MGEE

General MGE Energy is an investor-owned public utility holding company operating through subsidiaries in five business segments: •Regulated electric utility operations, conducted through MGE, which generate and distribute electricity to approximately 170,000 customers in Dane County, Wisconsin, •Regulated gas utility operations, conducted through MGE, which distribute natural gas to approximately 180,000 customers in seven south-central and western Wisconsin counties, •Nonregulated energy operations, conducted through MGE Power and its subsidiaries, which own interests in electric generating capacity that is leased to MGE, •Transmission investments, representing our equity investment in ATC, which owns and operates electric transmission facilities primarily in Wisconsin, and ATC Holdco, a company created to facilitate out-of-state electric transmission development and investments, and •All other, which includes investing in companies and property that relate to the regulated operations and financing of the regulated operations, through its wholly owned subsidiaries CWDC, MAGAEL, and North Mendota, and corporate operations and services. MGE will continue to focus on growing earnings while controlling operating and fuel costs. MGE's goal is to provide safe and efficient operations in addition to providing customer value. We believe it is critical to maintain a strong credit rating consistent with financial strength in MGE in order to accomplish these goals. The ownership/leasing structure for our nonregulated energy operations was adopted under applicable state regulatory guidelines for MGE's participation in these generation facilities, consisting principally of a stable return on the equity investment in the new generation facilities over the term of the related leases. The nonregulated energy operations include an ownership interest in two coal-fired generating units in Oak Creek, Wisconsin, and a partial ownership of a cogeneration project on the UW-Madison campus. A third party operates the units in Oak Creek, and MGE operates the cogeneration project. Due to the nature of MGE's participation in these facilities, the results of MGE Energy's nonregulated operations are also consolidated into MGE's consolidated financial position and results of operations under applicable accounting standards. Executive Overview We principally earn revenue and generate cash from operations by providing electric and natural gas utility services, including electric power generation and electric power and gas distribution. The earnings and cash flows from the utility business are sensitive to various external factors, including, but not limited to: •Weather, and its impact on customer sales, •Economic conditions, including current business activity and employment and their impact on customer demand, •Regulation and regulatory issues, and their impact on the timing and recovery of costs, •Energy commodity prices, including natural gas prices, •Equity price risk pertaining to pension-related assets, •Credit market conditions, including interest rates and our debt credit rating, •Environmental laws and regulations, including adopted and pending environmental rule changes, and •Other factors listed in Item 1A. Risk Factors in our 2025 Annual Report on Form 10-K. During the three months ended June 30, 2026, MGE Energy's earnings were $33.4 million, or $0.89 per diluted share, compared to $26.5 million, or $0.72 per diluted share, during the same period in the prior year. MGE's earnings during the three months ended June 30, 2026, were $22.5 million compared to $18.8 million during the same period in the prior year. During the six months ended June 30, 2026, MGE Energy's earnings were $81.8 million, or $2.21 per diluted share, compared to $68.1 million, or $1.86 per diluted share, during the same period in the prior year. MGE's earnings during the six months ended June 30, 2026, were $62.6 million compared to $53.0 million during the same period in the prior year. 33 MGE Energy's net income was derived from our business segments as follows: Three Months Ended Six Months Ended (In millions) June 30, June 30, Business Segment: 2026 2025 2026 2025 Electric Utility $ 22.6 $ 19.6 $ 48.3 $ 39.8 Gas Utility (1.0) (1.3) 12.8 12.3 Nonregulated Energy 6.5 6.2 12.8 12.2 Transmission Investments 2.8 2.2 5.3 4.5 All Other 2.5 (0.2) 2.6 (0.7) Net Income $ 33.4 $ 26.5 $ 81.8 $ 68.1 Our net income during the three and six months ended June 30, 2026, compared to the same periods in the prior year, primarily reflects the effects of the following factors: Electric Utility Earnings for the three and six months ended June 30, 2026, increased year-over-year, primarily driven by a rise in the rate base due to increased electric investments approved in the 2026/2027 rate case. All Other Investment gains from venture capital funds resulted in higher earnings for the three and six months ended June 30, 2026, compared to the same period in the prior year. These venture capital investments support early-stage companies working to advance smart technologies, the customer experience, distributed energy resources, electrification, cybersecurity and other priorities for utility companies, such as greater sustainability. Significant Events The following events affected the first six months of 2026: 2026/2027 Rate Settlement Agreement: In December 2025, the PSCW approved a unanimous settlement agreement that MGE reached with intervening parties in its 2026/2027 rate case. As part of the settlement agreement, the PSCW approved a 0.15% increase for electric rates and a 2.77% increase to gas rates for 2026 and a 3.63% increase for electric rates and a 2.04% increase to gas rates for 2027. MGE filed a 2027 Fuel Cost Plan with the PSCW in June 2026. MGE expects a final decision from the PSCW on the Fuel Cost Plan by the end of 2026. See "Other Matters" below for additional information on the 2026/2027 rate case settlement. 