SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: MARCH 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from: _____________ to
___________
Commission File Number 0-1125
MADISON GAS AND ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Wisconsin 39-0444025
(State or other jurisdiction of (IRS Employer Identification
No.)
incorporation or organization)
133 South Blair Street, Madison, Wisconsin 53703
(Address of principal executive offices and ZIP code)
(608) 252-7000
(Registrant's telephone number including area code)
Common Stock Outstanding at May 14, 1997: 16,079,718
Shares
Indicate by check mark whether the registrant (1) has filed all
reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject
to such
filing requirements for the past 90 days. Yes [X] No [ ]
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED INCOME
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Three
Months Ended
March 31,
1997
1996
<S> <C>
<C>
STATEMENTS OF INCOME
Operating Revenues:
Electric . . . . . . . . . . . . . . . . . . $37,431
$36,078
Gas . . . . . . . . . . . . . . . . . . . . 47,482
43,977
Total Operating Revenues . . . . . . . . . 84,913
80,055
Operating Expenses:
Fuel for electric generation . . . . . . . . 7,509
6,559
Purchased power . . . . . . . . . . . . . . 4,314
1,892
Natural gas purchased . . . . . . . . . . . 33,176
29,568
Other operations . . . . . . . . . . . . . . 15,358
14,068
Maintenance . . . . . . . . . . . . . . . . 2,540
2,140
Depreciation and amortization . . . . . . . 6,364
6,197
Other general taxes . . . . . . . . . . . . 2,214
2,245
Income tax items . . . . . . . . . . . . . . 4,085
5,642
Total Operating Expenses . . . . . . . . . 75,560
68,311
Net Operating Income . . . . . . . . . . . . . 9,353
11,744
Allowance for funds used during construction -
equity funds . . . . . . . . . . . . . . . . 12
10
Other income, net . . . . . . . . . . . . . . 531
233
Non-utility operating income/(loss), net, . . 786
(1,912)
Income before interest expense. . . . . . . . 10,682
10,075
Interest expense:
Interest on long-term debt . . . . . . . . . 2,404
2,516
Other interest . . . . . . . . . . . . . . . 248
198
Allowance for funds used during construction -
borrowed funds . . . . . . . . . . . . . . (6)
(5)
Net Interest Expense . . . . . . . . . . . . 2,646
2,709
Net Income. . . . . . . . . . . . . . . . . . $ 8,036
$ 7,366
Earnings per share of common stock (Note 3). . $0.50
$0.46
STATEMENTS OF RETAINED INCOME
Balance - beginning of period. . . . . . . . . $50,451
$64,499
Earnings on common stock. . . . . . . . . . . 8,036
7,366
Cash dividends on common stock (Note 3). . . . (5,146)
(5,092)
Balance - end of period. . . . . . . . . . . . $53,341
$66,773
The accompanying notes are an integral part of the above
statements.
/TABLE
<PAGE>
<TABLE>
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Three
Months Ended
March 31,
1997
1996
<S> <C>
<C>
Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . $
8,036 $ 7,366
Items not affecting working capital:
Depreciation and amortization . . . . . . . . .
6,364 6,197
Deferred income taxes . . . . . . . . . . . . .
17 (1,027)
Amortization of nuclear fuel . . . . . . . . . .
- - 755
Amortization of investment tax credits . . . . .
(191) (188)
Allowance for funds used during construction -
equity funds . . . . . . . . . . . . . . . . .
(12) (10)
Other . . . . . . . . . . . . . . . . . . . . .
180 (975)
Net funds provided from operations . . . . .
14,394 12,118
Changes in working capital, excluding cash
equivalents, sinking funds,
maturities, and interim loans:
Decrease in current assets . . . . . . . . . . .
22,801 4,340
(Decrease)/increase in current liabilities . . .
(13,812) 11,162
Other noncurrent items, net . . . . . . . . . . .
7,096 3,181
Cash provided by Operating Activities . . . . .
30,479 30,801
Financing Activities:
Cash dividends on common and preferred stock . . .
(5,146) (5,092)
Other decreases in First Mortgage Bonds . . . . .
9 9
Decrease in interim loans . . . . . . . . . . . .
(21,250) (20,500)
Cash used for Financing Activities . . . . . . .
(26,387) (25,583)
Investing Activities:
Additions to utility plant and nuclear fuel . . .
