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Summary of Significant Accounting Policies | 12 Months Ended
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Dec. 31, 2025
Accounting Policies [Abstract] |
Significant Accounting Policies [Text Block] | Summary of Sign ificant Accounting Policies. a. Basis of Presentation - MGE Energy and MGE. The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which give recognition to the rate making accounting policies for regulated operations prescribed by the regulatory authorities having jurisdiction, principally the PSCW and FERC. MGE's accounting records conform to the FERC uniform system of accounts. b. Principles of Consolidation - MGE Energy and MGE. MGE, a wholly owned subsidiary of MGE Energy, is a regulated electric and gas utility headquartered in Madison, Wisconsin. MGE Energy and MGE consolidate all majority owned subsidiaries in which they have a controlling influence. Additional wholly owned subsidiaries of MGE Energy include CWDC, MAGAEL, MGE Power, MGE State Energy Services, MGE Services, MGE Transco, and MGEE Transco. CWDC owns 100% of North Mendota, a subsidiary created to serve as a development entity for property. MGE Power owns 100% of MGE Power Elm Road and MGE Power West Campus. MGE Power and its subsidiaries are part of MGE Energy's nonregulated energy operations, which were formed to own and lease electric generation projects to assist MGE. MGE Transco and MGEE Transco are nonregulated entities formed to own the investments in ATC and ATC Holdco, respectively. MGE did not own any subsidiaries as of December 31, 2025. MGE Energy and MGE consolidate variable interest entities (VIEs) for which each is the primary beneficiary. Variable interest entities are legal entities that possess any of the following characteristics: equity investors who have an insufficient amount of equity at risk to finance their activities, equity owners who do not have the power to direct the significant activities of the entity (or have voting rights that are disproportionate to their ownership interest), or equity holders who do not receive expected losses or returns significant to the VIE. Ongoing reassessments of all VIEs are performed to determine if the primary beneficiary status has changed. MGE has consolidated MGE Power Elm Road and MGE Power West Campus. Both entities are VIEs. See Footnote 3 for more discussion of these entities. The consolidated financial statements reflect the application of certain accounting policies described in this note. All intercompany accounts and transactions have been eliminated in consolidation. c. Use of Estimates - MGE Energy and MGE. In order to prepare consolidated financial statements in conformity with GAAP, management must make estimates and assumptions. These estimates could affect reported amounts of assets, liabilities, and disclosures at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from management's estimates. d. S upplemental Cash Flow Information – MGE Energy and MGE.
|  | MGE Energy |  |  | MGE(b) |
(In Thousands) |  | 2025 |  |  | 2024 |  |  | 2023 |  |  | 2025 |  |  | 2024 |  |  | 2023 |
Interest Paid |  | $ | 35,755 |  |  | $ | 34,306 |  |  | $ | 29,526 |  |  | $ | 35,755 |  |  | $ | 34,306 |  |  | $ | 29,526 |
Income taxes paid (receipts), net(a): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
US Federal |  |  | (3,970 | ) |  |  | (16,238 | ) |  |  | 4,000 |  |  |  | (5,750 | ) |  |  | (18,658 | ) |  |  | 3,450 |
US State and Local: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Wisconsin |  |  | 10,250 |  |  |  | 3,100 |  |  |  | 5,800 |  |  |  | 9,650 |  |  |  | 2,450 |  |  |  | 5,990 |
Other |  |  | 66 |  |  |  | 36 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Significant noncash investing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accrued capital expenditures(c) |  |  | 55,283 |  |  |  | 22,734 |  |  |  | 17,247 |  |  |  | 55,283 |  |  |  | 22,734 |  |  |  | 17,247 |
(a) During the years ended December 31, 2025 and December 31, 2024, federal tax payments and receipts included proceeds from the transfer of PTCs under Internal Revenue Code Section 6418. Cash received for income taxes in 2025 includes $10.9 million related to PTCs generated in 2025 that were sold to a third party. Cash received for income taxes in 2024 includes $18.5 million related to PTCs generated in 2024 and 2023 that were sold to a third party. (b) MGE Energy files a consolidated federal income tax return with its subsidiaries. While taxes are filed on a consolidated basis, MGE calculates its respective share of tax liability and makes intercompany tax payments to or from its parent company. (c) Includes a $2.0 million unsecured promissory note, for an acquisition of land, issued to the seller, with all principal and interest paid in January 2026. The following table presents components of cash flow, total cash, cash equivalents, and restricted cash on the consolidated balance sheets.