2026 Deferred Fuel Savings: MGE had deferred fuel savings through the six months ended June 30, 2026. As of June 30, 2026, MGE deferred $6.7 million of 2026 fuel savings. These costs will be subject to the PSCW's annual review of 2026 fuel costs, expected to be completed during 2027. See Footnote 9 of the Notes to the Consolidated Financial Statements in this Report for further information regarding fuel cost proceedings. Large Scale Utility Projects: Large scale generation projects recently completed or under construction are summarized in the following table. Incurred costs are reflected in "Property, plant, and equipment, net" for projects placed in service, or "Construction work in progress" for projects under construction on the consolidated balance sheets. Source (In millions) Share of Estimated Costs(a) Costs Incurred as of June 30, 2026(a)(b) Solar $ 539 $ 175.0 Wind 73 13.4 Battery 200 84.0 Storage 22 6.9 Other 11 1.0 (a)Excluding AFUDC. (b)MGE received specific approval to recover 100% AFUDC. After tax, MGE recognized $4.4 million, $3.3 million, $1.9 million, and $2.0 million of AFUDC equity earnings through June 30, 2026, on Koshkonong, High Noon, Sunnyside, and other projects, respectively, during construction. AFUDC has been excluded from the costs incurred in the table above. 34 In February 2026, MGE executed an asset purchase agreement to acquire a 33.4% ownership interest in the RockGen Energy Center, an existing natural gas-fired generating plant near Cambridge, Wisconsin. MGE's estimated cost is approximately $203 million. If approved, the transaction is expected to close in late 2027. In the near term, several items may affect us, including: 2025 Annual Fuel Proceeding: MGE had fuel savings in 2025. As of December 31, 2025, MGE deferred $7.1 million of 2025 fuel savings. The PSCW has completed the annual review of 2025 fuel costs and gave approval for MGE to return these savings in October 2026. There was no change to the costs to be refunded in the fuel rule proceedings from the amount MGE deferred in the previous year. Environmental Initiatives: There are proposed legislative rules and initiatives involving matters related to air emissions, water effluent, hazardous materials, and greenhouse gases, all of which affect generation plant capital expenditures and operating costs as well as future operational planning. Legislation and rulemaking addressing climate change and related matters could significantly affect the costs of owning and operating fossil-fueled generating plants. MGE would expect to seek and receive recovery of any such costs in rates. However, it is difficult to estimate the amount of such costs due to the uncertainty as to the timing and form of any legislation or rules, the timing and effects of any judicial review, and the scope and time of the recovery of costs in rates, which may occur after those costs have been incurred and paid. Future Generation – MGE continues to work toward its goal of net-zero carbon electricity by 2050. Solar, wind, and battery storage projects are a major step toward deep decarbonization and greater use of clean energy sources in pursuit of our goal. •Growing renewable generation and storage. MGE is seeking to acquire, or has acquired, joint interests in several renewable generation and storage projects. The forecasted capital expenditures include approximately 252 MW of solar, 18 MW of wind, and 104 MW of storage, which include projects approved or pending PSCW approval. See the 2026-2030 capital expenditures forecast disclosed in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Annual Report on Form 10-K. •Transitioning away from coal. Elm Road Units: In October 2025, MGE, along with the plant co-owners, filed a joint application with the PSCW to end the use of coal as a primary fuel at the Elm Road Units and transition the plant to natural gas. See the 2026-2030 capital expenditures forecast disclosed in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Annual Report on Form 10-K. By the end of 2030, coal is expected to be used only as a backup fuel at the Elm Road Units. By the end of 2032, MGE expects that the Elm Road Units will be fully transitioned away from coal. Columbia: Operational, regulatory, and environmental regulation considerations have impacted and continue to impact Columbia's generation planning. MGE, as a minority owner, and Columbia's other co-owners continue to evaluate transitioning away from coal and continue to evaluate replacing the generation from Columbia while maintaining electric service reliability. MGE and Columbia's co-owners are exploring converting Columbia to natural gas. 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 methane emissions from its natural gas system—through the evolution of new technologies, such as renewable natural gas—it will. MGE is working to reduce overall emissions from its natural gas distribution system in a quick and cost-effective manner. MGE offers two voluntary renewable natural gas programs. The initial program, launched in May 2024, enables customers to offset emissions associated with their natural gas consumption through a mechanism in which MGE purchases renewable thermal credits and retires them on behalf of participating customers. The second program, launched in January 2026, enables customers to inject renewable natural gas produced on the customer's premise into MGE's distribution system. Customers may sell the natural gas to MGE or another third party and may retain or sell to MGE or another third party the associated environmental attributes. Solar Procurement Disruptions: MGE is monitoring import regulations under the Uyghur Forced Labor Prevention Act and the U.S. Department of Commerce's new solar tariffs. These disruptions have a potential to impact current and future solar projects which may result in an increase in costs or delays in construction timelines. In the event that such disruptions cause costs to exceed the levels approved for specific projects, we have filed, and expect to continue to file, notifications with the PSCW and expect to request 35 recovery of any increases in MGE's future rate proceedings. See "Other Matters" below for additional information on the solar procurement disruptions. Tariffs: MGE is monitoring the actions of the Trump Administration with respect to certain proposed or recently implemented import tariffs on foreign goods. These tariffs have a potential impact on cost of operations and on current and future capital projects. See "Other Matters" below for additional information on tariffs. Financing and Equity Issuance Plans: As of June 30, 2026, MGE has $140 million of remaining regulatory authority from the PSCW to issue long-term debt to finance authorized utility capital expenditures. MGE expects to use a portion of the remaining authority during 2026 to finance authorized utility capital expenditures. MGE Energy has equity programs available to issue new shares of common stock, including its at-the-market offering program, forward equity sale agreements, and its Direct Stock Purchase and Dividend Reinvestment Plan. See Footnote 