Condensed Parent Company Financial Statements

12 Months Ended

Dec. 31, 2011

Condensed Parent Company Financial Statements Disclosure [Abstract]

Schedule I Condensed Parent Company Financial Statements

Schedule I
Condensed Parent Company Financial Statements
MGE Energy, Inc.
Statements of Income
(Parent Company Only)
(In thousands)
		For the years ended December 31,
		2011		2010		2009
Operating Expenses:
Other operations and maintenance	$	718	$	653	$	654
Total Operating Expenses		718		653		654
Operating Loss		(718)		(653)		(654)
Equity in earnings of investments		61,075		59,147		50,742
Other income/(loss), net		505		(22)		(56)
Interest on long-term debt		0		0		2,766
Other interest		(22)		3		0
Income before income taxes		60,840		58,475		52,798
Income tax provision		88		(757)		(1,801)
Net Income	$	60,928	$	57,718	$	50,997
The accompanying notes are an integral part of the above consolidated financial statements.

MGE Energy, Inc.
Statements of Cash Flows
(Parent Company Only)
(In thousands)
		For the years ended December 31,
		2011		2010		2009
Net Cash Flows Provided by Operating Activities	$	50,696	$	48,430	$	16,469
Investing Activities:
Return of investment - affiliates		30,000		50,000		3,297
Other investing		(3,022)		(1,656)		(150)
Cash Provided by Investing Activities		26,978		48,344		3,147
Financing Activities:
Issuance of common stock, net		0		0		6,275
Cash dividends paid on common stock		(35,026)		(34,370)		(33,693)
Change in short-term debt		(19,000)		(62,000)		7,500
Cash Used for Financing Activities		(54,026)		(96,370)		(19,918)
Change in Cash and Cash Equivalents:		23,648		404		(302)
Cash and cash equivalents at beginning of period		972		568		870
Cash and cash equivalents at end of period	$	24,620	$	972	$	568
The accompanying notes are an integral part of the above consolidated financial statements.

Schedule I
Condensed Parent Company Financial Statements (continued)
MGE Energy, Inc.
Balance Sheets
(Parent Company Only)
(In thousands)
		At December 31,
ASSETS		2011		2010
Current Assets:
Cash and cash equivalents	$	24,620	$	972
Accounts receivable, net:
Accounts receivable from affiliates		2,148		58
Prepaid taxes and other		481		1,161
Total Current Assets		27,249		2,191
Other deferred assets and other		151		163
Investments:
Investments in affiliates		534,009		551,818
Other		567		483
Total Investments		534,576		552,301
Total Assets	$	561,976	$	554,655
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term debt	$	0	$	19,000
Accounts payable to affiliates		602		630
Other current liabilities		218		141
Total Current Liabilities		820		19,771
Other Credits:
Deferred income taxes		3,320		2,391
Accounts payable to affiliates		6,884		7,413
Total Other Credits		10,204		9,804
Shareholders' Equity:
Common shareholders' equity		339,382		339,382
Retained income		211,458		185,556
Other comprehensive income/(loss)		112		142
Total Shareholders' Equity		550,952		525,080
Commitments and contingencies (see Footnote 18)		0		0
Total Liabilities and Shareholders' Equity	$	561,976	$	554,655
The accompanying notes are an integral part of the above consolidated financial statements.

Schedule I

Condensed Parent Company Financial Statements (continued)

Notes to Condensed Financial Statements

(Parent Company Only)

1.       Basis of Presentation.

MGE Energy is a holding company and conducts substantially all of its business operations through its subsidiaries. For Parent Company only presentation, investment in subsidiaries are accounted for using the equity method. These condensed Parent Company financial statements and related notes have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X. These statements should be read in conjunction with the financial statements and the notes of the Annual Report on Form 10-K for the year ended December 31, 2011.

2.       Credit Agreements.

As of December 31, 2011, MGE Energy had access to an unsecured, committed credit facility with aggregate bank commitments of $40.0 million and available capacityunder those commitments of $40.0 million.

See Footnote 10 of the Notes to Consolidated Financial Statements for further information regarding MGE Energy's debt and credit agreements.

3.       Commitments and Contingencies.

See Footnote 18 of the Notes to Consolidated Financial Statements for commitments and contingencies.

4.       Dividends from Affiliates.

		Dividends from Affiliates
(In thousands)		2011		2010		2009
MGE		26,648		26,150		19,318
MGE Construct		0		0		4,915
MGE Power West Campus		9,500		4,000		9,150
MGE Power Elm Road		43,000		52,028		0
MGE Transco		0		2,372		1,795
Total	$	79,148	$	84,550	$	35,178

Dividend Restrictions

Dividend payments by MGE to MGE Energy are subject to restrictions arising under a PSCW rate order and, to a lesser degree, MGE's first mortgage bonds. The PSCW order limits the amount of dividends that MGE may pay MGE Energy when its common equity ratio, calculated in the manner used in the rate proceeding, is less than 55%. Under those circumstances, MGE may not pay dividends in excess of $39.8 million plus dividends on MGE Energy's shares issued in excess of the issued share number used in the rate proceeding forecast if the proceeds are invested in MGE. MGE's thirteen month rolling average common equity ratio at December 31, 2011, is estimated to be 57.3% as determined under the calculation used in the rate proceeding. MGE paid cash dividends of $26.6million to MGE Energy in 2011.The rate proceeding calculation includes as indebtedness imputed amounts for MGE's outstanding purchase power capacity payments and other PSCW adjustments, but does not include the indebtedness associated with MGE Power Elm Roador MGE Power West Campus, which are consolidated into MGE's financial statements.

MGE has covenanted with the holders of its first mortgage bonds not to declare or pay any dividend or make any other distribution on or purchase any shares of its common stock unless, after giving effect thereto, the aggregate amount of all such dividends and distributions and all amounts applied to such purchases, after December 31, 1945, shall not exceed the earned surplus (retained earnings) accumulated subsequent to December 31, 1945. As of December 31, 2011, approximately $260.2 million was available for the payment of dividends under this covenant.

See Footnote 9 and 10 of the Notes to Consolidated Financial Statement for long-term debt and lines of credit dividend restrictions.