MADISON GAS AND ELECTRIC COMPANY,
THE LENDERS,

BANK ONE, NA,
AS ADMINISTRATIVE AGENT,

U.S. BANK NATIONAL ASSOCIATION,
AS SYNDICATION AGENT,

MARSHALL & ILSLEY BANK
AND
ASSOCIATED BANK, N.A.,
AS MANAGING AGENTS

AND

BANC ONE CAPITAL MARKETS, INC.
AS LEAD ARRANGER AND SOLE BOOK RUNNER

2.1. The Facility 10
2.2. Advances 11
2.3. Method of Borrowing 12
2.4. Upfront Fee; Facility Fee; Utilization Fee; Reductions in Aggregate Commitment 12
2.5. Minimum Amount of Each Advance 12
2.6. Optional Principal Payments 12
2.7. Changes in Interest Rate, etc 13
2.8. Rates Applicable After Default 13
2.9. Method of Payment 13
2.10. Noteless Agreement; Evidence of Indebtedness 13
2.11. Telephonic Notices 14
2.12. Interest Payment Dates; Interest and Fee Basis 14
2.13. Notification of Advances, Interest Rates, Prepayments and Commitment Reductions 15
2.14. Lending Installations 15
2.15. Non-Receipt of Funds by the Administrative Agent 15
2.16. Extension of Facility Termination Date 15

ARTICLE III
YIELD PROTECTION; TAXES

3.1. Yield Protection 16
3.2. Changes in Capital Adequacy Regulations 17
3.3. Availability of Types of Advances 17
3.4. Funding Indemnification 17
3.5. Taxes 18
3.6. Lender Statements; Survival of Indemnity 19

ARTICLE IV
CONDITIONS PRECEDENT

4.1. Initial Advance 20
4.2. Each Advance 21

ARTICLE V
REPRESENTATIONS AND WARRANTIES

5.1. Existence and Standing 22
5.2. Authorization and Validity 22
5.3. No Conflict; Government Consent 22
5.4. Financial Statements 22
5.5. Material Adverse Change 23
5.6. Taxes 23
5.7. Litigation and Contingent Obligations 23
5.8. Subsidiaries 23
5.9. ERISA 23
5.10. Accuracy of Information 23
5.11. Regulation U 24
5.12. Material Agreements 24
5.13. Compliance With Laws 24
5.14. Ownership of Properties 24
5.15. Plan Assets; Prohibited Transactions 24
5.16. Environmental Matters 24
5.17. Investment Company Act 25
5.18. Public Utility Holding Company Act 25
5.19. Insurance 25
5.20. Regulatory Approval 25

ARTICLE VI
COVENANTS

6.1. Financial Reporting 25
6.2. Litigation 26
6.3. Use of Proceeds 26
6.4. Notice of Default 27
6.5. Conduct of Business 27
6.6. Taxes 27
6.7. Insurance 27
6.8. Compliance with Laws 27
6.9. Maintenance of Properties 27
6.10. Inspection 27
6.11. Merger 28
6.12. Sale of Assets 28
6.13. Liens 28
6.14. Affiliates 30
6.15. Financial Covenant 30

ARTICLE VII
DEFAULTS

ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

8.1. Acceleration 32
8.2. Amendments 32
8.3. Preservation of Rights 33

ARTICLE IX
GENERAL PROVISIONS

9.1. Survival of Representations 33
9.2. Governmental Regulation 33
9.3. Headings 33
9.4. Entire Agreement 33
9.5. Several Obligations; Benefits of this Agreement 34
9.6. Expenses; Indemnification 34
9.7. Numbers of Documents 34
9.8. Accounting 35
9.9. Severability of Provisions 35
9.10. Nonliability of Lenders 35
9.11. Confidentiality 35
9.12. Nonreliance 36
9.13. Disclosure 36

ARTICLE X
THE ADMINISTRATIVE AGENT

10.1. Appointment; Nature of Relationship 36
10.2. Powers 36
10.3. General Immunity 36
10.4. No Responsibility for Loans, Recitals, etc 37
10.5. Action on Instructions of Lenders 37
10.6. Employment of Administrative Agents and Counsel 37
10.7. Reliance on Documents; Counsel 37
10.8. Administrative Agent's Reimbursement and Indemnification 37
10.9. Notice of Default 38
10.10. Rights as a Lender 38
10.11. Lender Credit Decision 38
10.12. Successor Administrative Agent 39
10.13. Administrative Agent and Arranger Fees 40
10.14. Delegation to Affiliates 40