6 of the Notes to Consolidated Financial Statements in this Report for additional information on these programs. The amount and timing of any financings will be primarily driven by capital investments and cash requirements and will depend upon market conditions, regulatory approvals, and other factors. Large-Load Growth: Management is seeing growing interest from large‑load customers, including data‑intensive and technology‑focused operations, seeking reliable and scalable electric service in our service territory. Our favorable location, strong regional transmission access, and proximity to major economic and research institutions support this interest. MGE engages early with prospective customers to evaluate load needs, interconnection requirements, and potential system impacts. Although the timing and size of individual projects remain uncertain, these inquiries represent a potential source of incremental and durable load growth. The following discussion is based on the business segments as discussed in Footnote 14 of the Notes to Consolidated Financial Statements in this Report. Results of Operations Three Months Ended June 30, 2026 and 2025 Electric sales and revenues The following table compares MGE's electric revenues and electric kWh sales by customer class for each of the periods indicated: Revenues Sales (kWh) Three Months Ended June 30, Three Months Ended June 30, (In thousands, except CDD) 2026 2025 % Change 2026 2025 % Change Residential $ 43,930 $ 43,182 1.7% 203,576 203,344 0.1% Commercial 65,618 64,027 2.5% 439,310 439,972 (0.2)% Industrial 3,274 3,117 5.0% 36,746 35,737 2.8% Other-retail/municipal 10,852 10,342 4.9% 102,697 99,198 3.5% Total retail 123,674 120,668 2.5% 782,329 778,251 0.5% Sales to the market 7,026 7,840 (10.4)% 62,600 92,400 (32.3)% Other 680 805 (15.5)% — — —% Total $ 131,380 $ 129,313 1.6% 844,929 870,651 (3.0)% Cooling degree days (normal 203) 164 223 (26.5)% Electric revenue increased $2.1 million during the three months ended June 30, 2026, compared to the same period in the prior year, due to the following: 36 (In millions) Rate changes $ 2.0 Customer fixed and demand charges 0.6 Revenue subject to refund, net 0.3 Net increase in commercial, industrial and other-retail/municipal volume 0.1 Sales to the market (0.8) Other (0.1) Total $ 2.1 •Rate changes. In December 2025, the PSCW authorized MGE to increase 2026 rates for retail electric customers by approximately 0.15%. Rates charged to retail customers during the three months ended June 30, 2026, were $2.0 million higher than those charged during the same period in the prior year. See Footnote 9 of the Notes to Consolidated Financial Statements in this Report for further information on the rate increase. Any increases in rates associated with fuel or purchase power costs are generally offset by fuel and purchased power costs and do not have a significant impact on net income. •Sales to the market. Sales to the market typically occur when MGE has more generation in the MISO market than is needed for its customer demand. The excess electricity is then sold to other utilities or power marketers in the MISO market. During the three months ended June 30, 2026, market volumes decreased compared to the same period in the prior year, reflecting a decrease in sales. This decrease was partially offset by an increase in the cost of capacity sold. The revenue generated from these sales is largely offset by fuel rules costs, and does not have a significant impact on net income. See fuel rules discussion in Footnote 9 of the Notes to Consolidated Financial Statements in this Report. Electric fuel and purchased power Three Months Ended June 30, (In millions) 2026 2025 $ Change Fuel for electric generation $ 12.9 $ 16.3 $ (3.4) Purchased power 5.8 5.6 0.2 The $3.4 million decrease in fuel for electric generation was due to an approximately 23% decrease in internal generation driven by a decrease in sales, partially offset by a 2% increase in the average cost, each compared to the same period in the prior year. Excluding deferred fuel costs, purchased power increased $0.3 million. The increase in purchased power was due to an approximately 59% increase in market purchases as a result of decreased internal generation. This increase was partially offset by an approximately 34% decrease in average cost. There were no deferred fuel costs recovered during the three months ended June 30, 2026 and 2025. Fuel and purchased power costs are generally offset by electric revenue and do not have a significant impact on net income. MGE expects to seek and receive recovery of fuel and purchased power costs that exceed the fuel rules bandwidth in customer rates. See Footnote 9 of the Notes to Consolidated Financial Statements in this Report for further information on the fuel rules bandwidth. Gas deliveries and revenues The following table compares MGE's gas revenues and gas therms delivered by customer class for each of the periods indicated: Revenues Therms Delivered (In thousands, except HDD and average Three Months Ended June 30, Three Months Ended June 30, rate per therm of retail customer) 2026 2025 % Change 2026 2025 % Change Residential $ 18,007 $ 17,956 0.3% 12,450 13,034 (4.5)% Commercial/Industrial 9,859 10,434 (5.5)% 13,956 14,484 (3.6)% Total retail 27,866 28,390 (1.8)% 26,406 27,518 (4.0)% Gas transportation 1,555 1,384 12.4% 15,223 15,429 (1.3)% Other 180 151 19.2% — — —% Total $ 29,601 $ 29,925 (1.1)% 41,629 42,947 (3.1)% Heating degree days (normal 794) 701 843 (16.8)% Average rate per therm of retail customer $ 1.055 $ 1.032 2.2% 37 Gas revenue decreased $0.3 million during the three months ended June 30, 2026, compared to the same period in the prior year, due to the following: (In millions) Decrease in volume $ (0.8) Rate changes (0.6) Revenue subject to refund, net (0.2) Other 1.3 Total $ (0.3) •Other. For the three months ended June 30, 2026, other gas revenue increased primarily due to customer growth and higher residential customer fixed rate. Cost of gas sold Cost of gas sold decreased $2.0 million during the three months ended June 30, 2026, compared to the same period in the prior year. Cost per therm decreased approximately 14% and there was a decrease in therms delivered of approximately 5%. MGE recovers the cost of natural gas in its gas segment through the PGA as described under gas deliveries and revenues above. Consolidated operations and maintenance expenses During the three months ended June 30, 2026, operations and maintenance expenses increased $7.5 