Condensed Parent Company Financial Statements

12 Months Ended

Dec. 31, 2020

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 Income
(Parent Company Only)
(In thousands)
		For the Years Ended December 31,
		2020		2019		2018
Operating Expenses:
Other operations and maintenance	$	882	$	815	$	913
Total Operating Expenses		882		815		913
Operating Loss		(882)		(815)		(913)
Equity in earnings of investments		92,922		87,728		85,220
Other income (loss), net		94		(1,500)		(1,966)
Interest income, net		78		1,224		1,489
Income before income taxes		92,212		86,637		83,830
Income tax provision		206		237		389
Net Income	$	92,418	$	86,874	$	84,219
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,
		2020		2019		2018
Net Cash Flows Provided by Operating Activities	$	27,631	$	27,901	$	27,211
Investing Activities:
Contributions to affiliates		(32,157)		(33,631)		(3,200)
Contributions to other investments		(3,809)		(4,496)		(2,626)
Other		622		214		873
Cash Used for Investing Activities		(35,344)		(37,913)		(4,953)
Financing Activities:
Issuance of common stock, net		79,635		-		-
Cash dividends paid on common stock		(51,729)		(47,842)		(45,762)
Cash Provided by (Used for) Financing Activities		27,906		(47,842)		(45,762)
Change in cash, cash equivalents, and restricted cash		20,193		(57,854)		(23,504)
Cash, cash equivalents, and restricted cash at beginning of period		17,182		75,036		98,540
Cash, cash equivalents, and restricted cash at end of period	$	37,375	$	17,182	$	75,036
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		2020		2019
Current Assets:
Cash and cash equivalents	$	37,375	$	17,182
Other current assets		1,494		3,180
Total Current Assets		38,869		20,362
Other deferred assets and other		364		498
Investments:
Investments in affiliates		953,810		856,444
Other investments		15,634		12,910
Total Investments		969,444		869,354
Total Assets	$	1,008,677	$	890,214
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable to affiliates	$	530	$	530
Other current liabilities		66		2,314
Total Current Liabilities		596		2,844
Other Credits:
Deferred income taxes		29,926		29,006
Accounts payable to affiliates		2,118		2,647
Other deferred liabilities		37		41
Total Other Credits		32,081		31,694
Shareholders' Equity:
Common shareholders' equity		430,571		350,936
Retained earnings		545,429		504,740
Total Shareholders' Equity		976,000		855,676
Commitments and contingencies (see Footnote 3)
Total Liabilities and Shareholders' Equity	$	1,008,677	$	890,214
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, 2020.

2.Credit Agreements.

As of December 31, 2020, MGE Energy had access to an unsecured, committed credit facility with aggregate bank commitments of $50.0 million. As of December 31, 2020, 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)		2020		2019		2018
MGE Power Elm Road	$	15,500	$	15,500	$	15,500
MGE Power West Campus		6,000		8,000		6,500
MGE Transco		5,864		4,653		4,625
MGEE Transco		350		93		60
NGV Fueling Services		-		-		50
Total	$	27,714	$	28,246	$	26,735

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, 2020, is 60.2% as determined under the calculation used in the rate proceeding. This restriction did not impact MGE's payment of dividends in 2020. No cash dividends were paid by MGE to MGE Energy in 2020 or 2019. 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, 2020, approximately $529.9 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.