ARTICLE XI
SETOFF; RATABLE PAYMENTS

11.1. Setoff 40
11.2. Ratable Payments 40

ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

12.1. Successors and Assigns 40
12.2. Participations 41
12.3. Assignments 42
12.4. Dissemination of Information 43
12.5. Tax Treatment 43

ARTICLE XIII
NOTICES

13.1. Notices 43
13.3. Change of Address 44

ARTICLE XIV
COUNTERPARTS; EFFECTIVENESS; TERMINATION OF EXISTING AGREEMENT

ARTICLE XV
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

15.1. CHOICE OF LAW 44
15.2. WAIVER OF JURY TRIAL 44

SCHEDULES

Pricing Schedule
Schedule I Existing Credit Agreements

EXHIBITS

EXHIBIT A Form of Opinion of Borrower's Counsel
EXHIBIT B Form of Compliance Certificate
EXHIBIT C Form of Assignment
EXHIBIT D Form of Written Money Transfer Instructions
EXHIBIT E Form of Note

CREDIT AGREEMENT

This Agreement, dated as of July 14, 2004, is among Madison Gas and Electric Company, the Lenders, and Bank One, NA, a national banking association having its principal office in Chicago, Illinois, as Administrative Agent, U.S. Bank National Association, as Syndication Agent, and Marshall & Ilsley Bank and Associated Bank, N.A., as Managing Agents. The parties hereto agree as follows:

ARTICLE I
DEFINITIONS

As used in this Agreement:

"Administrative Agent" means Bank One in its capacity as contractual representative of the Lenders pursuant to Article X, and not in its individual capacity as a Lender, and any successor Administrative Agent appointed pursuant to Article X.

"Advance" means a borrowing hereunder (i) made by the Lenders on the same Borrowing Date, or (ii) converted or continued by the Lenders on the same date of conversion or continuation, consisting, in either case, of the aggregate amount of the several Loans of the same Type and, in the case of Eurodollar Loans, for the same Interest Period.

"Affiliate" of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person.

"Aggregate Commitment" means the aggregate of the Commitments of all the Lenders, in the initial aggregate amount of $45,000,000 as reduced from time to time pursuant to the terms hereof.

"Agreement" means this credit agreement, as it may be amended or modified and in effect from time to time.

"Agreement Accounting Principles" means generally accepted accounting principles as in effect from time to time, applied in a manner consistent with that used in preparing the financial statements referred to in Section 5.4.

"Alternate Base Rate" means, for any day, a rate of interest per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of the Federal Funds Effective Rate for such day plus 1/2% per annum.

"Applicable Fee Rate" means, at any time, the percentage rate per annum at which Facility Fees are accruing on the Aggregate Commitment (without regard to usage) at such time as set forth in the Pricing Schedule.

"Applicable Margin" means, with respect to Advances of any Type at any time, the percentage rate per annum which is applicable at such time with respect to Advances of such Type as set forth in the Pricing Schedule.

"Arranger" means Banc One Capital Markets, Inc., a Delaware corporation, and its successors, in its capacity as Lead Arranger and Sole Book Runner.

"Article" means an article of this Agreement unless another document is specifically referenced.

"Authorized Officer" means any of the Chairman, President, Chief Financial Officer, Treasurer or an Assistant Treasurer of the Borrower, acting singly.

"Bank One" means Bank One, NA, a national banking association having its principal office in Chicago, Illinois, in its individual capacity, and its successors.

"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. 101 et seq.).

"Borrower" means Madison Gas and Electric Company, a Wisconsin corporation, and its successors and assigns.

"Borrowing Date" means a date on which an Advance is made hereunder.

"Borrowing Notice" is defined in Section 2.2.3.

"Business Day" means (i) with respect to any borrowing, payment or rate selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago and New York for the conduct of substantially all of their commercial lending activities, interbank wire transfers can be made on the Fedwire system and dealings in United States dollars are carried on in the London interbank market and (ii) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago for the conduct of substantially all of their commercial lending activities and interbank wire transfers can be made on the Fedwire system.