(3,317) (3,350)
Allowance for funds used during construction -
borrowed funds . . . . . . . . . . . . . . . . .
(6) (5)
Increase in nuclear decommissioning fund . . . . .
(1,141) (1,076)
Cash used for Investing Activities . . . . . . .
(4,464) (4,431)
Change in Cash and Cash Equivalents (Note 6) . . . .
(372) 787
Cash and cash equivalents at beginning of period .
5,288 2,844
Cash and cash equivalents at end of period . . . $
4,916 $ 3,631
The accompanying notes are an integral part of the above
statements.
</TABLE>
<PAGE>
<TABLE>
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Mar.
31, Dec. 31,
1997 1996
<S> <C>
<C>
ASSETS
Utility Plant, at original cost, in service:
Electric . . . . . . . . . . . . . . . . . . . . .
$503,436 $500,690
Gas . . . . . . . . . . . . . . . . . . . . . . .
179,089 178,312
Gross plant in service . . . . . . . . . . . . .
682,525 679,002
Less accumulated provision for depreciation . . .
(380,432) (374,315)
Net plant in service . . . . . . . . . . . . . .
302,093 304,687
Construction work in progress . . . . . . . . . .
6,744 7,517
Nuclear decommissioning fund (Note 2) . . . . . .
45,961 44,617
Nuclear fuel, net . . . . . . . . . . . . . . . .
9,111 8,378
Total Utility Plant . . . . . . . . . . . . . .
363,909 365,199
Other property and investments . . . . . . . . . . .
7,177 7,115
Current Assets:
Cash and cash equivalents . . . . . . . . . . . .
4,916 5,288
Accounts receivable, less reserves of $1,555 and
$1,220, respectively . . . . . . . . . . . . . .
31,328 39,145
Unbilled revenue . . . . . . . . . . . . . . . . .
7,622 13,852
Materials and supplies, at average cost . . . . .
5,766 5,740
Fossil fuel, at average cost . . . . . . . . . . .
1,653 1,808
Stored natural gas, at average cost . . . . . . .
1,729 7,189
Prepaid taxes . . . . . . . . . . . . . . . . . .
4,421 7,258
Other prepayments . . . . . . . . . . . . . . . .
1,099 1,429
Total Current Assets . . . . . . . . . . . . . .
58,534 81,709
Deferred charges . . . . . . . . . . . . . . . . . .
22,674 30,146
Total Assets . . . . . . . . . . . . . . . .
$452,294 $484,169
CAPITALIZATION AND LIABILITIES
Capitalization (see statement) . . . . . . . . . . .
$310,874 $307,975
Current Liabilities:
Long-term debt sinking fund requirements (Note 4) .
200 200
Interim loans - commercial paper outstanding . . .
8,500 29,750
Accounts payable . . . . . . . . . . . . . . . . .
15,275 30,094
Accrued taxes . . . . . . . . . . . . . . . . . .
1,456 79
Accrued interest . . . . . . . . . . . . . . . . .
3,598 2,322
Accrued nonregulated items . . . . . . . . . . . .
- - 7,923
Other . . . . . . . . . . . . . . . . . . . . . .
13,930 7,653
Total Current Liabilities . . . . . . . . . . .
42,959 78,021
Other Credits:
Deferred income taxes . . . . . . . . . . . . . .
46,988 46,972
Regulatory liability - SFAS 109 . . . . . . . . .
23,915 23,914
Investment tax credit - deferred . . . . . . . . .
11,248 11,439
Other regulatory liabilities. . . . . . . . . . .
16,310 15,848
Total Other Credits . . . . . . . . . . . . . .
98,461 98,173
Commitments . . . . . . . . . . . . . . . . . . . . .
- - -
Total Capitalization and Liabilities . . . .
$452,294 $484,169
The accompanying notes are an integral part of the balance
sheets.
