Condensed Parent Company Financial Statements

12 Months Ended

Dec. 31, 2019

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Parent Company Financial Statements

Schedule I
Condensed Parent Company Financial Statements
MGE Energy, Inc.
Statements of Comprehensive Income
(Parent Company Only)
(In thousands)
		For the Years Ended December 31,
		2019		2018		2017
Operating Expenses:
Other operations and maintenance	$	815	$	913	$	880
Total Operating Expenses		815		913		880
Operating Loss		(815)		(913)		(880)
Equity in earnings of investments		87,728		85,220		99,246
Other (loss) income, net		(1,500)		(1,966)		(2,165)
Interest income, net		1,224		1,489		605
Income before income taxes		86,637		83,830		96,806
Income tax provision		237		389		800
Net Income		86,874		84,219		97,606
Other Comprehensive Income, Net of Tax:
Unrealized gain on available-for-sale securities, net of
tax ($-, $-, and $(117))		-		-		175
Comprehensive Income	$	86,874	$	84,219	$	97,781
The accompanying notes are an integral part of the above consolidated financial statements.

MGE Energy, Inc.
Statements of Cash Flows
(Parent Company Only)
(In thousands)
		For the Years Ended December 31,
		2019		2018		2017
Net Cash Flows Provided by Operating Activities	$	27,901	$	27,211	$	70,268
Investing Activities:
Contributions to affiliates		(33,631)		(3,200)		(6,522)
Contributions to other investments		(4,496)		(2,626)		(4,534)
Other		214		873		843
Cash Used for Investing Activities		(37,913)		(4,953)		(10,213)
Financing Activities:
Cash dividends paid on common stock		(47,842)		(45,762)		(43,682)
Other		-		-		(58)
Cash Used for Financing Activities		(47,842)		(45,762)		(43,740)
Change in cash, cash equivalents, and restricted cash		(57,854)		(23,504)		16,315
Cash, cash equivalents, and restricted cash at beginning of period		75,036		98,540		82,225
Cash, cash equivalents, and restricted cash at end of period	$	17,182	$	75,036	$	98,540
The accompanying notes are an integral part of the above consolidated financial statements.

Schedule I
Condensed Parent Company Financial Statements (continued)
MGE Energy, Inc.
Balance Sheets
(Parent Company Only)
(In thousands)
		As of December 31,
ASSETS		2019		2018
Current Assets:
Cash and cash equivalents	$	17,182	$	75,036
Other current assets		3,180		3,646
Total Current Assets		20,362		78,682
Other deferred assets and other		498		110
Investments:
Investments in affiliates		856,444		763,625
Other investments		12,910		7,672
Total Investments		869,354		771,297
Total Assets	$	890,214	$	850,089
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable to affiliates	$	530	$	617
Other current liabilities		2,314		2,500
Total Current Liabilities		2,844		3,117
Other Credits:
Deferred income taxes		29,006		27,151
Accounts payable to affiliates		2,647		3,177
Other deferred liabilities		41		-
Total Other Credits		31,694		30,328
Shareholders' Equity:
Common shareholders' equity		350,936		350,936
Retained earnings		504,740		465,708
Total Shareholders' Equity		855,676		816,644
Commitments and contingencies (see Footnote 3)
Total Liabilities and Shareholders' Equity	$	890,214	$	850,089
The accompanying notes are an integral part of the above consolidated financial statements.

Schedule I

Condensed Parent Company Financial Statements (continued)

Notes to Condensed Financial Statements

(Parent Company Only)

1.Basis of Presentation.

MGE Energy is a holding company and conducts substantially all of its business operations through its subsidiaries. For Parent Company only presentation, investment in subsidiaries are accounted for using the equity method. These condensed Parent Company financial statements and related notes have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X. These statements should be read in conjunction with the financial statements and the notes in Item 8. Financial Statements and Supplementary Data of the Annual Report on Form 10-K for the year ended December 31, 2019.

2.Credit Agreements.

As of December 31, 2019, MGE Energy had access to an unsecured, committed credit facility with aggregate bank commitments of $50.0 million. As of December 31, 2019, no borrowings were outstanding under this facility. See Footnote 13 of the Notes to Consolidated Financial Statements in this Report for further information regarding MGE Energy's credit agreement.

3.Commitments and Contingencies.

See Footnote 16 of the Notes to Consolidated Financial Statements in this Report for information regarding commitments and contingencies.

4.Dividends from Affiliates.

		Dividends from Affiliates
(In thousands)		2019		2018		2017
MGE	$	-	$	-	$	45,000
MGE Power Elm Road		15,500		15,500		12,000
MGE Power West Campus		8,000		6,500		6,000
MGE Transco		4,653		4,625		4,669
MGEE Transco		93		60		112
NGV Fueling Services		-		50		-
Total	$	28,246	$	26,735	$	67,781

Dividend Restrictions

Dividend payments by MGE to MGE Energy are subject to restrictions arising under a PSCW rate order and, to a lesser degree, MGE's first mortgage bonds. The PSCW order restricts any dividends that MGE may pay MGE Energy if its common equity ratio, calculated in the manner used in the rate proceeding, is less than 55%. MGE's thirteen month rolling average common equity ratio as of December 31, 2019, is 57.3% as determined under the calculation used in the rate proceeding. This restriction did not impact MGE's payment of dividends in 2019. No cash dividends were paid by MGE to MGE Energy in 2019 or 2018. The rate proceeding calculation includes as indebtedness imputed amounts for MGE's outstanding purchase power capacity payments and other PSCW adjustments but does not include the indebtedness associated with MGE Power Elm Road or MGE Power West Campus, which are consolidated into MGE's financial statements but are not direct obligations of MGE.

MGE has covenanted with the holders of its first mortgage bonds not to declare or pay any dividend or make any other distribution on or purchase any shares of its common stock unless, after giving effect thereto, the aggregate amount of all such dividends and distributions and all amounts applied to such purchases, after December 31, 1945, shall not exceed the earned surplus (retained earnings) accumulated subsequent to December 31, 1945. As of December 31, 2019, approximately $465.2 million was available for the payment of dividends under this covenant.

See Footnotes 13 and 14 of the Notes to Consolidated Financial Statements in this Report for more information on dividend restrictions appearing in credit agreements and long-term debt, respectively.