Investment in ATC and ATC Holdco

3 Months Ended

Mar. 31, 2019

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.

MGE Transco and MGEE Transco have accounted for their investments in ATC and ATC Holdco, respectively, under the equity method of accounting. Equity earnings from investments are recorded as "Other income" on the consolidated statements of income of MGE Energy. MGE Transco recorded the following:

		Three Months Ended
		March 31,
(In thousands)		2019		2018
Equity earnings from investment in ATC	$	2,218	$	2,451
Dividends from ATC^(a)		2,012		-
Capital contributions to ATC		178		710

(a) MGE Transco recorded a $2.3 million dividend receivable from ATC as of December 31, 2017. A cash dividend was received in January of the proceeding year.

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.

In April 2019, MGE Transco made a $1.1 million capital contribution to ATC.

ATC's summarized financial data is as follows:

		Three Months Ended
		March 31,
(In thousands)		2019		2018
Operating revenues	$	177,715	$	165,429
Operating expenses		(90,387)		(84,893)
Other income, net		260		111
Interest expense, net		(29,118)		(27,762)
Earnings before members' income taxes	$	58,470	$	52,885

MGE receives transmission and other related services from ATC. During the three months ended March 31, 2019, MGE recorded $7.6 million for transmission services received compared to $7.2 million for the comparable period in 2018. MGE also provides a variety of operational, maintenance, and project management services for ATC, which is reimbursed by ATC. As of March 31, 2019, and December 31, 2018, MGE had a receivable due from ATC of $0.1 million.