(In thousands) |  | MGE Energy |  |  | MGE |
As of December 31, |  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Cash and cash equivalents |  | $ | 5,666 |  |  | $ | 21,302 |  |  | $ | 2,248 |  |  | $ | 16,865 |
Restricted cash |  |  | 952 |  |  |  | 1,113 |  |  |  | 952 |  |  |  | 1,113 |
Receivable - margin account |  |  | 2,118 |  |  |  | 2,081 |  |  |  | 2,118 |  |  |  | 2,081 |
Cash, cash equivalents, and restricted cash |  | $ | 8,736 |  |  | $ | 24,496 |  |  | $ | 5,318 |  |  | $ | 20,059 |
Cash Equivalents All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. Restricted Cash MGE has certain cash accounts that are restricted to uses other than current operations and designated for a specific purpose. MGE's restricted cash accounts include cash held by trustees for certain employee benefits and cash deposits held by third parties. These are included in "Other current assets" on the consolidated balance sheets. Receivable – Margin Account Cash amounts held by counterparties as margin collateral for certain financial transactions are recorded as Receivable – margin account in "Other current assets" on the consolidated balance sheets. The costs being hedged are fuel for electric generation, purchased power, and cost of gas sold. e. Trade Receivables, Allowance for Doubtful Accounts, and Concentration Risk - MGE Energy and MGE. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. A 1% late payment charge is recorded on all receivables unpaid after the due date. The allowance for credit losses associated with these receivables represents MGE's best estimate of the amount of probable credit losses for existing accounts receivable. MGE manages concentration of credit risk through its credit and collection policies, which are consistent with state regulatory requirements. The allowance for credit losses is estimated based on historical write-off experience, regional economic data, review of the accounts receivable aging, and reasonable and supportable forecasts that affect the collectability of the reported amount. As of December 31, 2025 and 2024, MGE had a reserve balance of $10.6 million and $9.0 million, respectively, against accounts receivable. For the years ended December 31, 2025 and 2024, MGE recorded $4.3 million and $4.0 million, respectively, in write-offs. For the years ended December 31, 2025 and 2024, MGE recorded $5.9 million and $4.9 million, respectively, of additional reserves. The current accounting treatment for bad debt expense allows MGE to defer any differential between bad debt expense reflected in rates and actual costs incurred in its next rate case filing. See Footnote 8 for further details of deferred bad debt expense. f. Inventories - MGE Energy and MGE. Inventories consist of natural gas in storage, fuel for electric generation, materials and supplies, and renewable energy credits (RECs). MGE values natural gas in storage, fuel for electric generation, and materials and supplies using average cost. REC allowances are included in "Materials and supplies" on the consolidated balance sheets and are recorded based on specific identification. These allowances are charged to purchase power expense as they are used in operations. g. D erivative and Hedging Instruments - MGE Energy and MGE. As part of regular operations, MGE enters into contracts, including options, swaps, futures, forwards, and other contractual commitments, to manage its exposure to commodity prices. MGE recognizes derivatives, excluding those that qualify for the normal purchases or normal sales exclusion, in the consolidated balance sheets at fair value, with changes in the fair value of derivative instruments to be recorded in current earnings or deferred in accumulated other comprehensive income (loss), depending on whether a derivative is designated as, and is effective as, a hedge and on the type of hedge transaction. Derivative activities are in accordance with the company's risk management policy. If the derivative qualifies for regulatory deferral, the derivatives are marked to fair value and are offset with a corresponding regulatory asset or liability depending on whether the derivative is in a net loss or net gain position, respectively. Cash flows from such derivative instruments are classified on a basis consistent with the nature of the underlying hedged item. h. Regulatory Assets and Liabilities - MGE Energy and MGE. Regulatory assets and regulatory liabilities are recorded consistent with regulatory treatment. Regulatory assets represent costs which are deferred due to the probable future recovery from customers through regulated rates. Regulatory liabilities represent the excess recovery of costs or accrued credits which were deferred because MGE believes it is probable such amounts will be returned to customers through future regulated rates. Regulatory assets and liabilities are amortized in the consolidated statements of income consistent with the recovery or refund included in customer rates. MGE believes it