MGE Energy, Inc.

What they do

MGE Energy generates and distributes electricity to 170,000 customers in Dane County, Wis., and purchases and distributes natural gas to 180,000 customers in seven south-central and western Wisconsin counties. The company operates through Electric Utility, Gas Utility, Nonregulated Energy, and Transmission Investments segments, with electric service as the largest source of earnings.

Revenue drivers

• Electric Utility — Largest segment; 2025 net income of $85.8M, driven by rate base growth from approved electric investments and higher residential sales from customer growth and favorable weather.
• Gas Utility — 2025 net income of $16.3M; gas retail sales rose ~14% year-over-year, helped by an ~18% increase in heating degree days.
• Nonregulated Energy — 2025 net income of $24.8M; includes returns from venture capital funds focused on energy technologies.
• Transmission Investments — 2025 net income of $9.5M, reflecting ownership in regional transmission assets.

Recent performance

For Q2 2026, MGE Energy reported net income of $33.4M ($0.89 diluted EPS), up from $26.5M ($0.72) in Q2 2025. Six-month 2026 net income was $81.8M ($2.21 diluted EPS) versus $68.1M ($1.86) in the prior-year period. The quarter benefited from $3.9M of investment gains, including venture capital returns. Full-year 2025 net income was $135.9M ($3.72 diluted EPS), compared to $120.6M ($3.33) in 2024.

Strategy

MGE is transitioning away from coal, expecting Elm Road Units to use coal only as backup by 2030 and fully transition away by 2032; Columbia is being evaluated for conversion to natural gas. The company is building large solar, wind, and battery projects, with $584.0M in solar, $224.3M in battery, $73.0M in wind, and $22.0M in storage estimated costs. It aims for net-zero methane emissions from its natural gas distribution system by 2035, offering voluntary renewable natural gas programs. MGE is also pursuing large-load customer growth, including data-intensive and technology operations, and has $140M of remaining regulatory authority to issue long-term debt for utility capital expenditures.

Risks

• Regulatory and rate recovery — Future earnings depend on PSCW approvals for rate recovery; the 2024/2025 rate order includes an earnings sharing mechanism that may require customer refunds above certain ROE thresholds.
• Solar procurement and tariff disruptions — Import regulations under the Uyghur Forced Labor Prevention Act and new U.S. solar tariffs could increase costs or delay solar projects; management may seek recovery in future rate proceedings.
• Coal transition and environmental regulation — Operational, regulatory, and environmental considerations at Columbia and Elm Road Units could affect generation planning, costs, and reliability.
• Weather and economic conditions — Earnings are sensitive to weather (heating/cooling degree days) and local economic conditions that affect customer demand and sales.

Outlook

Management expects to use a portion of the remaining $140M long-term debt authority during 2026 to finance authorized utility capital expenditures. The pace and timing of future financings will depend on capital investments, cash requirements, market conditions, and regulatory approvals. Large-load customer interest, particularly from data-intensive and technology-focused operations, is seen as a potential source of incremental and durable load growth, though project timing and size remain uncertain. MGE will also continue to monitor the 2025 fuel cost review, with $7.1M of deferred fuel savings subject to PSCW review expected in 2026.