Long-Term Debt

12 Months Ended

Dec. 31, 2018

Long-Term Debt - MGE Energy and MGE.

a. Long-Term Debt.

		December 31,
(In thousands)		2018		2017
First Mortgage Bonds:^(a)
7.70%, 2028 Series	$	1,200	$	1,200
Tax Exempt Debt:
3.45%, 2027 Series,
Industrial Development Revenue Bonds		19,300		19,300
Medium-Term Notes:^(b)
6.12%, due 2028		20,000		20,000
7.12%, due 2032		25,000		25,000
6.247%, due 2037		25,000		25,000
Total Medium-Term Notes		70,000		70,000
Other Long-Term Debt:^(d)
5.59%, due 2018^(c)(e)		-		20,000
3.38%, due 2020^(e)		15,000		15,000
3.09%, due 2023^(e)		30,000		30,000
3.29%, due 2026^(e)		15,000		15,000
3.11%, due 2027^(e)		30,000		30,000
5.68%, due 2033^(f)		25,064		26,121
5.19%, due 2033^(f)		16,561		17,290
5.26%, due 2040^(e)		15,000		15,000
5.04%, due 2040^(g)		35,139		36,806
4.74%, due 2041^(g)		22,167		23,166
4.38%, due 2042^(e)		28,000		28,000
4.42%, due 2043^(e)		20,000		20,000
4.47%, due 2048^(e)		20,000		20,000
3.76%, due 2052^(e)		40,000		40,000
4.19%, due 2048^(c)(e)		60,000		-
4.24%, due 2053^(c)(e)		20,000		-
4.34%, due 2058^(c)(e)		20,000		-
Total Other Long-Term Debt		411,931		336,383
Long-term debt due within one year		(4,553)		(24,452)
Unamortized discount and debt issuance costs		(4,535)		(4,270)
Total Long-Term Debt	$	493,343	$	398,161

(a) MGE's utility plant is subject to the lien of its Indenture of Mortgage and Deed of Trust, under which its first mortgage bonds are issued. The Mortgage Indenture provides that dividends or any other distribution or purchase of shares may not be made if the aggregate amount thereof since December 31, 1945, would exceed the earned surplus (retained earnings) accumulated subsequent to December 31, 1945. As of December 31, 2018, approximately $400.0 million was available for the payment of dividends under this covenant.

(b) The indenture under which MGE's Medium-Term notes are issued provides that those notes will be entitled to be equally and ratably secured in the event that MGE issues any additional first mortgage bonds.

(c) In July 2018, MGE issued a total of $40 million of new long-term unsecured debt. In September 2018, MGE issued $60 million of new long-term unsecured debt. MGE used the net proceeds from these debt financings to assist with financing capital expenditures, such as the Saratoga Wind Farm, and to refinance $20 million of long-term debt which matured in September 2018.

(d) Unsecured notes issued pursuant to various Note Purchase Agreements with one or more purchasers. The notes are not issued under, or governed by, MGE's Indenture dated as of September 1, 1998, which governs MGE's Medium-Term Notes.

(e) Issued by MGE. Under that Note Purchase Agreement: (i) note holders have the right to require MGE to repurchase their notes at par in the event of an acquisition of beneficial ownership of 30% or more of the outstanding voting stock of MGE Energy, (ii) MGE must maintain a ratio of its consolidated indebtedness to consolidated total capitalization not to exceed a maximum of 65%, and (iii) MGE cannot issue "Priority Debt" in an amount exceeding 20% of its consolidated assets. Priority Debt is defined as any indebtedness of MGE secured by liens other than specified liens permitted by the Note Purchase Agreement and certain unsecured indebtedness of certain subsidiaries. As of December 31, 2018, MGE was in compliance with the covenant requirements.

(f) Issued by MGE Power West Campus. The Note Purchase Agreements require it to maintain a projected debt service coverage ratio of not less than 1.25 to 1.00, and debt to total capitalization ratio of not more than 0.65 to 1.00. The notes are secured by a collateral assignment of lease payments that MGE is making to MGE Power West Campus for use of its ownership interest in the WCCF pursuant to a long-term lease. As of December 31, 2018, MGE Power West Campus was in compliance with the covenant requirements.

(g) Issued by MGE Power Elm Road. The Note Purchase Agreement requires MGE Power Elm Road to maintain a projected and actual debt service coverage ratio at the end of any calendar quarter of not less than 1.25 to 1.00 for the trailing 12-month period. The notes are secured by a collateral assignment of lease payments that MGE is making to MGE Power Elm Road for use of its ownership interest in the Elm Road Units pursuant to long-term leases. As of December 31, 2018, MGE Power Elm Road was in compliance with the covenant requirements.

b. Long-Term Debt Maturities.

Below is MGE Energy's and MGE's aggregate maturities for all long-term debt for years following December 31, 2018.

	(In thousands)		2019		2020		2021		2022		2023		Thereafter
	Long-term debt maturities	$	4,553	$	19,659	$	4,771	$	4,889	$	35,014	$	433,545

MGE includes long-term debt held by MGE Power Elm Road and MGE Power West Campus in the consolidated financial statements (see Footnote 3 for further information).