Mge Energy Inc. · NASDAQ:MGEE
Mge Energy — EEI Financial Conference 2022
34 slides from Mge Energy's conference presentation, Nov 10, 2022
Slide 1: Technology in Action
Technology in Action Bringing the benefits of sustainability to all. EEI FINANCIAL CONFERENCE NOVEMBER 2022
Slide 2: Disclaimer
Disclaimer This presentation contains summarized information concerning MGE Energy, Inc. (“MGE Energy”) and its subsidiaries (principally Madison Gas and Electric Company (“MGE”)) and MGE Energy’s consolidated business, operations, financial performance and trends. No representation is made that the
Slide 3: Cautionary Note Regarding Forward-looking Information
Cautionary Note Regarding Forward‐looking Information All statements in this presentation, other than historical facts, are forward‐looking statements (including but not limited to forecasted capital expenditures, expected in‐service dates and carbon dioxide projections) that involve risks and uncer
Slide 4: Company Mission and Values
Company Mission and Values MGE Energy is the parent company of Madison Gas and Electric Company (MGE). MGE is your community energy company, committed to engaging with our customers in different ways to meet their needs and providing safe, reliable, affordable and sustainable energy to power our com
Slide 5: Company Highlights
Company Highlights Diversified Customer Base and Revenue Profile Regulated, Highly Visible Growth Resilient Revenue Stream and Customer Base Historical 5‐Year Regulated PPE(1) CAGR of ~8% • Electric service to ~159,000 customers located in the city of Madison and • Forecasted capital investment of ~
Slide 6: Earnings and Dividends Per Share Growth
Earnings and Dividends Per Share Growth Earnings Per Share Dividends Per Share $3.50 $1.75 $3.00 $1.50 $2.50 $1.25 $2.00 $1.00 $1.50 $0.75 $1.00 $0.50 $0.50 $0.25 $‐ $‐ (1) 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 6 (1) 2017 Non‐Regulated earnings per share includes one‐time tax b
Slide 7: Corporate Structure
Corporate Structure Over 98% of MGE Energy assets are dedicated to regulated and quasi‐regulated utility operations (1) Owns and operates electric transmission lines in Wisconsin 7 (2) Transmission development company. Separate from American Transmission Company, LLC (3) Presently inactive
Slide 8: Attractive Service Territory
Attractive Service Territory The Madison area and Dane County lead the state in population growth. Our service territory is a growing and diverse community of urban, suburban and rural communities. Home to the flagship University of Wisconsin at Madison Robust biotech industry and entrepreneurial co
Slide 9: Accelerating Transition Toward Cleaner Energy
Accelerating Transition Toward Cleaner Energy Track Record of Increasing Pace of Decarbonization • MGE’s clean energy transition has reduced emissions while maintaining top‐ranked electric reliability, strengthening key infrastructure, and providing affordable power to customers • 2015: Energy 2030
Slide 10: Plan to Eliminate Coal-Fired Generation by 2035
Plan to Eliminate Coal‐Fired Generation by 2035 Retiring the coal‐fired Columbia Energy Center In 2022, the target retirement date for both units was updated to June 2026. The revised retirement date reflects tight energy supply conditions in the Midwest power market and supply chain issues that wil
Slide 11: Rapidly Expanding Clean Energy Portfolio
Rapidly Expanding Clean Energy Portfolio Planned wind, solar and battery storage resources comprise ~44% of planned capital investment (2022‐2025). Current and proposed clean energy projects will grow MGE’s renewables capacity by over 9x since 2015. In Progress ‐ Regulatory Approval Granted Investme
Slide 12: Focus on Clean Energy & Progress Toward Net-Zero Carbon
Focus on Clean Energy & Progress Toward Net‐Zero Carbon Actual and Projected Capital Expenditures Forecasted $250 $212 $215 $219 $203 $204 $200 $164 $171 $ Millions $153 $150 $119 $106 $58 $50 $100 $50 $108 $93 $106 $97 $103 $72 $84 ‐ 2015 2016 2017 2018 2019 2020 2021 2022P 2023P 2024P 2025P Renewa
Slide 13: Capital Expenditures Updates
Capital Expenditures Updates Updated capital expenditures forecast to reflect 2022 actuals and added capex forecast for 2025 All announced clean energy projects in‐tact, reflects delays in COD schedule (including procurement of battery storage components) into future periods. No material chang
Slide 14: ATC Transmission Investment Outlook
ATC Transmission Investment Outlook MGE Energy anticipates material transmission investment opportunities later this decade through ATC • MGE Energy holds 3.6% equity ownership interest in ATC MISO Long Range Transmission Plan (LRTP) Tranche 1 Portfolio proposal addresses needs across the entire
Slide 15: Inflation Reduction Act of 2022 (IRA)
Inflation Reduction Act of 2022 (IRA) Inflation Reduction Act supports MGE’s carbon reduction strategy and increases flexibility toward meeting customer needs for affordable and reliable clean energy resources Positioned to deliver material benefits to customers • Long‐term extension of tax credit
Slide 16: Constructive Regulatory Environment
Constructive Regulatory Environment Both S&P and Moody’s view the Wisconsin regulatory environment as highly credit supportive with timely operating and capital cost recovery, and view MGE's relationship with the Public Service Commission as constructive. • Regulatory approvals of utility‐scale rene
