Interim Report: December 2018

December 2018 Interim Report [1,013 kB PDF]

Third Quarter Financial Tables [309 kB PDF]

Technology is paving the way for a more sustainable energy future.

New investments are advancing our clean energy goals. We are building a utility of the future, seizing opportunities to offer new products and services that build customer and shareholder value.

Solar project announced under Renewable Energy Rider

Site of proposed 8-megawatt solar array near Dane County Regional Airport.

Site of proposed 8-megawatt solar array near Dane County Regional Airport.

A solar partnership with Dane County is the first project to be announced under MGE's Renewable Energy Rider (RER). The service, unique to MGE, enables MGE to partner with large customers to develop a renewable energy solution to meet the specific customer's goals.

In October, Dane County announced it will work with MGE to build up to 8 megawatts (MW) of new solar generation on 41 acres next to Dane County Regional Airport. MGE will own the array, lease the land from the county and sell the energy to Dane County, which has the goal of 100% renewable energy for its operations.

Under the RER, the customer is responsible for the costs of the renewable generation and any distribution costs to deliver the energy. The innovative model is one way to grow renewable energy in MGE's service territory.

The project builds upon MGE's history of partnering with Dane County. MGE purchases electricity generated from methane at the Dane County landfill and from a manure digester.

The contract between MGE and Dane County will need to be approved by state regulators. If approved, construction is expected to begin in 2019.

The proposal is the third solar project announced this year. In late May, MGE announced plans to partner with another Wisconsin utility, Wisconsin Public Service, to build two large-scale solar projects in Wisconsin. Combined, the two projects will generate 300 MW of electricity. MGE's share of the solar energy produced will power about 33,000 households.

MGE will own 50 MW of the Badger Hollow Solar Farm in Iowa County and 50 MW of Two Creeks Solar in Manitowoc and Kewaunee counties. The projects deliver cost-effective, zero-emissions generation. Renewable generation has no fuel costs, which avoids potential future cost increases.

If approved by state regulators, construction is expected to begin by spring 2019. Commercial operation of both projects would begin by the end of 2020. MGE's investment for both projects is expected to be approximately $130 million.

Third-quarter earnings

MGE Energy reported in November third-quarter earnings of $29.5 million, or 85 cents per share, compared to $26.6 million, or 77 cents per share, for the same period last year.

Electric net income increased in the third quarter due to a 3.5% increase in electric retail sales resulting from warmer weather, particularly in August, compared to cooler weather for the same month in 2017. The average temperature in August was 72 degrees compared to 67 degrees in 2017.

Tax updates

Investors directly registered with MGE Energy: If you received MGE Energy dividends during 2018, the 1099-DIV tax information will be mailed with your December dividend payment notification. It will also be available to print at computershare.com.

For tax information regarding your sale of MGE Energy shares, the required tax information will be mailed on or before Feb. 15, 2019.

Investors owning shares through a brokerage firm: Your broker will provide the necessary tax forms. Please contact your broker if you have any questions.

New wind farm nearing completion

A rotor and nacelle rest next to one of Saratoga's towers.

A rotor and nacelle rest next to one of Saratoga's towers.

MGE's Saratoga wind farm in northeast Iowa, about 200 miles west of Madison, Wis., is expected online in early 2019.

Crews began in fall erecting the wind farm's 33 Vestas turbines after roads, foundations and the substation were completed.

Saratoga will generate enough electricity to power about 47,000 households. The $108 million project will be MGE's largest and most efficient wind farm.

Lobbying updates

We monitor federal, state and local legislation and regulations. On behalf of our regulated utility, MGE, the company has lobbyists who advocate positions that are in the best interest of our customers and shareholders.

Federal lobbying efforts: We employ the lobbying firm Michael Best Strategies, LLC, which files lobbying reports for its activities on our behalf with the U.S. House of Representatives and the U.S. Senate.

State lobbying efforts: The Wisconsin Ethics Commission requires lobbying reports be filed every six months detailing an organization's time, expenses and the legislation or proposals lobbied.

Local lobbying efforts: The City of Madison posts each person registered to lobby and an expense statement on behalf of that person or organization. MGE typically does not incur lobbying expenses with the city at a level that would trigger a detailed report. If it does, information on its efforts would be available on the city's website.

Reports of the company's lobbying activities can be found online. For links to access these reports, visit mgeenergy.com/lobbying.

LovEV

New online resources

The electrification of transportation is one of MGE's key strategies for deep decarbonization. Facilitating the growth of electric vehicles (EVs) also will help to enable future market growth.

MGE has launched a new resource for customers to discover why "there's a lot to love" about EVs. LovEV highlights available models, explains charging options, and details cost and environmental savings. Plus, customers can learn about what it's like to drive an EV. LovEV is an easy, one-stop online resource for drivers exploring EVs. Visit mge.com/LovEV to discover the great reasons to "go electric."

EEI

Sustainability reporting
MGE is participating in the Edison Electric Institute's (EEI) environmental, social, governance (ESG) and sustainability reporting template. The new industry tool enhances transparency and disclosure by offering meaningful, easily accessible and relevant information for investors and other stakeholders.

EEI, which represents all U.S. investor-owned electric companies, developed the voluntary, industry-specific template to offer more uniform and consistent reporting of data and information from the electric sector. It includes data related to MGE's energy portfolio (generation and capacity), emissions, capital expenditures, and human and natural resources. MGE's template and its 2018 Environmental and Sustainability Report are available at mgeenergy.com/environment.

Jeffrey M. Keebler, Chairman, President and CEO

Jeffrey M. Keebler, Chairman, President and CEO