is probable that its recorded regulatory assets and liabilities will be recovered and refunded, respectively, in future rates. See Footnote 8 for further information. i. Debt Issuance Costs - MGE Energy and MGE. Premiums, discounts, and expenses incurred with the issuance of outstanding long-term debt are amortized over the life of the debt issue. Any call premiums or unamortized expenses associated with refinancing higher-cost debt obligations used to finance utility-regulated assets and operations are amortized consistent with regulatory treatment of those items. These costs are included as a direct reduction to the related debt liability on the consolidated balance sheets. j. Property, Plant, and Equipment - MGE Energy and MGE. Property, plant, and equipment is recorded at original cost. Cost includes indirect costs consisting of payroll taxes, pensions, postretirement benefits, other fringe benefits, and administrative and general costs. Also, included in the cost is AFUDC for utility property and capitalized interest for nonregulated property. Additions for significant replacements of property are charged to property, plant, and equipment at cost; and minor items are charged to maintenance expense. Depreciation rates on utility property are approved by the PSCW, based on the estimated economic lives of property, and include estimates for salvage value and removal costs. Removal costs of utility property, less any salvage value, are adjusted through regulatory liabilities. Depreciation rates on nonregulated property are based on the estimated economic lives of the property. See Footnote 4 for further information. Provisions at composite straight-line depreciation rates approximate the following percentages for the cost of depreciable property:
|  | 2025 |  | 2024 |  | 2023 |
Electric |  | 3.7 | % |  | 3.8 | % |  | 3.8 | %
Gas |  | 2.2 | % |  | 2.1 | % |  | 2.1 | %
Nonregulated |  | 2.3 | % |  | 2.3 | % |  | 2.3 | %
k. Asset Retirement Obligations - MGE Energy and MGE. A liability is recorded for the fair value of an asset retirement obligation (ARO) to be recognized in the period in which it is incurred if it can be reasonably estimated. The offsetting associated asset retirement costs are capitalized as a long-lived asset and depreciated over the asset's useful life. The expected present value technique used to calculate the fair value of ARO liabilities includes assumptions about costs, probabilities, settlement dates, interest accretion, and inflation. Revisions to the assumptions, including the timing or amount of expected asset retirement costs, could result in increases or decreases to the AROs. All asset retirement obligations are recorded as "Asset retirement obligations" on the consolidated balance sheets. MGE has regulatory treatment and recognizes regulatory assets or liabilities for the timing differences between when it recovers legal AROs in rates and when it would recognize these costs. See Footnote 17 for further information. l. Repairs and Maintenance Expense - MGE Energy and MGE. MGE utilizes the direct expensing method for planned major maintenance projects. Under this method, MGE expenses all costs associated with major planned maintenance activities as incurred. m. Purchased Gas Adjustment Clause - MGE Energy and MGE. MGE's natural gas rates are subject to a fuel adjustment clause designed to recover or refund the difference between the actual cost of purchased gas and the amount included in rates. Differences between the amounts billed to customers and the actual costs recoverable are deferred and recovered or refunded in future periods by means of prospective monthly adjustments to rates. These amounts are included as a regulatory asset or liability depending on whether MGE is under-collected or over-collected actual costs. See Footnote 8 for further information. n. Revenue Recognition - MGE Energy and MGE. Operating revenues are recorded as service is rendered or energy is delivered to customers. Meters are read on a systematic basis throughout the month based on established meter-reading schedules. At the end of the month, MGE accrues an estimate for the unbilled amount of energy delivered to customers. The unbilled revenue estimate is based on daily system demand volumes, weather factors, estimated line losses, estimated customer usage by class, and applicable customer rates. See Footnote 20 for further information. o. Utility Cost Recovery - MGE Energy and MGE. MGE's tariff rates include a provision for fuel cost recovery. The PSCW allows Wisconsin utilities to defer electric fuel-related costs that fall outside a symmetrical cost tolerance band around the amount approved for a utility in its annual fuel proceedings. Any over- or under-recovery of the actual costs is determined in the following year and is then reflected in future billings to electric retail customers. Over-collection of fuel-related costs that are outside the approved range will be recognized as a reduction of revenue. Under-collection