2025 Annual Report

Our dynamic world is more reliant than ever on safe, reliable and affordable energy, delivered by an evolving energy industry. New technologies offer new opportunities to serve customers more sustainably and reliably, and in ways that better meet their needs and preferences and that deliver value.

Your community energy company is delivering future-forward energy—an electric grid that is smart and sustainable, resilient and adaptable. MGE Energy's 2025 Annual Report highlights some of the ways in which the Company is moving forward to serve our dynamic world and to meet our shared goals.

MGE Energy (MGEE)

For detailed financial information, see the 2025 MGE Energy Form 10-K.

To our shareholders

From investing in sustainable generation and battery energy storage to building a more dynamic electric grid, to enhancing the customer experience and equipping our workforce for new challenges, your community energy company is prepared for the future. The theme of our 2025 Annual Report is future-forward energy.

Our utility subsidiary, Madison Gas and Electric (MGE), continues to transform how we serve our customers and communities for today and tomorrow. A future-forward electric grid is sustainable and smart, resilient and adaptable, prepared to meet the needs of all customers while embracing new technologies to optimize the grid for efficiency and customer value.

A dynamic grid for a dynamic world

Top-ranked for electric reliability, your community energy company is growing our use of renewable energy while maintaining our record of reliability. Based on an annual industry survey of more than 75 electric utilities nationwide, MGE has been highly ranked for reliable service for almost 20 years.

MGE remains committed to providing dependable power as we continue to transition our energy supply with more than 40 clean energy generation and battery energy storage projects announced in the last ten years. Plans for other cost-effective generation investment opportunities continue to be evaluated.

As customers electrify their vehicles and automate their homes with smart technologies, our multiyear grid modernization initiative is enabling a more resilient electric distribution grid. By replacing aging infrastructure and enhancing grid monitoring and control technology, we are able to better manage the impact of weather-related outages to reduce their frequency and duration.

Our teams also continue to work with customers to manage their energy use through our demand response programs, such as Charge Ahead for electric vehicles and, for smart thermostats, MGE Connect^®, which will include smart water heaters. By partnering with customers to control their devices remotely, we can reduce peaks in energy use, helping to manage demand for generation resources and, in turn, the impact to long-term customer costs. An optimized, efficient and dynamic grid helps to maintain energy affordability.

Commitment to affordability

Affordable energy is a top priority for MGE. Managing costs to customers helps to ensure our communities continue to grow and to thrive. Throughout the past 10 years, customer rate increases have remained below the rate of inflation. 

In 2025, MGE reached a comprehensive, collaborative agreement with every intervenor party in its rate case. Among other things, the agreement established new annual funding for the next two years to support programs assisting low- to moderate-income customers, reinforcing MGE's longstanding commitment to helping manage energy affordability.

An MGE residential electric customer bill as a percentage of wallet at 1.46% is below the Wisconsin utility peer average of 1.59%. MGE's affordability as a percentage of customer wallet has improved 20% since 2014. 

With the potential for new large‑load customers, including technology‑focused operations, the Company is committed to working with State regulators to establish rate structures that protect existing customers, support economic development, and preserve long-term financial stability and shareholder value. With MGE's favorable location, strong regional transmission access, and proximity to major economic and research institutions, your community energy company continues to see interest from large prospective customers.

An evolving energy supply

Growing our use of carbon-free energy generation is one of the ways in which we continue to work toward net-zero carbon electricity. In 2025, a number of new generation projects began serving MGE electric customers. These investments in cost-effective renewable generation continue to help fuel the Company's asset growth.

In January, MGE's 6-megawatt (MW) Strix Solar project became operational. A third of the Fitchburg facility serves MGE's new community solar program, Shared Solar - Strix. The remaining 4 MW of solar capacity serve all MGE electric customers with local solar.

In March, the 250-MW Darien Solar project in Rock and Walworth counties became operational. MGE owns 25 MW of solar capacity from the Darien project. MGE will own 7.5 MW of battery energy storage from the facility when the battery energy storage system comes online in 2026.

