Investment in ATC and ATC Holdco

9 Months Ended

Sep. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

Investment in ATC and ATC Holdco - MGE Energy and MGE.

ATC owns and operates electric transmission facilities primarily in Wisconsin. MGE received an interest in ATC when it, like other Wisconsin electric utilities, contributed its electric transmission facilities to ATC as required by Wisconsin law. That interest is presently held by MGE Transco, a subsidiary of MGE Energy. ATC Holdco was formed by several members of ATC, including MGE Energy, to pursue electric transmission development and investments outside of Wisconsin. The ownership interest in ATC Holdco is held by MGEE Transco, a subsidiary of MGE Energy.

MGE Transco and MGEE Transco have accounted for their investments in ATC and ATC Holdco, respectively, under the equity method of accounting. Equity earnings from investments are recorded as "Other income" on the consolidated statements of income of MGE Energy. MGE Transco recorded the following amounts related to its investment in ATC:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2021		2020		2021		2020
Equity earnings from investment in ATC	$	2,500	$	2,319	$	7,333	$	7,724
Dividends from investments		1,942		2,349		5,842		6,620
Capital contributions to ATC		—		359		—		892

ATC Holdco was formed in December 2016. ATC Holdco's transmission development activities have been suspended for the near term.

ATC's summarized financial data is as follows:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(In thousands)	2021			2020			2021			2020
Operating revenues	$	186,785		$	187,833		$	561,379		$	577,705
Operating expenses		(91,340	)		(92,975	)		(278,828	)		(285,697	)
Other income, net		123			643			1,164			1,924
Interest expense, net		(28,674	)		(28,801	)		(86,337	)		(83,947	)
Earnings before members' income taxes	$	66,894		$	66,700		$	197,378		$	209,985

MGE receives transmission and other related services from ATC. During the three and nine months ended September 30, 2021, MGE recorded $8.0 million and $24.0 million, respectively, for transmission services received compared to $7.7 million and $23.0 million for the comparable periods in 2020. MGE also provides a variety of operational, maintenance, and project management work for ATC, which is reimbursed by ATC. As of September 30, 2021, and December 31, 2020, MGE had a receivable due from ATC of $4.7 million and $2.6 million, respectively. The receivable is primarily related to Badger Hollow I and II. MGE is reimbursed for these costs after the new generation assets are placed into service.