MGE Energy(MGEE) - 2024 Q2 - Quarterly Report

Financial Performance - MGE Energy's earnings for the three months ended June 30, 2024, were $23.8 million or$0.66 per share, a decrease from $28.7 million or$0.79 per share in the same period last year[98]. - MGE Energy's net income for the six months ended June 30, 2024, was $57.6 million, down from$59.8 million in the same period last year[99]. - Electric revenue decreased by $1.1 million to$120.383 million for the three months ended June 30, 2024, compared to $121.492 million in the same period of the prior year, reflecting a 0.9$1.2 million to $25.116 million for the three months ended June 30, 2024, compared to$26.291 million in the same period of the prior year, a decline of 4.5%[121]. - Electric revenues decreased by $2.2 million during the six months ended June 30, 2024, with total retail electric revenues at$236.5 million, a 0.9% decline from $238.7 million in the prior year[135]. - Gas revenue decreased by$26.0 million, totaling $100.3 million, a 20.6$126.3 million in the prior year[141]. Sales and Revenue Trends - Electric utility earnings decreased due to unfavorable weather, with residential sales down approximately 4% for both the three and six months ended June 30, 2024[100]. - Gas utility earnings were impacted by lower retail sales, which decreased approximately 8% due to warmer than normal weather in the first quarter of 2024[101]. - Residential sales volume decreased by approximately 4% year-over-year, driven by warmer weather conditions in April 2024 compared to April 2023[117]. - Residential electric sales volume decreased by 3.6%, while commercial sales increased by 0.9%[135]. Rate Changes - The PSCW approved a 1.54% increase to electric rates and a 2.44% increase to gas rates for 2024, with further increases planned for 2025[102]. - The average retail rate for electric customers increased by approximately 1.54% in December 2023, resulting in $1.2 million higher rates charged during the three months ended June 30, 2024[117]. - The average retail rate per therm for gas increased by approximately 4$4.7 million to $X million during the three months ended June 30, 2024, primarily due to increased customer accounts costs and transmission costs[125]. - Operations and maintenance expenses increased by$8.8 million, primarily due to increased customer accounts costs of $4.6 million and increased transmission costs of$2.9 million[145]. - Electric depreciation expense increased by $1.5 million, attributed to the placement of Badger Hollow II in service in December 2023[128]. - Electric depreciation expense increased by$3.2 million, attributed to the purchase of West Riverside and the in-service date of Badger Hollow II[148]. Renewable Energy and Environmental Goals - MGE aims for an 80% carbon reduction target by 2030 from 2005 levels, focusing on growing renewable generation and transitioning to natural gas[107]. - MGE plans to retire Columbia Unit 1 and Unit 2 by June 2026 as part of its transition away from coal[108]. - MGE continues to expand renewable generation, with a 29% increase in renewable generation driven by new sources including Badger Hollow II[139]. - MGE has set a goal to achieve net-zero methane emissions from its natural gas distribution system by 2035[111]. Capital and Financing - MGE has $330 million of remaining regulatory authority to issue long-term debt for financing authorized utility capital expenditures[113]. - Capital expenditures for MGE Energy and MGE totaled$111.6 million during the six months ended June 30, 2024, reflecting an increase of $3.9 million from the same period in 2023[161]. - Cash provided by operating activities was$130.4 million for the six months ended June 30, 2024, compared to $127.0 million in the prior year[157]. - MGE Energy's capitalization ratios as of June 30, 2024, were 59.9$6.0 million for the three months ended June 30, 2024, compared to $5.5 million in the same period of the prior year[130]. - Nonregulated energy operations segment net income increased to$11.9 million for the six months ended June 30, 2024, compared to $11.0 million in the same period of 2023[150]. - Other income from transmission investment operations increased to$2.8 million for the three months ended June 30, 2024, compared to $2.6 million in the same period of the prior year[131]. - Other income increased by$0.9 million due to decreased investment distribution losses from venture capital funds compared to the prior year[132]. - Other income from all other operations increased by $1.1 million, primarily due to decreased investment distribution losses from venture capital funds[152]. Market Risks and Future Outlook - MGE's share of ATC's earnings reflected a$0.6 million reduction in reserves due to the May 2020 FERC order[170]. - MGE's estimated possible loss related to the First Complaint Period is approximately $0.9 million, inclusive of interest and net of tax[171]. - MGE derived approximately 6.7% of its net income from its investment in ATC for the six months ended June 30, 2024[172]. - There were no material changes to the market risks disclosed in the 2023 Annual Report on Form 10-K[175]. - MGE Energy expects to begin issuing new shares of common stock in the second half of 2024 as part of its Direct Stock Purchase and Dividend Reinvestment Plan[156]. - MGE's share of ATC's earnings for the six months ended June 30, 2023, was 6.2% of net income[172].