rate case proceedings.

(g)
The project was awarded with a grant from the U.S. Department of Energy Office of Clean Energy Demonstrations. The grant will reduce the total estimated project expenses. MGE holds a 19% ownership interest in this project and the cost, after grant, is expected to be approximately $16 million.

(h)
In October 2025, MGE and other co-owners filed a joint application with the PSCW for upgrades to the non-regulated Elm Road Units. The project would convert existing coal-fired boilers to natural gas. MGE holds an 8.33% ownership interest in the facility. MGE's estimated cost is approximately $11 million. If approved, the project is expected to be placed in service in 2028.

(i)
In February 2026, MGE executed an asset purchase agreement to acquire 33.4% ownership interest in the RockGen Energy Center, an existing natural gas-fired generating plant near Cambridge, Wisconsin. MGE's estimated cost is approximately $203 million. If approved, the project is expected to be placed in service in 2027.

MGE continues to assess the potential impact of procurement disruptions on current and future generation projects that may result in an increase in costs or delays in construction timelines. In the event that such disruptions cause costs to exceed the levels approved for specific projects, we have filed, and expect to continue to file, notifications with the PSCW and expect to request recovery of any increases in MGE's future rate proceedings. See further information on procurement disruptions discussed earlier under "Executive Overview."

Other local solar and battery storage projects: In 2026 through 2028, electric renewable capital expenditures include local investments in solar generation and battery storage. Forecasted total capital expenditures for those years is approximately $55 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.

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

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.

(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. 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. 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. 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.

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. As of December 31, 2025, approximately $807.2 million was available for the payment of dividends under this covenant. On January 27, 2026, MGE completed a redemption of all outstanding first mortgage bonds, and delivered to the Trustee a satisfaction and discharge which, pursuant to the terms of the Indenture, effectively discharged the Indenture.

MGE Power West Campus has covenanted with the holders of its outstanding senior secured notes not to declare or make distributions to us in the event that, both before and after giving effect to such distribution, its total debt to total capitalization would exceed 0.65 to 1.00 or its projected debt service coverage ratio for the following four fiscal quarters would be less than 1.25 to 1.00. 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.

MGE Power Elm Road has covenanted with the holders of its outstanding senior secured notes not to declare or make distributions to us in the event that, both before and after giving effect to such distribution, its projected debt service coverage ratio for the following four fiscal quarters would be less than 1.25 to 1.00. 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.

Credit 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. The "floating rate" is calculated on a daily basis as the highest of a prime rate and several adjusted interest rate indices (as set forth in the Credit Agreements), subject to a floor of one percent per annum or zero, depending on the credit agreement. The "floating rate" adder ranges from zero to 0.125%. The "Adjusted Term SOFR Rate" is calculated as provided in the Credit Agreements. The "Adjusted Term SOFR Rate" adder ranges from 0.625% to 1.125%.

The credit agreements require the borrower to maintain a ratio of consolidated debt to consolidated total capitalization not to exceed a maximum of 65%. In the case of MGE, the ratio calculation excludes assets, liabilities, revenues, and expenses included in MGE's financial statements as a result of the consolidation of VIEs, such as MGE Power Elm Road and MGE Power West Campus. 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.

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.

Credit Ratings

MGE Energy's and MGE's access to the capital markets, including, in the case of MGE, the commercial paper market, and their respective financing costs in those markets, may depend on the credit ratings of the entity that is accessing the capital markets.

None of MGE Energy's or MGE's borrowing is subject to default or prepayment as a result of a downgrading of credit ratings, although a downgrading of MGE's credit ratings would increase fees and interest charges under both MGE Energy's and MGE's credit agreements and may affect the collateral required to be posted under derivative transactions.

Contractual Obligations and Commercial Commitments for MGE Energy and MGE

MGE Energy's and MGE's contractual obligations as of December 31, 2025, representing future cash obligations that are considered to be firm commitments, are as follows:

Payment Due Within:

Due After

(In thousands)

Total

1 Year

2-3 Years

4-5 Years

5 Years

MGE Energy

Long-term debt(a)

818,115

21,633

80,641

62,036

653,805

Short-term debt(b)

94,527

—

Interest expense(c)

511,030

36,966

69,805

62,978

341,281

Leases(d)

58,686

2,427

3,510

2,218

50,531

Purchase obligations(e)

717,951

91,181

149,317

126,916

350,537

Construction obligations(f)

296,911

175,449

121,462

—

Other obligations(g)

17,602

13,663

1,479

1,127

1,333

Total MGE Energy contractual obligations

2,514,822

435,846

426,214

255,275

1,397,487

MGE

Long-term debt(a)

818,115

21,633

80,641

62,036

653,805

Short-term debt(b)

94,527

—

Interest expense(c)

511,030

36,966

69,805

62,978

341,281

Leases(d)

58,686

2,427

3,510

2,218

50,531

Purchase obligations(e)

717,951

91,181

149,317

126,916

350,537

Construction obligations(f)

296,911

175,449

121,462

—

Other obligations(g)

11,719

7,780

1,479

1,127

1,333

Total MGE contractual obligations

2,508,939

429,963

426,214

255,275

1,397,487

(a)
Long-term debt consisting of unsecured medium-term notes and Industrial Development Revenue Bonds issued by MGE, and private placement debt issued by MGE, MGE Power Elm Road, and MGE Power West Campus. 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. 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. 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. See Footnote 16.c. of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report.