"Capitalized Lease" of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles.

"Capitalized Lease Obligations" of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles.

"Cash Equivalent Investments" means (i) short-term obligations of, or fully guaranteed by, the United States of America, (ii) commercial paper rated A-1 or better by S&P or P-1 or better by Moody's, (iii) demand deposit accounts maintained in the ordinary course of business, and (iv) certificates of deposit issued by and time deposits with commercial banks (whether domestic or foreign) having capital and surplus in excess of $100,000,000; provided in each case that the same provides for payment of both principal and interest (and not principal alone or interest alone) and is not subject to any contingency regarding the payment of principal or interest.

"CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time.

"CERCLIS" means the Comprehensive Environmental Response Compensation Liability Information System List, as amended from time to time.

"Change in Control" means the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of voting stock of the Borrower.

"Code" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.

"Commitment" means, for each Lender, the obligation of such Lender to make Loans not exceeding the amount set forth opposite its signature below, as it may be modified as a result of any assignment that has become effective pursuant to Section 12.3.2 or as otherwise modified from time to time pursuant to the terms hereof.

"Consolidated Indebtedness" means at any time the Indebtedness of the Borrower and its Subsidiaries calculated on a consolidated basis as of such time.

"Consolidated Net Worth" means at any time the consolidated stockholder's equity of the Borrower and its Subsidiaries calculated on a consolidated basis as of such time.

"Consolidated Total Capitalization" means at any time the sum of Consolidated Indebtedness and Consolidated Net Worth, each calculated at such time.

"Contingent Obligation" of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the Indebtedness of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or the obligations of any such Person as general partner of a partnership with respect to the liabilities of the partnership.

"Controlled Group" means all members of a controlled group of corporations or other business entities and all members of a controlled group of trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414 of the Code or Section 4001 of ERISA.

"Conversion/Continuation Notice" is defined in Section 2.2.4.

"Default" means an event described in Article VII.

"Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to (i) the protection of the environment, (ii) the effect of the environment on human health, (iii) emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water, ground water or land, or (iv) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder.

"Eurodollar Advance" means an Advance which bears interest at a Eurodollar Rate requested by the Borrower pursuant to Section 2.2.

"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the relevant Interest Period, the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, provided that, (i) if Reuters Screen FRBD is not available to the Administrative Agent for any reason, the applicable Eurodollar Base Rate for the relevant Interest Period shall instead be the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars as reported by any other generally recognized financial information service as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, and (ii) if no such British Bankers' Association Interest Settlement Rate is available to the Administrative Agent, the applicable Eurodollar Base Rate for the relevant Interest Period shall instead be the rate determined by the Administrative Agent to be the rate at which Bank One or one of its Affiliate banks offers to place deposits in U.S. dollars with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, in the approximate amount of Bank One's relevant Eurodollar Loan and having a maturity equal to such Interest Period.

"Eurodollar Loan" means a Loan which bears interest at a Eurodollar Rate requested by the Borrower pursuant to Section 2.2.

"Eurodollar Rate" means, with respect to a Eurodollar Advance for the relevant Interest Period, the sum of (i) the quotient of (a) the Eurodollar Base Rate applicable to such Interest Period, divided by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to such Interest Period, plus (ii) the Applicable Margin.

"Excluded Taxes" means, in the case of each Lender or applicable Lending Installation and the Administrative Agent, taxes imposed on its overall net income, and franchise taxes imposed on it, by (i) the jurisdiction under the laws of which such Lender or the Administrative Agent is incorporated or organized or (ii) the jurisdiction in which the Administrative Agent's or such Lender's principal executive office or such Lender's applicable Lending Installation is located.

"Exhibit" refers to an exhibit to this Agreement, unless another document is specifically referenced.

"Existing Credit Agreements" means the existing bilateral credit agreements of the Borrower listed on Schedule I attached hereto.

"Extension Request" is defined in Section 2.16.

"Facility Termination Date" means July 14, 2007 or any later date as may be specified as the Facility Termination Date in accordance with Section 2.16 or any earlier date on which the Aggregate Commitment is reduced to zero or otherwise terminated pursuant to the terms hereof.

"Federal Funds Effective Rate" means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago time) on such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by the Administrative Agent in its sole discretion.

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