million, compared to the same period in the prior year. The following contributed to the net change: (In millions) Increased administrative and general costs $ 3.4 Increased electric production expenses 1.6 Increased transmission costs 1.6 Increased electric distribution expenses 0.8 Increased other expenses 0.1 Total $ 7.5 •Increased administrative and general costs are primarily related to increased pension and other postretirement costs. The PSCW has authorized MGE to defer as a regulatory asset or liability, the difference between actual pension and other postretirement costs included in rates and to be recovered or refunded in a future rate proceeding. Pension and other postretirement cost are generally offset by electric revenue and does not have a significant impact on net income. •Electric production expenses increased primarily due to higher operating and maintenance costs at the Columbia generating station, including boiler plant maintenance and other generation-related expenses, along with increased costs associated with renewable generating facilities. •Increased transmission costs are primarily a result of an increase in transmission rate. Transmission costs represent ATC and MISO network transmission expenses authorized to collect in rates. The PSCW has authorized MGE to defer as a regulatory asset or liability, the difference between actual costs included in rates and to be recovered or refunded in a future rate proceeding. Transmission cost is generally offset by electric revenue and does not have a significant impact on net income. Consolidated depreciation expense Electric depreciation expense decreased $0.1 million and gas depreciation expense increased $0.7 million during the three months ended June 30, 2026, compared to the same period in the prior year. In December 2025, the PSCW approved new depreciation rates, which were implemented and became effective as of January 1, 2026. These new rates were the primary driver for the change in depreciation expense. 38 Electric and gas other income Electric other income increased $4.9 million and gas other income increased $2.0 million during the three months ended June 30, 2026, compared to the same period in the prior year, driven by a $2.3 million positive impact from non-service costs components of pension and other postretirement costs. The PSCW has authorized MGE to defer as a regulatory asset or liability, the difference between actual pension and other postretirement costs included in rates and to be recovered or refunded in a future rate proceeding. Pension and other postretirement cost is generally offset by electric and gas revenue and does not have a significant impact on net income. Higher AFUDC-Equity due to continued capital investment further contributed to an increase in electric other income. Nonregulated Energy Operations - MGE Energy and MGE The nonregulated energy operations are conducted through MGE Energy's subsidiaries: MGE Power Elm Road (the Elm Road Units) and MGE Power West Campus (WCCF), which have been formed to own and lease electric generating capacity to assist MGE. During the three months ended June 30, 2026 and 2025, net income at the nonregulated energy operations segment was $6.5 million and $6.2 million, respectively. Transmission Investment Operations - MGE Energy The transmission investment segment holds our interest in ATC and ATC Holdco, and its income reflects our equity in the earnings of those investments. ATC Holdco was formed in December 2016 to pursue transmission development opportunities that typically have long development and investment lead times before becoming operational. During the three months ended June 30, 2026 and 2025, other income at the transmission investment segment primarily reflects ATC's operations and was $3.8 million and $3.1 million, respectively. See Footnote 3 of the Notes to Consolidated Financial Statements in this Report for summarized financial information regarding ATC. All Other Operations - MGE Energy Other income The increase of $2.9 million in other income from all other operations during the three months ended June 30, 2026, primarily reflects results from investment gains recognized in the current year, from venture capital funds. These venture capital investments support early-stage companies working to advance smart technologies, the customer experience, distributed energy resources, electrification, cybersecurity and other priorities for utility companies, such as greater sustainability. Consolidated Income Taxes - MGE Energy and MGE See Footnote 4 of the Notes to Consolidated Financial Statements in this Report for the effective tax rate reconciliation. Noncontrolling Interest, Net of Tax - MGE Noncontrolling interest, net of tax, reflects the accounting required for MGE Energy's interest in MGE Power Elm Road (the Elm Road Units) and MGE Power West Campus (WCCF). MGE Energy owns 100% of MGE Power Elm Road and MGE Power West Campus. They are not owned by MGE. Due to the contractual agreements for these projects with MGE, the entities are considered VIEs with respect to MGE and their results are consolidated with those of MGE, the primary beneficiary of the VIEs. The following table shows MGE Energy's noncontrolling interest, net of tax, reflected on MGE's consolidated statement of income: Three Months Ended June 30, (In millions) 2026 2025 MGE Power Elm Road $ 3.8 $ 3.9 MGE Power West Campus 1.9 1.8 39 Results of Operations Six Months Ended June 30, 2026 and 2025 Electric sales and revenues The following table compares MGE's electric revenues and electric kWh sales by customer class for each of the periods indicated: Revenues Sales (kWh) Six Months Ended June 30, Six Months Ended June 30, (In thousands, except CDD) 2026 2025 % Change 2026 2025 % Change Residential $ 89,244 $ 88,321 1.0% 418,909 418,336 0.1% Commercial 127,037 124,662 1.9% 873,469 870,250 0.4% Industrial 6,122 6,081 0.7% 71,570 70,270 1.9% Other-retail/municipal 20,186 19,690 2.5% 182,920 178,950 2.2% Total retail 242,589 238,754 1.6% 1,546,868 1,537,806 0.6% Sales to the market 18,635 14,320 30.1% 180,352 219,499 (17.8)% Other revenues 1,536 1,693 (9.3)% — — —% Total $ 262,760 $ 254,767 3.1% 1,727,220 1,757,305 (1.7)% Cooling degree days (normal 203) 164 223 (26.5)% Electric revenue increased $8.0 million during the six months ended June 30, 2026, compared to the same period in the prior year, due to the following: (In millions) Sales to the market $ 4.3 Rate changes 4.0 Customer fixed and demand charges 1.1 Net increase in