</TABLE>
<PAGE>
<TABLE>
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CAPITALIZATION
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Mar. 31,
Dec. 31,
1997
1996
<S> <C>
<C>
Common Shareholders' Equity:
Common stock - par value $1 per share:
Authorized 50,000,000 shares
Outstanding 16,079,718 shares . . . . . . . $ 16,080
$ 16,080
Amount received in excess of par value . . . . 112,558
112,558
Retained income . . . . . . . . . . . . . . . 53,341
50,451
Total Common Shareholders' Equity . . . . . 181,979
179,089
First Mortgage Bonds:
6 1/2%, 2006 series:
Pollution Control Revenue Bonds . . . . . . 6,875
6,875
8.50%, 2022 series . . . . . . . . . . . . . . 40,000
40,000
6.75%, 2027A series:
Industrial Development Revenue Bonds . . . . 28,000
28,000
6.70%, 2027B series:
Industrial Development Revenue Bonds . . . . 19,300
19,300
7.70%, 2028 series . . . . . . . . . . . . . . 25,000
25,000
First Mortgage Bonds Outstanding . . . . . . 119,175
119,175
Unamortized discount and premium on bonds, net. (1,080)
(1,089)
Long-term debt sinking fund requirements
Note 4) . . . . . . . . . . . . . . . . . . . (200)
(200)
Total First Mortgage Bonds . . . . . . . . . 117,895
117,886
Other Long-Term Debt:
6.01%, due 2000 . . . . . . . . . . . . . . . 11,000
11,000
Total Capitalization . . . . . . . . . . . . $310,874
$307,975
The accompanying notes are an integral part of the above
statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 1997
The consolidated financial statements included herein have been
prepared by
the Company, without audit, pursuant to the rules and regulations
of the
Securities and Exchange Commission (SEC). Certain information and
footnote
disclosures normally included in financial statements prepared in
accordance
with generally accepted accounting principles have been condensed
or omitted
pursuant to such rules and regulations, although the Company
believes that the
disclosures made are adequate to make the information presented
not
misleading. In the opinion of Company management, all adjustments
(consisting
of only normal recurring adjustments) necessary to fairly present
results have
been made.
It is suggested that these consolidated financial statements be
read in
conjunction with the financial statements and the notes thereto
set forth on
pages 14 through 19 of the Company's 1996 Annual Report to
Shareholders and in
the Company's 1996 Annual Report on Form 10-K.
1. Summary of Significant Accounting Policies
The accounting and financial policies relative to the
following items have
been described in the "Notes to Consolidated Financial
Statements" in the
Company's 1996 Annual Report to Shareholders and have been
omitted herein
because they have not changed materially through the date of
this report.
a. General
b. Utility plant
c. Nuclear fuel
d. Joint plant ownership
e. Depreciation
f. Income taxes
g. Pension plans
h. Postretirement benefits other than pensions
i. Fair value of financial instruments
j. Capitalization matters: First Mortgage Bonds and other
long-term debt;
preferred stock; and notes payable to banks, commercial
paper, and
lines of credit
k. Gas marketing subsidiaries
l. GLENCO economic benefit
m. Commitments
n. Segments of business
o. Regulatory assets and liabilities
<PAGE>
2. Nuclear Decommissioning
Nuclear decommissioning costs are accrued over the estimated
service life
of the Kewaunee Nuclear Power Plant (Kewaunee), which is
through the year
2013. These costs are currently recovered from customers in
rates and are
deposited in external trusts. The Company is presently funding
decommissioning costs at the $3.1 million level. A higher
annual amount is
being requested by the Company in its pending rate case (see
Item 5 -
Other Information). These trusts are shown on the balance
sheet in the
utility plant section, and as of March 31, 1997, these trusts
totaled
$46.0 million (fair market value).
Decommissioning costs are recovered through depreciation
expense,
exclusive of earnings on the trusts. Net earnings on the
trusts are
included in other income. The long-term, after-tax earnings
assumption on
these trusts is 6.2 percent.
The Company's share of Kewaunee decommissioning costs is
estimated to be
$71.8 million in current dollars based on a site-specific
study performed
in 1992 using immediate dismantlement as the method of
decommissioning.
Decommissioning costs are assumed to inflate at an average
rate of
6.1 percent. Physical decommissioning is expected to occur
during the
period 2014 through 2021, with additional expenditures being
incurred
during the period 2022 through 2050 related to the storage of
spent
nuclear fuel at the site.
3. Per-Share Amounts
Earnings per share of common stock are computed on the basis
of the
weighted average of the daily number of shares outstanding.
For the three
months ended March 31, 1997 and 1996, there were 16,079,718
shares.
Dividends declared and paid per share of common stock for the
three months
ended March 31, 1997 and 1996, were $0.320 and $0.317,
respectively.
