10-Q

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended:

March 31, 2018

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _______________ to _______________

Commission File No.	Name of Registrant, State of Incorporation, Address of Principal Executive Offices, and Telephone No.	IRS Employer Identification No.
000-49965	MGE Energy, Inc. (a Wisconsin Corporation) 133 South Blair Street Madison, Wisconsin 53788 (608) 252-7000 mgeenergy.com	39-2040501
000-1125	Madison Gas and Electric Company (a Wisconsin Corporation) 133 South Blair Street Madison, Wisconsin 53788 (608) 252-7000 mge.com	39-0444025

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days: Yes [X] No [ ]

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web sites, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files):

Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

	Large Accelerated Filer	Accelerated Filer	Non-accelerated Filer	Smaller Reporting Company	Emerging Growth Company
MGE Energy, Inc.	X
Madison Gas and Electric Company			X

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

MGE Energy, Inc., and Madison Gas and Electric Company: Yes [ ] No [X]

Number of Shares Outstanding of Each Class of Common Stock as of April 30, 2018
MGE Energy, Inc.	Common stock, $1.00 par value, 34,668,370 shares outstanding.
Madison Gas and Electric Company	Common stock, $1.00 par value, 17,347,894 shares outstanding (all of which are owned beneficially and of record by MGE Energy, Inc.).

1

Table of Contents

2

PART I. FINANCIAL INFORMATION.

Filing Format

This combined Form 10-Q is being filed separately by MGE Energy, Inc. (MGE Energy) and Madison Gas and Electric Company (MGE). MGE is a wholly owned subsidiary of MGE Energy and represents a majority of its assets, liabilities, revenues, expenses, and operations. Thus, all information contained in this report relates to, and is filed by, MGE Energy. Information that is specifically identified in this report as relating solely to MGE Energy, such as its financial statements and information relating to its nonregulated business, does not relate to, and is not filed by, MGE. MGE makes no representation as to that information. The terms "we" and "our," as used in this report, refer to MGE Energy and its consolidated subsidiaries, unless otherwise indicated.

Forward-Looking Statements

This report, and other documents filed by MGE Energy and MGE with the Securities and Exchange Commission (SEC) from time to time, contain forward-looking statements that reflect management's current assumptions and estimates regarding future performance and economic conditions—especially as they relate to economic conditions, future load growth, revenues, expenses, capital expenditures, financial resources, regulatory matters, and the scope and expense associated with future environmental regulation. These forward-looking statements are made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. Words such as "believe," "expect," "anticipate," "estimate," "could," "should," "intend," "will," and other similar words generally identify forward-looking statements. Both MGE Energy and MGE caution investors that these forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from those projected, expressed, or implied.

The factors that could cause actual results to differ materially from the forward-looking statements made by a registrant include (a) those factors discussed in the registrants' 2017 Annual Report on Form 10-K: Item 1A. Risk Factors, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, as updated by Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations in this report, and Item 8. Financial Statements and Supplementary Data – Note 17, as updated by Part I, Item 1. Financial Statements – Note 9 in this report, and (b) other factors discussed herein and in other filings made by that registrant with the SEC.

Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this report. MGE Energy and MGE undertake no obligation to release publicly any revision to these forward-looking statements to reflect events or circumstances after the date of this report, except as required by law.

Where to Find More Information

The public may read and copy any reports or other information that MGE Energy and MGE file with the SEC at the SEC's public reference room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. These documents also are available to the public from commercial document retrieval services, the website maintained by the SEC at sec.gov, MGE Energy's website at mgeenergy.com, and MGE's website at mge.com. Copies may be obtained from our websites free of charge. Information contained on MGE Energy's and MGE's websites shall not be deemed incorporated into, or to be a part of, this report.

3

Definitions, Abbreviations, and Acronyms Used in the Text and Notes of this Report

Abbreviations, acronyms, and definitions used in the text and notes of this report are defined below.

MGE Energy and Subsidiaries:
CWDC	Central Wisconsin Development Corporation
MAGAEL	MAGAEL, LLC
MGE	Madison Gas and Electric Company
MGE Energy	MGE Energy, Inc.
MGE Power	MGE Power, LLC
MGE Power Elm Road	MGE Power Elm Road, LLC
MGE Power West Campus	MGE Power West Campus, LLC
MGE Services	MGE Services, LLC
MGE State Energy Services	MGE State Energy Services, LLC
MGE Transco	MGE Transco Investment, LLC
MGEE Transco	MGEE Transco, LLC
Other Defined Terms:
AFUDC	Allowance for Funds Used During Construction
ANPR	Advance Notice of Public Rulemaking
ATC	American Transmission Company LLC
ATC Holdco	ATC Holdco, LLC
Blount	Blount Station
CAVR	Clean Air Visibility Rule
CCR	Coal Combustion Residual
CNG	Compressed Natural Gas
Codification	Financial Accounting Standards Board Accounting Standards Codification
Columbia	Columbia Energy Center
CPP	Clean Power Plan
CSAPR	Cross-State Air Pollution Rule
Dth	Dekatherms, a quantity measure used in respect of natural gas
EGUs	Electric Generating Units
Electric margin	Electric revenues less fuel for electric generation and purchase power costs
Elm Road Units	Elm Road Generating Station
EPA	United States Environmental Protection Agency
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
FTR	Financial Transmission Rights
GAAP	Generally Accepted Accounting Principles
Gas margin	Gas revenues less cost of gas sold
GHG	Greenhouse Gas
Heating degree days (HDD)	Measure of the extent to which the average daily temperature is below 65 degrees Fahrenheit, which is considered an indicator of possible increased demand for energy to provide heating
IRS	Internal Revenue Service
kWh	Kilowatt-hour, a measure of electric energy produced
MISO	Midcontinent Independent System Operator (a regional transmission organization)
MW	Megawatt, a measure of electric energy generating capacity
MWh	Megawatt-hour, a measure of electric energy produced
NAAQS	National Ambient Air Quality Standards
NOx	Nitrogen Oxides
PGA	Purchased Gas Adjustment clause, a regulatory mechanism used to reconcile natural gas costs recovered in rates to actual costs
PPA	Purchased Power Agreement
PSCW	Public Service Commission of Wisconsin
Riverside	Riverside Energy Center
ROE	Return on Equity

4

SCR	Selective Catalytic Reduction
SEC	Securities and Exchange Commission
SO2	Sulfur Dioxide
Stock Plan	Direct Stock Purchase and Dividend Reinvestment Plan of MGE Energy
Tax Act	Tax Cuts and Jobs Act
UW	University of Wisconsin at Madison
VIE	Variable Interest Entity
WCCF	West Campus Cogeneration Facility
Working capital	Current assets less current liabilities
WPL	Wisconsin Power and Light Company, a subsidiary of Alliant Energy Corporation
XBRL	eXtensible Business Reporting Language

5

Item 1. Financial Statements.

MGE Energy, Inc.

Consolidated Statements of Income (unaudited)

(In thousands, except per-share amounts)

			Three Months Ended                             March 31,
			2018		2017
	Operating Revenues:
	Electric revenues	$	94,867	$	98,397
	Gas revenues		62,765		58,426
	Total Operating Revenues		157,632		156,823
	Operating Expenses:
	Fuel for electric generation		11,900		12,199
	Purchased power		17,033		15,354
	Cost of gas sold		39,626		35,784
	Other operations and maintenance		44,393		43,764
	Depreciation and amortization		13,623		12,959
	Other general taxes		4,869		4,927
	Total Operating Expenses		131,444		124,987
	Operating Income		26,188		31,836
	Other income, net		4,919		3,525
	Interest expense, net		(4,739)		(4,894)
	Income before income taxes		26,368		30,467
	Income tax provision		(6,367)		(11,167)
	Net Income	$	20,001	$	19,300
	Earnings Per Share of Common Stock
	(basic and diluted)	$	0.58	$	0.56
	Dividends per share of common stock	$	0.323	$	0.308
	Average Shares Outstanding
	(basic and diluted)		34,668		34,668
The accompanying notes are an integral part of the above unaudited consolidated financial statements.

MGE Energy, Inc.

Consolidated Statements of Comprehensive Income (unaudited)

(In thousands)

			Three Months Ended
			March 31,
			2018		2017
	Net Income	$	20,001	$	19,300
	Other comprehensive income, net of tax:
	Unrealized gain (loss) on available-for-sale securities, net of
	tax ($- and ($65))		-		97
	Comprehensive Income	$	20,001	$	19,397
The accompanying notes are an integral part of the above unaudited consolidated financial statements.

6

MGE Energy, Inc.

Consolidated Statements of Cash Flows (unaudited)

(In thousands)

		Three Months Ended
		March 31,
		2018		2017
Operating Activities:
Net income	$	20,001	$	19,300
Items not affecting cash:
Depreciation and amortization		13,623		12,959
Deferred income taxes		(1,793)		(3,732)
Provision for doubtful receivables		264		254
Employee benefit plan (credit) cost		(561)		202
Equity earnings in ATC		(2,451)		(2,608)
Other items		(152)		641
Changes in working capital items:
Decrease in current assets		25,208		27,124
Decrease in current liabilities		(7,771)		(9,318)
Dividends from ATC		2,348		2,072
Cash contributions to pension and other postretirement plans		(1,319)		(7,168)
Other noncurrent items, net		(419)		1,526
Cash Provided by Operating Activities		46,978		41,252
Investing Activities:
Capital expenditures		(37,631)		(16,117)
Capital contributions to investments		(1,877)		(2,939)
Other		(35)		928
Cash Used for Investing Activities		(39,543)		(18,128)
Financing Activities:
Cash dividends paid on common stock		(11,181)		(10,660)
Repayment of long-term debt		(1,103)		(31,080)
Issuance of long-term debt		-		40,000
Repayments of short-term debt		(1,000)		-
Other		-		(289)
Cash Used for Financing Activities		(13,284)		(2,029)
Change in cash, cash equivalents, and restricted cash		(5,849)		21,095
Cash, cash equivalents, and restricted cash at beginning of period		112,094		101,633
Cash, cash equivalents, and restricted cash at end of period	$	106,245	$	122,728
Supplemental disclosures of cash flow information:
Significant noncash investing activities:
Accrued capital expenditures	$	4,706	$	6,804
The accompanying notes are an integral part of the unaudited consolidated financial statements.

7

MGE Energy, Inc.

Consolidated Balance Sheets (unaudited)

(In thousands)

		March 31,	December 31,
ASSETS		2018		2017
Current Assets:
Cash and cash equivalents	$	101,157	$	107,952
Accounts receivable, less reserves of $2,804 and $2,840, respectively		43,307		42,299
Other accounts receivable, less reserves of $317 and $335, respectively		5,851		9,440
Unbilled revenues		25,471		31,400
Materials and supplies, at average cost		23,554		22,614
Fuel for electric generation, at average cost		9,478		8,256
Stored natural gas, at average cost		3,686		12,923
Prepaid taxes		14,956		26,535
Regulatory assets - current		8,721		7,888
Assets held for sale		1,383		8,817
Other current assets		11,176		12,507
Total Current Assets		248,740		290,631
Other long-term receivables		4,449		4,788
Regulatory assets		140,218		142,567
Pension and other postretirement benefit asset		9,631		7,336
Other deferred assets and other		2,150		731
Property, Plant, and Equipment:
Property, plant, and equipment, net		1,290,148		1,283,313
Construction work in progress		76,066		58,044
Total Property, Plant, and Equipment		1,366,214		1,341,357
Investments		72,176		67,772
Total Assets	$	1,843,578	$	1,855,182
LIABILITIES AND CAPITALIZATION
Current Liabilities:
Long-term debt due within one year	$	24,477	$	24,452
Short-term debt		3,000		4,000
Accounts payable		35,026		47,645
Accrued interest and taxes		4,497		5,602
Accrued payroll related items		8,390		12,244
Regulatory liabilities - current		12,325		5,633
Derivative liabilities		8,950		8,180
Other current liabilities		9,565		18,758
Total Current Liabilities		106,230		126,514
Other Credits:
Deferred income taxes		224,309		225,130
Investment tax credit - deferred		893		918
Regulatory liabilities		157,890		154,153
Accrued pension and other postretirement benefits		69,030		69,088
Derivative liabilities		32,340		33,990
Other deferred liabilities and other		68,746		69,041
Total Other Credits		553,208		552,320
Capitalization:
Common shareholders' equity		787,007		778,187
Long-term debt		397,133		398,161
Total Capitalization		1,184,140		1,176,348
Commitments and contingencies (see Footnote 9)
Total Liabilities and Capitalization	$	1,843,578	$	1,855,182
The accompanying notes are an integral part of the above unaudited consolidated financial statements.

8

MGE Energy, Inc.

Consolidated Statements of Common Equity (unaudited)

(In thousands, except per-share amounts)

									Accumulated
					Additional				Other
	Common Stock				Paid-in		Retained		Comprehensive
	Shares		Value		Capital		Earnings		Income/(Loss)		Total
2017
Beginning balance - December 31, 2016	34,668	$	34,668	$	316,268	$	372,950	$	202	$	724,088
Net income							19,300				19,300
Other comprehensive income									97		97
Common stock dividends declared
($0.308 per share)							(10,660)				(10,660)
Ending balance - March 31, 2017	34,668	$	34,668	$	316,268	$	381,590	$	299	$	732,825
2018
Beginning balance - December 31, 2017	34,668	$	34,668	$	316,268	$	426,874	$	377	$	778,187
Cumulative effect of new accounting principle							377		(377)		-
Beginning balance - adjusted							427,251		-		778,187
Net income							20,001				20,001
Common stock dividends declared
($0.323 per share)							(11,181)				(11,181)
Ending balance - March 31, 2018	34,668	$	34,668	$	316,268	$	436,071	$	-	$	787,007
The accompanying notes are an integral part of the above unaudited consolidated financial statements.

9

Madison Gas and Electric Company

Consolidated Statements of Income (unaudited)

(In thousands)

			Three Months Ended
			March 31,
			2018		2017
	Operating Revenues:
	Electric revenues	$	94,867	$	98,401
	Gas revenues		62,765		58,435
	Total Operating Revenues		157,632		156,836
	Operating Expenses:
	Fuel for electric generation		11,900		12,201
	Purchased power		17,033		15,356
	Cost of gas sold		39,626		35,793
	Other operations and maintenance		44,187		43,395
	Depreciation and amortization		13,623		12,959
	Other general taxes		4,869		4,927
	Income tax provision		5,524		10,265
	Total Operating Expenses		136,762		134,896
	Operating Income		20,870		21,940
	Other Income and Deductions:
	AFUDC - equity funds		595		271
	Income tax provision		(57)		(44)
	Other income, net		1,902		998
	Total Other Income and Deductions		2,440		1,225
	Income before interest expense		23,310		23,165
	Interest Expense:
	Interest on long-term debt		5,206		5,043
	Other interest, net		49		31
	AFUDC - borrowed funds		(201)		(92)
	Net Interest Expense		5,054		4,982
	Net Income	$	18,256	$	18,183
	Less Net Income Attributable to Noncontrolling Interest, net of tax		(5,806)		(5,389)
	Net Income Attributable to MGE	$	12,450	$	12,794
The accompanying notes are an integral part of the above unaudited consolidated financial statements.

Madison Gas and Electric Company

Consolidated Statements of Comprehensive Income (unaudited)

(In thousands)

			Three Months Ended
			March 31,
			2018		2017
	Net Income	$	18,256	$	18,183
	Other comprehensive income, net of tax:
	Unrealized loss on available-for-sale securities, net of
	tax ($- and $4)		-		(6)
	Comprehensive Income	$	18,256	$	18,177
	Less: Comprehensive Income Attributable to Noncontrolling
	Interest, net of tax		(5,806)		(5,389)
	Comprehensive Income Attributable to MGE	$	12,450	$	12,788
The accompanying notes are an integral part of the above unaudited consolidated financial statements.

10

Madison Gas and Electric Company

Consolidated Statements of Cash Flows (unaudited)

(In thousands)

		Three Months Ended
		March 31,
		2018		2017
Operating Activities:
Net income	$	18,256	$	18,183
Items not affecting cash:
Depreciation and amortization		13,623		12,959
Deferred income taxes		(2,229)		(4,242)
Provision for doubtful receivables		264		254
Employee benefit plan (credit) cost		(561)		202
Other items		(17)		690
Changes in working capital items:
Decrease in current assets		24,779		26,166
Decrease in current liabilities		(5,749)		(9,022)
Cash contributions to pension and other postretirement plans		(1,319)		(7,168)
Other noncurrent items, net		(468)		1,488
Cash Provided by Operating Activities		46,579		39,510
Investing Activities:
Capital expenditures		(37,631)		(16,117)
Other		(198)		158
Cash Used for Investing Activities		(37,829)		(15,959)
Financing Activities:
Cash dividends paid to parent by MGE		-		(15,000)
Distributions to parent from noncontrolling interest		(7,500)		(5,500)
Repayment of long-term debt		(1,103)		(31,080)
Issuance of long-term debt		-		40,000
Repayments of short-term debt		(1,000)		-
Other		-		(289)
Cash Used for Financing Activities		(9,603)		(11,869)
Change in cash, cash equivalents, and restricted cash		(853)		11,682
Cash, cash equivalents, and restricted cash at beginning of period		10,093		16,442
Cash, cash equivalents, and restricted cash at end of period	$	9,240	$	28,124
Supplemental disclosures of cash flow information:
Significant noncash investing activities:
Accrued capital expenditures	$	4,706	$	6,804
The accompanying notes are an integral part of the unaudited consolidated financial statements.

11

Madison Gas and Electric Company

Consolidated Balance Sheets (unaudited)

(In thousands)

		March 31,	December 31,
ASSETS		2018		2017
Current Assets:
Cash and cash equivalents	$	4,152	$	5,951
Accounts receivable, less reserves of $2,804 and $2,840, respectively		43,307		42,299
Affiliate receivables		690		668
Other accounts receivable, less reserves of $317 and $335, respectively		5,740		6,984
Unbilled revenues		25,471		31,400
Materials and supplies, at average cost		23,554		22,614
Fuel for electric generation, at average cost		9,478		8,256
Stored natural gas, at average cost		3,686		12,923
Prepaid taxes		13,893		25,073
Regulatory assets - current		8,721		7,888
Assets held for sale		1,383		8,817
Other current assets		11,162		12,484
Total Current Assets		151,237		185,357
Affiliate receivable long-term		3,574		3,707
Regulatory assets		140,218		142,567
Pension and other postretirement benefit asset		9,631		7,336
Other deferred assets and other		4,512		3,280
Property, Plant, and Equipment:
Property, plant, and equipment, net		1,290,176		1,283,341
Construction work in progress		76,066		58,044
Total Property, Plant, and Equipment		1,366,242		1,341,385
Investments		409		409
Total Assets	$	1,675,823	$	1,684,041
LIABILITIES AND CAPITALIZATION
Current Liabilities:
Long-term debt due within one year	$	24,477	$	24,452
Short-term debt		3,000		4,000
Accounts payable		35,026		47,614
Accrued interest and taxes		4,443		5,558
Accrued payroll related items		8,390		12,244
Regulatory liabilities - current		12,325		5,633
Derivative liabilities		8,950		8,180
Other current liabilities		9,557		16,749
Total Current Liabilities		106,168		124,430
Other Credits:
Deferred income taxes		200,093		201,486
Investment tax credit - deferred		893		918
Regulatory liabilities		157,890		154,153
Accrued pension and other postretirement benefits		69,030		69,088
Derivative liabilities		32,340		33,990
Other deferred liabilities and other		68,746		69,041
Total Other Credits		528,992		528,676
Capitalization:
Common shareholder's equity		504,322		491,872
Noncontrolling interest		139,208		140,902
Total Equity		643,530		632,774
Long-term debt		397,133		398,161
Total Capitalization		1,040,663		1,030,935
Commitments and contingencies (see Footnote 9)
Total Liabilities and Capitalization	$	1,675,823	$	1,684,041
The accompanying notes are an integral part of the above unaudited consolidated financial statements.

12

Madison Gas and Electric Company

Consolidated Statements of Equity (unaudited)

(In thousands)

								Accumulated
					Additional				Other		Non-
	Common Stock				Paid-in		Retained	Comprehensive			Controlling
	Shares		Value		Capital		Earnings	Income/(Loss)			Interest		Total
2017
Beginning balance - Dec. 31, 2016	17,348	$	17,348	$	192,417	$	277,300	$	19	$	115,665	$	602,749
Net income							12,794				5,389		18,183
Other comprehensive loss									(6)				(6)
Cash dividends paid to parent
by MGE							(15,000)						(15,000)
Distributions to parent from
noncontrolling interest											(5,500)		(5,500)
Ending balance - March 31, 2017	17,348	$	17,348	$	192,417	$	275,094	$	13	$	115,554	$	600,426
2018
Beginning balance - Dec. 31, 2017	17,348	$	17,348	$	192,417	$	282,135	$	(28)	$	140,902	$	632,774
Cumulative effect of new accounting principle							(28)		28				-
Beginning balance - adjusted							282,107		-				632,774
Net income							12,450				5,806		18,256
Distributions to parent from
noncontrolling interest											(7,500)		(7,500)
Ending balance - March 31, 2018	17,348	$	17,348	$	192,417	$	294,557	$	-	$	139,208	$	643,530
The accompanying notes are an integral part of the above unaudited consolidated financial statements.

13

MGE Energy, Inc., and Madison Gas and Electric Company

Notes to Consolidated Financial Statements (unaudited)

March 31, 2018

1.

Summary of Significant Accounting Policies.

a.

Basis of Presentation - MGE Energy and MGE.

This report is a combined report of MGE Energy and MGE. References in this report to "MGE Energy" are to MGE Energy, Inc. and its subsidiaries. References in this report to "MGE" are to Madison Gas and Electric Company.

MGE Power Elm Road and MGE Power West Campus own electric generating assets and lease those assets to MGE. Both entities are variable interest entities under applicable authoritative accounting guidance. MGE is considered the primary beneficiary of these entities as a result of contractual agreements. As a result, MGE has consolidated MGE Power Elm Road and MGE Power West Campus. See Footnote 2 of Notes to Consolidated Financial Statements under Item 8, Financial Statements and Supplementary Data, of MGE Energy's and MGE's 2017 Annual Report on Form 10-K (the 2017 Annual Report on Form 10-K).

The accompanying consolidated financial statements as of March 31, 2018, and for the three months ended, are unaudited, but include all adjustments that MGE Energy and MGE management consider necessary for a fair statement of their respective financial statements. All adjustments are of a normal, recurring nature except as otherwise disclosed. The year-end consolidated balance sheet information was derived from the audited balance sheet appearing in the 2017 Annual Report on Form 10-K, but does not include all disclosures required by accounting principles generally accepted in the United States of America. These notes should be read in conjunction with the financial statements and the notes on pages 54 through 103 of the 2017 Annual Report on Form 10-K.

b.

Cash, Cash Equivalents, and Restricted Cash - MGE Energy and MGE.

The following table presents the components of total cash, cash equivalents and restricted cash on the consolidated balance sheets.

		MGE Energy				MGE
		March 31,		December 31,		March 31,		December 31,
(In thousands)		2018		2017		2018		2017
Cash and cash equivalents	$	101,157	$	107,952	$	4,152	$	5,951
Restricted cash		2,763		1,635		2,763		1,635
Receivable - margin account		2,325		2,507		2,325		2,507
Cash, cash equivalents, and restricted cash	$	106,245	$	112,094	$	9,240	$	10,093

Cash Equivalents

MGE Energy and MGE consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Restricted Cash

MGE has certain cash accounts that are restricted to uses other than current operations and designated for a specific purpose. MGE's restricted cash accounts include cash held by trustees for certain employee benefits and cash deposits held by third parties. These are included in "Other current assets" on the consolidated balance sheets.

Receivable – Margin Account

Cash amounts held by counterparties as margin collateral for certain financial transactions are recorded as receivable – margin account in "Other current assets" on the consolidated balance sheets. The costs being hedged are fuel for electric generation, purchased power, and cost of gas sold.

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The following table presents the retrospective adjustments to cash flow amounts on MGE Energy's and MGE's consolidated statements of cash flows in accordance with the adoption of ASU 2016-18, Restricted Cash.

		Three Months Ended
(In thousands)		March 31, 2017
Cash provided by operating activities	$	(1,035)
Cash used for investing activities		387
Change in cash, cash equivalents, and restricted cash		(648)
Cash, cash equivalents, and restricted cash at beginning of period		5,674
Cash, cash equivalents, and restricted cash at end of period	$	5,026

2.

New Accounting Standards - MGE Energy and MGE.

a.

Recently Adopted

Revenue from Contracts with Customers.

The FASB issued authoritative guidance within the codification's Revenue Recognition topic that provides guidance on the recognition, measurement, and disclosure of revenue from contracts with customers. The new standard establishes a five step model for recognizing and measuring revenue from contracts with customers and replaces existing guidance on revenue recognition. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services.

This authoritative guidance became effective January 1, 2018, and MGE Energy and MGE adopted the standard upon the effective date. Adoption of this standard is permitted under one of two methods: the full retrospective method or the modified retrospective method. MGE Energy and MGE implemented the standard using the modified retrospective method. The cumulative impact of this guidance on our financial statements is not material, except for additional footnote disclosures. See Footnote 3 for further information.

Financial Instruments.

In January 2016, the FASB issued authoritative guidance within the codification's Financial Instruments topic that provides guidance on the recognition and measurement of financial instruments. This authoritative guidance became effective January 1, 2018, and required equity investments to be measured at fair value with changes in fair value recognized in net income rather than in other comprehensive income. As a result of this guidance, MGE Energy and MGE will no longer have other comprehensive income related to equity investments. This standard was applied using a modified retrospective approach, with a cumulative effect adjustment recorded to opening retained earnings as of the beginning of the fiscal year of adoption. As of January 1, 2018, MGE Energy recorded a $0.4 million increase in retained earnings and a corresponding decrease in other comprehensive income, and MGE recorded less than a $0.1 million decrease in retained earnings and a corresponding increase in other comprehensive income, related to equity investments within the scope of this standard.

Restricted Cash.

In November 2016, the FASB issued authoritative guidance within the codification's Statement of Cash Flows topic that provides guidance on the classification and presentation of changes in restricted cash within the statement of cash flows. Under the new guidance, reporting entities are required to explain the changes in the total of restricted and unrestricted cash and cash equivalents when reconciling the beginning and ending balances on the statement of cash flows. Prior to the authoritative guidance, changes in restricted cash were presented as either cash flows from operating, investing, or financing activities within the statement of cash flows, as appropriate based on the nature of the restriction. Also under the new standard, reporting entities are required to provide a reconciliation from the balance sheet to the statement of cash flows and disclose the nature of the restrictions of cash. This authoritative guidance became effective January 1, 2018. Upon the effective date, MGE Energy and MGE changed the presentation of restricted cash on the consolidated statements of cash flows to reflect the new accounting guidance retrospectively to all periods presented. See Footnote 1.b. for further information.

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Pension and Other Postretirement Benefits.

In March 2017, the FASB issued authoritative guidance within the codification's Compensation – Retirement Benefits topic that provides guidance on the presentation of net periodic pension cost and net periodic postretirement benefit cost (together, net benefit cost). This authoritative guidance became effective January 1, 2018. Under the new guidance, the service cost component of net benefit cost is required to be recorded in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside of income from operations. A practical expedient within the standard permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan footnote for prior comparative periods as the estimation basis for applying the retrospective presentation requirements. MGE Energy and MGE have elected to apply the practical expedient. Upon the effective date, MGE Energy and MGE changed the presentation of net benefit cost on the consolidated statements of income to reflect the new accounting guidance retrospectively to all periods presented. For both MGE Energy and MGE, "Other operations and maintenance expense" increased and "Other income, net" increased $1.1 million for the three months ended March 31, 2017. The standard also only allows the service cost component to be eligible for capitalization prospectively from the effective date of the pronouncement (whereas under previous GAAP, all components of net benefit cost were eligible for capitalization). See Footnote 6 for further information.

b.

Recently Issued

Leases.

In February 2016, the FASB issued authoritative guidance within the codification's Leases topic that provides guidance on the classification, recognition, measurement, and disclosure of leases. The new leasing standard establishes that a lease conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. Under the new guidance, lessees will be required to recognize all leases with terms greater than one year, including operating leases, on the balance sheet by recording a right-of-use asset and lease liability. Prior to the authoritative guidance, only capital leases were recognized on the balance sheet by lessees. The new accounting guidance, as applied by lessors, is materially consistent with current GAAP. In January 2018, the FASB issued authoritative guidance which provided an optional practical expedient to grandfather the accounting for existing and expired land easements not accounted for as a lease under the new authoritative guidance. MGE Energy and MGE plan to adopt this practical expedient.

Management has begun utilizing a bottoms-up approach to analyze the impact of the standard on our lease portfolio. MGE Energy and MGE have been reviewing current accounting policies and procedures to identify potential differences in accounting treatment that would result from applying the requirements of the new standard to our existing lease portfolio. In addition, we are identifying appropriate changes to our business processes, systems, and controls to support recognition and disclosure requirements under the new standard. This authoritative guidance will become effective January 1, 2019, with early adoption permitted. MGE Energy and MGE anticipate adopting the standard upon the effective date. The new leasing standard requires entities to recognize and measure leases at the beginning of the earliest comparative period presented using a modified retrospective approach. MGE Energy and MGE are currently assessing the impact this pronouncement will have on our financial statements.

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3.

Revenue - MGE Energy and MGE.

Revenues disaggregated by revenue source were as follows:

		Three Months Ended
(In thousands)		March 31,
Electric revenues		2018		2017
Residential	$	33,259	$	33,353
Commercial(a)		47,452		50,164
Industrial		2,895		4,215
Other-retail/municipal		8,287		9,021
Total retail		91,893		96,753
Sales to the market		2,034		972
Other revenues		470		429
Adjustments to revenues		(6)		170
Total electric revenues		94,391		98,324
Gas revenues
Residential		36,551		33,903
Commercial/Industrial(a)		24,952		23,048
Total retail		61,503		56,951
Gas transportation		1,135		1,350
Other revenues		127		125
Total gas revenues		62,765		58,426
Non-regulated energy revenues		476		73
Total Operating Revenue(a)	$	157,632	$	156,823

(a)

In 2017, MGE had less than $0.1 million of revenues related to CNG vehicle fuel servicing. No revenue was recognized for fuel servicing by MGE Energy in 2017.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of MGE Energy's and MGE's contracts have a single performance obligation.

Retail Revenue (Residential, Commercial, Industrial, and Other Retail/Municipal)

Retail revenue of electric and gas utility service represent MGE's core business activities. Tariffs are approved by the PSCW through a rate order and provide MGE's customers with the standard terms and conditions, including pricing terms. The performance obligation to deliver electricity or gas is satisfied over time as the customer simultaneously receives and consumes the commodities provided by MGE. MGE recognizes revenues as the commodity is delivered to customers. Meters are read on a systematic basis throughout the month based on established meter-reading schedules and the customer is subsequently billed for their services. At the end of the month, MGE accrues an estimate for the unbilled amount of commodities delivered to customers. The unbilled revenue estimate is based on daily system demand volumes, weather factors, estimated line losses, estimated customer usage by class, and applicable customer rates.

Utility Cost Recovery Mechanisms

MGE's tariff rates include a provision for fuel cost recovery. The PSCW allows Wisconsin utilities to defer electric fuel-related costs, less excess revenues, that fall outside a symmetrical cost tolerance band. Any over/under recovery of the actual costs in a given year is determined in the following year and is then reflected in future billings to electric retail customers. Over-collection of fuel-related costs that are outside the approved range will be recognized as a reduction of revenue. Prior to adoption of the new revenue recognition guidance, effective January 1, 2018, over-collected fuel-related costs were reflected in "Purchased Power" expense. Under-collection of these costs will continue to be recognized in "Purchased Power" expense in the consolidated statements of income of MGE Energy and MGE. The cumulative effects of these deferred amounts will be recorded in "Regulatory assets" or "Regulatory liabilities" on the consolidated balance sheets of MGE Energy and MGE until they are reflected in future billings to customers. See Footnote 10.b. for further information.

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MGE received a PSCW order to defer the over-collection of income tax expense collected in customer rates as a result of the Tax Cuts and Jobs Act (the Tax Act) reduction in the income tax rate to 21 percent. See Footnote 5 for further information.

MGE has other cost recovery mechanisms, any over-collection of the difference between actual costs incurred and the amount of costs collected from customers is recorded as a reduction of revenue in the period incurred.

Sales to the Market

Sales to the market include energy charges, capacity or demand charges, and ancillary charges represented by wholesale sales of electricity made to third parties who are not ultimate users of the electricity. Most of these sales are spot market transactions on the markets operated by MISO. Each transaction is considered a performance obligation and revenue is recognized in the period in which availability is provided to MISO. MGE reports on a net basis, transactions on the MISO markets in which it buys and sells power within the same hour to meet electric energy delivery requirements.

Transportation of Gas

MGE has written contracts under which MGE provides gas transportation services to customers whom have elected to purchase gas from a third party and have gas delivered via pipelines within MGE's service territory. Revenue is recognized as service is rendered or gas is delivered to customers. Tariffs are approved by the PSCW through a rate order and provide gas transportation customers with the standard terms and conditions, including pricing terms.

4.

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.

At March 31, 2018, and December 31, 2017, MGE Transco held a 3.6% ownership interest in ATC. At March 31, 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 investment in ATC and ATC Holdco, respectively, under the equity method of accounting. Equity earnings from investments are recorded as "Other income" on MGE Energy's consolidated statements of income. For the three months ended March 31, 2018 and 2017, MGE Transco recorded the following:

		Three Months Ended
		March 31,
(In thousands)		2018		2017
Equity earnings from investment in ATC	$	2,451	$	2,608
Dividends from ATC(a)		-		-
Capital contributions to ATC		710		1,420

(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.

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. For the three months ended March 31, 2018 and 2017, MGEE Transco recorded capital contributions of $0.1 million and $0.2 million, respectively, to ATC Holdco.

In April 2018, MGE Transco made a $1.1 million capital contribution to ATC and MGEE Transco made a $0.1 million contribution to ATC Holdco.

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ATC's summarized financial data for the three months ended March 31, 2018 and 2017, is as follows:

		Three Months Ended
		March 31,
(In thousands)		2018		2017
Operating revenues	$	165,429	$	174,669
Operating expenses		(84,893)		(82,697)
Other income, net		111		682
Interest expense, net		(27,762)		(26,783)
Earnings before members' income taxes	$	52,885	$	65,871

MGE receives transmission and other related services from ATC. During the three months ended March 31, 2018, MGE recorded $7.2 million for transmission services received compared to $9.2 million for the comparable period in 2017. MGE also provides a variety of operational, maintenance, and project management services for ATC, which is reimbursed by ATC. As of March 31, 2018, and December 31, 2017, MGE had a receivable due from ATC of $0.2 million.

5.

Taxes - MGE Energy and MGE.

Effective Tax Rate.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the Tax Act). The Tax Act makes broad and complex changes to the U.S. tax code, including the reduction in the U.S. federal corporate tax rate from 35 percent to 21 percent, effective January 1, 2018. MGE Energy and MGE recorded a provisional decrease in deferred tax assets and deferred tax liabilities as of December 31, 2017. In accordance with Staff Accounting Bulletin 118, any subsequent adjustment to these amounts will be recorded in the quarter of 2018 when the analysis is complete. No adjustments have been recorded in the first quarter of 2018. Beginning January 1, 2018, MGE began amortization of the regulated utility excess deferred taxes recognized using a normalization method of accounting. For the three months ended March 31, 2018, MGE recognized $0.6 million of excess deferred taxes as a reduction of revenue and a corresponding increase in a regulatory liability. The amount and timing of the cash impacts will depend on the period over which certain income tax benefits are provided to customers, which will be determined by the PSCW.

Customer rates approved for 2018 reflect an income tax rate of 35 percent. MGE received a PSCW order to defer the over-collection of income tax expense as a result of the decrease in tax rate to 21 percent. As of March 31, 2018, MGE has deferred $3.3 million as a regulatory liability and recorded a corresponding reduction in operating revenues. The PSCW reached a preliminary decision in April 2018 for the return of the over-collection of income tax expense. The preliminary decision includes a one-time bill credit in July of 2018 for the first six months of 2018 over-collection and a monthly bill credit beginning in August 2018 of the estimated remaining annual amount to be returned to customers. Any over/under recovery of the actual costs will be subject to the PSCW's annual review in the following year and is then reflected in future billings to retail customers. A final order is expected in May 2018.

The consolidated income tax provision differs from the amount computed by applying the statutory federal income tax rate to income before income taxes, as follows:

	MGE Energy		MGE
Three Months Ended March 31,	2018	2017	2018	2017
Statutory federal income tax rate	21.0 %	35.0 %	21.0 %	35.0 %
State income taxes, net of federal benefit	6.4 %	5.3 %	6.0 %	5.1 %
Amortized investment tax credits	(0.1)%	(0.1)%	(0.1)%	(0.1)%
Credit for electricity from wind energy	(0.5)%	(1.8)%	(0.5)%	(2.0)%
Domestic manufacturing deduction	-%	(1.3)%	-%	(1.4)%
AFUDC equity, net	(0.4)%	(0.2)%	(0.4)%	(0.2)%
Amortization of utility excess deferred tax - tax reform(a)	(1.8)%	-%	(2.0)%	-%
Other, net, individually insignificant	(0.4)%	(0.2)%	(0.6)%	(0.2)%
Effective income tax rate	24.2 %	36.7 %	23.4 %	36.2 %

(a)

Included are impacts of the Tax Act for the regulated utility for excess deferred taxes recognized using a normalization method of accounting.

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6.

Pension and Other Postretirement Plans - MGE Energy and MGE.

MGE maintains qualified and nonqualified pension plans, health care, and life insurance benefits. Additionally, MGE has defined contribution 401(k) benefit plans.

The components of net periodic benefit cost, other than the service cost component, are recorded in "Other income, net" on the consolidated statements of income. The service cost component is recorded in "Other operations and maintenance" on the consolidated statements of income. Prior to January 1, 2018, a portion of all net periodic benefit cost components were capitalized within the consolidated balance sheets. The FASB issued authoritative guidance within the codification's Compensation-Retirement Benefits topic that, beginning January 1, 2018, only allows the service cost component of net periodic benefit cost to be eligible for capitalization within the consolidated balance sheets. MGE has regulatory treatment and recognizes regulatory assets or liabilities for timing differences between when net periodic benefit costs are recovered and when costs are recognized.

The following table presents the components of net periodic benefit costs recognized for the three months ended March 31, 2018 and 2017.

		Three Months Ended
		March 31,
(In thousands)		2018		2017
Pension Benefits
Components of net periodic benefit cost:
Service cost	$	1,457	$	1,332
Interest cost		3,208		3,119
Expected return on assets		(6,568)		(5,742)
Amortization of:
Prior service credit		(11)		(4)
Actuarial loss		1,298		1,464
Net periodic benefit (credit) cost	$	(616)	$	169
Postretirement Benefits
Components of net periodic benefit cost:
Service cost	$	332	$	206
Interest cost		658		444
Expected return on assets		(802)		(472)
Amortization of:
Transition obligation		1		-
Prior service credit		(667)		(436)
Actuarial loss		128		129
Net periodic benefit (credit) cost	$	(350)	$	(129)

7.

Equity and Financing Arrangements - MGE Energy.

a.

Common Stock.

MGE Energy sells shares of its common stock through its Stock Plan. Those shares may be newly issued shares or shares that MGE Energy has purchased in the open market for resale to participants in the Stock Plan. All sales under the Stock Plan are covered by a shelf registration statement that MGE Energy filed with the SEC. For both the three months ended March 31, 2018 and 2017, MGE Energy did not issue any new shares of common stock under the Stock Plan.

b.

Dilutive Shares Calculation.

MGE Energy does not have any stock option or stock award programs or any dilutive securities.

8.

Share-Based Compensation - MGE Energy and MGE.

Under MGE Energy's Director Incentive Plan and Performance Unit Plan, non-employee directors and eligible employees may receive performance units that entitle the holder to receive a cash payment equal to the value of a designated number of shares of MGE Energy's common stock, plus dividend equivalent payments thereon, at the end of the set performance period.

20

In 2018, 5,810 units were granted under the Director Incentive Plan and are subject to a three-year graded vesting schedule and 17,830 units were granted under the Performance Unit Plan and are subject to a five-year graded vesting schedule. On the grant date, the cost of the director or employee services received in exchange for a performance unit award is measured based on the current market value of MGE Energy common stock. The fair value of the awards is re-measured quarterly, including at March 31, 2018, as required by applicable accounting standards. Changes in fair value as well as the original grant are recognized as compensation cost. Since this amount is re-measured throughout the vesting period, the compensation cost is subject to variability.