Wisconsin's first large-scale battery storage project came online in June. MGE owns 20 MW of solar capacity and 11 MW of battery storage at the Paris Solar-Battery Park in Kenosha. The addition of battery storage further enhances electric system reliability as MGE transitions to greater use of renewable generation.

MGE also plans to invest in additional natural gas-fired generation to ensure continued reliability. In February 2026, MGE entered an agreement to purchase one-third of the existing natural-gas fired RockGen Energy Center. If the purchase is approved by State regulators, the transaction is expected to close in late 2027.

Natural gas plants help enable the Company's clean energy transition by adding balance to the electric system. Natural gas generation complements intermittent renewable energy because it can be dispatched quickly and at times when it is more challenging for wind or solar generation, such as during periods of extreme cold weather. This makes natural gas a reliable and cost-effective option to serve customers reliably.

Significant capital investment

MGE's strong credit quality helps to enable the Company's significant capital investment to ensure we are future-forward in our service to our customers. MGE maintains the highest credit ratings of any investor-owned combination utility in the nation from Standard & Poor's (S&P) and Moody's.

With approximately $1.5 billion in investment in clean energy expected from 2015 through 2030, renewables and battery storage will play a significant role in helping to advance our goal of net-zero carbon electricity. In the last 10 years, MGE Energy has grown its asset base from approximately $1.7 billion to about $3 billion, resulting in a compound annual growth rate in assets of 5.7%.

Earnings growth

In 2025, we reported GAAP (Generally Accepted Accounting Principles) earnings of $3.72 per share, compared to $3.33 per share in 2024. Earnings for 2025 were positively impacted by an increase in electric investments included in rate base, including the Darien Solar project and the Paris battery energy storage system. Gas net income exhibited steady performance, with minimal variation compared to 2024.

Investment gains from venture capital funds also drove higher nonutility earnings in 2025. These investments support early-stage companies working to advance smart technologies, the customer experience, distributed energy resources, electrification, cybersecurity and other priorities such as greater sustainability.

A dividend milestone

In 2025, the board increased the dividend for the 50th consecutive year, reaching a milestone achieved by only a select number of companies. The board increased the annualized dividend rate by 5.6% to $1.90 per share. In the last five years, shareholders have seen a compound annual growth rate in dividends of 5%.

MGE Energy has paid dividends for more than 110 years. No other Wisconsin utility or utility holding company matches our history of dividend increases. The financial publisher Mergent consistently recognizes MGE Energy as a "Dividend Achiever" for our record of dividend growth.

Innovative energy solutions

Achieving net-zero carbon electricity will require innovative energy solutions. The Columbia Energy Storage Project, the first long-duration energy storage system of its kind to be developed in the United States, received approval from State regulators in June.

The project between the co-owners of the Columbia Energy Center is designed to improve grid stability. It is expected to deliver enough electricity to power approximately 18,000 homes for 10 hours on a single charge. MGE will own about 3 MW of storage capacity from the 18-MW project.

The project will be built near the existing Columbia Energy Center. Construction is expected to begin in 2026 and be completed by the end of 2027.

Locally, MGE has invested in battery energy storage capacity on its distribution grid. In the fall of 2025, MGE installed more than 20 MW of battery storage in the Madison area. This local battery capacity will store energy that can be dispatched at night, in the early morning or whenever needed to maintain reliability—both to manage the grid with greater use of variable renewable generation resources and to meet peak demand periods.

Our community at work

Central to our success is the attraction and retention of a talented workforce. In 2025, our corporate office renovation project began to modernize our General Office Facility (GOF). The GOF, which broke ground in 1981, houses roughly half of MGE's more than 700 employees.

The renovation is designed to enhance the physical space to better meet the needs of our employees and to facilitate the work that they do. With better circulation of air and foot traffic, more natural light, and added multiuse and collaboration spaces, MGE is working in multiple ways to become your community energy company for the future. Investment in a modern workplace and in employee engagement is part of how we continue working toward our goals.

With a commitment to safety and reliability, to meaningful employee and community engagement, and to sound governance and consistent performance, MGE Energy is prepared to deliver future-forward energy for our dynamic world.

