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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2025


	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.

Cash, Cash Equivalents, and Restricted Cash

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

Straight-Line Depreciation Rates

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	%

Approved AFUDC retail rates by rate case

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	%

Approved AFUDC-debt and equity capitalized amounts

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