commercial, industrial and other-retail/municipal volume 0.3 Increase in residential volume 0.1 Revenue subject to refund, net (1.6) Other (0.2) Total $ 8.0 •Sales to the market. Sales to the market typically occur when MGE has more generation in the MISO market than is needed for its customer demand. The excess electricity is then sold to other utilities or power marketers in the MISO market. During the six months ended June 30, 2026, sales were made at higher market prices and partially offset by decreased market volume compared to the same period in the prior year. The revenue generated from these sales is largely offset by fuel rules costs, and does not have a significant impact on net income. See fuel rules discussion in Footnote 9 of the Notes to Consolidated Financial Statements in this Report. •Rate changes. In December 2025, the PSCW authorized MGE to increase 2026 rates for retail electric customers by approximately 0.15%. Rates charged to retail customers during the six months ended June 30, 2026, were $4.0 million higher than those charged during the same period in the prior year. See Footnote 9 of the Notes to Consolidated Financial Statements in this Report for further information on the rate increase. Any increases in rates associated with fuel or purchase power costs are generally offset by fuel and purchased power costs and do not have a significant impact on net income. •Customer fixed and demand charges. During the six months ended June 30, 2026, fixed and demand charges increased $1.1 million, primarily attributable to the increase in demand charges for commercial customers. •Revenue subject to refund. For cost recovery mechanisms, any over-collection of revenues resulting from costs authorized to be collected from customers in rates exceeding actual costs is recorded as a reduction of revenue in the period incurred, as the over-collection is expected to be refunded to customers in a subsequent period. In the year the over-collection is refunded, rates are reduced and offset as revenue subject to refund. There is no net income impact in the year the costs are refunded. 40 Electric fuel and purchased power Six Months Ended June 30, (In millions) 2026 2025 $ Change Fuel for electric generation $ 33.2 $ 33.9 $ (0.7) Purchased power 8.3 9.9 (1.6) The $0.7 million decrease in fuel for electric generation in the first six months of 2026 was due to an approximately 5.4% decrease in internal generation, partially offset by a 3.8% increase in the average cost, each compared to the same period in the prior year. Excluding deferred fuel costs, purchased power decreased $1.7 million in the first six months of 2026, compared to the same period in the prior year. The decrease in purchased power was due to an approximately 42% decrease in average cost. This decrease was partially offset by an approximately 43% increase in market purchases as a result of decreased internal generation. There were no deferred fuel costs recovered during the six months ended June 30, 2026 and 2025. Fuel and purchased power costs are generally offset by electric revenue and do not have a significant impact on net income. MGE expects to seek and receive recovery of fuel and purchased power costs that exceed the fuel rules bandwidth in customer rates. See Footnote 9 of the Notes to Consolidated Financial Statements in this Report for further information on the fuel rules bandwidth. Gas deliveries and revenues The following table compares MGE's gas revenues and gas therms delivered by customer class for each of the periods indicated: Revenues Therms Delivered (In thousands, except HDD and average Six Months Ended June 30, Six Months Ended June 30, rate per therm of retail customer) 2026 2025 % Change 2026 2025 % Change Residential $ 80,771 $ 71,824 12.5% 62,708 65,263 (3.9)% Commercial/Industrial 55,364 47,547 16.4% 58,972 60,620 (2.7)% Total retail 136,135 119,371 14.0% 121,680 125,883 (3.3)% Gas transportation 4,322 3,697 16.9% 36,964 37,253 (0.8)% Other revenues 407 338 20.4% — — —% Total $ 140,864 $ 123,406 14.1% 158,644 163,136 (2.8)% Heating degree days (normal 4,284) 4,028 4,212 (4.4)% Average rate per therm of retail customer $ 1.119 $ 0.948 18.0% Gas revenue increased $17.5 million during the six months ended June 30, 2026, compared to the same period in the prior year, due to the following: (In millions) Rate changes $ 16.2 Other 2.4 Revenue subject to refund, net 2.2 Decrease in volume (3.3) Total $ 17.5 •Rate changes. In December 2025, the PSCW authorized MGE to increase 2026 rates for retail gas customers by approximately 2.77%. MGE recovers the cost of natural gas in its gas segment through the PGA. Under the PGA, MGE is able to pass through to its gas customers the cost of gas. Changes in PGA recoveries affect revenues but do not change net income in view of the pass-through treatment of the costs. Payments for natural gas increased, driving higher rates during the six months ended June 30, 2026. The average retail rate per therm excluding customer fixed charges for the six months ended June 30, 2026, increased approximately 18% compared to the same period in the prior year, reflecting an increase in natural gas commodity costs (recovered through the PGA). •Other. For the six months ended June 30, 2026, other gas revenue increased primarily due to customer growth and higher residential customer fixed rate. 41 •Revenue subject to refund. For cost recovery mechanisms, any over-collection of revenues resulting from costs authorized to be collected from customers in rates exceeding actual costs is recorded as a reduction of revenue in the period incurred, as the over-collection is expected to be refunded to customers in a subsequent period. In the year the over-collection is refunded, rates are reduced and offset as revenue subject to refund. There is no net income impact in the year the costs are refunded. •Volume. For the six months ended June 30, 2026, retail gas deliveries decreased approximately 3% compared to the same period in the prior year. The decrease was primarily attributable to lower residential use per customer. Unfavorable weather conditions during the first six months of 2026 further contributed to the reduction in volumes. Cost of gas sold Cost of gas sold increased $14.8 million during the six months ended June 30, 2026, compared to the same period in the prior year. Cost per therm increased approximately 27%, partially offset by a decrease in therms delivered of approximately 4%. MGE recovers the cost of natural gas in its gas segment through