of these costs will be recognized in "Purchased power" expense in the consolidated statements of income. The cumulative effects of these deferred amounts will be recorded as a regulatory asset or regulatory liability until they are reflected in future billings to customers. See Footnote 9.b. for further information. p. Regional Transmission Organizations - MGE Energy and MGE. MGE reports on a net basis transactions on the MISO markets in which it buys and sells power within the same hour to meet electric energy delivery requirements. q. Allowance for Funds Used During Construction - MGE Energy and MGE. Allowance for funds used during construction is included in utility plant accounts and represents the cost of borrowed funds used during plant construction and a return on shareholder's capital used for construction purposes. In the consolidated income statements, the cost of borrowed funds (AFUDC-debt) is presented as an offset to "Interest expense, net" and the return on shareholder's capital (AFUDC-equity funds) is shown as an item within "Other income, net." For 2025, 2024, and 2023, as approved by the PSCW, MGE capitalized AFUDC-debt and equity on 50% of applicable average construction work in progress as shown in the following table:
|  | 2025 |  | 2024 |  | 2023 |
Approved AFUDC retail rates |  | 7.72 | % |  | 7.73 | % |  | 7.11 | %
MGE received specific approval to recover 100% AFUDC on certain costs for Badger Hollow I and II, Paris, Darien, Koshkonong, Sunnyside, High Noon, Columbia Energy Dome, Ursa, Forward Repower, Dawn Harvest, Good Oak, Gristmill, and Saratoga. These amounts are recovered under the ratemaking process over the service lives of the related properties. For the years ended 2025, 2024, and 2023, MGE recorded AFUDC-debt and AFUDC-equity as shown in the following table:
(In millions) |  | 2025 |  | 2024 |  | 2023
AFUDC-debt |  | $ | 2.4 |  | $ | 2.2 |  | $ | 2.0
AFUDC-equity |  |  | 6.2 |  |  | 5.7 |  |  | 5.8
r. Investments - MGE Energy and MGE. Investments in limited liability companies that have specific ownership accounts in which MGE Energy or MGE's ownership interest is more than minor and are considered to have significant influence are accounted for using the equity method. For equity security investments without readily determinable fair values and for which MGE Energy and MGE do not have significant influence, MGE Energy and MGE have elected to use the practicability exception to measure these investments, defined as cost adjusted for changes from observable transactions for identical or similar investments of the same issuer, less impairment. Changes in measurement are reported in earnings. Equity security investments with readily determinable fair values are carried at fair value. Realized and unrealized gains and losses are included in earnings. See Footnote 7 for further information on investments. s. Capitalized Software Costs - MGE Energy and MGE. The net book value of capitalized costs of internal use software included in property, plant, and equipment was $64.4 million and $67.5 million as of December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, accumulated amortization was $84.5 million and $74.4 million, respectively. For the years ended December 31, 2025, 2024, and 2023, MGE recorded $10.1 million, $10.5 million and $10.4 million, respectively, of amortization expense. Capitalized software costs are amortized on a straight-line basis over the estimated useful lives of the assets. The useful lives range from three to fifteen years. t. Capitalized Software Assets – Hosting Arrangements – MGE Energy and MGE. The net book value of capitalized costs of internal use software incurred in a hosting arrangement was $8.8 million and $8.5 million as of December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, accumulated amortization was $17.9 million and $14.6 million, respectively. Capitalized software assets for hosted arrangements and the related accumulated amortization expense are recorded in "Other deferred assets and other" on the consolidated balance sheets. For the years ended December 31, 2025, 2024, and 2023, MGE recorded $3.3 million, $3.2 million, and $2.9 million, respectively, of amortization expense related to software assets for hosted arrangements. These costs are recognized in "Other operations and maintenance" expense in the consolidated statements of income and are amortized on a straight-line basis over the term of the hosted contract, which includes renewable option periods. Software assets for hosted arrangements have terms ranging from three to thirteen years. u. Impairment of Long-Lived Assets - MGE Energy and MGE. MGE reviews plant and equipment and other property for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. MGE's policy for determining when long-lived assets are impaired is to recognize an impairment loss if the sum of the expected future cash flows (undiscounted and without interest charges) from an asset are less than the carrying amount of