4. Rate Matters
In September 1996, the Company announced its intention to
increase
electric rates for the test period beginning July 1, 1997, by
$7.7
million, or 5.1 percent, annually and increase natural gas
rates by $3.7
million, or 3.8 percent, annually for the same time period.
The proposed
changes are based on a requested return on common equity of
12.0 percent
and would remain in effect through 1998. The proposed early
recovery of
the Kewaunee investment and accelerated decommissioning
collections are
the primary reasons for the increase in electric rates.
Hearings were held
during April 1997 with a decision expected by the end of the
second
quarter of 1997.
<PAGE>
The Company received an interim rate order from the PSCW in
March 1997.
The order provides for a 0.507 cent per kilowatt-hour
surcharge on
customers' bills to cover the continuing costs that are being
incurred by
the Company while Kewaunee remains out of service. The interim
electric
rate order is scheduled to remain in effect until either
Kewaunee returns
to service or the Company receives its final rate order.
Rates for electric service have not been increased since 1990
and were
reduced in 1993 and 1994. Gas rates have not been increased
since 1989 and
were reduced in 1990, 1992, and 1993.
5. Supplemental Cash Flow Information
For purposes of the Consolidated Statements of Cash Flows, the
Company
considers cash equivalents to be those investments that are
highly liquid
with maturity dates of less than three months.
Cash payments for interest, net of amounts capitalized, and
income taxes
were as follows:
Three Months Ended
March 31,
(Thousands of dollars) 1997
1996
Interest, net of amounts capitalized $1,302
$1,422
Income taxes (received)/paid ($256)
$2,102
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and
Results of Operations
Liquidity and Capital Resources
The Company's internally generated funds were greater than the
funds used for
construction and nuclear fuel expenditures during the three
months ended
March 31, 1997 and 1996. It is anticipated that 1997 construction
and nuclear
fuel expenditures will be approximately $30.8 million.
Cash provided by operating activities decreased $0.3 million, or
1.1 percent,
from the same three-month period a year ago due to a decrease in
current
liabilities.
Cash used for financing activities increased $0.8 million, or 3.1
percent,
compared to the same period a year ago. This was mainly
attributable to a
decrease in the Company's short-term debt.
Bank lines of credit available to the Company as of March 31,
1997, were
$45 million.
The Company's capitalization ratios were as follows:
Mar. 31, 1997 Dec. 31,
1996
Common shareholders' equity 56.9%
53.0%
Long-term debt* 40.4
38.2
Short-term debt 2.7
8.8
*Includes current maturities and current sinking fund
requirements.
The Company's bonds are currently rated Aa2 by Moody's Investors
Service,
Inc., and AA by Standard & Poor's Corporation. The Company's
dealer-issued
commercial paper carries the highest ratings assigned by Moody's
and
Standard & Poor's.
Business Environment
On May 1, 1995, Northern States Power Company and Wisconsin
Energy Corporation
announced a proposed merger. If approved, the two companies would
form a
holding company called Primergy Corporation (Primergy), creating
the tenth
largest utility company in the United States. The merger has been
approved by
the shareholders of both companies. Various regulatory agency
approvals are
required including the SEC, the Nuclear Regulatory Commission,
the Federal
Energy Regulatory Commission (FERC), and state regulatory
agencies.
<PAGE>
The Company and a broad coalition of customer groups are opposing
approval of
the merger on the grounds that the merger would violate antitrust
laws and
principles by increasing the exercise of anticompetitive market
power by
Primergy. Studies show Primergy could significantly raise prices
for electric
customers in Wisconsin by exercising anticompetitive market
power. Hearings on
the proposed merger have been concluded before the FERC and
Public Service
Commission of Wisconsin (PSCW).
Regulatory Environment
In December 1995, the PSCW outlined its plan for the
restructuring of the
electric utility industry in Wisconsin. The PSCW's plan generally
followed a
plan proposed by the Company and a broad coalition of customers,
public
interest groups, cooperative associations, municipal power
entities, organized
labor, and others. Under the proposed PSCW plan, the Company is
developing
plans illustrating how it intends to separate generation,
transmission,
distribution, and energy services into separate business units.