For nonretirement eligible employees under the Performance Unit Plan, stock based compensation costs are accrued and recognized using the graded vesting method. Compensation cost for retirement eligible employees or employees that will become retirement eligible during the vesting schedule are recognized on an abridged horizon.

During the three months ended March 31, 2018, MGE recorded $0.2 million in compensation expense as a result of awards under the plans compared to $0.5 million for the comparable period in 2017. In January 2018, cash payments of $1.6 million were distributed relating to awards that were granted under the plans. No forfeitures of units occurred during the three months ended March 31, 2018 and 2017. At March 31, 2018, $4.8 million of outstanding awards are vested, and of this amount, no cash settlements have occurred.

9.

Commitments and Contingencies.

a.

Environmental - MGE Energy and MGE.

MGE Energy and MGE are subject to frequently changing local, state, and federal regulations concerning air quality, water quality, land use, threatened and endangered species, hazardous materials handling, and solid waste disposal. These regulations affect the manner in which they conduct their operations, the costs of those operations, as well as capital and operating expenditures. Several of these environmental rules are subject to legal challenges, reconsideration and/or other uncertainties. Regulatory initiatives, proposed rules, and court challenges to adopted rules, have the potential to have a material effect on our capital expenditures and operating costs. Management believes compliance costs will be recovered in future rates based on previous treatment of environmental compliance projects. These initiatives, proposed rules, and court challenges include:

•

The EPA's published water effluent limitations guidelines and standards for steam electric power plants, which focus on the reduction of metals and other pollutants in wastewater from new and existing power plants, such as the coal-burning plants at Columbia and the Elm Road Units.

•

The EPA's cooling water intake rules, which require cooling water intake structures at electric power plants, such as our WCCF, Blount, and Columbia plants, meet best available technology standards so that mortality from entrainment (drawing aquatic life into a plant's cooling system) and impingement (trapping aquatic life on screens) are reduced.

•

Greenhouse Gas (GHG) reduction guidelines and approval criteria established under the Clean Air Act for states to use in developing plans to control GHG emissions from existing fossil fuel-fired electric generating units (EGUs) and systems (the Clean Power Plan, or CPP). Implementation of the CPP is expected to have a direct impact on existing coal and natural gas fired generating units, including possible changes in dispatch and additional operating costs. In May 2017, the EPA requested the U.S. Court of Appeals for the D.C. Circuit to put on hold, indefinitely, any ongoing challenges to the CPP while the EPA reviews the rule and undertakes any potential rulemaking. In October 2017, the EPA published a proposed rule announcing the EPA's intention to repeal the CPP and has sought public comment on whether to replace the rule, and if so how. In December 2017, the EPA published an Advance Notice of Public Rulemaking (ANPR) to solicit information from the public as it considers a future rule to limit GHG emissions from electric generating units.

Given the pending legal proceedings, and the ANPR, the nature and timing of any final requirements to control GHG emissions is subject to uncertainty. If the CPP remains substantially in its present form, it is expected to have a material impact on MGE. MGE will continue to monitor developments with this proposed rule.

21

•

The EPA's rule to regulate ambient levels of a pollutant through the Ozone National Ambient Air Quality Standards (NAAQS). The EPA issued final designations on May 1, 2018, which designated the northeast portion of Milwaukee County as nonattainment. The Elm Road Units are located outside the designated nonattainment area. MGE expects that Ozone NAAQS will not have a material effect on its existing plants based on final designations.

The State of Wisconsin has joined a lawsuit filed by several states challenging the EPA's new ozone standard, alleging that the new standard is not attainable and the EPA is not properly considering background levels in setting its ozone attainment levels. The lawsuit has been stayed at the request of the EPA; however the significance of the challenge, as it might relate to MGE, is now diminished with the final ozone designations.

•

Rules regulating nitrogen oxide (NO_x) and sulfur dioxide (SO₂) emissions, including the Cross State Air Pollution Rule (CSAPR) and Clean Air Visibility Rule (CAVR). At this time, regulatory obligations, compliance strategies, and costs remain uncertain due to uncertainties surrounding the ongoing implementation of Phase II of CSAPR and the continued legal challenges surrounding CSAPR and CAVR.

•

The EPA's Coal Combustion Residuals Rule (CCR), which regulates coal ash as a solid waste, and defines what ash use activities would be considered generally exempt beneficial reuse of coal ash. The rule also regulates landfills, ash ponds, and other surface impoundments for coal combustion residuals by regulating their design, location, monitoring, and operation. Review of our Elm Road Units has indicated that the costs to comply with this rule are not expected to be significant. Columbia's operator has completed a review of their system and has determined that an onsite ash pond will need to be closed by 2023 and replace it with a dry ash handling system. The dry ash handling system installation is planned for 2020-2021. In 2015, MGE recorded an asset retirement obligation for its share of the legal liability associated with the effect of the CCR rule. Actual costs of compliance may be different than the amount recorded due to potential changes in compliance strategies that will be used, as well as other potential cost estimate changes. Management believes compliance costs will be recovered in future rates based on previous treatment of environmental compliance projects.

b.

Legal Matters - MGE Energy and MGE.

MGE is involved in various legal matters that are being defended and handled in the normal course of business. MGE maintains accruals for such costs that are probable of being incurred and subject to reasonable estimation. The accrued amount for these matters is not material to the financial statements. MGE does not expect the resolution of these matters to have a material adverse effect on its consolidated results of operations, financial condition, or cash flows.

c.

Purchase Contracts - MGE Energy and MGE.

The following table shows MGE Energy and MGE's future commitments related to purchase contracts as of March 31, 2018:

(In thousands)		2018		2019		2020		2021		2022		Thereafter
Saratoga wind	$	13,578	$	858	$	2,266	$	1,775	$	1,784	$	4,429

In December 2017, the PSCW authorized construction of a 66MW wind farm, consisting of 33 turbines, located near Saratoga, Iowa. MGE received specific approval to recover 100% AFUDC on the project. As of March 31, 2018, MGE has incurred $23.3 million of capital expenditures. Construction of the project is expected to be completed by the end of 2018, with an estimated capital cost of $108 million.

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10.

Rate Matters - MGE Energy and MGE.

a.

Rate Proceedings.

In December 2016, the PSCW authorized MGE, effective January 1, 2017, to decrease 2017 rates for retail electric customers by 0.8% or $3.3 million on an annual basis and to increase rates for retail gas customers by 1.9% or $3.1 million on an annual basis. The decrease in retail electric rates was attributable to declining fuel and purchased power costs. The increase in retail gas rates covers costs associated with MGE's natural gas system infrastructure improvements. The authorized return on common stock equity for 2017 was 9.8% based on a capital structure consisting of 57.2% common equity. The PSCW also approved MGE's request to extend the current accounting treatment for transmission related costs through 2018. This accounting treatment allows MGE to reflect any differential between transmission costs reflected in rates and actual costs incurred in its next rate case filing.

b.

Fuel Rules.

Fuel rules require the PSCW and Wisconsin utilities to defer electric fuel-related costs that fall outside a symmetrical cost tolerance band around the amount approved for a utility in its annual fuel proceedings. Any over/under recovery of the actual costs is determined in the following year and is then reflected in future billings to electric retail customers. The fuel rules bandwidth is currently set at plus or minus 2%. Under fuel rules, MGE would defer costs, less any excess revenues, if its actual electric fuel costs exceeded 102% of the electric fuel costs allowed in its latest rate order. Excess revenues are defined as revenues in the year in question that provide MGE with a greater return on common equity than authorized by the PSCW in MGE's latest rate order. Conversely, MGE is required to defer the benefit of lower costs if actual electric fuel costs were less than 98% of the electric fuel costs allowed in that order.

In July 2017, the PSCW issued a final order in the fuel rules proceedings requiring MGE to refund additional fuel savings realized during 2015 and 2016 to its retail electric customers over a one-month period. In October 2017, MGE returned $6.2 million to customers through bill credits.

In December 2017, the PSCW approved a surcharge for 2018 electric fuel-related costs. The surcharge will increase electric retail revenue in 2018 by $0.5 million or 0.1%.

As of March 31, 2018, MGE has deferred $1.5 million of 2018 fuel savings. The 2018 fuel savings will be subject to the PSCW's annual review of 2018 fuel costs, expected to be completed in 2019. As of March 31, 2017, MGE had deferred $1.1 million of 2017 fuel savings.

11.

Derivative and Hedging Instruments - MGE Energy and MGE.

a.

Purpose.

As part of its regular operations, MGE enters into contracts, including options, swaps, futures, forwards, and other contractual commitments, to manage its exposure to commodity prices. To the extent that these contracts are derivatives, MGE assesses whether or not the normal purchases or normal sales exclusion applies. For contracts to which this exclusion cannot be applied, the derivatives are recognized in the consolidated balance sheets at fair value. MGE's financial commodity derivative activities are conducted in accordance with its electric and gas risk management program, which is approved by the PSCW and limits the volume MGE can hedge with specific risk management strategies. The maximum length of time over which cash flows related to energy commodities can be hedged is four years. If the derivative qualifies for regulatory deferral, the derivatives are marked to fair value and are offset with a corresponding regulatory asset or liability depending on whether the derivative is in a net loss or net gain position, respectively. The deferred gain or loss is recognized in earnings in the delivery month applicable to the instrument. Gains and losses related to hedges qualifying for regulatory treatment are recoverable in gas rates through the PGA or in electric rates as a component of the fuel rules mechanism.

23

b.

Notional Amounts.

The gross notional volume of open derivatives is as follows:

	March 31, 2018	December 31, 2017
Commodity derivative contracts	538,050 MWh	552,310 MWh
Commodity derivative contracts	3,270,000 Dth	5,460,000 Dth
FTRs	886 MW	2,226 MW
PPA	2,500 MW	2,650 MW

c.

Financial Statement Presentation.

MGE purchases and sells exchange-traded and over-the-counter options, swaps, and future contracts. These arrangements are primarily entered into to help stabilize the price risk associated with gas or power purchases. These transactions are employed by both MGE's gas and electric segments. Additionally, as a result of the firm transmission agreements that MGE holds on electricity transmission paths in the MISO market, MGE holds financial transmission rights (FTRs). An FTR is a financial instrument that entitles the holder to a stream of revenues or charges based on the differences in hourly day-ahead energy prices between two points on the transmission grid. The fair values of these instruments are offset with a corresponding regulatory asset/liability depending on whether they are in a net loss/gain position. Depending on the nature of the instrument, the gain or loss associated with these transactions will be reflected as cost of gas sold, fuel for electric generation, or purchased power expense in the delivery month applicable to the instrument. At March 31, 2018, and December 31, 2017, the fair value of exchange traded derivatives and FTRs exceeded their cost basis by $0.1 million and $0.2 million, respectively.

MGE is a party to a purchased power agreement that provides MGE with firm capacity and energy during a base term from June 1, 2012, through May 31, 2022. The agreement also allows MGE an option to extend the contract after the base term. The agreement is accounted for as a derivative contract and is recognized at its fair value on the consolidated balance sheets. However, the derivative qualifies for regulatory deferral and is recognized with a corresponding regulatory asset or liability depending on whether the fair value is in a loss or gain position. The fair value of the contract at March 31, 2018, and December 31, 2017, reflects a loss position of $41.3 million and $42.2 million, respectively. The actual cost will be recognized in purchased power expense in the month of purchase.

The following table summarizes the fair value of the derivative instruments on the consolidated balance sheets. All derivative instruments in this table are presented on a gross basis and are calculated prior to the netting of instruments with the same counterparty under a master netting agreement as well as the netting of collateral. For financial statement purposes, instruments are netted with the same counterparty under a master netting agreement as well as the netting of collateral. As of March 31, 2018, and December 31, 2017, the receivable margin account balance of $2.3 million and $2.5 million, respectively, is shown net of any collateral posted against derivative positions.

		Derivative		Derivative
(In thousands)		Assets		Liabilities	Balance Sheet Location
March 31, 2018
Commodity derivative contracts(a)	$	403	$	294	Derivative liability (current)(b)
Commodity derivative contracts(a)		9		189	Derivative liability (long-term)
FTRs		120		-	Other current assets
PPA		N/A		8,950	Derivative liability (current)
PPA		N/A		32,340	Derivative liability (long-term)
December 31, 2017
Commodity derivative contracts(a)	$	566	$	603	Derivative liability (current)(b)
Commodity derivative contracts(a)		110		190	Derivative liability (long-term)
FTRs		329		-	Other current assets
PPA		N/A		8,180	Derivative liability (current)
PPA		N/A		33,990	Derivative liability (long-term)

(a)

As of March 31, 2018, and December 31, 2017, collateral of $0.1 million was posted against and netted with derivative liability positions on the consolidated balance sheets.

(b)

As of March 31, 2018, and December 31, 2017, $0.1 million was presented as other current assets on the consolidated balance sheets.

24

The following tables show the effect of netting arrangements for recognized derivative assets and liabilities that are subject to a master netting arrangement or similar arrangement on the consolidated balance sheets.

Offsetting of Derivative Assets
(In thousands)		Gross Amounts		Gross Amounts Offset in Balance Sheets		Collateral Posted Against Derivative Positions		Net Amount Presented in Balance Sheets
March 31, 2018
Commodity derivative contracts	$	412	$	(390)	$	-	$	22
FTRs		120		-		-		120
December 31, 2017
Commodity derivative contracts	$	676	$	(654)	$	-	$	22
FTRs		329		-		-		329

Offsetting of Derivative Liabilities
(In thousands)		Gross Amounts		Gross Amounts Offset in Balance Sheets		Collateral Posted Against Derivative Positions		Net Amount Presented in Balance Sheets
March 31, 2018
Commodity derivative contracts	$	483	$	(390)	$	(93)	$	-
PPA		41,290		-		-		41,290
December 31, 2017
Commodity derivative contracts	$	793	$	(654)	$	(139)	$	-
PPA		42,170		-		-		42,170

The following tables summarize the unrealized and realized gains (losses) related to the derivative instruments on the consolidated balance sheets at March 31, 2018 and 2017, and the consolidated income statements for the three months ended March 31, 2018 and 2017.

		2018				2017
(In thousands)		Current and Long-Term Regulatory Asset		Other Current Assets		Current and Long-Term Regulatory Asset		Other Current Assets
Three Months Ended March 31:
Balance at January 1,	$	41,958	$	806	$	49,281	$	230
Unrealized loss (gain)		128		-		(689)		-
Realized (loss) gain reclassified to a deferred account		(158)		158		(78)		78
Realized loss reclassified to income statement		(687)		(645)		(441)		(166)
Balance at March 31,	$	41,241	$	319	$	48,073	$	142

		Realized losses (gains)
		2018				2017
(In thousands)		Fuel for Electric Generation/ Purchased Power		Cost of Gas Sold		Fuel for Electric Generation/ Purchased Power		Cost of Gas Sold
Three Months Ended March 31:
Commodity derivative contracts	$	374	$	615	$	385	$	146
FTRs		(175)		-		(685)		-
PPA		518		-		761		-

MGE's commodity derivative contracts, FTRs, and PPA are subject to regulatory deferral. These derivatives are marked to fair value and are offset with a corresponding regulatory asset or liability. Realized gains and losses are deferred on the consolidated balance sheets and are recognized in earnings in the delivery month applicable to the instrument. As a result of the above described treatment, there are no unrealized gains or losses that flow through earnings.

25

The PPA has a provision that may require MGE to post collateral if MGE's debt rating falls below investment grade (i.e., below BBB-). The amount of collateral that it may be required to post varies from $20.0 million to $40.0 million, depending on MGE's nominated capacity amount. As of March 31, 2018, no collateral is required to be, or has been, posted. Certain counterparties extend MGE a credit limit. If MGE exceeds these limits, the counterparties may require collateral to be posted. As of March 31, 2018, and December 31, 2017, certain counterparties were in a net liability of $0.1 million.

Nonperformance of counterparties to the non-exchange traded derivatives could expose MGE to credit loss. However, MGE enters into transactions only with companies that meet or exceed strict credit guidelines, and it monitors these counterparties on an ongoing basis to mitigate nonperformance risk in its portfolio. As of March 31, 2018, no counterparties have defaulted.

12.

Fair Value of Financial Instruments - MGE Energy and MGE.

Fair value is defined as the price that would be received to sell an asset or would be paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The accounting standard clarifies that fair value should be based on the assumptions market participants would use when pricing the asset or liability including assumptions about risk. The standard also establishes a three level fair value hierarchy based upon the observability of the assumptions used and requires the use of observable market data when available. The levels are:

Level 1 - Pricing inputs are quoted prices within active markets for identical assets or liabilities.

Level 2 - Pricing inputs are quoted prices within active markets for similar assets or liabilities; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations that are correlated with or otherwise verifiable by observable market data.

Level 3 - Pricing inputs are unobservable and reflect management's best estimate of what market participants would use in pricing the asset or liability.

a.

Fair Value of Financial Assets and Liabilities Recorded at the Carrying Amount.

At March 31, 2018, and December 31, 2017, the carrying amount of cash, cash equivalents, and outstanding commercial paper approximates fair market value due to the short maturity of those investments and obligations. The estimated fair market value of long-term debt is based on quoted market prices for similar financial instruments at March 31, 2018, and December 31, 2017. Since long-term debt is not traded in an active market, it is classified as Level 2. The estimated fair market value of financial instruments are as follows:

		March 31, 2018				December 31, 2017
(In thousands)		Carrying Amount		Fair Value		Carrying Amount		Fair Value
MGE Energy
Assets:
Cash and cash equivalents	$	101,157	$	101,157	$	107,952	$	107,952
Liabilities:
Short-term debt - commercial paper		3,000		3,000		4,000		4,000
Long-term debt(a)		425,780		462,151		426,883		475,282
MGE
Assets:
Cash and cash equivalents	$	4,152	$	4,152	$	5,951	$	5,951
Liabilities:
Short-term debt - commercial paper		3,000		3,000		4,000		4,000
Long-term debt(a)		425,780		462,151		426,883		475,282

(a)

Includes long-term debt due within one year. Excludes debt issuance costs and unamortized discount of $4.2 million and $4.3 million at March 31, 2018, and December 31, 2017, respectively.

26

b.

Recurring Fair Value Measurements.

The following table presents the balances of assets and liabilities measured at fair value on a recurring basis.

		Fair Value as of March 31, 2018
(In thousands)		Total		Level 1		Level 2		Level 3
MGE Energy
Assets:
Derivatives, net	$	531	$	284	$	-	$	247
Exchange-traded investments		855		855		-		-
Total Assets	$	1,386	$	1,139	$	-	$	247
Liabilities:
Derivatives, net(b)	$	41,772	$	62	$	-	$	41,710
Deferred compensation		3,110		-		3,110		-
Total Liabilities	$	44,882	$	62	$	3,110	$	41,710
MGE
Assets:
Derivatives, net	$	531	$	284	$	-	$	247
Exchange-traded investments		65		65		-		-
Total Assets	$	596	$	349	$	-	$	247
Liabilities:
Derivatives, net(b)	$	41,772	$	62	$	-	$	41,710
Deferred compensation		3,110		-		3,110		-
Total Liabilities	$	44,882	$	62	$	3,110	$	41,710
		Fair Value as of December 31, 2017
(In thousands)		Total		Level 1		Level 2		Level 3
MGE Energy
Assets:
Derivatives, net	$	1,005	$	278	$	-	$	727
Exchange-traded investments		792		792		-		-
Total Assets	$	1,797	$	1,070	$	-	$	727
Liabilities:
Derivatives, net(b)	$	42,963	$	210	$	-	$	42,753
Deferred compensation		3,065		-		3,065		-
Total Liabilities	$	46,028	$	210	$	3,065	$	42,753
MGE
Assets:
Derivatives, net	$	1,005	$	278	$	-	$	727
Exchange-traded investments		64		64		-		-
Total Assets	$	1,069	$	342	$	-	$	727
Liabilities:
Derivatives, net(b)	$	42,963	$	210	$	-	$	42,753
Deferred compensation		3,065		-		3,065		-
Total Liabilities	$	46,028	$	210	$	3,065	$	42,753

(b)

These amounts are shown gross and exclude $0.1 million of collateral that was posted against derivative positions with counterparties as of March 31, 2018, and December 31, 2017.

No transfers were made in or out of Level 1 or Level 2 for the three months ended March 31, 2018.

Investments include exchange-traded investment securities valued using quoted prices on active exchanges and are therefore classified as Level 1.

27

Derivatives include exchange-traded derivative contracts, over-the-counter transactions, a purchased power agreement, and financial transmission rights (FTRs). Most exchange-traded derivative contracts are valued based on unadjusted quoted prices in active markets and are therefore classified as Level 1. A small number of exchange-traded derivative contracts are valued using quoted market pricing in markets with insufficient volumes and are therefore considered unobservable and classified as Level 3. Transactions done with an over-the-counter party are on inactive markets and are therefore classified as Level 3. These transactions are valued based on quoted prices from markets with similar exchange-traded transactions. FTRs are priced based upon monthly auction results for identical or similar instruments in a closed market with limited data available and are therefore classified as Level 3.

The purchased power agreement (see Footnote 11) was valued using an internally-developed pricing model and therefore is classified as Level 3. The model projects future market energy prices and compares those prices to the projected power costs to be incurred under the contract. Inputs to the model require significant management judgment and estimation. Future energy prices are based on a forward power pricing curve using exchange-traded contracts in the electric futures market. A basis adjustment is applied to the market energy price to reflect the price differential between the market price delivery point and the counterparty delivery point. The historical relationship between the delivery points is reviewed and a discount (below 100%) or premium (above 100%) is derived. This comparison is done for both peak times when demand is high and off peak times when demand is low. If the basis adjustment is lowered, the fair value measurement will decrease, and if the basis adjustment is increased, the fair value measurement will increase.

The projected power costs anticipated to be incurred under the purchased power agreement are determined using many factors, including historical generating costs, future prices, and expected fuel mix of the counterparty. An increase in the projected fuel costs would result in a decrease in the fair value measurement of the purchased power agreement. A significant input that MGE estimates is the counterparty's fuel mix in determining the projected power cost. MGE also considers the assumptions that market participants would use in valuing the asset or liability. This consideration includes assumptions about market risk such as liquidity, volatility, and contract duration. The fair value model uses a discount rate that incorporates discounting, credit, and model risks.

The following table presents the significant unobservable inputs used in the pricing model.

	Model Input
Significant Unobservable Inputs	March 31, 2018	December 31, 2017
Basis adjustment:
On peak	91.7%	92.3%
Off peak	93.1%	94.1%
Counterparty fuel mix:
Internal generation	50% - 75%	55% - 75%
Purchased power	50% - 25%	45% - 25%

The deferred compensation plan allows participants to defer certain cash compensation into a notional investment account. These amounts are included within other deferred liabilities in the consolidated balance sheets of MGE Energy and MGE. The notional investments earn interest based upon the semiannual rate of U.S. Treasury Bills having a 26 week maturity increased by 1% compounded monthly with a minimum annual rate of 7%, compounded monthly. The notional investments are based upon observable market data, however, since the deferred compensation obligations themselves are not exchanged in an active market, they are classified as Level 2.

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The following table summarizes the changes in Level 3 commodity derivative assets and liabilities measured at fair value on a recurring basis.

		Three Months Ended
		March 31,
(In thousands)		2018		2017
Beginning balance	$	(42,026)	$	(50,306)
Realized and unrealized gains (losses):
Included in regulatory assets		563		1,953
Included in other comprehensive income		-		-
Included in earnings		(542)		(586)
Included in current assets		(173)		125
Purchases		5,834		5,996
Sales		-		-
Issuances		-		-
Settlements		(5,119)		(5,536)
Transfers in and/or out of Level 3		-		-
Balance as of March 31,	$	(41,463)	$	(48,354)
Total gains (losses) included in earnings attributed to the change in unrealized gains (losses) related to assets and liabilities held at March 31,(c)	$	-	$	-

The following table presents total realized and unrealized losses included in income for Level 3 assets and liabilities measured at fair value on a recurring basis (c).

		Three Months Ended
		March 31,
(In thousands)		2018		2017
Purchased power expense	$	(723)	$	(431)
Cost of gas sold expense		181		(155)
Total	$	(542)	$	(586)

(c)

MGE's exchange-traded derivative contracts, over-the-counter party transactions, purchased power agreement, and FTRs are subject to regulatory deferral. These derivatives are therefore marked to fair value and are offset in the financial statements with a corresponding regulatory asset or liability.

13.

Joint Plant Ownership - MGE Energy and MGE.

Columbia.

In 2016, MGE and WPL negotiated an amendment to the existing Columbia joint operating agreement, that has been approved by the PSCW, under which MGE will have the option to reduce its obligation to pay certain capital expenditures (other than SCR-related expenditures) at Columbia in exchange for a proportional reduction in MGE's ownership in Columbia. On January 1 of each year, beginning in 2017 and ending June 1, 2020, the ownership percentage will be adjusted, through a partial sale, based on the amount of capital expenditures foregone. In June 2017, the FERC approved the ownership transfer in Columbia, effective January 1, 2017.

During 2017, MGE accrued $8.8 million of 2017 capital expenditures that MGE has forgone as part of the ownership transfer agreement with WPL. As of December 31, 2017, MGE classified $8.8 million of Columbia assets as held-for-sale on the consolidated balance sheets. In January 2018, MGE reduced its ownership interest in Columbia from 20.4% to 19.4% through the partial sale of plant assets to WPL.

During three months ended March 31, 2018, MGE accrued $1.4 million of 2018 capital expenditures that MGE has forgone subject to the ownership transfer agreement. As of March 31, 2018, MGE classified $1.4 million of Columbia assets as held-for-sale on the consolidated balance sheets. The assets recognized as held-for-sale are subject to a partial sale of plant assets to WPL, expected to occur in January 2019.

29

14.

Segment Information - MGE Energy and MGE.

MGE Energy operates in the following business segments: electric utility, gas utility, nonregulated energy, transmission investment, and all other. See the 2017 Annual Report on Form 10-K for additional discussion of each of these segments.

The following tables show segment information for MGE Energy's operations for the indicated periods:

(In thousands) MGE Energy		Electric		Gas		Nonregulated Energy		Transmission Investment		All Others		Consolidation/ Elimination Entries		Consolidated Total
Three Months Ended March 31, 2018
Operating revenues	$	94,391	$	62,765	$	476	$	-	$	-	$	-	$	157,632
Interdepartmental revenues		31		4,347		9,820		-		-		(14,198)		-
Total operating revenues		94,422		67,112		10,296		-		-		(14,198)		157,632
Depreciation and amortization		(9,378)		(2,395)		(1,850)		-		-		-		(13,623)
Other operating expenses		(76,575)		(55,195)		(43)		(3)		(203)		14,198		(117,821)
Operating income (loss)		8,469		9,522		8,403		(3)		(203)		-		26,188
Other income, net		1,730		766		-		2,372		51		-		4,919
Interest (expense) income, net		(2,867)		(839)		(1,348)		-		315		-		(4,739)
Income before taxes		7,332		9,449		7,055		2,369		163		-		26,368
Income tax provision		(1,200)		(2,458)		(1,922)		(648)		(139)		-		(6,367)
Net income	$	6,132	$	6,991	$	5,133	$	1,721	$	24	$	-	$	20,001
Three Months Ended March 31, 2017
Operating revenues	$	98,324	$	58,426	$	73	$	-	$	-	$	-	$	156,823
Interdepartmental revenues		(105)		4,394		11,070		-		-		(15,359)		-
Total operating revenues		98,219		62,820		11,143		-		-		(15,359)		156,823
Depreciation and amortization		(8,900)		(2,213)		(1,846)		-		-		-		(12,959)
Other operating expenses(a)		(76,006)		(50,971)		(41)		-		(369)		15,359		(112,028)
Operating income (loss)		13,313		9,636		9,256		-		(369)		-		31,836
Other income (deductions), net(a)		870		399		-		2,478		(222)		-		3,525
Interest (expense) income, net		(2,776)		(799)		(1,407)		-		88		-		(4,894)
Income (loss) before taxes		11,407		9,236		7,849		2,478		(503)		-		30,467
Income tax (provision) benefit		(3,454)		(3,704)		(3,151)		(997)		139		-		(11,167)
Net income (loss)	$	7,953	$	5,532	$	4,698	$	1,481	$	(364)	$	-	$	19,300

(a)

Reflects retrospective application of new accounting pronouncement related to pension and other postretirement benefits, see Footnote 2 for further information.

30

The following tables show segment information for MGE's operations for the indicated periods:

(In thousands) MGE		Electric		Gas		Nonregulated Energy		Consolidation/ Elimination Entries		Consolidated Total
Three Months Ended March 31, 2018
Operating revenues	$	94,391	$	62,765	$	476	$	-	$	157,632
Interdepartmental revenues		31		4,347		9,820		(14,198)		-
Total operating revenues		94,422		67,112		10,296		(14,198)		157,632
Depreciation and amortization		(9,378)		(2,395)		(1,850)		-		(13,623)
Other operating expenses(b)		(77,731)		(57,641)		(1,965)		14,198		(123,139)
Operating income(b)		7,313		7,076		6,481		-		20,870
Other income, net(b)		1,686		754		-		-		2,440
Interest expense, net		(2,867)		(839)		(1,348)		-		(5,054)
Net income		6,132		6,991		5,133		-		18,256
Less: Net income attributable to
noncontrolling interest, net of tax		-		-		-		(5,806)		(5,806)
Net income attributable to MGE	$	6,132	$	6,991	$	5,133	$	(5,806)	$	12,450
Three Months Ended March 31, 2017
Operating revenues	$	98,328	$	58,435	$	73	$	-	$	156,836
Interdepartmental revenues		(109)		4,385		11,070		(15,346)		-
Total operating revenues		98,219		62,820		11,143		(15,346)		156,836
Depreciation and amortization		(8,900)		(2,213)		(1,846)		-		(12,959)
Other operating expenses(a), (b)		(79,426)		(54,665)		(3,192)		15,346		(121,937)
Operating income(b)		9,893		5,942		6,105		-		21,940
Other income, net(a), (b)		836		389		-		-		1,225
Interest expense, net		(2,776)		(799)		(1,407)		-		(4,982)
Net income		7,953		5,532		4,698		-		18,183
Less: Net income attributable to
noncontrolling interest, net of tax		-		-		-		(5,389)		(5,389)
Net income attributable to MGE	$	7,953	$	5,532	$	4,698	$	(5,389)	$	12,794

(a)

Reflects retrospective application of new accounting pronouncement related to pension and other postretirement benefits, see Footnote 2 for further information.

(b)

Amounts are shown net of the related tax expense, consistent with the presentation on the MGE Consolidated Statements of Income.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

General

MGE Energy is an investor-owned public utility holding company operating through subsidiaries in five business segments:

·

Regulated electric utility operations, conducted through MGE,

·

Regulated gas utility operations, conducted through MGE,

·

Nonregulated energy operations, conducted through MGE Power and its subsidiaries,

·

Transmission investments, representing our equity investment in ATC and ATC Holdco, and

·

All other, which includes corporate operations and services.

Our principal subsidiary is MGE, which generates and distributes electric energy, distributes natural gas, and represents a majority portion of our assets, liabilities, revenues, and expenses. MGE generates and distributes electricity to approximately 151,000 customers in Dane County, Wisconsin, including the city of Madison, and purchases and distributes natural gas to approximately 158,000 customers in the Wisconsin counties of Columbia, Crawford, Dane, Iowa, Juneau, Monroe, and Vernon.

Our nonregulated energy operations own interests in electric generating capacity that is leased to MGE. The ownership/leasing structure was adopted under applicable state regulatory guidelines for MGE's participation in these generation facilities, consisting principally of a stable return on the equity investment in the new generation facilities over the term of the related leases. The nonregulated energy operations include an ownership interest in two coal-fired generating units in Oak Creek, Wisconsin and a partial ownership of a cogeneration project on the UW-Madison campus. A third party operates the units in Oak Creek, and MGE operates the cogeneration project. Due to the nature of MGE's participation in these facilities, the results of MGE Energy's nonregulated operations are also consolidated into MGE's consolidated financial position and results of operations under applicable accounting standards.

Executive Overview

Our primary focus today and for the foreseeable future is our core utility customers at MGE as well as creating long-term value for our shareholders. MGE continues to face the challenge of providing its customers with reliable power at competitive prices. MGE meets this challenge by investing in more efficient generation projects, including renewable energy sources. MGE continues to examine and pursue opportunities to reduce the proportion that coal generation represents in its generation mix, including the announced reduction in its ownership of Columbia and the construction of the Saratoga, Iowa wind generation facility. MGE will continue to focus on growing earnings while controlling operating and fuel costs. MGE maintains safe and efficient operations in addition to providing customer value. We believe it is critical to maintain a strong credit standing consistent with financial strength in MGE as well as the parent company in order to accomplish these goals.

We earn our revenue and generate cash from operations by providing electric and natural gas utility services, including electric power generation and electric power and gas distribution. The earnings and cash flows from the utility business are sensitive to various external factors, including:

·

Weather, and its impact on customer sales,

·

Economic conditions, including current business activity and employment and their impact on customer demand,

·

Regulation and regulatory issues, and their impact on the timing and recovery of costs,

·

Energy commodity prices, including natural gas prices,

·

Equity price risk pertaining to pension related assets,

·

Credit market conditions, including interest rates and our debt credit rating,

·

Environmental laws and regulations, including adopted and pending environmental rule changes, and

·

Other factors listed in "Item 1A. Risk Factors" in our 2017 Annual Report on Form 10-K.

For the three months ended March 31, 2018, MGE Energy's earnings were $20.0 million or $0.58 per share compared to $19.3 million or $0.56 per share for the same period in the prior year. MGE's earnings for the three months ended March 31, 2018, were $12.5 million compared to $12.8 million for the same period in the prior year.

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MGE Energy's net income was derived from our business segments as follows:

		Three Months Ended
(In millions)		March 31,
Business Segment:		2018		2017
Electric Utility	$	6.1	$	8.0
Gas Utility		7.0		5.5
Nonregulated Energy		5.1		4.7
Transmission Investments		1.7		1.5
All Other		0.1		(0.4)
Net Income	$	20.0	$	19.3

Our net income during the three months ended March 31, 2018, compared to the same period in the prior year primarily reflects the effects of the following factors:

Electric Utility

For the three months ended March 31, 2018, electric operating income decreased primarily due to an increase in fuel costs in the first quarter of 2018 as a result of a scheduled plant outage.

Gas Utility

For the three months ended March 31, 2018, gas operating income increased primarily related to a 14.7% increase in gas retail sales reflecting higher customer demand resulting from colder weather experienced in the first quarter of 2018 compared to the same period in the prior year and an increase in retail customers. The average temperature in February 2018 was 22 degrees compared to 33 in February 2017. Heating degree days (a measure for determining the impact of weather during the heating season) increased by 14.6% compared to the prior year.

During the first three months of 2018, the following events occurred:

Tax Reform: On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the Tax Act). The Tax Act makes broad and complex changes to the U.S. tax code, including the reduction in the U.S. federal corporate tax rate from 35 percent to 21 percent, effective January 1, 2018.

Rates approved for 2018 reflect an income tax rate of 35 percent. MGE received a PSCW order to defer the over-collection of income tax expense as a result of the decrease in tax rate to 21 percent. As of March 31, 2018, MGE has deferred $3.3 million in a regulatory liability and recorded a corresponding reduction in operating revenues. The PSCW reached a preliminary decision in April 2018 for the return of the over-collection of income tax expense. The preliminary decision includes a one-time bill credit in July of 2018 for the first six months of 2018 over-collection and a monthly bill credit beginning in August 2018 of the estimated remaining annual amount to be returned to customers. Any over/under recovery of the actual costs will be subject to the PSCW's annual review in the following year and is then reflected in future billings to retail customers. A final order is expected in May 2018.

Saratoga Wind Farm: In December 2017, the PSCW authorized construction of a 66MW wind farm, consisting of 33 turbines, located near Saratoga, Iowa. MGE received specific approval to recover 100% AFUDC on the project. As of March 31, 2018, MGE has incurred $23.3 million of capital expenditures. Construction of the project is expected to be completed by the end of 2018, with an estimated capital cost of $108 million.

Deferred Fuel Costs – Subject to Refund: As of March 31, 2018, MGE has deferred $1.5 million of 2018 fuel savings. These costs will be subject to the PSCW's annual review of 2018 fuel costs, expected to be completed in 2019.

In the near term, several items may affect us, including:

Tax Reform: Pursuant to the Tax Act, deferred income tax balances as of December 31, 2017, were remeasured to reflect the decrease in corporate tax rate. A $130.5 million regulatory liability was recorded given that changes in income taxes are generally passed through in customer rates for the regulated utility. The amount and timing of the cash impacts will depend on the period over which certain income tax benefits are provided to customers, which will be determined by the PSCW. A portion of the regulatory liability will be returned to customers using a normalization method of accounting.

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Forward Wind: In April 2018, MGE, along with two other utilities, purchased the Forward Wind Energy Center, which consists of 86 wind turbines located in Wisconsin with a total capacity of 129 MWs. The aggregate purchase price was approximately $174 million of which MGE's proportionate share is 12.8%, or approximately $23 million. The purchase of the Forward Wind Energy Center replaced an existing purchase power agreement, of which MGE purchased 12.8% of the facility's energy output.

Financing Plans: MGE has regulatory authority to issue up to $150 million of new long-term debt during the next three years to finance authorized utility capital expenditures, including the Saratoga Wind Farm, refinance a portion of its current and maturing long-term debt, reduce short-term debt, and finance other corporate utility purposes.

ATC Return on Equity: Several parties have filed complaints with the FERC seeking to reduce the ROE used by MISO transmission owners, including ATC. Any change to ATC's ROE could result in lower equity earnings and distributions from ATC in the future. We derived approximately 8.9% and 8.0% of our net income for the three months ended March 31, 2018 and 2017, respectively, from our investment in ATC. See "Other Matters" below for additional information concerning ATC.

Environmental Initiatives: There are proposed legislative rules and initiatives involving matters related to air emissions, water effluent, hazardous materials, and greenhouse gases, all of which affect generation plant capital expenditures and operating costs as well as future operational planning. At present, it is unclear how the changes in the Presidential and EPA administrations may affect existing, pending or new legislative or rulemaking proposals or regulatory initiatives. Such legislation and rulemaking could significantly affect the costs of owning and operating fossil-fueled generating plants, such as Columbia and the Elm Road Units, from which we derive approximately 44% of our electric generating capacity as of March 31, 2018. We would expect to seek and receive recovery of any such costs in rates; however, it is difficult to estimate the amount of such costs due to the uncertainty as to the timing and form of the legislation and rules, and the scope and time of the recovery of costs in rates, which may lag the incurrence of those costs.

EPA's Clean Power Plan: In October 2015, the EPA finalized its Clean Power Plan (CPP) rule with an effective date of December 2015, setting guidelines and approval criteria for states to use in developing plans to control GHG emissions from existing fossil fuel-fired electric generating units (EGUs) and systems. Implementation of the rule is expected to have a direct impact on existing coal and natural gas fired generating units, including possible changes in dispatch and additional operating costs. In October 2017, the EPA published a proposed rule announcing the EPA's intention to repeal the CPP and has sought public comment on whether to replace the rule, and if so how. Given the pending legal proceedings, and the EPA's proposal, the nature and timing of any final requirements to control GHG emissions from existing fossil fuel-fired EGUs is subject to uncertainty. If a rule is implemented substantially in its present form, it is expected to have a material impact on MGE. MGE will continue to monitor developments with this proposed rule.

Future Generation: During the first quarter of 2016, MGE entered into an agreement with WPL under which MGE may acquire up to 50 MW of capacity in a gas-fired generating plant to be constructed by WPL at its Riverside Energy Center in Beloit, Wisconsin, during the five-year period following the in-service date of the plant. The plant is expected to be completed by early 2020. MGE and WPL have negotiated an amendment to the existing Columbia joint operating agreement, effective January 1, 2017, under which MGE will reduce its obligation to pay certain capital expenditures (other than SCR-related expenditures) at Columbia prior to the expected in-service date of the Riverside gas-fired generating plant in exchange for a proportional reduction in MGE's ownership in Columbia. On January 1 of each year, beginning in 2017 and ending June 1, 2020, the ownership percentage will be adjusted, through a partial sale, based on the amount of capital expenditures foregone. During the three months ended March 31, 2018, MGE accrued $1.4 million of 2018 capital expenditures that MGE has forgone as part of the ownership transfer agreement with WPL. During 2017, MGE accrued $8.8 million of 2017 capital expenditures forgone. As of March 31, 2018, and December 31, 2017, MGE classified $1.4 million and $8.8 million, respectively, of Columbia assets as held-for-sale on the consolidated balance sheets. In January 2018, MGE reduced its ownership interest in Columbia from 20.4% to 19.4% through the partial sale of plant assets to WPL. By June 2020, MGE's ownership in Columbia is forecasted to be approximately 19%, a decrease of 3% from the 22% ownership interest held by MGE on January 1, 2016.