that asset. If an impairment loss is recognized, the amount that will be recorded will be measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. When it becomes probable that a generating unit will be retired before the end of its useful life, MGE assesses whether the generating unit meets the criteria for probability of abandonment. If a generating unit meets the applicable criteria to be considered probable of abandonment, MGE assesses the likelihood of recovery of the remaining net book value of that generating unit at the end of each reporting period. If it becomes probable that regulators will disallow full recovery or a return on the remaining net book value of a generating unit that is either abandoned or probable of being abandoned, an impairment loss would be required. An impairment loss would be recorded for the difference of the remaining net book value of the generating unit that is greater than the present value of the amount expected to be recovered from ratepayers. There was no significant impairment of long-lived assets during 2025, 2024, and 2023. v. Income Taxes and Excise Taxes - MGE Energy and MGE. Income taxes Under the balance sheet method, income taxes are deferred for all temporary differences between pretax financial and taxable income and between the book and tax basis of assets and liabilities using the tax rates scheduled by law to be in effect when the temporary differences reverse. Future tax benefits are recognized to the extent that realization of such benefits is more likely than not. A valuation allowance is recorded for those benefits that do not meet this criterion. Accounting for uncertainty in income taxes applies to all tax positions and requires a recognition threshold and measurement standard for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in an income tax return. The threshold is defined for recognizing tax return positions in the financial statements as "more likely than not" that the position is sustainable, based on its merits. Subsequent recognition, derecognition, and measurement is based on management's best judgment given the facts, circumstances, and information available at the reporting date. Regulatory and accounting principles have resulted in a regulatory liability related to income taxes. Excess deferred income taxes result from past taxes provided in customer rates higher than current rates. The income tax regulatory liability and deferred investment tax credit reflect the revenue requirement associated with the return of these tax benefits to customers. Investment tax credits from regulated operations are amortized over related property service lives. Transfer tax credits MGE may determine to transfer certain tax credits to third parties in exchange for cash. MGE elects to account for the transferred tax credits under the scope of ASC 740. The sale of tax credits is presented in the operating activities section of the consolidated statements of cash flows consistent with the presentation of cash taxes paid. MGE includes any expected proceeds from the transfer of tax credits in the evaluation of realizability of deferred tax assets related to tax credits and records a valuation allowance for the difference between the tax value of the credits and the expected proceeds. The PSCW approved the deferral by MGE of any differential between tax credit transfer proceeds and the tax value of credits reflected in rates to its next rate case filing. Excise taxes MGE Energy, through its utility operations, pays a state license fee tax in lieu of property taxes on property used in utility operations. License fee tax is calculated as a percentage of adjusted operating revenues of the prior year. The electric tax rate is 3.19% for retail sales and 1.59% for sales of electricity for resale by the purchaser. The tax rate on sales of natural gas is 0.97%. The tax is required to be estimated and prepaid in the year prior to its computation and expensing. License fee tax expense, included in "Other general taxes," was $17.0 million, $17.0 million, and $16.5 million for the years ended December 31, 2025, 2024, and 2023, respectively. Operating income taxes, including tax credits and license fee tax, are included in rates for utility related items. w. Share-Based Compensation - MGE Energy and MGE. Eligible employees and non-employee directors may receive awards of restricted stock, restricted stock units, performance units, and dividend equivalents, or any combination of the foregoing. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period. Awards classified as equity awards are measured based on their grant-date fair value. Awards classified as liability awards are recorded at fair value each reporting period. Forfeitures are recognized as they occur, rather than estimating potential future forfeitures and recording them over the vesting period. See Footnote 12 for additional information on MGE's share-based compensation plans.

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