Mge Energy Inc. · NASDAQ:MGEE
Mge Energy — AGA Financial Forum 2023
33 slides from Mge Energy's conference presentation, May 19, 2023
Slide 1: AGA Financial Forum May 2023
AGA FINANCIAL FORUM MAY 2023
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 – Forward Looking Information
CAUTIONARY NOTE – 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 uncertainties
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 to providing safe, reliable, affordable and sustainable energy to power our
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 ~161,000 customers located in the city of Madison and • Forecasted capital investment of ~
Slide 6: Earnings and Dividends Growth
EARNINGS AND DIVIDENDS 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 $- $- 2017(1) 2018 2019 2020 2021 2022 2017 (1) 2018 2019 2020 2021 2022 (1) 2017 Non-Regulated earnings per share includes one-time tax benefit of
Slide 7: Transition Toward Cleaner Energy
TRANSITION TOWARD CLEANER ENERGY Track Record of Increasing Pace of Decarbonization • MGE’s clean energy transition has reduced emissions while maintaining top-ranked electric reliability, strengthening key infrastructure, and providing affordable power to customers. • 2015: Energy 2030 framework in
Slide 8: Environmental Initiatives - Natural Gas Distribution
ENVIRONMENTAL INITIATIVES - NATURAL GAS DISTRIBUTION Building upon our long-standing commitment to providing affordable, sustainable energy, MGE has set a goal to achieve Net-Zero Methane Emissions from its natural gas distribution system by 2035. • If MGE can accelerate plans to achieve net-zero me
Slide 9: Plan to Eliminate Coal-Fired Generation
PLAN TO ELIMINATE COAL-FIRED GENERATION Retiring the coal-fired Columbia Energy Center In 2022, the target retirement date for both units at the Columbia Energy Center was updated to June 2026. The revised retirement date reflects tight energy supply conditions in the Midwest power market and supply
Slide 10: Expanding Clean Energy Portfolio
EXPANDING CLEAN ENERGY PORTFOLIO Planned wind, solar and battery storage resources comprise over 40% of planned capital investment between 2023 and 2027. In Progress - Regulatory Approval Granted Investment Ownership Nameplate Estimated 30% Project ($M) Interest (MW) In-Service Date Red Barn Wind Fa
Slide 11: Focus on Clean Energy Investments
FOCUS ON CLEAN ENERGY INVESTMENTS Actual and Projected Capital Expenditures $250 Forecasted $226 $215 $219 $219 $212 $203 $197 $200 $175 $88 $164 $76 $98 $153 $117 $150 $85 $ Millions $108 $100 $139 $138 $121 $112 $50 $102 - 2017 2018 2019 2020 2021 2022 2023P 2024P 2025P 2026P 2027P Renewables and
Slide 12: Transmission Investment Outlook
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 entirety
Slide 13: 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 renewa
Slide 14: PSCW Regulators
PSCW REGULATORS WISCONSIN PARTY TERM BEGAN TERM ENDS COMMISSIONERS Rebecca Valcq (Chair) D Jan 2019 Mar 2025 Tyler Huebner * D Mar 2020 Mar 2027 Summer Strand * D Mar 2023 Mar 2029 * Not confirmed COMMISSION: - Gubernatorial appointment, Senate confirmation - Chair: Gubernatorial appointed - 6-year
Slide 15: MGE Rate Case Update – 2024 / 2025 Test Year
MGE RATE CASE UPDATE – 2024 / 2025 TEST YEAR (TY) TERMS APPROVED APPROVED FILED FILED ($000’s where applicable) 2022 TY 2023 TY 2024 TY 2025 TY Average Electric Rate Base $1,044,362 $1,162,516 $1,202,123 $1,281,236 Average Gas Rate Base $299,319 $312,270 $338,417 $345,463 Average Common Stock Equity
Slide 16: Customer Affordability
CUSTOMER AFFORDABILITY Average residential electric customer bill as % of Wisconsin median household income 2.05% MGE residential customer bill as a 1.96% percentage of customer wallet at 1.53% is below the Wisconsin 1.69% utility peer average of 1.69%. MGE’s affordability as percentage 1.53% of cus
Slide 17: 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 credi
Slide 18: 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 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: ESG - Disclosures
ESG - DISCLOSURES Below are links to where you can find ESG information: Corporate Responsibility and Sustainability Report • CDP Climate Change Questionnaire • EEI Qualitative Template • EEI Quantitative Template • EEO-1 Data Report Statement on Human Rights Occupational Health and Safety Policy Re
Slide 23: Appendix
APPENDIX 23 QOOOOOON
Slide 24: 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 25: 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 (2) Transmission development company. Separate from American Transmission Company, LLC (3) Presently inactive 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 • $180M consolidated, committed, syndicated lines • Dec 2022 funding: $25M 10-year notes (5.43% coupon) of credit • Feb 2023 funding: $15M 10-year notes (5.43% coupon) • Termination d
Slide 28: First Quarter EPS by Segment
FIRST QUARTER EPS BY SEGMENT Three Months Ended March 31 2023 2022 $1.00 $0.05 $0.01 $0.15 $0.90 $0.05 $0.15 Diluted EPS $0.33 Diluted EPS $0.80 ($0.01) $0.70 $0.30 $0.60 $0.50 $0.95 $0.40 $0.86 $0.30 $0.41 $0.37 $0.20 $0.10 $0.00 Electric Utility Gas Utility NonReg Energy Transmission Other MGE Ene
Slide 29: First Quarter Impacted by Warmer Weather
FIRST QUARTER IMPACTED BY WARMER WEATHER HDD were down 12% year over year in Wisconsin, due to the extremely warmer than normal weather experienced in January and February of this year 29
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 2022 Q1 2023 30
Slide 31: Electric Utility Mix
ELECTRIC UTILITY MIX Three Months Ended March 31, 2023 Note: Electric customers are as of 12/31/2022 31
Slide 32: Gas Utility Mix
GAS UTILITY MIX Three Months Ended March 31, 2023 Note: Gas customers are as of 12/31/2022 32
Slide 33: Quarter 2022 Financial For 4 more
For4more Quarter th 2022 Financial information, visit Update February 2023 mgeenergy.com Ken Frassetto Director Shareholder Services and Treasury Management kfrassetto@mge.com 608-252-4723 P.O. Box 1231 Madison WI 53701-1231