Future Generation - Utility Solar: As part of MGE's Energy 2030 commitment, we plan to invest in utility scale solar. MGE is partnering with WEC Energy Group to build two large solar projects in Wisconsin. MGE's ownership share is expected to be at least 50 MW.

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The following discussion is based on the business segments as discussed in Footnote 14 of the Notes to Consolidated Financial Statements in this Report.

Results of Operation

Three Months Ended March 31, 2018 and 2017

Results of operations include financial information prepared in accordance with GAAP and electric and gas margins which are non-GAAP measures. Electric margin (electric revenues less fuel for electric generation and purchase power costs) and gas margin (gas revenues less cost of gas sold) are non-GAAP measures because they exclude nonregulated operating revenues, other operations and maintenance expense, depreciation and amortization expense, and other general taxes expense.

Management believes that electric and gas margins provide a meaningful basis for evaluating and managing utility operations since fuel for electric generation, purchase power costs, and cost of gas sold are passed through to customers in current rates. As a result, management uses electric and gas margins internally when assessing the operating performance of our segments. The presentation of utility electric and gas margins herein is intended to provide supplemental information for investors regarding operating performance. These electric and gas margins may not be comparable to how other entities define utility electric and gas margin. Furthermore, these measures are not intended to replace operating income as determined in accordance with GAAP as an indicator of operating performance.

The following table provides a calculation of electric and gas margins (non-GAAP), along with a comparable GAAP measure, operating income:

		Three Months Ended March 31,
(In millions)		2018		2017		$ Change
Electric revenues	$	94.4	$	98.3	$	(3.9)
Fuel for electric generation		11.9		12.2		(0.3)
Purchased power		17.0		15.3		1.7
Total Electric Margins		65.5		70.8		(5.3)
Gas revenues		62.8		58.4		4.4
Cost of gas sold		39.7		35.8		3.9
Total Gas Margins		23.1		22.6		0.5
Other operating revenues		0.5		0.1		0.4
Other operations and maintenance		44.4		43.8		0.6
Depreciation and amortization		13.6		13.0		0.6
Other general taxes		4.9		4.9		-
Operating Income	$	26.2	$	31.8	$	(5.6)

Electric sales and revenues

The following table compares MGE's electric revenues and electric kWh sales by customer class for each of the periods indicated:

		Revenues				Sales (kWh)
(In thousands)		Three Months Ended March 31,				Three Months Ended March 31,
		2018		2017	% Change	2018	2017	% Change
Residential	$	33,259	$	33,353	(0.3)%	207,151	197,674	4.8 %
Commercial		47,452		50,164	(5.4)%	440,891	433,389	1.7 %
Industrial		2,895		4,215	(31.3)%	42,867	51,765	(17.2)%
Other-retail/municipal		8,287		9,021	(8.1)%	89,245	92,087	(3.1)%
Total retail		91,893		96,753	(5.0)%	780,154	774,915	0.7 %
Sales to the market		2,034		972	N/A%	32,559	35,862	(9.2)%
Other revenues		470		429	9.6	-	-	-  %
Adjustments to revenues		(6)		170	(103.5)%	-	-	-  %
Total	$	94,391	$	98,324	(4.0)%	812,713	810,777	0.2 %

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Electric Margin

Electric margin decreased $5.3 million for the three months ended March 31, 2018, compared to the same period in 2017, due to the following:

(In millions)
Revenue subject to refund	$	(3.8)
Increased fuel costs		(1.3)
Other		(0.9)
Change in fuel-related costs, net of recoveries		(0.4)
Increase in volume		1.1
Total	$	(5.3)

·

Revenue subject to refund. MGE received a PSCW order to defer the over-collection of income tax expense collected in customer rates as a result of the Tax Act reduction in federal income tax rate to 21 percent. During the three months ended March 31, 2018, MGE recorded $2.5 million as a reduction in retail revenues and recorded a corresponding regulatory liability. MGE has other cost recovery mechanisms; any over-collection of the difference between actual costs incurred and the amount of costs collected from customers is recorded as a reduction of revenue in the period incurred. During the three months ended March 31, 2018, MGE recorded $1.3 million as a reduction in retail revenues and recorded a corresponding regulatory liability.

·

Fuel costs. Fuel costs increased during the three months ended March 31, 2018, primarily as a result of a scheduled plant outage.

·

Fuel-related costs. Under fuel rules, MGE is required to defer electric fuel-related costs that fall outside a 2% cost tolerance band around the amount used in the most recent rate proceeding. Beginning in 2018, over-collection of fuel-related costs outside the tolerance band are reflected as a reduction of revenue in the period incurred. Under-collection of costs outside the tolerance band is reflected as a reduction of purchase power expense in the period incurred. Any potential recovery of excess fuel costs will be recorded in the period received. Prior to adoption of the new revenue recognition guidance, effective January 1, 2018, deferred fuel-related costs were reflected in purchased power expense, with potential refunds associated with fuel savings increasing that expense and potential recovery of excess fuel costs decreasing that expense.

·

Volume. During the three months ended March 31, 2018, there was a 4.8% increase in residential sales volumes compared to the same period in the prior year driven by increased customer demand. During the three months ended March 31, 2018, there was a 17.2% decrease in industrial retail sales volumes compared to the same period in the prior year as a result of a large industrial customer relocating its operations out of state.

Gas deliveries and revenues

The following table compares MGE's gas revenues and gas therms delivered by customer class for each of the periods indicated:

		Revenues				Therms Delivered
(In thousands, except HDD and average rate per therm of retail customer)		Three Months Ended March 31,				Three Months Ended March 31,
		2018		2017	% Change	2018	2017	% Change
Residential	$	36,551	$	33,903	7.8 %	49,712	43,038	15.5 %
Commercial/Industrial		24,952		23,048	8.3 %	42,307	37,176	13.8 %
Total retail		61,503		56,951	8.0 %	92,019	80,214	14.7 %
Gas transportation		1,135		1,350	(15.9)%	21,941	21,035	4.3 %
Other revenues		127		125	1.6 %	-	-	-  %
Total	$	62,765	$	58,426	7.4 %	113,960	101,249	12.6 %
Heating degree days (normal 3,479)						3,586	3,130	14.6 %
Average rate per therm of
retail customer	$	0.668	$	0.710	(5.9)%

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Gas Margin

Gas margin increased $0.5 million for the three months ended March 31, 2018, compared to the same period in 2017, due to the following:

(In millions)
Increase in volume	$	1.9
Revenue subject to refund		(1.4)
Total	$	0.5

·

Volume. For the three months ended March 31, 2018, retail gas deliveries increased 14.7% compared to the same period in the prior year primarily related to customer growth and more favorable weather conditions in the current year.

·

Revenue subject to refund. MGE received a PSCW order to defer the over-collection of income tax expense collected in customer rates as a result of the Tax Act reduction in federal income tax rate to 21 percent. For the three months ended March 31, 2018, MGE recorded $1.4 million in a reduction in retail revenues and recorded a corresponding regulatory liability.

Consolidated operations and maintenance expenses

For the three months ended March 31, 2018, operations and maintenance expenses increased $0.6 million, compared to the same period in the prior year. The following contributed to the net change:

(In millions)
Increased production expenses	$	0.6
Increased administrative and general costs		0.4
Increased other costs		0.2
Decreased transmission costs		(0.4)
Decreased distribution expenses		(0.2)
Total	$	0.6

Nonregulated Energy Operations - MGE Energy and MGE

The nonregulated energy operations are conducted through MGE Energy's subsidiaries: MGE Power Elm Road (the Elm Road Units) and MGE Power West Campus (WCCF), which have been formed to own and lease electric generating capacity to assist MGE. For the three months ended March 31, 2018 and 2017, net income at the nonregulated energy operations segment was $5.1 million and $4.7 million, respectively. The decrease in tax rate from 35% to 21%, effective January 1, 2018, lowered lease revenues and income tax expense for the three months ended 2018. Income tax expense is a factor used in the formula to calculate lease rates.

Transmission Investment Operations - MGE Energy and MGE

Transmission investment other income

For the three months ended March 31, 2018 and 2017, other income at the transmission investment segment was $2.4 million and $2.5 million, respectively. The decrease in tax rate from 35% to 21%, effective January 1, 2018, lowered earnings from ATC and income tax expense for the three months ended 2018. Income tax expense is a factor used in the calculation of ATC transmission rates. The transmission investment segment holds our interest in ATC and ATC Holdco, and its income reflects our equity in the earnings of the investments. 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. See Footnote 3 of the Notes to Consolidated Financial Statements in this Report and "Other Matters" below for additional information concerning ATC and summarized financial information regarding ATC.

Consolidated Income Taxes - MGE Energy and MGE

Although effective tax rates have been lowered as a result of the Tax Act, regulated revenues have been affected as tax expense is a factor in the determination of rates for electric and gas service, and rates held by our investment in transmission. See Footnote 5 of the Notes to Consolidated Financial Statements for effective tax rate reconciliation.

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Noncontrolling Interest, Net of Tax - MGE

The noncontrolling interest, net of tax, reflects the accounting required for MGE Energy's interest in MGE Power Elm Road (the Elm Road Units) and MGE Power West Campus (WCCF). MGE Energy owns 100% of MGE Power Elm Road and MGE Power West Campus; however, due to the contractual agreements for these projects with MGE, the entities are considered VIEs with respect to MGE and their results are consolidated with those of MGE, the primary beneficiary of the VIEs. The following table shows MGE Energy's noncontrolling interest, net of tax, reflected on MGE's consolidated statement of income:

		Three Months Ended
		March 31,
(In millions)		2018		2017
MGE Power Elm Road	$	4.0	$	3.6
MGE Power West Campus		1.8		1.8

Contractual Obligations and Commercial Commitments - MGE Energy and MGE

There were no material changes, other than from the normal course of business, to MGE Energy's and MGE's contractual obligations (representing cash obligations that are considered to be firm commitments) and commercial commitments (representing commitments triggered by future events) during the three months ended March 31, 2018, except as noted below. Further discussion of the contractual obligations and commercial commitments is included in Footnote 17 of Notes to Consolidated Financial Statements and "Contractual Obligations and Commercial Commitments for MGE Energy and MGE" under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in MGE Energy's and MGE's 2017 Annual Report on Form 10-K.

Purchase Contracts - MGE Energy and MGE

See Footnote 9.c. of Notes to Consolidated Financial Statements in this Report for a description of commitments at March 31, 2018, that MGE Energy and MGE have entered with respect to the Saratoga wind project.

Liquidity and Capital Resources

MGE Energy and MGE have adequate liquidity to fund future operations and capital expenditures over the next twelve months. Available resources include cash and cash equivalents, operating cash flows, liquid assets, borrowing capacity under revolving credit facilities, and access to equity and debt capital markets. See "Credit Facilities" under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources in MGE Energy's and MGE's 2017 Annual Report on Form 10-K for information regarding MGE Energy's and MGE's credit facilities.

Cash Flows

The following summarizes cash flows for MGE Energy and MGE during the three months ended March 31, 2018 and 2017:

		MGE Energy				MGE
(In thousands)		2018		2017		2018		2017
Cash provided by/(used for):
Operating activities	$	46,978	$	41,252	$	46,579	$	39,510
Investing activities		(39,543)		(18,128)		(37,829)		(15,959)
Financing activities		(13,284)		(2,029)		(9,603)		(11,869)

Cash Provided by Operating Activities

MGE Energy

MGE Energy's consolidated net cash provided by operating activities is derived mainly from the electric and gas operations of its principal subsidiary, MGE.

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Cash provided by operating activities for the three months ended March 31, 2018, was $47.0 million, an increase of $5.7 million when compared to the same period in the prior year, primarily reflecting a decrease in pension contribution.

MGE Energy's net income increased $0.7 million for the three months ended March 31, 2018, when compared to the same period in the prior year.

Working capital accounts (excluding prepaid and accrued taxes) resulted in $6.3 million in cash provided by operating activities for the three months ended March 31, 2018, primarily due to decreased gas inventories, decreased unbilled revenues, and decreased other current assets, partially offset by decreased accounts payable, decreased other current liabilities, and increased accounts receivable.

Working capital accounts (excluding prepaid and accrued taxes) resulted in $0.1 million in cash used for operating activities for the three months ended March 31, 2017, primarily due to decreased accounts payable and decreased accrued payroll, partially offset by decreased gas inventories, decreased unbilled revenues, and decreased current assets.

A decrease in pension contribution resulted in an additional $5.8 million in cash provided by operating activities for the three months ended March 31, 2018, when compared to the same period in the prior year. Pension contributions reflect amounts required by law and discretionary amounts.

MGE

Cash provided by operating activities for the three months ended March 31, 2018, was $46.6 million, an increase of $7.1 million when compared to the same period in the prior year, primarily reflecting a decrease in pension contribution.

Net income increased $0.1 million for the three months ended March 31, 2018, when compared to the same period in the prior year.

Working capital accounts (excluding prepaid and accrued taxes) resulted in $8.3 million in cash provided by operating activities for the three months ended March 31, 2018, primarily due to decreased gas inventories, decreased unbilled revenues, and decreased other current assets, partially offset by decreased accounts payable, decreased accrued payroll, and increased other accounts receivable.

Working capital accounts (excluding prepaid and accrued taxes) resulted in $0.3 million in cash used for operating activities for the three months ended March 31, 2017, primarily due to decreased accounts payable and decreased accrued payroll, partially offset by decreased gas inventories, decreased unbilled revenues, and decreased other current assets.

A decrease in pension contribution resulted in an additional $5.8 million in cash provided by operating activities for the three months ended March 31, 2018, when compared to the same period in the prior year. Pension contributions reflect amounts required by law and discretionary amounts.

Cash Used for Investing Activities

MGE Energy

MGE Energy's cash used for investing activities increased $21.4 million for the three months ended March 31, 2018, when compared to the same period in the prior year.

Capital expenditures for the three months ended March 31, 2018, were $37.6 million. This amount represents an increase of $21.5 million from the expenditures made in the same period in the prior year. This increase primarily reflects expenditures on the Saratoga wind project.

Capital contributions in other investments decreased $1.1 million for the three months ended March 31, 2018, when compared to the same period in the prior year.

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MGE

MGE's cash used for investing activities increased $21.9 million for the three months ended March 31, 2018, when compared to the same period in the prior year.

Capital expenditures for the three months ended March 31, 2018, were $37.6 million. This amount represents an increase of $21.5 million from the expenditures made in the same period in the prior year. This increase primarily reflects expenditures on the Saratoga wind project.

Cash Used for Financing Activities

MGE Energy

Cash used for MGE Energy's financing activities was $13.3 million for the three months ended March 31, 2018, compared to $2.0 million of cash used for MGE Energy's financing activities for the same period in the prior year.

For the three months ended March 31, 2018, dividends paid were $11.2 million compared to $10.7 million in the prior year. This increase was a result of a higher dividend per share ($0.323 vs. $0.308).

During the three months ended March 31, 2018, net short-term debt repayments were $1.0 million. There were no short-term debt repayments for the three months ended March 31, 2017.

During the three months ended March 31, 2017, MGE issued $40.0 million of senior unsecured notes, which was used to refinance $30.0 million of medium-term notes and assist with financing additional capital expenditures.

MGE

During the three months ended March 31, 2018, cash used for MGE's financing activities was $9.6 million compared to $11.9 million of cash used for MGE's financing activities for the same period in the prior year.

Dividends paid from MGE to MGE Energy were $15.0 million for the three months ended March 31, 2017. There were no dividends from MGE to MGE Energy for the three months ended March 31, 2018.

Distributions to parent from noncontrolling interest, which represent distributions from MGE Power Elm Road and MGE Power West Campus to MGE Energy, were $7.5 million for the three months ended March 31, 2018, compared to $5.5 million in the prior year.

During the three months ended March 31, 2018, net short-term debt repayments were $1.0 million. There were no short-term debt repayments for the three months ended March 31, 2017.

During the three months ended March 31, 2017, MGE issued $40.0 million of senior unsecured notes, which was used to refinance $30.0 million of medium-term notes and assist with financing additional capital expenditures.

Capitalization Ratios

MGE Energy's capitalization ratios were as follows:

	MGE Energy
	March 31, 2018	December 31, 2017
Common shareholders' equity	65.0 %	64.6 %
Long-term debt(a)	34.8 %	35.1 %
Short-term debt	0.2 %	0.3 %

(a)

Includes the current portion of long-term debt.

MGE Energy's and MGE's Capital Requirements

MGE Energy's and MGE's liquidity are primarily affected by their capital requirements. During the three months ended March 31, 2018, capital expenditures for MGE Energy and MGE totaled $37.6 million, which included $35.6 million of utility capital expenditures primarily related to the Saratoga wind project.

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Credit Ratings

MGE Energy's and MGE's access to the capital markets, including, in the case of MGE, the commercial paper market, and their respective financing costs in those markets, may depend on the credit ratings of the entity that is accessing the capital markets.

None of MGE Energy's or MGE's borrowings are subject to default or prepayment as a result of a downgrading of credit ratings, although a downgrading of MGE's credit ratings could increase fees and interest charges under both MGE Energy's and MGE's credit agreements.

Environmental Matters

There were no material updates or developments in environmental matters that occurred during the three months ended March 31, 2018. Further discussion of environmental matters is included in MGE Energy's and MGE's 2017 Annual Report on Form 10-K and Footnote 9.a. of Notes to Consolidated Financial Statements in this Report.

Other Matters

ATC

In 2013, several parties filed a complaint with the FERC seeking to reduce the base return on equity (ROE) used by MISO transmission owners, including ATC, "due to changes in the capital markets." The complaint alleged that the MISO ROE should not exceed 9.15%, the equity components of hypothetical capital structures should be restricted to 50%, and the relevant incentive ROE adders should be discontinued. At the time, MISO's base ROE was 12.38% and ATC's base ROE was 12.2%. In February 2015, a second complaint was filed for the period February 2015 through May 2015 with the FERC requesting a reduction in the base ROE used by MISO transmission owners, including ATC, to 8.67%, with a refund effective date retroactive to the filing date of the complaint. In June 2016, an administrative law judge issued an initial decision for the second complaint that would reduce the transmission owner's base ROE to 9.7%. The initial decision will be reviewed by FERC. It is anticipated FERC will issue an order on this issue in 2018. On September 28, 2016, FERC issued an order on the first complaint, for the period November 2013 through February 2015, reducing the base ROE to 10.32%. This base ROE also became effective September 28, 2016, and will apply to future periods until FERC rules in the second complaint, at which time the base ROE ordered by FERC in the second complaint will prospectively become the authorized base ROE. Any change to ATC's ROE could result in lower equity earnings and distributions from ATC in the future.

In January 2015, FERC accepted the transmission owner's request for a 50 basis-point incentive ROE adder for participating in MISO. The adder became effective January 6, 2015.

FERC staff challenged certain aspects of ATC's implementation of its formula rate tariff. FERC has determined that a refund is required from ATC to its customers. The refund, pending FERC approval, is expected to occur in mid-2018.

Our share of ATC's earnings reflects a pre-tax adjustment of $0.1 million for the three months ended March 31, 2017, recorded by ATC for these matters representing its estimate of its refund liability. We derived approximately 8.9% and 8.0% of our net income for the three months ended March 31, 2018 and 2017, respectively, from our investment in ATC.

Adoption of Accounting Principles and Recently Issued Accounting Pronouncements

See Footnote 2 of Notes to Consolidated Financial Statements in this Report for discussion of new accounting pronouncements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

MGE Energy and MGE are potentially exposed to market risk associated with interest rates, commodity prices, and equity returns. MGE currently has no exposure to foreign currency risk. MGE manages some risk exposure through risk management policies and the use of derivative instruments. MGE's risk management policy prohibits speculative trading transactions.

Commodity Price Risk

MGE has commodity price risk exposure with respect to the price of natural gas, electricity, coal, emission credits, and oil. MGE's electric operations burn natural gas in several of its peaking power plants and, in many cases, the cost of purchased power is tied to the cost of natural gas. MGE employs established policies and procedures to reduce the market risks associated with changing commodity prices. MGE's commodity risks are somewhat mitigated by the current ratemaking process in place for recovering electric fuel cost, purchased energy costs, and the cost of natural gas.

MGE's electric fuel costs are subject to fuel rules established by the PSCW. The fuel rules require the PSCW and Wisconsin utilities to defer electric fuel-related costs that fall outside a symmetrical cost tolerance band. Any over/under recovery of the actual costs in a year outside of the symmetrical cost tolerance band is determined in the following year and is then reflected in future billings to electric retail customers. Under the electric fuel rules, MGE is required to defer the benefit of lower costs if the actual electric fuel costs fall outside the lower end of the range and is required to defer costs, less any excess revenues, if the actual electric fuel costs exceed the upper end of the range. Excess revenues are defined as revenues in the year in question that provide MGE with a greater return on common equity than authorized by the PSCW in MGE's latest rate order. The range is defined by the PSCW and has been modified throughout the years based on market conditions and other relevant factors. Currently, MGE is subject to a plus or minus 2% range. MGE assumes the risks and benefits of variances that are within the cost tolerance band. For 2018, fuel and purchased power costs included in MGE's fuel monitoring level rates are $102.4 million. See Footnote 10.b. of the Notes to Consolidated Financial Statements in this Report for additional information.

MGE recovers the cost of natural gas in its gas utility segment through the purchased gas adjustment clause (PGA). Under the PGA, MGE is able to pass through to its gas customers the cost of gas.

MGE also reduces price risk caused by market fluctuations via physical contracts and financial derivative contracts, including futures, swaps, options, forwards, and other contractual commitments. The maximum length of time over which cash flows related to energy commodities can be hedged under applicable PSCW approvals is four years.

MGE has financial gas and electric commodity contracts to hedge commodity price risk in the gas and electric utility segments. These contracts are primarily comprised of exchange-traded option and future contracts. MGE also holds financial transmission rights (FTRs), which are used to hedge the risk of increased transmission congestion charges. At March 31, 2018, the fair value of these instruments exceeded their cost basis by $0.1 million. Under the PGA clause and electric fuel rules, MGE may include the costs and benefits of the aforementioned fuel price risk management tools in the costs of fuel (natural gas or power). Because these costs/benefits are recoverable, the related unrealized loss/gain has been deferred on the consolidated balance sheets as a regulatory asset/liability.

MGE has also entered into a purchased power agreement that provides MGE with firm capacity and energy that began on June 1, 2012, and ends on May 31, 2022 (the "base term"). The agreement also allows MGE an option to extend the contract after the base term. The agreement is considered a derivative contract and is recognized at its fair value on the consolidated balance sheets. However, the derivative qualifies for regulatory deferral and is recognized with a corresponding regulatory asset or liability depending on whether the fair value is in a loss or gain position. The fair value of the contract at March 31, 2018, reflects a loss position of $41.3 million.

Interest Rate Risk

Both MGE Energy and MGE may have short term borrowings at varying interest rates. MGE issues commercial paper for its short-term borrowings, while MGE Energy draws from its current credit facility to meet its short-term borrowing needs. Borrowing levels vary from period to period depending upon capital investments and other factors. Future short-term interest expense and payments will reflect both future short-term interest rates and borrowing levels. MGE Energy and MGE manage interest rate risk by limiting their variable rate exposure and continually monitoring the effects of market changes on interest rates. MGE is not exposed to changes in interest rates on a substantial portion of its long-term debt until that debt matures and is refinanced at market rates.

42

Equity Price Risk - Pension-Related Assets

MGE currently funds its liabilities related to employee benefits through trust funds. These funds, which include investments in debt and equity securities, are managed by various investment managers. Changes in market value of these investments can have an impact on the future expenses related to these liabilities.

Credit Risk - Counterparty

Credit risk is the loss that may result from counterparty nonperformance. MGE is exposed to credit risk primarily through its merchant energy business. MGE uses credit policies to manage its credit risk, which include utilizing an established credit approval process, monitoring counterparty limits, employing credit mitigation measures such as collateral or prepayment arrangements, and using netting agreements.

Due to the possibility of extreme volatility in the prices of energy commodities and derivatives, the market value of contractual positions with individual counterparties could exceed established credit limits or collateral provided by those counterparties. If such a counterparty were then to fail to perform its obligations under its contract (for example, fail to deliver the electricity MGE originally contracted for), MGE could sustain a loss that could have a material impact on its financial results.

Additionally, if a counterparty were to default and MGE were to liquidate all contracts with that entity, MGE's credit loss would include the loss in value of mark-to-market contracts; the amount owed for settled transactions; and additional payments, if any, to settle unrealized losses on accrual contracts. As of March 31, 2018, no counterparties have defaulted.

MGE is obligated to provide service to all electric and gas customers within its respective franchised territories. MGE's franchised electric territory includes a 316 square-mile area in Dane County, Wisconsin, and MGE's franchised gas territory includes a service area covering 1,682 square miles in Wisconsin. Based on results for the year ended December 31, 2017, no one customer constituted more than 10% of total operating revenues for MGE Energy and MGE. Credit risk for electric and gas is managed by MGE's credit and collection policies, which are consistent with state regulatory requirements.

Cash, cash equivalents, and customer accounts receivable are the financial instruments that potentially subject MGE Energy and MGE to concentrations of credit risk. MGE Energy and MGE place their cash and cash equivalents with high credit-quality financial institutions. MGE has limited concentrations of credit risk from customer accounts receivable because of the large number of customers and relatively strong economy in its service territory.

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Item 4. Controls and Procedures.

During the first quarter of 2018, each registrant's management, including the principal executive officer and principal financial officer, evaluated its disclosure controls and procedures related to the recording, processing, summarization, and reporting of information in its periodic reports that it files with the SEC. These disclosure controls and procedures have been designed to ensure that material information relating to that registrant, including its subsidiaries, is accumulated and made known to that registrant's management, including these officers, by other employees of that registrant and its subsidiaries as appropriate to allow timely decisions regarding required disclosure, and that this information is recorded, processed, summarized, evaluated, and reported, as applicable, within the time periods specified in the SEC's rules and forms. Due to the inherent limitations of control systems, not all misstatements may be detected. These inherent limitations include the realities that judgments in decision making can be faulty and breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Also, MGE Energy does not control or manage certain of its unconsolidated entities and thus, its access and ability to apply its procedures to those entities is more limited than is the case for its consolidated subsidiaries.

As of March 31, 2018, each registrant's principal executive officer and principal financial officer concluded that its disclosure controls and procedures were effective. Each registrant intends to strive continually to improve its disclosure controls and procedures to enhance the quality of its financial reporting.

During the quarter ended March 31, 2018, there were no changes in either registrant's internal controls over financial reporting that materially affected, or are reasonably likely to affect materially, that registrant's internal control over financial reporting.

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PART II. OTHER INFORMATION.

Item 1. Legal Proceedings.

MGE Energy and MGE

MGE Energy and its subsidiaries, including MGE, from time to time are involved in various legal proceedings that are handled and defended in the ordinary course of business.

See Footnote 9.a. and 9.b. of Notes to Consolidated Financial Statements in this Report for more information.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased		Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs*	Maximum number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs*
January 1-31, 2018	8,826	$	59.85	-	-
February 1-28, 2018	9,411		55.59	-	-
March 1-31, 2018	60,489		58.18	-	-
Total	78,726	$	58.06	-	-

*Under the MGE Energy, Inc. Direct Stock Purchase and Dividend Reinvestment Plan (Stock Plan), common stock shares deliverable to plan participants may be either newly issued shares or shares purchased on the open market, as determined from time to time by MGE Energy. MGE Energy's transfer agent uses open market purchases to provide shares to meet obligations to participants in the Stock Plan. The shares are purchased on the open market through the transfer agent's securities broker-dealer and then are reissued under the Stock Plan as needed to meet share delivery requirements. The volume and timing of share repurchases in the open market depends upon the level of dividend reinvestment and optional share purchases being made from time to time by plan participants. As a result, there is no specified maximum number of shares to be repurchased and no specified termination date for the repurchases. All shares issued through the Stock Plan, whether newly issued or reissued following open market purchases, are issued and sold pursuant to a registration statement that was filed with the SEC and is currently effective.

Item 4. Mine Safety Disclosures.

Not applicable to MGE Energy and MGE.

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Item 6. Exhibits.

Ex. No.	Exhibit Description
4.2*	Supplemental Indenture dated as of February 1, 1993, to aforementioned Indenture of Mortgage and Deed of Trust.
10.4*	Joint Power Supply Agreement with Wisconsin Power and Light Company and Wisconsin Public Service Corporation.
12.1*	Statements regarding computation of ratio of earnings to fixed charges for MGE Energy, Inc.
12.2*	Statements regarding computation of ratio of earnings to fixed charges for Madison Gas and Electric Company.
31.1*	Certifications Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934 filed by Jeffrey M. Keebler for MGE Energy, Inc.
31.2*	Certifications Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934 filed by Jeffrey C. Newman for MGE Energy, Inc.
31.3*	Certifications Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934 filed by Jeffrey M. Keebler for Madison Gas and Electric Company
31.4*	Certifications Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934 filed by Jeffrey C. Newman for Madison Gas and Electric Company
32.1**	Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code (Sarbanes-Oxley Act of 2002) filed by Jeffrey M. Keebler for MGE Energy, Inc.
32.2**	Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code (Sarbanes-Oxley Act of 2002) filed by Jeffrey C. Newman for MGE Energy, Inc.
32.3**	Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code (Sarbanes-Oxley Act of 2002) filed by Jeffrey M. Keebler for Madison Gas and Electric Company
32.4**	Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code (Sarbanes-Oxley Act of 2002) filed by Jeffrey C. Newman for Madison Gas and Electric Company
101.INS*	XBRL Instance
101.SCH*	XBRL Taxonomy Extension Schema
101.CAL*	XBRL Taxonomy Extension Calculation
101.DEF*	XBRL Taxonomy Extension Definition
101.LAB*	XBRL Taxonomy Extension Labels
101.PRE*	XBRL Taxonomy Extension Presentation
*	Filed herewith.
**	Furnished herewith.

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Signatures - MGE Energy, Inc.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MGE ENERGY, INC.
Date: May 8, 2018	/s/ Jeffrey M. Keebler
	Jeffrey M. Keebler President and Chief Executive Officer (Duly Authorized Officer)
Date: May 8, 2018	/s/ Jeffrey C. Newman
	Jeffrey C. Newman Executive Vice President, Chief Financial Officer, Secretary and Treasurer (Chief Financial and Accounting Officer)

47

Signatures - Madison Gas and Electric Company

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MADISON GAS AND ELECTRIC COMPANY
Date: May 8, 2018	/s/ Jeffrey M. Keebler
	Jeffrey M. Keebler President and Chief Executive Officer (Duly Authorized Officer)
Date: May 8, 2018	/s/ Jeffrey C. Newman
	Jeffrey C. Newman Executive Vice President, Chief Financial Officer, Secretary and Treasurer (Chief Financial and Accounting Officer)

48

EX-4

EXHIBIT 4.2

SEVENTEENTH

SUPPLEMENTAL INDENTURE

MADISON GAS AND ELECTRIC COMPANY

TO

FIRSTAR TRUST COMPANY

(FORMERLY KNOWN AS FIRST WISCONSIN TRUST COMPANY),

TRUSTEE

DATED AS OF FEBRUARY 1, 1993

CREATING AN ISSUE OF 7.70%

FIRST MORTGAGE BONDS, 2028 SERIES

SUPPLEMENTAL TO INDENTURE OF

MORTGAGE AND DEED OF TRUST

DATED AS OF JANUARY 1, 1946

1

Seventeenth Supplemental Indenture, dated as of the 1st day of February, 1993, between MADISON GAS AND ELECTRIC COMPANY, a corporation duly organized and existing under and by virtue of the laws of the State of Wisconsin (hereinafter called the "Company"), party of the first part, and FIRSTAR TRUST COMPANY (formerly known as FIRST WISCONSIN TRUST COMPANY), a corporation duly organized and existing under and by virtue of the laws of the State of Wisconsin, having its principal place of business in the City of Milwaukee, Wisconsin (hereinafter called the "Trustee"), as Trustee under the Indenture hereinafter mentioned, party of the second part:

WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture of Mortgage and Deed of Trust (hereinafter called the "Indenture"), dated as of January 1, 1946, to secure the Company's First Mortgage Bonds, unlimited in aggregate principal amount except as therein otherwise provided, and has heretofore executed and delivered to the Trustee sixteen supplemental indentures creating sixteen series of bonds, bonds of nine of which series are outstanding as of the date hereof; and

WHEREAS, the Company desires in and by this Seventeenth Supplemental Indenture (hereinafter called "this Supplemental Indenture") to create a seventeenth series of bonds to be issued under the Indenture, to designate or otherwise distinguish such series, to specify the particulars necessary to describe and define the same, and to specify such other provisions and agreements in respect thereof as are in said Indenture provided or permitted; and

WHEREAS, the Company also desires in and by this Supplemental Indenture to record the description of, and confirm unto the Trustee, certain property acquired after execution and delivery of the Sixteenth Supplemental Indenture; and

WHEREAS, all the conditions and requirements necessary to make this Supplemental Indenture, when duly executed and delivered, a valid, binding and legal instrument in accordance with its terms and for the purposes herein expressed have been done, performed, and fulfilled, and the execution and delivery of this Supplemental Indenture in the form and with the terms hereof have been in all respects duly authorized;

NOW, THEREFORE, in consideration of the premises and in further consideration of the sum of One Dollar in lawful money of the United States of America paid to the Company by the Trustee at or before the execution and delivery of this Supplemental Indenture, the receipt whereof is hereby acknowledged, and of other good and valuable considerations, it is agreed by and between the Company and the Trustee as follows:

2

CONFIRMATION OF CONVEYANCE OF CERTAIN PROPERTY ACQUIRED AFTER EXECUTION AND DELIVERY OF THE SIXTEENTH SUPPLEMENTAL INDENTURE

First. The Company records in Exhibit "A" to this Supplemental Indenture, which is annexed hereto and made a part hereof, the description of, and hereby confirms unto the Trustee, the property therein described which has been acquired by the Company after the execution and delivery of the Sixteenth Supplemental Indenture and is now subject to the lien of the Indenture in all respects as if originally described therein, to have and to hold such property in trust, upon all the terms and trusts and subject to all the matters and to all conditions, all to the same extent and with the same force and effect as though conveyed by the Indenture in the first instance.

Second. The Company also hereby confirms unto the Trustee all other property of every kind, character and description (other than Excepted Property as defined in the Indenture), acquired or constructed by the Company after the execution and delivery of the Sixteenth Supplemental Indenture, located in the counties of Dane, Columbia, Kewaunee, Fond du Lac, Green Lake, Dodge, and Iowa, State of Wisconsin, or elsewhere, including, without limiting the generality of the foregoing, all transmission lines, pipe lines, additions to electric generating plants and to gas works, substations, and electric and gas distribution systems and facilities, including those now under construction; also all franchises, leases, permits, easements, rights of way, consents and licenses; all of said property being now subject to the lien of the Indenture in all respects as if originally described therein; together with all and singular the easements, hereditaments and appurtenances belonging or in any wise appertaining to the property above described or referred to, and all the estate, title, claims and demands whatsoever, as well in law as in equity, of the Company in and to the same and any and every part and parcel thereof; and all and singular the rents, issues, profits, tolls and other income thereof; excepting always Excepted Property as defined in the Indenture.

ARTICLE I

7.70% FIRST MORTGAGE BONDS, 2028 SERIES

SECTION 1. There is hereby created a series of bonds to be issued under and secured by the Indenture, to be designated, distinguished and known as "7.70% First Mortgage Bonds, 2028 Series" of the Company (hereinafter called "Bonds of This Series"). Bonds of This Series may be issued without limitation as to aggregate principal amount except as provided in the Indenture and this Supplemental Indenture. Bonds of This Series shall be issued as fully registered bonds without coupons and shall be dated as of the interest payment date next preceding the authentication thereof by the Trustee, except that: (i) if any Bond of This Series shall be authenticated before August 15, 1993 it shall be dated as of February 15, 1993 (unless (iii) below is applicable); (ii) if the Company shall at the time of authentication of a Bond of This Series be in default in the payment of interest upon Bonds of This Series, such Bond of This Series shall be dated as of the date of the beginning of the period for which such interest is so in default; and (iii) so long as there is no existing default in the payment of interest on Bonds of This Series, if any Bond of This Series shall be authenticated at any time after the close of business on any record date, as hereinafter defined, with respect to any interest payment date (February 15 or August 15, as the case may be) and on or prior to such interest payment date, it shall be dated as of such interest payment date.

3

The registered owner of any Bond of This series dated as of an interest payment date as provided in (iii) above shall, if the Company has defaulted in the payment of interest due on such interest payment date and such default shall be continuing, be entitled to exchange such Bond of This Series for a Bond or Bonds of This Series of the same aggregate principal amount dated as of the interest payment date next preceding the interest payment date first mentioned in this sentence. If the Trustee shall have knowledge at any time that any registered owner of a Bond of This Series shall be entitled by the provisions of the next preceding sentence to exchange such Bond of This Series, the Trustee shall within 30 days mail to such owner at the address of such owner appearing upon the registry book of the Company a notice informing such owner that such owner has such right of exchange.

Each of the Bonds of This Series shall mature February 15, 2028. The principal of, premium, if any, and interest on each Bond of This Series shall be payable in lawful money of the United States of America at the principal office of the Trustee in the City of Milwaukee, Wisconsin, or at the principal office of any successor in trust; provided that, at the option of the Company, the interest on each Bond of This Series shall be payable by check mailed to the registered owner. The rate of interest on each Bond of This Series shall be 7.70% per annum, payable on the fifteenth day of February and August of each year; and the terms of redemption for each Bond of This series shall be as referred to in Section 2 of this Article I.

So long as there shall be no existing default in the payment of interest on the Bonds of This Series, the person in whose name any Bond of This Series is registered at the close of business on the record date (as hereinafter defined) with respect to any interest payment date shall be entitled to receive the interest payable on such interest payment date notwithstanding any transfer or exchange of such Bond of This Series subsequent to such record date and on or prior to such interest payment date. If and to the extent the Company shall default in the payment of the interest due on such interest payment date, such defaulted interest shall, upon the subsequent payment thereof, be paid to the person in whose name such Bond of This Series is registered on the date of such payment.

The term "record date" as used herein with respect to any interest payment date shall mean the 10th business day prior to such interest payment date. The term "business day" as used herein shall mean any day other than a Saturday or a Sunday or a day on which the offices of the Trustee are closed pursuant to authorization of law.

SECTION 2. The Bonds of This Series shall be redeemable prior to maturity, in whole at any time or in part from time to time except as hereinafter provided, either at the option of the Company or pursuant to the requirements of the Indenture, on notice given in the manner and with the effect provided in Article IV of the Indenture and as in this Section 2 provided, at the applicable redemption prices provided in the Form of Bond of This Series set forth in Exhibit B annexed hereto.

In case the Company shall at any time elect to redeem in accordance with this Supplemental Indenture, all or any part of the Bonds of This Series, it shall give notice to the effect that it has so elected to redeem all or a part thereof, as the case may be, on a date therein designated, specifying in case of redemption of a part of the Bonds of This Series the distinctive numbers of the bonds to be redeemed (and the portion thereof-to be redeemed in the case of partial redemption of any bond), and in every case stating the applicable redemption price, the provision, of this Supplemental Indenture pursuant to which such redemption is being made and in substance that on

4

said date there will become and be due and payable upon each bond or portion thereof so to be redeemed, at the principal office of the Trustee in the City of Milwaukee, Wisconsin, or at the principal office of any successor in trust, the redemption price thereof hereinbefore in this Section 2 referred to, and that on and after such date interest thereon will cease to accrue.

Such notice shall be mailed by the Company, postage prepaid, at least 30 and not more than 45 days prior to such date of redemption, to the registered owners of all Bonds of This Series to be so redeemed, at their respective addresses appearing upon the register thereof. Any notice which is mailed as herein provided shall be conclusively presumed to have been properly and sufficiently given on the date of such mailing, whether or not the holder receives such notice. In any case, failure to give due notice by mail, or any defect in such notice, to the registered owner of any Bond of This Series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Bond of This Series.

