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Investment in ATC

9 Months Ended

Sep. 30, 2013

Equity Method Investments and Joint Ventures [Abstract]

3. 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 the nine months ended September 30, 2013 and 2012, MGE Transco recorded equity earnings from the investment in ATC of $7.0 million and $6.8 million, respectively. Dividends received from ATC were $5.5 million and $5.3 million for the nine months ended September 30, 2013 and 2012, respectively. In addition, during the nine months ended September 30, 2013 and 2012, MGE Transco made $1.1 million and $1.8 million in capital contributions to ATC, respectively. On October 31, 2013, MGE Transco made a $0.4 million capital contribution to ATC.

MGE Transco's investment in ATC as of September 30, 2013 and December 31, 2012 was $63.6 million and $61.0 million, respectively.

At September 30, 2013, 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, 2013 and 2012, is as follows:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
(In thousands)		2013		2012		2013		2012
Operating revenues	$	160,480	$	150,303	$	464,345	$	450,136
Operating expenses		(77,595)		(68,813)		(217,240)		(210,139)
Other income (expense), net		917		(5)		585		(832)
Interest expense, net		(21,136)		(20,983)		(63,232)		(61,260)
Earnings before members' income taxes	$	62,666	$	60,502	$	184,458	$	177,905

- Definition

The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.

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