Investment in ATC and ATC Holdco

6 Months Ended

Jun. 30, 2018

Equity Method Investments and Joint Ventures [Abstract]

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

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

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

MGE Transco and MGEE Transco have accounted for their 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 and six months ended June 30, 2018 and 2017, MGE Transco recorded the following:

		Three Months Ended				Six Months Ended
		June 30,				June 30,
(In thousands)		2018		2017		2018		2017
Equity earnings from investment in ATC	$	1,990	$	2,486	$	4,441	$	5,094
Dividends from ATC^(a)		2,959		2,000		2,959		2,000
Capital contributions to ATC		1,065		888		1,775		2,308

(a) MGE Transco recorded a $2.3 million and $2.1 million dividend receivable from ATC as of December 31, 2017 and 2016, respectively. A cash dividend was received in January of each of the proceeding years. MGE Transco recorded a $1.4 million dividend receivable from ATC as of June 30, 2018. A cash dividend was received in July 2018.

ATC Holdco was formed in December 2016. In the near term, it is expected that ATC Holdco will be pursuing transmission development opportunities that typically have long development and investment lead times before becoming operational. During the three and six months ended June 30, 2018, MGEE Transco recorded capital contributions of $0.1 million and $0.2 million, respectively, to ATC Holdco compared to $0.5 million and $0.7 million for the comparable periods in 2017.

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

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

		Three Months Ended				Six Months Ended
		June 30,				June 30,
(In thousands)		2018		2017		2018		2017
Operating revenues	$	165,506	$	176,610	$	330,935	$	351,279
Operating expenses		(91,474)		(82,974)		(176,367)		(165,670)
Other income, net		1,520		1,088		1,631		1,771
Interest expense, net		(26,895)		(26,466)		(54,657)		(53,250)
Earnings before members' income taxes	$	48,657	$	68,258	$	101,542	$	134,130

MGE receives transmission and other related services from ATC. During the three and six months ended June 30, 2018, MGE recorded $7.2 million and $14.4 million, respectively, for transmission services received compared to $7.3 million and $14.6 million for the comparable periods in 2017. MGE also provides a variety of operational, maintenance, and project management services for ATC, which is reimbursed by ATC. As of June 30, 2018, and December 31, 2017, MGE had a receivable due from ATC of $0.1 million and $0.2 million, respectively.