MGEE

MGE Energy is doing what a well-run regulated utility should: net income has climbed every year ($106M→$111M→$118M→$121M→$136M FY2021–25), with FY2025 up 12.7% and diluted EPS up 11.7% to $3.72. The MD&A ties the gains to the right drivers — a higher electric rate base from investments approved in the 2024/2025 rate case, residential customer growth, and strong gas results (retail sales +14%). The balance sheet is sound for the sector: $1.30B equity against $792M long-term debt, retained earnings up 8.9% to $832M, and $263M of operating cash flow funding a growing $67.6M dividend. The diversified segment mix (Electric $85.8M, Gas $16.3M, Nonregulated $24.8M, Transmission $9.5M) adds resilience.

The catch is twofold. First, FY2025's growth was meaningfully weather-flattered — management cites heating degree days up ~18% — so the 12.7% earnings jump is not a clean run-rate. Second, the 2024/2025 rate order imposes an earnings-sharing mechanism that caps retained upside above a 9.7% authorized ROE (100% of the next 60bps split, then full refund), and reported ROE is already only 10.4%. That structurally limits how much earnings can outrun the regulated rate base. ATC's authorized ROE is also under FERC challenge, and ATC supplied 6.6% of 2025 net income.