The PSCW would
continue distribution and transmission regulation. To limit the
market power
of current transmission owners, the PSCW proposes moving either
to appointment
of an independent system operator or to organization of a single
statewide
transmission system. Additional proceedings and presentation to
the state
legislature on the PSCW's electric utility restructuring proposal
are planned
prior to the target implementation date. The targeted date under
the PSCW
proposal is the year 2001, at which time consumers will be able
to choose
their electricity provider.
On November 8, 1996, the PSCW issued an order stating that the
Company must
file a modified one-for-one recovery mechanism or an incentive
mechanism. On
February 7, 1997, the Company filed a modified one-for-one
recovery mechanism
and supporting testimony. Approval of a mechanism from the PSCW
is expected by
July 1, 1997. The proposed implementation date is November 1,
1997. The
proposed modified one-for-one recovery mechanism provides
appropriate price
signals to the Company's customers while minimizing the risk to
shareholders.
Results of Operations
Electric Sales and Revenues
Electric retail sales increased 2.5 percent in the three-month
period ending
March 31, 1997, over the comparable period last year.
Three Months Ended
March 31,
Electric Sales (megawatt-hours) 1997 1996
% Change
Residential 188,905 193,420
(2.3)%
Large commercial and industrial 230,809 223,912
3.1
Small commercial and industrial 172,841 172,573
0.2
Other 87,070 73,246
18.9
Total Retail 679,625 663,151
2.5
Resale 5,584 9,159
(39.0)
Total Sales 685,209 672,310
1.9
<PAGE>
The increased sales were due, in part, to an increased customer
base over the
comparative three-month period ended a year ago. Electric
operating revenues
for the same period increased approximately $1.4 million, or 3.8
percent. The
increase in electric operating revenues was the result of
increased sales and
an electric rate surcharge effective March 6, 1997, which is
related to the
extended outage at Kewaunee (see table on previous page).
Gas Sales and Revenues
The decrease in gas delivered was due to the warmer weather
experienced in the
first quarter of this year (see table below).
The average temperature for the three months ended March 31,
1997, was
24.9 degrees Fahrenheit as compared to 22.0 degrees Fahrenheit
for the same
three months ended last year, or 2.9 percent warmer than last
year's first
quarter.
Three Months Ended
March 31,
Gas Deliveries (thousands of therms) 1997 1996
% Change
Residential 40,961 44,682
(8.3)%
Commercial and industrial 36,399 39,231
(7.2)
Total Retail 77,360 83,913
(7.8)
Transport 9,342 9,309
0.4
Total Gas Deliveries 86,702 93,222
(7.0)
For the three months ended March 31, 1997, gas revenues increased
$3.5
million, or 8.0 percent, compared to last year despite a 7.0
percent decrease
in gas deliveries for the same time period. This was the result
of higher unit
gas costs. Higher gas costs are passed on to customers in the
form of higher
rates through the purchased gas adjustment clause, thus
increasing natural gas
revenues on a one-for-one basis.
Electric Fuel and Natural Gas Costs
Fuel cost for electric generation and purchased power increased
39.9 percent,
or $3.4 million, for the first three months of 1997 when compared
to the same
time period in 1996. The electric margin decreased $2.0 million,
or 7.3
percent, for the first quarter of 1997 compared to last year's
first quarter.
The primary factor for the decrease in the electric margin is the
increase in
replacement power costs due to the extended outage at Kewaunee.
The Company
was granted a surcharge March 6, 1997, to offset these higher
costs.
Natural gas costs for the three months ended March 31, 1997,
versus the 1996
comparative period increased about $3.6 million, or 12.2 percent.
This is
mainly due to an increase in the cost per therm of $0.08, or 21.6
percent.
<PAGE>
Other Operating Expenses
Income tax items decreased 27.6 percent for the first three
months of 1997
when compared to the same time period in 1996. This was mainly
attributable to
a decrease in pretax operating income.
Operations and maintenance costs increased $1.7 million, or 10.4
percent, for
the three months ended March 31, 1997, compared to the same time
period a year
ago. This is due to an increase in industry restructuring costs
and costs
associated with participation in proposed utility merger filings.
Other Items
Interest expense for the three months ended March 31, 1997,
decreased
2.3 percent when compared to the same time period for 1996. This
is due to
lower interest rates in the first quarter of 1997 compared to the
same period
last year.