the PGA as described under gas deliveries and revenues above. Consolidated operations and maintenance expenses During the six months ended June 30, 2026, operations and maintenance expenses increased $12.5 million, compared to the same period in the prior year. The following contributed to the net change: (In millions) Increased administrative and general costs $ 7.0 Increased transmission costs 3.2 Increased electric production expenses 2.2 Increased electric distribution expenses 0.5 Decreased other expenses (0.4) Total $ 12.5 •Increased administrative and general costs are primarily related to increased pension and other postretirement costs. The PSCW has authorized MGE to defer as a regulatory asset or liability, the difference between actual pension and other postretirement costs included in rates and to be recovered or refunded in a future rate proceeding. Pension and other postretirement cost are generally offset by electric revenue and does not have a significant impact on net income. •Increased transmission costs are primarily a result of an increase in transmission rate. Transmission costs represent ATC and MISO network transmission expenses authorized to collect in rates. The PSCW has authorized MGE to defer as a regulatory asset or liability, the difference between actual costs included in rates and to be recovered or refunded in a future rate proceeding. Transmission cost is generally offset by electric revenue and does not have a significant impact on net income. •Electric production expenses increased primarily due to higher operating and maintenance costs at the Columbia generating station, including boiler plant maintenance and other generation-related expenses, along with increased costs associated with renewable generating facilities. Consolidated depreciation expense Electric depreciation expense decreased $0.4 million and gas depreciation expense increased $1.3 million during the six months ended June 30, 2026, compared to the same period in the prior year. In December 2025, the PSCW approved new depreciation rates, which were implemented and became effective as of January 1, 2026. These new rates were the primary driver for the change in depreciation expense. Electric and gas other income Electric other income increased $10.9 million and gas other income increased $3.0 million during the six months ended June 30, 2026, compared to the same period in the prior year, driven by a $6.5 million positive impact from non-service costs components of pension and other postretirement costs. The PSCW has authorized MGE to defer as a regulatory asset or liability, the difference between actual pension and other postretirement costs included in rates and to be recovered or refunded in a future rate proceeding. Pension and other postretirement cost is generally offset by electric and gas revenue and does not have a significant 42 impact on net income. Higher AFUDC-Equity due to continued capital investment further contributed to an increase in electric other income. Nonregulated Energy Operations - MGE Energy and MGE The nonregulated energy operations are conducted through MGE Energy's subsidiaries: MGE Power Elm Road (the Elm Road Units) and MGE Power West Campus (WCCF), which have been formed to own and lease electric generating capacity to assist MGE. During the six months ended June 30, 2026 and 2025, net income at the nonregulated energy operations segment was $12.8 million and $12.2 million, respectively. Transmission Investment Operations - MGE Energy The transmission investment segment holds our interest in ATC and ATC Holdco, and its income reflects our equity in the earnings of those investments. ATC Holdco was formed in December 2016 to pursue transmission development opportunities that typically have long development and investment lead times before becoming operational. During the six months ended June 30, 2026 and 2025, other income at the transmission investment segment primarily reflects ATC's operations and was $7.3 million and $6.2 million, respectively. See Footnote 3 of the Notes to Consolidated Financial Statements in this Report for summarized financial information regarding ATC. All Other Operations - MGE Energy Other income The increase of $3.9 million in other income from all other operations during the six months ended June 30, 2026, primarily reflects results from investment gains recognized in the current year, from venture capital funds. These venture capital investments support early-stage companies working to advance smart technologies, the customer experience, distributed energy resources, electrification, cybersecurity and other priorities for utility companies, such as greater sustainability. Consolidated Income Taxes - MGE Energy and MGE See Footnote 4 of the Notes to Consolidated Financial Statements in this Report for the effective tax rate. Noncontrolling Interest, Net of Tax - MGE Noncontrolling interest, net of tax, reflects the accounting required for MGE Energy's interest in MGE Power Elm Road (the Elm Road Units) and MGE Power West Campus (WCCF). MGE Energy owns 100% of MGE Power Elm Road and MGE Power West Campus. They are not owned by MGE. Due to the contractual agreements for these projects with MGE, the entities are considered VIEs with respect to MGE and their results are consolidated with those of MGE, the primary beneficiary of the VIEs. The following table shows MGE's noncontrolling interest, net of tax, reflected on MGE's consolidated statement of income: Six Months Ended June 30, (In millions) 2026 2025 MGE Power Elm Road $ 7.5 $ 7.7 MGE Power West Campus 3.8 3.6 Contractual Obligations and Commercial Commitments - MGE Energy and MGE There were no material changes, other than from the normal course of business, to MGE Energy's and MGE's contractual obligations (representing cash obligations that are considered to be firm commitments) and commercial commitments (representing commitments triggered by future events) during the six months ended June 30, 2026, except as noted below. Further discussion of the contractual obligations and commercial commitments is included in Footnote 16 of the Notes to Consolidated Financial Statements and "Contractual Obligations and Commercial Commitments for MGE Energy and MGE" under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in the 2025 Annual Report on Form 10-K. 43 Purchase Contracts – MGE Energy and MGE See Footnote 8.c. of Notes to Consolidated Financial Statements in this Report for a description of commitments as of June 30, 2026, that