SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: SEPTEMBER 30, 1998
(Date of earliest event reported)
Commission File Number 0-1125
MADISON GAS AND ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
WISCONSIN
(State or other jurisdiction of incorporation or organization)
39-0444025
(IRS Employer Identification No.)
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)
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ITEM 5 - OTHER EVENTS
On September 30, 1998, Madison Gas and Electric Company (the Company) issued a
press release (a copy of which is attached as Exhibit 99 to this Current Report
on Form 8-K) announcing its agreement with Wisconsin Public Service Corporation
(WPSC) to transfer to WPSC the Company's 17.8 percent ownership interest in the
Kewaunee Nuclear Power Plant.
EXHIBIT 99 - ADDITIONAL EXHIBITS
Madison Gas and Electric Company's press release dated September 30, 1998.
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: September 30, 1998 /s/ David C. Mebane
David C. Mebane
Chairman, President and Chief Executive Officer
(Duly Authorized Officer)
Date: September 30, 1998 /s/ Terry A. Hanson
Terry A. Hanson
Vice President - Finance
(Chief Financial and Accounting Officer)
Exhibit 99
Madison Gas and Electric Company
EXHIBIT INDEX TO FORM 8-K CURRENT REPORT
September 30, 1998
MGE's Press Release Dated September 30, 1998
MGE Divests Nuclear Power to Protect Customers and Investors
Madison, Wis., Sept. 30, 1998--Madison Gas and Electric Co. (MGE) finalized an
agreement to sell its share of the Kewaunee Nuclear Power Plant in a deal that
will result in lower prices for MGE's customers and less risk for its investors,
according to Senior Vice President - Energy Services Mark C. Williamson.
"After the sale occurs, our customers will see significant savings from
replacing the power from Kewaunee with power from other options we have,"
Williamson said.
MGE has agreed to sell its share of the Kewaunee Plant (17.8%) to Wisconsin
Public Service Corp. (WPSC). WPSC is also building a natural gas-fired
combustion turbine for MGE. The 83-megawatt (MW) unit at West Marinette will
serve MGE customers during peak times.
If approved by state and federal regulators, the transaction will close when the
Kewaunee Plant is shut down for a major overhaul, currently scheduled for the
spring of 2000. Two steam generators must be replaced at a cost of about
$90 million to keep the Kewaunee Plant operating through at least 2013. MGE's
share of the steam generator cost would have been about $17 million.
MGE has opposed replacing the steam generators because its projections show that
other lower-cost electricity could meet its customers' needs.
MGE has several options for replacing power from the Kewaunee Plant. The company
will own more gas-fired generation after the deal closes with WPSC. MGE may also
contract for power from:
- - Existing plants in Wisconsin that produce power at a much lower cost.
- - New generation that is being built in Wisconsin by independent companies.
- - Several sources outside of the state as transmission access improves.
- - WPSC, at set prices, for up to two years after the deal closes.
"New generation and transmission projects will expand our opportunities in the
marketplace over the next two years," Williamson said. "We will carefully
evaluate all options to achieve lower costs for customers, while maintaining
high reliability."
Work is well under way on a new 180-MW gas-fired generating plant in eastern
Wisconsin that will be on line by June 1999. Applications for up to another
825 MW of generating capacity that will produce power by June 2000 are currently
before state regulators for approval.
By June 2000, the Public Service Commission expects to decide where transmission
lines will be built in Wisconsin to ease constraints for importing power. The
Wisconsin Reliability Act, passed earlier this year, also requires an
Independent System Operator to be managing transmission lines in the state by
June 2000. All of these factors will improve MGE's access to transmission
lines and sources of lower-cost power, according to Williamson.
MGE is also getting out of the nuclear power business to eliminate financial
risks for investors and customers when unexpected outages occur.
"The extended outage at the Kewaunee Plant in 1997 cost our shareholders and
customers nearly $5 million above and beyond the budgeted repair costs,"
Williamson said. "We are eliminating this risk as well as future costs that
could be incurred for relicensing the plant, meeting stricter regulations or
decommissioning the plant."
"As a minority owner in the Kewaunee Plant, MGE is not in the driver's seat,"
Williamson said. "Divesting our interest in this plant will give us more
flexibility to choose options that make sense for our customers and
shareholders."
MGE is a public utility that generates, transmits and distributes electricity
to 123,000 customers in Dane County. The company also transports and distributes
natural gas to 107,000 customers in seven South Central and Western Wisconsin
counties. MGE has served the Madison area since 1896.
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