Slide 17: PSCW Approved 2022-2023 Rate Case / Filed 2023 Reopener
PSCW Approved 2022‐2023 Rate Case / Filed 2023 Reopener Approved Settlement Terms Test Year 2022 Test Year 2023 ($000’s where applicable) Average Electric Rate Base $1,044,362 $1,159,155(1) Average Gas Rate Base $299,319 $312,270 Regulatory Equity Layer 55.63% 55.63% Authorized ROE 9.80% 9.80% Elect
Slide 18: Customer Affordability
Customer Affordability Average residential electric customer bill as % of Wisconsin median household income MGE residential customer bill as a 2.05% percentage of customer wallet at 1.53% is below the Wisconsin 1.96% utility peer average of 1.69% 1.69% MGE’s affordability as percentage of customer w
Slide 19: ESG Summary - Environmental
ESG Summary ‐ Environmental As your community energy company, MGE recognizes its responsibility to preserve and protect the environment while serving our communities with safe, reliable, affordable and sustainable energy. Leadership Energy Efficiency & Conservation Electrification of Transportation
Slide 20: ESG Summary - Social
ESG Summary ‐ Social As your community energy company, we consider it part of our responsibility to engage with our customers “where they are.” Our commitment to equitable service and to the power of working together drives how we seek to fulfill our mission and strengthen our communities. Safety /
Slide 21: ESG Summary - Governance
ESG Summary ‐ Governance Our Board of Directors has a strong commitment to corporate responsibility and accountability. Community‐focused and with a breadth and diversity of experience, board members bring strong effective oversight in their service to MGE and MGE Energy. Corporate Governance Highli
Slide 22: Electric Vehicles and Deep Decarbonization
Electric Vehicles and Deep Decarbonization MGE has been supporting the adoption of alternative fuel vehicles since the launch of its public charging network more than a decade ago and anticipates continued electrification of transportation could drive incremental sales growth over the long term. Ele
Slide 23: Commitment to Dividends & Shareholder Value
Commitment to Dividends & Shareholder Value Recent dividend increase was approximately 5% • Increased dividend in August 2022 for the 47th consecutive year • Paid dividends for more than 110 years • Dividend payout ratio in the 50‐60% range in recent years • No dividend payout range targeted • Divid
Slide 24: Company Highlights
Company Highlights Diversified Customer Base and Revenue Profile Regulated, Highly Visible Growth Resilient Revenue Stream and Customer Base Historical 5‐Year Regulated PPE(1) CAGR of ~8% • Electric service to ~159,000 customers located in the city of Madison and • Forecasted capital investment of ~
Slide 25: Appendix
Appendix 25
Slide 26: Strong Credit Ratings
Strong Credit Ratings (1) S&P (UTILITY RATINGS) MOODY’S (UTILITY RATINGS) Corporate credit AA‐ Secured Aa2 Business risk Excellent Unsecured A1 Commercial paper A‐1+ Commercial paper P‐1 Outlook Stable Outlook Stable • Effective management of regulatory risk • Rating reflects a credit supportive reg
Slide 27: Financing and Liquidity
Financing and Liquidity Long‐Term Debt Short‐Term Liquidity: MGE Energy • $75M of long‐term debt priced October 2022 • $150M consolidated, committed, syndicated lines of credit • Dec 2022 funding: $25M 10‐year notes (5.43% coupon) • Termination date – November 2027 • Feb 2023 funding: $15M 10‐year n
Slide 28: Quarterly Diluted EPS by Segment
Quarterly Diluted EPS by Segment Three Months Ended September 30 2022 2021 $1.10 $1.10 $1.00 $0.03 $1.00 $0.05 $0.00 $0.15 $0.15 $0.90 $0.90 ($0.00) $0.80 $0.80 $0.70 ($0.01) $0.70 ($0.01) Diluted EPS Diluted EPS $0.60 $0.60 $0.50 $0.50 $0.93 $0.97 $0.40 $0.40 $0.76 $0.77 $0.30 $0.30 $0.20 $0.20 $0.
Slide 29: YTD Diluted EPS by Segment
YTD Diluted EPS by Segment Nine Months Ended September 30 2022 2021 $2.80 $2.80 $2.70 $2.70 $0.15 $2.60 $0.13 $0.02 $2.60 $2.50 $2.50 $0.44 ($0.01) $2.40 $0.45 $2.40 $2.30 $2.30 $2.20 $2.20 $2.10 $2.10 $0.32 $2.00 $1.90 $0.35 $2.00 $1.90 $1.80 $1.80 Diluted EPS Diluted EPS $1.70 $1.70 $1.60 $1.60 $1
Slide 30: Strong Track Record of Regulated Asset Growth
Strong Track Record of Regulated Asset Growth $2,000 Net PP&E + CWIP ($millions) $1,500 $1,000 $500 $‐ 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 3Q'2022 30
Slide 31: MGE - YTD Electric & Gas Sales Comparison
MGE –YTD Electric & Gas Sales Comparison Nine Months Ended September 30, 2022 16.0% 13.1% 12.0% % change Y/Y 8.0% 4.0% 1.0% 0.0% 0.0% 0.0% ‐4.0% ‐2.1% Residential Electric Commercial/Industrial Other Retail/Municipal Total Retail Electric Total Retail Natural Gas Electric Electric 2022 2021 % Coolin
Slide 32: Electric Utility Mix
Electric Utility Mix Twelve Months Ended December 31, 2021 32
Slide 33: Gas Utility Mix
Gas Utility Mix Twelve Months Ended December 31, 2021 33
Slide 34: EEI Financial Conference November 2022
EEI Financial Conference November 2022 For more information visit: mgeenergy.com Ken Frassetto Director Shareholder Services and Treasury Management kfrassetto@mge.com 608‐252‐4723 P.O. Box 1231 Madison WI 53701‐1231 34