(f)
Construction obligations consist of solar, wind, and storage projects approved.

(g)
Other obligations are primarily related to investment commitments, environmental projects, and uncertain tax positions.

The above amounts do not include any contributions for MGE's pension and postretirement plans. MGE does not expect to need to make any required contributions to the qualified plans for 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. 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. In January 2026, MGE Transco made a $4.5 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.

In January 2026, MGE entered into a private placement Note Purchase Agreement in which it issued $90 million of senior unsecured notes. In January 2026, MGE completed a redemption of all $1.2 million of its outstanding first mortgage bonds, which were the last remaining series of first mortgage bonds outstanding under the Indenture. 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.

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. 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. 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.

Other Matters

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%.

In December 2025, the PSCW approved a settlement agreement for MGE's 2026/2027 rate case. As part of that settlement agreement, the PSCW approved a 0.15% increase for electric rates and a 2.77% increase to gas rates for 2026 and a 3.63% increase for electric rates and a 2.04% increase to gas rates for 2027.

Details related to MGE's 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. The PSCW provides a return on selected CWIP and a cash working capital allowance by adjusting the percentage return on rate base.

(b)
50% of the forecasted 13-month average CWIP for the test periods which earns an AFUDC return. Projects eligible to earn 100% AFUDC are excluded from this balance and discussed further in the Management Discussion and Analysis of Financial Condition and Results of Operations - Significant Events section.

(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.

ATC

MISO transmission owners, including ATC, were previously involved in complaints filed at the FERC challenging the base ROE applicable to MISO transmission owners for historical periods. In October 2024, FERC issued a final order resolving the remaining matters related to these complaints, resulting in a four‑basis‑point reduction to the base ROE applicable to the first complaint period and periods subsequent to September 2016, while reaffirming dismissal of the second complaint. 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. As a result of the October 2024 ruling, during the fourth quarter 2024 earnings in ATC reflected an approximately $0.8 million reduction of the reserve. These matters were fully resolved in 2024 and had no impact on the Company's results of operations, cash flows, or financial condition in 2025.

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. 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. Suppliers for MGE's current solar projects were able to provide the CBP sufficient documentation to meet WRO and UFLPA compliance requirements, however we cannot currently predict what, if any, impact the UFLPA will have on the overall supply of solar panels into the United States and the related impact to timing and cost of solar projects included in our capital plan. In the event that such disruptions cause costs to exceed the levels approved for specific projects, we have filed and expect to continue to file a notification with the PSCW and expect to request recovery of any cost increases in MGE's future rate proceedings.

In January 2025, several more Chinese companies, including five solar supply chain providers, were banned under the UFLPA. MGE continues to ensure its compliance with the UFLPA.

U.S. Department of Commerce - Solar Cells and Modules

In August 2023, the U.S. Department of Commerce issued its final determination on a solar tariff investigation that began in 2022, finding that Chinese manufacturers were circumventing tariffs on solar panels by shipping them through four Southeast Asian countries. A 24-month exemption from tariffs for solar panel and module imports from these four countries was in effect from June 2022 until June 6, 2024. In May 2024, the Biden Administration announced that bifacial solar panels would be subject to safeguard tariffs under Section 201 of the Trade Act of 1974, from which they were previously excluded. President Biden also directed U.S. Trade Representatives to increase tariffs under Section 301 from 25% to 50% on solar cells and modules. This change went into effect in September 2024. In April 2025, the U.S. Department of Commerce issued final determinations indicating that panel cells imported from Cambodia, Malaysia, Thailand, and Vietnam are being unfairly traded. The U.S. International Trade Commission issued a final injury ruling in favor of the tariffs, which went into effect in June 2025. In August 2025, the U.S. Court of International Trade ruled that the two-year moratorium on these duties was illegal and therefore Customs and Border Protection may collect retroactive tariffs on imports that occurred during the moratorium. The case has been appealed to the U.S. Court of Appeals for the Federal Circuit and the order is stayed pending appeal. Furthermore, in late 2025, the Department of Commerce initiated new anti-dumping and countervailing duty investigations into solar imports from India, Indonesia, and Laos. Preliminary determinations for these investigations are expected in early 2026, which may further restrict the availability of alternative supply sources. Additionally, a new 'Section 232' national security investigation into the global polysilicon supply chain was launched in late 2025, which could result in broad, global tariffs on solar components regardless of their country of origin. MGE continues to assess the potential impact of these tariffs on current and future solar projects, which may result in increased costs, delays in construction timelines, or a new and potentially material financial liability due to retroactive tariffs. In the event that such disruptions 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.