Notice of redemption having been given as aforesaid, the Bonds of This Series so called for redemption, or the specified portions thereof, shall, on the date designated in such notice, become due and payable at the then applicable redemption price, and upon presentation and surrender thereof, accompanied by a written instrument of transfer duly executed by the registered owner or by a duly authorized attorney with the signature guaranteed to the satisfaction of the Trustee, such bonds or the specified portions thereof shall be paid and redeemed at said redemption price, and on and after said redemption date interest on said bonds shall cease to accrue.

In case of any redemption of Bonds of This Series by the Trustee pursuant to the provisions of the Indenture, notice of redemption shall be given by the Trustee in a similar manner as hereinabove provided.

SECTION 3. Bonds of This Series may be issued in the denomination of $1,000, and in such multiples of $1,000 as the Company may authorize, numbered consecutively from "RU1" upward, the execution and delivery thereof to be conclusive evidence of such authorization.

The Bonds of This Series and the Trustee's certificate of authentication thereon shall be substantially in the respective forms set forth in Exhibit B annexed hereto (any of the provisions of such Bonds may be set forth on the reverse side thereof).

SECTION 4. Bonds of This Series shall be transferable and exchangeable at the option of the registered owners thereof upon presentation and surrender thereof at the principal office of the Trustee in the City of Milwaukee, Wisconsin, or at the principal office of any successor in trust. In the case of an exchange, Bonds of This Series may be exchanged for bonds of the same aggregate principal amount but of different authorized denomination or denominations. Any exchanges and transfers shall be without charge (other than for taxes and other governmental charges, if any) and otherwise be subject to the terms and conditions set forth in Article II of the Indenture.

Every Bond of This Series so surrendered for transfer or exchange shall be accompanied by a written instrument of transfer duly executed by the registered owner or by duly authorized attorney (transferring such bond to the Company in the case of exchanges), and the signature to such transfer power shall be guaranteed to the satisfaction of the Trustee.

5

All Bonds of This Series so surrendered shall be forthwith cancelled and delivered to or upon the order of the Company.

All Bonds of This Series executed, authenticated and delivered in exchange for bonds so surrendered shall be valid obligation, of the Company, evidencing the same debt as the bonds surrendered, and shall be secured by the same lien and be entitled to the same benefits and protection as the bonds in exchange for which they are executed, authenticated and delivered.

The Company shall not be required to make any exchange or transfer of Bonds of This Series either (i) during a period of 15 days next preceding any interest payment date but only if there is an existing default in the payment of interest on the Bonds of This Series or (ii) after the bonds so presented for exchange or transfer, or any portion thereof, have been drawn for redemption or have been called for redemption, but may do so at its option.

SECTION 5. Pending the preparation of definitive Bonds of This Series the Company may from time to time execute, and, upon its written order, the Trustee shall authenticate and deliver, in lieu of such definitive bonds and subject to the same provisions, limitations and conditions, one or more temporary printed, lithographed or typewritten bonds, in registered form, substantially of the tenor of the bonds to be issued as hereinbefore recited, of any denomination specified in the written order of the Company for the authentication and delivery thereof, without coupons, and with such omissions, insertions and variations as may be determined by the Board of Directors of the Company. Such temporary bonds may, in lieu of the statement of the specified redemption prices required to be set forth in Bonds of This Series in definitive form, include a reference to the Form of Bond of This Series set forth in Exhibit B annexed hereto for a statement of such redemption prices.

If any such temporary Bonds of This Series shall at any time be so authenticated and delivered in lieu of definitive bonds, the Company shall without unreasonable delay at its own expense prepare, execute and deliver to the Trustee and thereupon, upon the presentation and surrender of temporary bonds, the Trustee shall authenticate and deliver in exchange therefor, without charge to the holder, definitive bonds of the same series for the same principal sum in the aggregate as the temporary bonds surrendered. All temporary bonds so surrendered shall be forthwith cancelled by the Trustee and delivered to or upon the order of the Company. Until exchanged for definitive bonds, the temporary bonds shall in all respects be entitled to the lien and security of the Indenture and all supplemental indentures.

SECTION 6. Definitive Bonds of This Series may be in the form of fully engraved bonds or bonds printed or lithographed with or without steel engraved borders or typewritten bonds.

SECTION 7. In the event that an interest payment date or the maturity date or a date fixed for redemption of any Bonds of This Series shall not be a business day, then payment of interest, principal or the redemption price, as the case may be, need not be made on such date, but may be made on the next, succeeding business day, with the same force and effect as if made on such interest payment date, maturity date or date fixed for redemption, and no interest shall accrue for the period-after such date.

6

ARTICLE II

ISSUE OF BONDS OF THIS SERIES

Bonds of This Series may be executed, authenticated and delivered from time to time as permitted by the provisions of Article III of the Indenture.

ARTICLE III

SINKING FUND FOR BONDS OF THIS SERIES

The Bonds of This Series are not subject to redemption by operation of any sinking fund.

ARTICLE IV

COVENANT WITH RESPECT TO DIVID.ENDS

SECTION 1. The Company-covenants and agrees that, so long as any Bonds of This Series are outstanding, it will not declare or pay any dividend on its common stock (other than dividends payable solely in shares of its common stock) or make any other distribution on or purchase any shares of its common stock, unless, after giving effect to such dividend, distribution or purchase, the aggregate of all such dividends and distributions and all amounts applied to such purchases, subsequent to December 31, 1945, shall not exceed the earned surplus of the Company available for dividends on its common stock accumulated subsequent to December 31, 1945.

For the purposes of this Article IV, the earned surplus of the Company available for dividends on its common stock. accumulated subsequent to December 31, 1945, shall be determined in accordance with sound accounting practice; provided, however, that (i) all direct charges to earned surplus, except charges occasioned by dividends (other than dividends payable solely in common stock of the Company) or other distributions on or purchases of shares of common stock of the Company, shall be deemed to be charges against earned surplus existing at December 31, 1945, to the extent thereof, and to such extent shall not diminish earned surplus accumulated subsequent to that date, and (ii) in no event shall profits or losses resulting from the sale or abandonment of mortgaged property or other capital assets, or taxes on or in respect of any such profits, be credited to or charged against earned surplus of the Company available for dividends on its common stock accumulated, subsequent to December 31, 1945.

The provisions of this Section 1 shall not apply to the acquisition of shares of common stock of the Company effected through the exchange of other shares of common stock of the Company, or otherwise acquired without expenditure of assets of the Company.

SECTION 2. The Company covenants that, so long as any Bonds of This Series are outstanding, it will file with the Trustee within four months after the close of each calendar year, beginning with the calendar year in which Bonds of This Series are first issued, an accountant's certificate stating as of the end. of such calendar year (i) the earned surplus of the Company available for dividends on its common stock accumulated subsequent to December 31, 1945 and (ii) the aggregate amount of all dividends (other than dividends payable solely in shares of common stock of the Company) and other distributions on or purchases of shares of common stock of the Company subsequent to December 31, 1945.

7

ARTICLE V

THE TRUSTEE

The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or-sufficiency of this Supplemental Indenture or the due execution hereof by the Company, or for or in respect of the recitals and statements contained herein, all of which recitals and statements are made solely by the Company.

Except as herein otherwise provided, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed, by the Trustee by reason of this Supplemental Indenture other than as set forth in the Indenture; and this Supplemental Indenture is executed and accepted on behalf of the Trustee, subject to all the terms and conditions set forth in the Indenture, as fully to all intents as if the same were herein set forth at length.

ARTICLE VI

MISCELLANEOUS PROVISIONS

Except in so far as herein otherwise expressly provided, all the provisions, terms and conditions of the Indenture shall be deemed to be incorporated in, and made a part of, this Supplemental Indenture; and the Indenture, as supplemented by the Fifth through the Sixteenth Supplemental Indentures, and by this Supplemental Indenture, is in all respects ratified and confirmed: and the Indenture and said supplemental indentures shall be read, taken and construed as one and the same instrument.

Nothing in this Supplemental Indenture is intended or shall be construed to give to any person or corporation, other than the parties hereto and the holders of bonds issued and to be issued under and secured by the Indenture, any legal or equitable right, remedy or claim under or in respect of this Supplemental Indenture, or under any covenant, condition or provision herein contained, all the covenants, conditions and provisions of this Supplemental Indenture being intended to be, and being, for the sole and exclusive benefit of the parties hereto and of the holders of bonds issued and to be issued under the Indenture and secured thereby.

All covenants, promises and agreements in this Supplemental Indenture contained by or on behalf of the Company shall bind its successors and assigns whether so expressed or not.

This Supplemental Indenture may be executed in any number of counterparts, and each of such counterparts when so executed shall be deemed to be an original: but all such counterparts shall together constitute but one and the same instrument.

8

IN WITNESS WHEREOF, MADISON GAS AND ELECTRIC COMPANY

has caused this Supplemental Indenture to be executed by its President or one of its Vice-Presidents and its corporate seal to be hereunto affixed, duly attested by its Secretary or one of its Assistant Secretaries, and FIRSTAR TRUST COMPANY (formerly known as FIRST WISCONSIN TRUST COMPANY), as Trustee as aforesaid, has caused the same to be executed by one of its Vice-Presidents or Assistant Vice-Presidents and its corporate seal to be hereunto affixed, duly attested by its Secretary or one of its Assistant Secretaries, as of the day and year first above written.

MADISON GAS AND ELECTRIC COMPANY,

By /s/ David C. Mebane

David C. Mebane

President and Chief Operating Officer

Countersigned:

/s/ Gary J. Wolter

Gary J. Wolter

Vice President-Administration

and Secretary

Signed, sealed, acknowledged

and delivered by Madison Gas

and Electric Company in the

presence of:

/s/ Joseph T. Kazoos

Joseph T. Kazoos

/s/ Janice M. Moen

Janice M. Moen

9

FIRSTAR TRUST COMPANY

as Trustee

By /s/ Joseph S. Quinn

Joseph S. Quinn

Vice President

Countersigned:

/s/ Pamela A. Warner

Pamela A. Warner

Assistant Secretary

Signed, sealed, acknowledged

and delivered by FirstarTrust Company in

the presence of:

/s/ J. R. Snyder

J. R. Snyder

/s/ Yvonne Siira

Yvonne Siira

[CORPORATE SEAL]

10

STATE OF WISCONSIN

)

) SS:

DANE COUNTY

)

Personally came before me this 22nd day of February, 1993, David c. Mebane, to me known to be the President and Chief Operating Officer, and Gary J. Wolter, to me known to be the Vice President - Administration and Secretary, of the above-named MADISON GAS AND ELECTRIC COMPANY, one of the corporations. described in and which executed the foregoing instrument, and to me known to be the persons who as such officers executed the foregoing instrument in the name and behalf of said corporation, and acknowledged the same, and acknowledged that the seal affixed to said instrument is the corporate seal of said corporation, and that they signed, sealed and delivered said instrument in the name and behalf of said corporation by authority of its Board of Directors, and said David c. Mebane and Gary J. Wolter then and there acknowledged said instrument to be the free act and deed of said corporation by each of them voluntarily executed.

Given under my hand and notarial seal this 22nd day of February, 1993.

/s/ Siri A. Weston

Siri A. Weston

Notary Public, State of Wisconsin

My commission expires: May 19, 1996

[NOTARY SEAL]

11

STATE OF WISCONSIN

)

) SS

MILWAUKEE COUNTY )

Personally came before me this 19th day of February, 1993, Josephs. Quinn, to me known to be a Vice President, and Pamela A. Warner, to me known to be an Assistant Secretary, of the above-named FIRSTAR TRUST COMPANY (formerly known as FIRST WISCONSIN TRUST COMPANY), one of the corporations described in and which executed the foregoing instrument, and to me known to be the persons who as such officers executed the foregoing instrument in the name and behalf of said corporation, and acknowledged the same, and acknowledged that the seal affixed to said instrument is the corporate seal of said corporation, and that they signed, sealed and delivered said instrument in the name and behalf of said corporation by authority of its Board of Directors, and said Joseph S. Quinn and Pamela A. Warner then and there acknowledged said instrument to be the free act and deed of said corporation by each of them voluntarily executed.

Given under my hand and notarial seal this 19th day of February, 1993.

/s/ Robert D. Hertzenberg

Robert D. Hertzenberg

Notary Public, State of Wisconsin

My commission is permanent

[NOTARY SEAL]

This instrument drafted by:

Daniel W. Stolper

Stafford, Rosenbaum, Rieser & Hansen

Tenney Plaza, Suite 1000

3 South Pinckney Street

Post Office Box 1784

Madison, Wisconsin 53701-1784

12

EXHIBIT "A"

To the Seventeenth Supplemental Indenture

The property of the Company, acquired after execution and delivery of the Sixteenth Supplemental Indenture, referred to in paragraph First at page 2 of the foregoing Seventeenth Supplemental Indenture, located in the counties named below, in the state of Wisconsin, is described as follows:

Columbia County

1.

Columbia Generating Plant Site: An undivided 22.0% interest as tenant in common in and to:

a.

Tract 30A, as is more fully described in a Warranty Deed from Hugh S. Jellum and Shirley A. Jellum, husband and wife, dated August 14, 1978 and recorded in the Office of the Register of Deeds for Columbia County on August 14, 1978 in Vol. 195 of Records, page 503, document number 396977;

b.

Tract 31, as is more fully described in a Warranty Deed from Kenneth L. Shiller, a single man, dated October 29, 1979, and recorded in the Office of the Register of Deeds for Columbia County on October 29, 1979 in Vol. 212 of Records, page 527, document number 405618;

c.

Tracts 32, 33, 34, 35, 36, 37, 38, 38A, 39, 40, 40A, 41, 42, 43, 44, 46, 48, 49 and 50 (Tracts 36, 37 and 38A being for subterranean water rights only), all as more fully described in a Warranty Deed from Wisconsin Power and Light Company, dated January 8, 1992, and recorded in the office of the Register of Deeds for Columbia County on July 1, 1992 in Volume 418 of Records, page 304, as document number 504454;

which, together with Tracts 5 and 7, described at pages A-2 through A-5 of Exhibit "A" to the Company's Ninth Supplemental Indenture, and Tracts 1 through 30, except Tracts 5 and 7, described at page A-4 of Exhibit "A" to the Company's Eleventh Supplemental Indenture, comprise the Columbia Generating Station.

Dane County

2.

1743 Commercial Avenue Property: Part of Lot 1, Certified Survey Map No. 2010 recorded in Volume 8 of Certified Survey Maps on pages 171 and 172, Dane County Registry, located in the NW 1/4 of the NW 1/4 of Section 6, T7N, Rl0E, City of Madison, Dane County, Wisconsin, To-wit:

Commencing at the northeast corner, of said Lot 1; thence S00°27'08"E, 175.00 feet to the point of beginning; thence continuing S00°27'08"E, .475.51 feet; thence S89°32'52"W, 285.00 feet; thence N05°02'0l"W, 13.23 feet to a point on a curve; thence northeasterly on a curve to the left which has a radius of 2927.36 feet and a chord which bears N00°36'5411E, 98.50 feet; thence N89°43'22"E, 196.62 feet; thence N00°27'08"W, 147.28 feet; thence N89°32''52"E, 11.00 feet; thence N00°27'08"W, 48.00 feet; thence S89°32'52"W, 11.00 feet; thence N00°27'08"W, 168.32 feet; thence N88°59'30"E, 87.60 feet to the point of beginning. Containing 64,126 square feet (1.472 acres).

3.

Driveway Adjoining 1825 Commercial Avenue: A parcel of land located in the Northwest Quarter of the Northwest Quarter of Section 6, Township 7 North, Range 10 East, City of Madison, Dane County, Wisconsin, being more particularly described as follows:

A-1

Commencing at the Northwest corner of said Section 6; thence N89°32'52"E, 860.57 feet along the North line of the Northwest Quarter of said Section 6 to the point of beginning; thence S00°27'08"E, 34 feet to the South line of Commercial Avenue; thence continuing S00°27'08"E, 651 feet; thence S89°32'52"W, 50 feet; thence N00°27'08"W, 651 feet to the South line of Commercial Avenue; thence continuing N00°27'08"W, 34 feet; thence N89°32'5i"E, 50 feet along the North line of the said Northwest Quarter to the point of beginning of this description. This parcel contains 0.786 total acres, or 0.767 acres with the Northerly 34 feet excluded. The said Northerly 34 feet are located within the Commercial Avenue right of way.

A-2

EXHIBIT "B"

To the Seventeenth Supplemental Indenture

(Form of Bond of This Series)

MADISON GAS AND ELECTRIC COMPANY

7.70% First Mortgage Bonds, 2028 Series

Due February 15, 2028

No. _____

$_____________

MADISON GAS AND ELECTRIC COMPANY {hereinafter called the "Company"), a corporation of the state of Wisconsin, for value received, hereby promises to pay to or registered assigns, on February 15, 2028, the sum of Dollars in lawful money of the United States of America, and to pay interest thereon from the date hereof at the rate of 7.70% per annum, in like lawful money, payable on the fifteenth day of February and August in each year until the Company's obligation with respect to the payment of such principal sum shall be discharged as provided in the indentures hereinafter mentioned. The principal of, premium, if any, and interest on this bond shall be payable to the person in whose name this bond is registered, at the principal office of the Trustee hereinafter referred to, in the City of Milwaukee, Wisconsin, or at the principal office of any successor in trust; provided that, at the option of the Company, the interest on this bond shall be payable by check mailed to such registered owner. So long as there shall be no existing default in the payment of interest on this bond, the interest payable hereon on any interest payment date shall be payable to the person in whose name this bond is registered at the close of business on the 10th business day prior to such interest payment date, notwithstanding any transfer or exchange of this bond subsequent to such record date and on or prior to such interest payment date. If and to the extent the Company• shall default in the payment of interest on such interest payment date, such defaulted interest shall, upon the subsequent payment thereof, be paid to the person in whose name this bond is registered on the date of such payment.

This bond is one, of the series hereinafter specified, of the bonds of the Company {herein called the "bonds") known as its "First Mortgage Bonds," issued and to be issued in one or more series under, and all equally and ratably secured by, an Indenture of Mortgage and Deed of Trust, dated as of January 1, 1946, duly executed by the Company to First Wisconsin Trust Company (now known as Firstar Trust company), Trustee (herein called the "Trustee"), to which Indenture and all indentures supplemental thereto (herein collectively called the "Indenture") reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security, the terms and conditions upon which the bonds are, and are to be, issued and secureµ, and the rights of the bearers or registered owners of the bonds and of the Trustee in respect of such security. As provided in the Indenture, the bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may-otherwise vary as therein provided. This bond is one of a series entitled "7.70% First Mortgage Bonds, 2028 Series" (herein called the "Bonds of This Series") created by the Seventeenth Supplemental Indenture (herein called the "Supplemental Indenture"), dated as of February 1, 1993, between the Company and the Trustee.

B-1

To the extent permitted by the Indenture, modifications or alterations of the Indenture or of any indenture supplemental thereto and of the rights and obligations of the Company and of the bearers or registered owners of the bonds and coupons may be made, and compliance with the Indenture or any such supplemental indenture may be waived, with the consent of the Company, by an affirmative vote of the bearers or registered owners of not less than 66-2/3% in principal amount of the bonds entitled to vote at a meeting of bondholders called and held as provided in said Indenture and by an affirmative vote of not less than 66-2/3% in principal amount of the bonds entitled to vote of each series affected by such modification or alteration or waiver in case one or more, but less than all, of the series of bonds then outstanding under the Indenture are so affected; provided, however, that no such modification or alteration or waiver shall be made which will (a) affect the terms of payment of the principal of, or premium, if any, or interest on, this bond, or the right of the registered owner hereof to institute suit for the enforcement of any such payment on or after the respective due dates expressed in this bond, or (b) otherwise than as permitted by the Indenture, permit the creation by the Company of any mortgage lien ranking prior to or on a parity with the lien of the Indenture or of any indenture supplemental thereto, with respect to any property covered thereby, or give to any bond or bonds secured by the Indenture any preference over any other bond or bonds so secured, or deprive any bondholder of the security afforded by the lien of the Indenture, or (c) reduce the percentage in principal amount of the bonds required to authorize any such modification or alteration or waiver; all as more fully provided in the Indenture.

The Bonds of this Series may be redeemed prior to maturity at the option of the Company, in whole at any time on or after February 15, 2003 or in part from time to time on or after such date, and are also subject to redemption pursuant to certain provisions of the Indenture, at the following percentages of the principal amount thereof, in each case plus accrued interest to the date of redemption:

IF REDEEMED DURING THE TWELVE MONTH PERIOD BEGINNING FEBRUARY 15:

2003

104.26%

2016

100.57%

2004

103.97%

2017

100.28%

2005

103.69%

2018

100.00%

2006

103.41%

2019

100.00%

2007

103.12%

2020

100.00%

2008

102.84%

2021

100.00%

2009

102.55%

2022

100.00%

2010

102.27%

2023

100.00%

2011

101.99%

2024

100.00%

2012

101.70%

2025

100.00%

2013

101.42%

2026

100.00%

2014

101.14%

2027

100.00%

2015

100.85%

B-2

In the event that any bond shall not be presented for payment when the principal thereof becomes due, either at maturity or otherwise or at the date fixed for the redemption thereof, and the Company shall have on deposit with the Trustee in trust for the purpose, on the date when sue bond is so due, funds sufficient to pay the principal of, and premium, if any, on, such bond, together with all interest due thereon to the date of maturity of such bond or to the date fixed for the redemption thereof, then all liability of the Company to the registered owner of said bond for the payment of the principal thereof and premium, if any, and interest thereon shall forthwith cease, determine and be completely discharged and such registered owner shall no longer be entitled to any lien or benefit of the Indenture.

Notice of any redemption as described above shall be mailed at least 30 and not more than 45 days prior to the redemption date to the registered owners of the bonds to be redeemed, at their respective addresses appearing upon the registry thereof, all subject to the conditions and as more fully set forth in the Indenture and the Supplemental Indenture. In the event of the selection for redemption of a portion only of the principal of this bond, payment of the redemption price will be made only (a) upon presentation of this bond for notation hereon of such payment, or (b) upon surrender of this bond in exchange for a Bond or Bonds of This Series (but only of authorized denominations) for the unredeemed balance of the principal amount of this bond.

In case an event of default as, defined in the Indenture shall occur, the principal of this bond may become or be declared due and payable in the manner, and with the effect, and subject to the conditions provided in the Indenture.

This bond is transferable by the registered owner hereof in person, or by attorney duly authorized in writing, at the principal office of the Trustee in the City of Milwaukee, Wisconsin, or at the principal office of any successor in trust, upon presentation and surrender of this bond, accompanied by a written instrument of transfer duly executed by the registered owner or a duly authorized attorney, with the signature guaranteed to the satisfaction of the Trustee, and upon any such transfer a new registered Bond of This Series in the same aggregate principal amount will be issued to the transferee in exchange here for, and, in the manner provided in the Supplemental Indenture, Bonds of This Series may at the option of the registered owners and upon surrender at said office of the Trustee, or of any successor in trust, be exchanged for Bonds of This Series of the same aggregate principal amount in larger or smaller authorized denominations, all without charge (except for any tax or other governmental charge).

The Company and the Trustee and any paying agent may deem and treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment of or on account of the principal hereof and interest hereon and for all other purposes, and neither the Company nor the Trustee nor any paying agent shall be affected by any notice to the contrary.

B-3

No recourse shall be had for the payment of the principal of, or premium, if any, or interest on, this bond, or for any claim based hereon or otherwise in respect hereof or of the Indenture or any indenture supplemental thereto, against any incorporator, or against any stockholder, director or officer, past, present or future, of the Company, as such, or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability, whether at common law, in equity, by any constitution, statute or otherwise, of .incorporators, stockholders, directors or officers being waived and released by every owner hereof by the acceptance of this bond and as part of the consideration for the issue hereof, and being likewise waived and released by the terms of the Indenture.

This bond shall not be valid or become obligatory, for any purpose unless and until the certificate hereon shall have been executed by the Trustee or its successor in trust under the Indenture.

B-4

IN WITNESS WHEREOF, MADISON GAS AND ELECTRIC COMPANY has caused this bond to be signed in its name by the manual or facsimile signature of its President or one of its Vice Presidents, and its corporate seal to be impressed or imprinted hereon and attested by its Secretary or one of its Assistant Secretaries.

MADISON GAS AND ELECTRIC COMPANY,

By________________________________

David C. Mebane

President and Chief Operating Officer

Attest:

_______________________________________

Gary J. Wolter

Vice President-Administration

and Secretary

(Form of Trustee's Certificate)

This bond is one of the bonds, of the series designated therein, described in the within-mentioned Indenture and Seventeenth Supplemental Indenture.

FIRSTAR TRUST COMPANY,

as Trustee,

By_________________________________

AUTHORIZED OFFICER

B-5

EX-10

EXHIBIT 10.4

JOINT POWER SUPPLY AGREEMENT

Dated February 2, 1967

Between

WISCONSIN POWER AND LIGHT COMPANY

WISCONSIN PUBLIC SERVICE CORPORATION, AND

MADISON GAS AND ELECTRIC COMPANY

1

JOINT POWER SUPPLY AGREEMENT

Wisconsin Power land Light Company,

Wisconsin Public Service Corporation, and

Madison Gas and Electric Company

THIS AGREEMENT is made and entered into this 2nd day of February, 1967, by and between Wisconsin Power and Light Company, a Wisconsin corporation (hereinafter called "Power Company"), Wisconsin Public Service Corporation, a Wisconsin corporation (hereinafter called "Service Company"), and Madison Gas and Electric Company, a Wisconsin corporation (hereinafter called "Electric Company"), the parties collectively being hereinafter called the "Companies",

WITNESSETH - that:

WHEREAS, each if the Companies owns electric facilities and is engaged in the generation, transmission and distribution of electric power and energy, purchases and sales thereof from and to the other Companies and other interconnected electric utilities, and sales thereof to customers within the respective geographical areas served by the Companies, and

WHEREAS, the companies, for the purpose of obtaining the benefits of advanced technologies and the economies of scale, and of making most effective use of power generation and transmission facilities, and for the purpose of assuring and supplying economical and reliable electric power to their respective customers, desire to mutually plan and share in the ownership of certain major generation and transmission facilities, and

WHEREAS, the parties have individually and collectively studied and established terms and conditions which are fair and equitable to the parties individually and collectively under which coordinated installation and operation of generating and interconnection facilities shall be effected.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein set forth, the parties agree as follows:

2

ARTICLE I

Power Pool Agreements

Section 1.01. Entry into Agreement. The Companies agree to enter into a new Power Pool Agreement upon terms substantially the same as those now in effect between Power Company and Service Company under their Power Pool Agreement dated December 29, 1960 and supplemental letter agreement 'dated November 27, 1964, but modified in order to (a) include Electric Company as a participant with representation on the Operating Committee thereunder, (b) provide for common ownership of facilities when so agreed by the Companies herein or hereafter, (c) provide that if any Company is not afforded the opportunity of ownership participation in the approximate ratio of its maximum "Accredited Demand" to the combined maximum "Accredited Demands" of the Companies in the first major unit constructed by any of the Companies subsequent to the 1976 Unit, such Company at any time after said subsequent unit is committed may itself build capacity which will be Accredited Capacity beginning with commercial operation of the first major unit constructed by any other Company or Companies subsequent to the 1976 Unit, (d) change the Contract Energy Rate from 0.5¢ per kilowatt hour to 0.4¢ per kilowatt hour, and (e) give effect to Sections 1.02 and 1.03 hereof.

Section 1.02. Term of New Power Pool Agreement. Such new Power Pool Agreement shall be executed and go into effect as soon as practicable after the date hereof arid shall remain in effect until cancelled by five years notice in writing from one Company to the others but in no event shall it be cancelled or terminated prior to December 31, 1980. Notwithstanding the effective date of such new Power Pool Agreement, it is understood and agreed that the purchase and sale by the participants of Participation Capacity and Contract Energy thereby provided shall not commence until January 1, 1970.

Section 1.03. Agreement Not Superseded. Notwithstanding the general provisions of such new Power Pool Agreement, there shall remain in effect and shall not be superseded thereby the agreement which is hereby confirmed, for the purchase (indicated by parentheses below) and the sale among the three Companies of megawatts of capacity for the respective calendar years, as follows:

Years	Power Company	Service Company	Electric Company
1970	10	(1)	(9)
1971	10	(1)	(9)
1972	14	(3)	(11)
1973	40	(15)	(25)
1974	27	(9)	(18)
1975	27	(9)	(18)
1976	(12)	19	(7)
1977	(12)	19	(7)
1978	(12)	19	(7)
1979	(12)	19	(7)
1980	(12)	19	(7)

3

all at a capacity charge of $1.67 per kilowatt per month and at a rate for energy furnished thereunder of 0.4¢ per kilowatt hour, said charge and rate being subject to change hereafter by mutual consent. The foregoing capacity purchases and sales shall not be taken into account in determining the Accredited Capacity, Accredited Demand or Capacity Responsibility of the respective Companies under such new Power Pool Agreement.

ARTICLE II

Edgewater 330 MW Unit #4 (1969)

Section 2.01. Ownership Shares. Power Company and Service Company agree to enter into a separate agreement providing for the payment for and ownership by them, as tenants in common, of the proposed new 330,000 Kilowatt Unit #4 at a location adjacent to Power Company's present Edgewater Plant at Sheboygan, Wisconsin, with undivided ownership interests in the proportions of 68.2% by Power Company and 31.8% by Service Company, and their participation in the cost of operation and maintenance and in the energy output of said Unit #4 in the same proportions.

Section 2.02. Effect on Pooling Obligations. The capacity and output of Edgewater Unit #4 shall be treated for the purposes of all power pool agreements between any or all of the Companies the same as though the ownership participations were separate plants owned by Power Company and Service Company, respectively.

Section 2.03. Construction and Operation Responsibility. Edgewater Unit #4 shall be constructed, completed and operated under the direct supervision of Power Company, and under the general policy supervision of an Operating Committee constituted as provided under Article 8 of the Interconnection Agreement dated January 5, 1966 between Power Company and Service Company, with details of administration of construction and operation otherwise upon terms substantially as provided in Article III hereof in respect to the Nuclear Plant, except as Power Company and Service Company may otherwise agree. Power Company and Service Company will use their best efforts toward the end that Edgewater Unit #4 will be completed, and commercial operations commenced, on or about December 1, 1969.

ARTICLE III

Nuclear 527 MW Plant (1972)

Section 3.01. Ownership Shares. The Companies hereby provide for the construction and operation of a nuclear energy plant (herein called the "Nuclear Plant") of approximately 527,000 KW name-plate capacity, to be located in northeastern Wisconsin, and to be owned by the Companies as tenants in common with undivided ownership interests as follows (in this Article III referred to as their respective "Ownership Shares"):

	%
Wisconsin Power and Light Company	41.0
Wisconsin Public Service Corporation	41.2
Madison Gas and Electric Company	17.8

4

Section 3.02. Construction Committee. Construction of the Nuclear Plant shall be carried out by the Companies under the direct supervision and direction of Service Company and under the general policy supervision and direction of a Construction Committee to be established by the Companies. All of the Companies shall be represented on the Construction Committee and the voting power of the representatives of each Company shall be in proportion to the Ownership Share of such Company. The vote of the representatives of Companies having Ownership Shares aggregating more than 50% shall be controlling on any question to be determined by the Construction Committee. The Companies and their representatives on the Construction Committee shall use their best efforts toward the end that the Nuclear Plant will be completed, and commercial operation commenced, on or about June 1, 1972.

Section 3.03. Scope of Plant. The Nuclear Plant to be so owned in common shall consist of the site and all property of the character of electric plant, as defined in the Uniform System of Accounts referred to in Section 3.07 hereof, which shall be included in the general or detailed Nuclear Plant and site plans approved from time to time by the Construction Committee, and shall include the substation facilities (up to and including the 345 KV bus) required to tie the Nuclear Plant to the 345 KV transmission system referred to in Article IV. The present estimate of the completed cost of the Nuclear Plant (exclusive of nuclear fuel and interest during construction) is $72,300,000.

Section 3.04. Initial Major Contracts. Service Company is hereby authorized and directed, in the name of and as agent for Power Company and Electric Company and also in its own behalf (all in the same percentages of interest as their respective Ownership Shares), forthwith to enter a firm contractual commitment (subject to regulatory approvals) with Westinghouse Electric Corporation in accordance with its proposal dated October 21, 1966 as modified by its letter dated December 7, 1966, covering the nuclear steam supply and turbine generator.

Section 3.05. Other Contracts. The Companies shall, with reasonable expedition, enter into or authorize the entry on their behalf into other contracts (which may be purchase order contracts) providing for (a) the purchase of materials, equipment and service for, and construction of, the Nuclear Plant and (b) insurance to insure all work under construction against risks usually insured against for such work. Each initial or other contract shall provide, among other things, that the performance of the contract shall be for the account of, and the charges therefor shall be billed to, and paid by the Companies in proportion to their respective Ownership Shares and that the invoices for such billing (Contractor's Invoice or Invoices) shall be submitted in the names of the Companies, in the care of Service Company. For their convenience the Companies may authorize Service Company or an individual or individuals to execute and deliver on behalf of the Companies all such other contracts to be entered into pursuant to this Section.

Section 3.06. Books and Records. Books of account and records containing details of the items of cost applicable to the construction of the Nuclear Plant and to its operation and maintenance shall be kept by the Operating Company referred to in Section 3.10 and shall be open to examination at any time by the other Companies or their representatives. The Operating Company shall furnish the Companies with summaries or counterparts of such books of account and records as may be necessary to satisfy all applicable regulatory requirements.

Section 3.07. Expenditures. All expenditures in respect of the Nuclear Plant shall be accounted for in accordance with the Uniform System of Accounts prescribed by the Federal Power Commission for Public Utilities and Licensees (Class A and B Electric Utilities).

5

All expenditures (including, but not limited to, expenditures for administration, labor, special training costs, payroll taxes, employee benefits, maintenance, materials, research and development, supplies and services), for the licensing, construction, operation and maintenance of the Nuclear Plant and for renewals, replacements, additions and retirements in respect thereof shall be shared by the Companies in proportion to their Ownership Shares. Expenditures of Service Company incurred prior to or after the date of this Agreement in connection with preliminary planning for the Nuclear Plant shall be treated as expenditures on behalf of all of the Companies and the other Companies shall reimburse Service Company for their respective ownership proportions of the cost thereof.

Interest charges on borrowed funds, income taxes, and property, business and occupation and like taxes, of each Company shall be borne entirely by such Company; and such items, as well as depreciation, amortization, and interest charged to construction, shall not be deemed expenditures for purposes of this Section.

Section 3.08. Funds. Whenever and so long as the Operating Company or a majority of the Companies may so demand, the Companies shall maintain a joint account or accounts (collectively, the "Joint Account") in a bank or banks approved by the Operating Company, the title of which Joint Account shall be in the respective Companies in proportion to their Ownership Shares. While so maintained and unless otherwise agreed by the Companies, all construction and capital expenditures, and all other expenditures referred to in the second paragraph of Section 3.07, shall be paid out of the Joint Account.

From time to time the Operating Company may request the Companies to advance such amount as is then needed for cash working capital for the plant project. Within ten days thereafter, or from time to time as specified in such request, the Companies, pro rata according to their respective Ownership Shares, shall deposit the amount specified in such request. Such deposit shall be made in the Joint Account, if such account is being maintained at the time for such purpose; otherwise, such deposit shall be made to the credit of the Operating Company in a bank designated by it.

As promptly as practicable after the end of each month the Operating Company shall send to each of the Companies a statement in reasonable detail of all expenditures for such month and the amount of each Company's share thereof.

The Operating Company shall cause to be drawn and to be delivered on behalf of the Companies, from funds so provided, checks or drafts in payment of expenditures. Funds so provided shall be disbursed in accordance with sound accounting and disbursement procedures. All persons authorized to handle or disburse funds from the Joint Account shall be bonded in favor of the Companies as their respective interests may appear, for such amounts as the Construction Committee may determine. The Operating Company accepts sole responsibility for the handling or disbursement of funds deposited to its credit.

Section 3.09. Default. During any period that a Company is in default in whole or in part in performing any of its obligations under this Article III, such Company shall be obligated to pay any damages to the non-defaulting companies resulting from the default, and in case of a default in making any payment then required under this Article III, (a) such Company shall be entitled to no energy from the Nuclear Plant during such period and (b) the non-defaulting Companies shall be entitled to all of the energy from the Nuclear Plant in proportion to their Ownership Shares. No such default shall affect any Company's ownership interest, or any Company's obligations under Sections 3.07 and 3.08.

6

Section 3.10. Operation and Maintenance. The Companies shall establish an Operating Committee for the purpose of establishing general policies for the operation and maintenance of the Nuclear Plant. All of the Companies shall be represented on the Operating Committee and the voting power of the representatives of each Company shall be in proportion to the Ownership Share of such Company. The vote of the representatives of Companies having Ownership Shares aggregating more than 50% shall be controlling on any question to be determined by the Operating Committee. The Operating Committee shall meet at the call of any member.

The Nuclear Plant will be directly operated and maintained by the "Operating Company" in accordance with good utility operating practices and the general policies to be established by the Operating Committee. Until otherwise agreed by all of the Companies, Service Company shall be the Operating Company, and the Atomic Energy Commission licensee. It shall operate and maintain the Nuclear Plant in the same manner as if it were one of its own generating stations, utilizing its own employees and supervisory personnel as required in the performance of this Agreement, and any independent technical advisors which it may select, and otherwise acting in all respects as though it were an independent contractor engaged by the Companies to be responsible for the result to be attained, i.e. generation of power and energy at the Nuclear Plant, as economically as possible, and delivery thereof to the connected 345 KV transmission system for transmission to the Companies, the Operating Company having sole responsibility for the specific manner of attaining that result. During operation conditions which the Operating Company in its sole judgment deems abnormal, the Operating Company shall take such action as it deems appropriate to safeguard equipment and to maintain service of the Nuclear Plant.

In hiring additional employees for work at the Nuclear Plant, the Operating Company will give reasonable preference to qualified employees of the other two Companies who express their desire to work at the Nuclear Plant and have the consent of their respective Companies to make an application.

Section 3.11. Renewals, Replacements, Additions and Retirements. Renewals and replacements necessary for the operation of the Nuclear Plant shall be made as required by good utility operating practice. Renewals, replacements, additions, and retirements (and related dispositions and sales) shall be effected by the Operating Company subject to the general policies established by the Operating Committee. Retirements, sales and other dispositions of the Nuclear Plant property shall be effected only in a manner consistent with the Companies' respective mortgage indentures, if any.

Section 3.12. Title to Property. Title to all property, whether real, personal or mixed and whether tangible or intangible and including without limitation property acquired for use or consumption in connection with its construction, operation or maintenance, and all options or contract rights for the acquisition of real property as the proposed site or as alternate sites for the Nuclear Plant, now owned or hereafter acquired or constructed for the purposes of the Nuclear Plant, whether held at any time or from time to time in the name or names of one or more of the Companies or of any nominee, agent or contractor of any one or more of the Companies, shall at all times be in the Companies as tenants in common with undivided interests in proportion to their Ownership Shares. Construction, acquisitions and purchases shall be made in such manner that title shall vest in accordance with the foregoing. All titles and interests of the Companies as such tenants in common shall be subject from inception to the provisions of Article VI hereof. Any alternative property acquired but not necessary for the Nuclear Plant shall be disposed of in accordance with the direction by the Construction Committee.

Section 3.13. Mutual Confirmation of Title. In order further to confirm and establish their intended ownership in accordance with their respective Ownership Shares, each of the Companies hereby sells, assigns and transfers to the other Companies, as tenants in common, all legal, equitable or other interest in any property referred to in Section 3.12 whether now owned or hereafter acquired, which it may at any time have in excess of its respective Ownership Share, in each case in such

7

proportions to each other Company so that the en­ tire interest of the Companies in such property shall be owned in the manner and in the respective Ownership Shares herein provided.

Each of the Companies agrees that from time to time, upon request by either of the other Companies, it will execute and deliver such further documents or instruments of transfer or confirmation of titles as may in the opinion of counsel for the requesting Company be necessary or advisable to legally effectuate and carry out the intent and purpose of this Agreement.

Section 3014. Power and Energy. Subject to Sections 3.09 and 3.10, each Company shall at all times have full ownership of and available to it at the Nuclear Plant the portion of the generating capability of the Nuclear Plant and the energy associated therewith, corresponding to its Ownership Share. Each Company shall keep the Operating Company informed as to the amount of power it requires to be generated for it. Subject to its capability, operating conditions and necessary or unavoidable outages, the Nuclear Plant shall be operated so as to produce a minimum output equal to the sum of the power requirements of the Companies therefrom.