Non-utility operating income for the three months ended March 31,
1997,
increased $2.7 million from last year's first quarter. The
Company's two gas
marketing subsidiaries, Great Lakes Energy Corp. and American
Energy
Management, Inc., formed a joint venture effective January 1,
1997, with
National Gas & Electric L.P. to market natural gas and energy
services to
industrial and commercial customers in the Great Lakes region.
The joint
venture is called National Energy Management, L.L.C., and is
based in Chicago.
The Company's non-utility operating income was $0.8 million for
the three
months ended March 31, 1997. For the same three months ended a
year ago, the
Company's two gas marketing subsidiaries experienced net
operating losses of
$1.9 million.
<PAGE>
PART II. OTHER INFORMATION
Item 4 Results of Votes of Security Holders
The Company's Annual Meeting of Shareholders was held
on May 5,
1997, in Middleton, Wisconsin. Proxies for the
meeting were
solicited pursuant to Regulation 14A of the
Securities Exchange
Act. The election of a slate of nominees for
directors of Class II
to hold office until 2000 were voted upon by the
shareholders at
the meeting. Listed below are the results of the
shareholders'
votes.
The election of members of the Board of Directors
Class II to hold
office until 2000:
Withhold
For
Authority/Against
H. Lee Swanson 13,095,776.8676
189,501.5522
Frank C. Vondrasek 13,086,008.3095
199,270.1103
Item 5 Other Information
Kewaunee Nuclear Power Plant
Kewaunee is operated by Wisconsin Public Service
Corporation. The
Company has a 17.8 percent ownership interest in
Kewaunee.
Kewaunee is operating with a license that expires in
2013.
Kewaunee continues to be out of service for
additional repairs to
the steam generators. These repairs could enable
Kewaunee to
return to service sometime in mid-1997 and are
expected to cost
approximately $7.5 million, of which the Company's
share is
approximately $1.3 million. The PSCW has authorized
deferral of
steam generator repair costs at Kewaunee incurred on
or after
March 20, 1997. The owners will request future rate
recovery of
these deferred costs. The PSCW authorization to defer
repair costs
does not constitute absolute assurance of future
recovery;
however, future recovery is probable.
<PAGE>
The Company is also incurring costs associated with
the
acquisition of replacement power while Kewaunee
remains out of
service. The Company's cost to use other generating
units and to
purchase replacement power is expected to cost on
average $38,000
a day. Effective March 6, 1997, the Company received
an interim
rate order from the PSCW authorizing a 0.507 cent per
kilowatt-
hour electric rate surcharge on customers' bills to
cover the
continuing costs that will be incurred while Kewaunee
remains out
of service. The interim electric rate order is
effective until
Kewaunee returns to service or a final rate order is
issued,
whichever comes first. The Company anticipates it
will have
sufficient sources to meet its customers' energy
requirements
during the Kewaunee repair outage.
At December 31, 1996, the net plant carrying amount
of the
Company's investment in Kewaunee was approximately
$21.7 million.
The Company's share of the current estimated costs to
decommission
Kewaunee, assuming early retirement, exceeds the fair
market value
of decommissioning trust assets at December 31, 1996,
by $26.2
million. The PSCW approved the accelerated recovery
of the current
undepreciated Kewaunee plant balance and the unfunded
estimated
costs to decommission the plant through 2002. This
was prompted by
the substantial uncertainty regarding the expected
useful life of
the plant. If Kewaunee is retired early, the Company
believes it
will be able to meet its commitments to supply energy
to its
customers through either (1) possible investments in
new
generating units, and/or (2) contracting for
additional purchased
power. The Company is considering various options
with respect to
Kewaunee, including divestiture or early closure of
the nuclear
plant.
For additional information regarding Kewaunee, refer
to the
Company's Annual Report on Form 10-K for the year
ended December
31, 1996.
Summer Power Demand
Some areas of Wisconsin and the Upper Midwest region
are facing
unusual electric supply challenges that could affect
business and
residential customers over the next six months. About
one-third of
the region's nuclear generating capacity is
temporarily out of
service due to a series of maintenance outages. This
includes
Kewaunee and the Point Beach nuclear plant, which is
owned by
Wisconsin Electric Power Company, in eastern
Wisconsin and several
nuclear units owned by Commonwealth Edison in
Illinois. Unless
these plants can be brought back on line, Wisconsin
may have to
rely on importing more electricity than normal.