MGE Energy and MGE have entered into with respect to various commodity supply and transportation contracts to meet their obligations to deliver electricity and natural gas to customers. Liquidity and Capital Resources MGE Energy and MGE expect to have adequate liquidity to support future operations and capital expenditures over the next twelve months. Available resources include cash and cash equivalents, operating cash flows, liquid assets, borrowing working capacity under revolving credit facilities, and access to equity and debt capital markets, including our at-the-market program. In May 2026, MGE Energy also completed a public offering of common stock, including forward sale agreements that will provide an additional source of liquidity and financial flexibility to support future capital investment needs upon settlement of the shares of common stock sold under the agreements, as described in Footnote 6.c. of the Notes to Consolidated Financial Statements in this Report. The amount and timing of any financings will be primarily driven by capital investments and cash requirements and will depend upon market conditions, regulatory approvals, and other factors. MGE plans to maintain a capital structure consistent with authorized levels approved by its regulator. See "Credit Facilities" under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources in the 2025 Annual Report on Form 10-K for information regarding MGE Energy's and MGE's credit facilities. Cash Flows The following summarizes cash flows for MGE Energy and MGE during the six months ended June 30, 2026 and 2025: MGE Energy MGE (In thousands) 2026 2025 2026 2025 Cash provided by (used for): Operating activities $ 148,828 $ 133,953 $ 146,450 $ 127,988 Investing activities (216,333) (118,254) (214,022) (112,518) Financing activities 78,452 (27,059) 76,053 (29,437) Cash Provided by Operating Activities Cash flows from operating activities for MGE Energy and MGE principally reflect the receipt of customer payments for electric and gas service and outflows related to fuel for electric generation, purchased power, gas, and operation and maintenance expenditures. The principal increases (decreases) in cash flows from operating activities during the six months ended June 30, 2026, compared to the same period in 2025, were as follows: (In millions) MGE Energy MGE Higher overall collections from customers, driven by higher electric and gas rates $ 38.1 $ 38.1 Changes in income taxes paid/received - includes proceeds from renewable tax credits transferred to other corporate taxpayers during 2026 of $9.5 million 12.1 12.6 Higher payments for fuel and purchased power at our generation plants, as well as higher natural gas costs to our customers (20.9) (20.9) Higher payments for other operation and maintenance expenses (11.7) (9.1) Higher payments for interest (1.9) (1.9) Lower dividend received from ATC (0.5) — Other operating activities (0.3) (0.3) Increase in cash provided by operating activities $ 14.9 $ 18.5 44 Capital Requirements and Investing Activities The principal increases (decreases) in cash flows from investing activities during the six months ended June 30, 2026, compared to the same period in 2025, were as follows: (In millions) MGE Energy MGE Capital expenditures, primarily reflects an increase in electric and gas utility expenditures, specifically related to spending for Sunnyside, Dawn Harvest, Saratoga, and local battery storage construction $ (99.2) $ (99.2) Capital contributions to ATC and other investments (1.8) — Proceeds from the sale of investments 5.3 — Other investing activities (2.4) (2.3) Decrease in cash flows from investing activities $ (98.1) $ (101.5) Cash Used for Financing Activities The principal sources and uses of cash are related to short-term and long-term borrowings and repayments and the payment of cash dividends. The principal increases (decreases) in cash flows from financing activities during the six months ended June 30, 2026, compared to the same period in 2025, were as follows: (In millions) MGE Energy MGE Change in long-term debt(a) $ 88.7 $ 88.7 Higher issuance of common stock 85.1 — Higher cash distribution from parent (MGE Energy) — 77.5 Lower cash dividends to parent (MGE Energy) — 5.5 Change in short-term debt borrowings, net (65.3) (65.3) Higher cash dividends paid, dividend rate per share ($0.950 vs. $0.900) (2.4) — Higher distributions to parent (MGE Energy) from noncontrolling interest, representing distributions from MGE Power Elm Road and MGE Power West Campus(b) — (0.3) Other financing activities (0.6) (0.6) Increase in cash flows from financing activities $ 105.5 $ 105.5 (a)In January 2026, MGE issued $90 million of senior unsecured notes that were used to assist with financing additional capital expenditures and other corporate obligations. In January 2026, MGE completed a redemption of $1.2 million of its outstanding first mortgage bonds. (b) The noncontrolling interest arises from the accounting required for the entities, which are not owned by MGE but are consolidated as VIEs. Capitalization Ratios MGE Energy's capitalization ratios were as follows: MGE Energy June 30, 2026 December 31, 2025 Common shareholders' equity 60.7% 58.9% Long-term debt(a) 37.9% 36.8% Short-term debt 1.4% 4.3% (a)Includes the current portion of long-term debt. Credit Ratings MGE Energy's and MGE's access to the capital markets, including, in the case of MGE, the commercial paper market, and their respective financing costs in those markets, may depend on the credit ratings of the entity that is accessing the capital markets. None of MGE Energy's or MGE's borrowing is subject to default or prepayment as a result of a downgrading of credit ratings, although a downgrading of MGE's credit ratings would increase fees and interest charges under both MGE Energy's and MGE's credit agreements and may affect the collateral required to be posted under derivative transactions. 