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MGE Energy(MGEE) - 2024 Q3 - Quarterly Report
MGEEMGE Energy(MGEE)2024-11-06 16:36

Financial Performance - MGE Energy's earnings for the three months ended September 30, 2024, were 40.9millionor40.9 million or 1.13 per share, an increase from 37.9millionor37.9 million or 1.05 per share in the same period last year, reflecting a 7.9% year-over-year growth [108]. - For the nine months ended September 30, 2024, MGE Energy's earnings were 98.5millionor98.5 million or 2.72 per share, compared to 97.6millionor97.6 million or 2.70 per share in the prior year, indicating a slight increase of 0.9% [108]. - Electric revenue increased by 8.9millionto8.9 million to 147.79 million for the three months ended September 30, 2024, compared to 138.89millioninthesameperiodof2023,representinga6.4138.89 million in the same period of 2023, representing a 6.4% increase [130]. - Electric revenue increased by 6.7 million (1.8%) during the nine months ended September 30, 2024, compared to the same period in 2023, totaling 384.3million[153].−Gasrevenuedecreasedby384.3 million [153]. - Gas revenue decreased by 26.9 million (18.2%) during the nine months ended September 30, 2024, totaling 120.8million,primarilyduetoadecreaseinvolumeandloweraveragerates[162].−MGEEnergy′scashprovidedbyoperatingactivitiesfortheninemonthsendedSeptember30,2024,was120.8 million, primarily due to a decrease in volume and lower average rates [162]. - MGE Energy's cash provided by operating activities for the nine months ended September 30, 2024, was 209.8 million, an increase from 194.0millionin2023[183].−MGEEnergy′scashusedforinvestingactivitiesincreasedby194.0 million in 2023 [183]. - MGE Energy's cash used for investing activities increased by 11.1 million during the nine months ended September 30, 2024, compared to the same period in the prior year [185]. - MGE's cash flows from financing activities increased by 0.4millionduringtheninemonthsendedSeptember30,2024,comparedtothesameperiodin2023[198].SegmentPerformance−ElectricutilitysegmentearningsforthethreemonthsendedSeptember30,2024,were0.4 million during the nine months ended September 30, 2024, compared to the same period in 2023 [198]. Segment Performance - Electric utility segment earnings for the three months ended September 30, 2024, were 35.0 million, up from 31.1millioninthesameperiodlastyear,whilegasutilitysegmentearningsdecreasedto31.1 million in the same period last year, while gas utility segment earnings decreased to (2.0) million from (0.8)million[110].−Gasretailsalesdecreasedapproximately7(0.8) million [110]. - Gas retail sales decreased approximately 7% due to warmer than normal weather, with heating degree days down by approximately 9% in the first nine months of 2024 compared to the prior year [112]. - Total retail electric sales decreased slightly by 0.1% to 902,615 kWh in Q3 2024 from 903,147 kWh in Q3 2023 [130]. - Residential electric sales decreased by approximately 2% due to warmer weather conditions, impacting sales volumes [157]. - Total retail electric sales volume decreased by 0.3% during the nine months ended September 30, 2024, totaling 2,411,901 kWh [153]. 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 [113]. - The PSCW authorized a 1.54% increase in retail electric rates effective December 2023, contributing to higher revenues [154]. - The average retail rate per therm for gas customers decreased approximately 2% to 1.246 in Q3 2024 compared to 1.270inQ32023[139].−Theaverageretailrateperthermforgascustomersdecreasedapproximately121.270 in Q3 2023 [139]. - The average retail rate per therm for gas customers decreased approximately 12% compared to the same period in the prior year, reflecting lower natural gas commodity costs [165]. Operational Expenses - Consolidated operations and maintenance expenses increased by 3.1 million, driven by higher customer accounts costs and transmission costs [141]. - Operations and maintenance expenses increased by 11.8millionduringtheninemonthsendedSeptember30,2024,drivenbyincreasedcustomeraccountscostsandtransmissioncosts[168].−Electricdepreciationexpenseroseby11.8 million during the nine months ended September 30, 2024, driven by increased customer accounts costs and transmission costs [168]. - Electric depreciation expense rose by 1.5 million in Q3 2024, attributed to the placement of Badger Hollow II in service in December 2023 [146]. - Electric depreciation expense increased by 4.7millionduetotheadditionofnewgeneratingfacilities,includingBadgerHollowII,whichwentonlineinDecember2023[172].RenewableEnergyInitiatives−MGEEnergyistargetingan804.7 million due to the addition of new generating facilities, including Badger Hollow II, which went online in December 2023 [172]. Renewable Energy Initiatives - MGE Energy is targeting an 80% carbon reduction by 2030 from 2005 levels, with plans to transition away from coal and increase renewable generation [121]. - MGE has acquired a joint interest in several renewable generation projects, forecasting capital expenditures for 198 MW of solar, 97 MW of battery, and 18 MW of wind [124]. - MGE aims to achieve net-zero methane emissions from its natural gas distribution system by 2035, introducing a renewable natural gas program effective May 2024 [125]. - MGE is monitoring potential disruptions in solar procurement due to new tariffs and regulations, which may impact costs and timelines for current and future projects [126]. - MGE holds a 19% ownership interest in the Columbia Energy Storage Project, which is currently under development [194]. Capital Expenditures - Capital expenditures for MGE Energy during the nine months ended September 30, 2024, were 164.1 million, reflecting an increase of 13.8millionfromtheprioryear[186].−MGEEnergy′sforecastedtotalcapitalexpendituresfor2024areprojectedtobe13.8 million from the prior year [186]. - MGE Energy's forecasted total capital expenditures for 2024 are projected to be 226.0 million, increasing to 312.0millionby2029[189].−MGE′sforecastedcapitalexpendituresforelectricandgasdistributionfrom2024to2029areapproximately312.0 million by 2029 [189]. - MGE's forecasted capital expenditures for electric and gas distribution from 2024 to 2029 are approximately 57 million, focusing on enhanced metering solutions [196]. Other Income and Investments - Nonregulated energy operations net income increased to 6.1millioninQ32024from6.1 million in Q3 2024 from 5.6 million in Q3 2023 [148]. - Nonregulated energy operations net income increased to 18.0millionfortheninemonthsendedSeptember30,2024,comparedto18.0 million for the nine months ended September 30, 2024, compared to 16.7 million in the prior year [174]. - The transmission investment segment reported other income of 2.9millioninQ32024,upfrom2.9 million in Q3 2024, up from 2.7 million in Q3 2023 [149]. - Other income from the transmission investment segment increased to 8.4millionintheninemonthsendedSeptember30,2024,comparedto8.4 million in the nine months ended September 30, 2024, compared to 7.9 million in the same period of 2023 [175]. - MGE derived approximately 6.0% of its net income from its investment in ATC during the nine months ended September 30, 2024 [208]. Tax and Liquidity - The effective tax rate reconciliation is detailed in the financial statements, reflecting the company's tax obligations [177]. - MGE Energy expects to have adequate liquidity to support future operations and capital expenditures over the next twelve months [182]. - MGE's common shareholders' equity ratio increased to 60.8% as of September 30, 2024, compared to 59.9% at the end of 2023 [199]. Regulatory Changes - The FERC ruling in October 2024 resulted in a 4-basis point reduction in the base ROE from 10.02% to 9.98% [175]. - The company expects potential procurement disruptions to impact costs and timelines for solar projects, necessitating notifications to the PSCW for cost recovery [193][210].