Jeffrey M. Keebler
Chairman, President and Chief Executive Officer

Increasing our use of carbon-free energy

Nestled at the edge of farmland and budding housing developments, MGE's Strix Solar quietly feeds cost-effective, carbon-free energy to the Company's distribution grid. Located just south of Madison in Fitchburg, the 6-megawatt (MW) Strix Solar facility came online in early 2025. One-third of the project serves MGE's new community solar program, Shared Solar - Strix.

Shared Solar is an optional community solar program for MGE electric customers who want to further reduce their environmental footprint as the Company works toward net-zero carbon electricity. Participants may subscribe to receive up to half of their annual electricity use through the program. Shared Solar is an easy, affordable option for customers who share the Company's commitment to sustainable energy.

In 2026, MGE launched a new community solar option for large business customers. This program, which will be served by local solar facilities, will help meet the needs and sustainability goals of MGE's business customers by providing affordable renewable energy and supporting the growth of locally generated clean energy.

Growing healthy ecosystems

In the warmer months, passersby may spot a flock of sheep munching on grasses under the facility's solar panels—a scene representative of a partnership through which farming and renewable energy generation work together.

After introducing sheep at its 6-MW Tyto Solar facility in Fitchburg in 2024, MGE expanded its use of "solar grazing." The sheep began grazing in 2025 at two other MGE solar facilities—Strix Solar and MGE's 8-MW Hermsdorf Solar Fields in Madison. The grazing sheep help control ground cover during the growing season, maintaining grass and brush while preventing vegetation from shading the solar panels. The practice also avoids the use of fossil fuels for mowing.

"This partnership is a win-win—the sheep manage the ground cover to keep the grasses below the panels, which helps to keep the panels operating efficiently, and the sheep contribute to the biodiversity of these sites," says John Armstrong, MGE Manager Renewable Engineering – Energy Production.

MGE's solar projects contribute in other ways to advancing healthy ecosystems in the Company's service area. Native plantings at solar sites, including MGE's 22-MW O'Brien Solar Fields, support pollinators such as monarch butterflies, birds and other species. MGE has been increasing its pollinator-friendly habitat at its solar facilities.

In 2025, MGE applied to join the voluntary Monarch Candidate Conservation Agreement with Assurances. The agreement, through the U.S. Fish and Wildlife Service, is designed to increase monarch habitat throughout their migratory range using transportation and utility properties to plant monarch-friendly milkweed and flowering plants. The agreement allows utilities flexibility for further growth and protection against future monarch regulatory obligations in exchange for agreeing to maintain, improve and create habitat in support of monarchs and other pollinators.

Partnerships continue to play an important role in advancing shared sustainability goals. In July, MGE and the Madison Metropolitan Sewerage District (District), the region's wastewater utility serving 24 Madison-area customer communities, announced plans to partner on a 7.5-MW solar array called Nine Springs Solar.

The partnership benefits the community with more than local clean energy. The land surrounding Nine Springs Solar will be maintained with a perennial cover, with the opportunity for harvesting. Maintaining perennial cover helps to preserve farmland and serves to benefit water quality by keeping phosphorus in the soil.

"As a significant energy user, this project allows us to be a part of the solution," says Eric Dundee, District Executive Director. 

MGE will build, own and operate the array and lease the land from the District, with the project expected to become operational in 2027.

Engaging our customers with energy resources and programs

Closer to the city's center, MGE's yearslong partnership with the residential community known as Bayview is helping to advance a more sustainable energy future through energy efficiency. Originally built in 1971, the Bayview complex offers residents affordable housing, essential support services and arts programming.

The MGE Foundation contributed in support of the redevelopment of the more than 50-year-old complex, partnering with others to facilitate energy-efficient design and offering technical support and expertise. The massive, three-year construction project by the nonprofit Bayview Foundation resulted in vibrant and sustainably-built residences and community center.

