Investment in ATC

9 Months Ended

Sep. 30, 2011

Investment in ATC Disclosure [Abstract]

4. Investment in ATC - 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. That interest is presently held by MGE Transco, which is jointly owned by MGE Energy and MGE.

MGE Transco has accounted for its investment in ATC under the equity method of accounting. For both the nine months ended September 30, 2011 and 2010, MGE Transco recorded equity earnings from the investment in ATC of $6.4 million. Dividend income received from ATC was $5.0 million for both the nine months ended September 30, 2011 and 2010. In addition, during the nine months ended September 30, 2011 and 2010, MGE Transco made $0.9 million and $0.5 million, respectively, in capital contributions to ATC.

MGE Energy and MGE's investment in ATC as of September 30, 2011 and December 31, 2010 was $56.5 million and $54.2 million, respectively.

During March 2010, MGE sold a parcel of land in Middleton, Wisconsin to ATC for $2.7 million, resulting in a gain of $2.6 million (pretax) in other income. The transaction was approved by the PSCW.

At September 30, 2011, MGE is the majority owner, and MGE Energy, the holding company, is the minority owner of MGE Transco. MGE Energy's proportionate share of the equity and net income of MGE Transco is classified within the MGE financial statements as noncontrolling interest.

ATC's summarized financial data for the three and nine months ended September 30, 2011 and 2010, is as follows:

		Three Months Ended				Nine Months Ended
(In thousands)		September 30,				September 30,
		2011		2010		2011		2010
Operating revenues	$	142,741	$	136,889	$	420,562	$	414,046
Operating expenses		(66,413)		(59,732)		(192,491)		(185,067)
Other expense, net		(173)		(609)		(665)		(1,428)
Interest expense, net		(19,517)		(21,530)		(60,893)		(63,361)
Earnings before members' income taxes	$	56,638	$	55,018	$	166,513	$	164,190