ARTICLE IV

345 KV Transmission Line

Section 4.01. Initial Line Route. In order to carry out the coordination and most effective use of power supplies in accordance with the Power Pool Agreements referred to in Section 1.01, and in order to make available to their respective service areas or to other purchasers their respective shares of the output of Edgewater Unit #4, the Nuclear Plant and the 1976 Unit, the Companies agree severally to construct and place in operation, not later than the date of completion of the Nuclear Plant, a 345 KV transmission line, commencing at the Nuclear Plant and extending to the vicinity of Madison via Green Bay, North Appleton substation, Fond du Lac and the 1976 Unit location.

Section 4002. Line Ownership. Ownership of the 345 KV transmission line shall not be in tenancy in common but shall be several and individual by segments as follows:

Owner	Terminal Points
Wisconsin Public Service Corporation	Nuclear Plant* - Green Bay - North Appleton - Oshkosh
Wisconsin Power and Light Company	Oshkosh - Fond du Lac**
Madison Gas and Electric Company	Fond du Lac - 1976 Unit location - Madison

*Service Company will also provide and own a connecting 345 KV line from the Nuclear Plant to the Point Beach plant of the Wisconsin Electric Power Company system.

**Power Company will also provide and own a connecting 345 KV line from the Edgewater Plant at Sheboygan to Fond du Lac.

The foregoing division of ownership is based on the assumption that the 1976 Unit will be located in the Prairie du Sac area. In the event the 1976 Unit shall be at a location other than the Prairie du Sac area, and thus reduce the mileage of line for which Electric Company would otherwise be obligated above, Electric Company shall provide a mileage of line equivalent to such reduction at a location which will reduce the obligations of Power Company under this Agreement.

Each of the Companies shall severally provide and own all necessary substation, switching and metering equipment at terminal points located on the portion of the line which it owns, except as otherwise agreed with another Company or Companies or another interconnecting company.

8

Section 4.03. Line Construction. Each Company agrees severally to procure in its own name all necessary right of way for, and itself to construct, operate and maintain the portion of the 345 KV transmission line which it is to own. The Companies shall jointly plan and design the line prior to the commencement of construction in order to assure adequacy and compatibility of each portion thereof to perform its intended purpose at completion and for a reasonable period in the future.

Section 4.04. Line Operation. Each Company shall operate on an interconnected and coordinated basis the part of the 345 KV transmission line owned by it and, in the event of any interruption thereon which has not been scheduled by agreement of all of the Companies, shall use its best efforts to remove the cause of such interruption as soon as practicable and to restore its portion of the line to normal operating condition. Each Company agrees that the respective segments of the 345 KV transmission lines which it agrees to provide and own under this Article IV shall at all times during the term of this Agreement be held available by it for transmission without charge of the respective shares of the output of the Edgewater #4 Unit, the Nuclear Plant and the 1976 Unit to which the respective Companies are entitled, and that any transfer of its interest therein shall be made only upon conditions which shall effectively bind the transferee to the obligations of this Section 4.04.

Section 4.05. 1974 Line Extension. Electric Company shall own, construct, operate and maintain an extension from Madison to Rockdale (approximately 25 miles) of the initial 345 KV transmission line, such extension to be completed and placed in operation on or about July 1, 1974, upon the same terms herein provided as to the initial 345 KV transmission line.

Section 4.06. 1976 Line Extension. Power Company shall own, construct, operate and maintain an extension from Rockdale to interconnect with the 345 KV systems of other companies near the Wisconsin-Illinois border (approximately 33 miles) of the extended 345 KV transmission line, such extension to be completed and placed in operation on or about July 1, 1976, upon the same terms herein provided as to the initial 345 KV transmission line. In the event such extension shall not be built, Power Company will provide equivalent construction for such other interconnection as the Companies may agree.

ARTICLE V

1976 Unit

Section 5.01. Identification of 1976 Unit. The Companies through their Operating Committee to be constituted under the new Power Pool Agreement referred to in Section 1. 01, shall jointly plan the general characteristics of a major generating plant or unit (herein called the "1976 Unit") to be located at a mutually agreed site in southern Wisconsin on property now owned by Power Company, to be completed and placed in full operation sometime in 1976 and of a capacity consistent with the estimated combined capacity requirements of the Companies at completion and for a reasonable period thereafter, taking into account economic factors and the availability to the Companies of alternate sources of capacity.

Section 5.02. Ownership. The 1976 Unit, including the site and the substation facilities required to tie the plant or unit to the 345 KV bus, shall be owned by the Companies as tenants in common with undivided ownership interests which, unless otherwise mutually agreed by all of the Companies, shall be for each Company a percentage amount which is in the same ratio as its respective maximum "Accredited Demand" (as such term is defined in the existing Power Pool Agreement dated December 29, 1960, supplemented as referred to in Section 1. 01 hereof) for the calendar year preceding the date of entry of contract or purchase order for the first major component of the 1976 Unit bears to the sum of the maximum Accredited Demands of the Companies for such year. Such maximum Accredited Demands need not be coincidental. Participation in the capitalized costs of site, construction, operation and maintenance, and in the energy output of the 1976 Unit shall be in the same proportions as ownership.

9

Section 5.03. Construction and Operation. When the general characteristics and ownership percentages of the 1976 Unit have been established, the Companies will enter into a separate agreement for the construction and operation thereof under the general policy supervision of committees of the Companies and under the direct supervision of Power Company as the Operating Company therefor, but otherwise upon terms substantially as provided in Article III hereof with respect to the Nuclear Plant.

Section 5.04. Fixing Location of 1976 Unit. The Operating Committee will use its best efforts to establish the location of the 1976 Unit at the earliest possible date, and at all events not later than December 31, 1968, in order that transmission line and related construction planning by Electric Company may be properly coordinated.

ARTICLE VI

Transferability of Interests

Section 6.01. Policy. The relation of tenants in common in the construction, maintenance and operation of the Edgewater 330 MW Unit #4, the Nuclear Plant and the 1976 Unit (all of which Plant and Units are referred to in this Article VI as "Subject Properties"), as provided by this Agreement, and the agreements herein for the operation and maintenance thereof by selected Companies, are each undertaken in mutual trust and confidence in the financial responsibility, engineering and operating competence, efficiency and common objectives of the Companies. Since the effects of transfers of the interests of any of the Companies upon the rights and interests of the other Companies over the long term of this Agreement cannot be determined at this time, it must be presumed that such effects might be adverse. Therefore, each of the Companies, for the protection of itself and of each of the other Companies, agrees that its interests in this Agreement and its titles to and interests in all Subject Properties shall at all times during the term of this Agreement be subject to the provisions of this Article VI.

Section 6.02. Restrictions on Transfer - General. Each Company agrees that, during the term of this Agreement and except as specifically permitted under Sections 6.03 and 6.04, neither its interest in this Agreement nor its interest in any of the Subject Properties shall be assigned, transferred or otherwise disposed of or permitted or required to be partitioned, or shall be permitted to be subject to any lien or encumbrance of any character, without the written consent of the other Companies.

Section 6.03. Restrictions on Transfer - Exceptions. The provisions of Section 6.02 shall not restrict (a) dispositions and sales incident to renewals or replacements, or (b) the right of any Company to subject its own interest to the lien of any mortgage upon all or substantially all of its physical electric utility property, or (c) the right of any purchaser on foreclosure of any such mortgage to acquire any interest subject to any such mortgage, or (d) the right of any Company to transfer voluntarily its interest as an incident to any sale, merger or other transfer of all or a substantial part of its electric facilities as an operating entirety, if the transferee assumes the obligations of the transferor under this Agreement and has the ability and adequate financial responsibility to carry out such obligations. The exceptions in the foregoing clauses (b), (c) and (d) shall not be deemed to allow any of the Companies to grant, extend, transfer or permit to any mortgagee, purchaser on foreclosure or other transferee of its interest in any of the Subject Properties, any right to partition or to require partitioning of the Subject Properties.

10

Section 6.04. Paramount Right of Purchase. All titles to Subject Properties shall be held subject to the right of purchase provided in this Section in favor of the other Companies, which shall be paramount to the rights of any person (other than one or more of the Companies) who shall succeed to the interests of any of the Companies. If, at any time during the term of this Agreement, any purchaser upon foreclosure or upon partition, or any receiver or liquidator, or any trustee or assignee in bankruptcy, or any other transferee by operation of law or other­ wise of the interest of any Company in any of the Subject Properties or any successor or transferee of any thereof, shall be finally upheld in any claim of ownership of any of the Subject Properties (herein referred to as "Incident Creating Right of Purchase"), the other Companies shall have the right (but not the obligation) to elect to purchase (in proportion to the respective Ownership Shares of such other Companies, if more than one shall desire to purchase) the entire interest in the Subject Properties of or derived from such Company, at a purchase price equal to the depreciated book value thereof, as determined under the Uniform System of Accounts mentioned in Section 3.07 hereof. Notice of such election to purchase shall be served upon the holder of such interest within six (6) months after the Incident Creating Right of Purchase, and the purchase shall then be consummated within one (1) year-after service of such notice. If the Public Service Commission of Wisconsin, or any other regulatory agency having jurisdiction to approve or disapprove the purchase price shall decline to approve such purchase price and shall determine that a different price would be fair and reasonable, the other Companies shall have a like right, for a period of six (6) months after such determination becomes final, to elect to purchase at the different price so determined.

Section 6.05. Consent as Necessary for Bonding. Each of the Companies hereby consents that the restrictions of this Article VI on transfer and on any right of partition, and any other restriction, term or condition of this Agreement, shall be and hereby is waived and shall be inapplicable to the extent (but only to the extent) that it shall be finally determined, by a court of competent jurisdiction in an action or proceeding to which all of the Companies and their respective mortgagees are parties, that such restriction, term or condition would disqualify the interest of one or more of the Companies in Subject Properties from eligibility as the basis for the issuance of additional bonds under their respective mortgage indentures as in effect at the date of this Agreement.

ARTICLE VII

Section 7.01. Waivers. Any waiver at any time by any Company of its rights with respect to a default under this Agreement, or with respect to any other matter arising in connection with this Agreement, shall not be deemed a waiver with respect to any subsequent default or matter. Any delay, short of the statutory period of limitation, in asserting or enforcing any right under this Agreement, shall not be deemed a waiver of such right.

ARTICLE VIII

Section 8.01. Arbitration. It is mutually agreed between the Companies that all disputes arising out of the performance of this Agreement which cannot be mutually adjusted or otherwise determined by vote as herein provided, shall be referred promptly to a committee of arbitrators, consisting of one selected by each of the Companies which is a party to such dispute, and one or two additional arbitrators chosen by those thus selected (so that the committee shall not have an even number of members), and the decision of the majority of said committee shall be final and conclusive and binding upon the parties to the dispute. The cost of arbitration including the compensation of the arbitrators, but not the direct expense of any Company in presenting its contentions, shall be assessed by the arbitrators against the respective parties to the dispute in proportion to the extent to which the claims of each party shall be disallowed.

11

ARTICLE IX

Section 9.01. Term of Agreement. This Agreement shall continue in full force and effect until December 31, 2011 and for such longer period as the Companies shall by mutual agreement continue to operate either the Nuclear Plant or the 1976 Unit. Termination of this Agreement shall not terminate the provisions of Article VIII.

ARTICLE X

Section 10.01. Amendment. This Agreement may be amended from time to time or cancelled at any time, by an instrument or instruments in writing signed by all of the Companies (or their successors or assigns).

ARTICLE XI

Section 11.01. Successors and Assigns. This Agreement shall inure to the benefit of and bind the successors and assigns of the parties hereto, but it may be assigned in whole or in part only consistently with the provisions of Article VI hereof.

ARTICLE XII

Section 12.01. Paramount Authority. This Agreement and all of its provisions shall be subject to the paramount authority of the Public Service Commission of Wisconsin and of any other governmental authority having jurisdiction of the Companies or of the subject matter.

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ARTICLE XIII

Notices and Communications

Section 13.01. Representatives. Each Company, by written notice signed by an executive officer delivered to each other Company, shall designate one representative and an alternate to receive notices and communications from another Company or Companies with respect to the subject matter of this Agreement and to deliver to the others, on behalf of such Company, notices, communications, decisions and approvals concerning the subject matter of this Agreement. The manner of making any decision by any Company or giving any approval by any Company shall be determined by such Company for itself but any communication received by any Company from a person designated by another Company pursuant to the preceding sentence (unless such designation shall have been previously revoked as provided in Section 13.02) may be conclusively relied upon by the recipient as having been authorized by said other Company.

Section 13.02. Change of Representatives. Any designation by a Company pursuant to Section 13.01 may be revoked by such Company by designating a substitute representative or alternate by a written notice signed by an executive officer and delivered to each of the other Companies.

IN WITNESS WHEREOF each of the parties has caused this Agreement to be duly executed.

WISCONSIN POWER AND LIGHT COMPANY

By /s/ Carl Forsberg

Chairman of the Board and Chief Executive Officer

Attest: /s/Donald Stokley

Secretary

WICONSIN PUBLIC SERVICE COPORATION

By /s/ Lee G. Roemer

President

Attest: C. R. Truss

Secretary

MADISON GAS AND ELECTRIC COMPANY

By Frederick Mackie

President

Attest: Beverly Duncan

Secretary

13

MUTUAL ASSIGNMENT OF OPTIONS,

CONTRACT RIGHTS AND

OTHER PROPERTIES

(1972 Nuclear Plant Project)

WISCONSIN POWER AND LIGHT COMPANY, WISCONSIN PUBLIC SERVICE CORPORATION and MADISON GAS AND ELECTRIC COMPANY each of which is a Wisconsin corporation and a party to the Joint Power Supply Agreement dated February 2, 1967 between them, providing among other things for the acquisition, construction and operation of the Nuclear Plant referred to in Section 3.01 of said Agreement, for the purpose of effectuating the intent and purpose of said Agreement, do each acknowledge, declare and agree as follows:

1.

All properties, whether real, personal, or mixed and whether tangible or intangible (including all options or contract rights for the acquisition of real property as the pro­ posed site or as alternate sites for said Nuclear Plant) now owned or hereafter acquired for the purposes of said Nuclear Plant, whether held at any time or from time to time in the name or names of one or more of the parties hereto or of any nominee, agent or contractor of any one or more of the parties hereto, shall at all times be owned by the parties hereto as tenants in common with undivided ownership interests in each of the following respective percentage shares in the whole and each and every item of such properties:

	%
Wisconsin Public Service Corporation	41.2
Wisconsin Power and Light Company	41.0
Madison Gas and Electric Company	17.8

Wisconsin Public Service Corporation Wisconsin Power and Light Company Madison Gas and Electric Company

2.

In order further to confirm and establish their intended ownership in accordance with the aforesaid respective shares, each of the parties hereto hereby sells, assigns and transfers to the other parties, as tenants in common, all legal, equitable or other interest in any such property, whether now owned or hereafter acquired, which it may at any time have in excess of its respective percentage share aforesaid, in each case in such proportions to each other party so that the entire interest of the parties in such property shall be owned in the manner and in the respective shares hereinabove provided.

3.

Payment from the Joint Account provided under Section 3.08 of said Agreement, for any costs of site or other property acquisitions, whether to a party hereto or to other persons, shall conclusively establish that each and every item of property, the cost of which is so paid or reimbursed from said Joint Account, is owned and held by the respective parties as tenants in common with undivided ownership interests in the respective percentages hereinabove provided; but this provision shall not be construed as a limitation upon the provisions of paragraphs 1 or 2 hereof.

4.

Each of the parties hereto agrees that from time to time, upon request by either of the other parties, it will execute and deliver such further documents or instruments of transfer or confirmation of titles as may in the opinion of counsel for the requesting party be necessary or advisable to legally effectuate and carry out the intent and purpose of this instrument.

14

IN WITNESS WHEREOF each of the parties has caused this agreement to be duly executed, as of February 2, 1967.

WISCONSIN POWER AND LIGHT COMPANY

By /s/ Carl Forsberg

Chairman of the Board and Chief Executive Officer

Attest: /s/Donald Stokley

Secretary

WICONSIN PUBLIC SERVICE COPORATION

By /s/ Lee G. Roemer

President

Attest: C. R. Truss

Secretary

MADISON GAS AND ELECTRIC COMPANY

By Frederick Mackie

President

Attest: Beverly Duncan

Secretary

15

CONTRACT AGENCY AUTHORIZATION

(1972 Nuclear Plant Project)

WISCONSIN POWER AND LIGHT COMPANY, WISCONSIN PUBLIC SERVICE CORPORATION and MADISON GAS AND ELECTRIC COMPANY, each of which is a Wisconsin corporation and a party to the Joint Power Supply Agreement dated February 2, 1967 between them, providing among other things for the acquisition, construction and operation of the Nuclear Plant referred to in Section 3.01 of said Agreement, for the purpose of effectuating the intent and purpose of Section 3.05 of said Agreement, do each agree as follows:

1.

Wisconsin Public Service Corporation is hereby authorized, in the name of and as agent for Wisconsin Power and Light Company and in the name of and as agent for Madison Gas and Electric Company, and also in its own behalf (in each case in the percentages of their respective Ownership Shares set forth in Section 3.01 of said Joint Power Supply Agreement) to conduct negotiations for and to enter into all such contracts (which may be purchase order contracts), and after such entry to modify or cancel any such contracts, as it may deem necessary in order to carry out in efficient and timely fashion the mutual obligations of the parties in respect to (a) the acquisition, testing and preparation of the site or alternate sites for said Nuclear Plant, (b) the design and purchase of, materials, equipment and service for, and construction of, said Nuclear Plant and (c) all insurance to insure work under construction against risks usually insured against for such work.

2.

Wisconsin Public Service Corporation undertakes and agrees that all contracts made and all other actions by it as such agent will be made and done in accordance with good utility construction practices and in conformity with the determinations of general policy made by the Construction Committee constituted as provided in Section 3.02 of said Joint Power Supply Agreement. As soon as practicable after entry into any such contract, modification or cancellation which effects any significant commitment or other obligation of the parties hereto, Wisconsin Public Service Corporation shall give notice thereof to each of the other parties hereto and shall provide such copies or summaries as may be necessary for the accounting and other records of the parties.

3.

Delivery of a photocopy of this instrument to any person concerned, shall have the same effect as delivery of a signed counterpart hereof. No contractor, supplier or other person with whom Wisconsin Public Service Corporation may deal purportedly as agent hereunder shall be under any obligation to inquire into the right or authority of Wisconsin Public Service Corporation to so deal; and every such contractor, supplier or other person may conclusively assume that such dealings are authorized hereby, and that this instrument has been duly authorized by the respective parties hereto and continues in full force and effect, provided that written notice of modification or cancellation of this instrument shall not have been received by such contractor, supplier or other person from one or more of the parties hereto.

16

Dated this 21st day of April, 1967.

WISCONSIN POWER AND LIGHT COMPANY

By /s/ Carl Forsberg

Chairman of the Board and Chief Executive Officer

Attest: /s/Donald Stokley

Secretary

WICONSIN PUBLIC SERVICE COPORATION

By /s/ Lee G. Roemer

President

Attest: C. R. Truss

Secretary

MADISON GAS AND ELECTRIC COMPANY

By Frederick Mackie

President

Attest: Beverly Duncan

Secretary

17

EX-12

EXHIBIT 12.1

MGE Energy, Inc.

Ratio of Earnings to Fixed Charges

		Three Months
		Ended
		March 31,				Twelve Months Ended December 31,
(In thousands)		2018		2017		2017		2016		2015		2014		2013
Earnings
Net income	$	20,001	$	19,300	$	97,606	$	75,560	$	71,343	$	80,319	$	74,905
Equity earnings		(2,363)		(2,475)		(9,814)		(8,394)		(7,701)		(9,150)		(9,434)
Income distribution from equity investees		-		-		8,803		7,926		6,645		7,740		7,404
Federal and state income taxes		6,367		11,167		22,094		42,513		41,363		48,185		44,859
Amortization of capitalized interest		132		132		527		527		527		527		527
Fixed charges		5,088		5,153		20,236		20,920		21,102		21,638		20,848
Total Earnings as Defined	$	29,225	$	33,277	$	139,452	$	139,052	$	133,279	$	149,259	$	139,109
Fixed Charges
Interest expense on long-term debt and other	$	4,518	$	4,676	$	18,449	$	18,963	$	19,256	$	18,975	$	18,248
Interest on rentals*		148		167		590		667		709		823		889
AFUDC - borrowed funds		201		92		412		387		231		1,142		1,035
Amortization of debt issuance costs		221		218		875		903		906		698		676
Total Fixed Charges	$	5,088	$	5,153	$	20,326	$	20,920	$	21,102	$	21,638	$	20,848
Ratio of Earnings to Fixed Charges		5.74X		6.46X		6.87X		6.65X		6.32X		6.90X		6.67X
*Management believes that using one-third of the total rental expense gives a reasonable approximation for actual
interest on rentals.

EX-12

EXHIBIT 12.2

Madison Gas and Electric Company

Ratio of Earnings to Fixed Charges

		Three Months
		Ended
		March 31,				Twelve Months Ended December 31,
(In thousands)		2018		2017		2017		2016		2015		2014		2013
Earnings
Net income before minority interest	$	18,256	$	18,183	$	93,072	$	74,592	$	71,465	$	81,938	$	76,445
Equity earnings		-		-		-		(6,366)		(7,728)		(9,150)		(9,434)
Income distribution from equity investees		-		-		-		5,032		6,645		7,740		7,404
Minority interest in pre-tax investees		-		-		-		(2,355)		(3,628)		(4,149)		(4,022)
Amortization of capitalized interest		132		132		527		527		527		527		527
Federal and state income taxes		5,581		10,309		18,990		41,791		41,406		49,145		45,822
Fixed charges		5,403		5,241		21,026		21,200		21,323		21,812		20,955
Total Earnings as Defined	$	29,372	$	33,865	$	133,615	$	134,421	$	130,010	$	147,863	$	137,697
Fixed Charges
Interest expense on long-term debt and other	$	4,833	$	4,764	$	19,149	$	19,235	$	19,477	$	19,149	$	18,355
Interest on rentals*		148		167		590		667		709		823		889
Amortization of debt issuance costs		221		218		875		903		906		698		676
AFUDC - borrowed funds		201		92		412		395		231		1,142		1,035
Total Fixed Charges	$	5,403	$	5,241	$	21,026	$	21,200	$	21,323	$	21,812	$	20,955
Ratio of Earnings to Fixed Charges		5.44X		6.46X		6.35X		6.34X		6.10X		6.78X		6.57X
*Management believes that using one-third of the total rental expense gives a reasonable approximation for actual
interest on rentals.

EX-31

EXHIBIT 31.1

Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934

I, Jeffrey M. Keebler, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of MGE Energy, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Jeffrey M. Keebler

Jeffrey M. Keebler

President and Chief Executive Officer

Date: May 8, 2018

EX-31

EXHIBIT 31.2

Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934

I, Jeffrey C. Newman, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of MGE Energy, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Jeffrey C. Newman

Jeffrey C. Newman

Executive Vice President, Chief Financial Officer,

Secretary and Treasurer

Date: May 8, 2018

EX-31

EXHIBIT 31.3

Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934

I, Jeffrey M. Keebler, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Madison Gas and Electric Company;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Jeffrey M. Keebler

Jeffrey M. Keebler

President and Chief Executive Officer

Date: May 8, 2018

EX-31

EXHIBIT 31.4

Certification Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934

I, Jeffrey C. Newman, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Madison Gas and Electric Company;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Jeffrey C. Newman

Jeffrey C. Newman

Executive Vice President, Chief Financial Officer,

Secretary and Treasurer

Date: May 8, 2018

EX-32

EXHIBIT 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report on Form 10-Q of MGE Energy, Inc. (the "Company"), for the period ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof ("the Report"), I, Jeffrey M. Keebler, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jeffrey M. Keebler

Jeffrey M. Keebler

President and Chief Executive Officer

Date: May 8, 2018

EX-32

EXHIBIT 32.2

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report on Form 10-Q of MGE Energy, Inc. (the "Company"), for the period ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof ("the Report"), I, Jeffrey C. Newman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jeffrey C. Newman

Jeffrey C. Newman

Executive Vice President, Chief Financial Officer,

Secretary and Treasurer

Date: May 8, 2018

EX-32

EXHIBIT 32.3

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report on Form 10-Q of Madison Gas and Electric Company (the "Company"), for the period ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof ("the Report"), I, Jeffrey M. Keebler, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jeffrey M. Keebler

Jeffrey M. Keebler

President and Chief Executive Officer

Date: May 8, 2018

EX-32

EXHIBIT 32.4

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report on Form 10-Q of Madison Gas and Electric Company (the "Company"), for the period ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof ("the Report"), I, Jeffrey C. Newman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jeffrey C. Newman

Jeffrey C. Newman

Executive Vice President, Chief Financial Officer,

Secretary and Treasurer

Date: May 8, 2018

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	Apr. 30, 2018
Document And Entity Information [Line Items]
Entity Registrant Name	MGE Energy Inc
Entity Central Index Key	0001161728
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Trading Symbol	MGEE
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Well known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock Shares Outstanding		34,668,370
MGE [Member]
Document And Entity Information [Line Items]
Entity Registrant Name	Madison Gas and Electric Company
Entity Central Index Key	0000061339
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock Shares Outstanding		17,347,894

XML

MGE Energy Inc Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating Revenues:
Electric revenues	$ 94,867	$ 98,397
Gas revenues	62,765	58,426
Total Operating Revenues	157,632	156,823
Operating Expenses:
Fuel for electric generation	11,900	12,199
Purchased power	17,033	15,354
Cost of gas sold	39,626	35,784
Other operations and maintenance	44,393	43,764
Depreciation and amortization	13,623	12,959
Other general taxes	4,869	4,927
Total Operating Expenses	131,444	124,987
Operating Income	26,188	31,836
Other income, net	4,919	3,525	[1]
Interest expense, net	(4,739)	(4,894)
Income before income taxes	26,368	30,467
Income tax provision	(6,367)	(11,167)
Net Income	$ 20,001	$ 19,300
Earnings Per Share of Common Stock (basic and diluted)	$ 0.58	$ 0.56
Dividends per share of common stock	$ 0.323	$ 0.308
Weighted Average Shares Outstanding (basic and diluted)	34,668	34,668

[1] Reflects retrospective application of new accounting pronouncement related to pension and other postretirement benefits, see Footnote 2 for further information.

XML

Madison Gas and Electric Company Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Operating Revenues:
Electric revenues		$ 94,867	$ 98,397
Gas revenues		62,765	58,426
Total Operating Revenues		157,632	156,823
Operating Expenses:
Fuel for electric generation		11,900	12,199
Purchased power		17,033	15,354
Cost of gas sold		39,626	35,784
Other operations and maintenance		44,393	43,764
Depreciation and amortization		13,623	12,959
Other general taxes		4,869	4,927
Total Operating Expenses		131,444	124,987
Operating Income		26,188	31,836
Other Income and Deductions:
Equity earnings in MGE Transco		2,451	2,608
Total Other Income and Deductions		4,919	3,525	[1]
Interest Expense:
Net Interest Expense		4,739	4,894
Net Income		20,001	19,300
MGE [Member]
Operating Revenues:
Electric revenues		94,867	98,401
Gas revenues		62,765	58,435
Total Operating Revenues		157,632	156,836
Operating Expenses:
Fuel for electric generation		11,900	12,201
Purchased power		17,033	15,356
Cost of gas sold		39,626	35,793
Other operations and maintenance		44,187	43,395
Depreciation and amortization		13,623	12,959
Other general taxes		4,869	4,927
Income tax provision		5,524	10,265
Total Operating Expenses		136,762	134,896
Operating Income	[2]	20,870	21,940
Other Income and Deductions:
AFUDC - equity funds		595	271
Income tax provision		(57)	(44)
Other income, net		1,902	998
Total Other Income and Deductions	[2]	2,440	1,225	[1]
Income before interest expense		23,310	23,165
Interest Expense:
Interest on long-term debt		5,206	5,043
Other interest, net		49	31
AFUDC - borrowed funds		(201)	(92)
Net Interest Expense		5,054	4,982
Net Income Including Noncontrolling Interest		18,256	18,183
Less Net Income Attributable to Noncontrolling Interest, net of tax		(5,806)	(5,389)
Net Income		$ 12,450	$ 12,794

[1] Reflects retrospective application of new accounting pronouncement related to pension and other postretirement benefits, see Footnote 2 for further information.

[2] Amounts are shown net of the related tax expense, consistent with the presentation on the MGE Consolidated Statements of Income.

XML

MGE Energy Inc Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Comprehensive Income [Abstract]
Net Income	$ 20,001	$ 19,300
Other comprehensive income, net of tax:
Unrealized gain (loss) on available-for-sale securities, net of tax	0	97
Comprehensive Income	$ 20,001	$ 19,397

XML

Madison Gas and Electric Company Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Other comprehensive income, net of tax:
Unrealized gain (loss) on available-for-sale securities, net of tax	$ 0	$ 97
Comprehensive Income	20,001	19,397
MGE [Member]
Net Income	18,256	18,183
Other comprehensive income, net of tax:
Unrealized gain (loss) on available-for-sale securities, net of tax	0	(6)
Total comprehensive income including noncontrolling interest	18,256	18,177
Less: Comprehensive income attributable to Noncontrolling Interest, net of tax	(5,806)	(5,389)
Comprehensive Income	$ 12,450	$ 12,788

XML

Consolidated Statements of Comprehensive Income (Unaudited) (Parantheticals) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Unrealized gain (loss) on available-for-sale securities, tax expense (benefit)	$ 0	$ 65
MGE [Member]
Unrealized gain (loss) on available-for-sale securities, tax expense (benefit)	$ 0	$ (4)

XML

MGE Energy Inc Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating Activities:
Net Income	$ 20,001	$ 19,300
Items not affecting cash:
Depreciation and amortization	13,623	12,959
Deferred income taxes	(1,793)	(3,732)
Provision for doubtful receivables	264	254
Employee benefit plan (credit) cost	(561)	202
Equity earnings in ATC	(2,451)	(2,608)
Other items	(152)	641
Changes in working capital items:
Decrease in current assets	25,208	27,124
Decrease in current liabilities	(7,771)	(9,318)
Dividends from ATC	2,348	2,072
Cash contributions to pension and other postretirement plans	(1,319)	(7,168)
Other noncurrent items, net	(419)	1,526
Cash Provided by Operating Activities	46,978	41,252
Investing Activities:
Capital expenditures	(37,631)	(16,117)
Capital contributions to investments	(1,877)	(2,939)
Other	(35)	928
Cash Used for Investing Activities	(39,543)	(18,128)
Financing Activities:
Cash dividends paid on common stock	(11,181)	(10,660)
Repayment of long-term debt	(1,103)	(31,080)
Issuance of long-term debt	0	40,000
Repayments of short-term debt	(1,000)	0
Other	0	(289)
Cash Used for Financing Activities	(13,284)	(2,029)
Change in cash, cash equivalents, and restricted cash	(5,849)	21,095
Cash, cash equivalents, and restricted cash at beginning of period	112,094	101,633
Cash, cash equivalents, and restricted cash at end of period	106,245	122,728
Significant noncash investing activities:
Accrued capital expenditures	$ 4,706	$ 6,804

XML

Madison Gas and Electric Company Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Items not affecting cash:
Depreciation and amortization	$ 13,623	$ 12,959
Deferred income taxes	(1,793)	(3,732)
Provision for doubtful receivables	264	254
Employee benefit plan (credit) cost	(561)	202
Equity earnings in MGE Transco	(2,451)	(2,608)
Other items	(152)	641
Changes in working capital items:
Decrease in current assets	25,208	27,124
Decrease in current liabilities	(7,771)	(9,318)
Cash contributions to pension and other postretirement plans	(1,319)	(7,168)
Other noncurrent items, net	(419)	1,526
Cash Provided by Operating Activities	46,978	41,252
Investing Activities:
Capital expenditures	(37,631)	(16,117)
Capital contributions to investments	(1,877)	(2,939)
Other	(35)	928
Cash Used for Investing Activities	(39,543)	(18,128)
Financing Activities:
Repayment of long-term debt	(1,103)	(31,080)
Issuance of long-term debt	0	40,000
Repayments of short-term debt	(1,000)	0
Other	0	(289)
Cash Used for Financing Activities	(13,284)	(2,029)
Change in cash, cash equivalents, and restricted cash	(5,849)	21,095
Cash, cash equivalents, and restricted cash at beginning of period	112,094	101,633
Cash, cash equivalents, and restricted cash at end of period	106,245	122,728
Significant noncash investing activities:
Accrued capital expenditures	4,706	6,804
MGE [Member]
Operating Activities:
Net Income	18,256	18,183
Items not affecting cash:
Depreciation and amortization	13,623	12,959
Deferred income taxes	(2,229)	(4,242)
Provision for doubtful receivables	264	254
Employee benefit plan (credit) cost	(561)	202
Other items	(17)	690
Changes in working capital items:
Decrease in current assets	24,779	26,166
Decrease in current liabilities	(5,749)	(9,022)
Cash contributions to pension and other postretirement plans	(1,319)	(7,168)
Other noncurrent items, net	(468)	1,488
Cash Provided by Operating Activities	46,579	39,510
Investing Activities:
Capital expenditures	(37,631)	(16,117)
Other	(198)	158
Cash Used for Investing Activities	(37,829)	(15,959)
Financing Activities:
Cash dividends paid to parent by MGE	0	(15,000)
Distributions to parent from noncontrolling interest	(7,500)	(5,500)
Repayment of long-term debt	(1,103)	(31,080)
Issuance of long-term debt	0	40,000
Repayments of short-term debt	(1,000)	0
Other	0	(289)
Cash Used for Financing Activities	(9,603)	(11,869)
Change in cash, cash equivalents, and restricted cash	(853)	11,682
Cash, cash equivalents, and restricted cash at beginning of period	10,093	16,442
Cash, cash equivalents, and restricted cash at end of period	9,240	28,124
Significant noncash investing activities:
Accrued capital expenditures	$ 4,706	$ 6,804

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current Assets:
Cash and cash equivalents	$ 101,157	$ 107,952
Accounts receivable, less reserves	43,307	42,299
Other accounts receivables, less reserves	5,851	9,440
Unbilled revenues	25,471	31,400
Materials and supplies, at average cost	23,554	22,614
Fuel for electric generation, at average cost	9,478	8,256
Stored natural gas, at average cost	3,686	12,923
Prepaid taxes	14,956	26,535
Regulatory assets - current	8,721	7,888
Assets held for sale	1,383	8,817
Other current assets	11,176	12,507
Total Current Assets	248,740	290,631
Other long-term receivables	4,449	4,788
Regulatory assets	140,218	142,567
Pension and other postretirement benefit asset	9,631	7,336
Other deferred assets and other	2,150	731
Property, Plant, and Equipment:
Property, plant, and equipment, net	1,290,148	1,283,313
Construction work in progress	76,066	58,044
Total Property, Plant, and Equipment	1,366,214	1,341,357
Investments	72,176	67,772
Total Assets	1,843,578	1,855,182
Current Liabilities:
Long-term debt due within one year	24,477	24,452
Short-term debt	3,000	4,000
Accounts payable	35,026	47,645
Accrued interest and taxes	4,497	5,602
Accrued payroll related items	8,390	12,244
Regulatory liabilities - current	12,325	5,633
Derivative liabilities	8,950	8,180
Other current liabilities	9,565	18,758
Total Current Liabilities	106,230	126,514
Other Credits:
Deferred income taxes	224,309	225,130
Investment tax credit - deferred	893	918
Regulatory liabilities	157,890	154,153
Accrued pension and other postretirement benefits	69,030	69,088
Derivative liabilities	32,340	33,990
Other deferred liabilities and other	68,746	69,041
Total Other Credits	553,208	552,320
Capitalization:
Common shareholders equity	787,007	778,187
Long-term debt	397,133	398,161
Total Capitalization	1,184,140	1,176,348
Commitments and contingencies (see Footnote 9)
Total Liabilities and Capitalization	1,843,578	1,855,182
MGE [Member]
Current Assets:
Cash and cash equivalents	4,152	5,951
Accounts receivable, less reserves	43,307	42,299
Affiliate receivables	690	668
Other accounts receivables, less reserves	5,740	6,984
Unbilled revenues	25,471	31,400
Materials and supplies, at average cost	23,554	22,614
Fuel for electric generation, at average cost	9,478	8,256
Stored natural gas, at average cost	3,686	12,923
Prepaid taxes	13,893	25,073
Regulatory assets - current	8,721	7,888
Assets held for sale	1,383	8,817
Other current assets	11,162	12,484
Total Current Assets	151,237	185,357
Affiliate receivable long-term	3,574	3,707
Regulatory assets	140,218	142,567
Pension and other postretirement benefit asset	9,631	7,336
Other deferred assets and other	4,512	3,280
Property, Plant, and Equipment:
Property, plant, and equipment, net	1,290,176	1,283,341
Construction work in progress	76,066	58,044
Total Property, Plant, and Equipment	1,366,242	1,341,385
Investments	409	409
Total Assets	1,675,823	1,684,041
Current Liabilities:
Long-term debt due within one year	24,477	24,452
Short-term debt	3,000	4,000
Accounts payable	35,026	47,614
Accrued interest and taxes	4,443	5,558
Accrued payroll related items	8,390	12,244
Regulatory liabilities - current	12,325	5,633
Derivative liabilities	8,950	8,180
Other current liabilities	9,557	16,749
Total Current Liabilities	106,168	124,430
Other Credits:
Deferred income taxes	200,093	201,486
Investment tax credit - deferred	893	918
Regulatory liabilities	157,890	154,153
Accrued pension and other postretirement benefits	69,030	69,088
Derivative liabilities	32,340	33,990
Other deferred liabilities and other	68,746	69,041
Total Other Credits	528,992	528,676
Capitalization:
Common shareholders equity	504,322	491,872
Noncontrolling interest	139,208	140,902
Total Equity	643,530	632,774
Long-term debt	397,133	398,161
Total Capitalization	1,040,663	1,030,935
Commitments and contingencies (see Footnote 9)
Total Liabilities and Capitalization	$ 1,675,823	$ 1,684,041

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Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Receivables, Net
Reserve for uncollectible accounts receivable	$ 2,804	$ 2,840
Reserve for uncollectible other accounts receivable	317	335
MGE [Member]
Receivables, Net
Reserve for uncollectible accounts receivable	2,804	2,840
Reserve for uncollectible other accounts receivable	$ 317	$ 335

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MGE Energy Inc Consolidated Statements of Common Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income/(Loss) [Member]
Beginning balance, shares at Dec. 31, 2016		34,668
Beginning balance, value at Dec. 31, 2016	$ 724,088	$ 34,668	$ 316,268	$ 372,950	$ 202
Increase (Decrease) In Stockholders' Equity [Roll Forward]
Net Income	19,300			19,300
Other comprehensive income (loss)	97				97
Common stock dividends declared	(10,660)			(10,660)
Ending balance, shares at Mar. 31, 2017		34,668
Ending balance, value at Mar. 31, 2017	732,825	$ 34,668	316,268	381,590	299
Beginning balance, shares at Dec. 31, 2017		34,668
Beginning balance, value at Dec. 31, 2017	778,187	$ 34,668	316,268	426,874	377
Cumulative effect of new accounting principle at Dec. 31, 2017	0			377	(377)
Beginning balance, value - Adjusted at Dec. 31, 2017	778,187			427,251	0
Increase (Decrease) In Stockholders' Equity [Roll Forward]
Net Income	20,001			20,001
Common stock dividends declared	(11,181)			(11,181)
Ending balance, shares at Mar. 31, 2018		34,668
Ending balance, value at Mar. 31, 2018	$ 787,007	$ 34,668	$ 316,268	$ 436,071	$ 0

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Madison Gas and Electric Company Consolidated Statements of Common Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	MGE [Member]	Common Stock [Member]	Common Stock [Member] MGE [Member]	Additional Paid-In Capital [Member] MGE [Member]	Retained Earnings [Member]	Retained Earnings [Member] MGE [Member]	Accumulated Other Comprehensive Income/(Loss) [Member]	Accumulated Other Comprehensive Income/(Loss) [Member] MGE [Member]	Noncontrolling Interest [Member] MGE [Member]
Beginning balance, shares at Dec. 31, 2016			34,668	17,348
Beginning balance, value at Dec. 31, 2016		$ 602,749		$ 17,348	$ 192,417		$ 277,300		$ 19	$ 115,665
Increase (Decrease) In Stockholders' Equity [Roll Forward]
Net Income		18,183					12,794			5,389
Other comprehensive income (loss)	$ 97	(6)						$ 97	(6)
Cash dividends paid to parent by MGE		(15,000)					(15,000)
Distributions to parent from noncontrolling interest		(5,500)								(5,500)
Ending balance, shares at Mar. 31, 2017			34,668	17,348
Ending balance, value at Mar. 31, 2017		600,426		$ 17,348	192,417		275,094		13	115,554
Beginning balance, shares at Dec. 31, 2017			34,668	17,348
Beginning balance, value at Dec. 31, 2017		632,774		$ 17,348	192,417		282,135		(28)	140,902
Cumulative effect of new accounting principle at Dec. 31, 2017	0	0				$ 377	(28)	(377)	28
Beginning balance, value - Adjusted at Dec. 31, 2017	$ 778,187	632,774				$ 427,251	282,107	$ 0	0
Increase (Decrease) In Stockholders' Equity [Roll Forward]
Net Income		18,256					12,450			5,806
Distributions to parent from noncontrolling interest		(7,500)								(7,500)
Ending balance, shares at Mar. 31, 2018			34,668	17,348
Ending balance, value at Mar. 31, 2018		$ 643,530		$ 17,348	$ 192,417		$ 294,557		$ 0	$ 139,208

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Consolidated Statements of Common Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Consolidated Statements of Common Equity
Dividends per share of common stock	$ 0.323	$ 0.308

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Summary of Significant Accounting Principles

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Summary of Significant Accounting Policies.

a. Basis of Presentation - MGE Energy and MGE.