In August, MGE residential energy engineers Laura Paprocki and Leah Samson visited Bayview's new community center to host an energy workshop for residents. Paprocki and Samson provided energy-saving tips, including recommended thermostat settings and information on how to properly ventilate your space for optimal comfort and air quality. They also discussed heating and cooling and other household appliances in Bayview households, offering tailored and simple, low-cost solutions to manage energy use and costs.

As MGE decarbonizes its electric generation with greater use of renewable energy, the role of energy efficiency, conservation and demand-side management—how and when customers use energy—becomes more powerful in reducing emissions. Programs such as MGE Connect^® allow MGE to partner with customers to manage demand on the grid.

Through MGE Connect, minor temperature adjustments are made to customers' smart thermostats to shift energy use from periods of high demand. Peak demand can occur, for example, during stretches of hot, humid weather when air conditioners run in a majority of homes and businesses.

In 2025, nearly 7,000 households and small businesses participated in the demand response program. Their collective participation allowed MGE to shift enough energy use to power more than 20,000 homes during the season's peak demand periods. Programs like MGE Connect help manage the grid for optimal efficiency, which helps to manage long-term costs to customers.

MGE continues to grow participation in MGE Connect, which is expanding to other devices. MGE plans to add a new smart water heater option in 2026.

Driving innovation for deep decarbonization

Another way MGE works with customers to manage electricity demand is behind the wheel—or rather, behind the charger—as the number of electric vehicles (EVs) on the road continues to grow. The electrification of transportation, the largest source of direct greenhouse gas emissions in the United States, is a key strategy for deep decarbonization.

Demand for electricity to charge EVs can be unpredictable. Customers charge at their convenience. MGE's managed charging program, Charge Ahead, allows the company to remotely control vehicle charging to better align with the needs of the electric grid.

The ability to shift EV charging to lower-cost times and to periods when renewable energy generation is most productive helps MGE prepare for more demand from customers charging their EVs. Demand response programs like Charge Ahead benefit all MGE customers by reducing the need for electric system upgrades and new generation facilities long term.

As your community energy company, MGE works with customers in several ways to help facilitate the growth of EVs and EV charging. The company helps educate customers, businesses and the community at-large about the benefits of driving electric. MGE's EV experts engage customers directly at community events.

One such example is the Madison EV Expo, hosted by MGE. The annual event on the Capitol Square in downtown Madison features a variety of vehicles on display from area dealerships and from local EV owners. From sports cars to sedans to full-size trucks, attendees get a close-up look at various makes and models while learning from people who own, drive or sell EVs.

"Few events offer the kind of opportunity to see all types of EVs, talk with the people who drive or sell them and learn about charging at home or on the go from MGE experts," says MGE Senior Community Services Manager Dave Benforado, who helps to coordinate the expo.

Increasing consumer interest in EVs is one part of the equation when it comes to electrifying transportation. Ensuring EV drivers have easy access to charge their vehicles is another. 

Studies show that about 80% of EV charging happens at home. This can be a challenge for drivers without garages or dedicated parking. To help reduce this potential barrier to EV adoption, MGE is working to expand access to charging—at home, at work and on the go.

Beyond its pole-mounted charging stations and downtown Madison charging hub, MGE also works with residential and business customers as well as local communities to facilitate charging throughout its service territory.

With a commitment to "creating long-term sustainability," MGE business customer Summit Credit Union is helping to advance green transportation with the addition of EV charging stations at two of its branch locations. People can use the chargers while banking and visiting Summit.

"When MGE approached us, seeking a partner to expand access to public charging, we saw this as an exciting, natural fit. Sustainability partnerships help advance our commitment to preserving our community's natural resources," says Kim Sponem, President and CEO of Summit Credit Union.

In 2025, MGE received regulatory approval for its Commercial EV Charging Allowance (CEVCA) program. This new pilot will help commercial customers interested in installing EV charging infrastructure at their sites by providing an allowance to reduce the up-front costs. And, because the additional load or energy usage created through increased EV adoption will expand the base through which utility costs are spread, programs like CEVCA benefit all MGE customers.

For detailed information on board members, see the MGE Energy Proxy Statement.

*Officers of MGE Energy and MGE. All others are MGE officers.

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