45 Environmental Matters See the discussion of environmental matters included in the 2025 Annual Report on Form 10-K, as updated by Footnote 8.a. of Notes to Consolidated Financial Statements in this Report. Other Matters Rate Matters In December 2025, the PSCW approved a settlement agreement for MGE's 2026/2027 rate case. As part of that settlement agreement, the PSCW approved a 0.15% increase for electric rates and a 2.77% increase to gas rates for 2026 and a 3.63% increase for electric rates and a 2.04% increase to gas rates for 2027. MGE filed a 2027 Fuel Cost Plan with the PSCW in June 2026. MGE expects a final decision from the PSCW on the Fuel Cost Plan by the end of 2026. Details related to MGE's 2026/2027 settlement are as follows: (Dollars in thousands) Average Rate Base(a) Average CWIP(b) Return on Common Equity(c) Common Equity Component of Regulatory Capital Structure Effective Date Electric (2026 Test Period) $ 1,346,269 $ 37,232 9.8% 56.09% 1/1/2026 Gas (2026 Test Period) $ 375,594 $ 7,764 9.8% 56.09% 1/1/2026 Electric (2027 Test Period) $ 1,537,938 $ 33,082 9.8% 56.05% 1/1/2027 Gas (2027 Test Period) $ 393,558 $ 8,912 9.8% 56.05% 1/1/2027 (a)Average rate base amounts reflect MGE's allocated share of rate base and do not include construction work in progress (CWIP) or a cash working capital allowance and were calculated using a forecasted 13-month average for the test periods. The PSCW provides a return on selected CWIP and a cash working capital allowance by adjusting the percentage return on rate base. (b)50% of the forecasted 13-month average CWIP for the test periods earns an AFUDC return. Projects eligible to earn 100% AFUDC are excluded from this balance and discussed further in the Management's Discussion and Analysis of Financial Condition and Results of Operations - Significant Events section. (c)Returns on common equity may not be indicative of actual returns earned or projections of future returns, as actual returns will be affected by the volume of electricity or gas sold. See Footnote 9 of Notes to Consolidated Financial Statements in this Report for further discussion of rate proceedings and an earnings sharing mechanism if MGE earns above the authorized return on common equity in the rate order. Uyghur Forced Labor Prevention Act The UFLPA, a federal law that became effective in June 2022, prohibits importation of goods, including silica-based products used in the production of solar panels, that are mined, produced, or manufactured wholly or in part in China’s Xinjiang Uyghur Autonomous Region. Suppliers for MGE's current solar projects were able to provide the CBP sufficient documentation to meet WRO and UFLPA compliance requirements, however we cannot currently predict what, if any, impact the UFLPA will have on the overall supply of solar panels into the United States and the related impact to timing and cost of solar projects included in our capital plan. In the event that such disruptions increase costs beyond approved levels, we have filed and expect to continue filing notifications with the PSCW and will seek recovery of those costs in future rate proceedings. The UFLPA Entity List continues to expand, including entities participating in solar and solar supply chain activities. MGE continues to monitor developments related to the UFLPA, evaluate supplier compliance, and assess potential impacts to current and future projects. U.S. Department of Commerce - Solar Cells and Modules In June 2024, following AD/CVD investigations by the DOC and the USITC determining that Chinese manufacturers were circumventing tariffs on solar panels by shipping them through Cambodia, Malaysia, Thailand, and Vietnam, the DOC began applying tariffs to the importation of solar cells from those countries. In the second quarter of 2025, the DOC and USITC issued final determinations affirming and increasing the tariffs. Later that year, the U.S. Court of International Trade ruled that the prior two-year moratorium was unlawful, permitting retroactive collection, though the ruling has been stayed pending appeal to the Federal Circuit. 46 In late 2025, the DOC initiated new AD/CVD investigations into solar imports from India, Indonesia, and Laos. In February and April 2026, the DOC issued preliminary affirmative determinations in the CVD and AD investigations, respectively, resulting in increased preliminary tariff rates. The investigations remain ongoing, and final determinations are expected later in 2026. Additionally, a new 'Section 232' national security investigation into the global polysilicon supply chain was launched in late 2025, which could result in broad, global tariffs on solar components regardless of their country of origin. MGE continues to assess the potential impact of these tariffs on current and future solar projects, which may result in increased costs, delays in construction timelines, or a new and potentially material financial liability due to retroactive tariffs. In the event that such disruptions increase costs beyond approved levels, we have filed and expect to continue filing notifications with the PSCW and will seek recovery of those costs in future rate proceedings. Tariffs U.S. and international trade policies, including tariffs, port fees, trade sanctions, and other import/export regulations, continue to evolve, influenced by geopolitical developments and economic priorities. MGE is proactively evaluating the potential effects of these changes on operating costs and capital investments, particularly for renewable energy and battery storage initiatives. Such policy shifts could lead to higher costs or delays in project timelines. Tax Update - One Big Beautiful Bill Act In July 2025, the OBBBA was signed into law, introducing significant changes to tax credits and compliance requirements. The OBBBA accelerates the termination of the Clean Electricity PTC and ITC for wind and solar projects placed in service after 2027. Pursuant to the OBBBA, the July 4, 2026 commencement-of-construction deadline for wind and solar projects has passed, and projects that did not begin construction by that date generally must be placed in service by December 31, 2027 to remain eligible for these credits. The phase out of PTCs and ITCs does not apply to energy storage, hydroelectric facilities, nuclear, or any other zero emission technology. The OBBBA imposes restrictions on credit eligibility, disallowing credits, and foreign entity material assistance. The Treasury Department issued new beginning-of-construction guidance in August 2025. However, a federal court vacated the guidance in June 2026, reinstating the prior physical work and 5% safe harbor framework, subject to further developments. Interim guidance has also been released on domestic content requirements. MGE has evaluated the impact of the OBBBA and will continue monitoring Treasury Department updates and engaging with industry groups to ensure compliance. Adoption of Accounting Principles and Recently Issued Accounting Pronouncements See Footnote 2 of Notes to Consolidated Financial Statements in this Report for discussion of new accounting pronouncements.