However, the
capacity of the regional transmission system for
imports into
eastern and central Wisconsin is limited. Needed
maintenance also
is reducing output at some of the region's coal-fired
power plants
this spring, adding to the energy supply challenges.
<PAGE>
Wisconsin utilities are working together and with the
PSCW to
assure adequate power supplies for their customers in
the coming
months. Specifically, the Wisconsin Reliability
Assessment Group
members are taking the following actions:
1. Rescheduling maintenance to keep key plants
available this
summer;
2. Upgrading the transmission system to improve its
capacity; and
3. Working aggressively to bring nuclear plants back
on line
during May and June.
Item 6(a) Exhibits
Exhibit 4 Indenture of Mortgage and Deed of Trust between the
Company and
Firstar Trust Company, as Trustee (and supplements)
reference was
provided in the Company's 1996 Annual Report on Form
10-K
(Commission File No. 0-1125).
Exhibit 12 Ratio of Earnings to Fixed Charges
Exhibit 27 Appendix E to Item 601(c) of Regulation S-K: Public
Utility
Companies Financial Data Schedule UT.
Exhibit Page
Exhibit 4 NA
Exhibit 12 17
Exhibit 27 18
Item 6(b) Reports on Form 8-K
No reports on 8-K were filed during the quarter for
which this
report is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the
registrant has duly caused this report to be signed on its behalf
by the
undersigned thereunto duly authorized.
MADISON GAS AND ELECTRIC COMPANY
(Registrant)
Date: May 14, 1997 /s/ David C. Mebane
David C. Mebane
Chairman, President and Chief Executive
Officer
(Duly Authorized Officer)
Date: May 14, 1997 /s/ Joseph T. Krzos
Joseph T. Krzos
Vice President - Finance
(Chief Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from SEC
Form 10-Q. Items 1 through 22 are as of March 31, 1997. Items 23 through 38 are
for the three months ended March 31, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 363,909
<OTHER-PROPERTY-AND-INVEST> 7,177
<TOTAL-CURRENT-ASSETS> 58,534
<TOTAL-DEFERRED-CHARGES> 22,674
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 452,294
<COMMON> 16,080
<CAPITAL-SURPLUS-PAID-IN> 112,558
<RETAINED-EARNINGS> 53,341
<TOTAL-COMMON-STOCKHOLDERS-EQ> 181,979
0
0
<LONG-TERM-DEBT-NET> 128,895
<SHORT-TERM-NOTES> 8,500
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 200
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 132,720
<TOT-CAPITALIZATION-AND-LIAB> 452,294
<GROSS-OPERATING-REVENUE> 84,913
<INCOME-TAX-EXPENSE> 4,085
<OTHER-OPERATING-EXPENSES> 71,475
<TOTAL-OPERATING-EXPENSES> 75,560
<OPERATING-INCOME-LOSS> 9,353
<OTHER-INCOME-NET> 1,329
<INCOME-BEFORE-INTEREST-EXPEN> 10,682
<TOTAL-INTEREST-EXPENSE> 2,646
<NET-INCOME> 8,036
0
<EARNINGS-AVAILABLE-FOR-COMM> 8,036
<COMMON-STOCK-DIVIDENDS> (5,146)
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 30,479
<EPS-PRIMARY> 0.50
<EPS-DILUTED> 0
</TABLE>
Ratio of Earnings to Fixed Charges
Exhibit 12
Three Months
Ended
(Thousands of dollars) March 31, 1997
Earnings
Income before interest expense . . . . . . . . . $10,682
Add:
Income tax items . . . . . . . . . . . . . . . . 4,085
Income tax on other income . . . . . . . . . . . 817
Amortization of debt discount, premium expense . 72
Allowance for funds used during construction -
borrowed funds . . . . . . . . . . . . . . . . 6
Interest on rentals . . . . . . . . . . . . . . . 240
Total Earnings . . . . . . . . . . . . . . . . $15,902
Fixed Charges
Interest on long-term debt . . . . . . . . . . . $ 2,404
Other interest . . . . . . . . . . . . . . . . . 248
Amortization of debt discount, premium expense . 72
Interest on rentals . . . . . . . . . . . . . . . 240
Total Fixed Charges . . . . . . . . . . . . . $ 2,964
Ratio of Earnings to Fixed Charges . . . . . . . 5.37x
