Cover Table of Contents 2008 Highlights Letter to our Shareholders Letter to our Shareholders (2) Letter to our Shareholders (3) Letter to our Shareholders (4) Building Shareholder Value Building Shareholder Value (2) Responding to our Customers Responding to our Customers (2) Growing A Healthy Economy Growing A Healthy Economy (2) Serving Our Communities Serving Our Communities (2) Income Statements Cash Flow Statements Balance Sheets Capitalization Statements Five—Year Total Return Directors Officers Shareholder Information Corporate Profile Back Cover

Renewable energy leader. MGE now has the highest green pricing participation rate of any investor-owned utility in the country. About 10% of our residential customers purchase clean wind and solar energy.

Through our expanded Green Power Tomorrow program, approximately 12,000 residential customers buy renewable energy. Most customers choose to buy enough green power to offset 100% of the carbon dioxide emissions from their electricity use. In addition, green energy sales to our business customers has increased 10 fold.

In response to our customers, we expanded our wind capacity by 12 times and launched a new solar-energy program.

Partners address climate change. We are giving customers concerned about global climate change the tools they need to reduce their carbon impacts and save energy. CO2gether.org is an innovative Web site that allows our customers and others to measure, track and manage the carbon dioxide (CO2) emitted from their energy use.

Through the Web site, customers can collaborate and learn from each other. People also can track their transportation use. The Web site was developed by MGE, 1000 Friends of Wisconsin and the University of Wisconsin-Madison Center for Sustainability and the Global Environment.

Working on the new Web site CO2gether.org are (left to right) Brad Nordeng, an MGE Web services manager, Anne Shudy Palmer of the University of Wisconsin-Madison and Sonjia Short, an MGE communications manager.

Solar energy. MGE is working together with customers in a new pilot program, which supports the development of solar power. MGE's Clean Power Partners program encourages customers to install solar photovoltaic systems on their homes or businesses and then sell the energy back to MGE. Since the launch in 2008, we doubled the capacity of the program to meet customer demand. The solar energy is part of our overall green pricing program.

Jeff Ford, an MGE market analyst, meets with Becky Steinhoff, director of the Goodman Community Center in Madison. The center installed a 10-kilowatt solar system on the roof of its new gym and joined the Clean Power Partners program.

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