Tariffs

U.S. and international trade policies, including tariffs, port fees, trade sanctions, and other import/export regulations, continue to evolve, influenced by geopolitical developments and economic priorities. MGE is proactively evaluating the potential effects of these changes on operating costs and capital investments, particularly for renewable energy and battery storage initiatives. Such policy shifts could lead to higher costs or delays in project timelines.

Tax Update - One Big Beautiful Bill Act

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, introducing significant changes to tax credits and compliance requirements. The OBBBA accelerates the termination of the Clean Electricity Production Tax Credit (PTC) and Clean Electricity Investment Tax Credit (ITC) for wind and solar projects placed in service after December 31, 2027, unless construction begins by July 4, 2026. The phase out of PTCs and ITCs does not apply to energy storage, hydroelectric facilities, nuclear, or any other zero emission technology. The OBBBA imposes stringent restrictions on tax credit eligibility, disallowing credits, and other provisions for projects involving material assistance from specified foreign entities or foreign-influenced entities for projects that begin construction after December 31, 2025. The Treasury Department issued new beginning of construction guidance in August 2025. The bill also increases domestic content requirements. On February 12, 2026, the Treasury Department and the IRS issued Notice 2026-15, providing interim guidance on these restrictions, including the establishment of the Material Assistance Cost Ratio (MACR) and related safe harbors to determine the impact of foreign-sourced components on credit eligibility. MGE has evaluated the impact of the OBBBA and will continue monitoring Treasury Department updates and engaging with industry groups to ensure compliance.

Critical Accounting Estimates - MGE Energy and MGE

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, estimates are evaluated, including those related to regulatory assets and liabilities, unbilled revenues, pension obligations, and income taxes. Estimates are based on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Those values may differ from these estimates under different assumptions or conditions. We believe the following critical accounting estimates affect the more significant judgments used in the preparation of the consolidated financial statements.

Regulatory Assets/Liabilities

Regulatory assets represent costs that have been deferred to future periods when it is probable that the regulator will allow future recovery of those costs through rates. MGE bases its assessment of recovery on precedents established by the regulatory body. Regulatory liabilities represent previous collections from customers that are expected to be refunded to customers in future periods. 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.

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. 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. 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. Consequently, at the end of any month, there exists a quantity of electricity and gas that has been delivered to customers but has not been captured by the meter readings. As a result, management must estimate revenue related to electricity and gas delivered to customers between meter-read dates and the end of the reporting period. 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.

MGE monitors the reasonableness of the unbilled revenue estimate through the review of ratios such as unbilled electric consumption compared to billed electric sales. To confirm the reasonableness of unbilled gas, the estimated unbilled consumption is compared to various other statistics, including percent of gas available for sale, change in unbilled month-to-month and change in unbilled compared to the prior year.

Pension and Other Postretirement Benefit Plans

MGE provides employees with certain retirement (pension) and postretirement (health care and life insurance) benefits. In order to measure the expense and obligations associated with these benefits, management must make a variety of estimates, including discount rates used to value certain liabilities, the expected return on plan assets set aside to fund these costs, the rate of compensation increase, employee turnover rates, retirement rates, health care trends, mortality rates, and other factors. These accounting estimates may change due to the uncertainty attached to the estimate as well as the fact that these estimates are difficult to measure. Different estimates used could result in recognizing different amounts of expense over different periods of time. Recovery in rates is expected.

MGE uses third-party specialists to assist with evaluating its assumptions and measurement of the costs and obligations associated with these retirement benefits. The discount rate and expected return on plan assets are based primarily on available investment yields and the historical performance of plan assets. They are critical accounting estimates because they are subject to management's judgment.

•
Assumed return on assets. This assumption represents the rate of return on plan assets reflecting the average rate of earnings expected on the funds invested (or to be invested) to provide for the benefits included in the projected benefit obligation. 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. 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. MGE uses high-grade bond yields as a benchmark for determining the appropriate discount rate. MGE uses individual spot rates rather than a weighted average of the yield curve spot rates to measure the service cost and interest cost components for net periodic benefit cost. 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. 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.

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. Determination of current-year federal and state income tax will not be settled for years.

Management regularly makes assessments of tax return outcomes relative to financial statement tax provisions and adjusts the tax provisions in the period when facts become final.

Additionally, in determining the current income tax provision, an assessment is completed on temporary differences resulting from differing treatments of items for tax and accounting purposes. 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. 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. 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.