This report is a combined report of MGE Energy and MGE. References in this report to "MGE Energy" are to MGE Energy, Inc. and its subsidiaries. References in this report to "MGE" are to Madison Gas and Electric Company.

MGE Power Elm Road and MGE Power West Campus own electric generating assets and lease those assets to MGE. Both entities are variable interest entities under applicable authoritative accounting guidance. MGE is considered the primary beneficiary of these entities as a result of contractual agreements. As a result, MGE has consolidated MGE Power Elm Road and MGE Power West Campus. See Footnote 2 of Notes to Consolidated Financial Statements under Item 8, Financial Statements and Supplementary Data, of MGE Energy's and MGE's 2017 Annual Report on Form 10-K (the 2017 Annual Report on Form 10-K).

The accompanying consolidated financial statements as of March 31,2018, and for the three months ended, are unaudited, but include all adjustments that MGE Energy and MGE management consider necessary for a fair statement of their respective financial statements. All adjustments are of a normal, recurring nature except as otherwise disclosed. The year-end consolidated balance sheet information was derived from the audited balance sheet appearing in the2017 Annual Report on Form 10-K, but does not include all disclosures required by accounting principles generally accepted in the United States of America. These notes should be read in conjunction with the financial statements and the notes on pages 54 through 103 of the 2017 Annual Report on Form 10-K.

b. Cash, Cash Equivalents, and Restricted Cash - MGE Energy and MGE.

The following table presents the components of total cash, cash equivalents and restricted cash on the consolidated balance sheets.

		MGE Energy				MGE
		March 31,		December 31,		March 31,		December 31,
(In thousands)		2018		2017		2018		2017
Cash and cash equivalents	$	101,157	$	107,952	$	4,152	$	5,951
Restricted cash		2,763		1,635		2,763		1,635
Receivable - margin account		2,325		2,507		2,325		2,507
Cash, cash equivalents, and restricted cash	$	106,245	$	112,094	$	9,240	$	10,093

Cash Equivalents

MGE Energy and MGE consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Restricted Cash

MGE has certain cash accounts that are restricted to uses other than current operations and designated for a specific purpose. MGE's restricted cash accounts include cash held by trustees for certain employee benefits and cash deposits held by third parties. These are included in "Other current assets" on the consolidated balance sheets.

Receivable – Margin Account

Cash amounts held by counterparties as margin collateral for certain financial transactions are recorded as receivable – margin account in "Other current assets" on the consolidated balance sheets. The costs being hedged are fuel for electric generation, purchased power, and cost of gas sold.

The following table presents the retrospective adjustments to cash flow amounts on MGE Energy's and MGE's consolidated statements of cash flows in accordance with the adoption of ASU 2016-18, Restricted Cash.

		Three Months Ended
(In thousands)		March 31, 2017
Cash provided by operating activities	$	(1,035)
Cash used for investing activities		387
Change in cash, cash equivalents, and restricted cash		(648)
Cash, cash equivalents, and restricted cash at beginning of period		5,674
Cash, cash equivalents, and restricted cash at end of period	$	5,026

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Adoption of Accounting Principles and Recently Issued Accounting Pronouncements

3 Months Ended

Mar. 31, 2018

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements

New Accounting Standards - MGE Energy and MGE.

a.Recently Adopted

Revenue from Contracts with Customers.

The FASB issued authoritative guidance within the codification's Revenue Recognition topic that provides guidance on the recognition, measurement, and disclosure of revenue from contracts with customers. The new standard establishes a five step model for recognizing and measuring revenue from contracts with customers and replaces existing guidance on revenue recognition. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services.

This authoritative guidance became effective January 1, 2018, and MGE Energy and MGE adopted the standard upon the effective date. Adoption of this standard is permitted under one of two methods: the full retrospective method or the modified retrospective method. MGE Energy and MGE implemented the standard using the modified retrospective method. The cumulative impact of this guidance on our financial statements is not material, except for additional footnote disclosures. See Footnote 3 for further information.

Financial Instruments.

In January 2016, the FASB issued authoritative guidance within the codification's Financial Instruments topic that provides guidance on the recognition and measurement of financial instruments. This authoritative guidance became effective January 1, 2018, and required equity investments to be measured at fair value with changes in fair value recognized in net income rather than in other comprehensive income. As a result of this guidance, MGE Energy and MGE will no longer have other comprehensive income related to equity investments. This standard was applied using a modified retrospective approach, with a cumulative effect adjustment recorded to opening retained earnings as of the beginning of the fiscal year of adoption. As of January 1, 2018, MGE Energy recorded a $0.4 million increase in retained earnings and a corresponding decrease in other comprehensive income, and MGE recorded less than a $0.1 million decrease in retained earnings and a corresponding increase in other comprehensive income, related to equity investments within the scope of this standard.

Restricted Cash.

In November 2016, the FASB issued authoritative guidance within the codification's Statement of Cash Flows topic that provides guidance on the classification and presentation of changes in restricted cash within the statement of cash flows. Under the new guidance, reporting entities are required to explain the changes in the total of restricted and unrestricted cash and cash equivalents when reconciling the beginning and ending balances on the statement of cash flows. Prior to the authoritative guidance, changes in restricted cash were presented as either cash flows from operating, investing, or financing activities within the statement of cash flows, as appropriate based on the nature of the restriction. Also under the new standard, reporting entities are required to provide a reconciliation from the balance sheet to the statement of cash flows and disclose the nature of the restrictions of cash. This authoritative guidance became effective January 1, 2018. Upon the effective date, MGE Energy and MGE changed the presentation of restricted cash on the consolidated statements of cash flows to reflect the new accounting guidance retrospectively to all periods presented. See Footnote 1.b. for further information.

Pension and Other Postretirement Benefits.

In March 2017, the FASB issued authoritative guidance within the codification's Compensation – Retirement Benefits topic that provides guidance on the presentation of net periodic pension cost and net periodic postretirement benefit cost (together, net benefit cost). This authoritative guidance became effective January 1, 2018. Under the new guidance, the service cost component of net benefit cost is required to be recorded in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside of income from operations. A practical expedient within the standard permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan footnote for prior comparative periods as the estimation basis for applying the retrospective presentation requirements. MGE Energy and MGE have elected to apply the practical expedient. Upon the effective date, MGE Energy and MGE changed the presentation of net benefit cost on the consolidated statements of income to reflect the new accounting guidance retrospectively to all periods presented. For both MGE Energy and MGE, "Other operations and maintenance expense" increased and "Other income, net" increased $1.1 million for the three months endedMarch 31,2017. The standard also only allows the service cost component to be eligible for capitalization prospectively from the effective date of the pronouncement (whereas under previous GAAP, all components of net benefit cost were eligible for capitalization). See Footnote 6 for further information.

b.Recently Issued

Leases.

In February 2016, the FASB issued authoritative guidance within the codification's Leases topic that provides guidance on the classification, recognition, measurement, and disclosure of leases. The new leasing standard establishes that a lease conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. Under the new guidance, lessees will be required to recognize all leases with terms greater than one year, including operating leases, on the balance sheet by recording a right-of-use asset and lease liability. Prior to the authoritative guidance, only capital leases were recognized on the balance sheet by lessees. The new accounting guidance, as applied by lessors, is materially consistent with current GAAP. In January 2018, the FASB issued authoritative guidance which provided an optional practical expedient to grandfather the accounting for existing and expired land easements not accounted for as a lease under the new authoritative guidance. MGE Energy and MGE plan to adopt this practical expedient.

Management has begun utilizing a bottoms-up approach to analyze the impact of the standard on our lease portfolio. MGE Energy and MGE have been reviewing current accounting policies and procedures to identify potential differences in accounting treatment that would result from applying the requirements of the new standard to our existing lease portfolio. In addition, we are identifying appropriate changes to our business processes, systems, and controls to support recognition and disclosure requirements under the new standard. This authoritative guidance will become effective January 1, 2019, with early adoption permitted. MGE Energy and MGE anticipate adopting the standard upon the effective date. The new leasing standard requires entities to recognize and measure leases at the beginning of the earliest comparative period presented using a modified retrospective approach. MGE Energy and MGE are currently assessing the impact this pronouncement will have on our financial statements.

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Revenue

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer

Revenue - MGE Energy and MGE.

Revenues disaggregated by revenue source were as follows:

		Three Months Ended
(In thousands)		March 31,
Electric revenues		2018		2017
Residential	$	33,259	$	33,353
Commercial(a)		47,452		50,164
Industrial		2,895		4,215
Other-retail/municipal		8,287		9,021
Total retail		91,893		96,753
Sales to the market		2,034		972
Other revenues		470		429
Adjustments to revenues		(6)		170
Total electric revenues		94,391		98,324
Gas revenues
Residential		36,551		33,903
Commercial/Industrial(a)		24,952		23,048
Total retail		61,503		56,951
Gas transportation		1,135		1,350
Other revenues		127		125
Total gas revenues		62,765		58,426
Non-regulated energy revenues		476		73
Total Operating Revenue(a)	$	157,632	$	156,823

(a)In 2017, MGE had less than $0.1 million of revenues related to CNG vehicle fuel servicing.No revenue was recognized for fuel servicing by MGE Energy in 2017.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of MGE Energy's and MGE's contracts have a single performance obligation.

Retail Revenue (Residential, Commercial, Industrial, and Other Retail/Municipal)

Retail revenue of electric and gas utility service represent MGE's core business activities. Tariffs are approved by the PSCW through a rate order and provide MGE's customers with the standard terms and conditions, including pricing terms. The performance obligation to deliver electricity or gas is satisfied over time as the customer simultaneously receives and consumes the commodities provided by MGE. MGE recognizes revenues as the commodity is delivered to customers. Meters are read on a systematic basis throughout the month based on established meter-reading schedules and the customer is subsequently billed for their services. At the end of the month, MGE accrues an estimate for the unbilled amount of commodities delivered to customers. The unbilled revenue estimate is based on daily system demand volumes, weather factors, estimated line losses, estimated customer usage by class, and applicable customer rates.

Utility Cost Recovery Mechanisms

MGE's tariff rates include a provision for fuel cost recovery. The PSCW allows Wisconsin utilities to defer electric fuel-related costs, less excess revenues, that fall outside a symmetrical cost tolerance band. Any over/under recovery of the actual costs in a given year is determined in the following year and is then reflected in future billings to electric retail customers. Over-collection of fuel-related costs that are outside the approved range will be recognized as a reduction of revenue. Prior to adoption of the new revenue recognition guidance, effective January 1, 2018, over-collected fuel-related costs were reflected in "Purchased Power" expense. Under-collection of these costs will continue to be recognized in "Purchased Power" expense in the consolidated statements of income of MGE Energy and MGE. The cumulative effects of these deferred amounts will be recorded in "Regulatory assets" or "Regulatory liabilities" on the consolidated balance sheets of MGE Energy and MGE until they are reflected in future billings to customers. See Footnote 10.b. for further information.

MGE received a PSCW order to defer the over-collection of income tax expense collected in customer rates as a result of the Tax Cuts and Jobs Act (the Tax Act) reduction in the income tax rate to 21 percent. See Footnote 5 for further information.

MGE has other cost recovery mechanisms, any over-collection of the difference between actual costs incurred and the amount of costs collected from customers is recorded as a reduction of revenue in the period incurred.

Sales to the Market

Sales to the market include energy charges, capacity or demand charges, and ancillary charges represented by wholesale sales of electricity made to third parties who are not ultimate users of the electricity. Most of these sales are spot market transactions on the markets operated by MISO. Each transaction is considered a performance obligation and revenue is recognized in the period in which availability is provided to MISO. MGE reports on a net basis, transactions on the MISO markets in which it buys and sells power within the same hour to meet electric energy delivery requirements.

Transportation of Gas

MGE has written contracts under which MGE provides gas transportation services to customers whom have elected to purchase gas from a third party and have gas delivered via pipelines within MGE's service territory. Revenue is recognized as service is rendered or gas is delivered to customers. Tariffs are approved by the PSCW through a rate order and provide gas transportation customers with the standard terms and conditions, including pricing terms.

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Investment in ATC and ATC Holdco

3 Months Ended

Mar. 31, 2018

Equity Method Investments and Joint Ventures [Abstract]

Investment in ATC and ATC Holdco

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.

At March 31,2018, and December 31, 2017, MGE Transco held a 3.6% ownership interest in ATC. At March 31,2018, and December 31, 2017, MGEE Transco held a 4.4% ownership interest in ATC Holdco.

MGE Transco and MGEE Transco have accounted for their investment in ATC and ATC Holdco, respectively, under the equity method of accounting.Equity earnings from investments are recorded as "Other income" on MGE Energy's consolidated statements of income. For the three months endedMarch 31,2018 and 2017, MGE Transco recorded the following:

		Three Months Ended
		March 31,
(In thousands)		2018		2017
Equity earnings from investment in ATC	$	2,451	$	2,608
Dividends from ATC(a)		-		-
Capital contributions to ATC		710		1,420

(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.

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. For the three months endedMarch 31,2018 and 2017, MGEE Transco recorded capital contributions of $0.1 million and $0.2 million, respectively, to ATC Holdco.

In April 2018, MGE Transco made a $1.1 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 months endedMarch 31,2018 and 2017, is as follows:

		Three Months Ended
		March 31,
(In thousands)		2018		2017
Operating revenues	$	165,429	$	174,669
Operating expenses		(84,893)		(82,697)
Other income, net		111		682
Interest expense, net		(27,762)		(26,783)
Earnings before members' income taxes	$	52,885	$	65,871

MGE receives transmission and other related services from ATC. During the three months endedMarch 31,2018, MGE recorded $7.2 million for transmission services received compared to $9.2 million for the comparable period in 2017. MGE also provides a variety of operational, maintenance, and project management services for ATC, which is reimbursed by ATC. As of March 31,2018, and December 31, 2017, MGE had a receivable due from ATC of $0.2 million.

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Taxes

3 Months Ended

Mar. 31, 2018

Income Tax Disclosure [Abstract]

Taxes

Taxes - MGE Energy and MGE.

Effective Tax Rate.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the Tax Act). The Tax Act makes broad and complex changes to the U.S. tax code, including the reduction in the U.S. federal corporate tax rate from 35 percent to 21 percent, effective January 1, 2018. MGE Energy and MGE recorded a provisional decrease in deferred tax assets and deferred tax liabilities as of December 31, 2017. In accordance with Staff Accounting Bulletin 118, any subsequent adjustment to these amounts will be recorded in the quarter of 2018 when the analysis is complete. No adjustments have been recorded in the first quarter of 2018. Beginning January 1, 2018, MGE began amortization of the regulated utility excess deferred taxes recognized using a normalization method of accounting. For the three months ended March 31, 2018, MGE recognized $0.6 million of excess deferred taxes as a reduction of revenue and a corresponding increase in a regulatory liability. The amount and timing of the cash impacts will depend on the period over which certain income tax benefits are provided to customers, which will be determined by the PSCW.

Customer rates approved for 2018 reflect an income tax rate of 35 percent. MGE received a PSCW order to defer the over-collection of income tax expense as a result of the decrease in tax rate to 21 percent. As of March 31, 2018, MGE has deferred $3.3 million as a regulatory liability and recorded a corresponding reduction in operating revenues. The PSCW reached a preliminary decision in April 2018 for the return of the over-collection of income tax expense. The preliminary decision includes a one-time bill credit in July of 2018 for the first six months of 2018 over-collection and a monthly bill credit beginning in August 2018 of the estimated remaining annual amount to be returned to customers. Any over/under recovery of the actual costs will be subject to the PSCW's annual review in the following year and is then reflected in future billings to retail customers. A final order is expected in May 2018.

The consolidated income tax provision differs from the amount computed by applying the statutory federal income tax rate to income before income taxes, as follows:

	MGE Energy		MGE
Three Months Ended March 31,	2018	2017	2018	2017
Statutory federal income tax rate	21.0 %	35.0 %	21.0 %	35.0 %
State income taxes, net of federal benefit	6.4 %	5.3 %	6.0 %	5.1 %
Amortized investment tax credits	(0.1)%	(0.1)%	(0.1)%	(0.1)%
Credit for electricity from wind energy	(0.5)%	(1.8)%	(0.5)%	(2.0)%
Domestic manufacturing deduction	-%	(1.3)%	-%	(1.4)%
AFUDC equity, net	(0.4)%	(0.2)%	(0.4)%	(0.2)%
Amortization of utility excess deferred tax - tax reform(a)	(1.8)%	-%	(2.0)%	-%
Other, net, individually insignificant	(0.4)%	(0.2)%	(0.6)%	(0.2)%
Effective income tax rate	24.2 %	36.7 %	23.4 %	36.2 %

(a)Included are impacts of the Tax Act for the regulated utility for excess deferred taxes recognized using a normalization method of accounting.

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Pension and Other Postretirement Plans

3 Months Ended

Mar. 31, 2018

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Plans

Pension and Other Postretirement Plans - MGE Energy and MGE.

MGE maintains qualified and nonqualified pension plans, health care, and life insurance benefits. Additionally, MGE has defined contribution 401(k) benefit plans.

The components of net periodic benefit cost, other than the service cost component, are recorded in "Other income, net" on the consolidated statements of income. The service cost component is recorded in "Other operations and maintenance" on the consolidated statements of income. Prior to January 1, 2018, a portion of all net periodic benefit cost components were capitalized within the consolidated balance sheets. The FASB issued authoritative guidance within the codification's Compensation-Retirement Benefits topic that, beginning January 1, 2018, only allows the service cost component of net periodic benefit cost to be eligible for capitalization within the consolidated balance sheets. MGE has regulatory treatment and recognizes regulatory assets or liabilities for timing differences between when net periodic benefit costs are recovered and when costs are recognized.

The following table presents the components of net periodic benefit costs recognized for the three months endedMarch 31,2018 and 2017.

		Three Months Ended
		March 31,
(In thousands)		2018		2017
Pension Benefits
Components of net periodic benefit cost:
Service cost	$	1,457	$	1,332
Interest cost		3,208		3,119
Expected return on assets		(6,568)		(5,742)
Amortization of:
Prior service credit		(11)		(4)
Actuarial loss		1,298		1,464
Net periodic benefit (credit) cost	$	(616)	$	169
Postretirement Benefits
Components of net periodic benefit cost:
Service cost	$	332	$	206
Interest cost		658		444
Expected return on assets		(802)		(472)
Amortization of:
Transition obligation		1		-
Prior service credit		(667)		(436)
Actuarial loss		128		129
Net periodic benefit (credit) cost	$	(350)	$	(129)

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Equity and Financing Arrangements

3 Months Ended

Mar. 31, 2018

Equity and Financing Arrangements Disclosure [Abstract]

Equity and Financing Arrangements

Equity and Financing Arrangements - MGE Energy.

a. Common Stock.

MGE Energy sells shares of its common stock through its Stock Plan. Those shares may be newly issued shares or shares that MGE Energy has purchased in the open market for resale to participants in the Stock Plan. All sales under the Stock Plan are covered by a shelf registration statement that MGE Energy filed with the SEC. For both the three months endedMarch 31,2018 and 2017, MGE Energy did not issue any new shares of common stock under the Stock Plan.

b. Dilutive Shares Calculation.

MGE Energy does not have any stock option or stock award programs or any dilutive securities.

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Share-Based Compensation

3 Months Ended

Mar. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation - MGE Energy and MGE.

Under MGE Energy'sDirector Incentive Plan and Performance Unit Plan, non-employee directorsand eligible employees may receive performance units that entitle the holder to receive a cash payment equal to the value of a designated number of shares of MGE Energy's common stock, plus dividend equivalent payments thereon, at the end of the set performance period.

In 2018, 5,810units were granted under the Director Incentive Plan and are subject to a three-year graded vesting schedule and 17,830 units were granted under the Performance Unit Plan and are subject to a five-year graded vesting schedule. On the grant date, the cost of the director or employee services received in exchange for a performance unit award is measured based on the current market value of MGE Energy common stock. The fair value of the awards is re-measured quarterly, including atMarch 31,2018, as required by applicable accounting standards. Changes in fair value as well as the original grant are recognized as compensation cost. Since this amount is re-measured throughout the vesting period, the compensation cost is subject to variability.

For nonretirement eligible employees under the Performance Unit Plan, stock based compensation costs are accrued and recognized using the graded vesting method. Compensation cost for retirement eligible employees or employees that will become retirement eligible during the vesting schedule are recognized on an abridged horizon.

During the three months endedMarch 31,2018, MGE recorded $0.2 million in compensation expense as a result of awards under the plans compared to $0.5 million for the comparable period in 2017. In January 2018, cash payments of $1.6 million were distributed relating to awards that were granted under the plans. No forfeitures of units occurred during the three months endedMarch 31,2018 and 2017. At March 31,2018, $4.8 million of outstanding awards are vested, and of this amount, no cash settlements have occurred.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies.

a. Environmental - MGE Energy and MGE.

MGE Energy and MGE are subject to frequently changing local, state, and federal regulations concerning air quality, water quality, land use, threatened and endangered species, hazardous materials handling, and solid waste disposal. These regulations affect the manner in which they conduct their operations, the costs of those operations, as well as capital and operating expenditures. Several of these environmental rules are subject to legal challenges, reconsideration and/or other uncertainties. Regulatory initiatives, proposed rules, and court challenges to adopted rules, have the potential to have a material effect on our capital expenditures and operating costs. Management believes compliance costs will be recovered in future rates based on previous treatment of environmental compliance projects. These initiatives, proposed rules, and court challenges include:

•The EPA's published water effluent limitations guidelines and standards for steam electric power plants, which focus on the reduction of metals and other pollutants in wastewater from new and existing power plants, such as the coal-burning plants at Columbia and the Elm Road Units.

•The EPA's cooling water intake rules, which require cooling water intake structures at electric power plants, such as our WCCF, Blount, and Columbia plants, meet best available technology standards so that mortality from entrainment (drawing aquatic life into a plant's cooling system) and impingement (trapping aquatic life on screens) are reduced.

•Greenhouse Gas (GHG) reduction guidelines and approval criteria established under the Clean Air Act for states to use in developing plans to control GHG emissions from existing fossil fuel-fired electric generating units (EGUs) and systems (the Clean Power Plan, or CPP). Implementation of the CPP is expected to have a direct impact on existing coal and natural gas fired generating units, including possible changes in dispatch and additional operating costs. In May 2017, the EPA requested the U.S. Court of Appeals for the D.C. Circuit to put on hold, indefinitely, any ongoing challenges to the CPP while the EPA reviews the rule and undertakes any potential rulemaking. In October 2017, the EPA published a proposed rule announcing the EPA's intention to repeal the CPP and has sought public comment on whether to replace the rule, and if so how. In December 2017, the EPA published an Advance Notice of Public Rulemaking (ANPR) to solicit information from the public as it considers a future rule to limit GHG emissions from electric generating units.

Given the pending legal proceedings, and the ANPR, the nature and timing of any final requirements to control GHG emissions is subject to uncertainty. If the CPP remains substantially in its present form, it is expected to have a material impact on MGE. MGE will continue to monitor developments with this proposed rule.

•The EPA's rule to regulate ambient levels of a pollutant through the Ozone National Ambient Air Quality Standards (NAAQS). The EPA issued final designations on May 1, 2018, which designated the northeast portion of Milwaukee County as nonattainment. The Elm Road Units are located outside the designated nonattainment area. MGE expects that Ozone NAAQS will not have a material effect on its existing plants based on final designations.

The State of Wisconsin has joined a lawsuit filed by several states challenging the EPA's new ozone standard, alleging that the new standard is not attainable and the EPA is not properly considering background levels in setting its ozone attainment levels. The lawsuit has been stayed at the request of the EPA; however the significance of the challenge, as it might relate to MGE, is now diminished with the final ozone designations.

•Rules regulating nitrogen oxide (NO_x) and sulfur dioxide (SO₂) emissions, including the Cross State Air Pollution Rule (CSAPR) and Clean Air Visibility Rule (CAVR). At this time, regulatory obligations, compliance strategies, and costs remain uncertain due to uncertainties surrounding the ongoing implementation of Phase II of CSAPR and the continued legal challenges surrounding CSAPR and CAVR.

•The EPA's Coal Combustion Residuals Rule (CCR), which regulates coal ash as a solid waste, and defines what ash use activities would be considered generally exempt beneficial reuse of coal ash. The rule also regulates landfills, ash ponds, and other surface impoundments for coal combustion residuals by regulating their design, location, monitoring, and operation. Review of our Elm Road Units has indicated that the costs to comply with this rule are not expected to be significant. Columbia's operator has completed a review of their system and has determined that an onsite ash pond will need to be closed by 2023 and replace it with a dry ash handling system. The dry ash handling system installation is planned for 2020-2021. In 2015, MGE recorded an asset retirement obligation for its share of the legal liability associated with the effect of the CCR rule. Actual costs of compliance may be different than the amount recorded due to potential changes in compliance strategies that will be used, as well as other potential cost estimate changes. Management believes compliance costs will be recovered in future rates based on previous treatment of environmental compliance projects.

b. Legal Matters - MGE Energy and MGE.

MGE is involved in various legal matters that are being defended and handled in the normal course of business. MGE maintains accruals for such costs that are probable of being incurred and subject to reasonable estimation. The accrued amount for these matters is not material to the financial statements. MGE does not expect the resolution of these matters to have a material adverse effect on its consolidated results of operations, financial condition, or cash flows.

c. Purchase Contracts - MGE Energy and MGE.

The following table shows MGE Energy and MGE's future commitments related to purchase contracts as of March 31,2018:

(In thousands)		2018		2019		2020		2021		2022		Thereafter
Saratoga wind	$	13,578	$	858	$	2,266	$	1,775	$	1,784	$	4,429

In December 2017, the PSCW authorized construction of a 66MW wind farm, consisting of 33 turbines, located near Saratoga, Iowa. MGE received specific approval to recover 100% AFUDC on the project. As of March 31, 2018, MGE has incurred $23.3 million of capital expenditures. Construction of the project is expected to be completed by the end of 2018, with an estimated capital cost of $108 million.

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Rate Matters

3 Months Ended

Mar. 31, 2018

Regulated Operations [Abstract]

Rate Matters

Rate Matters - MGE Energy and MGE.

a. Rate Proceedings.

In December 2016, the PSCW authorized MGE, effective January 1, 2017, to decrease 2017 rates for retail electric customers by 0.8% or $3.3million on an annual basis and to increase rates for retail gas customers by 1.9% or $3.1million on an annual basis. The decrease in retail electric rates was attributable to declining fuel and purchased power costs. The increase in retail gas rates covers costs associated with MGE's natural gas system infrastructure improvements. The authorized return on common stock equity for 2017 was 9.8% based on a capital structure consisting of 57.2% common equity. The PSCW also approved MGE's request to extend the current accounting treatment for transmission related costs through 2018. This accounting treatment allows MGE to reflect any differential between transmission costs reflected in rates and actual costs incurred in its next rate case filing.

b. Fuel Rules.

Fuel rules require the PSCW and Wisconsin utilities to defer electric fuel-related costs that fall outside a symmetrical cost tolerance band around the amount approved for a utility in its annual fuel proceedings. Any over/under recovery of the actual costs is determined in the following year and is then reflected in future billings to electric retail customers. The fuel rules bandwidth is currently set at plus or minus 2%. Under fuel rules, MGE would defer costs, less any excess revenues, if its actual electric fuel costs exceeded 102% of the electric fuel costs allowed in its latest rate order. Excess revenues are defined as revenues in the year in question that provide MGE with a greater return on common equity than authorized by the PSCW in MGE's latest rate order. Conversely, MGE is required to defer the benefit of lower costs if actual electric fuel costs were less than 98% of the electric fuel costs allowed in that order.

In July 2017, the PSCW issued a final order in the fuel rules proceedings requiring MGE to refund additional fuel savings realized during 2015 and 2016 to its retail electric customers over a one-month period. In October 2017, MGE returned $6.2million to customers through bill credits.

In December 2017, the PSCW approved a surcharge for 2018 electric fuel-related costs. The surcharge will increase electric retail revenue in 2018 by $0.5 million or 0.1%.

As of March 31,2018, MGE has deferred $1.5 million of 2018 fuel savings. The 2018 fuel savings will be subject to the PSCW's annual review of 2018 fuel costs, expected to be completed in 2019. As of March 31,2017, MGE had deferred $1.1 million of 2017 fuel savings.

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Derivative and Hedging Instruments

3 Months Ended

Mar. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative and Hedging Instruments

Derivative and Hedging Instruments - MGE Energy and MGE.

a. Purpose.

As part of its regular operations, MGE enters into contracts, including options, swaps, futures, forwards, and other contractual commitments, to manage its exposure to commodity prices. To the extent that these contracts are derivatives, MGE assesses whether or not the normal purchases or normal sales exclusion applies. For contracts to which this exclusion cannot be applied, the derivatives are recognized in the consolidated balance sheets at fair value. MGE's financial commodity derivative activities are conducted in accordance with its electric and gas risk management program, which is approved by the PSCW and limits the volume MGE can hedge with specific risk management strategies. The maximum length of time over which cash flows related to energy commodities can be hedged is four years. If the derivative qualifies for regulatory deferral, the derivatives are marked to fair value and are offset with a corresponding regulatory asset or liability depending on whether the derivative is in a net loss or net gain position, respectively. The deferred gain or loss is recognized in earnings in the delivery month applicable to the instrument. Gains and losses related to hedges qualifying for regulatory treatment are recoverable in gas rates through the PGA or in electric rates as a component of the fuel rules mechanism.

b. Notional Amounts.

The gross notional volume of open derivatives is as follows:

	March 31, 2018	December 31, 2017
Commodity derivative contracts	538,050 MWh	552,310 MWh
Commodity derivative contracts	3,270,000 Dth	5,460,000 Dth
FTRs	886 MW	2,226 MW
PPA	2,500 MW	2,650 MW

c.Financial Statement Presentation.

MGE purchases and sells exchange-traded and over-the-counter options, swaps, and future contracts. These arrangements are primarily entered into to help stabilize the price risk associated with gas or power purchases. These transactions are employed by both MGE's gas and electric segments. Additionally, as a result of the firm transmission agreements that MGE holds on electricity transmission paths in the MISO market,MGE holdsfinancial transmission rights (FTRs). An FTR is a financial instrument that entitles the holder to a stream of revenues or charges based on the differences in hourly day-ahead energy prices between two points on the transmission grid. The fair values of these instruments are offset with a corresponding regulatory asset/liability depending on whether they are in a net loss/gain position. Depending on the nature of the instrument, the gain or loss associated with these transactions will be reflected as cost of gas sold, fuel for electric generation, or purchased power expense in the delivery month applicable to the instrument. At March 31,2018, and December 31, 2017, the fair value of exchange traded derivatives and FTRs exceeded their cost basis by $0.1 million and $0.2 million, respectively.

MGE is a party to a purchased power agreement that provides MGE with firm capacity and energy during a base term from June 1, 2012, through May 31, 2022. The agreement also allows MGE an option to extend the contract after the base term. The agreement is accounted for as a derivative contract and is recognized at its fair value on the consolidated balance sheets. However, the derivative qualifies for regulatory deferral and is recognized with a corresponding regulatory asset or liability depending on whether the fair value is in a loss or gain position. The fair value of the contract at March 31,2018, and December 31, 2017, reflects a loss position of $41.3 million and $42.2 million, respectively. The actual cost will be recognized in purchased power expense in the month of purchase.

The following table summarizes the fair value of the derivative instruments on the consolidated balance sheets. All derivative instruments in this table are presented on a gross basis and are calculated prior to the netting of instruments with the same counterparty under a master netting agreement as well as the netting of collateral. For financial statement purposes, instruments are netted with the same counterparty under a master netting agreement as well as the netting of collateral. As of March 31,2018, and December 31, 2017, the receivable margin account balance of $2.3 million and $2.5 million, respectively, is shown net of any collateral posted against derivative positions.

		Derivative		Derivative
(In thousands)		Assets		Liabilities	Balance Sheet Location
March 31, 2018
Commodity derivative contracts(a)	$	403	$	294	Derivative liability (current)(b)
Commodity derivative contracts(a)		9		189	Derivative liability (long-term)
FTRs		120		-	Other current assets
PPA		N/A		8,950	Derivative liability (current)
PPA		N/A		32,340	Derivative liability (long-term)
December 31, 2017
Commodity derivative contracts(a)	$	566	$	603	Derivative liability (current)(b)
Commodity derivative contracts(a)		110		190	Derivative liability (long-term)
FTRs		329		-	Other current assets
PPA		N/A		8,180	Derivative liability (current)
PPA		N/A		33,990	Derivative liability (long-term)

(a)As of March 31,2018, and December 31, 2017, collateral of $0.1 million was posted against and netted with derivative liability positions on the consolidated balance sheets.

(b)As of March 31,2018, and December 31, 2017, $0.1 million was presented as other current assets on the consolidated balance sheets.

The following tables show the effect of netting arrangements for recognized derivative assets and liabilities that are subject to a master netting arrangement or similar arrangement on the consolidated balance sheets.

Offsetting of Derivative Assets
(In thousands)		Gross Amounts		Gross Amounts Offset in Balance Sheets		Collateral Posted Against Derivative Positions		Net Amount Presented in Balance Sheets
March 31, 2018
Commodity derivative contracts	$	412	$	(390)	$	-	$	22
FTRs		120		-		-		120
December 31, 2017
Commodity derivative contracts	$	676	$	(654)	$	-	$	22
FTRs		329		-		-		329

Offsetting of Derivative Liabilities
(In thousands)		Gross Amounts		Gross Amounts Offset in Balance Sheets		Collateral Posted Against Derivative Positions		Net Amount Presented in Balance Sheets
March 31, 2018
Commodity derivative contracts	$	483	$	(390)	$	(93)	$	-
PPA		41,290		-		-		41,290
December 31, 2017
Commodity derivative contracts	$	793	$	(654)	$	(139)	$	-
PPA		42,170		-		-		42,170

The following tables summarize the unrealized and realized gains (losses) related to the derivative instruments on the consolidated balance sheets at March 31,2018 and 2017, and the consolidated income statements for the three months endedMarch 31,2018 and 2017.

		2018				2017
(In thousands)		Current and Long-Term Regulatory Asset		Other Current Assets		Current and Long-Term Regulatory Asset		Other Current Assets
Three Months Ended March 31:
Balance at January 1,	$	41,958	$	806	$	49,281	$	230
Unrealized loss (gain)		128		-		(689)		-
Realized (loss) gain reclassified to a deferred account		(158)		158		(78)		78
Realized loss reclassified to income statement		(687)		(645)		(441)		(166)
Balance at March 31,	$	41,241	$	319	$	48,073	$	142

		Realized losses (gains)
		2018				2017
(In thousands)		Fuel for Electric Generation/ Purchased Power		Cost of Gas Sold		Fuel for Electric Generation/ Purchased Power		Cost of Gas Sold
Three Months Ended March 31:
Commodity derivative contracts	$	374	$	615	$	385	$	146
FTRs		(175)		-		(685)		-
PPA		518		-		761		-

MGE's commodity derivative contracts, FTRs, and PPA are subject to regulatory deferral. These derivatives are marked to fair value and are offset with a corresponding regulatory asset or liability. Realized gains and losses are deferred on the consolidated balance sheets and are recognized in earnings in the delivery month applicable to the instrument. As a result of the above described treatment, there are no unrealized gains or losses that flow through earnings.

The PPA has a provision that may require MGE to post collateral if MGE's debt rating falls below investment grade (i.e., below BBB-). The amount of collateral that it may be required to post varies from $20.0 million to $40.0 million, depending on MGE's nominated capacity amount. As of March 31,2018, no collateral is required to be, or has been, posted. Certain counterparties extend MGE a credit limit. If MGE exceeds these limits, the counterparties may require collateral to be posted. As of March 31,2018, and December 31, 2017, certain counterparties were in a net liability of $0.1 million.

Nonperformance of counterparties to the non-exchange traded derivatives could expose MGE to credit loss. However, MGE enters into transactions only with companies that meet or exceed strict credit guidelines, and it monitors these counterparties on an ongoing basis to mitigate nonperformance risk in its portfolio. As of March 31,2018,no counterparties have defaulted.

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Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments - MGE Energy and MGE.

Fair value is defined as the price that would be received to sell an asset or would be paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The accounting standard clarifies that fair value should be based on the assumptions market participants would use when pricing the asset or liability including assumptions about risk. The standard also establishes a three level fair value hierarchy based upon the observability of the assumptions used and requires the use of observable market data when available. The levels are:

Level 1 - Pricing inputs are quoted prices within active markets for identical assets or liabilities.

Level 2 - Pricing inputs are quoted prices within active markets for similar assets or liabilities; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations that are correlated with or otherwise verifiable by observable market data.

Level 3 - Pricing inputs are unobservable and reflect management's best estimate of what market participants would use in pricing the asset or liability.

a. Fair Value of Financial Assets and Liabilities Recorded at the Carrying Amount.

At March 31,2018, and December 31, 2017, the carrying amount of cash, cash equivalents, and outstanding commercial paper approximates fair market value due to the short maturity of those investments and obligations. The estimated fair market value of long-term debt is based on quoted market prices for similar financial instruments at March 31,2018, and December 31, 2017. Since long-term debt is not traded in an active market, it is classified as Level 2.The estimated fair market value of financial instruments are as follows:

		March 31, 2018				December 31, 2017
(In thousands)		Carrying Amount		Fair Value		Carrying Amount		Fair Value
MGE Energy
Assets:
Cash and cash equivalents	$	101,157	$	101,157	$	107,952	$	107,952
Liabilities:
Short-term debt - commercial paper		3,000		3,000		4,000		4,000
Long-term debt(a)		425,780		462,151		426,883		475,282
MGE
Assets:
Cash and cash equivalents	$	4,152	$	4,152	$	5,951	$	5,951
Liabilities:
Short-term debt - commercial paper		3,000		3,000		4,000		4,000
Long-term debt(a)		425,780		462,151		426,883		475,282
(a) Includes long-term debt due within one year. Excludes debt issuance costs and unamortized discount of
$4.2 million and $4.3 million at March 31, 2018, and December 31, 2017, respectively.

b. Recurring Fair Value Measurements.

The following table presents the balances of assets and liabilities measured at fair value on a recurring basis.

