Investment in ATC and ATC Holdco

9 Months Ended

Sep. 30, 2018

Equity Method Investments and Joint Ventures [Abstract]

Investment in ATC and ATC Holdco - MGE Energy and MGE.

ATC owns and operates electric transmission facilities primarily in Wisconsin. MGE received an interest in ATC when it, like other Wisconsin electric utilities, contributed its electric transmission facilities to ATC as required by Wisconsin law. That interest is presently held by MGE Transco, which, since December 1, 2016, is owned by MGE Energy. ATC Holdco was formed by several members of ATC, including MGE Energy, to pursue electric transmission development and investments outside of Wisconsin. The ownership interest in ATC Holdco is held by MGEE Transco, a wholly-owned subsidiary of MGE Energy.

As of September 30, 2018, and December 31, 2017, MGE Transco held a 3.6% ownership interest in ATC. As of September 30, 2018, and December 31, 2017, MGEE Transco held a 4.4% ownership interest in ATC Holdco.

MGE Transco and MGEE Transco have accounted for their investments in ATC and ATC Holdco, respectively, under the equity method of accounting. Equity earnings from investments are recorded as "Other income" on the consolidated statements of income of MGE Energy. For the three and nine months ended September 30, 2018 and 2017, MGE Transco recorded the following:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
(In thousands)		2018		2017		2018		2017
Equity earnings from investment in ATC	$	1,672	$	2,338	$	6,113	$	7,432
Dividends from ATC^(a)		1,581		2,070		4,540		4,070
Capital contributions to ATC		533		710		2,308		3,018

(a) MGE Transco recorded a $2.3 million and $2.1 million dividend receivable from ATC as of December 31, 2017 and 2016, respectively. A cash dividend was received in January of each of the proceeding years. MGE Transco recorded a $1.6 million dividend receivable from ATC as of September 30, 2018. A cash dividend was received in October 2018.

ATC Holdco was formed in December 2016. In the near term, it is expected that ATC Holdco will be pursuing transmission development opportunities that typically have long development and investment lead times before becoming operational. During the three and nine months ended September 30, 2018, MGEE Transco recorded capital contributions of $0.1 million and $0.3 million, respectively, to ATC Holdco. During the nine months ended September 30, 2017, MGEE Transco recorded capital contributions of $0.7 million to ATC Holdco. During the three months ended September 30, 2017, MGEE Transco recorded no capital contributions to ATC Holdco.

In October 2018, MGE Transco made a $0.5 million capital contribution to ATC and MGEE Transco made a $0.1 million contribution to ATC Holdco.

ATC's summarized financial data for the three and nine months ended September 30, 2018 and 2017, is as follows:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
(In thousands)		2018		2017		2018		2017
Operating revenues	$	170,341	$	171,123	$	501,276	$	522,402
Operating expenses		(87,959)		(85,372)		(264,326)		(251,042)
Other income, net		439		1,272		2,070		3,043
Interest expense, net		(27,754)		(28,440)		(82,411)		(81,690)
Earnings before members' income taxes	$	55,067	$	58,583	$	156,609	$	192,713

MGE receives transmission and other related services from ATC. During the three and nine months ended September 30, 2018, MGE recorded $7.2 million and $21.7 million, respectively, for transmission services received compared to $7.3 million and $21.9 million for the comparable periods in 2017. MGE also provides a variety of operational, maintenance, and project management services for ATC, which is reimbursed by ATC. As of September 30, 2018, and December 31, 2017, MGE had a receivable due from ATC of $0.1 million and $0.2 million, respectively.