Investment in ATC and ATC Holdco

6 Months Ended

Jun. 30, 2023

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, a subsidiary of 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 subsidiary of MGE Energy.

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. MGE Transco recorded the following amounts related to its investment in ATC:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands)	2023		2022		2023		2022
Equity earnings from investment in ATC	$	2,599	$	2,592	$	5,182	$	5,070
Dividends received from ATC		2,042		1,958		4,248		3,959
Capital contributions to ATC		1,601		540		1,958		1,783

ATC Holdco was formed in December 2016. ATC Holdco's transmission development activities have been suspended for the near term.

In July 2023, MGE Transco made a $1.1 million capital contribution to ATC.

ATC's summarized financial data is as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2023			2022			2023			2022
Operating revenues	$	203,776		$	191,605		$	404,202		$	382,604
Operating expenses		(101,517	)		(95,256	)		(200,593	)		(190,747	)
Other income, net		565			344			956			748
Interest expense, net		(33,504	)		(29,059	)		(66,414	)		(57,499	)
Earnings before members' income taxes	$	69,320		$	67,634		$	138,151		$	135,106

MGE receives transmission and other related services from ATC. During the three and six months ended June 30, 2023, MGE recorded $8.5 million and $16.9 million, respectively, for transmission service compared to $7.8 million and $15.7 million for comparable periods in 2022. MGE also provides a variety of operational, maintenance, and project management work for ATC, which is reimbursed by ATC. As of June 30, 2023, and December 31, 2022, MGE had a receivable due from ATC of $5.2 million and $4.8 million, respectively. The receivable is primarily related to transmission interconnection activities at Badger Hollow and Paris solar generation sites. MGE will be reimbursed for these costs after the new generation assets are placed into service.