		Fair Value as of March 31, 2018
(In thousands)		Total		Level 1		Level 2		Level 3
MGE Energy
Assets:
Derivatives, net	$	531	$	284	$	-	$	247
Exchange-traded investments		855		855		-		-
Total Assets	$	1,386	$	1,139	$	-	$	247
Liabilities:
Derivatives, net(b)	$	41,772	$	62	$	-	$	41,710
Deferred compensation		3,110		-		3,110		-
Total Liabilities	$	44,882	$	62	$	3,110	$	41,710
MGE
Assets:
Derivatives, net	$	531	$	284	$	-	$	247
Exchange-traded investments		65		65		-		-
Total Assets	$	596	$	349	$	-	$	247
Liabilities:
Derivatives, net(b)	$	41,772	$	62	$	-	$	41,710
Deferred compensation		3,110		-		3,110		-
Total Liabilities	$	44,882	$	62	$	3,110	$	41,710

		Fair Value as of December 31, 2017
(In thousands)		Total		Level 1		Level 2		Level 3
MGE Energy
Assets:
Derivatives, net	$	1,005	$	278	$	-	$	727
Exchange-traded investments		792		792		-		-
Total Assets	$	1,797	$	1,070	$	-	$	727
Liabilities:
Derivatives, net(b)	$	42,963	$	210	$	-	$	42,753
Deferred compensation		3,065		-		3,065		-
Total Liabilities	$	46,028	$	210	$	3,065	$	42,753
MGE
Assets:
Derivatives, net	$	1,005	$	278	$	-	$	727
Exchange-traded investments		64		64		-		-
Total Assets	$	1,069	$	342	$	-	$	727
Liabilities:
Derivatives, net(b)	$	42,963	$	210	$	-	$	42,753
Deferred compensation		3,065		-		3,065		-
Total Liabilities	$	46,028	$	210	$	3,065	$	42,753
(b)     These amounts are shown gross and exclude $0.1 million of collateral that was posted against derivative
positions with counterparties as of March 31, 2018, and December 31, 2017.

No transfers were made in or out of Level 1 or Level 2 for the three months endedMarch 31,2018.

Investments include exchange-traded investment securities valued using quoted prices on active exchanges and are therefore classified as Level 1.

Derivatives include exchange-traded derivative contracts, over-the-counter transactions, a purchased power agreement, and financial transmission rights (FTRs). Most exchange-traded derivative contracts are valued based on unadjusted quoted prices in active markets and are therefore classified as Level 1. A small number of exchange-traded derivative contracts are valued using quoted market pricing in markets with insufficient volumes and are therefore considered unobservable and classified as Level 3. Transactions done with an over-the-counter party are on inactive markets and are therefore classified as Level 3. These transactions are valued based on quoted prices from markets with similar exchange-traded transactions. FTRs are priced based upon monthly auction results for identical or similar instruments in a closed market with limited data available and are therefore classified as Level 3.

The purchased power agreement (see Footnote 11) was valued using an internally-developed pricing model and therefore is classified as Level 3. The model projects future market energy prices and compares those prices to the projected power costs to be incurred under the contract. Inputs to the model require significant management judgment and estimation. Future energy prices are based on a forward power pricing curve using exchange-traded contracts in the electric futures market. A basis adjustment is applied to the market energy price to reflect the price differential between the market price delivery point and the counterparty delivery point. The historical relationship between the delivery points is reviewed and a discount (below 100%) or premium (above 100%) is derived. This comparison is done for both peak times when demand is high and off peak times when demand is low. If the basis adjustment is lowered, the fair value measurement will decrease, and if the basis adjustment is increased, the fair value measurement will increase.

The projected power costs anticipated to be incurred under the purchased power agreement are determined using many factors, including historical generating costs, future prices, and expected fuel mix of the counterparty. An increase in the projected fuel costs would result in a decrease in the fair value measurement of the purchased power agreement. A significant input that MGE estimates is the counterparty's fuel mix in determining the projected power cost. MGE also considers the assumptions that market participants would use in valuing the asset or liability. This consideration includes assumptions about market risk such as liquidity, volatility, and contract duration. The fair value model uses a discount rate that incorporates discounting, credit, and model risks.

The following table presents the significant unobservable inputs used in the pricing model.

	Model Input
Significant Unobservable Inputs	March 31, 2018	December 31, 2017
Basis adjustment:
On peak	91.7%	92.3%
Off peak	93.1%	94.1%
Counterparty fuel mix:
Internal generation	50% - 75%	55% - 75%
Purchased power	50% - 25%	45% - 25%

The deferred compensation plan allows participants to defer certain cash compensation into a notional investment account. These amounts are included within other deferred liabilities in the consolidated balance sheets of MGE Energy and MGE. The notional investments earn interest based upon the semiannual rate of U.S. Treasury Bills having a 26 week maturity increased by 1% compounded monthly with a minimum annual rate of 7%, compounded monthly. The notional investments are based upon observable market data, however, since the deferred compensation obligations themselves are not exchanged in an active market, they are classified as Level 2.

The following table summarizes the changes in Level 3 commodity derivative assets and liabilities measured at fair value on a recurring basis.

		Three Months Ended
		March 31,
(In thousands)		2018		2017
Beginning balance	$	(42,026)	$	(50,306)
Realized and unrealized gains (losses):
Included in regulatory assets		563		1,953
Included in other comprehensive income		-		-
Included in earnings		(542)		(586)
Included in current assets		(173)		125
Purchases		5,834		5,996
Sales		-		-
Issuances		-		-
Settlements		(5,119)		(5,536)
Transfers in and/or out of Level 3		-		-
Balance as of March 31,	$	(41,463)	$	(48,354)
Total gains (losses) included in earnings attributed to the change in unrealized gains (losses) related to assets and liabilities held at March 31,(c)	$	-	$	-

The following table presents total realized and unrealized losses included in income for Level 3 assets and liabilities measured at fair value on a recurring basis (c).

		Three Months Ended
		March 31,
(In thousands)		2018		2017
Purchased power expense	$	(723)	$	(431)
Cost of gas sold expense		181		(155)
Total	$	(542)	$	(586)

(c)MGE's exchange-traded derivative contracts, over-the-counter party transactions, purchased power agreement, and FTRs are subject to regulatory deferral. These derivatives are therefore marked to fair value and are offset in the financial statements with a corresponding regulatory asset or liability.

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Joint Plant Ownership

3 Months Ended

Mar. 31, 2018

Regulated Operations [Abstract]

Joint Plant Ownership

Joint Plant Ownership - MGE Energy and MGE.

Columbia.

In 2016, MGE and WPL negotiated an amendment to the existing Columbia joint operating agreement, that has been approved by the PSCW, under which MGE will have the option to reduce its obligation to pay certain capital expenditures (other than SCR-related expenditures) at Columbia in exchange for a proportional reduction in MGE's ownership in Columbia. On January 1 of each year, beginning in 2017 and ending June 1, 2020, the ownership percentage will be adjusted, through a partial sale, based on the amount of capital expenditures foregone. In June 2017, the FERC approved the ownership transfer in Columbia, effective January 1, 2017.

During 2017, MGE accrued $8.8 million of 2017 capital expenditures that MGE has forgone as part of the ownership transfer agreement with WPL. As of December 31, 2017, MGE classified $8.8 million of Columbia assets as held-for-sale on the consolidated balance sheets. In January 2018, MGE reduced its ownership interest in Columbia from 20.4% to 19.4% through the partial sale of plant assets to WPL.

During three months endedMarch 31,2018, MGE accrued $1.4 million of 2018 capital expenditures that MGE has forgone subject to the ownership transfer agreement. As of March 31,2018, MGE classified $1.4 million of Columbia assets as held-for-sale on the consolidated balance sheets. The assets recognized as held-for-sale are subject to a partial sale of plant assets to WPL, expected to occur in January 2019.

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Segment Information

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

Segment Information

Segment Information - MGE Energy and MGE.

MGE Energy operates in the following business segments: electric utility, gas utility, nonregulated energy, transmission investment, and all other. See the 2017 Annual Report on Form 10-K for additional discussion of each of these segments.

The following tables show segment information for MGE Energy's operations for the indicated periods:

(In thousands)MGE Energy		Electric		Gas		Non-regulated Energy		Transmission Investment		All Others		Consolidation/ Elimination Entries		Consolidated Total
Three Months Ended March 31, 2018
Operating revenues	$	94,391	$	62,765	$	476	$	-	$	-	$	-	$	157,632
Interdepartmental revenues		31		4,347		9,820		-		-		(14,198)		-
Total operating revenues		94,422		67,112		10,296		-		-		(14,198)		157,632
Depreciation and amortization		(9,378)		(2,395)		(1,850)		-		-		-		(13,623)
Other operating expenses		(76,575)		(55,195)		(43)		(3)		(203)		14,198		(117,821)
Operating income (loss)		8,469		9,522		8,403		(3)		(203)		-		26,188
Other income, net		1,730		766		-		2,372		51		-		4,919
Interest (expense) income, net		(2,867)		(839)		(1,348)		-		315		-		(4,739)
Income before taxes		7,332		9,449		7,055		2,369		163		-		26,368
Income tax provision		(1,200)		(2,458)		(1,922)		(648)		(139)		-		(6,367)
Net income	$	6,132	$	6,991	$	5,133	$	1,721	$	24	$	-	$	20,001
Three Months Ended March 31, 2017
Operating revenues	$	98,324	$	58,426	$	73	$	-	$	-	$	-	$	156,823
Interdepartmental revenues		(105)		4,394		11,070		-		-		(15,359)		-
Total operating revenues		98,219		62,820		11,143		-		-		(15,359)		156,823
Depreciation and amortization		(8,900)		(2,213)		(1,846)		-		-		-		(12,959)
Other operating expenses(a)		(76,006)		(50,971)		(41)		-		(369)		15,359		(112,028)
Operating income (loss)		13,313		9,636		9,256		-		(369)		-		31,836
Other income (deductions), net(a)		870		399		-		2,478		(222)		-		3,525
Interest (expense) income, net		(2,776)		(799)		(1,407)		-		88		-		(4,894)
Income (loss) before taxes		11,407		9,236		7,849		2,478		(503)		-		30,467
Income tax (provision) benefit		(3,454)		(3,704)		(3,151)		(997)		139		-		(11,167)
Net income (loss)	$	7,953	$	5,532	$	4,698	$	1,481	$	(364)	$	-	$	19,300
(a) Reflects retrospective application of new accounting pronouncement related to pension and other postretirement benefits, see Footnote 2 for further information.

The following tables show segment information for MGE's operations for the indicated periods:

(In thousands)MGE		Electric		Gas		Non-regulated Energy		Consolidation/ Elimination Entries		Consolidated Total
Three Months Ended March 31, 2018
Operating revenues	$	94,391	$	62,765	$	476	$	-	$	157,632
Interdepartmental revenues		31		4,347		9,820		(14,198)		-
Total operating revenues		94,422		67,112		10,296		(14,198)		157,632
Depreciation and amortization		(9,378)		(2,395)		(1,850)		-		(13,623)
Other operating expenses(b)		(77,731)		(57,641)		(1,965)		14,198		(123,139)
Operating income(b)		7,313		7,076		6,481		-		20,870
Other income, net(b)		1,686		754		-		-		2,440
Interest expense, net		(2,867)		(839)		(1,348)		-		(5,054)
Net income		6,132		6,991		5,133		-		18,256
Less: Net income attributable to
noncontrolling interest, net of tax		-		-		-		(5,806)		(5,806)
Net income attributable to MGE	$	6,132	$	6,991	$	5,133	$	(5,806)	$	12,450
Three Months Ended March 31, 2017
Operating revenues	$	98,328	$	58,435	$	73	$	-	$	156,836
Interdepartmental revenues		(109)		4,385		11,070		(15,346)		-
Total operating revenues		98,219		62,820		11,143		(15,346)		156,836
Depreciation and amortization		(8,900)		(2,213)		(1,846)		-		(12,959)
Other operating expenses(a), (b)		(79,426)		(54,665)		(3,192)		15,346		(121,937)
Operating income(b)		9,893		5,942		6,105		-		21,940
Other income, net(a), (b)		836		389		-		-		1,225
Interest expense, net		(2,776)		(799)		(1,407)		-		(4,982)
Net income		7,953		5,532		4,698		-		18,183
Less: Net income attributable to
noncontrolling interest, net of tax		-		-		-		(5,389)		(5,389)
Net income attributable to MGE	$	7,953	$	5,532	$	4,698	$	(5,389)	$	12,794
(a) Reflects retrospective application of new accounting pronouncement related to pension and other postretirement benefits, see Footnote 2 for further information.
(b) Amounts are shown net of the related tax expense, consistent with the presentation on the MGE Consolidated Statements of Income.

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Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Variable Interest Entities

MGE Power Elm Road and MGE Power West Campus own electric generating assets and lease those assets to MGE. Both entities are variable interest entities under applicable authoritative accounting guidance. MGE is considered the primary beneficiary of these entities as a result of contractual agreements. As a result, MGE has consolidated MGE Power Elm Road and MGE Power West Campus.

Cash and Cash Equivalents

Cash Equivalents

MGE Energy and MGE consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Restricted Cash

Restricted Cash

MGE has certain cash accounts that are restricted to uses other than current operations and designated for a specific purpose. MGE's restricted cash accounts include cash held by trustees for certain employee benefits and cash deposits held by third parties. These are included in "Other current assets" on the consolidated balance sheets.

Receivable Margin Account

Receivable – Margin Account

Cash amounts held by counterparties as margin collateral for certain financial transactions are recorded as receivable – margin account in "Other current assets" on the consolidated balance sheets. The costs being hedged are fuel for electric generation, purchased power, and cost of gas sold.

New Accounting Pronouncements Disclosure

New Accounting Standards - MGE Energy and MGE.

a.Recently Adopted

Revenue from Contracts with Customers.

The FASB issued authoritative guidance within the codification's Revenue Recognition topic that provides guidance on the recognition, measurement, and disclosure of revenue from contracts with customers. The new standard establishes a five step model for recognizing and measuring revenue from contracts with customers and replaces existing guidance on revenue recognition. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services.

This authoritative guidance became effective January 1, 2018, and MGE Energy and MGE adopted the standard upon the effective date. Adoption of this standard is permitted under one of two methods: the full retrospective method or the modified retrospective method. MGE Energy and MGE implemented the standard using the modified retrospective method. The cumulative impact of this guidance on our financial statements is not material, except for additional footnote disclosures. See Footnote 3 for further information.

Financial Instruments.

In January 2016, the FASB issued authoritative guidance within the codification's Financial Instruments topic that provides guidance on the recognition and measurement of financial instruments. This authoritative guidance became effective January 1, 2018, and required equity investments to be measured at fair value with changes in fair value recognized in net income rather than in other comprehensive income. As a result of this guidance, MGE Energy and MGE will no longer have other comprehensive income related to equity investments. This standard was applied using a modified retrospective approach, with a cumulative effect adjustment recorded to opening retained earnings as of the beginning of the fiscal year of adoption. As of January 1, 2018, MGE Energy recorded a $0.4 million increase in retained earnings and a corresponding decrease in other comprehensive income, and MGE recorded less than a $0.1 million decrease in retained earnings and a corresponding increase in other comprehensive income, related to equity investments within the scope of this standard.

Restricted Cash.

In November 2016, the FASB issued authoritative guidance within the codification's Statement of Cash Flows topic that provides guidance on the classification and presentation of changes in restricted cash within the statement of cash flows. Under the new guidance, reporting entities are required to explain the changes in the total of restricted and unrestricted cash and cash equivalents when reconciling the beginning and ending balances on the statement of cash flows. Prior to the authoritative guidance, changes in restricted cash were presented as either cash flows from operating, investing, or financing activities within the statement of cash flows, as appropriate based on the nature of the restriction. Also under the new standard, reporting entities are required to provide a reconciliation from the balance sheet to the statement of cash flows and disclose the nature of the restrictions of cash. This authoritative guidance became effective January 1, 2018. Upon the effective date, MGE Energy and MGE changed the presentation of restricted cash on the consolidated statements of cash flows to reflect the new accounting guidance retrospectively to all periods presented. See Footnote 1.b. for further information.

Pension and Other Postretirement Benefits.

In March 2017, the FASB issued authoritative guidance within the codification's Compensation – Retirement Benefits topic that provides guidance on the presentation of net periodic pension cost and net periodic postretirement benefit cost (together, net benefit cost). This authoritative guidance became effective January 1, 2018. Under the new guidance, the service cost component of net benefit cost is required to be recorded in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside of income from operations. A practical expedient within the standard permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan footnote for prior comparative periods as the estimation basis for applying the retrospective presentation requirements. MGE Energy and MGE have elected to apply the practical expedient. Upon the effective date, MGE Energy and MGE changed the presentation of net benefit cost on the consolidated statements of income to reflect the new accounting guidance retrospectively to all periods presented. For both MGE Energy and MGE, "Other operations and maintenance expense" increased and "Other income, net" increased $1.1 million for the three months endedMarch 31,2017. The standard also only allows the service cost component to be eligible for capitalization prospectively from the effective date of the pronouncement (whereas under previous GAAP, all components of net benefit cost were eligible for capitalization). See Footnote 6 for further information.

b.Recently Issued

Leases.

In February 2016, the FASB issued authoritative guidance within the codification's Leases topic that provides guidance on the classification, recognition, measurement, and disclosure of leases. The new leasing standard establishes that a lease conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. Under the new guidance, lessees will be required to recognize all leases with terms greater than one year, including operating leases, on the balance sheet by recording a right-of-use asset and lease liability. Prior to the authoritative guidance, only capital leases were recognized on the balance sheet by lessees. The new accounting guidance, as applied by lessors, is materially consistent with current GAAP. In January 2018, the FASB issued authoritative guidance which provided an optional practical expedient to grandfather the accounting for existing and expired land easements not accounted for as a lease under the new authoritative guidance. MGE Energy and MGE plan to adopt this practical expedient.

Management has begun utilizing a bottoms-up approach to analyze the impact of the standard on our lease portfolio. MGE Energy and MGE have been reviewing current accounting policies and procedures to identify potential differences in accounting treatment that would result from applying the requirements of the new standard to our existing lease portfolio. In addition, we are identifying appropriate changes to our business processes, systems, and controls to support recognition and disclosure requirements under the new standard. This authoritative guidance will become effective January 1, 2019, with early adoption permitted. MGE Energy and MGE anticipate adopting the standard upon the effective date. The new leasing standard requires entities to recognize and measure leases at the beginning of the earliest comparative period presented using a modified retrospective approach. MGE Energy and MGE are currently assessing the impact this pronouncement will have on our financial statements.

Investments - ATC and ATC Holdco

MGE Transco and MGEE Transco have accounted for their investment in ATC and ATC Holdco, respectively, under the equity method of accounting.

Pension and Other Postretirement Benefit Plan Assets

MGE maintains qualified and nonqualified pension plans, health care, and life insurance benefits. Additionally, MGE has defined contribution 401(k) benefit plans.

The components of net periodic benefit cost, other than the service cost component, are recorded in "Other income, net" on the consolidated statements of income. The service cost component is recorded in "Other operations and maintenance" on the consolidated statements of income.

Common Stock

MGE Energy sells shares of its common stock through its Stock Plan. Those shares may be newly issued shares or shares that MGE Energy has purchased in the open market for resale to participants in the Stock Plan. All sales under the Stock Plan are covered by a shelf registration statement that MGE Energy filed with the SEC.

Share-based Compensation

Under MGE Energy'sDirector Incentive Plan and Performance Unit Plan, non-employee directorsand eligible employees may receive performance units that entitle the holder to receive a cash payment equal to the value of a designated number of shares of MGE Energy's common stock, plus dividend equivalent payments thereon, at the end of the set performance period.

In 2018, 5,810units were granted under the Director Incentive Plan and are subject to a three-year graded vesting schedule and 17,830 units were granted under the Performance Unit Plan and are subject to a five-year graded vesting schedule. On the grant date, the cost of the director or employee services received in exchange for a performance unit award is measured based on the current market value of MGE Energy common stock. The fair value of the awards is re-measured quarterly, including atMarch 31,2018, as required by applicable accounting standards. Changes in fair value as well as the original grant are recognized as compensation cost. Since this amount is re-measured throughout the vesting period, the compensation cost is subject to variability.

For nonretirement eligible employees under the Performance Unit Plan, stock based compensation costs are accrued and recognized using the graded vesting method. Compensation cost for retirement eligible employees or employees that will become retirement eligible during the vesting schedule are recognized on an abridged horizon.

Wisconsin Fuel Rules

Fuel rules require the PSCW and Wisconsin utilities to defer electric fuel-related costs that fall outside a symmetrical cost tolerance band around the amount approved for a utility in its annual fuel proceedings. Any over/under recovery of the actual costs is determined in the following year and is then reflected in future billings to electric retail customers. The fuel rules bandwidth is currently set at plus or minus 2%. Under fuel rules, MGE would defer costs, less any excess revenues, if its actual electric fuel costs exceeded 102% of the electric fuel costs allowed in its latest rate order. Excess revenues are defined as revenues in the year in question that provide MGE with a greater return on common equity than authorized by the PSCW in MGE's latest rate order. Conversely, MGE is required to defer the benefit of lower costs if actual electric fuel costs were less than 98% of the electric fuel costs allowed in that order.

Derivative Hedging

As part of its regular operations, MGE enters into contracts, including options, swaps, futures, forwards, and other contractual commitments, to manage its exposure to commodity prices. To the extent that these contracts are derivatives, MGE assesses whether or not the normal purchases or normal sales exclusion applies. For contracts to which this exclusion cannot be applied, the derivatives are recognized in the consolidated balance sheets at fair value. MGE's financial commodity derivative activities are conducted in accordance with its electric and gas risk management program, which is approved by the PSCW and limits the volume MGE can hedge with specific risk management strategies. The maximum length of time over which cash flows related to energy commodities can be hedged is four years. If the derivative qualifies for regulatory deferral, the derivatives are marked to fair value and are offset with a corresponding regulatory asset or liability depending on whether the derivative is in a net loss or net gain position, respectively. The deferred gain or loss is recognized in earnings in the delivery month applicable to the instrument. Gains and losses related to hedges qualifying for regulatory treatment are recoverable in gas rates through the PGA or in electric rates as a component of the fuel rules mechanism.

Derivative Netting

All derivative instruments in this table are presented on a gross basis and are calculated prior to the netting of instruments with the same counterparty under a master netting agreement as well as the netting of collateral. For financial statement purposes, instruments are netted with the same counterparty under a master netting agreement as well as the netting of collateral

Recurring Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or would be paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The accounting standard clarifies that fair value should be based on the assumptions market participants would use when pricing the asset or liability including assumptions about risk. The standard also establishes a three level fair value hierarchy based upon the observability of the assumptions used and requires the use of observable market data when available. The levels are:

Level 1 - Pricing inputs are quoted prices within active markets for identical assets or liabilities.

Level 2 - Pricing inputs are quoted prices within active markets for similar assets or liabilities; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations that are correlated with or otherwise verifiable by observable market data.

Level 3 - Pricing inputs are unobservable and reflect management's best estimate of what market participants would use in pricing the asset or liability.

At March 31,2018, and December 31, 2017, the carrying amount of cash, cash equivalents, and outstanding commercial paper approximates fair market value due to the short maturity of those investments and obligations. The estimated fair market value of long-term debt is based on quoted market prices for similar financial instruments at March 31,2018, and December 31, 2017. Since long-term debt is not traded in an active market, it is classified as Level 2.

Investments include exchange-traded investment securities valued using quoted prices on active exchanges and are therefore classified as Level 1.

Derivatives include exchange-traded derivative contracts, over-the-counter transactions, a purchased power agreement, and financial transmission rights (FTRs). Most exchange-traded derivative contracts are valued based on unadjusted quoted prices in active markets and are therefore classified as Level 1. A small number of exchange-traded derivative contracts are valued using quoted market pricing in markets with insufficient volumes and are therefore considered unobservable and classified as Level 3. Transactions done with an over-the-counter party are on inactive markets and are therefore classified as Level 3. These transactions are valued based on quoted prices from markets with similar exchange-traded transactions. FTRs are priced based upon monthly auction results for identical or similar instruments in a closed market with limited data available and are therefore classified as Level 3.

The purchased power agreement (see Footnote 11) was valued using an internally-developed pricing model and therefore is classified as Level 3. The model projects future market energy prices and compares those prices to the projected power costs to be incurred under the contract. Inputs to the model require significant management judgment and estimation. Future energy prices are based on a forward power pricing curve using exchange-traded contracts in the electric futures market. A basis adjustment is applied to the market energy price to reflect the price differential between the market price delivery point and the counterparty delivery point. The historical relationship between the delivery points is reviewed and a discount (below 100%) or premium (above 100%) is derived. This comparison is done for both peak times when demand is high and off peak times when demand is low. If the basis adjustment is lowered, the fair value measurement will decrease, and if the basis adjustment is increased, the fair value measurement will increase.

The projected power costs anticipated to be incurred under the purchased power agreement are determined using many factors, including historical generating costs, future prices, and expected fuel mix of the counterparty. An increase in the projected fuel costs would result in a decrease in the fair value measurement of the purchased power agreement. A significant input that MGE estimates is the counterparty's fuel mix in determining the projected power cost. MGE also considers the assumptions that market participants would use in valuing the asset or liability. This consideration includes assumptions about market risk such as liquidity, volatility, and contract duration. The fair value model uses a discount rate that incorporates discounting, credit, and model risks.

The following table presents the significant unobservable inputs used in the pricing model.

	Model Input
Significant Unobservable Inputs	March 31, 2018	December 31, 2017
Basis adjustment:
On peak	91.7%	92.3%
Off peak	93.1%	94.1%
Counterparty fuel mix:
Internal generation	50% - 75%	55% - 75%
Purchased power	50% - 25%	45% - 25%

The deferred compensation plan allows participants to defer certain cash compensation into a notional investment account. These amounts are included within other deferred liabilities in the consolidated balance sheets of MGE Energy and MGE. The notional investments earn interest based upon the semiannual rate of U.S. Treasury Bills having a 26 week maturity increased by 1% compounded monthly with a minimum annual rate of 7%, compounded monthly. The notional investments are based upon observable market data, however, since the deferred compensation obligations themselves are not exchanged in an active market, they are classified as Level 2.

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Summary of Significant Accounting Principles (Tables)

3 Months Ended

Mar. 31, 2018

Cash, Cash Equivalents, And Restricted Cash [Abstract]

Cash, Cash Equivalents, and Restricted Cash

The following table presents the components of total cash, cash equivalents and restricted cash on the consolidated balance sheets.

		MGE Energy				MGE
		March 31,		December 31,		March 31,		December 31,
(In thousands)		2018		2017		2018		2017
Cash and cash equivalents	$	101,157	$	107,952	$	4,152	$	5,951
Restricted cash		2,763		1,635		2,763		1,635
Receivable - margin account		2,325		2,507		2,325		2,507
Cash, cash equivalents, and restricted cash	$	106,245	$	112,094	$	9,240	$	10,093

Retrospective Adjustments to Cash Flows

The following table presents the retrospective adjustments to cash flow amounts on MGE Energy's and MGE's consolidated statements of cash flows in accordance with the adoption of ASU 2016-18, Restricted Cash.

		Three Months Ended
(In thousands)		March 31, 2017
Cash provided by operating activities	$	(1,035)
Cash used for investing activities		387
Change in cash, cash equivalents, and restricted cash		(648)
Cash, cash equivalents, and restricted cash at beginning of period		5,674
Cash, cash equivalents, and restricted cash at end of period	$	5,026

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Revenue (Tables)

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

Revenues disaggregated by revenue source were as follows:

		Three Months Ended
(In thousands)		March 31,
Electric revenues		2018		2017
Residential	$	33,259	$	33,353
Commercial(a)		47,452		50,164
Industrial		2,895		4,215
Other-retail/municipal		8,287		9,021
Total retail		91,893		96,753
Sales to the market		2,034		972
Other revenues		470		429
Adjustments to revenues		(6)		170
Total electric revenues		94,391		98,324
Gas revenues
Residential		36,551		33,903
Commercial/Industrial(a)		24,952		23,048
Total retail		61,503		56,951
Gas transportation		1,135		1,350
Other revenues		127		125
Total gas revenues		62,765		58,426
Non-regulated energy revenues		476		73
Total Operating Revenue(a)	$	157,632	$	156,823

(a)In 2017, MGE had less than $0.1 million of revenues related to CNG vehicle fuel servicing.No revenue was recognized for fuel servicing by MGE Energy in 2017.

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Investment in ATC and ATC Holdco (Tables)

3 Months Ended

Mar. 31, 2018

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments Financial Data

MGE Transco and MGEE Transco have accounted for their investment in ATC and ATC Holdco, respectively, under the equity method of accounting.Equity earnings from investments are recorded as "Other income" on MGE Energy's consolidated statements of income. For the three months endedMarch 31,2018 and 2017, MGE Transco recorded the following:

		Three Months Ended
		March 31,
(In thousands)		2018		2017
Equity earnings from investment in ATC	$	2,451	$	2,608
Dividends from ATC(a)		-		-
Capital contributions to ATC		710		1,420

(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.

ATC's summarized financial data for the three months endedMarch 31,2018 and 2017, is as follows:

		Three Months Ended
		March 31,
(In thousands)		2018		2017
Operating revenues	$	165,429	$	174,669
Operating expenses		(84,893)		(82,697)
Other income, net		111		682
Interest expense, net		(27,762)		(26,783)
Earnings before members' income taxes	$	52,885	$	65,871

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Taxes (Tables)

3 Months Ended

Mar. 31, 2018

Income Tax Disclosure [Abstract]

Effective Tax Rate Reconciliation

The consolidated income tax provision differs from the amount computed by applying the statutory federal income tax rate to income before income taxes, as follows:

	MGE Energy		MGE
Three Months Ended March 31,	2018	2017	2018	2017
Statutory federal income tax rate	21.0 %	35.0 %	21.0 %	35.0 %
State income taxes, net of federal benefit	6.4 %	5.3 %	6.0 %	5.1 %
Amortized investment tax credits	(0.1)%	(0.1)%	(0.1)%	(0.1)%
Credit for electricity from wind energy	(0.5)%	(1.8)%	(0.5)%	(2.0)%
Domestic manufacturing deduction	-%	(1.3)%	-%	(1.4)%
AFUDC equity, net	(0.4)%	(0.2)%	(0.4)%	(0.2)%
Amortization of utility excess deferred tax - tax reform(a)	(1.8)%	-%	(2.0)%	-%
Other, net, individually insignificant	(0.4)%	(0.2)%	(0.6)%	(0.2)%
Effective income tax rate	24.2 %	36.7 %	23.4 %	36.2 %

(a)Included are impacts of the Tax Act for the regulated utility for excess deferred taxes recognized using a normalization method of accounting.

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Pension and Other Postretirement Plans (Tables)

3 Months Ended

Mar. 31, 2018

Compensation and Retirement Disclosure [Abstract]

Schedule of Net Periodic Benefit Costs

The following table presents the components of net periodic benefit costs recognized for the three months endedMarch 31,2018 and 2017.

		Three Months Ended
		March 31,
(In thousands)		2018		2017
Pension Benefits
Components of net periodic benefit cost:
Service cost	$	1,457	$	1,332
Interest cost		3,208		3,119
Expected return on assets		(6,568)		(5,742)
Amortization of:
Prior service credit		(11)		(4)
Actuarial loss		1,298		1,464
Net periodic benefit (credit) cost	$	(616)	$	169
Postretirement Benefits
Components of net periodic benefit cost:
Service cost	$	332	$	206
Interest cost		658		444
Expected return on assets		(802)		(472)
Amortization of:
Transition obligation		1		-
Prior service credit		(667)		(436)
Actuarial loss		128		129
Net periodic benefit (credit) cost	$	(350)	$	(129)

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Purchase Contracts, Fiscal Year Maturity Schedule

The following table shows MGE Energy and MGE's future commitments related to purchase contracts as of March 31,2018:

(In thousands)		2018		2019		2020		2021		2022		Thereafter
Saratoga wind	$	13,578	$	858	$	2,266	$	1,775	$	1,784	$	4,429

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Derivative and Hedging Instruments (Tables)

3 Months Ended

Mar. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Gross Notional Volume of Open Derivatives

The gross notional volume of open derivatives is as follows:

	March 31, 2018	December 31, 2017
Commodity derivative contracts	538,050 MWh	552,310 MWh
Commodity derivative contracts	3,270,000 Dth	5,460,000 Dth
FTRs	886 MW	2,226 MW
PPA	2,500 MW	2,650 MW

Fair Value of Derivative Instruments on the Balance Sheet

The following table summarizes the fair value of the derivative instruments on the consolidated balance sheets. All derivative instruments in this table are presented on a gross basis and are calculated prior to the netting of instruments with the same counterparty under a master netting agreement as well as the netting of collateral. For financial statement purposes, instruments are netted with the same counterparty under a master netting agreement as well as the netting of collateral. As of March 31,2018, and December 31, 2017, the receivable margin account balance of $2.3 million and $2.5 million, respectively, is shown net of any collateral posted against derivative positions.

		Derivative		Derivative
(In thousands)		Assets		Liabilities	Balance Sheet Location
March 31, 2018
Commodity derivative contracts(a)	$	403	$	294	Derivative liability (current)(b)
Commodity derivative contracts(a)		9		189	Derivative liability (long-term)
FTRs		120		-	Other current assets
PPA		N/A		8,950	Derivative liability (current)
PPA		N/A		32,340	Derivative liability (long-term)
December 31, 2017
Commodity derivative contracts(a)	$	566	$	603	Derivative liability (current)(b)
Commodity derivative contracts(a)		110		190	Derivative liability (long-term)
FTRs		329		-	Other current assets
PPA		N/A		8,180	Derivative liability (current)
PPA		N/A		33,990	Derivative liability (long-term)

(a)As of March 31,2018, and December 31, 2017, collateral of $0.1 million was posted against and netted with derivative liability positions on the consolidated balance sheets.

(b)As of March 31,2018, and December 31, 2017, $0.1 million was presented as other current assets on the consolidated balance sheets.

Offsetting Assets

The following tables show the effect of netting arrangements for recognized derivative assets and liabilities that are subject to a master netting arrangement or similar arrangement on the consolidated balance sheets.

Offsetting of Derivative Assets
(In thousands)		Gross Amounts		Gross Amounts Offset in Balance Sheets		Collateral Posted Against Derivative Positions		Net Amount Presented in Balance Sheets
March 31, 2018
Commodity derivative contracts	$	412	$	(390)	$	-	$	22
FTRs		120		-		-		120
December 31, 2017
Commodity derivative contracts	$	676	$	(654)	$	-	$	22
FTRs		329		-		-		329

Offsetting Liabilities

Offsetting of Derivative Liabilities
(In thousands)		Gross Amounts		Gross Amounts Offset in Balance Sheets		Collateral Posted Against Derivative Positions		Net Amount Presented in Balance Sheets
March 31, 2018
Commodity derivative contracts	$	483	$	(390)	$	(93)	$	-
PPA		41,290		-		-		41,290
December 31, 2017
Commodity derivative contracts	$	793	$	(654)	$	(139)	$	-
PPA		42,170		-		-		42,170

Derivative Gains and Losses in Balance Sheet

The following tables summarize the unrealized and realized gains (losses) related to the derivative instruments on the consolidated balance sheets at March 31,2018 and 2017, and the consolidated income statements for the three months endedMarch 31,2018 and 2017.

		2018				2017
(In thousands)		Current and Long-Term Regulatory Asset		Other Current Assets		Current and Long-Term Regulatory Asset		Other Current Assets
Three Months Ended March 31:
Balance at January 1,	$	41,958	$	806	$	49,281	$	230
Unrealized loss (gain)		128		-		(689)		-
Realized (loss) gain reclassified to a deferred account		(158)		158		(78)		78
Realized loss reclassified to income statement		(687)		(645)		(441)		(166)
Balance at March 31,	$	41,241	$	319	$	48,073	$	142

Derivative Gains and Losses in Income Statement

		Realized losses (gains)
		2018				2017
(In thousands)		Fuel for Electric Generation/ Purchased Power		Cost of Gas Sold		Fuel for Electric Generation/ Purchased Power		Cost of Gas Sold
Three Months Ended March 31:
Commodity derivative contracts	$	374	$	615	$	385	$	146
FTRs		(175)		-		(685)		-
PPA		518		-		761		-

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Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Estimated Fair Market Value of Financial Instruments

The estimated fair market value of financial instruments are as follows:

		March 31, 2018				December 31, 2017
(In thousands)		Carrying Amount		Fair Value		Carrying Amount		Fair Value
MGE Energy
Assets:
Cash and cash equivalents	$	101,157	$	101,157	$	107,952	$	107,952
Liabilities:
Short-term debt - commercial paper		3,000		3,000		4,000		4,000
Long-term debt(a)		425,780		462,151		426,883		475,282
MGE
Assets:
Cash and cash equivalents	$	4,152	$	4,152	$	5,951	$	5,951
Liabilities:
Short-term debt - commercial paper		3,000		3,000		4,000		4,000
Long-term debt(a)		425,780		462,151		426,883		475,282
(a) Includes long-term debt due within one year. Excludes debt issuance costs and unamortized discount of
$4.2 million and $4.3 million at March 31, 2018, and December 31, 2017, respectively.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents the balances of assets and liabilities measured at fair value on a recurring basis.

		Fair Value as of March 31, 2018
(In thousands)		Total		Level 1		Level 2		Level 3
MGE Energy
Assets:
Derivatives, net	$	531	$	284	$	-	$	247
Exchange-traded investments		855		855		-		-
Total Assets	$	1,386	$	1,139	$	-	$	247
Liabilities:
Derivatives, net(b)	$	41,772	$	62	$	-	$	41,710
Deferred compensation		3,110		-		3,110		-
Total Liabilities	$	44,882	$	62	$	3,110	$	41,710
MGE
Assets:
Derivatives, net	$	531	$	284	$	-	$	247
Exchange-traded investments		65		65		-		-
Total Assets	$	596	$	349	$	-	$	247
Liabilities:
Derivatives, net(b)	$	41,772	$	62	$	-	$	41,710
Deferred compensation		3,110		-		3,110		-
Total Liabilities	$	44,882	$	62	$	3,110	$	41,710

		Fair Value as of December 31, 2017
(In thousands)		Total		Level 1		Level 2		Level 3
MGE Energy
Assets:
Derivatives, net	$	1,005	$	278	$	-	$	727
Exchange-traded investments		792		792		-		-
Total Assets	$	1,797	$	1,070	$	-	$	727
Liabilities:
Derivatives, net(b)	$	42,963	$	210	$	-	$	42,753
Deferred compensation		3,065		-		3,065		-
Total Liabilities	$	46,028	$	210	$	3,065	$	42,753
MGE
Assets:
Derivatives, net	$	1,005	$	278	$	-	$	727
Exchange-traded investments		64		64		-		-
Total Assets	$	1,069	$	342	$	-	$	727
Liabilities:
Derivatives, net(b)	$	42,963	$	210	$	-	$	42,753
Deferred compensation		3,065		-		3,065		-
Total Liabilities	$	46,028	$	210	$	3,065	$	42,753
(b)     These amounts are shown gross and exclude $0.1 million of collateral that was posted against derivative
positions with counterparties as of March 31, 2018, and December 31, 2017.

Significant Unobservable Inputs

The following table presents the significant unobservable inputs used in the pricing model.

	Model Input
Significant Unobservable Inputs	March 31, 2018	December 31, 2017
Basis adjustment:
On peak	91.7%	92.3%
Off peak	93.1%	94.1%
Counterparty fuel mix:
Internal generation	50% - 75%	55% - 75%
Purchased power	50% - 25%	45% - 25%

Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes the changes in Level 3 commodity derivative assets and liabilities measured at fair value on a recurring basis.

		Three Months Ended
		March 31,
(In thousands)		2018		2017
Beginning balance	$	(42,026)	$	(50,306)
Realized and unrealized gains (losses):
Included in regulatory assets		563		1,953
Included in other comprehensive income		-		-
Included in earnings		(542)		(586)
Included in current assets		(173)		125
Purchases		5,834		5,996
Sales		-		-
Issuances		-		-
Settlements		(5,119)		(5,536)
Transfers in and/or out of Level 3		-		-
Balance as of March 31,	$	(41,463)	$	(48,354)
Total gains (losses) included in earnings attributed to the change in unrealized gains (losses) related to assets and liabilities held at March 31,(c)	$	-	$	-

(c)MGE's exchange-traded derivative contracts, over-the-counter party transactions, purchased power agreement, and FTRs are subject to regulatory deferral. These derivatives are therefore marked to fair value and are offset in the financial statements with a corresponding regulatory asset or liability.

Gains and Losses Included in Income for Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents total realized and unrealized losses included in income for Level 3 assets and liabilities measured at fair value on a recurring basis (c).

		Three Months Ended
		March 31,
(In thousands)		2018		2017
Purchased power expense	$	(723)	$	(431)
Cost of gas sold expense		181		(155)
Total	$	(542)	$	(586)

(c)MGE's exchange-traded derivative contracts, over-the-counter party transactions, purchased power agreement, and FTRs are subject to regulatory deferral. These derivatives are therefore marked to fair value and are offset in the financial statements with a corresponding regulatory asset or liability.

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

Segment Information

The following tables show segment information for MGE Energy's operations for the indicated periods:

(In thousands)MGE Energy		Electric		Gas		Non-regulated Energy		Transmission Investment		All Others		Consolidation/ Elimination Entries		Consolidated Total
Three Months Ended March 31, 2018
Operating revenues	$	94,391	$	62,765	$	476	$	-	$	-	$	-	$	157,632
Interdepartmental revenues		31		4,347		9,820		-		-		(14,198)		-
Total operating revenues		94,422		67,112		10,296		-		-		(14,198)		157,632
Depreciation and amortization		(9,378)		(2,395)		(1,850)		-		-		-		(13,623)
Other operating expenses		(76,575)		(55,195)		(43)		(3)		(203)		14,198		(117,821)
Operating income (loss)		8,469		9,522		8,403		(3)		(203)		-		26,188
Other income, net		1,730		766		-		2,372		51		-		4,919
Interest (expense) income, net		(2,867)		(839)		(1,348)		-		315		-		(4,739)
Income before taxes		7,332		9,449		7,055		2,369		163		-		26,368
Income tax provision		(1,200)		(2,458)		(1,922)		(648)		(139)		-		(6,367)
Net income	$	6,132	$	6,991	$	5,133	$	1,721	$	24	$	-	$	20,001
Three Months Ended March 31, 2017
Operating revenues	$	98,324	$	58,426	$	73	$	-	$	-	$	-	$	156,823
Interdepartmental revenues		(105)		4,394		11,070		-		-		(15,359)		-
Total operating revenues		98,219		62,820		11,143		-		-		(15,359)		156,823
Depreciation and amortization		(8,900)		(2,213)		(1,846)		-		-		-		(12,959)
Other operating expenses(a)		(76,006)		(50,971)		(41)		-		(369)		15,359		(112,028)
Operating income (loss)		13,313		9,636		9,256		-		(369)		-		31,836
Other income (deductions), net(a)		870		399		-		2,478		(222)		-		3,525
Interest (expense) income, net		(2,776)		(799)		(1,407)		-		88		-		(4,894)
Income (loss) before taxes		11,407		9,236		7,849		2,478		(503)		-		30,467
Income tax (provision) benefit		(3,454)		(3,704)		(3,151)		(997)		139		-		(11,167)
Net income (loss)	$	7,953	$	5,532	$	4,698	$	1,481	$	(364)	$	-	$	19,300
(a) Reflects retrospective application of new accounting pronouncement related to pension and other postretirement benefits, see Footnote 2 for further information.

The following tables show segment information for MGE's operations for the indicated periods:

(In thousands)MGE		Electric		Gas		Non-regulated Energy		Consolidation/ Elimination Entries		Consolidated Total
Three Months Ended March 31, 2018
Operating revenues	$	94,391	$	62,765	$	476	$	-	$	157,632
Interdepartmental revenues		31		4,347		9,820		(14,198)		-
Total operating revenues		94,422		67,112		10,296		(14,198)		157,632
Depreciation and amortization		(9,378)		(2,395)		(1,850)		-		(13,623)
Other operating expenses(b)		(77,731)		(57,641)		(1,965)		14,198		(123,139)
Operating income(b)		7,313		7,076		6,481		-		20,870
Other income, net(b)		1,686		754		-		-		2,440
Interest expense, net		(2,867)		(839)		(1,348)		-		(5,054)
Net income		6,132		6,991		5,133		-		18,256
Less: Net income attributable to
noncontrolling interest, net of tax		-		-		-		(5,806)		(5,806)
Net income attributable to MGE	$	6,132	$	6,991	$	5,133	$	(5,806)	$	12,450
Three Months Ended March 31, 2017
Operating revenues	$	98,328	$	58,435	$	73	$	-	$	156,836
Interdepartmental revenues		(109)		4,385		11,070		(15,346)		-
Total operating revenues		98,219		62,820		11,143		(15,346)		156,836
Depreciation and amortization		(8,900)		(2,213)		(1,846)		-		(12,959)
Other operating expenses(a), (b)		(79,426)		(54,665)		(3,192)		15,346		(121,937)
Operating income(b)		9,893		5,942		6,105		-		21,940
Other income, net(a), (b)		836		389		-		-		1,225
Interest expense, net		(2,776)		(799)		(1,407)		-		(4,982)
Net income		7,953		5,532		4,698		-		18,183
Less: Net income attributable to
noncontrolling interest, net of tax		-		-		-		(5,389)		(5,389)
Net income attributable to MGE	$	7,953	$	5,532	$	4,698	$	(5,389)	$	12,794
(a) Reflects retrospective application of new accounting pronouncement related to pension and other postretirement benefits, see Footnote 2 for further information.
(b) Amounts are shown net of the related tax expense, consistent with the presentation on the MGE Consolidated Statements of Income.

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Summary of Significant Accounting Principles (Details-1) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Cash Cash Equivalents And Restricted Cash [Line Items]
Cash and cash equivalents	$ 101,157	$ 107,952
Restricted cash	2,763	1,635
Receivable - margin account	2,325	2,507
Cash, cash equivalents, and restricted cash	106,245	112,094	$ 122,728	$ 101,633
MGE [Member]
Cash Cash Equivalents And Restricted Cash [Line Items]
Cash and cash equivalents	4,152	5,951
Restricted cash	2,763	1,635
Receivable - margin account	2,325	2,507
Cash, cash equivalents, and restricted cash	$ 9,240	$ 10,093	$ 28,124	$ 16,442

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Summary of Significant Accounting Principles (Details-2) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cash provided by operating activities	$ 46,978	$ 41,252
Cash used for investing activities	(39,543)	(18,128)
Change in cash, cash equivalents, and restricted cash	(5,849)	21,095
Cash, cash equivalents, and restricted cash at end of period	$ 106,245	122,728
Accounting Standards Update 2016-18 - Restricted Cash [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cash provided by operating activities		(1,035)
Cash used for investing activities		387
Change in cash, cash equivalents, and restricted cash		(648)
Cash, cash equivalents, and restricted cash at end of period		$ 5,026

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New Accounting Standards (Details-1) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Adoption of Accounting Principles and Recently Issued Accounting Pronouncements [Line Items]
Cumulative Effect of New Accounting Principle in Period of Adoption		$ 0
MGE [Member]
Adoption of Accounting Principles and Recently Issued Accounting Pronouncements [Line Items]
Cumulative Effect of New Accounting Principle in Period of Adoption		$ 0
Accounting Standards Update 2016-01 - Financial Instruments - Overall [Member]
Adoption of Accounting Principles and Recently Issued Accounting Pronouncements [Line Items]
Accumulated other comprehensive income (loss)	$ (377,000)
Cumulative Effect of New Accounting Principle in Period of Adoption	377,000
Accounting Standards Update 2016-01 - Financial Instruments - Overall [Member] | MGE [Member]
Adoption of Accounting Principles and Recently Issued Accounting Pronouncements [Line Items]
Accumulated other comprehensive income (loss)	28,000
Cumulative Effect of New Accounting Principle in Period of Adoption	(28,000)
Accounting Standards Update 2017-07 - Compensation - Retirement Benefits [Member]
Adoption of Accounting Principles and Recently Issued Accounting Pronouncements [Line Items]
Cumulative Effect of New Accounting Principle in Period of Adoption	1,100,000
Accounting Standards Update 2017-07 - Compensation - Retirement Benefits [Member] | MGE [Member]
Adoption of Accounting Principles and Recently Issued Accounting Pronouncements [Line Items]
Cumulative Effect of New Accounting Principle in Period of Adoption	$ 1,100,000

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Revenue (Details-1) - USD ($) $ in Thousands	3 Months Ended			12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017		Dec. 31, 2017
Total Operating Revenue [Member]
Disaggregation of Revenue [Line Items]
Revenues recognized from contracts with customers	$ 157,632	$ 156,823	[1]
Electric [Member]
Disaggregation of Revenue [Line Items]
Revenues recognized from contracts with customers	94,391	98,324
Electric [Member] | Residential [Member]
Disaggregation of Revenue [Line Items]
Revenues recognized from contracts with customers	33,259	33,353
Electric [Member] | Commercial [Member]
Disaggregation of Revenue [Line Items]
Revenues recognized from contracts with customers	47,452	50,164	[1]
Electric [Member] | Industrial [Member]
Disaggregation of Revenue [Line Items]
Revenues recognized from contracts with customers	2,895	4,215
Electric [Member] | Other-retail/municipal
Disaggregation of Revenue [Line Items]
Revenues recognized from contracts with customers	8,287	9,021
Electric [Member] | Total Retail [Member]
Disaggregation of Revenue [Line Items]
Revenues recognized from contracts with customers	91,893	96,753
Electric [Member] | Sales To The Market [Member]
Disaggregation of Revenue [Line Items]
Revenues recognized from contracts with customers	2,034	972
Electric [Member] | Other Revenues [Member]
Disaggregation of Revenue [Line Items]
Revenues recognized from contracts with customers	470	429
Electric [Member] | Adjustments To Revenues [Member]
Disaggregation of Revenue [Line Items]
Revenues recognized from contracts with customers	(6)	170
Gas [Member]
Disaggregation of Revenue [Line Items]
Revenues recognized from contracts with customers	62,765	58,426
Gas [Member] | Residential [Member]
Disaggregation of Revenue [Line Items]
Revenues recognized from contracts with customers	36,551	33,903
Gas [Member] | Commercial/Industrial [Member]
Disaggregation of Revenue [Line Items]
Revenues recognized from contracts with customers	24,952	23,048	[1]
Gas [Member] | Total Retail [Member]
Disaggregation of Revenue [Line Items]
Revenues recognized from contracts with customers	61,503	56,951
Gas [Member] | Gas Transportation [Member]
Disaggregation of Revenue [Line Items]
Revenues recognized from contracts with customers	1,135	1,350
Gas [Member] | Other Revenues [Member]
Disaggregation of Revenue [Line Items]
Revenues recognized from contracts with customers	127	125
Non Regulated Energy [Member]
Disaggregation of Revenue [Line Items]
Revenues recognized from contracts with customers	$ 476	$ 73
MGE [Member]
Disaggregation of Revenue [Line Items]
CNG Vehicle Fuel Servicing Revenue				$ 100

[1] In 2017, MGE had less than $0.1 million of revenues related to CNG vehicle fuel servicing. No revenue was recognized for fuel servicing by MGE Energy in 2017.

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Investment in ATC and ATC Holdco (Details-1) - USD ($) $ in Thousands			3 Months Ended
		Apr. 30, 2018	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Schedule Of Equity Method Investments [Line Items]
Equity earnings from investment in ATC			$ 2,451	$ 2,608
Dividends from ATC			2,348	2,072
Capital contributions to investments			1,877	2,939
MGE Transco [Member] | ATC [Member]
Schedule Of Equity Method Investments [Line Items]
Equity earnings from investment in ATC			2,451	2,608
Dividends from ATC	[1]		0	0
Capital contributions to investments			$ 710	1,420
Ownership interest in equity-method investee			3.60%		3.60%
Dividend receivable from ATC			$ 2,300		$ 2,100
MGE Transco [Member] | ATC [Member] | Subsequent Event [Member]
Schedule Of Equity Method Investments [Line Items]
Capital contributions to investments		$ 1,100
MGEE Transco [Member] | ATC Holdco [Member]
Schedule Of Equity Method Investments [Line Items]
Capital contributions to investments			$ 100	$ 200
Ownership interest in equity-method investee			4.40%		4.40%
MGEE Transco [Member] | ATC Holdco [Member] | Subsequent Event [Member]
Schedule Of Equity Method Investments [Line Items]
Capital contributions to investments		$ 100

[1] 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 .

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Investment in ATC and ATC Holdco (Details-2) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
ATC [Member]
Schedule Of Equity Method Investments [Line Items]
Operating revenues	$ 165,429	$ 174,669
Operating expenses	(84,893)	(82,697)
Other income, net	111	682
Interest expense, net	(27,762)	(26,783)
Earnings before members' income taxes	52,885	65,871
ATC [Member]
Related Party Transaction [Line Items]
Related party expenses	7,200	$ 9,200
Due from related parties	$ 200		$ 200

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Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018		Mar. 31, 2017	Dec. 31, 2017
Reconciliation of tax provision to statutory federal income tax rate [Abstract]
Statutory federal income tax rate	21.00%		35.00%
State income taxes, net of federal benefit	6.40%		5.30%
Amortized investment tax credits	(0.10%)		(0.10%)
Credit for electricity from wind energy	(0.50%)		(1.80%)
Domestic manufacturing deduction	0.00%		(1.30%)
AFUDC equity, net	(0.40%)		(0.20%)
Amortization of utility excess deferred tax - tax reform	(1.80%)	[1]	0.00%
Other, net, individually significant	(0.40%)		(0.20%)
Effective income tax rate	24.20%		36.70%
Effects Of The Tax Cuts And Jobs Act [Abstract]
Regulatory liabilities - current	$ 12,325			$ 5,633
Regulatory liabilities	157,890			154,153
Revenue Subject to Refund | Tax Cuts and Jobs Act [Member]
Effects Of The Tax Cuts And Jobs Act [Abstract]
Regulatory liabilities - current	3,300
Revenue Subject to Refund | Excess Deferred Taxes, Tax Cuts And Jobs Act [Member]
Effects Of The Tax Cuts And Jobs Act [Abstract]
Regulatory liabilities	$ 600
MGE [Member]
Reconciliation of tax provision to statutory federal income tax rate [Abstract]
Statutory federal income tax rate	21.00%		35.00%
State income taxes, net of federal benefit	6.00%		5.10%
Amortized investment tax credits	(0.10%)		(0.10%)
Credit for electricity from wind energy	(0.50%)		(2.00%)
Domestic manufacturing deduction	0.00%		(1.40%)
AFUDC equity, net	(0.40%)		(0.20%)
Amortization of utility excess deferred tax - tax reform	(2.00%)	[1]	0.00%
Other, net, individually significant	(0.60%)		(0.20%)
Effective income tax rate	23.40%		36.20%
Effects Of The Tax Cuts And Jobs Act [Abstract]
Regulatory liabilities - current	$ 12,325			5,633
Regulatory liabilities	$ 157,890			$ 154,153

[1] Included are impacts of the Tax Act for the regulated utility for excess deferred taxes recognized using a normalization method of accounting.

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Pension and Other Postretirement Plans (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Pension Benefits [Member]
Components of net periodic benefit cost:
Service cost	$ 1,457	$ 1,332
Interest cost	3,208	3,119
Expected return on assets	(6,568)	(5,742)
Amortization of:
Prior service credit	(11)	(4)
Actuarial loss	1,298	1,464
Net periodic benefit (credit) cost	(616)	169
Postretirement Benefits [Member]
Components of net periodic benefit cost:
Service cost	332	206
Interest cost	658	444
Expected return on assets	(802)	(472)
Amortization of:
Transition obligation	1	0
Prior service credit	(667)	(436)
Actuarial loss	128	129
Net periodic benefit (credit) cost	$ (350)	$ (129)

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Equity and Financing Arrangements (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Common Stock [Abstract]
Common stock issued during period	0	0
Dilutive Shares Calculation [Abstract]
Dilutive securities	$ 0

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Share Based Compensation (Details) - Performance Units [Member] - USD ($) $ in Millions	1 Months Ended	3 Months Ended
	Jan. 31, 2018	Mar. 31, 2018	Mar. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense		$ 0.2	$ 0.5
Cash payments distributed related to awards previously granted and now payable	$ 1.6
Awards forfeited during period, value		$ 0.0	$ 0.0
Awards forfeited during period, units		0	0
Outstanding awards vested during period		$ 4.8
Director Incentive Agreement [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted during period (in units)		5,810
Award vesting period		3 years
Performance Unit Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted during period (in units)		17,830
Award vesting period		5 years

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Commitments and Contingencies (Details-1) - Saratoga Wind [Member] $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($) Turbines MW
Operating expense purchase contracts [Abstract]
Purchase obligation, 2018	$ 13,578
Purchase obligation, 2019	858
Purchase obligation, 2020	2,266
Purchase obligation, 2021	1,775
Purchase obligation, 2022	1,784
Purchase obligation, Thereafter	$ 4,429
Saratoga Wind
Saratoga Capacity (MW) | MW	66
Saratoga Turbines | Turbines	33
Projected Saratoga Wind Project Costs	$ 108,000
Saratoga Wind Project Costs Year to Date	$ 23,300
Public Service Commission of Wisconsin [Member]
Allowance for Funds Used During Construction
Authorized AFUDC Rate	100.00%

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Rate Matters (Details) - PSCW [Member] - MGE [Member] - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017	Mar. 31, 2017
Rate Proceedings [Abstract]
Authorized return on equity, percentage			9.80%
Approved equity capital structure, percentage			57.20%
Fuel Rules [Abstract]
Fuel rules, bandwidth	2.00%
Fuel rules, electric fuel deferred costs upper threshold	102.00%
Fuel rules, electric fuel deferred costs lower threshold	98.00%
Deferred fuel rules monitored costs	$ 1.5			$ 1.1
Fuel Rules Refund, 2015/2016 [Member]
Fuel Rules [Abstract]
Return of electric fuel credit, total			$ 6.2
Approved Future Rate Matters [Member]
Fuel Rules [Abstract]
Public Utilities Fuel Surcharge Amount		$ 0.5
Public Utilities Fuel Surcharge Percentage		0.13%
Electric Rate Proceeding [Member]
Rate Proceedings [Abstract]
Authorized rate increase (decrease), percentage			(0.80%)
Authorized rate increase (decrease), amount			$ (3.3)
Gas Rate Proceeding [Member]
Rate Proceedings [Abstract]
Authorized rate increase (decrease), percentage			1.90%
Authorized rate increase (decrease), amount			$ 3.1

XML

Derivative and Hedging Instruments (Details-1) $ in Thousands		3 Months Ended	12 Months Ended
		Mar. 31, 2018 USD ($) Dth MWh MW	Dec. 31, 2017 USD ($) Dth MWh MW	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Derivative fair values [Abstract]
Receivable, margin account balance, net of collateral posted against derivative positions		$ 2,325	$ 2,507
Other Current Assets [Member]
Derivative fair values [Abstract]
Derivative fair value, net		319	806	$ 142	$ 230
Commodity Contracts And Financial Transimission Rights [Member]
Derivative fair values [Abstract]
Derivative fair value, net		$ 100	$ 200
Commodity Derivative Contracts [Member]
Gross Notional Volume of Open Derivatives
Notional amount, energy measure (in MWh) | MWh		538,050	552,310
Notional amount, decatherm measure (in Dth) | Dth		3,270,000	5,460,000
Derivative fair values [Abstract]
Asset Derivatives, fair value, gross basis		$ 412	$ 676
Liability Derivatives, fair value, gross basis		483	793
Commodity Derivative Contracts [Member] | Other Current Assets [Member]
Derivative fair values [Abstract]
Liability Derivatives, fair value, gross basis		100	100
Derivative, right to reclaim collateral (receivable)		0	0
Commodity Derivative Contracts [Member] | Derivative Liability (Current) [Member]
Derivative fair values [Abstract]
Asset Derivatives, fair value, gross basis	[1],[2]	403	566
Liability Derivatives, fair value, gross basis	[1],[2]	294	603
Commodity Derivative Contracts [Member] | Derivative Liability (Long-term) [Member]
Derivative fair values [Abstract]
Asset Derivatives, fair value, gross basis	[1]	9	110
Liability Derivatives, fair value, gross basis	[1]	$ 189	$ 190
Energy Related Commodity Contract [Member] | Cash Flow Hedging [Member]
Derivatives Fair Value [Line Items]
Maximum term of derivative hedging contract		4 years
Financial Transmission Rights [Member]
Gross Notional Volume of Open Derivatives
Notional amount, power measure (in MW) | MW		886	2,226
Derivative fair values [Abstract]
Asset Derivatives, fair value, gross basis		$ 120	$ 329
Financial Transmission Rights [Member] | Other Current Assets [Member]
Derivative fair values [Abstract]
Asset Derivatives, fair value, gross basis		120	329
Liability Derivatives, fair value, gross basis		$ 0	$ 0
PPA [Member]
Gross Notional Volume of Open Derivatives
Notional amount, power measure (in MW) | MW		2,500	2,650
Derivative fair values [Abstract]
Derivative fair value, net		$ (41,300)	$ (42,200)
Liability Derivatives, fair value, gross basis		41,290	42,170
PPA [Member] | Derivative Liability (Current) [Member]
Derivative fair values [Abstract]
Liability Derivatives, fair value, gross basis		8,950	8,180
PPA [Member] | Derivative Liability (Long-term) [Member]
Derivative fair values [Abstract]
Liability Derivatives, fair value, gross basis		$ 32,340	$ 33,990

[1] As of March 31, 2018 , and December 31, 2017 , collateral of $0.1 million was posted against and netted with derivative liability positions on the consolidated balance sheets.

[2] As of March 31, 2018 , and December 31, 2017 , $0.1 million was presented as other current assets on the consolidated balance sheets.

XML

Derivative and Hedging Instruments (Details-2) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Commodity Derivative Contracts [Member]
Offsetting Assets [Line Items]
Gross amounts	$ 412	$ 676
Gross amounts offset in balance sheet	(390)	(654)
Collateral posted against derivative positions	0	0
Net amount presented in balance sheet	22	22
Financial Transmission Rights [Member]
Offsetting Assets [Line Items]
Gross amounts	120	329
Gross amounts offset in balance sheet	0	0
Collateral posted against derivative positions	0	0
Net amount presented in balance sheet	$ 120	$ 329

XML

Derivative and Hedging Instruments (Details-3) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Offsetting Liabilities [Line Items]
Collateral posted against derivative positions	$ (100)	$ (100)
Commodity Derivative Contracts [Member]
Offsetting Liabilities [Line Items]
Gross amounts	483	793
Gross amounts offset in balance sheet	(390)	(654)
Collateral posted against derivative positions	(93)	(139)
Net amount presented in balance sheet	0	0
Purchased Power Agreement [Member]
Offsetting Liabilities [Line Items]
Gross amounts	41,290	42,170
Gross amounts offset in balance sheet	0	0
Collateral posted against derivative positions	0	0
Net amount presented in balance sheet	$ 41,290	$ 42,170

XML

Derivative and Hedging Instruments (Details-4) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Current and Long-Term Regulatory Asset [Member]
Change In Derivative Fair Value [Roll Forward]
Beginning balance,	$ 41,958	$ 49,281
Unrealized loss (gain)	128	(689)
Realized (loss) gain reclassified to a deferred account	(158)	(78)
Realized (loss) gain reclassified to income statement	(687)	(441)
Ending balance,	41,241	48,073
Other Current Assets [Member]
Change In Derivative Fair Value [Roll Forward]
Beginning balance,	806	230
Unrealized loss (gain)	0	0
Realized (loss) gain reclassified to a deferred account	158	78
Realized (loss) gain reclassified to income statement	(645)	(166)
Ending balance,	$ 319	$ 142

XML

Derivative and Hedging Instruments (Details-5) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($) counterparty	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($)
Counterparties in net liability position or default [Abstract]
Derivative, net liability position of counterparties	$ 100		$ 100
Number of counterparties in default | counterparty	0
Commodity Derivative Contracts [Member] | Fuel For Electric Generation Purchased Power [Member]
Realized losses (gains) on income statement [Line Items]
Realized losses (gains) on income statement	$ 374	$ 385
Commodity Derivative Contracts [Member] | Cost Of Gas Sold Expense [Member]
Realized losses (gains) on income statement [Line Items]
Realized losses (gains) on income statement	615	146
Financial Transmission Rights [Member] | Fuel For Electric Generation Purchased Power [Member]
Realized losses (gains) on income statement [Line Items]
Realized losses (gains) on income statement	(175)	(685)
Financial Transmission Rights [Member] | Cost Of Gas Sold Expense [Member]
Realized losses (gains) on income statement [Line Items]
Realized losses (gains) on income statement	0	0
Purchased Power Agreement [Member]
Derivative collateral required to be posted for PPA [Abstract]
Minimum collateral that may be required to be posted	20,000
Maximum collateral that may be required to be posted	40,000
Collateral posted	0
Purchased Power Agreement [Member] | Fuel For Electric Generation Purchased Power [Member]
Realized losses (gains) on income statement [Line Items]
Realized losses (gains) on income statement	518	761
Purchased Power Agreement [Member] | Cost Of Gas Sold Expense [Member]
Realized losses (gains) on income statement [Line Items]
Realized losses (gains) on income statement	$ 0	$ 0

XML

Fair Value of Financial Instruments (Details-1) - USD ($) $ in Thousands		Mar. 31, 2018	Dec. 31, 2017
Fair Value Measurement [Domain]
Liabilities:
Unamortized discount and debt issuance costs, net		$ 4,200	$ 4,300
Carrying Amount [Member]
Assets:
Cash and cash equivalents		101,157	107,952
Liabilities:
Short-term debt - commercial paper		3,000	4,000
Long-term debt	[1]	425,780	426,883
Fair Value [Member]
Assets:
Cash and cash equivalents		101,157	107,952
Liabilities:
Short-term debt - commercial paper		3,000	4,000
Long-term debt	[1]	462,151	475,282
MGE [Member] | Fair Value Measurement [Domain]
Liabilities:
Unamortized discount and debt issuance costs, net		4,200	4,300
MGE [Member] | Carrying Amount [Member]
Assets:
Cash and cash equivalents		4,152	5,951
Liabilities:
Short-term debt - commercial paper		3,000	4,000
Long-term debt	[1]	425,780	426,883
MGE [Member] | Fair Value [Member]
Assets:
Cash and cash equivalents		4,152	5,951
Liabilities:
Short-term debt - commercial paper		3,000	4,000
Long-term debt	[1]	$ 462,151	$ 475,282

[1] Includes long-term debt due within one year. Excludes debt issuance costs and unamortized discount of $4.2 million and $4.3 million at March 31, 2018 and December 31, 2017, respectively.

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Fair Value of Financial Instruments (Details-2) - USD ($) $ in Thousands		Mar. 31, 2018	Dec. 31, 2017
Liabilities:
Derivative liability, collateral offset		$ 100	$ 100
Recurring [Member]
Assets:
Derivatives		531	1,005
Total Assets		1,386	1,797
Liabilities:
Derivatives	[1]	41,772	42,963
Deferred compensation		3,110	3,065
Total liabilities		44,882	46,028
Recurring [Member] | Exchange Traded [Member]
Assets:
Available-for-sale securities		855	792
Recurring [Member] | Level 1 [Member]
Assets:
Derivatives		284	278
Total Assets		1,139	1,070
Liabilities:
Derivatives	[1]	62	210
Deferred compensation		0	0
Total liabilities		62	210
Recurring [Member] | Level 1 [Member] | Exchange Traded [Member]
Assets:
Available-for-sale securities		855	792
Recurring [Member] | Level 2 [Member]
Assets:
Derivatives		0	0
Total Assets		0	0
Liabilities:
Derivatives	[1]	0	0
Deferred compensation		3,110	3,065
Total liabilities		3,110	3,065
Recurring [Member] | Level 2 [Member] | Exchange Traded [Member]
Assets:
Available-for-sale securities		0	0
Recurring [Member] | Level 3 [Member]
Assets:
Derivatives		247	727
Total Assets		247	727
Liabilities:
Derivatives	[1]	41,710	42,753
Deferred compensation		0	0
Total liabilities		41,710	42,753
Recurring [Member] | Level 3 [Member] | Exchange Traded [Member]
Assets:
Available-for-sale securities		0	0
MGE [Member]
Liabilities:
Derivative liability, collateral offset		100	100
MGE [Member] | Recurring [Member]
Assets:
Derivatives		531	1,005
Total Assets		596	1,069
Liabilities:
Derivatives	[1]	41,772	42,963
Deferred compensation		3,110	3,065
Total liabilities		44,882	46,028
MGE [Member] | Recurring [Member] | Exchange Traded [Member]
Assets:
Available-for-sale securities		65	64
MGE [Member] | Recurring [Member] | Level 1 [Member]
Assets:
Derivatives		284	278
Total Assets		349	342
Liabilities:
Derivatives	[1]	62	210
Deferred compensation		0	0
Total liabilities		62	210
MGE [Member] | Recurring [Member] | Level 1 [Member] | Exchange Traded [Member]
Assets:
Available-for-sale securities		65	64
MGE [Member] | Recurring [Member] | Level 2 [Member]
Assets:
Derivatives		0	0
Total Assets		0	0
Liabilities:
Derivatives	[1]	0	0
Deferred compensation		3,110	3,065
Total liabilities		3,110	3,065
MGE [Member] | Recurring [Member] | Level 2 [Member] | Exchange Traded [Member]
Assets:
Available-for-sale securities		0	0
MGE [Member] | Recurring [Member] | Level 3 [Member]
Assets:
Derivatives		247	727
Total Assets		247	727
Liabilities:
Derivatives	[1]	41,710	42,753
Deferred compensation		0	0
Total liabilities		41,710	42,753
MGE [Member] | Recurring [Member] | Level 3 [Member] | Exchange Traded [Member]
Assets:
Available-for-sale securities		$ 0	$ 0

[1] These amounts are shown gross and exclude $0.1 million of collateral that was posted against derivative positions with counterparties as of March 31, 2018 and December 31, 2017.

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Fair Value of Financial Instruments (Details-3)	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Basis adjustment:
Basis adjustment - on peak	91.70%	92.30%
Basis adjustment - off peak	93.10%	94.10%
US Treasury Bill Securities [Member]
Deferred compensation plan [Abstract]
Investment interest calculation, investment maturity period (26 weeks)	182 days
Investment interest calculation, monthly compounding rate	1.00%
Investment interest calculation, minimum annual rate compounded monthly	7.00%
Minimum [Member]
Counterparty fuel mix:
Internal generation	50.00%	55.00%
Purchased power	25.00%	25.00%
Maximum [Member]
Counterparty fuel mix:
Internal generation	75.00%	75.00%
Purchased power	50.00%	45.00%

XML

Fair Value of Financial Instruments (Details-4) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Beginning balance,		$ (42,026)	$ (50,306)
Realized and unrealized gains (losses):
Included in regulatory assets		563	1,953
Included in other comprehensive income		0	0
Included in earnings	[1]	(542)	(586)
Included in current assets		(173)	125
Purchases		5,834	5,996
Sales		0	0
Issuances		0	0
Settlements		(5,119)	(5,536)
Transfers in and/or out of level 3		0	0
Ending balance,		(41,463)	(48,354)
Total gains (losses) included in earnings attributed to the change in unrealized gains (losses) related to assets and liabilities	[1]	0	0
Purchased Power Expense [Member]
Realized and unrealized gains (losses):
Included in earnings	[1]	(723)	(431)
Cost Of Gas Sold Expense [Member]
Realized and unrealized gains (losses):
Included in earnings	[1]	$ 181	$ (155)

[1] MGE's exchange-traded derivative contracts, over-the-counter party transactions, purchased power agreement, and FTRs are subject to regulatory deferral. These derivatives are therefore marked to fair value and are offset in the financial statements with a corresponding regulatory asset or liability.

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Joint Plant Ownership (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Jan. 01, 2018
Jointly Owned Utility Plant Interests [Line Items]
Assets held for sale	$ 1,383		$ 8,817
Accrued capital expenditures	4,706	$ 6,804
MGE [Member]
Jointly Owned Utility Plant Interests [Line Items]
Assets held for sale	1,383		$ 8,817
Accrued capital expenditures	4,706	$ 6,804
Columbia Units [Member] | MGE [Member]
Jointly Owned Utility Plant Interests [Line Items]
Jointly Owned Utility Plant, Proportionate Ownership Share			20.40%	19.40%
Assets held for sale	1,400		$ 8,800
Accrued capital expenditures	$ 1,400		$ 8,800

XML

Segment Information (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Segment Reporting Information [Line Items]
Operating revenues		$ 157,632	$ 156,823
Depreciation and amortization		(13,623)	(12,959)
Other operating expenses		(117,821)	(112,028)	[1]
Operating income (loss)		26,188	31,836
Other income (deductions), net		4,919	3,525	[1]
Interest (expense) income, net		(4,739)	(4,894)
Income before income taxes		26,368	30,467
Income tax (provision) benefit		(6,367)	(11,167)
Net Income (Loss)		20,001	19,300
Electric [Member]
Segment Reporting Information [Line Items]
Operating revenues		94,391	98,324
Gas [Member]
Segment Reporting Information [Line Items]
Operating revenues		62,765	58,426
Non Regulated Energy [Member]
Segment Reporting Information [Line Items]
Operating revenues		476	73
Transmission Investment [Member]
Segment Reporting Information [Line Items]
Operating revenues		0	0
All Others [Member]
Segment Reporting Information [Line Items]
Operating revenues		0	0
Operating Segments [Member]
Segment Reporting Information [Line Items]
Operating revenues		157,632	156,823
Operating Segments [Member] | Electric [Member]
Segment Reporting Information [Line Items]
Operating revenues		94,422	98,219
Depreciation and amortization		(9,378)	(8,900)
Other operating expenses		(76,575)	(76,006)	[1]
Operating income (loss)		8,469	13,313
Other income (deductions), net		1,730	870	[1]
Interest (expense) income, net		(2,867)	(2,776)
Income before income taxes		7,332	11,407
Income tax (provision) benefit		(1,200)	(3,454)
Net Income (Loss)		6,132	7,953
Operating Segments [Member] | Gas [Member]
Segment Reporting Information [Line Items]
Operating revenues		67,112	62,820
Depreciation and amortization		(2,395)	(2,213)
Other operating expenses		(55,195)	(50,971)	[1]
Operating income (loss)		9,522	9,636
Other income (deductions), net		766	399	[1]
Interest (expense) income, net		(839)	(799)
Income before income taxes		9,449	9,236
Income tax (provision) benefit		(2,458)	(3,704)
Net Income (Loss)		6,991	5,532
Operating Segments [Member] | Non Regulated Energy [Member]
Segment Reporting Information [Line Items]
Operating revenues		10,296	11,143
Depreciation and amortization		(1,850)	(1,846)
Other operating expenses		(43)	(41)	[1]
Operating income (loss)		8,403	9,256
Other income (deductions), net		0	0	[1]
Interest (expense) income, net		(1,348)	(1,407)
Income before income taxes		7,055	7,849
Income tax (provision) benefit		(1,922)	(3,151)
Net Income (Loss)		5,133	4,698
Operating Segments [Member] | Transmission Investment [Member]
Segment Reporting Information [Line Items]
Operating revenues		0	0
Depreciation and amortization		0	0
Other operating expenses		(3)	0	[1]
Operating income (loss)		(3)	0
Other income (deductions), net		2,372	2,478	[1]
Interest (expense) income, net		0	0
Income before income taxes		2,369	2,478
Income tax (provision) benefit		(648)	(997)
Net Income (Loss)		1,721	1,481
Operating Segments [Member] | All Others [Member]
Segment Reporting Information [Line Items]
Operating revenues		0	0
Depreciation and amortization		0	0
Other operating expenses		(203)	(369)	[1]
Operating income (loss)		(203)	(369)
Other income (deductions), net		51	(222)	[1]
Interest (expense) income, net		315	88
Income before income taxes		163	(503)
Income tax (provision) benefit		(139)	139
Net Income (Loss)		24	(364)
Consolidation Elimination Entries [Member]
Segment Reporting Information [Line Items]
Operating revenues		(14,198)	(15,359)
Depreciation and amortization		0	0
Other operating expenses		14,198	15,359	[1]
Operating income (loss)		0	0
Other income (deductions), net		0	0	[1]
Interest (expense) income, net		0	0
Income before income taxes		0	0
Income tax (provision) benefit		0	0
Net Income (Loss)		0	0
Consolidation Elimination Entries [Member] | Electric [Member]
Segment Reporting Information [Line Items]
Operating revenues		31	(105)
Consolidation Elimination Entries [Member] | Gas [Member]
Segment Reporting Information [Line Items]
Operating revenues		4,347	4,394
Consolidation Elimination Entries [Member] | Non Regulated Energy [Member]
Segment Reporting Information [Line Items]
Operating revenues		9,820	11,070
Consolidation Elimination Entries [Member] | Transmission Investment [Member]
Segment Reporting Information [Line Items]
Operating revenues		0	0
Consolidation Elimination Entries [Member] | All Others [Member]
Segment Reporting Information [Line Items]
Operating revenues		0	0
MGE [Member]
Segment Reporting Information [Line Items]
Operating revenues		157,632	156,836
Depreciation and amortization		(13,623)	(12,959)
Other operating expenses	[2]	(123,139)	(121,937)	[1]
Operating income (loss)	[2]	20,870	21,940
Other income (deductions), net	[2]	2,440	1,225	[1]
Interest (expense) income, net		(5,054)	(4,982)
Net Income Including Noncontrolling Interest		18,256	18,183
Less Net Income Attributable to Noncontrolling Interest, net of tax		(5,806)	(5,389)
Net Income (Loss)		12,450	12,794
MGE [Member] | Electric [Member]
Segment Reporting Information [Line Items]
Operating revenues		94,391	98,328
MGE [Member] | Gas [Member]
Segment Reporting Information [Line Items]
Operating revenues		62,765	58,435
MGE [Member] | Non Regulated Energy [Member]
Segment Reporting Information [Line Items]
Operating revenues		476	73
MGE [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Operating revenues		157,632	156,836
MGE [Member] | Operating Segments [Member] | Electric [Member]
Segment Reporting Information [Line Items]
Operating revenues		94,422	98,219
Depreciation and amortization		(9,378)	(8,900)
Other operating expenses	[2]	(77,731)	(79,426)	[1]
Operating income (loss)	[2]	7,313	9,893
Other income (deductions), net	[2]	1,686	836	[1]
Interest (expense) income, net		(2,867)	(2,776)
Net Income Including Noncontrolling Interest		6,132	7,953
Less Net Income Attributable to Noncontrolling Interest, net of tax		0	0
Net Income (Loss)		6,132	7,953
MGE [Member] | Operating Segments [Member] | Gas [Member]
Segment Reporting Information [Line Items]
Operating revenues		67,112	62,820
Depreciation and amortization		(2,395)	(2,213)
Other operating expenses	[2]	(57,641)	(54,665)	[1]
Operating income (loss)	[2]	7,076	5,942
Other income (deductions), net	[2]	754	389	[1]
Interest (expense) income, net		(839)	(799)
Net Income Including Noncontrolling Interest		6,991	5,532
Less Net Income Attributable to Noncontrolling Interest, net of tax		0	0
Net Income (Loss)		6,991	5,532
MGE [Member] | Operating Segments [Member] | Non Regulated Energy [Member]
Segment Reporting Information [Line Items]
Operating revenues		10,296	11,143
Depreciation and amortization		(1,850)	(1,846)
Other operating expenses	[2]	(1,965)	(3,192)	[1]
Operating income (loss)	[2]	6,481	6,105
Other income (deductions), net	[2]	0	0	[1]
Interest (expense) income, net		(1,348)	(1,407)
Net Income Including Noncontrolling Interest		5,133	4,698
Less Net Income Attributable to Noncontrolling Interest, net of tax		0	0
Net Income (Loss)		5,133	4,698
MGE [Member] | Consolidation Elimination Entries [Member]
Segment Reporting Information [Line Items]
Operating revenues		(14,198)	(15,346)
Depreciation and amortization		0	0
Other operating expenses	[2]	14,198	15,346	[1]
Operating income (loss)	[2]	0	0
Other income (deductions), net	[2]	0	0	[1]
Interest (expense) income, net		0	0
Net Income Including Noncontrolling Interest		0	0
Less Net Income Attributable to Noncontrolling Interest, net of tax		(5,806)	(5,389)
Net Income (Loss)		(5,806)	(5,389)
MGE [Member] | Consolidation Elimination Entries [Member] | Electric [Member]
Segment Reporting Information [Line Items]
Operating revenues		31	(109)
MGE [Member] | Consolidation Elimination Entries [Member] | Gas [Member]
Segment Reporting Information [Line Items]
Operating revenues		4,347	4,385
MGE [Member] | Consolidation Elimination Entries [Member] | Non Regulated Energy [Member]
Segment Reporting Information [Line Items]
Operating revenues		$ 9,820	$ 11,070

[1] Reflects retrospective application of new accounting pronouncement related to pension and other postretirement benefits, see Footnote 2 for further information.

[2] Amounts are shown net of the related tax expense, consistent with the presentation on the MGE Consolidated Statements of Income.

XML

Label	Element	Value
Accounting Standards Update 2016-18 - Restricted Cash [Member]
Cash, cash equivalents, and restricted cash	us-gaap_CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsIncludingDisposalGroupAndDiscontinuedOperations	$ 5,674,000